I should like to confirm my understanding that while it purports to relate to the new issue of land bonds, it is not so much the matter of a new issue as the extension of the power of the Minister for Lands, in conjunction with the Minister for Finance, to determine the type of bonds that will be issued from year to year. The position has been that every year, at about Christmas or January, an order is made that bonds for the year then about to commence would be issued at the rate of X per cent.
It has happened in the past, as we all know, that, largely because of what has come to be known as the Daltonian era of cheap money of the late forties, many people have bonds at as low as three per cent. The existence of those bonds is a matter of considerable trouble and make for bad public relations for the Land Commission. When people hear that they are to be paid in bonds, their minds go back to these three per cent bonds and the general talk that such bonds are never worth par. The six per cent bonds are generally above par, depending on the amount of interest accrued.
It would be desirable if in future issues of land bonds two things were borne in mind in so far as possible. First, it would be utterly impossible to have any goodwill for the Land Commission unless the rate of interest were so fixed that the value of the bonds was slightly over rather than slightly under par. To endeavour to cheesepare on the rate of interest in that respect would do so much damage from the public relations point of view of the Land Commission that it would cost a great deal more than the slight saving in interest to overcome it. Secondly, I want to make it clear to the Minister that it is essential, in relation to any issue of land bonds, that there should be a substantial amount of that particular issue in existence. One of the troubles about some of the earlier issues of land bonds, since the emergency period I am talking about, is that there is so little in volume of the 3 per cent and 3½ per cent bonds in existence that there is never any market for them.
I understand that the Government stockbroker's shop does not operate for land bonds. So far as land bonds are concerned, the Government do not stand ready to make a market and to buy or sell land bonds in the same way as the Government stockbroker does stand ready to ensure that there is a permanent market in national loans. I can see the reason for it. I think it is something that we could, perhaps, hardly change, but, when we cannot change it that way, there is all the stronger obligation on us to ensure that the amount of any particular issue of land bonds is such as to mean that there will be a market, even if the rate of interest were so to vary that it would not be practicable to continue to pay six per cent, which is the present rate.
I should like to see a method by which, if the national rate of interest on money was changed up or down, six per cent bonds would continue to be issued but at a premium or a discount, as the case may be, at a discount if the rate of interest rises above six per cent and at a premium if the rate of interest drops below that figure. If that were done, the six per cent bond issue would be of such a size as to be freely negotiable. It is because, in the case of the smaller issues, there is so little outstanding and so little held that it is virtually impossible to sell them for a considerable period of time.
I doubt if the Minister has to his hand—I certainly have not got it to my hand at the moment—the amount outstanding of each particular issue of land bonds. There was, of course, a very heavy issue of the 4½ per cent bonds and those bonds were the issue for many years, up almost to the beginning of the emergency, I think, unless I am mistaken. Subsequently there was a four per cent bond issue, in which I believe there is a substantial amount outstanding, enough to make a market. With regard to the three per cent and the 3½ per cent, my recollection is that the amount issued was so small that there is virtually no Stock Exchange issue.
If the amount of any issue is small, where an owner has been paid in bonds for his land, he is unable to cash them for a considerable time. That, of course, is most unfair. It operates not merely to be unfair on the individual but, in addition, it operates also as a tremendous deterrent to the Land Commission making any acquisition with goodwill. I take it I am correct in thinking that the purchase price of land is paid in bonds only when there are acquisition proceedings or agreement for purchase. When there is a purchase by auction the position is that it is a cash purchase. I have sometimes wondered, when I have come across cases in which the Land Commission do not appear to have been anxious to buy at the auction but have come along immediately afterwards and tried to negotiate, whether the reason was that the cash provision was not there and they wanted to pay for the land in bonds.
I am bound to put on record that where a person is paid in six per cent bonds, if he wants to cash those, he is able to do so with reasonable facility and without loss. That is not the case in respect of many people who were paid for earlier sales of land to the Land Commission in earlier issues of bonds and who are, in consequence, suffering at present, if they want to cash, losses down as far as 35 per cent of their purchase price. It is unfair that that should be so and it certainly does not help voluntary acquisition.
I would urge the Minister very strongly, therefore, that so far as this additional £10 millions is to be issued, it should be issued, as far as possible, in the one interest rate block so that there will be sufficient there always to find a free market for a vendor to cash in if he wants to, and therefore for the purchaser. If the rate of interest changes at any time in the future, then that change should be met not by a change in the interest rate but by a change in the issue price of the bond, be it at a premium or at a discount. Quite honestly, I do not know whether the Minister, with the Minister for Finance, has power under the existing land bond statute law to issue in that way, but, if he has not power to do so, I think it desirable that such power should be incorporated in the Statute Book with the appropriate usual safeguard of tabling a resolution, so that, if the power were used wrongly, the House would have an opportunity of reconsidering the matter.
