STATE ADVANCES

Evening Post, Volume CXVIII, Issue 34, 9 August 1934, Page 14

STATE ADVANCES

EFFECTS OF SLUMP

MORTGAGORS AMD ARREARS

PRICE-LEVEL FACTOR

The repercussions of the economic situation on the position of tho State Advances Office arc outlined by the superintendent in his report to Parliament which was presented to both Houses of Parliament yesterday. It| is pointed out, however, that the an-] nusil amount of arrears on mortgages is showing a definite downward tendency. ff '' Tho difficulties of the prevailing conditions are reflected in the position of the office with its mortgagors," states the report. "These mortgagors have not, in the main, securities other than those charged to the Department. Consequently, no reserves arc available to carry them over the time of depression, and the sources from which their annual charges are met arise from receipts of mortgaged assets or from their earnings. A present improvement in the general position appears to be indicated by the increased cash payments being made to this office by mortgagors in arrears with their payments. A comparison with preceding years willgbest illustrate this point. The amount of the annual increase in the arrears-payable to the office has shown a definite downward tendency, .notwithstanding the fact that tiro number of mortgagors who have been unable to meet their commitments over the same period has increased. * The increase in the arrears for the year ended March .31, 1932, was £042,184, for tho year ending March 31, 1933, £559,210, for tho year ended March 31, 1934, £508,132. "The number of mortgagors in urban and suburban properties failing in their payments has iucreased during the past twelve months, but the facilities offered through the system of frequent and regular collections have enabled the Department to restrict the amount of the arrears in each case as much as possible. A general acceptance of thesn facilities by the mortgagors is now met with as the value to mortgagors themselves of these measures is being realised. For the year ended March 31, 1934, 343,127 actual collections were made, the total sum received from these collections being :£514,344. FORMS OF RELIEF. "The Department has continued to extend its various forms of relief in suitable cases to its mortgagors. The facilities offered by way' of a postpone-, inent of principal in the instalment due under a mortgage have . been freely availed of when it was found that the difficulties are transitory. In many eases appreciation has been expressed ■by its mortgagors of tho Department's efforts. ' : "With those properties in urban and suburban areas that have como under the control and administration of the Department no change has at present been made in the policy of refraining from forcing realisation sales. Meantime the action is restricted to the regaining possession of the asset and its- letting until a more favourable market for realisation is reached. The real estate movements are closely watched, and adequate steps, will bo taken in sufficient time to meet the market when the conditions aro definitely moro buoyant than those which exist at. the present time. Tho same policy cannot bo applied, for obvious reasons, to rural securities, and offerings of. reverted securities aix therefore from time to timo necessary.

"The advance in tho price of wool during last season' offered some relief to many of tho office mortgagors. Most of tho office mortgagors in sheep, however, have not largo'flocks, and any stoop increase in their annual returns was not therefore experienced. In some cases, however, it has been noticed that the mortgagors have taken advantage of their increased revenue to reduce the arrears under their mortgages as much as possible. The position of the dairying industry,,in so far as it is reflected by office mortgagors in dairying, shows a slight decline for tho year just ended as compared with the immediato preceding year. Tho total number of .mortgagors dairying on freehold and leasehold land as at March .31, 1934, was 10,222. Of this number approximately 54 por cent, have met their commitments to tho office. The number in default at March 31, 1934, is 4065, as compared with 4455 for . the corresponding period ending -March 31, 1933. MARGINAL LAND. "It is clear that tho losses in this Department will be increased if the present indications of continued low price-levels are realised. A number of tho Department's securities affects land that may be described as 'marginal.' Unless the price-levels rise, this marginal land will revert, as its continued development will not be justified by economic considerations. ' "Until the Department disposes of its properties and collects payment of the outstanding arrears, tho ultimate loss will not be ascertained. To provide in some measure "for. this contingency tho balance of gross profits available has. been transferred 'to tho reserve for loss. It is regretted that no accretion to tho advances office sinking fund, created for the redemption of tho loan liability was possible during the year. ' .

"The total amount advanced from the inception of the office in 1894 up to March 31, 1934, was £75,462,498 4s 9d. Payments of half-yearly instaments, together with repayments in full to release securities, have to date totalled £32,950,915 5s 4d, leaving a balance outstanding of £42,511,582 19s-sd. The total losses from the inception amount to £785,563 3s lid, or £1 0s lOd in every £100 of tile amount advanced. This tofiil does not ineludo losses which may in fact exist but are not definitely ascortainablo until securities are realised. The percentage of arrears, to the balance of advances outstanding at the close of the year was 5.519 per cent.

"Tho total capital amounts to £44,880,936 8s sd, and the cost of management expenses is £65,522 6s 7d, being 0.146 per cent., or 2s lid per £100 of tho capital employed. Mortgages and instalments of principal repaid during the year amounted to £1,402,245 13s. Tho interest collected amounted to £1,825,714 6s Bd, and tho interest paid on loaiv moneys was £1,667,208 14s lid. Interest amounting to £22,675 18s 8d was capitalised during the year.

"The total advances now current are £42,511,583, including £23,332,852 in loans to settlers, £.14,606,506 in- loans to workers, and £4,572,225 in loans to local authorities."

An iuspection engine was crawling along the, line near Bystre, Bohemia. It overtook a man walking beside the track. 'One of ■ the engine 's crow snatched off the man's hat for a joke, and dangled it in front of him. As ho puffed and panted after them the men roared with laughter. The'men were so engrossed in the joke that they failed to notice a two-year-old girl crossing tho line. She was run over and killed distantly. Botli the engine-driver and his assistant were arrested.