§ 55. Mr. Kendall
asked the Chancellor of the Exchequer if he can give any indication when the present restrictions on capital issues for expanding and reconstituting private industry will be lifted.
§ Sir J. Anderson
As the answer is long I will, with my right hon. Friend's permission, circulate it in the OFFICIAL REPORT.
Following is the answer:
I have recently been reviewing the working of the capital issues control and related measures and, with the permission of the House, I should like to take the opportunity of my hon. Friend's Question to state the conclusions at which I have arrived. With a view to assisting the financing of the war in as sound and orderly a manner as possible, it has been a deliberate part of our financial policy that demands on the capital market should, by means of the capital issues control, be confined to Government issues and to other borrowing essential in the national interest. The necessity for such a policy clearly continues, and I therefore do not propose to make any changes in the control at present. As a corollary it has also been the policy that, in the case of essential non-Government issues, the necessary funds should be raised not by public offers but by placing the issues with investment institutions, and I do not propose to change that policy. It would normally be the practice of such institutions to retain the greater part of the in- 626 vestments so taken up: but it will in future be made a definite condition of such placings that the institutions concerned should agree not to sell any stock, or to apply for permission to deal, for six months and that if, after those six months, permission to deal is desired, approval to apply for such permission must be obtained through the Capital Issues Committee before application is made to a Stock Exchange for leave to deal.
Subsequent to the imposition of the capital issues control, it became necessary to take measures for the regulation of dealings in unquoted securities. The Stock Exchanges agreed that they would not consider applications for permission to deal in any securities without specific Treasury approval. Later, the institutions particularly concerned in transactions in unquoted securities were asked to ensure that any such transactions in which they wished to participate had received. Treasury approval. Present conditions would not, in my view, justify any change in either of these arrangements, and I am satisfied that it is right for me to ask all concerned to continue the procedures which they have followed hitherto. Approval will continue to be given, as at present, where a transaction accords with Government policy or where it is justified by special circumstances such as the payment of death duties.
I should like to make it clear that at the moment I am dealing only with the needs of the present situation. The transition from war to peace will, of course, involve the opening of the market to a larger flow of issues by borrowers other than the Government. It will still be necessary to regulate that flow in an orderly manner; but modifications of our present policy and procedure will be required, and these are under consideration. Finally, I would add that, with a view to the greater convenience of all concerned, I have decided that as soon as the necessary accommodation can be arranged, the small staff of the Capital Issues Committee shall return to London.