OUR FARMING MESS.

Auckland Star, Volume LIX, Issue 261, 3 November 1928, Page 18

OUR FARMING MESS.

REFORM'S ROAD TO RUIN.

THE DRIFT TO LANDLORDISM.

A POSSIBLE WAY OCT

(liy TOUCHSTONE.)

It is a very human problem, this land problem we have been discussing in these- articles (luring the last few weeks. All over .New Zealand as the dusk settles down this evening the lights will be twinklink out. across the fields from scores of thousands of little homesteads in which this question of the land means everything, m. loc of men and women gathered about the board for the evening meal out in those quiet country homes arc* not getting the chnncn in life that men and women in New Zealand ought to get, and a lot of the children conning over their lessons there, ami the toddler* .yucked off to bed, will not get it either unless wo find some way of cleaning up tho mesa in which our land problem lias been landed by Reform Party misrule.

VVc have seen in previous articles how farmers throughout tin; Dominion have been plunged into one great strangulation, of mortgage debt as the aftermath of the soldier settlement land boom deliberately created by the Reform Government in the face of the plainest Avaxninga. As to the extent of the evil we have the words in Parliament last year of the present Minister of Lands: "Them are more mortgages than I care to think about, and mortgages far in excess elf the present-day Government valuation. I cannot see how any system of lending can possibly assist such farmers without throwing away the money of tb(S taxpayer . . . Many of them are hopelessly overmortgaged, and it would bo better for themselves if they walked out i,- t t With reasonable breathing time T think the bulk of the people on the land will pull through." Fortunately for all;Of lis better prices have piveu that breathing time, and have mitigated tho disaster inflicted on our fine little country by the folly of Reform.

, A Nice, Innocuous Term. Tit© aftermath of a land boom is J labelled, "deflation," and it commonly, rnds up by being "deflation by transfer." It spUUdB a nice, innocuous term. What j does It fcally mean in practice? Some i of the soldier settlers could tell us a I lot about itj a good many thousands of other settlers too. For a succinct account we cannot do better than turn to ft 'description by the Minister of Lands* Mr. McLeod was explaining in Parliament last year what lie had done with, ft soldier sell' r who had got heavily into arrears vith his interest. The Government, the Minister said, had advanced this returned soldier £2500 to buy a farm, and the farm was worth only £2300. In addition the man had to giro the vendor of the land a second mortgage of £1000. When it was seen that it was totally impossible for the man to get enough off the place to meet | the; interest on mortgages totalling I £3500, the Government tried to persuade! the/ second mortgagee to remove his mortgage'. After a lot of battling he agreed to come down to £400, but would go no further. To get rid of the second mortgage altogether the Government foreclosed. At the same time a stock and station agent sold up the stock on the farm, under a bill of sale. The soldlefHsettler thus evicted was, the Minister stated, "a good hard-working man," but with the encumbrances on the balding he had "no hope of success." "We have no power," added Mr. McLeod, "to compel a man to remove a second mortgage, and the only thing to do was to sell the place up." This case is a very typical instance of what is occurring in New Zealand • sincs Kefbrm's land boom has"' burst. The first person to get it in the neck is the settler. He loses all the money he put in to start with, and in most cases that money took a lot of getting together. He loses, too, all that ho; spent in time and money In improving the place- Then, and not ufltil then, comes the turn of the mortgagees. On the Wrong Shoulders. And what is the result from a national point of view! The land goes out of production for a term, it may be a short term or it may be a lon» term. Wo are all the poorer by that much. And when it goes out of production it goes back; rubbish springs into growth all over the place, and money has to be spent to get rid of it and bring the place back to where it was before the eviction. When a farmer is doing all that can he done with a holding, is it not a bad and wasteful thing for all of us that he should be thrown off it to clean up the mess of the Reform party's land boom? Are we putting the burden on the right shoulders ? The soldier settlers are in much better case than the other settlers trapped in that boom. The Reform party has shifted from their backs to ours millions of the money it paid away to landowners. But the farmers caught in the boom have had to shift for Their number may be judged from the fact that in the two boom years there were 35,000 sales of freehold farms for a total sum—on paper—of £98,000,000. Not all of these over-mortgaged farmers are being pushed off their farms. If that were done, there would be so many farms vacant that land prices would slump to nothing. It pays the mortgagees far better to keep the farmers on their holdings for the time being and to take from them everything beyond a bare living. The mortgagee does not Ret the full pound of flesh the law allows, but he get 9 all that the farm will yield, and much mote than it would yield if he had to pay anybody wages to work it. The farmer on, hoping against hope that a day will come when he can free himself. And in the end the mortgagee may decide that ho can make more money by selling up his debtor, and the man is turned off, broken and ruined after years of fruitless struggle. It is a pretty cruel business, this, and nationally it is a wasteful business. It is a situation to which Tory land policy has twice reduced New Zealand. About the best thing that can happen to an over-mortgaged farmer as things stand is that the first mortgagee, to save *himself, buys in the farm, thus clearing the title of the other mortgagees, and then allows the farmer to remain on as his tenant at a rental within his capacity to pay. The farmer's own edUity in the farm, however, disappears in this case just as effectively as in any otlteT *ase, and private landlordism—the Might of •very country that has experienced It -—become* firmly established 1 . An Over-capitalised Industry. Summed up, our Dosition is that our ™3n? aAa *t r y is* capitalised far beyond its earning capacity. Many mer-

