FIRST IMPORTANCE

Evening Post, Volume CVI, Issue 27, 1 August 1923, Page 14

FIRST IMPORTANCE

OUR PRIMARY PRODUCTS

FINANCE AND THE FARM.

The whole economic structure of the Dominion, declared Mr. W. D. Hunt irhile speaking before the Accountants Students' Society on "The Financing of iour Primary Products," is built upon a pastoral and agricultural foundation, and^ anything which affects the well-being of the farming industry affects in similar manner every other industry of the country. The importance oE New Zealand's primary industries might be judged, continued Mr. Hunt, from the fact that the agricultural and pastoral industry provided about 95 per cent, of the exports of the country, or, excluding re-exports, practically the lot, as well as providing lor New Zealand consumption. New •Zealand was dependent upon those products to pay for the whole of its imports and to pay interest and sinking fund on the whole of the National Debt. They were the coin with which the coun»ry paid its way. The return for the twelve months fended 31st May, 1923, showed that the iotal dairy products were valued at !£17,482,624.' The meat exported was valued at £9,668,506, while wool accounted for £11,855,426, hides and skin* for £2,268,101, tallow for £797,445, sausage skins for £390,937, and live stock for '£55,020, making a total from animal products of £42,519,059. The total agricultural and pastoral products £43,514,----088. Gold, gum, timber, hemp, tow. twines, coal, silver, and sundry nonagricultural exports totalled £2,440,638 and re-exports £741,589, making the total of* all exports £46,696,315. The. history of the'development of the Dominion's agricultural and pastoral industrjr^was- a story of hard work and thrift oh the part of the farmer, and considerable enterprise on the part of those who organised various financial institutions, for when the country was first settled the land was entirely unimproved, and though large areas, m the South Island rather than in the North, had natural grasses, the great bulk of the land was of practically no value for working farms till it was improved. Ths State Valuation Department did iiot allow for improvements anything like the cost of bringing absolutely unimproved country into its improved condition. Those who had had experience of breaking-in unimproved country knew that very few farms could be brought to their present productive state, for two, threp, or four times the amount allowed tor improvements by the Valuation De-' partment.. FAR.U MORTGAGES. Reference was made to the growth and flevelopment of banking in New Zealand,. ] &nd the speaker then turned to the various aspects of mortgage as it affected the farmer. First mortgages on farms, •he remarked, were not now, relatively to other investments, nearly as popular today as they were in pre-war days, and the rea3oa coald be found to some extent , in the fact that the recent land boom find subsequent slump had disturbed lenders fealing of security with regard to land values. The chief reasons, however, were the mortgage moratorium and tho. graduated income tax, differentiated against farm mortgages.. The mortgage moratorium had been brought in at the commencement of the war in 1914. UnHer this the due date of mortgages' was postponed^ and this postponement had been continued from time to time, and did not new end until the end of 1924 wita no certainty that there would not fee a further postponement. After 1914 i almost all'fresh mortgages had the moratorium contracted out, but legislation in 1919 brought all these new mortgages under the.moratorium. The uncertainty' consequently upon the legislation--had destroyed tie ready saleability' that 'good first mortgages ,had in pre-war days She differential graduated income tax s a. further great cause of the present tmpopularity of fawi mortgages. Interjest received on these mortgages paid in-come-tax up to a maximum graduated Srateof 7s 4d in the £1, whereas interest received from public body loans paid tax fcp to a maximum graduated rate of onlt 2s 6d m the £1, and Government war Joans were free of tax. This heavy tax, coup ed with the fact that tax-free or Jightly-taxed outlets wpre available for (large investors, meant that large investtors, including financial institutions subject to the maximum tax, now avoided farm mortgages. The result that farmtars now had much more difficulty than formerly in obtaining mortgage loans, and ivta obtained they had to pay higher rates of interest. . 6 The total amount of" mortgages outstanding at. 31sfc May was returned It over £240,000,000.. The amount *£ SSSVS? 4 siMe the c 0"

,THE COUNTERS CHIEF SA7ERS 1 Something .'ike £10,QDO,C00 on an ayeS 1™5, u1,» 58 financing the export of m^rf^ifS?^ to Britain aloneWhere did all that money come from? The capital owned by farmers and em Ployed m their farm/was, of course, ?n the aggregate a very j h > " addition to what the farmers had of their own they supplied amongst them a large proportion of the money they borrowed ™SrT s"PPlled a lofc of the money SS&./X.- comparaes ' banks 'f-» Taken as a whole, farmers were the thrifty section of the community! S were the country's chief savers This IX. not.J )ecausf. they got more for their labour than others, but because their conditions compelled them.to save. J.ne iai-m was the farmer's savings bank It w.as by continuous work and saving »nd._not by speculation, that a farmer acquired wealth. Five shillings a day accumulating for 40 years at 6 per ceni was approximately £13,000.- Five shiil lings-a day was less . than ■ two hours' overtime for a town labourer. The difference was that a town labourer could not often obtain the overtime .work,.and get it. With the.farmer, the work "was constantly there looking him in the face and demanding attention, and "when "tho work was done its value was at once automatically tanked in the farm, Sni wag beginning to yield its return