FARMERS’ MONEY.

Hawera Star, Volume XLVIII, 1 September 1924, Page 7

FARMERS’ MONEY.

MERCANTILE GAZETTE’S PROPOSAL.

“Mortgagor” writes at great length in criticism of the proposal of the Mercantile Gazette that money lent to farmers at 5 per cent, and under be free of income tax. His letter, which is opposed to the suggestion throughout, is far too long for publication in full. ‘Mortgagor” thinks that the suggestion is “monstrous,” and asks: “Is there really a shortage of money in relation to the security offering, and is there really, any problem that can conceivably be solved by the panacea of ‘cheap money’?” He quotes' the total amount of outstanding mortgages at March 31, 1923, at £209,603,145 and at March 31, 1924. at £258,208,145, as a reply to our statement that “a considerable portion of the inflation has been wiped off.” But we would point out that these mortgages are by no means confined to farm mortgages, and we prefer the fact that farms are selling at considerably lower prices as evidence. that inflation is being wiped off. The correspondent Continues at l length and combats statements that

| “money would flow into the Dominion,’’ ! and questions the desirability of induc- | ing money to flow into the Dominion '°n the ground that it would “increase our indebtedness abroad., and by the accompanying increase of interest payments to be made reduce our buying capacity in the world’s markets.” He things that the effect of the proposal “would be above all else to hold up the inflated price of land, and similar, jit would seem, will be the effect of any other scheme of ‘cheap money’, which may in some cases enable mortgagors to rearrange, their finances on more favourable ternis as'regards the annual interest payments, but will, leave them still liable to the same burden of principal charge, much of it the result of pure inflation and representing no actual investment of savings by the mortgagee on the land in question. . . .. . If mortgages are charged'on lands largely in excess of the value of the security, then no tinkering with interest rates wall provide , permanent relief for the unfortunate fanner who attempts to carry on under this impossible dead-weight burden of debt, [f the security i s not there no mere remission of taxation will induce investors to advance the sums necessary to pay off mortgages secured of no real values. Would' people lend on worthless securities at low* rates even if bribed to do so by a misuse of the taxation system of the country ? If land were bv gome means brought down to somewhere near its true value it is certain that, so far from there being large excess of new r mortgages registered over* old mortgages discharged, there would have to be a large balance the other way. 5 -’ After quoting portion of a speech by Mr. Rolleston during the Financial Debate and extracts, from a paper on “Rural Credits in New Zealand” by ■ Professor J. B. Condliffe, M.A.. and. Mr. H. Belshaw, tutorial class lecturer at Canterbury University College, in which opinions are expressed that the solution does not lie in prodding cheap money for farmers, “Mortgagor”, sa.ys : “Doubtless, too, we would soon find other interests than the mortgagees of land organising tc show the vital importance of their investments to. the national welfare, and demanding and, with the enthusiastic support of a sympathetic press, receiving complete relief from taxation.” The Mercantile Gazette’s proposal is. of course, one upon which opinions will vary, but \ve think it is worthy of the full consideration and investigation suggested in our article.