FARM FINANCE

Press, Volume LXXV, Issue 22727, 3 June 1939, Page 9

FARM FINANCE

TO THE EDITOR Of THE PRESS Sir,—Your very informing article in “The Press” to-day on farm finance should be read and pondered by every responsible adult Many urban dwellers consider that the farmer can go overboard without anything more serious happening than a distinct improvement in rural scenery. Better informed people realise that the matter is one of major importance. A reduction or repudiation of debt by farmers sufficient to satisfy them will constitute a calamity that threatens the solvency of banks, insurance companies, stock and station agents, private mortgagees and all others with capital invested in rural securities. This calamity will occur casually if a definite, planned and effective remedy is not put into practice in time to prevent it. Some persons desire to precipitate, this repudiation by instituting another sitting of the Mortgage Relief Commission. Reduced costs are a remedy that attracts many theorists. To reduce costs to such an extent as to relieve the situation involves the reduction of wages, salaries, interest rates, and rents so substantially that it would cause an appalling reaction, which no responsible person would even consider, An increase in the rate of exchange is likely to prove a malady rather than a remedy as it will certainly increase the costs of imported farm requisites without any certainty that it will increase the price of farm products. It will certainly exasperate British exporters and probably as a result of that, depreciate the value of New Zealand exports to that .country, thus neutralising the inflation of export prices and retaining the inflation of imports and ultimately other costs. The proposed alteration in the rate of exchange as a remedy lacks precision. A remedy that is simple and precise and has the merit of placing the direct responsibility for reconciling prices with costs or the reverse upon our legislators is that of compensated prices. It has the additional virtue that it deals with the trouble with a minimum of interference, no more in fact than is now welcomed by wheatgrowers and for that reason places upon the farmer the responsibility of minding his own business. —Yours, etc., H. J. BUTTLE. Darfield, May 30, 1939.