condition. To this end, however, the Government should think
seriously of restricting their own expenditure. Trade unions and
employers' associations will also have to be aware of their
responsibility in this respect.
Internationally, 1977 offers sufficient points of application for some
optimism in the economic field if only we do not let opportunities
slip by. In fact, thanks to the large balance of payments surplus
Holland also is in a relatively favourable position.
In our previous annual report we exercised fundamental criticism
on the Bill on the retained capital gains tax. We do not want to
repeat this criticism here. We also expressed concern about the
plans of the Government to propose already now amendments of the
Staff Councils Act 1971, although too little experience has yet been
gained in practice with the operation of the current law.
Within the framework of its aim to exercise influence on the manner
in which corporate investments are made the Government now
wants to introduce a new investment regulation to replace the
existing rules of investment allowance and accelerated depreciation.
The degree to which investment facilities are offered to industry
under the new regulation will depend on the social value of the
investment concerned, in which connection the number of jobs to
be created will be one of the main graduators.
In this new system the question to what extent investments are
justified and should be stimulated is no longer determined by
economic magnitudes, such as supply and demand, but threatens to
be answered on the basis of the subjective judgment of the ap
propriate Government authorities. In our opinion it needs no ar
gument that this new regulation will not primarily stimulate the
most profitable investments with all dangers for our future pros
perity.
The past years of creeping inflation and inadequate profit growth
have in many industries led to an erosion of the net worth. For the
sake of credit-worthiness it is of great importance for a finance
institution like ours to take care of a strong capital structure. Thanks
to constantly growing results we were able in our company to bring
about a continuous strengthening of our net worth and to attain
at the same time a regular increase in dividend. Due to this the
share of the FGH has rightly obtained the image of being a growth
share.
The urgently necessary strengthening of our capital structure en
tailed that in spite of the constantly growing dividend distributions
the pay-out showed a decline. We are fully confident that with this
