TIGHT MONEY.

Gisborne Times, Volume XXVII, Issue 2465, 1 April 1909, Page 6

TIGHT MONEY.

DISCUSSED BY NAPIER BUSINESS 1] MEN. ~wi THE MORTGAGE TAX BLAMED. £ ! At a special meeting of the Napier domi Chamber of Commerce, held last week, L. to consider the financial stringency, £ Mr. N Kettle said he thought the time j had come when it was’the duty of ■ ■ the Chamber of Commerce to take into £ > consideration the question of financial I stringency. It had now been with us sevei over a year. In reviewing the situaacre tion they found that all the British Towi lending institutions operating in the to theOominion had closed their doors. These price Companies had invested hundreds of effect jhousands and by doing so had mater- ; —ally assisted in the development cf. the ountry. If it had not been for these' -jompanies the development of Hawke’s REDlikiy would have beeiygreatly retarded. Mffie position now was that existing fin-4-*,*Ancial institutions had over advanced, jnd there was nothing to take their rnn. dace in the development of the disVsX a a jrict. If they had an application for or £SOOO .in Napier tomorrow froin 't could not be raised. This showed Alotu-' hcre they were drifting to. The anortfor -wfl? a S e tax resulted in a great deal time • mone y being taken away from the to x| n ,Ihe Government was told this was an crifice m ' a ‘ r tax> The country ought to be L jible to attract foreign capitalists to in\iistr’ os t their money. . The companies buv i A ’bich had withdrawn their money had can b^ one so "without loss. The mortgage _:ax was where the shoe pinched. Then C a pi-here was the development of the coun- ■ ary to be considered. Ten years ago HOLp U " r exports had 'amounted to £10,000,G.IOO while last year they were £20,000,jO /|)00. In ten years they had doubled, oW jfuid how could they develop the home country for the next ten years without for vdnancial assistance. The imports of ast year exceeded the exports by about PROFEI,OOO,OOO while ten years ago there was a, surplus of exports of about £2,- , ,, T .;00,000. That surplus had decreased xU miit-il it had disappeared, leaving last 4? Pyear, as.he had shown, a. balance on the pother side. That was all due to capital dwellj ea ving the country, and what was y ears wanted was an inducement to companPrice j eg IV } lO had closed down to come back Fuland invest their money in New Zea- — -land. Mr. Kettle adversely criticised FIN Ethe unfair incidence of the graduated .tax on capital invested in shares in public companies, and said that a man an income from lending out 4£,Miis money should not have to pay any Mnore 'than the man who invested his ‘ , 'money in business. He moved : oirer j i.p That whereas the mortgage tax Si as been found to be the cause of a ~~arge amount of capital being withbMUUrawn from New Zealand and to re- _ vtrict the influx of capital for in vest--4? Qnent and to create financial stringency obtaining loans required for the best, legitimate development of the country’s and d ia t U ral reources, the attention of the. man s Government should be called to the losition and it be suggested that the mortgage tax be abolished. Further, lihat in lieu thereof all income derived n rtrom investment of capital on mort--swQi;ages be made subject to the incomeshow tax. divide “2. That the graduated tax on ccpdoublital invested in shares of public eomsanies be levied on paid up value of inch shares only, instead of as at prefT'c /lent, on the proportion, of such shares the totai value of land owned by on Qpublic companies, irrespective of their effere -^ r - Sandtmann, in seconding the yYoui/uotion, said there had been three . causes operating on the withdrawal of Soivcapital from New Zealand. The. first was the money in the hands of private --companies,, the second moneys in the ( 4m:ihand of insurance companies, and the s^third capital obtained from invesi-■4-,v-i»ent companies. He mentioned spec- £ cW mally the case of investment companies who held an accumulation of capitl” a 1 from various people in England, jk/withdrawal of money from investment tin New Zealand was the natural re~jTj p suit of the mortgage tax which so reInduced the margin of profit that there practically none left. The North-4-Aeni Investment Company, of which he Mi ad been local manager, had been forc4-, Jed to close down owing to the competc*'*/ it ion of the Governmet advaces to set- ■ tiers policy and the insurance companies. The investment companies had Qlto operate on a fixed max-gin, while ■ their rivals were not so resti’icted, but •pypitheir operations were more beneficial ■since they advanced, not only on broad _acres, but also on current accounts. A-* *} The Chairman said he thought ■ a cause of the stringency was the £-ou.fact that the Government had indulged ‘fed largely in borrowing in the colony. He thought they might again consider : th# question of borrowing from the London market. Mr. Coleman said he did not like to be a silent member although lie could only confirm what had been said by Mr. Sandtmann. He had been a director of the Northern Investment Company, of which Mr. Sandtmann was manager. The company had a. large amount of money invested in this district but the rates of interest became so low that it did not pay to, carry on. The company was wound up without a single loss. Continuing, Mr. Coleman said that he at present bad control of _ a large sum of money as trustee, and this had been invested in the Dominion. When the interest.came down to 4 per- cent, for after allowing for 'the mortgage tax that was all that was got for it, those interested m the estate had that the money be invested elsewhere and this had been done. This sum of money amounted to between £300,000 arid £400,000. his might not be a very large sum but it showed what 'was being done. It was all very well to blame the banks for the financial stringency, but he thought the banks had acted very fairly and liberally. The chamber should endeavor to show the Government that the abolution of the mortgage tax would have the effect of attracting capital, because its imposition bad cei'tafnh. driven capital away. If they chd that they would have done some little good. Mr. R. A. Wilson said that the gist of the. matter appeared to be that the present rated of interest were so low that even the removal- of the 2 u per cent, mortgage tax would not provide a remedy, as even then there would not be a sufficiently good investment to induce British loan companies to come here. He quite believed that at the Government had not imposed the id per cent mortgage tax a lot ot British money would have remained ■here but the .position was now aidifferent, and for this reason he”was afraid that the motion woind have very , little effect. If they could permanently guarantee a rate or- interest of 6 or 7 per'cent, they might

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again induce the investment of British capital. There was also the question of the insecurity of investment in industrial disputes to he considered. The motion, on. being put was carried.