CAPITAL SHY

Waikato Times, Volume 124, Issue 20742, 28 February 1939, Page 8

CAPITAL SHY

INVESTORS SCARED j GOVERNMENT VAGUENESS OUTSPOKEN STOCKBROKER (By Telegraph.—Press Association) WELLINGTON, Tuesday Mr Henry Kltson, president of the Stock Exchange Association, spoke out freely at the annual meeting to-day. “Steady trading,” he said, “is now only a vague memory and one wonders if we will ever know it again. The volume of recorded business has decreased, investors are thoroughly scared and it will take some time for them to recover. There, of course, will come a time when capital must come out Into the open again and those who hold to-day will reap the benefit. “Apparently the surplus money for investment has almost vanished and a great deal of the falling away in business is due to the utter uncertainty of the position in the Dominion. It is impossible to get any clear and concise statement as to the Government’s future policy. For some months now an internal loan has been in the offing and the public is naturally anxious to know when this loan and conditions will be announced. “Uncertainty breeds rumours and rumours are unsettling,” he added. “Unsettled conditions clog the wheels of industry and progress. If those in power would only make straightforward statements and announce the policy they propose to pursue business might recover. People in New Zealand are entitled to know the truth and are getting tired or vague, contradictory statements. Straightforward Facts Wanted “They were told that the drastic measures taken to cope with the sterling funds position was all according to plan, well-thought-out, carefully considered and normal. If that is so it is sincerely to be hoped the Government will never be called upon to introduce measures to meet an emergency.” He knew it was easy to criticise and difficult to give the plain, invarnished truth. If we had to revert to flax mats and pipis at least we were entitled to receive some w r arning ahead. There was never a time In the history of New Zealand when plain, straightforward facts were more looked for and necessary. Bluff, bluster and political showmanship were apt to be expensive, tiresome and destructive sometimes. We were told import control was primarily a measure to regain our sterling position and at other times that it was to promote secondary industries. To expect factories to cope with internal consumption in the twinkling of an eye was asking an impossibility. Uncertainty of Profits Industries were not built overnight, and further capital outlay was imperative. Capital expenditure was governed by the probability of profit on outlay. If by taxation these'profits w r ere decidedly uncertain expansion was shy. No doubt manufacturers would look carefully into the mouth of the gift horse of import control if the overseas funds were built up by export surpluses to the figure deemed necessary. How were future surpluses to be brought back to New Zealand except by opening the door once more to imports? concluded Mr Kitson. Surpluses could be .used to repay external loans but it was not possible to use that money as income. Non-Default In the Past Mr Kitson reminded the meeting that £17,173,191 was due in London this year. It was unfortunate that the overseas funds were as depleted as they were. “Apparently the only sin previous Governments have not committed,” I he said, “is that New Zealand has defaulted in the payment of interest and principal on loans. It remains to be seen just how much confidence the fact that we have never defaulted in the past will inspire in overseas investors.”