The Wanganui Chronicle SATURDAY, AUGUST 31, 1935. THE MORTGAGE CORPORATION.

Wanganui Chronicle, Volume 79, Issue 204, 31 August 1935, Page 8

The Wanganui Chronicle SATURDAY, AUGUST 31, 1935. THE MORTGAGE CORPORATION.

‘■'THE mortgage situation generally,” said Mr. Coates in his Budget last August, ‘‘is complicated and an obstacle to economic recovery. The statutory reductions under the National Expenditure Adjustment Act and the operation of the Mortgagors’ Relief legislation from the nature of things cannot be anything more than a temporary expedient, and what is wanted now is a sound method of liquidating the position that vx ill tend to strengthen confidence in mortgage investments. Having succeeded in obtaining lower market rates of interest, the problem resolves itself into finding more adequate means of taking full advantage of those lower interest rates . . . It is . . . considered that the solution docs not lie in further legislation bearing directly on interest rates, but in facilitating the refinancing of existing debts at lower interest rates. Now that Mr. Coates has returned the tempo of movement in the Government has perceptibly quickened, and the issue of Mortgage Corporation bonds is to be essayed. It is a compliment to Mr. Coates that ho is so openly acknowledged to be the active agent in the Government, but it is not so complimentary to the Government as such that it depends upon the energies of one man, and that when that one man is out of the picture everything and everybody apparently marks time. The Government is going forward, however, now that the dynamic is again in the Dominion and an issue, certainly a very small one is to be made immediately. The issue of £500,000 of bonds at £3-j per cent, will be attractive to some people and for so limited an issue the success thereof can be regarded as almost certain. - There are, nevertheless, reasons for hurrying up the issue for despite the fact that money rates are likely to remain easy on the London market for some months 1o come, there is no ground for believing that similar conditions will endure in New Zealand. It has already been made plain that money rates arc hardening in Australia, otherwise the last Commonwealth loan would not have hung fire after a fortnight’s presence on the market and resulting in £1,500,000 being left on the hands of the underwriters. A substantial loan in New Zealand would at 3|per cent, fare similarly is almost a certainty and the Government is in consequence wise to be cautious in the issue of the Mortgage Corporation bonds. It would be an unhappy experience indeed for the Mortgage Corporation to find itself unable to command complete support for its initial issue. The desirability of maintaining interest rates at such a low level as at present obtains may indeed be called into question. It should be remembered that industry ami agriculture require borrowed money all of the time, and the forcing of a low rate results almost invariably in a scarcity of money for loan purposes later on. Should that period of high cost money coincide with a period of business expansion, then the advantages graned by the present policy wotild have to be weighed against the disadvantages of being short of money when opportunity lor profit would be more numerous than they are now. Au easy money policy is a natural one for a Government to bring into being just before a General Election, and not being purists in polities (surely a contradiction in terms) the Chronicle does not expect anything else just now. 'I he future can always take care of itself in the. realm of polities.