The Outlook for Farmers.

Press, Volume LXVII, Issue 20328, 29 August 1931, Page 12

The Outlook for Farmers.

With the candour that is now a public duty Messrs Pyne, Gould, Guinness, Ltd.'s Annual Review, extracts from which appear in this issue, begins with the admission that 1931 is the worst year farmers have had this century. It is not the worst year farmers have known since Canterbury was first settled, but the number who have seen harder days is too small to have its duo influence on public opinion. There would be less gloom, and far less cause for gloom, if it were clearly realised to begin with that the sun has, broken through blacker clouds, and if, in the second place, the many as well as the few had seen that the country has been making far too free a use of borrowed money. It has to be remembered that in addition to the loans raised in London the State has borrowed more than eight million pounds locally during the last two years, and that in addition to these State borrowings at least half as much more has been added, to the debts of Local Bodies. Most of these loans are only remotely reproductive, but they have been returning investors up to 5i per cent, and embarrassing the primary producer. A related and very interesting point made in the Review is the effect on land values of the long-term loans introduced by the Government thirtysix years ago.

It is generally admitted that the only land-holder who has actually benefited by these low rates of interest is the original borrower, because in subsequent sales the favourable rate of interest on these Government long-term mortgages was generally a determining factor in the price paid. .. To prevent loans, which might carry for any length of time rates of interest below the ruling rate, being used as a lever to inflate the price of farm lands and to enable borrowers to ensure that a rate of interest considered reasonable when the loan is taken up will not prove an unfair loading in later years, we contend that rates of interest on long-term amortised loans should be re-assessed every five years.

There are some objections to that cause, direct and indirect, but hundreds of people in Canterbury at the present time will be wishing that it had always been the custom. It would be interesting to know how many would take advantage of what the Review calls a not impossible application of the State Advances system to investments of private capital on the security of farm lands. It ought to work if the "reasonable" valuations stipulated by the Review were production valuations and not what might seem reasonable to speculative buyers and sellers. "" :