MORTGAGE LIABILITIES

New Zealand Herald, Volume LXIX, Issue 21253, 5 August 1932, Page 15

MORTGAGE LIABILITIES

Sir, —I will endeavour to briefly outline a scheme which will (1) make it possible for the dairy and sheep farmer to make both ends meet at the present prices ruling for our produce; (2) not interfere with our external exchange; (3) make a return* of normal conditions in New Zealand possible and remove the gloomy outlook at present staring into the faces of bur primary producers. The Government has been largely responsible for inflating land values after the wsjr by buying a lot of improved estates, and should now come to the aid of the farmer in the painful process of devaluating the artificial values which it has assisted in creating. To express my scheme in a few words, I propose that the Government should temporarily shoulder those mortgage liabilities which are above the producing value of the properties involved. My proposal is to lend the money required to the mortgagor free of interest and enter a Crown mortgage for the amount involved on the title of the property. The value of dairy farms should bo estimated at £l2 per acre, subject to size, area of land under cultivation, buildings, etc.; sheep land at £5, etc. The total amount of mortgages in New Zealand is roughly 115 million. Let us assume that 30 million is necessary to carry out my scheme. The Government would issue Treasury notes in the shape rtf bank notes in denominations of £l, £5, £lO, £SO, £IOO and £IOOO. These notes would be made legal tender, and on each note it would be clearly stated that it is part of an issue of 30 million pounds* issued for the purpose of assisting tho farming community of New Zealand in tho devaluation process of their properties to the interest-bearing level, and that at least six hundred thousand pounds would bo redeemed annually. It will thus be seen that the redemption is spread over 50 years. In the improbable event of prices for our produce remaining as they are for the next 50 years, • the taxpayers would have to find the six hundred thousand pounds required for redemption per annum, and when, they realise that this is an insurance premium against making further heavy or even total losses in whatever interest they are holding in New Zealand at the present time, I don't think they will grumble. In order to prevent an orgy of land speculation, a Crown mortgage would be entered for the money advanced, which would contain a repayment clause. The rate of repayment would bo in proportion to tho rise and return above to-day's price for our wool and butter. The money repaid to the mortgagees would speedily look for reinvestment, and enterprise would once more take tho place of stagnation, and tho wheels of industry in general would start to run again and money would be available at lower rates of interest. This plan would not affect our outside creditors. There is no alteration in tho assets and liabilities of this country. Tho Government would havo tho mortgages, as good as any it has now, on the asset side against tho notes issued, and it would naturally make the best bargain it could with existing mortgagees. There i.> no fear of any money being paid out for fictitious mortgages, and mortgagees in general would havo to accept a reasonable valuation or bo left out of this scheme. It is of no use putting any further taxation on tho man who is earning from £4 to £6 per week.. Incomes from £6OO upwards could boar an additional shilling; incomes from £IOOO and £1250, an additional 2s 6d, and higher incomes' a proportionately higher scale/toward the unemployment relief tax. Less talk of what is going to be done for the unemployed and more action is what we need in this country. Unemployment is the root of the depression; let us abolish it as far as New Zealand is concerned. H. Kemeiis.