33

.C—9a

The point is particularly stressed that, although notices were issued to every soldier settler, approximately 7,625, applications for inspection and consideration were received from only 4,322 settlers. Subdivision A of Schedule 1 shows the estimated cost of the assistance recommended in respect of the 4,322 settlers who applied. It was recognized that out of the remaining 3,303 settlers there would be a number who, for several reasons, had failed to apply, and although, the onus of so doing rested entirely with these settlers, yet, even assuming that the Department would be warranted in coming to the conclusion they were satisfied and well placed, nevertheless it is felt that a mistake would be made if assistance were granted only to those settlers who made application. It was realized that there is a general feeling throughout the Dominion, and especially among soldier farmers themselves, that assistance would be generally distributed. There was also the point to remember that the apparently successful men, who had met all their obligations, would be placed at a financial disadvantage as compared with their neighbours who had taken full advantage of the privileges already extended. It was therefore decided to prepare a.n estimate as per Subdivision Bto meet any cases arising, such relief to be on the same lines as set out in Subdivision A. It is taken for granted that it is the desire of the Government to extend assistance to all soldier farmers who are in need thereof, and therefore it would be invidious to make a distinction between applicants and non-applicants. Subdivision Cof the Schedule gives the estimated total cost of both classes of settlers under the various headings. The summary of costs has already been referred to. It is now proposed to make special mention of important subjects arising out of the general report. Mortgages under Section 2 of the Discharged Soldiers Settlement Act. 1917. In cases where the Crown holds first mortgage and there are no subsequent private mortgages, the procedure is simple, provided the necessary legislation is passed enabling a reduction in principal to be made, and such legislation is tantamount to a revaluation — i.e., the holders of the land under mortgage would receive practically the same treatment as the holders of leases who obtain a revaluation. The revaluation question is dealt with later. Turning to those cases where the Crown's first mortgage is followed by subsequent private mortgages, the position is much more complex, and it is extremely difficult to advise as to the most satisfactory solution. The following are extracts from some of the reports of the Inquiry Boards dealing with second private mortgages : — (a.) " The Department's valuations of land are generally very sound and not inflated, but many of the settlers who are now in difficulties bought their land at high prices above the Department's valuation and against, the Department's advice, and gave second mortgages for the balance of the purchase-money. In those cases the second mortgages, owing to the drop, have ceased to have any value." (b.) " Where the Crown is amply secured, but the value is not covered by other encumbrances, that the settlers' position be stabilized by the discharge of all liabilities in excess of realization value. If the subsidiary mortgagees to the Crown refuse to fall in with this proposal, then, in the interests of the Crown and the settlers, steps should bo taken to force the position." (c.) " The Board would like to draw attention to the fact that considerable trouble has been caused over advances made under section 2 of the 1917 Act, where in some instances very high prices have been paid for the freehold. The land was sold at an excessive value, and in many cases the Government advanced up to 90 per cent, of the purchase price. The sale of the security at present values would show a very great loss to the Government. " It is of frequent occurrence that the second and third mortgagee is also the original vendor, and through his selling the land at very high prices and taking as security a second or third mortgage for the balance of the purchase-money (on present-day values these mortgages are of little or no value), any financial assistance recommended to the soldier would only add to the value of the second mortgagee's security. For this reason, when making a recommendation for financial assistance to the soldier, it has been made a condition that the second mortgagee should allow the soldier a similar concession, as indicated on the individual papers. If this were not insisted upon, any assistance given by the Government to the soldier would simply enhance the security of the second mortgagee. Interested commercial firms are treated in the same way as private mortgagees whore the stock is not sufficient to cover the amount of the advance." (d.) " A number of the soldiers were placed on farms bought at prices beyond the amount the Government was prepared to advance on first mortgage. In some cases the men paid the difference in cash, thus crippling their efforts from want of capital. There are many who gave a second, mortgage, which, as the properties were bought at peak prices, are above the present value. The Board has advice of several second mortgagees who are willing to make valuable concessions. As these encumbrances interfere with further advances for improvement, and in many ways hamper the settler and the administration of the Land Board, wo recommend that a general effort should be made to remove them. It is very largely a matter of negotiation, and we recommend that some capable and tactful men be appointed for the work, having authority to negotiate for the purchase by the Crown, or other method, with power to conclude an agreement, subject always to confirmation by the Minister. " There are cases where it seems right to sell up the property and buy it in to dispose of the undue burden ; in such cases we recommend that favourable consideration be given to the occupant's claim to be reinstated at an adjusted valuation. The vendor having in most cases received a large cash payment, we submit that these readjustments should be made in the interest of the settler and of the State, in preference to that of any other mortgagee."

7—C. 9a.