FARMERS’ FINANCE

Dominion, Volume 28, Issue 114, 7 February 1935, Page 10

FARMERS’ FINANCE

Proposed Mortgage Corporation N.Z.F.U. VIEWPOINT Commendation of Plan General approval of Hie proposed Mortgage Finance Corporation and some criticism of the statement of the Associated Chambers of Commerce concerning tlie proposal were made at the meeting of the Dominion Executive of tlie New Zealand Farmers’ Union in Wellington yesterday. A motion declaring that tlie executive approved of the creation of a mortgage corporation subject to the provision, firstly, that the bonds be sold at a rate of interest that would secure a reduction in the farmers’ interests, and, secondly, that the control be co-operative, or in the alternative by the State, preferably the former, was carried unanimously. A committee was set up to deni with the details of the Mortgage Corporation, consisting of Hon. F. Waite, M.L.C., Mr. W. J. Polson. M.P., Mr. H. O. Melsopp, Mr. C. W. Mulholland, and Mr. H. Seifert.

The subject was introduced by the president, Mr. W. J. Polson, who stated that it involved the burning question of farmers' finance, and consequently was worthy of deep consideration . What was now proposed was to set up a corporation with share capital or State controlled. From the first the Farmers’ Union had made proposals for the setting up of a corporation, but they had believed that co-operation was the basis of success. In the present proposals he saw something which might lead to tlie breaking down of co-operation in this country; in fact, the proposed corporation would eliminate co-operation altogether. No man went into a joint stock controlled organisation unless be desired either money or power. • At the same time he realised that something on the lines of the proposed corporation was undoubtedly needed, and that the corporation, properly controlled, preferably by the Government, must achieve results in rescuing the country from disaster. He believed that neither Parliament nor the people would agree to State securities being handed over to a joint stock company. For interest rate to fall substantially the State must support the proposal and' stand behind it whatever was done. The.statements made by the Rt. Hon. J. G. Coates in his pamphlet on the subject were rather disturbing to the speaker. However managed, the bonds would have to be sold at a lower rate of interest than stated, and the legislature would not agree to any more tax-free bonds. i . . - Chambers of Commerce Manifesto. Tlie chambers of commerce had issued a manifesto which was not at all helpful. Behind it was the desire of the chambers of commerce to maintain the old laissez-faire attitude to questions of this kind and, furthermore, judging from its perusal, it had been inspired by the dictates of finance. Its writers either did not understand the advantage of pooling the 'securities or were not honest in their arguments. The plan of the chambers of commerce was to set up a series of mortgage corporations in each province, and these would be entitled to lend 10, 15 or 20 times the amount of their capital. It was to be hoped that nothing of the sort would be done, for in the United States farm support had thus been prejudiced. As to the suggestion made that no sympathy was desirable for the incompetent farmer, this might be the ease, but in the first place a definition of incompetence was necessary, and then there was nolgmirantee that tlie men who were to fill the places of incompenents would be any better. Generally speaking the matter could be brought down two points —that interest should lie reduced to bed-rock ami that control should be co-operative, and, if this could not be obtained, then by the State. "These proposals go a long way further'than the union has been prepared to advocate.” said the Hon. F. Waite, M.L.C.. who added that support for the proposal was necessary. If any point in the proposals was not agreed xvith then those present should say so. The chambers of commerce were frightened that if tlie proposals were successful interest rates would lie lowered. It was from such people that most of the opposition was coming. The pamphlet issued had stated that there would, definitely lie Government control. Even in tlie proposed shareholder control the shareholder had really not got control. It would be difficult to get co-operative control, and probably state control would result. Country Over-Mortgaged. All property north of the Waitaki River was over-mortgaged, he stated, and while a reduction in interest rates would solve the problem for Otago and Southland it would not do so for the rest of New Zealand. As far as the rehabiliation of farmers’ finance was concerned, different* problems were faced in every part of the country, and it was difficult to find something which would suit tlie whole of New Zealand. Every ease had to be taken on Its merits. Tlie live years’ valuation period and the determination of equity were important factors also in solving the problems of those who could not be saved by tax-reduction. The Mortgage Corporation proposals ■were commended by Mr. W. \V. Mulholland, who said that as the State would be a considerable lender it would have to have some representation. It could not remain, in justice tc tlie community, outside the corporation’s deliberations. But an immense financial trust was in tlie process of formation, and it was not desirable that all tlie power in it should be in tlie hands of the lenders. There should be representatives of the borrowers as well. Tlie findings of the Otago executive of tlie Farmers’ Union were submitted by Mr. M. A. Kinney He looked on the scheme as a huge farm mortgage scheme, which had become necessary, and pre-supposed a reduction of interest rates for its success. Tlie proposal was discussed at length in committee, and it was stated that the Right Hon. J. G. Coates would be present to talk over the details of the corporation witli members on the following morning.