"GAMBLING GROUND"

Evening Post, Volume CXVIII, Issue 52, 30 August 1934, Page 14

"GAMBLING GROUND"

MORTGAGE CORPORATION

ATTACKED BY MR. SAVAGE

The Government's proposal for. the establishment of a National Mortgage Corporation was hotly criticised in the House of Representatives last night by the Leader of "tho Opposition (Mr. M. J. Savage), who predicted that the institution would become a gambling ground for those who lived at the expense of others.

"I agree with the Budget statement that the mortgage situation generally is complicated and an obstacle to economic recovery," said Mr. Savage, "but what of the proposed solution of the difficulty? There appears to be another financial tragedy awaiting us. The Government proposes to destroy the last remnants' of our State lending institutions and to hand them over to the tender mercies of a semi-privately-controlled. National Mortgage Corporation. Yes, we are to have our State lending institutions turned over to the tender mercies of private enterprise in finance —that control that has landed the world where it is today. The State Advances Office, which has always been conducted at a minimum of cost and was a substantial influence in keeping interest rates down, is to be swept away by a Government which has long Binee forfeited the right to claim that it represents the people. Moreover, the state.of this institution today is due to the Government's policy of deflation which destroyed the foundation upon which it rested. "I am going to promise the people of New Zealand now," Mr. Savage added, "that what the present Government can destroy, we, in office, can reestablish; and the State lending institutions of today will in future play integral parts in a national monetary system, which will make industrial development in New Zealand possible." MINISTER REPLIES. Replying to Mr. Savage, the Minister of Lands (the Hon. E. A. Ransom) said that it was amazing to hear Mr. Savage criticising the proposal to set. up the proposed National Mortgage Corporation. He did not criticise the State, lending institutions, and it was difficult to see why he should find fault with an institution that would give still greater benefit. ; Mr. F. ■ Langstone (Labour, Waimarino): Where will you get the money from? . Mr. Ransom: We are simply extending in order to.give tho scheme a wider basis. Ho refuted the suggestion that the investments would be confined to the wealthy section of the community. Mortgage bonds- would be on the market, and they would be purchased by small investors. Mr. Eansom said that he regarded the decision to establish the National Mortgage Corporation as an outstanding advance. The corporation would take some time to organise, but its establishment alone was sufficient reason for the four-year Parliament..: The Government had done a great deal to ease the burden of finan.ee by reducing interest rates, not only for purposes of the State, but also for private enterprise, and its programme would be carried a stage further with the establishment of the corporation. The mortgage bonds would be a reliable source of investment, and readily saleable on the Stock Exchange. There was ample money waiting for investment, and all that was required was an impetus, which the corporation would supply. The corporation would do away with the continual embarrassment to borrowers resulting from their having to rearrange their loans every five years. - ' CHEAPER MONEY. Long-term loans would be arranged for, and it should be possible to obtain money at 41 per cent, as against 6 to 7 per cent., "which had been the ruling rato for first mortgages. ■ By the pay-1 menf of an additional 1 per cent.' the debt would ultimately be wiped off on the amortisation principle. The corporation would provide adequate finance for economic^ activity, and at the same time security for the lender.