MORTGAGES & EXCHANGE

Evening Post, Volume CXIII, Issue 33, 9 February 1932, Page 8

MORTGAGES & EXCHANGE

(To the Editor.)

Sir,—Whilst agreeing to", much that you report Mr. E. W. Nicolauo as saying, under the heading "High Exchange," I should like to point out that his statement that Dr. Copland has advocated high exchange in the interests of mortgage holders is unfair and absurd. Take a mortgage contract entered into five years ago for £100 at 5 per Cent, per annum. The then value of the pound was 123.25 grains of standard gold. The principal representing 12,325 grains, and the interest 616.25 gra.ns. With the presently New f™ a\ Ue Of ,^ he pound approximately (or actually) equalling 80 grain? of standard 111 c PnnclPal represents 8000 grains, and the mterest 400 grains. A loss of «-'o g ra i ns m capital va]ue and 2i62g grains.per annum in interest. However much we may disregard it, gold is the only international medium of calculating exchange. The majority of the mortgagees are banks and financial institutions with overseas interests." Parity of exchange FnSrT- thf val«e °lt&* securitya an°d Srf !? *«? O1?l y value that really. m.itteis T gold. Should the debtor fail to pay his interest through the low exchange W°f ufr the result is cither »»- SWMai t t0 S pital or foreclosure. whit f en^ led to pay by a rise in exchange value, the mortgage holding interests suffer, both in calntal valu^and mt£££%£ inthe -]^a^terms 7}% ng *je approximate actual New Zealand pound value of 80 grains, I somewhat overstate the exchange value posimoral.^ to illustrate *"c

V. HAMILTON.