"NO MORTGAGES”

Taranaki Daily News, 15 December 1932, Page 7

"NO MORTGAGES”

FARM LANDS TO BE FREED

MR. C. A. WILKINSON’S PLAN

GOVERNMENT TO TAKE OVER

REVOLUTIONARY MEASURES

SUM OF £200,000,000 INVOLVED

FINANCE BY STATE BONDS

Drastic proposals of a revolutionary nature for rehabilitating New Zealand were advanced by Mr- C. A. Wilkinson, Independent member for Egmont, at a meeting in New Plymouth last night. . t

The freeing of farm lands from all mortgage liability, which is considered should be taken over by the' State, broadly outlines the scheme propounded by-Mr. Wilkinson, and now being, considered by a representative committee at. New Plymouth. It was submitted in committee to a meeting of farmers recently apd referred to a committee. , The special ;committee, consisting of members of Parliament, representatives ofthe Farmers’ Union, the Lands Department, the Rural Credit Board and leading commercial men met in New Plymouth last night Mr. H. E. Blyde, president of the North Taranaki executive of the Farmers’ Union, presided, others present including. Messrs. 5- G. Smith, M.P., W. J. Polson, M.P., J. T. Salmond, D. L. Mackay, W- D. Armit,. C. J. Harris, M. G. Trotter, T. C. List, EjShaw, E. Maxwell, H. Hunt, W. Jones arid H. C. Sorenson. The attendance proved, said Mr. Blyde, that all sections of the., community were recognising the need' for assistance being given to the primary producers. He hoped the evening’s discussion would result in suggestions being evolved which would appeal both to the Government to the country as a.--practicable scheme for affording that relief.

Mr. Wilkinson said he desired to make it plain that his proposals. were entirely his own. He had given the matter much thought, but if any better plan than his could be suggested he would willingly drop his proposals and give the better suggestions his utmost support.

lENTED PRICE -FALL.

**Tn view,” he continued, “of the unprecedented fall in the price of primary - products upon which. New Zealand’s prosperity absolutely depends, the general depression existing throughout the country, the enormous burden imposed upon the country owing to unemployment and the distress occasional thereby, the inability of - the Government to propound measures to bring about an im-' provement, and the general unsatisfactory condition of the country’s finances with a steep downward decline to be faced, I consider it is imperatively necessary that most drastic steps should "be taken to relieve what is rapidly becomingan intolerable position. .. “I am of opinion,” continued Mr. Wilkinson, “that nothing short of almost revolutionary measures will do what is required, and the country will, I am. sure, respond if the proposed steps are considered to be a satisfactory solution of-our chief difficulty. It is generally agreed that the greatest burden upon ' the ’primary producer is that of interest, rent and taxation. These charges under to-day’s prices, . constitute a burden which makes farming, New Zealand’s chief industry, unprofitable, and in the end will tend to general decay, loss of production, stagnation and default. Dealing with the first two of these items, I suggest that certain matters should be Jiaken into consideration by Parliament and the necessary legislation placed vn the statute book.

•“My proposal, in brief, is that all farm lands in New Zealand should be entirely freed from mortgage liability both of capital and. of, interest; that from henceforth no mortgage liability should be allowed on farm land, which shall be entirely free from any such encumbrance; and that • in view of the freeing of tend from mortgage debt, that all farm land over and above What is considered a reasonable area, should be resumed by the State without payment, for further settlement purposes, and land thus resumed by the Crown should be acquired on the basis ;of the reduction made by the. abolishing of the mortgage debt on the said land, DRASTIC STEPS NECESSARY. " “These steps,’’- continued Mr. Wilkinson, “would, I-consider, place the primary producer, in. a position to compete with any country in the world, and would'do more to rehabilitate the country than-any other: proposal yet suggested. The main feature of my scheme is that I propose to bring- money values into line with farm production values, and "after arriving at the' true value of mortgages, to have interest payments on a 3 per cent, basis, and to provide for fluctuations up or down on an index system according to export values. “The procedure I propose is that all existing farm. mortgages. shall be reduced in value commensurate with pre-sent-day export prices and that they should be dealt with as follows, viz., that all farm mortgage contracts made before September 30, 1929, and still outstanding, have their-value based on the average of export prices from." September 30, 1925, to September 30, 1929, and be now reduced proportionately accord-

ing to -export values, existing between October 1, 1929, . and March 31, 1933. That \ all outstanding mortgages on farm lands entered into between the years October 1, 1929, and September .30, 1930, be calculated in a like maimer, and in the subsequent separate years up to the coming into operation of legislative measures dealing with this question. “I propose that the State should take over the whole of the liability under the mortgages, as adjusted, by issuing State bonds payable to bearer and saleable on the stock exchanges. “I -estimate that this liability would not under any circumstances exceed the sum of £200,000,000, possibly considerably less, which would entail a burden of interest payments not exceeding £6,000,000. “In. order to provide funds for the payment of such annual amount I propose to impose an income tax upon the net profit of-all farmers,, or a sales tax upon all. produce, or stock sold from the farms, or an income tax on the gross receipts from farms and the balance to be made up by general taxation. “I am convinced,” said Mr. Wilkinson In conclusion, “that ■ New . Zealand is now facing the greatest crisis in its history, and that if measures affording the necessary relief are not given, the Dominion will shortly be facing wholesale private bankruptcies, and local body and national default. Some definite action is essential for mere palliatives will be * found useless and illusionary.” J Mr. N. B. Fletcher submitted as an alternative to. Mr. Wilkinson’s proposals that there should be a moratorium on all mortgages upon ’ farm lands.. It as-, distance to the primary producer were he said/.-it must be.

