FARM DEBTS

Evening Post, Volume CXVII, Issue 18, 21 July 1934, Page 16

FARM DEBTS

- ?'M)T IMPOSSIBLE'^

.TIME~(AND PRICE)' MAY HEAL

THE CREDITOR'S MITE

1£ all the farmois in any section of farming—whether wheat, or dairying, or grazing—were in an impossible position, it would seem that nothing would be gained by deferring liquidation. But where a large portion of farmers are in a recoverable position (if allowed time and credit) a liquidation (or even a writing down) based on today's facts and figures would be bad for the individual and for tho community.

This conclusion seems to arise- from the evidenco given on July 5 to the Australian Wheat Commission by the assistant chief inspector of the Bank of Now South. Wales, Mr. T. B. Heffcr. He expressedtho opposition of the bank to any writing-down by law of the debts of embarrassed wheat farmers. OBLIGATIONS MET BY A MAJORITY. , He said, during his evidence, that adjustment of debts should bo left un--1 til. conditions stabilised, and even t"hen, should be a-matter not for Government action, but for arrangement between the creditor and the debtor on. the merits of each case. . In answer to Mr. J. S. Duncan, who is assisting the Commission,. Mr. Hcfler said that a majority of the farmers with, whom the bank had dealings had been able to meet their obligations. It would be an exaggeration .to say that ♦.'he debt structure was impossible. The chairman (Sir Herbert Gepp): Do you say that in the belief that prices are going to rise, or do you say it assuming that prices will remain as they have been since 1931? Mr. Hetfer: I am assuming that there will be some recovery in prices within a measurable period. The chairman: 1£ puces lemain at 2s 3d: at the siding, what 'would your answer be then?— That those who have .sidelines, possibly, may be able to cairy on for a number-, of years; but tho?e who Lave no. sidelines, but who are purely and simply producers of wheat, must get into a bad state in their finances. Many of them possibly -would have to. get out. Mr. H.effer said that legislation enforcing .reduction of wheat farmers' debt's would hav'o far-reach hig repercussions, .and -would react disastrously on the credit of the industry. It would involve- the writing-off of large sums in\ one stroke in the balance-sheets of innumerable storekeepers, traders, and merchants throughout'the country, and substantial losses would bo shown in many of their .prout-*ind*loss accounts for the.period during which tho writing--63 was.effected* Confidence would again bo shaken, and credit to farmers would be severely restricted from the smallest trader right up tho scale. I A GRADUAL WRITING-OFF. Mr. Heffcr said that, loft alone, all parties with book debts dependent upon the wheat industry would make their adjustments, gradually writing off somothing each year as it became apparent that recovery in this or that account was hopeless. ' Meanwhile it was a vital matter to the 'creditors tbatthey.should support every wheat farmer who was worth supporting, in order that-they might eventually recover their debts. So : far as the banks were concerned, they conld be trusted in their own interests to do their best for the wheat farmer. Their interests were identical -w'ith'his. It was a short-sighted policy, recklessly to damage the reputation of all wheat farmers as borrowers," in'order to- afford -relief to those of tho industry who were financially embarrassed. Apart from that there was the question of equity. Were tho parties who had found more and more of .the capital to carry on aa industry of national importance to be told finally that their book"debts were to be adjusted on the basis of present wheat prices, which were said to bo the lowest in,history? S[Q TINIVERSAIi FORMULA. Mr. Heffer said that no formula would fit all cases. If it was found, as.tho bank was confident it would bo found, that the trading banks were doing their duty by the farmer and the community, that they were finding assistance in those cases where they could reasonably be expected to find it, and that they were not harassing farmers, then the sensible thing to do was to let them handle their own job. They wero well experienced in dealing with the finance of primary producers. In other depressions the bank had pulled its men through, and, left alone, the bank was ready to do so again. Mr. Heffer said that no one could forecast the future of wheat, the price of which depended upon so many factors. ■ Throughout history, wheat had been. ,subject to spectacular rises and falls in its market price. No doubt hisV;;y -would .repeat itself. The world would not go on indefinitely producing wheat at a loss. Those farmers who weie incompetent would, through foree of circumstances, drift into other employment. An increase in Eastern consump. tion and an upward movement in the price of other commodities would help. European countries might grow tired of the high cost of production in other industries which wero involved in the home-growing of wheat, and they might revise their wheat tariffs downwards. The farmer, said Mr. Heffer, was the mainspring of the industry, and was entitled to consideration as such. The bank could say with every confidence that, where help to tho wheat farming customers was possible and justified, the bank was giving it. THE. CREDITOR'S DUTY. If time, bringing the hoped-for priee-i-ise, is to have a healing influence on farm, economies,-should not the creditor contribute to-the cure? The witness's answer, boiled down, was to tho effect that the .creditors had contributed and were'; contributing.1 The report of the proceedings' concludes:— The If tho nation adopts a policy of systematic, organised assistan.ce,'based on the idea that a section of the community cannot lose its moialo unless the moralo of a nation is aft'ec-ted —if that contribution is based on a sound systematic scheme, could not the creditors .make sonio wmtributiou parallel'to the contribution of the Commonwealth, if that is necessary?—As portion of; the community they would be bearing their share. The chairman: Don't you think you have to go further? The industry is divided into three sections, one of which is the : creditor. If, as you say, the producer.is; accepting1 a reduced standard of living and working hard, and if the nation says "We will make our contribution," then is it not arguable at least that the other sections of the community, including the creditor concerned,' should make an organised contribution? '; I am not saying that credi: tors are 'not makinjg contributions.— They bave! made, their- sacrifices., Any; thing more - than what they are doing is a national.matter.

In answer to Mr. Bheedy, a member of the Commission, Mr. Heffer said the position of the bank in tho industry w,is difficult, but not alarming. _ The further hearing was adjourned.

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