MORTGAGE INTEREST

New Zealand Herald, Volume LXIX, Issue 21252, 4 August 1932, Page 5

MORTGAGE INTEREST

A.M.P. SOCIETY'S RATES RECENT DECISION EXPLAINED FACTOR IN REDUCING COSTS M ore detailed information has been received from Sydney regarding the decision of the Australian Mutual Provident Society to reduce the rate of interest payaide on property mortgages. The reduction to a maximum rale of per cent applies not only to present loans on mortgages on city, suburban and country lands, but also to interest on any future loans on mortgage which may be made by the society. The reduction is contingent on no further legislative interference with existing contracts. The society's loans on mortgage amounted on December 31 last to £20.593,582. The announcement states that the board has given earnest and prolonged consideration to the question of reducing tho rate of interest payable on properties mortgaged to the society, it being recognised that a reduction in interest will bo a factor in reducing costs of production and distribution essential in this period of low world prices. "The. board is practically a body of trustees for the holders of approximately 1,000,000 policies of life assurance, tho vast bulk of which are for moderate amounts," states tho announcement. "Tho funds of the society are in the main the continued savings of lens of thousands of persons who, by abstinence and thrift, are endeavouring to secure to their dependants some protection against adversity. It is felt that a long view of tho interests of all the society's policyholders justifies the board taking action to assist in national recovery from the present depression .... "Tho board desires to emphasise the fact that at present a special imposition of a super-tax of 2s in the pound is levied on all interest received under mortgages. Were it not for this t ax > the society would be in a position to lend at 5 per cent, whereas, owing to this imposition, it is forced to charge per cent. If this supertax on interest is reduced or abolished, the benefit of such reduction or abolition will bo passed on by tho society to its mortgagors on the basis of a minimum rate of 5 per cent." DISRUPTION OF TRADE DANUBIAN SITUATION EFFECT OF NEW BOUNDARIES The most critical situation created by disruption of trade is the Danubian situation, says the Journal of the National City Bank of New York. The old AustroHungarian Empire, although racially a patchwork, was economically a balanced State existing upon a diversified production and mutually advantageous exchange of products. The parts of the Empire that are now in Hungary, Rumania and Jugoslavia were predominantly agricultural, and Austria and the present Czechoslovakia wore the manufacturing sections. Each section produced what it was best fitted for and each complemented the other, all exchanging to the profit of all. The erection of new political boundaries in this area, of course, did not alter the soil, climate, location of materials, abilities and training of the people or the other factors which had determined what each section could economically produce, but the policios of the new governments have been in the direction of self-sufficiency and aimed at overcoming such factors rather than deriving benefit from them. The fact that the existing industrial plant was sufficient for the supply of the agricultural countries was ignored by them because the plant was now within another political boundary; and the farming countries set out to build factories and the factory countries to stimulate farming. Before the separation Hungary milled wheat for tho Empire, but tho (fther States set about building mills to be rid of dependence on Hungary. Hungary doubled its spinning and weaving plant in order to buy less from Czecho-slovakia. Austria, an industrial country now bereft of its market, has tried through subsidies to build up agriculture in the unsuitable alpine regions. The agricultural States, with conditions unfavourable to industry, inadequate transport facilities and skilled labour lacking, have been building factories, naturally providing high tariffs to keep them going. According to tho International Chamber of Commerce the tariffs of tho Danubian countries one year ago averaged nearly double those of most of tho Western European countries. In all this thero was insufficient consideration of the matter which is responsible for much of the present diffti culty, namely, the wasteful cost of the duplication of factories, agricultural activity and banking in the region where tho old state of affairs was working very well. It, is said that plants had to be abandoned and the investment in them lost while similar plants were built only a few miles away, but across a new border. Of course this duplication could not support itself and the local industries with few exceptions had not developed real strength when tho depression began. Nor had any country approached in measurable, degree ils goal of selfsufficiency, or even altered the broad character of its trade. The farm countries continue to export farm products and import manufactures, and vice versa. Trade Still dovetails, but with the great difference that all trade is restricted and hampered, tho cost of living is raised and the standards of living are lowered. Moreover, a smaller percentage of their trade is with each other, and more with other countries, an uneconomical condition. For these countries the problem of making payments on indebtedness due abroad has been extremely difficult. As other debtor countries have done, they have i sharply reduced unfavourable balances of i trado by restriction of imports, but total trade is now so small in relation to their debt that their difficulties arc acute. KAURI GUM INDUSTRY PAST MONTH'S PRODUCTION A total of 153 tons of kauri gum was received into store by Auckland brokers hist, month, an increase of nine tons on the figure for the previous month and a decrease of 91 as compared with .July of last year. Market conditions remain dull. The following table shows the amounts of gum received into store for the lirst seven months of this year and of the past three years: — . Tons Tons Tons Tori 3 1032 1031 1030 1029 January .. If 371 200 February .. 277 281 412 2.5 March .. 221 3% 5(>3 2-10 \nril .. .. 40.') 300 441 330 May .. .- 245 301 374 421 i June . , # , 144 263 24. 28n July .. .. 153 241 309 3-19 Totals ..1,042 2,035 2,717 2.201 P. AND O. DEFERRED STOCK LONDON, Aus. 2 P. and O. deferred stock is quot«d at 16s 6d, same as on July 29*