C—9a.

34

One Board advised that legislation be passed empowering the Government to reduce the principal of second private mortgages by an amount equal to the amount of any reduction by the Crown of the first mortgage, and made the following remarks in regard thereto : — " This may appear a handicap on second mortgagees as a whole, but in the majority of cases the mortgages represent money left on by the vendors, who have been only too well paid for the properties, so that it is only right they should bear a proportion of the loss and that it should not fall wholly on the shoulders of the Government." It has been ascertained by careful analysis that the majority of the subsequent private mortgages are held by the vendors of the land, and in some cases such mortgages are, owing to the drop in values, practically worthless. In such cases it is obvious that any reduction made by the Crown in the first mortgage would operate only in the interests of the second mortgagee, as it would enhance the value of an almost worthless security by the amount of the Crown's reduction. Again, where the second mortgage is of some value the same remarks apply, as the reduction on the first mortgage would only increase the value of subsequent encumbrances. It is difficult and unreasonable to recommend the adoption of the suggestion to take power to reduce private mortgages, as such action would interfere too much with private as well as existing statutory rights. Further, no reduction is recommended so long as there are subsequent heavy encumbrances. It is for the holders of such encumbrances to reduce to a fair value. In many cases, according to recent official reports and Inquiry Boards' reports, the vendors have been well paid for land already. It is in the interests of the subsequent mortgagees to reduce to a fair and reasonable value, otherwise the settler cannot carry on. In accordance with the established practice of the Lands Department, it is considered, in all cases where the settler is likely to fail on account of heavy private liabilities, that the holder of the private encumbrances should be given an opportunity of making satisfactory adjustments. In the event of default being made through excessive liabilities, the Crown should act under existing statutory authority to protect its securities. In the interests of all parties concerned — viz., the Crown, the settlor, and the subsequentmortgagees — amicable arrangements should be made wherever possible for reductions of private encumbrances. If the holders of encumbrances subsequent to the Crown's are willing, after negotiation, to reduce their securites to such an amount as may be arranged, the Government might assist where deemed advisable, by taking over such encumbrances and paying the reduced amount in bonds. If the suggestion is adopted, rigid safeguards must be provided, as it is probable there would be a large number of applications for relief involving a considerable sum of money. Every case would, of course, require to be considered on its merits, and be subject to the approval of the Minister of Lands. The regulations would require to be extended to give effect to this suggestion, the extension being in the direction of authorizing advances for such purposes in excess of the present limit of £2.500. Additional Advances on Current Account. Several Boards have made recommendations for additional advances on current account, and it is evident that advances in this connection will have to be extended if settlers, in many cases, are to be assisted to fully establish themselves. In many instances it is apparent that an additional advance would make all the difference between success and failure. Again, if the Department has made advances on current account up to the limit, and holds first mortgage and other collateral securities, mercantile firms cannot be expected to make further advances even if the farm will carry double the stock secured by the Department's b"ll of sale. Limited advance on current account is therefore a hindrance to a settler, as it restricts his chances of outside financial assistance. An extension of the limit of advances on current account is therefore advisable in many cases, as without it many settlers will have no chance of success. Legislation is not necessary to give effect to this recommendation, as it can be provided by an amendment of the regulations. Inquiry Boards' Recommendations. Uniformity of recommendations was not expected from the eleven Inquiry Boards, and it will be observed from the various reports and schedules that recommendations have been made under all conceivable headings. Hawke's Bay Inquiry Board, for instance, recommends " remissions and postponements," while the Wellington Inquiry Board's recommendation is in the main for " revaluation." Each Inquiry Board has submitted its recommendation according to its views and .on consideration of the cases coming under its notice, and it is now for the Government to decide as to the nature of the relief to be afforded. In this connection, notwithstanding that different recommendations have been received from various Boards, it is of the utmost importance, in order to prevent any dissatisfaction, that the form of relief to be given should be uniform throughout the Dominion. It is obvious that if settlers in one land district are given a postponement or a remission, while settlers in the adjoining land district are afforded the right of revaluation, the position would be most unsatisfactory and embarrassing. Some Boards appear to have made rather wholesale recommendations for remission. This is not concurred in. The mere fact that a holding is overvalued does not warrant a remission of the whole of the rent and interest, but merely a rebate on the amount by which it is overvalued. If wholesale remissions of arrears were made it would cause serious discontent among soldier settlers who have made an effort, and perhaps at very considerable sacrifices, to meet their obligations ; but no objection whatsoever could be taken to the remissions of rent and interest pro rata with the amount of overvaluation, and a postponement in respect of the balance owing. The soldier who has met his payments would still be in a better position.