MORTGAGE CORPORATION

Evening Star, Issue 21819, 7 September 1934, Page 6

MORTGAGE CORPORATION

MR W. D. STEWART'S WARNING GOVERNMENT GUARANTEE WOULD INFLATE PUBLIC DEBT [From Our Parliamentary . Reporter.] WELLINGTON, September 7. A note of caution regarding tha operations of the proposed National Mortgage Corporation was sounded by Mr Downie Stewart when speaking in the Budget debate in the House this morning. He expressed the hope that the Government would not allow itself to be drawn into guaranteeing tha bonds, and thereby inflating the publio debt. _ Mr Stewart said one of the most im-i portant proposals in the Budget was that of creating a National Mortgage Corporation to raise money on bonds and refinance existing debts at lower interest rates. It was suggested that the constitution of the corporation would bo on a similar basis to that of tbe Reserve Bank. The corporation would not take over all mortgages, but it was hoped that its operations would; be large enough to influence the mair-i ket. It was of the utmost importance to know to what extent the Government would be called on, directly or in-i directly, to guarantee tbe bonds issued by the corporation, “ Already demands are being made by the members of the Labour Party, Mr Poison, and others that the corporation shall be entirely, a Government concern; in other words, that the Government must, directly or indirectly, guarantee tl, bonds,” said Mr Stewart. “ This is ominous,. be* cause if the operations of the corporation spread far and wide, and the Government has ■to stand behind tha scheme, it merely means another huge addition to the public debt, either directly or indirectly.” Mr Stewart added that if part of tha proposal was to relieve tho Government lending departments and transfer their assets and liabilities to this Mortgage 'Corporation, that would reduce ,tha public debt; but if it• was to be a semiprivate and semi-State institution, then the Government would find a constant demand for further State control and guarantee. ;