RURAL CREDITS

Evening Star, Issue 19326, 12 August 1926, Page 7

RURAL CREDITS

THE COMMISSION'S REPOST COMMENT IT H FISHER The lengthy report of the _ Royal Commission'on rural credits, which was placed before Parliament yesterday is evidently far from being an easily assimilated dish, judging by the comments made by a number of those whom an ‘ Evening Star ’ reporter considered might be interested in the subject. Most of those who were waited upon by the news-gatherer to-day, and they included prominent business men and those who had a good deal to do wirii tho farming community, conlesscd that they had either merely glanced “at the report,” or that the “ more they read it, tho less understandable became.” The only one of those approached who was prepared to give a pronouncement on the subject before spending the evening and a pipe or two on it, was Dr Fisher, professor _ot economics, at tho Otago University. And Dr Fisher made it clear at the outset of his brief chat that it was very difficult to give a formal opinion when all the data he had were the condensed newspaper reports. “Tho real problem of agricultural credit,” he. said, “is the difficulty of establishing direct contact between the people who need credit and those who liavo funds available for _ investment. This had been observed in all parts of the world, and is one of the numerous instances in which free competition fails to bring the results which arc socially desirable. This is not to say that there is a reservoir of credit available for agricultural purposes which is at present lying idle. It is a question ■of getting tho funds—that is the difficulty.” Dr Fisher said the objection that had been raised to the Government borrowing for advances to settlers, on the grounds that this would have a tightening effect on the local money market, applied equally as well to any other purpose for raising money. “ Sir George Elliott, the chairman of directors of the Bank of New Zealand,” he continued, “ seems to imply that raising capital by the Bank of Now Zealand would not have tho same effect as borrowing money by the Advances Department. The real problem ip either case is to make conditions sufficiently attractive to divert funds that would go elsewhere. The Commission appears to suggest that new funds could be raised charged directly against tho public revenues, as at present. It seems doubtful, however, that the funds required would bo forthcoming without a Government guarantee, which is equivalent to charges against the public revenues.” Ho contended that the danger of agricultural banks was that some people were hypnotised by the word “ bank/’ and appeared to imagine that those institutions had peculiar powers in creating funds for investment which were domed other persons. While a good case could be made out for making credit available to sound farmers, it was very necessary that care should be taken to avoid bolstering up those who had purchased land at prices that were universally admitted to be too high. He emphasised that the farmer was in a similar position to the heads of other businesses who_ had capitalised their assets at too high a figure. The only sound policy was to write them down to their real value. Though this policy was drastic 1 and unpleasant, it should bo applied to farming as to any other business.