MR McLEOD AND THE RATE OF INTEREST.

Manawatu Times, Volume XLIX, Issue 1274, 16 July 1925, Page 8

MR McLEOD AND THE RATE OF INTEREST.

Speaking in the House on Monday in connection with the Address-in-Reply debate, the Hon. A. I). McLeod, Minister of Lands, said that the Government had endeavoured to keep the interest down. In connection with the general land of the cmmtry, ho said the mortgages had increased. In 191920 there had been a tremendous boom in land-values, which had added £BO.000,000 to the mortgages of the country. In many individual cases this increase represented Unpaid valuation and purchases. * Dealing with the question of mortgages on land and stock in New Zealand, the Minister stated that the total of new mortgages in this category in 1912,13 was £22,597,000. while the corresponding amount in 1924 was £37,862,19. The average interest on money lent in 1912-13 in the way of mortgages showed an average of £5 13/4d per cent. I.n 1924 the average interest was £6 7/- 4 per cent., or an increase of 14/- per cent. over, the total mortgage rate in 1912-13. No other country in the world, added Mr. McLeod, could show that the mortgage rate was kept so well in hand as in New Zealand. The point the Minister of Lands endeavoured to make is of course, contained in the statement that the rate of interest on mortgages only increased from £5 13/7 per cent, in 1912-13 to £6 7/4 per cent, in 1924. or an increase'of 14/- per cent. Ip making this statement, Mr. McLeod, no doubt, is relying on the official figures and entirely forgets or overlooks the fact that mortgages, running into millions of pounds have become overdue and arc carrying a much higher interest than the official records would disclose. ■ It is quite impossible for the Minister, or any other person to estimate the average rate of interest paid by the New Zealand farmers to-day. In almost every case, where mortgages became due and had to seek .the protection of the moratorium the rate of interest was automatically raised to 61 per cent., while others that were without this protection had to submit to 7 per cent, and more. These increased rates of interest were entirely a matter of private arrangement as between mortgagee and mortgagor and as there is no official record" of these transactions it is impossible to estimate oven roughly the actual rate of interest paid. So much it is certain, however, that the increase is a very sußstantial one and without the slightest doubt is fifty per cent, higher than stated by the Minister. This in itself discounts the statement made by Mr. McLeod that the Government has done wonders ,in keeping down the rate of interest on mortgages. It could he argued, in fact, that during 1917 to 1919. by adopting a policy of heavy local borrowing it has done everything to increase the cost of mony. The only possible claim the Government can make of keeping down the rate of interest was through the loans made by the Advance to Settlers. But as has been pointed onion a number of occasions the assistance given by this Department was entirely out of proportion to the actual requirements of the producers. Taking the year ending March 31, 1924, for instance, out of loan money raised during that year and aggregating over fifteen million pounds the Government was only able to spare £1.300,000 for the Advance to Settlers Department. Mr. McLeod’s self-praise must therefore he taken with the proverbial grain of salt and in case he might forgot we would like 1c remind him that

much remains to be done before the farmers’ finances in New Zealand are placed on % sound basis.