prompt. He suggested that with the moratorium there should be an immediate re-valuation, based upon prices received for the product of the farm whether dairy produce, meat or wool. To speed up matters the valuation should be made first by declaration made by the occupier, though this might be reviewed later by qualified assessors. The valuation would stand for a certain period, say seven years, or any period thought desirable. Mortgages would then be reduced in accordance with the new valuation and interest reduced to not more than 5 per cent. Where the existing mortgage exceeded the new valuation he suggested instead of the excess sum being wiped off the Government should issue to the mortgagee State bonds bearing 2 per cent interest. It had to be remembered, continued Mr. Fletcher, that the loans covered by the existing mortgages had been borrow-, ed and lent in good faith, and the issue of bonds would remove the suggestion of repudiation which seemed to him to prejudice Mr. Wilkinson’s plan. The bonds would only apply where actual money ■had been lent on mortgage. They would not apply to mortgages taken as part payment for land sold at unduly high prices. The issue of bonds would obviate interference with private mortgages up to the new valuation, and thus enable free circulation to continue of the money necessary for the improvement .of farm lands. This would enable private loans to be still obtainable, and if properly handled the land ought to be the safest of securities for private investment. Under his proposals he thought that would be brought about. The bonds should be redeemable, possibly by a system of balloting from funds provided by a sales tax on all sales of land at a price in excess of , the new valuation during the special period indicated. He would suggest the sales tax might be as high as 33 1-3 per cent, on the amount paid upon a sale of land over and, above the declared value. It would riot be permissible for this excess price to be left on mortgage; it would have to be jn cash. This would ensure payment of the sales tax and would create a fund from which the bonds could be redeemed. IMMEDIATE RELIEF.

Mr. Fletcher did, not think his proposals need cost a great deal of money. They would give immediate relief, ' he said, prevent land speculation, and need not-plunge the Dominion into further heavy debt. The farmer would get an immediate reduction in interest, his tenure would be secured, while the mortgagee would be guaranteed 5 per cent, interest up to the new. valuation because that would foe based on prices obtainable for produce. It might be that those prices would have to be reviewed pediodically, but even where a mortgagee, had lent money above the . new value he would at-least get 2 per cent, on that, excess amount and in time his investment recovered "and? there, would be no repudiation. Land speculation would be prevented, for if-a man paid more than the valuation or more than a farm was worth it would only affect the individual as the excess pricewould have to be paid in cash. Of course in cases of. incompetency farmers would most likely lose their holdings sooner or later, but he thought it would restore, confidencete lenders, when- they knew that land could not be mortgaged above its producing, capacity. Naturally, said' Mr. Fletcher, the plan needed mature consideration, but he .thought it might .form the basis of dis; cussiori and between his suggestions and those of Mr. Wilkinson a practicable scheme, might be evolved. Mr. Sorenson thought that the Government should take over, the control of all' produce and should issue currency, negotiable, within the Dominion only, to an ektent which would enable the farmer to live. He felt that any plan proposed must. leave room for private initiative and effort.

OTHER BIG ISSUES INVOLVED. 'Mr. E. Shaw said Mr, Wilkinson’s plan was certainly drastic,; if not,'revolutionary. It needed a good deal of thought. He wondered whether Mr. Wilkinson thought the oversea debt should alsoshare in the adjustments proposed. ; ’,t Mr. Wilkinson: I have not put ',the whole case. There are other big issues involved. ~ - . • . . The valuations of existing mortgages,' he added, would be made by actuaries and based upon the difference in price values .at the time when, the were issued and those obtaining to-day. Mr. S. G. Smith, M.P., considered the position, though vei-y serious, was not so black as Mr. Wilkinson, had painted it. His information was that Great Britain was almost embarrassed by the over-supply of money. Foreign countries that had borrowed from the United Kingdom were keeping up their payments, but the difficulty was to find channels for their re-investment. Mr. .Blyde; And yet. we. canpot borrow! '■ - Mr. Smith: That shows the lack of confidence. Mr. Wilkinson, was right, he considered, in urging that drastic steps must be taken to put New . Zealand right, but his plan required a lot of consideration before it could be properly, understood or criticised.: It was unfair to say the Government was. not alive to the position, or that the Coalition was at loggerheads over the matter. There were strong differences of opinion as to the right method, but he had no doubt that when Parliament met again, and the results of the Ministry’s inquiries were known, many who had not helped as much as they could have done towards the recovery of the Dominion would do a good deal more, either voluntarily or by compulsion. Mr. Wilkinson deserved credit for having at least made definite suggestions which could be considered, and which would possibly prove the nucleus of a scheme which would appeal to the Government and to the country. Every member of Cabinet had a full sense of his responsibility, and was anxious to do something to meet the worst crisis the Dominion had ever experienced. In Parliament and elsewhere there was a section of the public which talked long and loudly about the war debts being the chief cause of the country’s troubles. They advocated the repudiation of the war debt, and in the same breath urged the Government to do more borrowing. He agreed with Mr. Wilkinson that the present was no time for party politics to predominate. Nor was it the time to accept wild schemes with mythical or magical powers of ending the Dominion’s troubles, but which nearly always ended in borrowing and leaving the other fellow to . pay.

