TUESDAY, AUGUST 28, 1934. FARMERS AND THEIR DEBTS.

Auckland Star, Volume LXV, Issue 203, 28 August 1934, Page 6

TUESDAY, AUGUST 28, 1934. FARMERS AND THEIR DEBTS.

There are two main reasons why some action is necessary to deal with the mortgage problem, but much more light is needed on the Government's proposal of a National Mortgage Corporation before it will be possible to decide whether it is the right body to deal with the matter. The first need is to save farmers from the burden of liabilities which they cannot meet; the second is to start a flow of new credit. It is exceedingly difficult, as some countries have learned, to attain the one, purpose without defeating the other. Producers must be helped, but if creditors are not protected farmers may find themselves saved from past troubles only to be confronted with others in the future. Some indication of the extent to which mortgagors are in difficulties is given by the latest report of the State Advances Office, which states that only about 54 per cent of the dairy farmers with liabilities to the State were able to meet their commitments last year. If this is an indication of the mortgage situation generally, there is no longer any room for doubt as to the size of the problem. And, seeing that Auckland is the most important dairying area in the Dominion, it can be inferred that the position is more serious here than elsewhere. Farmers who for several years have been squeezed between the burden of debts contracted when values were high and prices which to-day are too low to cover costs, have an accumulation of liabilities not only on account of interest, but also for unpaid taxes.

The Government, with outstanding advances totalling £42,511,500, nearly half of I which is secured on rural land, cannot fail to have been strongly influenced by its own difficulties in proposing a mortgage corporation, and so far as private mortgagees and lending institutions are concerned that is the "catch" in the proposal. Mr. Coates has said that the new organisation could take over the present investments of the State Advances Office, the Lands Department and the Rural Intermediate Credit Board, but the public will want to know how far the Government proposes to exercise control. Is rural finance to be conducted as a private enterprise, or is it to be subject to political influences? This is a point of vital importance. The freedom of borrowers and lenders in entering into mortgage contracts must be restored, and if rural financing can be improved by a system of mortgage bonds, easily bought and sold on the open market, that will be a decided gain. But it would be a pity if a scheme with so much to commend it in one direction were spoiled by any effort on the part of the State to use it for its own special ends. As it is not proposed to bring forward legislation until next session, the Government will have ample time to fill in the details of its plan, and opportunity will be given for the public to study the question.