Grey River Argus SATURDAY, July 9, 1927. STATE ADVANCES.

Grey River Argus, 9 July 1927, Page 4

Grey River Argus SATURDAY, July 9, 1927. STATE ADVANCES.

The Prime Minister scarcely could have done otherwise yesterday than agree with the Member who pointed out in Parliament that it was time to stop the spending upon foreign limber of money for housing obtained in State advances. The condition of the milling industry throughout the country is such that Departmental regulations which favour imported timber are suicidal. The Prime Minister blames the millers for ignoring the specifications, and may have in this some justifiea tion, but the initiative in rectifying the anomaly properly rested with the Government, seeing the extent of the unemployment prevalent. As a matter of fact, the

onus is on the Government to devise means whereby there shall be much less waste in the timber industry, or, in other words, facilities should be sought for the utilisation of a great deal of the second class timber cut which at present is boycotted by architects and others for reasons of their own.. The Minister of Finance in his latest reference to State Advances gave an indication that the London money-lenders look unfavourably upon the development of State enterprise as an in- , vestment for their money. Possibly, in conjunction with our own private bankers, they foresee the advent of the State as a rival to the private capitalist. The perio clieal statistics relative to the Public Trust, Postal Savings Bank, and State Advances operations demonstrate that whether anti-Socialist opinion is averse or not, the State is inevitably being propelled by national necessity

into the bankin' l ' business. It seems that the London lenders ; will not allow their money to go out in State Advances, but insist that the security shall be public property; that is that public works only shall be carried out ( with London loans; and they , have also placed £6.000,000 per s annum as the limit to London , borrowing. We are thus at last ■ in the position of having to sub- ' init to a London financial dictatorship. It is no more than the logical conclusion to the policy of mortgaging the country overseas. The Finance Minister announces that applications have ’ been received for over threequarters of a million of rural ad- 1 vances, and that over £300,000 has been granted. The private money-lenders, however, are more fearful of the Public Trust than of the Rural Advances innovation. They point out that the rural advances are made to borrowers by means of loans secured by direct mortgage of properties •without any liability on the part of the Government. Certainly the State Advances Department is temporarily lending half a million for the inauguration of the scheme, but it depends ultimately on funds to be raised by the sab. of bonds, and if the London financiers’ embargo on advances other than for public works persuades \'ew Zealanders not to buy the rural bonds, the Act will fail, and the farmers will again fall into the soup. The private lenders say local body bonds will appeal more to New Zealand lenders than rural bonds. We have here a very good illustration of how much the patriotism of capitalists is worth. It measures itself by |lhe standard of interest and security. The Minister of Finance recalls that £8.000,000 has I been obtained through the State I Advances in four years to build close on four thousand houses, and ihat on these nearly two and three-quarter millions have been received by way of mortgage repayment, -whilst a total of nearly sixteen thousand homes have been built with State Advances, totalling twelve ami a half millions. In all probability, when stock comes to be taken at the end of a generation, it will be found that the Dominion has made no better investment in its history than this outlay in bousin- its people properly. The experience is that lhe workers are more reliable payers than farmers in reducing the mortgages. The security for the housing advances is good, but if the present stringency of money supply should dictate the necessity for State banking to cope with the public needs, the accumulation of arrears in applications for advances could readily be dealt with in that way. In any ease, now’ that a halt has been called at London, it is time the Dominion faced the necessity’ to become more self-supporting, arid it is the State utilisation of the national credit which will achieve that object. The private financiers are unreliable in critical times, because tlie credit which they, are lavish in extending when credit is least in demand becomes a minus quantity when credit is most in demand. The banks have felt obliged to raise their overdraft rates, and the Minister of Finance states that, despite, their profits and reserves, lie felt they could not be restrained for fear the objection to political interference would lead to serious consequences. It is evident that, whatever the peculiarities of NewZealand banking practice, the financial enterprise of the State has given rise to a class of business outside the scope of institutions run primarily’ for private profit, so that eventually rural, housing. trading and credit necessities will oblige the State to enter the banking arena in real earnest. For one thing, the State has too much at stake to allow its assets to deteriorate through the unenterprising attitude of private lenders. It will then be in a better position to do without London credit when it has at its command the credit of New Zealand.