WELLINGTON NEWS

Hokitika Guardian, 26 March 1931, Page 6

WELLINGTON NEWS

MORTGAGES AND MONEY (Spedul Correspondcut.) WELLINGTON, .March 24. Tin; authorities will need to be very ca loin I how they deal with mortgagees j and mortgagors lor any harsh tieminent. will be bound . to have its repercussions. The moratorium during the war period did a considerable amount j o) harm tor it cheeked the How lunds lor mortgages on broad areas and, at*though you this oeeasion (there i-s not to be a moratorium, it is eiident that the .Mortgagors Relief Bill, if passed, as it surely wtTi he, is certain to ineon venienee ii it does not cause some hardship to mortgagees. That it should he found necessary to pass such legislation as the Mortgagors Relief Bill shows something very radically wrong with land valuations in the Dominion and because of the t unity valuation, both mortgagors and mortgagees are to suffer. It is alleged that m numerous eases the mortgagor has no equity left, the land value in many eases not being equal to the amount oi the mortgage. It is no doubt true to say j bat t lie slump in commodity values is rather drastic. hut is there any guarantee that values will again reach the 11)27 or ID2S level. Those who believe they will can point to wool which shows a phenomenal advance, but this is m> sudden and so pronounced that it is doubtful whether the advance will be maintained. At the same time, should there he a recession it is not likely to fall to rhe low level ruling in January. In any ease there must he an adjustment of land values and a more scientific system of valuing is needed. One can almost see signs of the aversion of investors to mortgages hv the activity shown by the Stock Exchanges. I’snally .March is a quiet month for it is the final period for income tax payments, the State and at least three of our hanks balance at the end of the month, besides several joint stock companies, where there is usually a good deal of “window dressing” and committments are discouraged. Furthermore the Government has to face a rather large deficit which spells increased taxation ml the unemployment fund is fuming low while unemployment is increasing yet, notwithstanding these adverse (factors, investment in stock and shares is active and prices are tending upward. The country cannot afford to have mortgage money diverted into other channels tor the producers will need a great deal of "‘tiaiicial assistance during the next twelve months. For that reason every •an> must be exercised in dealing with maturiiig mortgages.

The farmers are in need of cheap money bub it is difficult to see where it is coming from. The Government is not able to provide what is required, lor the Government cannot, at the moment. raiTe money in London not even to help the people impoverished by th e , earthquake of February 3rd., and had to resort to the expedient of drawing upon the reserve fund in London to the extent of £l ; dd(),0()0 and for the purpose of replacing this reserve the Is fid per cent, insurance tax ip proposed. It is quite apparent that we will experience something in the nature of a credit famine because ihe savings of the nations are quite inadequate to meet the demand. This is another potent reason for reductions in spending. The rate of saving in the Dominion during the past two years lias been much restricted and chip can lie seen in the people’s hank, the Post. Office Savings Bank. We have been so used to living on the savings of the people of Britain by borrowing from them year after year that now, when some isource of easy money is temporarily closed to us, we are not in a position to help ourselves. The insistent cry of the producers is for cheap money, but. it is difficult to know where this is to come from. The Government cannot borrow in London just now. and. if it did. it could not get money at less than 5 per cent: it would probably have to pay more. The Government js offering for Gale locally, over the Treasury counter, o\ per cent. Bonds maturing in 1937 at par, but as tli<> debentures ol a like denomination are procurable in tb° '•mn market at under par, not a great deal of money is finding its way to the Treasury for fbo purchase of Bonds. Cheap money and cheap commodities are a contradiction, cheap commodities mean dear money.