TIGHT MONEY MARKET

Auckland Star, Volume XLIV, Issue 183, 2 August 1913, Page 11

TIGHT MONEY MARKET

PARLIAMENT DISCUSSES THE SITUATION.

SPECIAL LOAK AWOCATED. jCnT-STE-iXfi-I. CAUTION. .Pr Telegttrp'fl-—t'arliaarentary Reporter.) 6. ELLINGTON. Friday. , sugge-Sticib that the t.ove.rnment should raise a special loan of £*~ooo,ono to relieve liie existing difficulty in obtiiainl Money ...n mortgage wa.s placed ■jcfore"the Minister nl' K:r__.nce this afternoon, following the statement that the Hate Advance-. Department wis lending ■("75.000 per month, nnd could not under- j __„_' further responsibilities until -the j jiionpv market wris eased. The Minister informed Mr Dickie, who had 'rue-stionod "union the point, thai U.e Department could net make advances to relieve existing mort_a_.-. A long discussion -nthe state of the.local rooney market. TWO MILLION J.UAN. ilr. BnsS'-U suggested that at- such a time of stre-s ns'the present, when rates -were so high, it would be a good -thing '.borrow a couple of million ou the London money market to provide money in V.w Zealand at more re._sonable terms. Xhc rate of interest should be steadier for the benefit of producers. He agreed that it was- a sound pri-triple not to advance money to pay off mortgages, as; tie time was exceptional. He. had heard of ten per cent being offered for a second mortgage, and the money hcing unprocurable. Sir Walter Buchanan expressed the opinion that eight or ten per cent in interest suggested poor security. Second nort'-a.'je securities varied very much, -and in some cases ten per cent would not be a very good and sale margin. MONEY AT RE..PONAHI.K.R-.TE-.. The Prime Minister agreed with the previous speaker that the rate of interest depended t" a v»ry p;reat extent on the qua'iity of the see-irky. Mr. Russell: AUo on the c_uant_ty of jn.oney available. Hon. Mr. Massey: -lust so. But we all Icnotr there jhas been a financial .strin-g-CD. cji anf l 60 that this stringency has been* relieved to a very great extent at the present, time. Money is available at nVe and five and a-half per cent. Of course the security must be good, but I know in the last five or six weeks- of an infanee where a very considerable stun of money has been borrowed at-that rate. A CAST-IRON" Rl'I.K. The Prime Minister went nn to saythat the principle had been laid down-for rears before the present came into office, a principle existing, he believed, ever since the Advances to Settlers Depart men. bad been set up. that it was no part of their business to lend money to pay off mortgages. Money was advanced purely tn improve farms and purchase stock, etc.. and the- principle set down.was one which the--Gov-ernment were prepared --o adhere to. ~ JJr.iiEiis.-Cr.l: J don'r think it it» a-cast-iron- rule. The Prime Minister: Well. T am driven tn understand il was. Applications-have come in an tl been refused by the Department, the. reason given being that the Advances Brum! • I.> not under any circumstances lend money to repay mortgages. -Ir. McCalluin: That i- i|iiiie incorrect. It has only been upplied lately. Hon. Mr. Fra-cr: There are the records on the hook. A YEAR'S RECORD. The -Prime Minister proceeded to point out that the return brought down by the Finance Minister showed thai, between July lot. 191-2. t.j duly Ist. 1913, a total of 3,055 applications w ere received for loans from the Advances to Settlers Office, aggregating J_ 1,041,50.">. Of these 2.052 were granted, the amount of money lent totalling tlijßti.44o. practically two-thirds of the income. He could understand that lending that amount to so many settlers in twelve months must mean a considerable relief to the want of money. Turning to the Advances to Worker* branch, he said the return showed that in the same period there had oeen 1.549 applications; for money total-ling-524,005. The number gran-ted was 1.112, the amount lent being L':j06,340. For the purpose of building workers' nouses, the number of workers who obtained Joans of not less than £400 was •41. I don't think it would have been jos-ible for this or any other <'overnment to have done better under the circumstances,'' declared Mr. Massev. add"•E- "Nobody will be better pleased than 1 shall'be when the financial position is frach that the Government will be enabled to take the limit, away from the advance., to settlers altogether. Members: What, do you mean" The Prime "Minister: 1 mean up to the ton, set forth hy the Act. which. T ■W I .'f*"' 000 - But we must be content with a smaller amount lir-st.

