STURDY OPTIMISM

Dominion, Volume 19, Issue 45, 17 November 1925, Page 10

STURDY OPTIMISM

INCREASED CONFIDENCE AMONG FARMERS EFFECT OF MORATORIUM EXTINCTION Bx Telegkafh—special CoßbespoNdeni Auckland, November 16. Hope, or rather that sturdy optimism that embraces hope and so many more of the admirable characteristics of a British farming community, is returning to the farmers of the Dominion following a period during which the prospect was dark and the future’ apparently had little promise for the man on tlie land.' With a rather hasty generalisation and somewhat confusing intermingling of cause and effect, the farmer’s bad time is described by some as an aftermath of the war. Others define it as a reaction following the boom in land values. Plain men who take things at their face value and do not probe for obscure causes simply call it the slump. Mortgagees have little hesitation in blaming the moratorium or at least its prolongation for the length of dark days that hovered over the. farmers. The last-mentioned cause is at least worthy of consideration, as with its extinction the prospects of the farmers are manifesting a progressive im-, provement. The withdrawal of capital from rural investment, whirij was the inevitable result of the reaction following the boom, was a serious blow to the farming community. More serious still was the prejudice created in financial circles by the prolongation of the moratorium.

“The aftermath of the moratorium has hardly yet been realised,” stated a prominent financial authority. "As far as the private mortgagee is concerned, he has practically ceased to exist. Capital previously considered to be safely invested in broad acres has been turned to other channels, and it will be many years, if ever, before rural mortgages again become popular with private investors.” The latter, it was stated, had turned their attention in many instances to the Stock Exchange, where sound investment securities were to be found in abundance.

As far as financial institutions are concerned, it is believed in some quarters that there has been a wholesale withdrawal of mortgage money in rural districts. Inquiry among experts failed to substantiate this suggestion. There is certainly a difference in the attitude of all capital towards farm securities, but it is z more a change from over confidence to a rational attitude than any suspicion or suggestion that such securities are unsound. The channels through which the great bulk of the mortgage money of the country flow are controlled by men of sufficient vision to realise that if farms are starved for lack of capital the effect will be reflected very shortly in the cities. Asked what he considered had been the effect of the prolonged moratorium, the head of a prominent insurance company stated that the termination of the moratorium was so recent that it was impossible at present to ascribe to it anv particular effect. It had been' stated' quite frequently that the interference the moratorium legislation had made with private contracts would result in a striking dearth of money for rural investment. This prediction was not being fulfilled. It was recognised as a basic Aiuciple in financial circles, said the authority quoted, that capital had to be made available for primary industries. That principle. was being observed by his company in all respects. Legitimate demands were being met to the fullest extent, but any tendency toward speculation was not encouraged. Confidence in the farming industry, due to a combination of circumstafices including the fextinction of the moratorium, was expressed by a representative of a leading firm of stock and station agents. 'Right through the country, he said, there was a marked increase of stability in all branches of farming, money was more freely available, and the majority of. people had got down to a proper working basis. In regard to expiring mortgages, it was stated that there was no great difficulty in arranging renewals. More care was now exercised in making a valuation for mortgage purposes, but this, he emphasised, was a further contribution to stability. A property was not now valued on the price that had been paid for other land in the vicinity, but on its actual producing value. On such a basis, which was the only safe standard, there was no difficulty in arranging finance. Prices for stock and other primary products, it was added, were good with a tendency to improve. An indication of this was afforded by the fact that there was a certain amount of inquiry being made privately for well-known wool clips. This was a satisfactory manifestation of confidence in the prospects of one of our chief primary products. At the opening of the new season farming operations were somewhat backward in some districts owing to the spring coming rather later than usual, but this was merely temporary and in no measure affected the cheerfulness with which farmers generally now regarded the outlook. Increased confidence in the future was an outstanding feature among those associated with the farming industry. This feeling had become more marked with the extinction of the moratorium. Other contributory causes, no doubt, were the stability in prices for primary products and the satisfactory result of the general election.