TOPICS OF THE TIME.

Hastings Standard, Issue 3, 29 April 1896, Page 2

TOPICS OF THE TIME.

The cheap-money scheme as submitted by the late Mr Ballance, he left as a legaey-io-\iis "colleagues, ran as follows :—" The principal question is how to assure the capitalists or lenders with respect to the security. Now, as in the Government Insurance Department money is lent on mortgage with practically the Government guarantee and for no consideration by way of interest or commission, the same Government might guarantee the mortgages on which, for the consideration of an annual charge of one-half per cent., withheld from the rate of interest to be paid by the mortgagors, it should lend the capital of the public. The mortgage office would, therefore, accept no proposals for mortgagers which the Government could not safely guarantee; and, supposing then, the lending rate to have been fixed at per cent., the applicant at the mortgage office for money on an improved mortgage proposal would, on execution of the mortgage receive the amount. The deed would then be sent in for registration and to be deposited, and an order or certificate respecting the mortgage, would be despatched to London for the transfer or hypothecation of the security to the person purchasing it, who would consent to receive 3| or 4 per cent, for the money."

"No money would come from London until long afler the mortgages for which the money is required have been effected. JThe Treasury remits large amounts "to London at par—that is free of exchange—by means of bank drafts payable 90 days after sight. The mortgage office, therefore, would give its own bills on London to the Treasury for the amounts which would be obtained from the Treasury to provide the money lent on mortgage and which money would be collected in London from the persons who would purchase the mortgages —that is, to whom the mortgages would be transferred or hypothecated —and if the demand of the public here for money should eventually exceed the amount which the Treasury might have to remit, the mortgage office could sell similar bills to the public at par."

" Now to illustrate the process, and to show the direct profit to the Government of thus supplying the_ people with capital at a low rate of interest, let us take the example of one approved mortgage of £IOOO at 4+ per cent. The mortgagor would apply to the mortgage office, execute the mortgage on a form supplied for the purpose, and receive the amount free of all charges for legal expenses, valuation, &c. The mortgage could then be registered and deposited, and an order for its hypothecation or transfer would be remitted to London, when the agent of the mortgage office would collect the amount from the purchaser or transferee to pay the bill which would have been given to the Treasury for the money This bill would be payable throe months after sightj and five wef>ks more would be required by the course of post, so that the mortgage cffi ce would receive pei cent on £lOoo for about four months —that is to say, appfoximately, £ls, before the hypothecation of the mortgage —and from the date of transfer or hypothecation the annual income of the mortgage office

would be one-half per cent., or £5, while the annual income , of the transferee would be 4 per cent, or £40."

The concluding paragraph of the memorandum is as follows :—" The present proposal obviates the borrowing of money by the State for the purpose of supplying special aid to settlement. It simply affords a State guarantee or insurance of the integrity of capital imported from the individual of a country where money abounds by the individuals of a country where money is scarce; and it might even be fairly contended that the two countries—the country of the lenders and the country of the borrowers, which would be mutually benefited, should mutually guarantee the transfer. The pecuniary value of freehold property, too, would, as a natural consequence, be largely enhanced, a value which must always vary inversely with the value of money; and then, as a following consequence, enterprise would be encouraged."