RURAL MORTGAGES

Akaroa Mail and Banks Peninsula Advertiser, Volume LXIII, Issue 6457, 19 August 1938, Page 3

RURAL MORTGAGES

UNSOUND IN BANKING PRACTICE Advantages of Swedish and Danish | Systems Explained Contending that it was an unsound practice in banking to grant overdrafts to farmers and that this class of mortgage should be provided by mortIgage corporations, Mr Malcolm Fawkner, accountant of Akaroa, explained the systems followed in the Scandinavian countries and Denmark to the members of the Banks Peninsula branch of the New Zealand Farmers Union. Farm and long term mortgages, he said, became frozen assets in time of slump, as had been demonstrated in the Commonwealth of Australia in the 1931 slump. Orthodox banking should not handle this class of business, but rather should deal only with liquid assets which could be negotiated quickly. Farm mortgages were better as tixed loans over long periods backed by a state bond issue. When the slump struck Australia the banks, which carried the farm mortgages by granting farmers overdrafts, found themselves saddled with frozen assets on which they could not realise. Tne consequences were disastrous. With wheat at Is 10£ d per bushel naturally trouble followed. Farmers could not be linanced to carry on eliicientiy and production and buying power sutfered in consequence. In detailing the Swedish system Mr Fawkner said the Royal Mortgage Bank of Sweden handled farm mortgages. There was the central bank, 12 provincial banks and local committees in every district. A mortgage was approved by the local committee, which meant contact with the individual and knowledge of his property and capabilities. This decentralisation was an important point in favour of such a system. The mortgage was issued on a long term repayment basis, by the Royal Swedish Mortgage Bank and had practically the whole country behind it. Every mortgagor was interested in the bank's success and so all participated in its welfare. The consequence was no fluctuation or panic

In Denmark the state backing of farm opeiationa had made farmers individually the richest in the world. The produce of the farm lands was hypothecated at the fanner's gate and a high standard of production demanded. This had led to national success, and Denmark, with perhaps some of the poorest producing land in Europe, was one of the most successful as far as farming was concerned. Dealing with the State Advances Department in New Zealand and the present mortgage corporation, the speaker said he had not studied New Zealand practice extensively, but he considered the mortgage corporation would function to much greater advantage if it were more decentralised as under the Swedish system. Mr Fawkner stated that during the slump in Australia he had made a trip to England to study farm mortgages and 011 his return to Australia had recommended the setting up of a farm mortgage bank for the Commonwealth This had been a plank in the United Australia Party's platform at the Federal elections. Though the mortgage bank had not yet been brought into being, he considered it the solution of farm mortgage pi'oblems and he felt sure such a policy would have to be adopted in Australia. Mr Fawkner, before coming to New Zealand, was interested in farm accountancy in Western Australia.

Strategy Officer: Now, tell me, what is your idea of strategy? Cadet: It's when you're out of ammunition but keep right on firing. A Libel for a Laugh The latest wicked libel on a noble race begins in the usual way with four j men of mixed nationalities going into a bar. The American stood a round. ' the Englishman stood a round, the : Irishman stood a round, and the Scot ; stood around.

Service Diner: Have you any wild duck? Waiter: No, sir; but we can take a tame one and irritate it for you. Tit for Tat Mrs Casey and Mrs Murphy were having one of their usual squabbles. Suddenly Mrs Murphy seized Mrs Casey's clock and threw it out of the window, saying: "It's wonderful how time flies." Thereupon Mrs Casey seized Mrs Murphy's young son and flung him across the room, saying: "Ay, bedad, an' youth must have its fling."