THE MORTGAGE CORPORATION

Otago Daily Times, Issue 23001, 2 October 1936, Page 6

THE MORTGAGE CORPORATION

The National Mortgage Corporation, which was established by the late Government with a view to the substitution of a non-political body for the State Advances Department, and to the setting up of suitable machinery for the rehabilitation of farmers’ finance, had a comparatively brief career. Under the present Administration it has been superseded by the State Advances Corporation, with a return of political control. The machinery, however, under which the Mortgage Corporation acted, embodying, as the late Government not unreasonably claimed, the result of many years’ experience of the operations of the State Advances Office, has been substantially retained. The Mortgage Corporation gave promise of fulfilling very satisfactorily the expectations of its usefulness. It was contended in some quarters that the farmers would be disinclined to seek advances under the system which it represented. In the course of the discussion in the House during the present session on the second reading of the State Advances Corporation Bill a Government member gave expression to the view that the Mortgage Corporation was so unpopular among the farmers that it did more than anything else to put the previous Government out of office. But the report of the activities of the Corporation, presented to Parliament this week, is far from suggesting that farmers displayed any reluctance to take advantage of its services or of the facilities which it provided. It shows that over a period of ten months, up to the end of June last, 5659 applications were received for loans under all headings, involving an aggregate amount of over eight millions, and that applications from farmers accounted for as much as six millions of this total. A proportion of the applications was declined on the ground of unsuitability, but loans to the amount of just on four millions were authorised. In the field of mortgage adjustment the Corporation obviously carried out a work of considerable magnitude. But the Corporation was said to be not working fast enough to serve the purposes of the present Government. The argument was used, too, that it required a margin of security greater than that required by the State Advances Department and greater than will be required by the State Advances Corporation. In the Mortgage Corporation’s report the provision allowing the Board to make advances in excess of a twothirds margin, subject to guarantee by the Minister of Finance, is described as having been found very useful and helpful in practice. In most cases mortgages are for 66 or 67 per cent, of the value, but the Corporation could extend its'loans to 80 per cent., the State being, under the legislation of 1935, responsible for the difference. Certainly the directors of the Mortgage Corporation had the interests of shareholders to consider as well as those of settlers desirous of being financed. But it is unnecessary to agree that this provided sufficient ground for characterising it as “ merely a commercial concern ” in the matter of granting assistance. Criticism was justly levelled at the State Advances Corporation Bill, on the other hand, on the score that it would

not be doing the farmer a good turn to afford him the opportunity of borrowing up to 100 per cent. Its report shows that the Mortgage Corporation was a very active body, and that its operations were conducted with a considerable amount of success. This is demonstrated in the net profit accruing on its operations over the period reviewed. The improvement that has been taking place in the economic conditions in the country is reflected in the increased percentage of receipts to interest due in the case of mortgage securities.