LAND BANK

Dominion, Volume 16, Issue 134, 22 February 1923, Page 6

LAND BANK

THE DENMARK FAILURE PRIME MINISTER REPLIES TO CRITICISM EXPANDING ADVANCES DEPARTMENT Questioned yesterday as to his recent reference to the failure of the Danish Landmandsbank, and to Mr. Lawrence Johnstone’s the Prime Minister (Mr. Massey) said that his information came from the Journal of the Empire Parliamentary Association, in which appeared this paragraph' : — “The failure of the Landmandsbank, which closed its doors on Septembei 18, led to a. considerable stir in political circles in Denmark. The loan of kr. 30 million advanced bv the National Bank last July had failed to restore public confidence in the Landmandsbank. and on the date of the closing of the latter an official notice was issued to the Press stating that, as a result of negotiations between the Government, the” National Bank, the East Asiatic Company, and other institutes. in which negotiations the State Inspector of Banks also took part, it had been decided that the management of the bank must be radically reformed, and its financial basis further strengthened. On September 19, at an extraordinary meeting of-the Riksdag, called to consider the position, and to tho employment of State funds for the above, purpose, Herr Neergaard, Prime Minister and Minister of Finance, and Herr Rothe, Minister of Commerce, were heavily attacked on the charge that in a statement of the position issued, in July (to the effect that kr. 56 million of its 60 million reserve fund had been written off as a result of severe losses) they had agreed to conceal the true state of tho bank’s affairs. “The general dissatisfaction at the manner in which the question of the Landmandsbank had been handled had a serious effect on the position of’ the Government, and a crisis was precipitated by tho dissension in tho Cabinet.” What Mr. Massey stated in the House, and in which tlwe was no reference to an agricultural bank, as such, was as follows: — “One of the biggest land banks in tho world came to grief only :v short time flgo. It is dow known that the largest land bank in Denmark has lost 90 per cent, of its capital, and the Government of the country, very, rightly and properly, are going to its assistance. The Government of the day has gone to its assistance and so have several financial institutions, and it is being carried on, but the fact of its failure shows that in connection with these things we have to be very careful. A banking crisis creates a political crisis in Denmark, and it is stated that three Ministers have been compelled to resign.” “From other sources, added the Primo Minister, “I learn that the principal business of this bank was in connection with mortgages on land, hence the name "Landmandsbank.” Facilitating Loans to Settlers. It may not be out of place if I mention what, as Minister of Finance, I have arranged for lately, by way of increasing tho usefulness of the Advances Department — “The capital has been increased by £2,600.000. ■ , “A branch has been established for the purpose of lending to small settlers on chattel security, and is now in operation. “I have given instructions to the head of the Department to increase the amount which may be advanced on mortgage to settlors from £lOOO to £2OOO, and this is being acted upon. The rate of interest will be as low as it is possible to lend it without causing a loss to the State, and, so far as mortgages arc concerned, in no case will it exceed per cent., and it will mostly be 5 per cent, with f per cent, rebate for prompt payment. The rate of interest will of course depend upon the rate which we have to pay for the borrowed capital, and I expect to very considerably increase the capital during the next financial year. ■'With the enormous amount of lending, which is done by the Public Trust Office and tho Government In-*-rance Office, along with the Advances Department, matters should, be very much' easier for the bona-ficls settler who has satisfactory security to offer for the amount which he may require to raise in connection with his business.”