WELLINGTON NEWS

Hokitika Guardian, 17 May 1927, Page 4

WELLINGTON NEWS

RURAL CREDITS,

(Special to “ Guardian.”) WELLINGTON, .May 13. The Government is finding that running a pawnshop is not an easy job. The .Minister for Finance in his address nt Feilding stated that the demands on the State Advances Department were so large that it was impossible to meet them, and the hulk of the applications have conic in from those in the cities ami the town, notwithstanding that the limit for each city loan had hewn reduced from C.'JjoOO to LI,20)1, or LM.500 in special eases. In respect to country loans lar too large a proportion ot the applications were to pay ofl existing loans. Private linancial institutions and individuals have heroine extremely reluctant to lend money on farms. There was a time when private investors would lend on nothing hut broad acres, which is true enough, and one wonders why and how such a change has been brought about. Tim Minister for Finance has merely to look up the Statute Hook to realise that the mortgage investor has been driven out by legislation, restricting and harnessing, and money that would otherwise have gone into mortgage of broad acres, and good city property is now going into the shares of hanks and breweries. Successive Governments have* boon responsible for this, and the accumulated effect of ill-considered restrictions is now being experienced. The Government must go on as it is doing, for very little assistance will be obtained from the investing public, who have now a wide choice of gilt-edged securities, and they are investing in such securities in Australia as well as in the Dominion.

With respect to the Rural Credits At-t, it is intended In issue bonds as soon ns a sufficient number of mort{{uHOS have been granted to make it worth while, such bonds to be issued either in Xew.Zealand or abroad" .secured on the mortgages and not on the revenue of the country. If the bonds are issued by the Government will they not necessarily carry the Government guarantee? If so, and there is a foreclosure, and a loss is incurred that loss must be met out of the Consolidated Fund, which means that the taxpayers will have to find the money. 'l.hc whole system of money lending on tho part of the State should be the subject of investigation to see whether the machinery is faulty or otherwise and t ) ascertain the psychological elicits. Cheap money is an economic fallacy. The price of credit varies, must vary with the changing conditions, and it is futile to endeavour to peg down the rate of interest. It was pointed out years ago that cheap money, that is a pegged low rate of interest, would iullate land values, and that is what has happened. Farmers keep on demanding cheap money, in order to keep up inflated values. Now that the country is experiencing the lean time ” loreeasted by .Mr 11. Ituekleton, Genera! Manager of the flank of Xew Zealand, there are all sorts ol suggestions Tor overcoming our difficulties and most if not all of the suggestions run in the direction of borrowing more millions. There is no suggestion ol writing down values, of squeezing out the inflation in land values; nothing is said about high costs of production, yet all these factors have to be laced. 'I be generation that does not know the trials of the country ire 1 SGI is bound to get its experiences now. I here is no sign at any real sjtteiunt at economy in public and private life, and the fascinations of the instalment plan are spreading, and it is stated by one authority that some young men are purchasing fancy boxes ol chocolates on the instalment plan, tor presentation to their particular choice of femininity. Wo are bound to have during the next few months numerous plans and easy methods of getting back into Easy street, but in the end it will be

found that economic laws are inexorable. There is no easy method to win prosperity. The pre-sine; problem to-day is how to cheapen production and at the same time increase production. This is obviously the key to the position, tor it we can reduce costs our income tit current rates would leave a larger margin for spending, and if we at the same time increase production then our intome will he so much larger mid our spending power so much greater. This aspect of the matter is known and recongised by hundreds of business men, but they are shirking the job for the present. Adjustments have got to he made, and that fact will lie forced upon the community by hard times.