mr.VINf; TIER ORBDIT. . Hon. members have suggested Hip rai<u gof one nr two millions for advances Purpose. M,,-h a Would be v.ur Unwise for the reason nf ~,,r present pat indebtedness year it in"eased by five wnd a-haif millions. Su.-h *• mcreasp, it will be admitted, is a* ««* as th P rredit of the ooimtir will fwnd. ]f wo had no difikiiKies "alipad it might bo advisaWp to p O (o t | lP Lon . don market as is but bptwpenl now and rhe end of next rpar. in addi- ™, a t0 th<. niMiPv wanlod for public w °rics, lands for spttlpment. native hind Pnrehasp. etc., wp have to apply to the market, for between eight a.nd J»e nnllions to meet debenture* falling Although 1 do not think if wise (o "ov more money at the present moc . J ' nr t' ,ll JJiirpoio .=ujrfref;ted. a propssive poli.-y win ho maintained so «ng as we 0mi .,,. l)|flfr , | ipn( , hes (O BUcra ku-tbtor.r R,K », Ho not Zu■W the tlwi. .mp.M-tunr to go in for ex- , Mr. p aj . ne ( .. lilin] lUu , |]tioll l 0 th( , facl , ' numl.cr uf Auckland workbad 1,;, i;-. ,! le ;V homes were ~2 d J w,,h Hip uarly iermmalion of the Penod of the loan.' Thr fi » me.n on-lit tfJtW SteU l >y ""■ S"»te. \M.y did • tnc Gnveriimeiu o in;n the question f *Wing .t* oiri, no:,- ~,.! borrow in the- Dominion. ~-"■• Buxton iTemnkai siitPd that in «» oyi, ai.nr.rt he Kt.p-.t nf holders of fa-ling to obtain :f"fy <he prnpie ■■■i:,'• On "wo driven to private lender;. ~«id squeezed. ;■ . COUNTRY CLAIMS. ' 1 ' 1 '- Pearce (Pateai declared that of the Act by past "wniineiitfi, who had loaned momy for

speculative building in the cities and , suburbs was responsible for the present ; difficulties. The money ought to have been spent in the country for -ettlers' benefit. "The town versus country cry had been r.used for party purposes," kid the Hon. D. Bud do. The. point, about which he was <-.onceraed was the strengthening of the-office to reiic\e the Pressure which was almost unbearable was being experienced -farmers. The opinion was -expressed b F 'Mr Wilford tha M.be trouble, had arisen* through the country having beeu taught to rely on the State for money. .Private lending ■companies ceased to do business. His experience as a Wellington. Sinking Fund Commissioner was (hat everr available copper was-snapped up al 6 per cent. "I would like to as.k the Minister of Finance," concluded Mr. Wilford. "if he believes in short-dated debentures or long-distance Joans under the circumstances.- If the heart of the (.Jovernment was in the lending business, he could acquit them of blame, but they bad not striven to meet the situation. * The Prime Minister: We have loaned a million, and we cannot do more.

Mr. Wilford condemned the banking ring, which, he said, gave live men in Wellington the power of raisins interest on overdrafts and reducing interest on deposits in a few minutes. He could not blu.mt> the Government for high interest, but he urged them lo believe in their own institution. MAr,,\r>MINIK'TR,AT'K).N <*H \ROE ANSWEKKD. Mr. MacDonuld declared that the million loaned last year consisted of interest a.ud repayments, which the Government whs obliged to lend. The lion. Mr. Allen: It was new money. Mr. -MaeDonah I replied that he had hunted through the balance-sheet, but could not find ii. The maladministration of past governments was the sort of maladministration which had eiutbled the Advances Department to lend last Tear £1.200.000 to settlers and workers wiihoui raising an additional loan. Tf. the (Government was not able to advance money to the settlers they should stop putting settlers out in the back-blocks nntil they caught up in roads and finance. Mr. .r. A. Young (Wafkuto) said that local causes of the stringency in the money market had intensified the position. He objected to money being lent at the rate of £2,000 at -one '"pop" on 41 town property. That was what hajppened in 19JJ. If the tima.ll settlers were helped to the utmost, tbe national wealth would he increased. HOX ME. A-LUEN'S VIEWS. The Minister of Ifina-nce suggested that the wonderful tales about iigh interest were 'told for party purposes. 1 f members were really sincere in their auxietv to help settlers they-shoold help the Government out of the difficulty. Money "was -Dot so dear to-day as six months ago. Only a, tfew days ago a local authority raised £50.000 at .") per cent. ■RASING -TSK LOC-At, MARKET. The Public Trustee ha? been finding a huge-sum in the same way. It would be impossible to go to the bundon money market for a loan as had been-suggested The practice- of stopping advances to repay mortgages coming due was commeJTCi'd on April let. 1012. by a previous <jovcninient. Ho agreed that this was good policy for Uie tiflie being. Were they to meet the mortgage.* coming due, or were they to find the iueans to enable settlers to go on fredh. country? The Government would, to the ■best- <"if its ability, find the money both for the settler and the worker to build his home, providing some satisfactory source of supply could be found. He would be very "pleased to increase the £750 limit in the advances In settlers to a higher amount. Money was going out from the two departments now at the rate of over £100,000 a month, and that mnst. despite all contention* to the con■trarv. ease the pressure on the local nionev market.