CAPTAIN RUSSELL, M.H.R., ON MORTGAGES.

New Zealand Mail, Issue 386, 5 July 1879, Page 21

CAPTAIN RUSSELL, M.H.R., ON MORTGAGES.

Our attention has been specially directed to some rather novel proposals recently made by the hon. and gallant member for Hawke’s Bay. In the course of his speech to his constituents at Wairoa, the hon. member stated that he had remarked that there were other methods, in addition to producing articles, such as sugar, beer, &c., by which we could retain vast sums of money in the colony, which were now annually seut away. The idea might at first strike them as somewhat chimerical, but he could assure them that in an old-fashioned country like England, where capital is p lentiful, and where the State rarely interferes with private enterprise, a practice analogous to what he was about to propose had been by no means uncommon for a very long while. He hoped they would admit the idea might be developed into a great practical good. He had not had an opportunity of examining for himself, but he understood, and for his argument would assume, that the private debt of the colony secured by mortgage upon real property amounted to £20,000,00(1 —about the same, in fact, as the public debt ; the great bulk of these mortgages were bearing interest at between 8 and 10 per cent. The idea he wished them to consider then was this—that the Colonial Government should consolidate, so to say, the whole of these loans ; should borrow in the English market a sufficient sum to pay off all these loans as they mature ; and should itself become the mortgagee. The leans could bf

raised by the colony at about 5 per cent. He should propose that the money be lent to mortgagers at 6 per cent., which would give 1 per cent, on £20,000,000 to pay the expenses of working the department, and guarding against loss of any kind ; but under the land tax valuations there would be ample and authoritative evidence of the value of properties, and under the Land Transfer Act, under which all properties would have to come, no difficulty would exist as to title. He had just said that a somewhat similar practice was established in England, where the Government were lending money at from 3 to 4 per cent., to reclaim land from the sea, drain large swamps, and bring parts of Scotland and Ireland under cultivation, which had hitherto been lying absolutely waste. There could be no reason, be thought, urged against the Government lending money to improve the soil ; hundreds of struggling settlers, who were unable to improve their properties, owing to the high rate of interest they had to pay, would, under his scheme, be able to employ quantities of laborers, with benefit to themselves, the laborers, and to the colony—undertakings which cannot bo now thought of, because capital was practically unprocurable, would be commenced, and an era of prosperity such as they had never enjoyed before would be before them ; the amount of money retained in the colony would be great, for, taking the debts as £20,000,000, and. the difference between the interest payable as 2 per cent, (that was, between 6 and 8 per cent.), the saving would be £400,000. a year, which would be retained in the colony, and expended in productive labor, which would in itself be of inestimable value to the colony ; nor would the advantage stop there. ' Exactly double the number of English capitalists who were now would then be interested in the srrccess of the colony ; a stability would be given to their financial position which now did not exist, and owing to the safety of the investment, hundreds of capitalists would be attracted to the colony, who, under existing circumstances, would never come near it. As capital in the shape of money was so scarce in the colony, lie did not think they need consider the case of the money lender out here. Naturally, there always would be. many securities, which from imperfect title, indifferent character of the owner, or various other reasons, the Government would not care to deal with, upon which those gentlemen who desired high rates of interest could always lend their money ; but however strange his idea might seem on first hearing, and though he had to put it simply in outline before the electors, owing to the many topics he had to address them upon, he trusted, on considering the subject quietly for themselves, they would agree with him that it was an. idea which might, under careful elaboration, be developed into a great benefit to the colony. He believed that then these periodical times of depression would not occur with so much frequency. .