MR. WRIGHT'S PLEA

Evening Post, Volume CXXII, Issue 67, 16 September 1936, Page 16

MR. WRIGHT'S PLEA

THE SMALL INVESTOR

SECOND MORTGAGES

Mr. R. A. "Wright (Independent, Wellington Suburbs) said that people who had'lent money oii second mortgages would lose all their interest in the properties on which they had made advances, and he questioned, whether second mortgages should be allowed. He referred to widows and old people who had invested all they possessed in second mortgages. They had saved money for their old age and with, the passing of the Bill their interest would vanish, and many would be left penniless to ' face the world again. He wanted to know whether the Minister of Finance had anything in his mind that would meet the position. Dili gence, thrift, and perseverance hsd j contributed to these investments. It was the mortgagor who had asked tor the money. Had it not been for the advance on second mortgage many of those who had taken up properties would have been unable to carry on, and their properties would have been lost. Scores of people in Wellington had borrowed from the Government on first mortgage and found that the money was insufficient to complete their transactions, and had borrowed from widows and old people. There were many who looked upon any person who lent money as a usurer. What about business men? Most of them, if they were in a large way, received overdrafts from their banks. Without that accommodation business would ba paralysed. ' Mr. Wright referred to friendly societies and insurance companies which held the money of working people and invested the funds in mortgages. The friendly societies throughout New Zealand had accumulated funds amounting to nearly £5,000,000, and the interest received totalled £170,117. Those societies would be affected by the Bill, as many of the securities would be depreciated after being dealt with by the Court of Review: Who would lend money on mortgages in the future? he asked. The time would come when there would be great difficulty to induce people with money to invest to put it into land. ' Supposing war broke out and primary produce rose? Mr. A. G. Hultquist (Government, Bay of Plenty): A sorry state of affairs. RECOUPING THE MORTGAGEE. Mr. Wright said he was not looking for war,. but under the Bill, if prices rose and the property mortgaged had greater returns, there was no provision to recoup a mortgagee who had had his interest jn a property reduced. That sort of thing would encourage people to say in the future that if they got into difficulties a Government would come along and help them. The Bill would affect retired clergymen on account of superannuation money from various churches being invested in mortgages. There was no provision in the legislation to protect any of the people he had mentioned. He presumed that the State Advances Corporation had £40,000,000 invested in mortgages and it would probably lose £5,000,000 under the Bill. That sum would have to be made up by taxation, and the mortgagee who suffered under the legislation would be called upon to contribute if he had anything left. No one seemed to ba able to deal with the evil of land selling and land speculation. As soon as prices rose the land also went up in price. The people themselves competed for it. Ridiculous prices were obtained. Mortgages in New Zealand were heavy and he could not see how they were going to avoid that sort,of thing. The last Government had done a great deal for the farmer, and the present Government was attempting to do more.

In conclusion, Mr. Wright appealed to the Minister of Finance to do something ' for the widow 'and the aged who had lent their entire savings on second mortgages. Many of the mortgagors would find themselves' in a better position than the people who had helped them by lending their money." ■ ,