NO DEADLOCK

Evening Post, Volume CXIII, Issue 105, 6 May 1927, Page 8

NO DEADLOCK

IN RURAL ADVANCES

BOND ISSUE PROCEDURE

REPLY TO MR. POLSON

A reply was made to-day by the Minister of Finance (the Hon. W. Downie Stewart) to Mr. W. J. Polson's criticism, published on Wednesday, of the administration of the Bural Advances Act.

"Mr. Poison's criticism," said Mr. Stewart, "means that, as a member of the Kural Advances Board, he contradicts most of what he said as a member of the Koyal Commission on rural credits. He says the Department insists on getting mortgages before advancing the money, and that the Act should be altered to provide that bonds can be issued against the-assets of the branch and the advances of the Government, instead of against' mortgages until the mortgages are available. But the only assets of the branch at present are £500,000, which has been lent to it to make advances to. farmers When these advances have been made either, for the whole or part of this amount, a bond issue can be floated secured, on the mortgages. This is the procedure recommended by the Royal Commission on rural credits, of which Mr. Poison was a member.

It would be a new development in high finance if the Department was to borrow £500,000 and then borrow on the borrowed money," said' Mr. Stewart, "and I hope all Mr. Poison's views on finance are not so original aa this idea. Mr. Poison complains that the scheme has not been advertised but I pointed out to him that we had communicated with the farmers' unions and sent notices throughout the country to all post offices. . But in my view at was unwise to broadcast an invitation for farmers to apply, because we have already in the ordinary State Advances Department thousands of applications from farmers for loans, and their applications are being transferred to the new branch in' order to expedite tne date on which we can make a bond issue. Mr. Poison knows this, because he was present at the Advances Board when this arrangement was made. There is no deadlock in the position. The Department has been put in funds to advance to farmers, and as soon as these advances are arranged we have a basis on which to build a bond issue in accordance with the Commission's recommendation.

I do not know why Mr. Poison should -suggest that the scheme will drift into stagnation when the £500 000 has been advanced," said the Minister in conclusion. "If he and the members of the Farmers' Union help to sell the bonds as the farmers' organisations do in other countries, I am very hopeful that they will sell. It looks as if Mr Poison is beginning to have doubts as to the scheme which lie himself recommended, and which he has been askta to help to administer."