FARMERS' BONDS.

Auckland Star, Volume LVIII, Issue 127, 1 June 1927, Page 13

FARMERS' BONDS.

THE FIRST ISSUE.

AGRICULTURAL BANK SYSTEM

INTEEEST AT 5J PER CENT,

TOR LONG TERM PERIOD,

(By Telegraph.—Press Association.)

DUNEDIN, Tuesday.

Finance for farmers was discussed by •the Minister of Agriculture, Hon. O. J. Ha-wken, in an address to members of the Otago Farmers' Union to-day. He said the first issue of bonds under the agricultural banking system would in all probability be of £100 value, the term being 30 or 36 years, and the rate of interest for the whole period 5i per cent. He commended the bonds to the small investor, and said he believed they would become a favourite form of Investment.

Some inducement was needed for the people to save money, and all should foster the saving habit. In the past these securities bad not been, easv to get, and he believed that both * the fanners and the people would benefit by gradually building up an investment fund for the use of farmers, and, perhaps, others. There was only one way of making money cheap, and that was to save it. Added production increased the wealth of the people, but if they spent the monev they would be no better off. The saving of money was a great necessity in New Zealand.

"I believe very strongly in the agricultural banking system," eaid Mr. Hawken. It was strange that when the Advances to Settlers Department offered its first loans it was years before farmers would take up .the money, although it was extremely cheap money at that time. The Government had to advertise to get the farmers to borrow the money, and it was only in the past five or six years that the farmers had studied the amortisation or sinking fund system of paying off debts. It \ras a good thing that they had studied it, as the old system was a bad one. ■ The short-dated loan system under which the New Zealand farmers had borrowed their money brought a mass of worrv and trouble.

It was alio a most expensive system. The cost of renewal and of the* documents ■Wμ far too great, and the ajrvicnttural "hanking system would undoubtedly give considerable relief in that direction. Even if they had to pay the same amount of interest, the advantages would be very great. Hβ believed the system would be adopted by farmers in New Zealand before many years had passed. The sinking fund system seemed sound to him. Many years ago local bodies had adopted it, and it would save the farmers a lot of trouble.

"We are only making a start, and I nope it will be a successful start," said the Minister. "Not only will it be an advantage to the farmers, but I believe these bonds will be a popular form of investment in New Zealand."