GOVERNMENT'S OBJECTIVE

Press, Volume LXX, Issue 21314, 6 November 1934, Page 12

GOVERNMENT'S OBJECTIVE

Proposed Mortgage Corporation EXPLANATION BY MR COATES [From Our Parliamentary Reporter.J WELLINGTON, November 5. In a statement in the House of Representatives to-night, the Minister for Finance (the Rt. Hon. J. G. Coates) referred to the proposed National Mortgage Corporation, which was referred to in the budget. "Time did not permit of the proposal being dealt with this session," said Mr Coates, "but I propose to concentrate on it during the recess, with a view to having legislation ready when Parliament resumes. So far the proposal has only been dealt with in broad outline, and a general discussion of the matter would be premature until definite proposals can be submitted. At the same time, I would like to take this opportunity of removing one or two misconceptions that appear to exist.

"The permanent objective that the Government has in mind is a soundly organised system of longterm mortgage finance (based on the well-known mortgage bond system extensively used in other countries) that will create a standard agricultural investment through which capital can confidently flow into the farming industry by largely obviating the risks normally involved in individual mortgage investments and providing a security which is practically as liquid as Government stock. Rehabilitation of Farmers "Capital will be obtained at cheaper rates. That is the essence of the idea. Concurrently and in conjunction with the National Mortgage Corporation, other measures will be proposed for dealing with the pressing problem of financial rehabilitation of farmers and others whose position has been rendered untenable as a result of the heavy fall in prices of primary products. I cannot give any details of this aspect of the matter at present, as the methods by which rchabiliation is to be achieved are still under consideration. I can say quite definitely, however, that each case will be dealt with on its merits, and there will be nothing in the nature of a general writing down or other reductions by legislation. Given suitable machinery, I have no doubt that the bulk of the cases can be dealt with by mutual arrangement between the parties concerned, and I would stress this aspect of the matter. The remainder will be dealt with by appropriate judicial machinery. "So far as the National Mortgage Corporation is concerned, various proposals have been, suggested; but people should not jump to conclusions that any particular features of these proposals are going to be adopted. Judgment should be suspended until the Government is able to bring down a considered scheme. It is fully realised that the success of the project depends upon obtaining the confidence oT investors in mortgage bonds, and the House and the: people can rest assured that the corporation will be organised on sound lines. Lower Kates of Interest "Furthermore, there is no intention of establishing anything in the nature of a monopoly of mortgage business, and if the parties concerned prefer it they will be able to continue making contracts for individual mortgages. We do feel, however, that proper organisation can narrow the margin that exists between the market rate for mortgages and for find stock exchange securities, and in the interests of the whole Dominion we propose to set. up an organisation. This organisation will, it is hoped, stabilise lower rates of interest: but provided that the concerns at present doing mortgage business are willing t r > do that business at market rales of interests, having regard to the nature of the security offered, there is no warrant for the statements made that their business is to be taken away from them.

| "As was indicated in the budget, the mortgage problem is the las', major item remaining to be dealt with in the financial rehabilitation of the Dominion. The difficulties to be overcome are recognised; but wo cannot hold back on that account as the job must be done. When it is done, however, our financial stability will be greatly increased to the lasting benefit of investors and the community generally."