NO MONOPOLY

Poverty Bay Herald, Volume LXI, Issue 18547, 6 November 1934, Page 4

NO MONOPOLY

MORTGAGE FINANCE CORK)RATION PROPOSAE MINISTER’S EXPLA N ATI ON (Per Press Association.) WELLINGTON, last night. “While on the subject of finance,” said the Rt. Hon. J. O. Coates, in the House to-night, “there is one other matter that S would like to mention, and that is the, National Mortgage Corporation proposal referred to in the Budget. “Time did not permit of it being dealt with this session, but 1 propose to concentrate on it during the recess with a view to having legislation ready when Parliament resumes. So far the proposal has only been dealt with in broad outline, and a general discussion of the matter would be premature until definite proposals can be submitted. At the same time I. would like to take this opportunity of removing one or two misconceptions that appear to exist. “The permanent objective that the Government has in mind is a soundly organised system of long-term mortgage finance based on the well-known mortgage bond system, extensively used in other countries, that will create a standard . agricultural investment through which capital can confidently flow into the farming industry. By largely obviating the risks normally involved in individual mortgage in vestments, and providing security which is practically as liquid as Government stock, capital will be obtained at cheaper rates. That is the essence of the idea. NO GENERAL REDUCTIONS.

“Concurrently, and in conjunction with the Mortgage Corporation legislation, other measures will be proposed 1 for dealing with the pressing problem of financial rehabilitation of farmers and others whose position has been rendered untenable as a result of the heavy fall in prices of primary products. I cannot give any details in regard "to this aspect of the matter at present, as the methods by which rehabilitation is to be achieved are still under consideration. 1 can say quite definitely, however, that each case will be dealt with on its merits, and thero will be nothing in the nature of a general writing down or other reductions by legislation. Given suitable machinery, I have no doubt that the bulk of the cases can be dealt with by mutual arrangements between the parties concerned, and I would stress this aspect of the matter. The remainder will be dealt with by appropriate judicial machinery. “So far as the National Mortgage Corporation is concerned, various proposals have been suggested, but people should not jump to conclusions that any particular features of these proposals are going to bo adopted. Judgment should be suspended until the Government is able to bring down a considered scheme. It is fully realised that the success of the project depends upon obtaining the confidence of investors in mortgage bonds, and the House and people can rest assured that the corporation will bo organised on sound lines. JOB MUST BE DONE.

“Furthermore, there is no intention of establishing anything in the nature of a monopoly of mortgage business, and, if the parties concerned prefer it, they will be able lo continue making contracts for individual mortgages. We do feel, however, that a proper organisation can narrow the margin that exists between the market rate for mortgages and for good' Stock Exchange securities, and in the interests of the whole Dominion, wo proposo to set up an organisation. This organisation will, it is hoped, stabilise lower rates of interest, but provided concerns at present doing mortgage business arc willing to do that business at markot rates of interest, having regard to the nature of the security offered, there is no warrant lor statements made that their business is to be taken away from them.

“As was indicated in the Budget, the mortgage problem is the last major item remaining to be dealt with in the financial rehabilitation of the Dominion. The difficulties to bo overcome are recognised, but wo cannot hold back on that account, as the job 1 must be done. When it is done, however, our financial stability will be greatly increased to the lasting benefit of investors and the community generally.”