VOICE OF THE PEOPLE

Taranaki Daily News, 8 March 1935, Page 7

VOICE OF THE PEOPLE

VIEWS ON CURRENT TOPICS MORTGAGE CORPORATION BILL. COLD FACTS ABOUT PROPOSAL. (To the Editor.) Sir,—Already in Parliament it has been stated that the mortgages to be dealt with by the Mortgage Corporation amount to £70,000,000. The monster will soon attain Frankenstein proportions, and under the Mortgagors’ Relief Act, these assets are not fluid. Their market price is a mystery, upon which Ministers give us no light. Under such conditions, members are asked to enact a Bill which is a complete reversal of the country’s former policy. Rather, it is a vicious system of dual control by eight directors, all placemen appointed by the State. This is what comes of the baneful meddling and muddling of the State and its departments, with the swift and free flow of capital into new fields—that is to say the unfair competition of the State in a world’s money market with the private investor or borrower. Shortly, let me illustrate how this flow of capital can take place. In 1862, I was in the Spanish island of Cuba, a hotbed of revolution. That is a long while ago. Age has its compensations, however, and, as they say there “The Devil knows a lot; he’s very old.” An English company had undertaken the development of copper mines near Santiago. To accommodate their Cornish miners they built a hospital. They had built tramways. They owned a fleet of ships to carry the ore to Swansea for smelting. This shows how bold and enterprising is the private investor, and how he delights to be the early bird. On the Spanish Main is Venezuela. Between the Republic’s port and its capital, Caracas, runs a spur of the mighty Andes. In the middle sixties, an English company undertook to connect port and capital by rail. This they did, climbing to a height of more than four thousand feet in the course of the work. Venezuelans, to this day, boast that, during seventy years, there has not been a single serious accident on the line. Can the New Zealand railways, State constructed and located, show a record like that? English companies own and run the, railways of Argentina. During those same sixties, they carried their lines from Mendoza over the Andes into Chile, rising to a height of nearly ten thousand feet. I do not think U.S.A, and certainly not Canada, had transcontinental lines at that early date. Five hundred millions of English capital are now invested in Argentina. That State was once held to be the preserve of the Rothschilds, and Chile and Peru of the Barings. The elder Baring died worth £4,000,000 and Rothschild of the day, said “I should have thought he was more at his ease.” This is more than can be said of State Advances officials, and they have handled £70,000,000 of other people’s money. I can recall the days when Grover Cleveland made a bellicose speech. Even peace-loving John Bull had to bristle up. It looked like war. Then the private investor played the role of peacemaker. Within a fortnight £200,000,000 of English capital fled from the United States. Mr. Cleveland climbed down. Mr. W. H. Skinner can show you a letter, bearing date February 8, 1842— less than a year after the arrival of the first ships off Moturoa. In it a pioneer settler tells his father in old Devon how English capitalists were already out in New Zealand looking for profitabe investments. This was how it should be. Here was cheap land. All that was needed to produce wealth was the friendly co-operation of capital and labour. That is, providing political labour for its own purpose does not antagonise the last two factors. But let us get to the point. The truth is, State money is never cheap money to the borrower, and to the taxpayer it is always dear. In the course of departmental handling, such money ever tends to rise in cost. The State is a squanderer. It has neyer the private investor’s dread of waste, or his anxious care to direct his own money to profitable and productive ends. This is well exemplified in the case of the State Advances.

I hinted before at the tendency of its operations to inflate the price of land. Take a single and simple instance. The Government granted returned soldiers a money bonus of £20,000,000, to be devoted solely to land purchase. The veriest tyro in finance could have told the Government the result Given a fixed sum solely to be used for the purchase of a single commodity, land, limited in supply, then the price of that commodity must rise till it has absorbed the whole sum. By that one act the price of New Zealand land was inflated by £20,000,000. The Government did the deed and not the ignorant cockie. I shall have more to say about these unfortunate men in another letter. I am told their allowances, small as they are, come from the Advances office. Mr. Dickie had better check his figures before he starts on his grand tour to London. Meanwhile, I am coming to believe, no I do believe, there is more in this Bill than a remedy for the mess, in the Advances. I believe all the State lending departments are involved. It is no use mincing words. . They are on the brink of bankruptcy. Hence the purpose of this Corporation Bill, to pass the blame on to others, and the final loss to the taxpayer. We are told the State will retain possession of the giltedged mortgage assets, leaving the Corporation to deal with the offal. Such garbage can only interest the secondhand dealer, the last man a, farmer in financial straits would care to deal with. Will self respecting' and intelligent investors be willing to have their affairs, at the outset of a new undertaking, managed by directors, all State nominated for seven years—mere placemen at high salaries? Once more, the price of land cannot fall till mortgage assets are written down, giving relief and hope to the farmer—swiftly too, as did the New Plymouth shopkeepers their damaged goods after the flood. The Mortgagors’ Relief Act must be repealed if confidence is to return to investors. And then, what is to become of bankrupt farmers —fifty per cent, of the whole? They will be swept off the land, as were half the small freeholders of England after• the French wars. There was a saying current in the West country in those days, “Some folks never woke up till the sun was in the west.” Is that going to be the case with the New Zealand cockies?—l am, etc., R. J. BAKEWELL. Waitui, March 7.