CORRESPONDENCE.

Auckland Star, Volume LXVII, Issue 139, 13 June 1936, Page 17

CORRESPONDENCE.

POINTS FROM LETTERS. HIGH OR LOW RENTS? Your letter of 3rd inst. on this question opens up a much bigger principle than just what the landlord or tenant can afford to accept or pay, and it is not one that, in my opinion, can be settled by any Magistrates Court decision, that is to say if the decision is to be of any further effect than an exposition of the effect of the law. What the legislature intends is clearly that there shall be no undue victimisation of tenants, and in its effort to effect this by a general rule, prineipfe is apt to give way to opportunism, although it may still recognise the fact that landlords generally have not had a payable return on the capital invested ofr some years. It is well, however, to try and see the position of all sections of property owners and users. Those renting houses have suffered from low rentals, and where interest on mortgages had*, to be paid they "losv. money" for the time being. Those occupying their own houses and out of employment were also at a distinct loss, and those who lent money on such securities and had their interest reduced also "lost money," as the. term goes.

Memory is always short, and if we like to look back over the last five years checking over the returns from "sound" investments nu,st> property owners will receive a shock. T have a list of of> investment concern returns these comprising all the banks and insurance companies, leading lending institutions, and other concerns of good standing 011 the Auckland exchange. The net return to investors 011 the market price of these shares lias varied over the past live years as follows: —

This shows clearly that the return from the best investments went down very considerably, whilst many investors went without any return at all in these years. In addition the recent "successful" floatations of New Zealand and Australian loans in London show clearly the world-wide reduction which investors of all kitads must be prepared to accept for some'time to come, with the evident probability of still lower rates as evidenced by the fact that London underwriters were, prepared to carry a substantial proportion of the offerings. It is not only a compliment to the Dominions concerned but it also means that they would not be prepared to hold such unless there wars every probability of a profit in the future. That means the bonds will rise in value as interest returns on later issues tend to decrease. The answer to all this is a general mortgage readjustment, under which interest on these "fixed contracts" shall be brought into line with other investment returns. The whole Dominion has to have a proI perty stocktaking before we can get | clear of these depressing conditions of i unbalance, but the sudden lifting of the I moratorium without some active safeguard will only precipitate at this stage an even worse crisis. If the proposed mortgage adjustments can be made by making the' State Advances Corporation the universal market for expired or overduemortgages, then we can have one standard of valuation for property and mortgage purposes, which will extend all over the Dominion on as even a basis as is reasonably possible. An application for a loan by either mortgagor or mortgagee would in itself be the basis for the adjustment between them. If the amount offered by the corporation in settlement were insufficient then the mortgagee would only be exercising his judgment if ho decided that the future held out better prices and he decided to carry on without calling up. Meanwhile it would be only just that the mortgagor alternately pay such interest as would be paid 011 the proffered loan by the corporation, plus the usual one per cent redemption, that amount being universal "rent" which, whether for farms or houses, would become recognised as leaving a living above basic costs under that heading. There would be some writing off to bo done of course, and as the investment returns, previously mentioned, show rightly so. There is no reason why there should be any privileged class of investment holders. The greatest losses were made by those who went out to battle and never returned, without wjiose help many will say we should now be under German domination. If that be so then a writing down by those at home who benefitted is by no means out of place. We need to get our cost down and not up. Higher wages can only be paid out of greater profit earnings, and greater demand can only come from a l>ettcr distribution of profits. We need to get our eyes on to steady circulation of money by fair distribution of profits, the ultimate reason for all effort of business of any kind and employment. High or low rents are, like high or low price's, merely relative but circulation of money and goods actually shows whether we are prosperous or not. Rent is a big factor in all costs, too big in the cities and large towns, and no prosperity can stay undercuts which take too big a portion of the income of the tenant. It means that too small a proportion of earnings is going back into circulation for the purchase of living necessities Profit is being made out of the use of fixed capital whereas a greater proportion should go back into circulation for the employment of labour. That brings a more economic distribution and steady circulation, the necessary conditions for continued prosperity. Ernest h. wright/

Aw return nt market priee No. pnssAprll eneli year. Jnj? cllvil. Yonr Per cent. for year. I'.Kil £('. 1 r. 7 *. 4 1032 4 (I 4 . 14 1033 3 2 0 3 0 1034 2 15 0 18 . 103.". 3 0 1 t 13 1930 3 8 5 10