Original Correspondence.

Clutha Leader, Volume XX, Issue 1031, 27 April 1894, Page 3

Original Correspondence.

GOVERNMENT LOANS TO . FARMERS. 4 TO THE EDITOB. Sir, — In the Leader of the 6th inst. you publish a letter which Mr Thomas Murray, late of Glenorey-ad-dressed to Mr Ward, the. Colonial Treasurer. Mr Murray occasionally writes you on public affairs ; I always r«ad his letters, and I do so with pleasure, because they are usually full of good sound sense. I am inclined to think, howprer, that his letter to Mr Ward is to some extent an exception in this respect. The letter deals with the proposal of th« Govern ment to lend money (o the farmers. Mr Murray approves of this and urges the Government to give it effect, pointing out the great advantages that would, result from it. One would, think from the way Mr Murray speaks that all the farmers would be able to take advantage of the proposal of the Government if £>iven effect to. But this he must know is not the case. I do not think it is very likely that Mr Ward's scheme, or rather the scheme put forth by Mr Se.ddon, will be given effect to. But the. scheme as I understand it is simply to make advances to the farmers on the security of their properties to the extent ot half their value as shown by j the property-tax valuation. This at once excludes from participation in the advantages all those farmers whose properties are mortgaged beyond the half of their value. T. do not know what proportion this class bears to the whole, • but it is probably a large proportion, and this at least is certain that they are the class that stand most in need of assistance. It may be that to people heavily mortgaged if they could get the Government to take over their mortgages the saving would be 2 or 2-J per cent, but in the case of persons who are mortgaged to the extent of one half the value of their properties the saving would be about 1 per cent. In the case of a farmer whose farm is worth LI OOO, and who is mortgaged to the extent of LSOO there' would be a saving to himof only L 5 a year, and in the ease of a farmer whose farm is worth L4OOO and whose mortgage of say L2OOO the Government has taken over there would be to him a saving of L2O a year.' No doubt in these times every saving is a consideration, but the saving is not such as to go any appreciable length towards placing a struggling farmer in a good financial position. In a l-ecent letter that appeared in the papers on this subject, the writer pointed out that it is not the rate of interest on mortgages that cripples the farmer so much as the interest on overdrafts on the banks and on advances from the agents. The interest charged in these cases is, it is said, 8 per cent, and it goes on increasing by the addition of compound interest every three months. This kind of indebtedness on the part of the. farmers the Government do not intend to touch and wisely so. The class of persons, therefore, who are indebted in this way, like those whose properties are mortgaged beyond the half of their value could not participate in the advantages of the proposed scheme. To do much good it appears to me the Government would have to take over the whole indebtedness of the farmers, and this they are neither likely to do nor to be permitted to do. The two things that Mr Murray refers to as injuring the farmers are high interest and low prices. Whilst, however, he shews us how the payment of high interest is to be remedied, he does not say one word as to how we are to get over the low price?. lam inclined to think that the latter is much the greater evil of the two. But Mr Murray, believes that cheap money alone will be a sufficient remedy against both high interest and low prices. Speaking of high interest he says, 'Remove the crushing burden and our fine country will rise at a bound and the people will be enabled to meet low prices and the competition of the world.' In -this I think he is entirely mistaken. The farmers need above all things better prices for their produce. They might to-morrow get cheap money in the way suggested, but until they get better prices for their grain and wool than they are getting at present they cannot be in a fairly thriving way. There are various other debateable points in Mr Murray's letter to which I might refer. For example, he gives a long list of the disadvantages which the country generally, as well as the farmers in particular, are suffering from owing to high interest and low prices, all of which he thinks would be remedied by the State lending money to the farmers. This I think is very doubtful. One of these disadvantages is the unwillingness on the part of many persons who have money to use it themselves in industrial pursuits. This, he says, is owing to this : that they find it more profitable and safe to lend their money than to use it themselves. I agree with him that it is very much to be regretted that people with means are so unwilling to use it themselves in the way of carrying on industries and businesses. But how is this unwillingness to be removed 1 Mr Murray seems to imagine that if the farmers would get from the State the money they require, private persons having money would then be forped to.

invest it in industrial pursuits. This they might do to some extent, but not . to the extent Mr Murray imagines, for the most of the money at present invested in mortgage does not belong to people in the Colony at all, but to Home people, and there are so many ways of investing 'money. . Mr Murray, at the close of his letter, refers to our present system of currency, and he does so in no measured terms. His opinion clearly is that this, if not the. chief cause of all the troubles of the farm pr and the community generally, has at least much to do with them. Ln this I quite agree, with him. The appreciation of gold has, I believe, more to do with our troubles than anything else, and this seems to be the opinion generally entertained by business men on this subject. lam sorry Mr Murray in his letter did not enter more fully into the question of the currency, as he has evidently thought much about it. But if he holds, as he seems to do, that this is a large factor in the troubles of the | farmer and of everybody else, surely he was not justified in pointing in the early part of his Jotter to cheap money as the panacea for all the troubles of the farmer. — I am, «fee, Farmer. April 18,- 1894.