Cheap Money Scheme.

Opunake Times, Volume I, Issue 9, 31 July 1894, Page 3

Cheap Money Scheme.

The following scheme was detailed

in the Financial Statement ; —I pro- - pose, on certain conditions, to ask the House to assent to legislation authorising the raising in London of a sum not exceeding £1,500,000 per annum to be advanced to settlers of this colony on freehold security, and I propose that 3d per cent inscribed stock be issued from time to time to provide the requisite amount. It may not fol'ow that in the course of a year the whole amount named will be raised for the purpose of advances. If, for example, the approved loans amounted to £500,000 then inscribed stock for this sum only w T ould be issued. After careful consideration it seems to be infinitely the best plan to obtain the money directly on behalf of the colony and for the colony to hold securities against the advances that may be made. The greatest good will in this way be conferred upon those requiring money at low rates of interest. It is intended that a lending board should be set up, with certain defined powers. To stipulate that these advances should only be made upon a 5 per cent valuation would, in my opinion, entirely neutralise any general good the scheme is intended to confer. There are, of course, exceptional cases where the owners adhere to higher values than the land is really worth, but I think I am right in saying that the laud may not in future be expected to further depreciate in value, and as the population increases, and the country becomes settled, the acreage value of the land must show a tendency to rise in proportion. I believe that with a lending board and a proper system of valuations it will be safe to authorise the board to advance up to two-thirds the value of the security. It is not intended by the Government that a large profit should be made out of the settlers—the margin of per cent will more than cover the ordinary expenses, and will provide the basis of an assurance fund. The scheme is a comprehensive one, and I think has the merit of being safe, practicable and sound. I can with confidence commend it to the careful consideration of members on both sides of the House whose co-op-eration I ask in assisting to solve what is admitted to be one of the most difficult and at the same time unavoidable problems that it has become necessary to deal w r ith during late years. The country must have a plentiful supply of money. It must not be dependent on the whims of investors who in the past have made use of it just as it suited them, and 100 often have shown, unfortunately, a desire to withdraw their money without reasonable cause, thus creating embarrassment and in many cases distress among those it affected. I ask honorable members, ns they have the welfare of the country at heart, when the Bill is before the House for consideration to * assist in making it where necessary a better Bill, and to bring about that which is so necessary to the Avell being of the colony, namely, obtaining a supply of capital at a lower rate of interest than has hitherto prevailed. THE MONEY MAUKET. It is generally admitted that there has been what is termed a tightness in the money market of the colony for some time , past. Various reasons may be assigned for this. Without discussing the causes, I may say that money in this colony will before long long be plentiful, and that with an additional supply a drop in the interest rates may be expected. It seems impossible for the vast accumulations of wealth now being hoarded up to continue long wilnout being remuneratively employed. With this belief I, some weeks ago, notified tbe various

departments which are in the habit of investing portions of funds with the Treasury that for the future no investments will be made at a higher rate than 4 per cent. Dear money is not a good thing, on the contrary it brings in its train many evils. No country can enjoy solid prosperity if the rates of interest are ruling high.

It would be to the advantage of all classes of the community, including the financial institutions in this colony, were there a plentiful supply of money with lower rates of interest, enabling the users to utilise it with a prospect of earning a profit. Under such circumstances, the original lender would have the first essential to a successful lending institution, os a farm and a better security.-- It is obvious that if money is lent at a high rate the difficulties the mortgagee experiences in using it so as to make a profit for himself as well as a return to the lender will only result in it being a question of time when the borrower must experience the impossibility of his being able to profitably employ such money. When this point is reached the security

of £he original lender is at once reduced 9 in value if he allows it to , remain long enough, It will be generally conceded to be of importance to all classes in the colony—to lenders as well as to borrowers—that money should stand at so a rate of interest. So far as I can I shall assist in* the direction of having money brought to a fair value. I feel satisfied from a careful study of the causes that have conduced to the tightness of the money market our colonists may now look forward hoping to a relaxation ;n this direction.