MB. POLSON’S COMMENT.' Mr. Polson thanked Mr. Wilkinson for having given an opportunity for discussing his plan. He thought he had made the position unduly black. . It was as unreasonable to expect conditions to remain as they are to-day as. to expect them to remain at. highest boom prices. He thought the Dominion was in sight of some improvement being brought about by the restoration of confidence. Until that was complete he was unable to see much daylight ahead. Many of the causes of the present depression were outside control by New. Zealand.There was the question of reparations. If this was settled it would release millions of credit that was now in cold storage. Mr. Wilkinson’s plan seemed to assume that the Dominion would always stay where it is at present. His proposals seemed also to Mr. Polson to go perilously near land nationalisation. They, did not go quite so far, but they went near enough to create the fear that under such a . system- as Mr. J7ilkipsbn

advocated the farmer would become a serf of the soil. He would become a peasant with little hope of emerging from that position. The settler did not want to becomej that. Desire for a better position for’himself and his family was the farmer’s incentive to improvement of the land and Mr. Wilkinson's plan might make this impossible. ■ Mr. .Polson was not certain that mortgage values had entirely disappeared, as Mr. Wilkinson had ’ ' suggested. He thought that when the effects of the Ottawa agreements, which he for one did. not class as so much “hot air,” had begun to be felt, New Zealand would see some restoration of prices. It might be heresy to say so, but he, had doubts whether the legislation passed during the past year or so, legislation which interfered with the sanctity of contract, had really helped the Dominion to get out of the tangle. Other countries, Australia in particular, were showing signs of improvement, and they had not gone so far as New Zealand in interference with contracts.

CAUSE PRICES. Mr. Polson thought the low price of butter was partly due to the fact that all the Dominion’s competitors were taking advantage of the position in Great Britain Before the Ottawa agreements came into force in January. When those agreements came into effect and •foreigners had to- pay an entry tax they would, seek other markets than Great Britain, and he thought that then they would see some improvement in prices. Meat rationing had already produced some improvement, with a prospect of the improvement increasing. He did Siot.-jhink it was quite justifiable to say that the pay-out for butter this season would be only 6d or 7d per pound. Mr. Polson did not like the suggestion of. the State as sole mortgagee. He was not certain whether, after all, it would not have been better for New Zealand had the State never become a mortgagee, but had left lending of money in private hands. He had always thought it regrettable that the State had not gone out of that business when it had the chance of adopting a system similar to the Danish system of farm lending. Mr. Polson thought that at first sight Mr. Fletcher’s scheme might be the more practicable. It would prevent inflation, and as - New Zealand sold most of its produce abroad no system of inflation would, take the Dominion very far. The Dominion had to get costs down, and to exercise rigid economy. . Only in that way. could the farmer be given any spending power. Some immediate assistance was necessary if settlers were to be kept on their farms. Some of them, particularly sheep-farmers, if they had the land for nothing, would still be unable to meet working expenses out of earnings. Various plans were being considered by the Government, and it was unfair to say the Government was not finding a way out of the depression. No Government had yet succeeded in this, but he hoped that as the result of Cabinet’s consultations with bankers,, commercial men and other sections of the community some practical scheme of a temporary. nature would be found—one which would not interfere with sound economic. laws. He would like to see Mr. Wilkinson’s plan receive further consideration, though. in its present form he thought it was hardly likely to be acceptable. If -such drastic action were taken on behalf of the farmer every other. section of the community would claim ■ similar treatment. No action should be taken which would stagnate development. That had only begun in New Zealand. Compared with Denmark, for instance the Dominion had seven-eighths of the way to go. He feared Mr. Wilkinson’s plan might lead to greater stagnation and a worse position than. now. He urged a small committee be set up to discuss the matter with Mr. Wilkinson. Mr. Wilkinson, in a brief reply to the discussion, said his plan was not to make the State a “super-mortgagee,” but to hand the land back to the present owners free of everything but taxes. He could not see any indication of an early improvement in prices. It had to be remembered that- the Ottawa Conference took into consideration the producers in the United Kingdom as well as those in the Dominions. If home production increased in- England the Dominions market there would again be lessened. He welcomed the idea of a small committee being set up to consider suggestions such as those made by him and by Mr. Fletcher. Messrs Wilkinson, Polson, Smith, Blyde, C. Trotter and E. Shaw (or nominee) were elected a committee for this purpose, with power to add to their numbftrs and to submit proposals to any authority they -thought desirable.