FINANCIAL STRINGENCY.

Dominion, Volume 2, Issue 465, 25 March 1909, Page 7

FINANCIAL STRINGENCY.

DISCUSSION BY NAPIER CHAMBER OF . COMMERCE. THE MORTGAGE TAX. NEW ZEALAND'S OFFER OF A BATTLESHIP. (BI TBLEGRAPH— SrSCJAL COBRESrONDENT.) . Naplor, March 24. A meeting of tho Napier Chamber of Commerce was held to-day to consider the question of the present financial stringency. The disoussion was an interesting ono, and evoked a speech which severely criticised Sir Joseph Ward's offer of a battleship to tho British Government. ■ The president (Mr. D. A. Baxter) said lie had two reasons for calling tho meeting. The first was tho importance of tho subject which demanded attention, and the second was because a conference of Chambers was to Le held in Wellington shortly, and if tho present meeting arrived at a resolution it could be. forwarded .there for disoussion. Ho wished to snggost that the keynote should not bo criticism of the past, but a discussion of tho conditions that had led up to tho present position. The reason of the financial stringency might bo over-trading or the mortgage tax. which had' squeezed out British capital. Speaking for tho company which ho lad the- honour to represent, the Loan and Mercantile Agoncy, he remembered about 20 years ago when they had some £100,000 lent out on mortgago debentures. It was now impossible to get this money on tho London market.

Mr. N. Kettle said he thought the time had arrived when it was tho duty of the Chamber to take into consideration tho question of the financial stringency. It had now been with us over a year. In reviewing tho situation, they found that all tho British lending institutions onco operating in the colony had closed their doors. If they had an application for £4000 or'£sooo in' Napier to-morrow tho money could not be ° raised. This showed where 'they Were drifting to. The mortgage' tax had resulted in a groat deal of money being taken away from tho country, and he thought it was time the Government was told this was an unfair tax. This was whero the shoe pinched, but the country should be ablo to attract British capital. He moved :—

; (1) That as the mortgago tax has been found to bo the cause of a large amount of capital being withdrawn from New Zealand, to restrict the influx of capital for investment, and to create' financial stringency in obtaining loans required for the legitimate development of the country's natural resources, the attention of the Government be called to the position, and it be suggested that the mortgage tax be abolished. Further, that in lieu thereof, all income derived from investment of capital on mortgages be mado subject to the income tax. . (2) That the graduated tax on capital invested in shares of public companies be levied on tho paid-up value of such shares only, instead of as at present on tho proportion of such shares to the total value of land owned by public companies, irrespective of their liabilities.

Mr. J. Sandtmann seconded the motion. The chairman said that Government borrowing in the Dominion was largely responsible for the present stringency. .Mr. Eustace Lano, the representative of tho Crown tenants on the Hawke's Bay Land Beard,.said that the question was a serious one,, but in view of the situation, the Prime Minister of the country had mado a present of £3,000,000 to the Home Government. In his opinion this present was absolutely uncalled for and unwarranted. In confirmation of this ho could quote a telegram to the Prime Minister himself from tho "Standard" newspaper asking why he had made this offer, rhe policy of this Dominion should have been to take steps to get the taxes removed from our imports into Gennanv. Ho would like to see New Zealand frozen meat entering Germany, as the Americans were tryinc to get a market for their, meat. Tho position in regard, to their, exports to tho Old Country showed very poor prices for their beef and mutton. The position was serious, and tor tho Government to make this gift of £3,000,000 without obtaining tho consent of the representatives of tho people was absolutely uncalled for.' Mr. Lano- conoluded by expressing himself in favour of the motion. Mr. R. A. Wilson said that tho gist of the matter appeared to bo that the present rates of interest were so low that even tho removal of tho J 'per cent, mortgage tax would not provide a remedy in inducing British companies to again invest their money here. Ho quite believed that if the Government had not imposed this tax the companies would have allowed their money to remain hero; but tho position was now altogether different. Unless they could guarantee a permanent rate of interest of 6 or 7 per cent., he thought that the motion 'would have very littlo effect.

_ Mr. J. H. Coleman said he did not think 10 was right to blamo the banks, as they had probably done their best.- As an illustration ot the effect of the low rate of interest, he said ho was a trustee over funds amount-in" to between £300,000 and £400.000, which had been invested in New Zealand. When tho rate of interest camo down to 4 per cent which was practically all it was after allowing, for the mortgago tax, this money was taken out of the country and invested elsewhere. Tho motion was carried. Mr. Lane gave notice to move at the next meeting— That, considering the present financial stringency in tho Dominion, and considering the low valuo which all lines of produce have reached, and tho fact that the naval scare iu England has been exaggerated, and that there is no urgent need, this chamber endorses the view of the Canterbury Trades and Labour Council and tho Federal Government of Australia m expressing disapproval of Sir Joseph Ward's offer of up to £3,000,000 in Dreadnoughts to the British Government.