The Evening Star FRIDAY, MAY 1,1936. PRICES AND MORTGAGES.

Evening Star, Issue 22327, 1 May 1936, Page 8

The Evening Star FRIDAY, MAY 1,1936. PRICES AND MORTGAGES.

Yesterday the Prime Minister informed interviewers of his hope that the mortgage legislation would comq before the House of Representatives early next week. The Government, he needlessly reminded his audience, was instituting a guaranteed price, and it was determined to have mortgage liabilities based on that same price. It is only fair to the Government to acknowledge the fact that when a policy of paying guaranteed prices was first suggested its instigators understood how closely produce prices were interwoven with mortgage adjustments. It is not so long since Mr Savage himself remarked, “ The question of mortgages is inextricably bound up with the payment of the guaranteed price.” It is extremely doubtful, however, whether at election time the many farmers who must have cast a vote for Labour and hoped for the best had the vaguest understanding of the ramifications—some of them complicated and unsound—which would ensue as a result of the majority’s choice. Can it be said, for instance, that there was a universal realisation of the contingency that speculation in land would follow; that there would be a movement to capitalise the guaranteed price and sell it with the land? This danger actually exists, and, unless it is checked promptly, future purchasers of land will derive no benefit from the guaranteed price. Possibly there would be an outcry for a higher guaranteed price or a writing down of mortgages. Some hope that the Government is prepared to meet the situation with an effective counter is provided in the assurance of the Prime Minister that it will take early and decisive action to, deal with that aspect of the problem. And yet there is a vagueness about the assurance which leads us to believe that before the Government has extricated itself and the Dominion from financial pitfalls which it is inviting it will have to pass legislation of a kind that was not anticipated by even its most knowledgeable supporters. How would it suit the farmers if the Government fixed the price of land and refused to register transfers except at that price? It must be apparent that any steps which are taken to prevent undesirable speculation will lead the country so much further along the road towards the system of land nationalisation. This way out may not be unwelcome in the eyes of the Labour Government, but by no stretch of the imagination or embellishment of election promises can it be hailed as one of the political plan’s on whjch farmer voters pinned their faith. Whether or not the verba) fight in the House over the new legislation is keen, there is little doubt as to how the divisions on such important questions will go. 'The Labonr Party appears determined to make its avowed policy law, and it will, by sheer parliamentary strength, drag electors witli it. The undesirability of readjusting mortgage liabilities on the prices ruling 1 over tho greater portion of the last decade was pointed out in the House I of Representatives last September by

Sir Alfred Ransom, whose remarks both then and now are well worthy of the Government’s attentive ear. Sir Alfred said: “ If we take the last eight years, five of them have been a period cf depression—of serious depression—and it would not be fair to tho mortgagee that his mortgage should be adjusted on the basis of prices ruling over that period.” Undoubtedly tho principles of the Mortgage Corporation of New Zealand Act and the Rural Mortgagors’ Final Adjustment Act are more equitable. Under the provisions of tho latter voluntary adjustments can bo brought about, and tho balance of evidence so far secured indicates that this is a more satisfactory system than that which seems to be just around tho corner. The present Government may bo highly pleased with tho thought that it is attempting to play tho part of Providence towards everybody. But tho further the ' session proceeds the more clear does it become that the role is one not easy to discharge.