FARMERS’ FINANCE

Evening Star, Issue 19952, 23 August 1928, Page 11

FARMERS’ FINANCE

A BREAKDOWN SOMEWHERERESULTS OF RURAL BONDS ISSUE [ltoil Out Paeuamotauj Uu’OKTEU. - ' WELLINGTON, August 22. Machinery had been provided lor farmers’ finance. The Government had given the scheme a start,_ and there had been no breakdown in the machinery. This was the assertion of the Minister of Finance in concluding the financial debate in the House today. If there had boon any breakdown, he added, then it must be due to some other factor. it was significant, said tho Hon. Mr Stewart, that the main topics in the debate had been those of the farming interest, and this was to bo expected. It was alleged by critics that the finance provided for farmers by the Government was inadequate, but was this the case? In tho Advances to Settlei’s branch applications came to under £l,000,000, and his experience was that during the sifting process about onethird of them could not reasonably be considered In the Rural Advances branch the Government had done all that it had been asked to do. It provided tho machinery, floated a bond issue, dealt with all loan applications to date, and there was no breakdown due to lack of funds. Mr H. E. Holland: How much more money has been available? The Minister; We have paid out over a million sterling, and the sale of bonds up to the present is between £600,000 and £700,000. As tho Government had carried out its share of tho contract, ho suggested that it was not lack of system which constituted any problem. If tho bonds were not going to be popular in New Zealand, owing to criticism raised that they were not part of the public debt, ho could still sell them at any time in Australia or England, whore no question of that kind would do raised While tho bonds were specifically excluded from tho public debt, be lad frankly admitted that if an mergence arose tho Government would see them through. Interest and principal were paid through tho consolidated fund, which bad the right to recover from the Rural Advances branch. That was all the investor was concerned about. He would get payment from_ tho Consolidated Fund, and knew bis interest was safe.

WHAT THE BANK BOUGHT. Mr Savage; Is that why tho bonds wore rushed? Tho Minister: “ No; they were not rushed, though that is what wo were told would bo done.” Before it was known whether tho issue would be a success or not he made an arrangement with tho Bank of New Zealand for underwriting. Tho bonds wero issued on February 23. They did not sell freely, and on ‘March 27 tho bank applied for an investment in tho loan in the usual form. It received tho bonds on the terms stated in the prospectus —viz., £94 10s—and as it was underwriting it did not get the commission which other brokers got If there was to bo any difficulty in getting the New Zealand investor to take up these bonds, lie would have no difficulty in obtaining tho money, though he assumed that it was the wish of the farmers, expressed when the scheme was advocated, that they should bo popularised in tho dominion, because that was tho whole . basis of tho scheme. It was thought I that tho farmers would buy them at 1 a discount, and use them for repayment purposes. £ho term fixed was twenty I years, but ho was wondering whether a shorter term would mate tho issue more popular. Ho proposed this session to take steps to make it clear that tho bonds were not to bo treated as part of tho Public Debt.

| AMPLE FUNDS FOR MORTGAGES. I Mr Ransom: What is tho amount | subscribed by tho public? 1 Tho Minister: “The bank took between £350,0DD and £400,000, and the public took tho rest.” He pointed out that, in addition to the rural credit scheme, many Government departments wero lending money freely when the security existed. The Public Trustee informed him that ho had loaned on mortgage last year between three and | three and g-half millions, but ho was unable at short notice to separate countrv from city mortgages. Mr Forbes: lie lends to local bodies, not farmers. Tho Minuter: Three millions were loaned on mortgages last year, and no mortgages arc turned down where there is security.

Tho Government Insurance Department was also lending, and thcro were i trust companies and lawyers with ample funds. “ft is not in lack of funds where the hold-up occurs,” concluded . lie Minister. “ Whether it is a fact that the margin is too tight 1 do not know, but that difficulty must be a North Island difficulty, as there is no such trouble in the South Island. If the hold-up is duo to the margin 1 do not know how you can remedy it by legislation, because the valuer will immediately uiicicr-valuo to safeguard himself in tho other direction.”