FARMERS’ MONEY.

Hawera Star, Volume XLVIII, 6 September 1924, Page 12

FARMERS’ MONEY.

(To the Editor.) j Sir, —Y our rejection of the letter I j wrote on the above topic over the j nom-de-plume of “Mortgagor” was not ' altogether unexpected. There are, j however, one or two corrections which ‘ 1 think should be,made in connection! with the remnants of my letter you i published oil Monday .last. The figure ! of £209,603,145 gives the total amount' of outstanding mortgages at March 31, ' 1921, and not at 1923, as you credit me with stating. The total of £258,- , 208,145 at March 31, 1924, discloses a ; net increase of £48,605,000 in one j year according to the figures as you publish them, whereas this net increase is really spread over a threeyear period. Later figures to which I have since had access covering the three months from April 1 to June 30, 1924, indicate that this steady increase in the total mortgages outstanding is being fully maintained, the total being now £262,141,076. The second quarter of the ' present year therefore showed a net increase of £3,932,931. This formidable total seems to mete absolutely contradict your assertion that “since* the 1920-21 bursting of the boom ... a considerable part of the inflation has been .wiped off.’’ You are quite correct in pointing out that all of there mortgages are not farm mortgages (I would have admitted as much, and have gone into the separate position of urban and rural mortgages had not regard for your time and space compelled me to restrict my letter as much as possible. You might also have allowed, as. weighing on my side, that all farmers’mortgages are not-secured on lands.) But when you state that you “prefer the fact that farms are selling at considerably lower prices as evidence that inflation is being wiped off,” you admit the weakness of vour

case. The fact that “farms are selling at considerably lower prices” surely does not prove anything of the kind*. Farms might be given away, and yet no inflation be wiped: off. * I think the majority of your readers will nrefer to accept the official figures, which indicate clearly that the burden of debt on land is increasing rather than diminishing, and moreover increasing at an alarming rate, which will probably be greatly accelerated if our “cheap money” enthusiasts gain their ends. If we take into account the distinction between the urban and rural mortgages, it will still be impossible for you to derive one iota of support for your contention from official statistics. Unfortunately the two classes of mortgages are not given 1 separately in all the returns, but if we commence from March 31, 1921, and . assume that every mortgage discharged was a mortgage, on rural security (an . assumption that will bear heavily in ; your favour), then for the two years . ending March 31, 1922 and 1923 respectively, new mortgages registered on . rural security under the Land Transfer Act amounted to £17,744.501 and £ll-,- ; 819,043—a total of £29,563,544, while during the same years the discharges of land transfer, mortgages amounted . to £10,824,276 in 1921-22, and £12,077,- , 315 in 1922-23, a total of £22,901,591. Even then, if we assume that every • mortgage, discharged during this two-' , year period was a rural mortgage, the . total volume of rural mortgages outstanding at March 31. 1923, must have been some £6,661,953 greater than the r ) total rural mortgages outstanding at ’ -j March 31. 1921. This latter total is

apparently unascertainable, as it is .impossible. to state definitely what portion: of the £192,838,993 outstanding at that date under the Land transfersystem represented though the proportion is usually regarded as being about 55 per cent, of the total. The- exact amount is im-

material, however, as no support can be deduced from official figures for the suggestion that inflation had been wiped out on a grand scale. Moreover, the above figures relate solely to mortgages under the Land Transfer Act, and therefore do not include the mortgages under the Deeds Registration system.; Mortages registered under the land transfer system have for a number of years constituted only about 82 per cent, of the total mortgages registered. It is certain therefore that t-he figure, of £6.661,953 is less than the smallest possible net increase that I would be secured by a consideration of all the figures for both systems. Assuming the position to be (roughly the same for mortgages under both systems, there would be a clear net increase of rural of at least £8,250,000. In any case,, as, the as- ! sumption that all mortgages discharged I were rural mortgages cqiild only be j true if we assume an altogether unj precedented boom in urban mortgages , the real • rate of net increase of rural mortgages i§ certainly far in excess of this figure, and probably somewhere in the region of the rate suggested by a consideration of the totals of both rural and urban ( mortgages at . the various dates, i.e., the net increase since March 31, 1921, ! has probably been equal to 25 p ( er cent of the total outstanding at that date. The; majority of mortgagors of inflated land values probably still find the mortgagee as unrelenting as ever, and the real burden of The debt increasing with every rise in the value of money. This being so mortgagors will derive ljttle hope from assertions that “there has been an improvement in' conditions,’’ or from the quack? nostrums of the Mercantile Gazette; and other “cheap money” enthusiasts.—am, ' \V. A. SHEtAT.

Hawera, Sept. 3, 1924

[We regret tlie terror- made in the previous letter. Mr Sheat’s analysis of mortgage statistics is interesting, and the increase in the total does indicate a prbbleni, the solution, of which may be clearer when the moratorium is lift-' ed. But in stating that a, considerable part of the inflation? had been wiped; off we were referring to farms .only, and not to the position in the; cities. We have been informed by people in Hawera who are closely connected with farms and financial transactions that a great number of mortgages have been; reduced,- while in some cases '.where; farms have gone baeki to their former owners some mortgagees have, dropped right out. It was upon .these facts and also that priees of farms are much lower than ; in the boom time that we; based the statement that' “a ..considerable part of the inflation has been wiped off. ’ ’ One man in very close touch with farmers told us the other, day that the position in the district? was much better and he thought that many farmers had improved their positions to the extent of probably £2O an? acre. It is, however, common knowledge that while money is being found for various purposes in the urban? areas, many farmers are being held up in their efforts to develop' their farms And increase production, because they are unable to secure money at a cheap rate to spend upon improvements. The proposal; against which The Correspondent is so keenly opposed; was made with the idea of solving the difficulty, and we maintain that the suggestion is of sufficient importance to warrant its being fully considered by the Governand the farmers. The correspond-;. ent is definitely opposed: to (cheap? money for farmers. If lie is consistent: lie must also be opposed to . cheap money for workers in the urban areas and an opponent of advances to workers at a cheap rate, which advances probably make up a very large portion' of the mortgage totals quoted by him.— Eck] ' (