chants and manufacturers at different times have found themselves in that position, Many have had their capitalisation reorganised without losing their personal connection with the business. A farmer loses his farm when his capital is reorganised. Is it not possible to lind a way of doing for tanners what has often enough been done for business men? It certainly seems a matter worthy of full and close inquiry. It lias been freely stated that there is no way out but to leave the mess to liquidate itself, and that Government interference with economic processes will only make things worse instead of better. People who take this stand should remember that the Government interference they deplore has already taken place, and that stupid Government action at the behest of a greedy few h. ; been the cause of the whole sorry business. The real question is whether the State, having done a wrong to the people, should endeavour to redross that wrong. Wo do not, of course, want a remedy that is worse than the disease. Modern medical science, for example, lias discovered numerous infallible ways of killing the tuberculosis germ, but every one of these ways kills the patient as well. We do not want a cure on these lines. We do not want a cure that is going to bolster up incompetent and thriftless farmers, for the best thing for everybody is to have such people forced off the land as speedily as possible. Nor do we want a cure that impairs the security of people whose mortgages represent the investment of good solid cash. If such people are treated unjustly the flow of capital into the farming industry will be ehecked and our well-meant endeavours will have done | more harm than good.

One Way Out? A possible method of approach to the problem that has attracted the writer of these articles is by giving freehold farmers the right to convert their farms into Crown tenancies under inconvertible leases. The experiment has been made of giving Crown tenants the right to convert to freehold, and great numbers who have done it are understood to be decidedly worse off than they were to start with. There is thus an initial case for working the machine in the other direction.

Let us suppose that it were enacted that a farmer had the right, on depositing a valuation fee, to demand that the Government value his freehold for conversion to a Crown lease. The valuation would be made on a properly defined basis, so as to arrive at the legitimate value of the land for farming purposes, and on the farmer being approved as a competent man he would be offered a lease at so much per cent per annum on the valuation.

On the farmer accepting the offer all persons holding encumbrances on the land would be notified, and the amount fixed as the value of the farm would be distributed in the same way that the proceeds of a sale of mortgaged land are distributed. The sufferers would be mortgagees with claims in excess of the economic value of the land. A conservative lender does not advance more than half the value of a farm. Mortgages above two-thirds of the value are at any time highly speculative. In the great majority of cases they represent the' rake-off of a vendor selling at a fictitioual value. In the case quoted even Reform's own Minister of Lands showed no bowels of compassion for such a vendor. In a minority of cases such mortgages may represent a genuine advance to help a man in difficulties. In such cases the process suggested would involve hardship, but against such hardship has to be weighed the widespread hardship as things stand. It is worth noting that the case of such mortgagees was not suffered to hold up the Irish Land Purchase Acts passed by the Imperial Parliament.

A more serious difficulty would be to arrive at a way of paying for the land. In Britain the Liberal party, in its exceadingly valuable report on the land question issued in 1925, proposes State resumption of farming land by the payment to the landowner of a perpetual annuity, the State having the right to redeem the annuity on an equitable basis at any time. Sir Joseph Ward, in his policy speech in Auckland, proposes that land resumed for closer settlement shall be paid for by Government bonds. A similar method would not seem inapplicable in the present case. The chief thing is to find ways and means of meeting the needs of those who want their claims paid off in a lump sum, without at the same time involving the State in heavy borrowing for this purpose. This side of the problem needs more expert consideration than the present writer is able to give it. In Scotland since 1886 they have had Land Courts which fix fair rates, and seem to do their work to give general satisfaction. The system began with the crpfteTs in seven Highland counties, but in 1911 was extended to all holdings in Scotland up to 50 acres. This suggests that another possibility in dealing with our particular problem might be to establish similar Courts to scale down mortgages to the true roductive value of the land, stripping off those which represent nothing but a fictitious value extorted by a vendor. The First Step. Either process suggested would depend on more correct valuation of the land than is reached by New Zealand Compensation Court methods at present. A gentleman associated with such proceedings over a long period told the writer the other day that in many cases what happened was that the Government officers gave evidence as to the true value of the land; the landowner alleged it was worth about double this; and the Court discharged its judicial function by the simple process of adding the two amounts together, dividing the total by two, and giving this as its award. The net result was that the State usually had to pay half as much again as the land was worth. It is impossible to believe that legislators who are in earnest can devise nothing better than things that work out into bosh of this sort. To free New Zealand from a single noxious weed the Government thought it worth while some years ago to offer a bonus of £10,000 to anyone who can discover a way of eradicating the blackberry. Another noxious weed, the speculative mortgage, is trailed across more New Zealand farms than even the blackberry vine, ai.d w4th more devastating results. If it is worth while paying £10,000 to anyone who can find a way of ridding the country of the blackberry, it would seem to be a justifiable proceeding, to say the least, to offer a similar bonus to anyone who can find a sound and workable method of eradicating the speculative mortgage that has been left like a blight across New Zealand by the Befotm party's land boom. Our examination of the land question has shown that the chief thing Reform has done for New Zealand has been to land it in the soup. And if we wish to get out pf the nauseous mess in Which our present political masters have placed us the first step to that end can be very effectively taken on election day. (Concluded.) 1