MAJOR ATKINSON ON CHEAP MONEY.

Otago Witness, Issue 1751, 13 June 1885, Page 9

MAJOR ATKINSON ON CHEAP MONEY.

In addressing his constituents at Mamia> recently, W9 leara from the Hawara Star that Major Atkinson said :— A eobetca for theborrowing of money by the Governmaafc at a low rate of iiafcoreot and lending the sama at am advanced rate has been brought before the Government, and Sir Julius Voxel's opinion fchereon has baan made known. The proposal, rotighly spaakinpr, is to borrow in the Home market at 4{ per cent, at par, and lend ta the colonist on faa\ security with a margin of onehalf, or at least; one third, afc 5£ par cent. Now, there is about £30,000,000 of borrowed capital in th 9 Colony, which the Government would havg to be prepared to pay off in order to make the schema one of Coloaial importance. Granting that Government might be able to hred half that sum, or £15,000,000 at 5.f, on a margin of one- half -and a less margin would be unsafe— lE io impossible that those who are now mortgaged Up to ti»9 full three-fourths of market value would ba in & position to pay off the existing mortgage by rai&i.?£ a Government loan of a lesser amounE. For' this reason the other half of the colonists debit* would still remain unprovided for. Pri^atCr capitalists would also be able to lend at a much higtae"? rate than at present, be "SBse a large amount of private capital w uld ha at once withdrawn itota a Colony where the individual had to compata with the Government. The effect would therefore be this : ThoBQ who were able to do with a loafi of one half on their lands— or, in other word 3, the psoprietoi'3 and speculators generally — would reap the benefit of ths cheap money, whilst the tenant would in the* increased piles of his money be actually paying for the cheapening of the money to fcho owner. So it would quickly assume the nature oi a class loan, increasing Ch<s facilities of the woll-to-do speculator in land and of the remaining money-lenders to dotsble tbehr profits at tha expense of the Sonants,. Them, aojitin, cheapening money means 2aisiDg' the price of land, and in this way, too, favours 1 the one at tlia coat of the other. The first reaults following the increase ia the value oi land would ba an increase in the rents which tenants would ba caS'led upon to pay, without any corresponding improvement in th'i markets for their produce. In thesa ways the owner gats the advantage, to the detriment of tha tanant. Again, the tendency of borrowers is not to reduce but to increase the amount of their mortgages. Hence, with the fictitiouslyincreased value of their Jaud, they are able to obtain further advances from time to time? and still be within the prescribed margin. Ifc is only a question involving time as to when the position will right itself. The tenant cannot pay what he does not make out of his holding. The landlord, therefore, will not hold a property which does not pay interest on borrowed capital, and sells his land for less than its fictitious value, and the lender — the Government — loses. Besides, if the Government were to offer cheap money to the agriculturist, i . could hardly deny it to tho equally large class of merchants. The distributing class was nearly as important as the producing elagg^ and would look for a share of the good things going. That mßanfc lending money for the discounting of trade bills — a system which no Government could countenance. Again, the ordinary farmer did nof; need to borrow money to carry out improvements } but to carry on his business, to buystock, implements, or the like ; but the English system provided this security, fchat the Board of Works only advanced money for permanent improvements, so that they not only had the security of the land, but tha land plus the added value of improvements, ffor these and other reasons he was satisfied that the scheme would prove a failure,