WELLINGTON NEWS

Hokitika Guardian, 23 June 1926, Page 4

WELLINGTON NEWS

LONG TERM LOANS. (Special to •’ Guardian.”) WELLINGTON, June 21. There is no doubt that there is a demand for long term loans, particularly among the smaller producers, and this demand must he met for the small producer is really the backbone ot the country. Not so very long .ago the Prime '.Minister stated that ho had suggested to private institutions that this question should receive tlieir attention. It is pleasing therefore to find that our national institution, the Lank of New Zealand, is rising to the occasion, for it was announced by tho Chairman at the annual meeting on Friday, that subject to tho legislative authority, it was the intention of the hank to establish a branch for long

term loans. The capital lor this pur- * pose is to bo obtained first by tho issuo of new shares to the • amount of i'l ,408,250,. ami subsequently to raise by Debenture Issues as required throe times‘the amount of the specified capital. Thus the aggregate amount of capital that would thus bo available is £3,625,000, sufficient to rumble the now department to make a very thorough test of the scheme, ‘which is apparently to bo quite a separate affair from the ordinary banking business. Hie new capital which is to bo known as “Long Term .Mortgage Capital,” will carry 7.} per emit interest. The amount of the bam. outstanding is to be limited to the amount ot the new paid-up capital and debentures, that is £5,625,000,. and none of tho present capital of the hank nor tho deposits is to be employed in the mortgage business. Loans are to be granted for periods not exceeding 36 V years and the rate of interest is to be 6 per cent, a very modest rate as compared with what is being charged in. some of the Australian States. Tbo whole scheme

has apparently been well thought out, but it remains to be seem whether \ Parliament will permit it to be-put into operation without hedging it with restrictions and conditions, lor which Parliament seems to have a- special predilection. No doubt th> proposal will be considered in conjunction with whatever recommendations and suggestions may bo made by the commissioners who have studied rural credits in other countries. At tho same time it is to ho hoped that the State will not cowjietc to an undue extent with the Hank in this matter, for State competition is always unfair, if the scheme of the bank proves successful it would IK) doubt attract the big life . insurance offices which have always funds for investment to take up the long term loan business. The long term loam system is complementary to the installment plan by which motorears, fur coats, pianos, gramaplionos, furniture and other articles aro purchased'.

MEAT CONTROL BOARD. It lias long been held by business mem that the Moat Control Board lias' done a mod'ernte amount of good, but a very great deal of harm, and emphasis was given to this by tho Chairman of the Bank of New Zealand In his speech to the shareholders last Friday. He pointed out that during the war period advances were mad© by the banks to assist tho industry in the erection and extension of freezing works, and it was believed that there was a fair margin of security. Then the politician intervened and gave tho A feat Control Board power to block the sale of freezing works, and as all New Zealand knows tlio sale of the works of the Wellington Meat Export Company to Bortliwiok and Sons lor £2(10,000 was blocked by tiho unanimous vote of tho Meat Control Board. The result of this, ns was indicated at the time of by many prominent men, has been that all freezing works have now become of little value as a security. and will remain so, unless something is done by Parliament to rectify tiie present anomalous position, and the position to-day is that apart from those works that have already closed down, several additional" works must give in, and with every such closing down the proprietary concerns have, the fat stock areas to themselves. It docs not seem sensible to block the sale of the works to Bortliwicks and at the same time clear tho field of competition. The closing down ot the Taranaki Aleut Company removed competition from Borthwiek’s AVaitarnworks, and the cessation’ of operations at the Wanganui Meat Works, Otaitmpe Meat Works, and Knkaviki have lessened the.demand for fat stock, or ■ivTuit is,-the same thing left the field open to the big proprietary concerns which the politician desired to prevent. Tho position is almost Gilbertian. The only outstanding achievement of tho A lent Control Board has been to impair the value of the fixed assets of freezing companies, to render them, worthless as a security for advances.