The Auckland Star. WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. FRIDAY, APRIL 29, 1910. THE LAND BANK SCHEME.

Auckland Star, Volume XLI, Issue 101, 29 April 1910, Page 4

The Auckland Star. WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

FRIDAY, APRIL 29, 1910. THE LAND BANK SCHEME.

For the cause that lacks assistance. For the wrong that needa resittauo*, tor the future in the distance. And the 00—I that _c c—t do.

We may take it that Lord Shaftesbury's Thrift and Credit Bank Bill, which has<just passed its second reading in the House of Lords is the first instalment of the "Social Beform programme" which the Unionists promised the country during the last election aampaign. If the advocates of social and «ind_-rial legislation at Home have so far been unable to accompl-— all that they hoped to achieve under a Liberal administration, they can, at least, reflect with sat—faction tihat they hare compelled the Oppo- | sition to adopt the policy of Social Reform as a prominent "plank" in their "platform." Many of the most distinsruished Unionists, even before the recent I electoral struggle, warned the party that j tbey were. making a great mistake in 1 ignoring the demand for legislation j directly calculated to improvp —ie condition of the comparatively poorer classes, and several of the most influential Unionist organs have called upon. Mr Balfour and his -friends to supply the J party with some practicable alternative • to the attractive schemes of Social Reform put forward by the Liberals. "With a good deal of dexterity, the Unionists have made the most of the comparative 1 failure of the Small Holdings policy which Sir Henry Campbe_"-Bannerman attempted to introduce in England and Scotland. ' They insist that it is imposi sible for the small landowner to make h.is way without capital, and they therefore offer the Land Bank as the only speedy and effective solution of the great ■ Land problem.

The principle on which the Land Bank is founded is really that of co-operation applied to finance. " The object of land banks," as the. " Daily Express " explained some time ago, " is to make credit accessible to people who have a profitable employment. La their simplest form they assist tbe small holder to borrow money at a reasonable interest, to buy additional machinery or additional stock, or to enable him to retain his produce until he is able to take advantage of a more favourable market. In their more advanced stage they enable the deserving man, possessed of a little capital, to become — small holder." Such an institution may be started in a very small way by the co-operative action of the small i farmers then_elves. Suppose ten or i twenty people contribute to a joint fund a —nail sum each; or if tbey are very poor they may obtain the guarantee of some local capitalist along with their own.

On the strengthfof their collective liability

each member of the group is enabled to borrow money from.'tl-s fund; "the credit of the whole bank, that is of each mdi

vidual member, being pledged on behalf of the borrower. The money, may be borrowed perhaps at 4 per cent and lens at 5 per cent, leaving the difference to cover working expenses. When a member. of this little company sells his produce, or makes a profit on the year- working,' be deposits it in the hank, which in course of time becomes independent of any outside guarantee. Gradually the entire district begins to realise the utility o£ such an institution, and the people get into the habit of taking their savj_ga there. As the-.l—nd Bank claims no pro. fit for itself, and there are no shareholders demanding dividends, it is possible by judicious management to run such an institution on very economics_ lines, and in a short time the Land Bank finds itself with funds at its disposai ■whioh enable it to extend its operations on a constantly expanding scale.

Such is the continental Land Bank as it was originally planned by Raiffeisen: for,- like so many other useful institutions, the Land Bank is of Genua, origin. Most of the ____e_en bankstarted with little or no capital; and within the last forty years their numbers have grown, till to-day about 15,000 of them are in opera—on in Germany alone, with an annual turnover of between two and three hundred millions sterling. In Germany their original object was hoj only to give the small farmer a start with borrowed capital, but to rescue him from the grasp of the money lender, aad both these objects have been attained". The system has extended in all/ directions to France, Switzerland,' Italy and Denmark, and everywhere it has been highly successful. The People's Bank of j Milan, which, though a city bank, was started on Land Bank lines, began in i 1866 with a capital of only £28; [and .now at- least £80,000,000 passes

through its hands every year. Denmark is a. very &atall and relatively & poor country, and it is nothing but *&> V__f'B_nk system, based upon the principles of co-operation and mutual credit, that enables it to act as chief provider of dairy produce to "England •on such extremely profitable terms. The value of these lessons has not been lost sight of at Home; and in Ireland Sir Horace Plunkett, who has done far more than any other man for agriculture there, has publicly declared that if be had to start his great work again, he would begin by establishing a chain of Land Banks tllrougfcout the country. Now, England is moving in the same direction, and whether ' this particular proposal is merely a political expedient or .not, the policy it represents is well worthy of the careful consideration of statesmen of all parties at Home.

One interesting feature of the discus sion that has been carried on for some time past on this subject is that the representatives of other banking interests do not seem to regard this new departure as in any sense an encroachment on their rights and privileges. For example, Sir Edward Holden, managing director of the London City and Midland Bank, has said that bis own bank would be prepared to advance to properly-managed Land Banks such money as they required, if they had a Government guarantee behind them. He points clearly to the chief disadvantage of the existing banking system at Home, regarded from the poor man's standpoint. Ordinary joint stock banks cannot lend the man whc has saved only a little money enough to make bim independent or to' enable h_n to cope with tbe difficulties of land" ho—ing unless he has good security. Moreover, a great deal of the business that the Land Bank would do is too small for the joint stock banks to touch. But with anything in the form of a State guarantee behind them, the Land Banks could command as much credit as they might require. It seems that Lord Shaftesbury's bill includes a suggestion for the establishment of "a central institution to finance rural village banks," and thus the State guarantee enters into the Unionist project. With this indispensable a_-stance, the Land Banks would be' able to deal with their clients and depositors on tbe basis of personal credit, which is an essential feature of the Continental system, and which naturally plays but a small part in the business of joint' stock l>a_—s working for their shareholders' dividends. It -will be intere_t__g to see how far the UnJon—±s wfll „lcceed with this novel attempt to "dash the Whigs" by outbidding them for popular support -with Social Reform. But', in any case, the close analogy in

principle between the proposed scheme and our Advances to Settlers system is extremely flattering to tbe foresight and the political wisdom of our own liberaL legislators, • C