MORTGAGE LAW

Southland Times, Issue 22508, 16 February 1935, Page 6

MORTGAGE LAW

FARMERS’ VIEWPOINT

OUTLINED BY MR POLSON

CLAUSES OPPOSED

(From Our Parliamentary Reporter.) Wellington, February 15.

Although prepared to give the measure the second reading, Mr W. J. Polson stated in the House of Representatives to-day that he opposed many clauses in the Mortgage (Corporation of New Zealand) Bill, and would vote against them in the committee stages.

Mr Polson attacked principally the provision for the inclusion of shareholder capital and the failure of the Government to evolve a co-operative plan which, in his opinion, would have ensured cheap finance to farmers. Mr Polson said that had the question of interest reduction and principal readjustment been tackled, some at least of the present proposals might have been avoided. Parliament might have extended the powers of the Mortgagors Relief Commissions; it might have cut interest and it might have given in deserving cases a readjustment of principal. The relief commissions should be given power when they consider it necessary, and where there was involved principal that was never paid and not represented in value, to lower the amount so that the farmer would see over the top. The farming community had been too long in chains, tied to big vested interests. Not to desire some form of relief that would afford a hope for the future, the farmer was asking why the Government would not start a plan to rid him forever of the complete domination which he was under by big vested interests. He was asking why he should work long hours year in and year out for a pittance that was in some cases not better than that given a relief worker. During the past decade the farmer had seen the effect and power of monied corporations and he believed the system needed drastic improvement. The farmer was not a socialist: he believed in individual effort and that competitive system gave him the best opportunities, but he believed the system needed amending and improving, and that the rewards should be more justly apportioned. The farmer was a co-operator and he believed in a co-operative plan of finance, but realizing that co-operation had received in the Bill a body blow that was almost a death knock, the farmer declared as an alternative that he was prepared to support State control of a State aid plan. A co-operative plan when used along with the farmers’ organization could accomplish much in New Zealand. The Bill meant the end of limited co-operative rural finance which had been established in New Zealand, and which was the system that was the hope of the primary industry elsewhere. The organizations comprising the Farmers’ Union had approved the Government’s proposals, only subject to certain conditions, firstly, that the bonds should be sold at such a rate of interest as would effectively ensure a reduction of interest rates to the farmer and secondly, that control should be co-operative or State control. If profit were the motive inspiring people to enter the Mortgage Corporation. then the incentive was to keep the bond rate high and not to reduce the rate of interest. The cry of “No political interference” offered excuses to investors to ask for higher rates. “An Old Dodge.”

“We have fallen in through that dodge on more than one occasion, and I do not wish to see it happen again,” said Mr Polson, who went on to argue that it was the duty of the Government to interfere when a crisis arose, although that was an entirely different thing from political control. He did not know why the machine recently created to manage New Zealand’s currency could not be used in the present instance to advance enough money by way of guarantee. Mr Polson contended that the mutual guarantee fund of £2,500,000 which it was proposed to build up, would be the property of the shareholders, used by them to protect their own capital, and standing between them and loss. It was five times the amount when built up of share capital subscribed by the shareholders, but borrowers who supplied the mutual guarantee fund were not to have the slightest control in the organization in which they were vitally interested. He could not understand how the £500.000 share capital would inspire any confidence. A guarantee from the State would be much more satisfactory. Instead of issuing share capital, the State should guarantee on top of the mutual guarantee the next 3 per cent., bringing it up to 5 per cent. That would launch a proposal much more satisfactorily than by the issue of shares’ capital. It would mean cheaper money; it would save the 1 per cent, that was to be paid to share capital; remove the scandal that less than 2 per cent, of the capital raised was controlling such an organization; it would franchise the real owners of the reserve capital who took the whole risk of the losses, and it would prevent powerful interests from obtaining control. The people from whom the shareholder directors of the Mortgage Corporation would be recruited had one object. It was not merely profits they were after. Profits would be a mere bagatelle to the power the control gave them. Shareholders’ Control. “If it will be added protection to the farming community to prevent shareholders’ capital from being introduced, and thereby prevent shareholders’ control, then I shall fight against shareholder control as long as I am in this House,” declared Mr Polson. “I trust others will show they are here to do their best for the country and not to give allegiance to a party without any consideration other than that of allegiance.” It was a serious matter for the State to hand over to an independent corporation an enormous block of Government Departments’ securities which it was proposed to transfer. It was extraordinary that the State should have any private or share capital controlled by a concern which might traffic in its securities in the way proposed. Mr Coates: Are you opposing the Bill?

“I will express my views in my own way,” replied Mr Polsorf. “If the Minister thinks that in making a statement like that he is going to make a threat to me, he is making the mistake of his life. I am expressing my opinion as trustee for the farming community. I am entitled to express the official view of the farmers, a view with which I entirely agree. I make the statement without the suggestion of a threat from anybody. I resent any suggestion of that kind. Mr Coates: That is not an answer. Mr Polson: That is my answer to the Minister.

Mr Coates: You are making a series of criticisms.

Mr Polson: I intend them as criticisms.

Mr Coates: I fail to see how you cannot even now support the principle of the Bill. Mr Polson said he was asking that agriculture be given a chance and the farmer be allowed to get some reward from the plan that would give him the lowest possible rate of interest with the utmost freedom. He was asking that the farmer be not shackled to any system

of control or interest that might mean rates would rise instead of fall. “I am going to oppose many clauses in the Bill,” Mr Polson added, “but I am not going to deny the measure the second reading. However, in committee, I intend to vote as I think necessary and right for such amendments as I think desirable.”