H.—258

a representative of secondary industries, and representatives of law and accountancy. Advisory panels in the fields of research, finance, law, accountancy, engineering, and architecture are suggested. Profits of the undertaking are to be derived from — (a) Payments for examining and sponsoring enterprises, (6) payments in consideration of guarantees, (c) payments as agents for an insurance company or companies. It is hoped that the company may obtain the co-operation of the Unemployment Board, which may assist financially in certain cases by making a limited guarantee in respect of wages. The above proposal is in line with modern developments towards what the authors of the Liberal Industrial Report* describe as the public concern—a type of organization in which all or a greater part of the capital is provided by private investors, but in which the profit-making motive is subservient to broader considerations of public policy, and in which, in consequence, there is a greater measure of public regulation or control. • In some measure such a company would perform the functions of a National Investment Board, because it would exercise a directive influence on industry through its selection of the enterprises to be guaranteed. In addition it might be instrumental at the present time in encouraging new enterprises or the development of existing concerns, because in some measure it would promote greater confidence through the limited guarantee. A related proposal consists in the " liquefaction" of mortgages. It is suggested that the gurantee company, or a mortgage company specially formed for the purpose, should agree to take over existing mortgages up to a safe proportion of current valuation, issuing debentures in their place. Whereas existing mortgages may be of little value as collateral and are practically unsaleable, such debentures would possess a ready market and would be readily acceptable as collateral. It will be apparent that such a proposal raises complicated and difficult issues, more especially in regard to the policy to be adopted with the balance of mortgages in excess of the value converted into debentures. A proposal related to the formation of the National Guarantee Company of New Zealand, Ltd., is the establishment of an underwriting company to be known as " New Zealand Underwriters, Ltd." The suggested capital is £125,000, the ordinary shares, totalling £25,000, to be held by members of stock exchanges and selected outside brokers. Such brokers will be underwriters, to whom will be attached sub-underwriters. These will be preference shareholders, holding £100,000 in 4-per-cent. cumulative preference shares of £1. The company proposes to accept underwriting contracts and apportion them among its ordinary shareholders, who will further distribute them among the preference shareholders. By means of such an organization it should be possible to undertake the flotation of large capital issues for which the machinery is lacking at the present time. We deem it unnecessary to discuss the above proposals in any detail, and think it sufficient to commend them for further investigation.

* Cf. "Britain's Industrial Future," page 63.

9—ll. 258.

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