STATE ADVANCES.

Northern Advocate, 31 July 1924, Page 4

STATE ADVANCES.

Prior to the delivery of the Financial Statement the Prime Minister promised to include in that weighty document more information than had ever before been given concerning the operations of the Isew Zealand State Advances Department. He kept his word, with the result that the figures presented by him last week were illuminating and impressive. The growth of the operations of the Advance's Department has certainly been remarkable. When it was established, thirty years ago, its capital was fixed at three millions sterling, which was to be raised in two years. At the ■end of last June, according to Mr. Massey's figures, the capital had been increa«6d j to a sum just under 24£ millions. Dur- I ing the year ended on March 31 last, j the sum of £3,114,750 was added to thffe j capital, and between that date and June 30 a further increase of £&,300,000 was made. The number of cants who received loans during the 1923-24 financial year was 7-592, and the total amount lent to them was £6,205,686. This is, it is not surprising to learn, the record year since the department was established. It is still more striking to recall figures that were given by Mr. Massey during 'the debate on the Address-in-Reply. The passage of amending legislation last year ' increased the facilities made available J by the Department, and Mr. Massey, ' stated that this change was followed by lending at "break-neck speed." On his return from the Imperial Conference, he had to call a halt, but in spite of that the amount lent between August 1, 1923, and May 31, 1924, was well over seven millions. His present intention is to restrict lending from the Department's capital to three millions a year, and it is interesting to note that one-third of that amount will be provided by borrowers' repayments of capital. So far as its treatment of actual borrowers is concerned —we draw a distinction between borrowers and applicants for loans —the Department is entitled to praise. It maintains the low interest rate of per cent, on all ordinary loans, where borrowers secure a rebate by making pay-

ment on the duo date-. Loans for the j

repayment of existing mortgages cost 5i per cent, aud chattel loans as much as (H per cent. Borrower;-. \'ho get their money at per cent, are actually ' paying less thin the Government h.is had to pay for recent loans; the tiirco ( millions borrowed last year cost £4 14s 9d per ceut. T-se Department, ( however, is able to work on a lower figure by averaging interest on the whole of its capital, though the Prime Minister has hinted that unless an un- ■ expected fall in the price of money occurs in London the Department may have to increase its charge.-. A small addition to the present rates : probably would not cause prospecstvp borrowers any great anxiety, provided they were assured that loan money would be available when required. At present, it seems, in spite of the great growth of the lending operations, the number of waiting applicants is very large. It will be remembered that in reply to a comment in the House a little while ago Mr. Massey remarked 1 that it would take till next century to 1 deal with all the applications. This, no doubt, was a joke, if a rather ponderous one; but on another occasion the Prime Minister admitted that the Department was "behind, but we are getting through." Judging from the remarks made by Mr. R. E. Hornblow last night at a meeting of the North Auckland Progress League, the Department is a very long way behind, and country settlers especially, are feeling the effect of the delay that occurs. Country settlers also are prejudiced by the readiness with whieh t'he Department has been meeting demands for money to be expended in the towns. We do not for a moment doubt Mr. Hornblow's statement—ample support for it is readily obtainable —that men are actually abandoning their farms because ' the Advances Department is not assisting them to carry on, and at the same time time they realise that the way :s being made easier for the town dweller than it is for the farmer. The position that arises is quite as serious as Mr. Hornblow would have us believe it to be. Here is a country crying out for more production, an agricultural country that depends for its life on the produce of the soil, and yet farmers who, with little temporary assistance, would be able to overcome the obstacles that the recent years of disturbed economic conditions have placed m their path are being denied the help to which they, are legitimately entitled. Here is where-the policy of the Advances Department, admirable though its work may have been in many ways, needs careful overhaul. Mr. Massey | gave in the Budget details showing that State assistance towards the erection »and purchase of dwellings from April 1, 1919, to March 31, 1924, amounted to £i 8,720,006. This sum includes loans for houses under the ordinary advances scheme (14,815 houses), loans 'to discharged soldiers I (11,341 urban'.and 3863 farm houses), loans to the Railways Department (276 houses), loans to the Public Works Department (164 houses), and loans totalling £577,195 to local bodies. In addition, approximately £13,000,000 has been advanced by way of mortgage during the same period by Government lending departments —State Advances, £5,000,000; public trustee, £f,000,000; and other lending departments, £I,ooo,ooo—some proportion of which total was required either to complete buildings in course of eroctnu or to purchase others recently ejected, the cost of which had been temporarily fmanced in anticipation of a Government loan. During the last financial year the following loans were actually granted by the. Advances Department: —To 6194 settlers, £5,416,987; to 3260 workers, £2,204,410; to 104 local au- j thori'ties, £444,805, a total of 9648 j loans representing £8,066,202. Ad- j Vances during the three months endsd Jund SO were:—Settlers, £561,350; workers, £475,360; local authorities, £69,9.25; "total, £1,106,635. For the purpose of assisting borrowers to repay mortgage's, 'since October, 1922, loans have bfeen granted to 8549 applicants, amounting 'to £3,584,205. Many of the j loans 'to settlers were, of course, for ! building purposes in urban areas how j many it i? unfortunately impossible to ' say. The Advance's Department has givfen valuable help in the solution of the housing problem and in financing 'the operations of local bodies. But it is surely essential that a Department whose resources are definitely limited should apportion its available funds with care and discrimination. Its policy appears to have encouraged the town dwellers a-nd to have discouraged the country people, ; and that is certainly against the Dominion's interests. Unless a greater proportion -of the funds is made available for rural development the towns will not be needed at all, for they cannot live without the support of a productive country. The question raised bv Mr Hornblow is one that demands earnest consideration, 1 and the Progress League has done well in commending it to 'the Chambers of Commerce and Other organisations, ' whose united 'voico should be raised 1 in an endeavour to induce the Govern- ! ment and Parliament to face a very ' grave danger.