FINANCE AND
INVESTMENT
DAVENPORT By NICHOLAS Victory for Hire-Purchase Finance
The repression of United Dominions Trust had therefore become, as its chairman, Mr. Gibson Jarvie, remarked at the annual meeting last week, 'almost childishly silly.' The remark may have stung Lord Kennet, the unpaid end public-spirited chairman of the Capital Issues Committee, who was getting the odium which should have been falling on the bureaucrats. I have no doubt that he was the cause of the prompt letter written by Mr. Butler (published last Saturday) revising the Treasury instructions In these cases. In future there is to be no rigid ban on issues by hire-purchase finance companies. The Capital Issues Committee must deal with them on their merits, having regard to the purposes for which the money is being raised. This implies that the United Dominions Trust will now receive the issue consent which has been so long denied. It THE City is rejoicing over its victory in the Crichel Down case of the financial world. For four years the United Dominions Trust, the largest and strongest of the hire-purchase finance companies, had been applying to the Capital Issues Committee (a Treasury agency) for permission to raise more capital by an issue of shares. Each time it had received a curt reply to the effect that the Lords Commissioners of H.M. Treasury were unable to give their consent. No appeal of course. In other words, the absolute ban on capital issues by hire-purchase finance companies which the Labour Government imposed from 1945 to 1951 and the Conserva- tive Government extended in its first disinflation period—to the point of freezing and then cutting bank credit for hire-purchase finance—had been blindly maintained by the bureaucrats in spite of a complete change in the economic climate from stormy inflation to settled equilibrium. Now no one wants an 'excessive expansion of consumer credit' which, as the Chancellor says, would not be in the national interest, but if the Capital Issues Committee had been allowed to use its common sense this could always have been avoided. In any case the greater part of the United Dominions Trust funds are actually employed in financ- ing capital goods for producers, not durable goods for consumers. Last year, with the ap- proval of the Government, it extended its good work by financing the purchase of road vehicles from the Transport Commission in order to expedite the denationalisation of road transport. To add irony to injustice, while the Treasury was denying the worthy company its new capital, about one hundred and seventy new companies were formed with capitalisations of £50,000 or less (i.e. below the limit which requires Treasury consent) to engage in hire-purchase finance and particularly to extend hire-purchase for consumer goods. Not only has the Treasury winked at this development but last month it had lifted the restrictions on consumer • hire-purchase which it had imposed in February, 1952 (requiring then a deposit of 333 per cent. of the purchase price and limiting the repayment period to eighteen months). Why, then, retain restrictions on producer hire-purchase, especially when an increase in producer goods, by Government
connivance, is in full swing? ' was a great victory for Mr. Gibson Jarvie who for many years has been fighting the stupidities and monstrosities of the bureau- cratic state as stoutly as Commander Marten fought for Crichel Down.
Abolish the Capital Issues Committee?
The cry now goes up for the abolition of the Capital Issues Committee. Now that trading in the City has been handed back to private enterprise and the commodity exchanges restored, why, it is asked, should This creature of Treasury managerialism be allowed to impose its dictate, unanswerable to either Parliament or the Courts? The answer is that it exercises by delegation the powers conferred on thq Treasury by the Borrowing (Control and Guarantees) Act of 1946 and that this Act has not yet been repealed or amended. If the present Govern- ment wins the next election this Act wil probably be repealed, for it represents the ill-fated Labour attempt to control the national economy by control of the nationa investment. On the one hand, like othe attempts to set up the bureaucratic managerial State, this Act did not plug al the loopholes for private enterprise whicl might be contrary to public policy (at investment of £50,000 was always free an could be multiplied). On the other hand i probably tended to reduce the total of invest ment that was desirable in the nationa interest. I doubt whether another Labou Government, except of the extreme left would want to continue this inadequate experiment in investment control. It woult probably prefer to rely, as Mr. Butler ha relied, on fiscal measures in the Budge for the stimulation or restraint of investment This being so, I am surprised that Mr Butler has not made more haste to dismantle the financial apparatus of the manageria State.
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