FARMERS' FINANCE

Dominion, Volume 21, Issue 115, 13 February 1928, Page 10

FARMERS' FINANCE

Sir, —As reported in your issue of February 3, Sir Harold Beauchamp, when presiding at a meeting of the shareholders of til® Equitable Building and Investment Co-, Ltd., in referring to losses made on rural advances, stated that: "We have discontinued making advances to farmers, and are now confining our operations to loans in properties in Wellington and suburbs.” Now, Sir, if this is the policy advocated by one of our leaning financiers, we may be sure that other lending institutions are also restricting advances to farmers. It will be readily admitted that the welfare of our cities depends almost entirely on the success of the farming community, and io me it seems that instead of decrying the value of country securities, the wiser plan would be for those who direct the policies of institutions whose business it is to lend money, to set themselves the task of devising ways and means of successfully financing the primary producer, thereby ensuring the stability of the foundation upon which rests the whole of the city securities which Sir Harold Beauchamp evidently considers are so desirable. I make bold to say that had a system of amortisation loans at a reasonable rate of interest —not seven per cent. —been available to farmers, say, ten. years ago, the heavy losses which have occurred would have been obviated, many a broken farmer would to-day be a successful man, .and tens of thousands of acres now lying idle would be producing their quota of exports upon which our na tional welfare depends. We owe sincere thanks to Sir Harold Beauchamp for frankly admitting, that rural securities receive scant consideration from business men. In face of this startling admission it surely behoves every farmer to use all means at his dis posal to indfice the Government to make available a way out of the present financial impasse.—T am. etc., PR I JIA RY PRODUCER. Ekotahuna, February 6. [The above letter was referred to Sn Harold Beauchamp, who replied as follows: “I have carefully read the above letter. In. addressing the shareholders of the Equitable Building and Investment Company of Welljjigton, Ltd., on February 3, I referred only to the policy of that company in respect to advances on broad acres. The experience of that company has been most unfortunate, although the directors in every case were careful to obtain valuations of land from men who were regarded as experts and practical farmers. So" far as the Equitable is concerned, the shareholders, I am sure, will approve of the alteration in the policy of the board—that is, in. now confining advances to town eecuri;ies which are immediately under the eyes of the directors, and tho executive officers. In the past I maintain that special financial facilities have been afforded to farmers by, not only the various State Departments, but by many lending companies in this Dominion. So far as the State is concerned, I claim that land values a few years ago were greatly inflated by the cheap and abundant money which was then placed at the dis posal of farmers. Your correspondent suggests that lending companies would not have been in such a bad position as they are to-day if they had established amortisation schemes in respect, to loans, but from our own experience, we know that this would not have helped farmers in the least degree. For a considerable tune many farmers have not been able to pay interest on their loans, and that being so. it. is ridiculous to suggest that their principal could have been reduced by an amortisation scheme. I quite recognise the important patt played by farmers in this country in contributing to tlie national welfare, but one cannot shut one’s eyes to the fact that they have been induced to pav excessive value for their land, and many men have gone on the land without the necessary experience or adequate capital. In these circumstances, no thing could be expected but failure.]