“PROTECTS INVESTOR"

Taranaki Daily News, 20 February 1935, Page 7

“PROTECTS INVESTOR"

MORTGAGE CORPORATION MR. C. A. WILKINSON’S CRITICISM. “INSTITUTION NOT NECESSARY.” NEEDS OF FARMING COMMUNITY. (By Wire—Parliamentary Reporter.) Wellington, Last Night. Tire opinion that the Mortgage Corporation was unnecessary and would not meet the position of heavily indebted farmers, was expressed by Mr. C. A. Wilkinson (Ind., Egmont) in the House of Representatives to-day. He contended that the Bill would protect the investor rather than the hard-pressed farmer and would lead to a high restriction of lending and a high rate of interest. Mr. Wilkinson said the Bill was causing a great deal of disappointment throughout the country. Although it might assist the more solvent man or the big farmer, it would be of no advantage to the small man. It was not a question of money, because mortgages already existed. ■ ■ The ■ State Advances Department had about £40,000,000 in mortgages, ahd if these were transferred to the-corporation the department could receive bonds for the value of the mortgages transferred. He could not see why the Minister of Finance should take so much trouble to ’consult the moneylending interests. The Associated Chambers of Commerce had issued a statement on the Bill, but that organisation represented the money-lending interests of the country. The people who were vitally interested, the farmers, were not being consulted. Mr. Wilkinson made a plea for consideration of. the problem outside party lines 'altogether. Apparently nothing could be done unless it were under the party system, and it was a wretched system indeed , for the people concerned. The Bill said in effect that people investing money were protected in certain circumstances. They were even to be protected against the payment of rates, while no consideration was to be given to the people who owed money. MUST GO FURTHER. , The Government would have to go much further before •it gave relief to the small farmer, who to-day was struggling under an impossible burden. The farmers had certainly borrowed money and it might be said that they should be kept to their bond, but it had to be remembered that Great Britain herself some time ago had not met her interest payments. Mr. F. Langstone: She defaulted. Mr. Wilkinson: Yes, that is so. Mr. Coates: She could have paid in commodities. Mr. Wilkinson said large numbers of farmers were desperately in need of relief from some of the charges they were faced with to-day. The only alternative was bankruptcy, but that was a cruel proceeding which had to be avoided at all costs. A member: How would you do it? Mr. Wilkinson: I would abolish farm mortgages altogether. Mr. Burnett: Now we know. Mr. Wilkinson: There we go. Mr. Wilkinson said apparently the Government was not prepared to take that step. ' 7 Mr. Burnett: Thank God for that. Mr. Wilkinson: You might not need assistance in the same way as other farmers. Mr. Burnett: Whatever I have I have earned. Mr. Wilkinson said that did not alter the fact that there were numbers of farms which could not stand the heavy mortgage charges which they were carrying. Many farmers were working long hours for little remuneration and were being forced to pay their labourers low wages. Both the farmers and their labourers were entitled to a good standard of living. The Bill stated that the principal business of the corporation was to lend money, whereas its principal business should be to help the fanners in their difficulties. The Government could carry out the job without borrowing one penny. It could take over the mortgage position and issue bonds direct. He believed the mortgagees would be prepared to accept Government scrip for a smaller amount than was owed, and if that was the case he could not see why it was necessary to raise capital to put into the corporation.

LAND VALUES ADJUSTMENT. . The farmers were asking for a low rate of interest, and he believed the Government could borrow money at 3 per cent, on taking over a mortgage. The Government could then give the farmer the advantage of cheap finance. It was absolutely necessary that land values should be readjusted, and if there was any loss to be borne it should be borne by the taxpayers. It would have to be in the long run. The country was getting into such a position that ships were coming to New Zealand in ballast. This one-way traffic could not continue, but the people could not purchase goods unless they had the money.

In making investments the mortgagee had taken the easy way and the safe way, but unfortunately the value of products and land had fallen and could not meet the mortgage charges. The mortgagee was thus in the same position .as. the tradesman who had given speculative credit. He had simply to recognise his loss and wipe it off. It was useless trying to maintain a heap of values that did not exist. “Mortgages should be based on existing Values, whether they are good or bad,” said Mr. Wilkinson. “If they are based on existing values they will be good. I am not in favour of the State taking over dud mortgages.” He said he could not see the necessity for having private shareholders in the corporation, and the farmers should register the strongest protests against the Government’s policy. Mr. W. A. Bodkin: Should they hand their farms back to the mortgagee? Mr. Wilkinson: In many cases yes. If they did that they would embarrass the mortgagee. THE NATIONAL; INTEREST. The Government should consider neither the borrower nor the lender, but act solely in the national interest, continued Mr. Wilkinson. All were agreed that the position was desperate, but apparently they could not agree on the remedy. However, the situation would have to be met sooner or later, and if the Government would not find a solution some other Government would, for while the people had been apathetic and had simply marked time they had not improved their farms, because there had been no inducement, but now there had been a set-back in the dairy industry through an adverse season and definite action was required. If the Government borrowed money at 3s per cent, and then charged 1 per cent, for administration the farmer would not get cheap money after he had also met the requirements of the sinking fund. The effect of the corporation would be to keep lending down and interest rates up.

“The people have asked for bread and they have got a stone.” said Mr. Wil-

kinson. “The Government is establishing a corporation without a soul.” At the present time the farmers were receiving sympathetic treatment from the State Advances Department, he added, but he had never met a mortgagee who had been prepared to give anything away unless he had to. If he could collect his interest he would collect it.

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