MONEY & MORTGAGES

Waikato Times, Volume 118, Issue 19662, 23 August 1935, Page 9

MONEY & MORTGAGES

LABOUR’S PANACEA. INADEQUATE CREDIT ISSUE. DIFFICULT ADMINISTRATION. A reference to the establishment of the Reserve Bank and to the recent emergency mortgago legislation was made bv the Leader of the Opposition, Mr M. J. Savage, M.P., speaking to a large gathering at Cambridge last evening. „ , , “The Reserve 'Bank of New Zealand, which has been in business since August 1, 1034, and has a subscribed capital of only £500,000, provides a striking example of modern banking, Mr Savage contended- "Its first transaction invo.ved the bank in the taking over of £23,000,000 London sterling, for which It had to pay £28,520,000 New Zealand currency. Taking the even figures from the last Budget of the net amount of sterling taken over from the banks in London at £23,000,000, ‘tho greater part of which has since been sold to the Reserve Bank,’ that bank will have to find £28,520,000 Now Zealand currency to complete the transaction. "If the Reserve Bank had been a State institution it could have carried out the same transaction, and the people of New Zealand, as owners of the bank, wotulcl have boon the proprietors of the £23,000,000 sterling assets in London. As it is, the Reserve Bank is the owner. "Where did the Reserve Bank get the money from to complete this transaction? It created it as it was found to be necessary. Reserve Bank notes and book entries, which could have no real existence without the people’s credit, constituted the only machinery necessary. The Reserve Bank had nothing else to offer,” Mr Savage claimed. Emergency Power# Act. The speaker alleged that the Agriculture (Emergency Powers) Act provided for a virtual dictatorship in the primary industries- The Executive Commission of Agriculture, which had been appointed under the Aot, had almost unlimited powers. The purpose of the Act appeared to be to squeeze the last ounce out of the industry concerned rather than to find means of paying for the increasing production which was already an accomplished fact. The Mortgage Corporation was to take over the investments of the State Advances, Lands Department, and the Rural Intermediate Credits Board. It appeared to be another attempt to head off the definite movement on the part of the people to establish a national banking system, The new organisation would no! get down to the roof of the money problem. It would merely borrow and lend money that happened to be in exlstenoe for the time being- The real dictatorship, the power to issue money, would still remain with private banking corporations. The solution of the money problem lay in the establishment ol' a national banking system which will carry out all the functions of banking at the cost of providing the service. The real basis of any monetary syslem must, in the long run, be the productivity of the Dominion’s industries. Mr Savage outlined the reasons tor Labour’s opposition to the mortgage legislation, and in reference lo the Ratal Mortgages Final Adjustment Act said that owing to a period ef depression for which nc'flier the mortgagor nor the mortgagee was responsible some of the parties to mortgage contracts were to be unnecessarily sacrificed. Anything short of restoration of equities to the level of normal times was bound to bristle with difficulties and anomalies, and tho administration of the law,would be costly and difficult. The Act provided no Immediate relief for farmers in difiiculties. It completed the dictatorship provided for in the Agricultural (Emergency Powers) Act, by placing all those seeking relief under direct supervision for a period of five years in order to provide a basis for valuation for the purpose of readjustment of equities in the securities InvolvedDuring this period the farmer would be subjected to budgetary control of a type apparently similar to the "inquisitorial" methods of the Unemployment Board in dealing with relief workers. Rehabilitation of Farmer- " The problem in front of Parliament Is to rehabilitate the farmer of average capacity, working under average conditions,; over a period of years which could be said to produce a fair average result,” Mr Savage said- “That is the main principle upon which the Valuation Department works at present, and it is,difficult to understand why the Minister should wish to depart from that—unless ii is tto postpone action until after the 'general election. . ‘‘The farmer lias more than doubled ihls production during the ten years ending in 1933. In 1924 the collec- • tlve efforts of the dairy farmers of New Zealand resulted in the export of 1,2G9,455cwt of butter, while in 1933 the amount exported had increased to 2,G35,2470wt. And yet 50 per cent, of them were practically bankrupt- For tho total ameunt of butter exported in 1924 tho farmers received £11,641,6G8, and in 1933, for more than doublo tile quantity, they received £11,048,699 —an increase of only £7031." “The Government should set itself to the task of restoring equities in land and homes by immediately promoting legislation authorising the readjustment of mortgages and farm costs on the basis of an average of prices received for primary products during the past eigiil or ten years, and for that purpose District Valuation Boards and a Land Court of Appeal should ho provided In order to arrive at valuations upon which to act,” explained Mr Savage. “If that wore done the average farmer, with tho assistance of guaranteed prices, would be ablo, to meet his obligations up to the normal average of production and prices during that period."