The Guardian Printed at Leeston, centerbury, New Zealand, on Tuesday and Friday afternoons. TUESDAY, NOVEMBER 14, 1939. FARM MORTGAGE RELIEF.

Ellesmere Guardian, Volume LX, Issue 90, 14 November 1939, Page 3

The Guardian Printed at Leeston, centerbury, New Zealand, on Tuesday and Friday afternoons. TUESDAY, NOVEMBER 14, 1939.

FARM MORTGAGE RELIEF.

Set up in 1936 to find means for giving relief to the financial burdens of farmers and others, who, because ( of the depression, were unable to meet their obligations under mortgage, the work of the readjustment commissions has been practically completed. That it was a monumental work is indicated by a report prepared by the Under-Secret-ary of Justice, who states that the sum remitted under the Act was £9,885,334 principally on account of farm mortgages, which were represented in this amount by the sum of £8,533,437. Allowing for capitalised value of reductions in rentals the total amount of the reductions would not be less than £10,----000,000. There are some sections of the report which are illuminating as to the cause of the difficulties of the farmers. The general assumption is that the cause was mainly that of the great fall in export values at the beginning of the slump, but that is not the whole story, being only the final result of a long and unfortunate process. The report first of all gives a picture of the background in the days prior to the slump, and dealing with price movements from 1914 to 1931 states that it was one of steady increases until 1921, a temporary drop in 1922, a fluctuating but high price-level till 1930 when a catastrophic fall occurred. Land values follow produce prices. The high prices increased farmers' profits, which were capitalised in land prices and these . quickly reached absurd levels. Two other factors tended to increase these values—the purchase of land by the Government for the settlement of returned soldiers and the reductions in direct taxation. The boom in land values and the numerous transactions at high figures will be remembered by farmers, many with sadness, but some idea of what actually happened in this way is

\ ■ ■ I given in the report, which mentions that during the years 1913 to 1930 the unimproved value of land increased from £212,000,000 to £338,----000,000, an increase of approximately 59 per cent. That, it should be remembered was the unimproved value. Mortgages during the same period increased from £85,000,000 to £235,000,000, a rate of increase of approximately 176 per cent. The figures are extraordinary' and are illustrative of the extent of the boom. More detail to the background is given in the figures dealing with income and these clearly show how the bubble was burst. Export, farm income of the country, which in 1920 was £48,000,----000 and in 1925 and 1929 was £55,000,000, had dropped in 1931 to £36,000,000, while the mortgages on farm lands had increased from £88,000,000 in 1920 to £130,000,000 in 1931. The total mortgages (suburban and rural) were in 1931, £241,000,000, and interest had to be met on this sum out of greatly reduced income. Some interesting expressions of opinion were supplied by the different adjustment commissions as to the reasons] given by applicants for seeking relief. Factors mentioned! were the breakdown of commodity prices, excessive purchase prices of land, low prices for farm products, high rents, faulty subdivision of land, lack of provision in good times for repairs and maintenance and failure to provide j reserve funds, high rates of! interest, lack of capital, short flat-term mortgages, increases; in farming costs. In the second question the commissions were asked to what extent certain factors were causes of the difficulties in their districts, the first factor being that of excessively high purchase prices. The general tenor of the replies was that the purchase prices were too high, even in relation to the preslump price-level. One commission was of opinion that buyers had arrived at values of farm lands by guess-work, instead of basing it on a careful analysis of working-costs in relation to the value of production. Another commission stated that its experience was that the price paid for all lands purchased in the years 1918 to 1920 and 1928 to 1929 was in excess of the true value, and that the majority of the applications in its district were in respect to lands purchased during those years. On the other hand, one commission thought that, viewing land-values in relation to the pre-slump level, there was no evidence of excessively high purchase prices, except in isolated cases. The undersecretary added that he thought a fair summary was that in about half of the cases the price was above productive value even if the price-level before 1930, had been maintained. Incidentally it might be added that 34,596 applications for relief were dealt .with, 15,621 by farmers and 18,973 by other applicants. There were 2569 voluntary adjustments and 8020 were withdrawn. Of the 9992 farm orders made the principal sum due under mortgage was reduced in 5406 cases. Unsecured debts were remitted in the case of 3446 farm applicants, for a total amount of £1,143,478.