NO LONGER GILT-EDGED.

Otago Daily Times, Issue 20323, 3 February 1928, Page 9

NO LONGER GILT-EDGED.

FARM LANDS AS SECURITIES.

LENDING CONCERNS HARD HIT.

(Special to Dailx Times.) WELLINGTON, February 2. “ Early in 1927 and throughout the past year one mortgagor after another informed the board that owing to the low prices of produce, adverse climatic conditions, and other causes he could no longer carry on. Most of these mortgagors expressed a desire to walk off the land and abandon everything in favour of the mortgagee. By making substantial concessions is principal and interest we have persuaded nearly all of our debtors to remain on the land in the hope that the tide would turn in their favour sooner or later.” These remarks were made by §ir Harold Beauchamp, chairman of directors of the Equitable Building and Investment Company, at a meeting of shareholders of that institution to-day. “ I have to deal with a matter which has occasioned your directors the gravest concern during the past 12 months,” he said. “ I refer to the unfortunate position in which this and so many other lending institutions in the Dominion find themselves with regard to mortgage advances on broad acres. In pre-war days there was no security held in such high esteem as farm lands, which, were valued for mortgage purposes by men who were considered as highly competent valuers. Borrowers had no difficulty whatever in obtaining advances to the extent of SO per cent, to 60 per cent, of such valuation. When I addressed you last year neither my colleagues nor myself had any reason to think that we would have to face heavy losses in respect to any such advances, all of which had been on our hooks for many years. In fact, up till December 31, 1926, the interest on the majority had been paid with commendable regularity and punctuality. The prompt payment of interest in the past naturally lulled us into a sense of false security, and other lenders were in similar circumstances. In the meantime, the board hhs considered it prudent to transfer to the contingent securities depreciation account from the general reserve fund the sum of £20,000 to meet any losses that may occur on the ultimate realisation of mortgages that may come under the category of ‘ bad and doubtful.’ I apprehend that there will be no difficulty in paying the same dividend in future as that which we are recommending to-day—namely, 10 per cent, per annum. I would add that ye have since discontinued making advances to farmers, and are now confining onr operations to loans on properties in Wellington and suburbs, and so far as possible providing that a portion of the money advanced shall be repayable under table.