§ Mr. Collins
asked the Chancellor of the Exchequer, in view of the recent curtailment of the investments programme, what new instructions have been given to the Capital Issues Committee.
§ 1949. Sir S. Cripps
I have sent a letter to the Chairman of the Capital Issues Committee on this subject, of which the following is a copy:
MY DEAR LORD KENNET,
In the light of the cuts in the investment programme which, as the Prime Minister recently explained to Parliament, we have been compelled by present circumstances to make, we have been considering afresh the instructions to the Capital Issues Committee.296W
These instructions, in their latest form, date from the 14th April, 1949, and the statement in the memorandum of that date that "the resources which can be devoted to new investment are strictly limited in relation to the demands likely to be made on them" is even more applicable to present circumstances than it was to those of last April. We have taken steps to ensure that the Departments, on whom you necessarily rely for advice as to the merits of applications for permission to make new issues, are fully alive to the need for examining all such proposals with a really critical eye, and with full regard to the general principles set out in the memorandum of last April. I do not think that any alteration of those principles is necessary; what is important is that, in present circumstances they should be interpreted strictly, and I am sure that we can rely on the C.I.C., in combination with Departments, to continue to provide, in the field of investment in the private sector, the maximum reinforcement of the Government's current policy, and to ensure that, in their recommendations, all applications for permission to make new issues of capital are realistically judged by reference to the criteria of the national interest which are indicated in the memorandum of 14th April last.
So far as Bonus Issues are concerned, I have carefully reconsidered this matter since I requested you on 24th October to suspend all action with regard to them.
I am now prepared to remove that absolute suspension, but I would ask your Committee not to make any recommendations to the Treasury to permit any such issue unless you are satisfied that each Bonus Issue in question is necessary to enable the Company to continue or to expand its production or to increase the volume of its exports.
I should consider that, in the case of a company which was exporting a considerable percentage of its production to hard currency markets, the onus of proving such necessity would be very much lighter, and that consequently your Commitee could make a favourable recommendation more freely.
In addition, 1 must ask that the Committee should not, save in exceptional cases, recommend the Treasury to consent to any Bonus Issue taking the form of Preference shares.
I should like to take the opportunity of this letter to thank you and your Committee for the help which you give us by your sound and steady work. I always feel confident that we can rely on the Committee to discharge their duties thoroughly and conscientiously, and that confidence is something which I value highly.
R. STAFFORD CRIPPS.