8.—13.

10. Financial Aspects of Invested Capital as represented by the Mortgage Assets — A survey, supported by recent valuations, of the mortgage assets of the Office may be desirable but is not possible without a heavy increase in management expenses resulting from the costs of valuing the securities individually so widely distributed throughout the Dominion. At the 31st March, 1935, the number of securities totalled 51,784. These figures attest the difficulty of such a procedure. Indeed, the justification of entertaining such an expense would require to be supported by convincing reasons, having regard to the following conditions : Firstly, the difficulty of obtaining reliable valuations on a market that is lacking in demand. This is particularly true of house properties. Secondly, as prices of produce are depressed, a fair valuation of farming properties is more a matter of individual expert opinion rather than a reflection of the price that should be obtainable under normal competitive circumstances. Finally, in long-term lending the personal covenant is tied more closely to the security than is generally realized. The continued capacity to pay annual instalments is almost as important as the strong financial position of the borrower at any given time. As a result, provided annual instalments are met as they fall due, over a period of years a doubtful security passes into the class of a safe investment. How can any appraisement be made of this " capacity to pay " ? Under such circumstances it is perhaps as informative to confine the present consideration to an analysis of the financial position of the Office as disclosed by its records. The groupings of the figures below have been arrived at in an endeavour to show the position from two different points of approach. The repayments are referable not only to the advances shown in the line immediately above, but also to all prior advances. 11. Looking at the movements of the capital in retrospect over a period of years, classified under loans to workers and loans to settlers, the following is the position : —

The main deduction that may reasonably be drawn is that capital, represented by current mortgage securities, in a large measure found investment in the ten-year period, 1921-31, a decade of buoyant prices excepting a relatively short period. Again, the growth of the advances in the settlers' classification from 1921 as compared with the operations in the workers' classification was as 15 : 12. 12. Viewing the position from.the stand-point of a block valuation of the amounts advanced as compared with the total valuations then existing, with subclassifications of mortgagors in arrear and mortgagors up to date, with further subdivisions, the following tables have been compiled. The figures are to be taken as estimates, although they have been based on approximate balances from the individual cases in the Office books. The purpose in view was to obtain in broad outline an approximate classification of the securities in the different classes according to stated repaid percentages. Further, the data was obtained approximately two months after the 31st March, 1935, and reconciliation with the totals in the year's accounts must allow for this factor.

4

Settlers. Workers. Total. . ; . . £ £ £ Loans outstanding 31st March, 1913 .. .. 7,600,936 2,007,917 9,608,853 New advances 1st April, 1913, to 31st March, 1921.. 6,105,090 2,175,820 8,280,910 Repaid to 31st March, 1921 .. .. .. 6,035,800 1,478,380 7,514,180 Balance outstanding 31st March, 1921 .. .. 7,670,226 2,705,357 10,375,583 Advances 1st April, 1921, to 31st March, 1931 .. 26,438,995 16,665,792 43,104,787 Repaid to 31st March, 1931 .. .. .. 9,489,746 3,973,909 13,463,655 Balance outstanding 31st March, 1931 .. .. 24,619,475 15,397,240 40,016,715 Advances 1st April, 1931, to 31st March, 1935 .. 1,716,981 414,305 2,131,286 Repaid to 31st March, 1935 .. .. .. 3,816,435 1,509,288 5,325,723 Balance outstanding 31st March, 1935 22,520,021 14,302,257 36,822,278