THE POLICY OF STATE LENDING

Dominion, Volume 6, Issue 1703, 20 March 1913, Page 4

THE POLICY OF STATE LENDING

The State Advances Department necessarily covers a wide field in its dealings with the public, and it would be interesting to learn exactly what policy has been laid down for the guidance of officials of the Department in the granting of loans. It is to be hoped that the Department does not often accept such a security as was accepted by the Advances to Settlers branch in a case recently brought under our, notice. In ono of the Wellington suburbs there is a section of rough hillside land which boars a little group of miserable dwellings, badly built, unfinished, and insanitary. One of these buildings apparently nevor has been habitable in the ordinary sense of the word. The two others conform in some respects to the standard of dwellings of a poor class, which, unare numerous' in "our. cities, but in some respects fall a long way short of even these poor standards. Verandahs of which the floors are at a breakneck height from the ground stand unrailed and withput steps for access;'old iincl inferior building material has been used in parts in tho construction of tho cottages, and there is a deplorable lack of sanitary fittings and equipment. The primitive arrangements for drainage in the case of each cottage are in such a dilapidated and dirty, state that it is difficult to understand how they have escaped the scrutiny of the Publio Health authorities. To all appearance these conditions have existed very much as at present for some years. The Advances to Settlers Office granted a loan upon this property three or four years ago ; and, we believe, is now endeavouring t-o realiso upon its security, having foreclosed under the mortgage. The action of the Department in entering into such a transaction seems to bo very much ■ open to question. It is claimed that rules in regard to inspection and valuation of securities are* now eilr

forced which would nirike repetition of a transaction of this character impossible, but obviously no such rules were enforced when the transaction under review was entered into. The present system is to make progress payments as the security for the loan is being built up, so that the Idan is completed only with the oompletion .of the security. The buildings upon the suburban section mentioned above are a. standing evidence that no such conditions were made in the transaction with which they arc connccted. Important structural additions are required to complete the cottages, which are the most important items in the security, and it is perfectly plain that for a long time past they have been allowed to go to rack and ruin without let or hindrance. This is apart from the fact that tho cottages have never been provided with deccnt water supply and surface drainage arrangements. The Advances Department may be able to recover its outlay upon the loan, and so justify itself commercially for havihg entered into the transaction, but this does not dispose of all the considerations raised by a survey of the facts of. the case. No doubt the Department exists primarily to assist, people requiring capital for tho improvement of farm lands and the erection of homes, and it follows that it may properly upon occasion make advances upon dwellings of a verypoor class with a view to their improvement and to the assistance of the struggling folk who inhabit them. But the suggestion which rises from the facts of the present case is that tlio Department carelessly unade an advanec upon a class of dwelling which it is not desirable as a matter of general pplicy to encourage people to build, and allowed its security to steadily depreciate under its very eyes, so to speak. It is at least an open question whether the Department, in making loans upon the class of property here described, should not impose conditions calculated to make the dwellings in question conform to something like decent standards and maintain tliern in that condition. Whether or not it is eiftitled to adopt a policy of this character, the Department certainly ought to enforce rules for the inspection and valuation of securities which would make impossible a recurrence of nt any rate the worst features of the transaction to which reference has' been here made.