FARMERS' PROPOSALS.

Hawera & Normanby Star, Volume XLII, Issue XLII, 22 May 1923, Page 8

FARMERS' PROPOSALS.

AGRICULTURAL BANKING

ADDRESS BY MR. POLSON

Mr W. J. Poison, Dominion Fresi dent of the New Zealand Farmers* Union, addressed a w-ell-attenaed meeting of farmers and townsmen interested in tne system oi agricultural banking at the Grand Theatre last night. The president of the Taranuki Executive, Mr Mills, of Tokaora, was in the chair. Mr Mills said it gave him much pleasure to introduce Mr Poison. They would hud that Mr. Poison would Ixj able to deal with subjects that would e;ive them something to think about. He understood that Mr Poison was going to speak at length on the subject of agricultural hanking. Although townsfolk were not directly interested, if the farmers could establish agricul tural banks then it would also be in the interests of townsfolk. Mr Poison had spent a great deal of time, energy and money in furthering the interests* of the farming community generally, and from his address- they wouiti glimpse a sample of what he had been doing. Mr Poison, on rising, thanked Mi Mills for his kind words. This was his first visit to Hawera in his official capacity as Dominion president, and it was the first time he had addressed a Hawera audience. He wanted to mention at the outset/ that the farmers' organisation had been growing very fast during the past 18 months. One or two organisations had joined hands with the Union, and they would have a great deal more punch than in the past. At the same time he recognised that the farmer was very much like the school boy —he had to be talked to, argued with and convinced. He intended to confine his remarks that evening to practically one subject —agricultural banking, the Ijrinciple of which had been considered )y large, meetings of fanners throughout the country, with the result that resolutions urging its adoption bad been passed unanimously. Many of those present knew something of the conditions which exist in other parts of the world, and most of them were aware we had a country where we could produce the ordinary produce as well as it could be produced in any other part of the world. New Zealand lamb was as good as any other, and yet we did not get the same price for it; our butter was as good as Danish —he was prepared to say it was better, because it came from stock that was not housed for eight months of the year, but was fed en natural grasses. i Tet our butter did not fetch within shillings of the prico obtained for Danish. Our beef was beaten out. of sight as far as price was concerned by beef from the Argentine, and the best Canadian cheese averaged a higher price than ours. If this country were "God's Own Country,'' and we could produce such excellent produce, surely there was something wrong when we were being beaten out of sight by our competitors. I The truth was that we must organise. j "We must have cheaper finance; we must have better methods of distribuproduce at this end; Aye must have some measure of marketing control; we must have beter methods of distribution at the other end. Also, until we reduced taxation and found a more economical method of public expenditure, \ve could not hope to get out of the difficulties which we were in. ■ Continuing, Mr Poison said that the Farmers' Union's original proposals .were based on some study of the Danish syetem. The Union found, as the result of observations, that the Danes were getting money at a much cheaper rate of interest than they were. That in spite of the fact that climatic conditions in Denmark were almost Arctic in their rigor and the Danes had to house their stock for eight months of the year, the value of Danish agricultural land was from £100 to £150 per acre. In some cases it was as high as £200 per acre. More than that, Denmark was 60 years ago a povertystricken country and now it was one of the wealthiest Also, although ifl \va.s only about the size of the Wellington province, it exported a great deal more butter than was produced in the whole of New Zealand. its bacon export amounted to £28,000,000. So they could realise the wonderful success attained by that country, and he would give them evidence that such success was due to its agricultural system. It had been said that the Danish agricultural banking system would not suit .New Zealand, owing to our moving population, and the fact that our areas were so much larger. However on subsequent research the best system had been found, a system which had ben in use for more than 1(X) years Onginally it had involved all the nobility of Germany who were large lardowners, but gradually it had adapted itself exclusively to the use of the smaller farmers. Some time ago the British Government investigated the System and sent to Germany a Mr Cahill, who was regarded as one" of the best' Known banking authorities in the world. Cahill reported in detail on the sys*fm»JJnd als° spoke enthusiastically of it. Then a President of the United states had investigated the system, and during the last few years' the United States had adopted the system. Their banks were still under the control of the Government, but that control would cease as soon as their liability to the Government was wiped out. The system had met with a, most wonderful success iv America, 2,000,000,000 dollars having been lent by the agricultural banks to the farmers. Then the joint stock banks of America woke up to the fact that the agricultural banks were reducing the rate of interest md they succeeded in entirely paralysing their opponents for two years. Fortunately the last High Court in America declared against them and the hanks were able to resume business How ever they did not need to go as far as America for an example of agricultural banks. In New South Wales a State bank, very much on the lines of the American bank, had been formed feo extraordinary has been the growth of this bank that there was now a Bill proposed which would hand the whole thing over to the producers The thing was growing too vast for the Government to handle it. Mr Poison considered that practically the whole wealth of New Zealand was produced from the soil, and that meant that the farmer was responsible for the wellbemg o f the country. As far as the advantages of agricultural banking were concerned, there could be no argumeiit about cheaper money. In New Zealand during 1920-1921. when times were bad, our rate of interest was 7J per cent. I n 1920-1921, when Germany had just emerged from the war, the German farmer was not pacing more than 4 per cent, and his bonds *%S a T a ™'emi"ui of £101 and to £104. In Denmark a similar state of things existed. At the same time the btate bonds of Germany were only worth £64. J /'Another thing." said Mr Poison, is it possible at present for a farmer to get a long-dated loan." A year or two ago mortgages for a term of four and five years could be raised, but it was almost impossible at present to raise mortgages for a longer period

than two or three years. If agricultural committees were in existence they j would be able to raise money, not for three years, but lor 86 years, with the right to pay it off at a total charge of £o or £(j. The whole keynote of tin's agricultural banking lay in the word amortisation. A farmer's land became his bank. He was able to borrow at a low rate of interest. At present when a farmer had a good year he went and bought a motor-car, or bought shares in some rickety concern, or worse still bought more land and got himself further into the mire. Under the proposed system a farmer could put this spare ! money back into his land, where were was no rear of it escaping. it had been asked, if a farmer could run his own bank. Certainly he could, only not in the way some * seemed to think. A central board was elected for the whole of the country, and it would have the assistance of certain Government nominees. In any case the system which it was proposed should "be | followed here set out very definitely the road which the bank must travel. The speaker said that recently a report h.id gone abroad that an important Danish landsmen's bank had failed. The Prime Minister of New Zealand had been one who entertained the reiv rt, but he had been misinformed. The bank which failed was a joint stock bank, and had nothing whatever t~ , ith the co-operative landsmen's banks' of Denmark. I Mr. Poison then dealt with the advisability or otherwise of the Government assisting in the establishment of , the agricultural banks. In Denmark assistance was given by the State in • the way of subsidies and loans without i interest, etc. Cahill said the same j thing obtained in Germany, and in j New South Wales the Government had i established the banks and taken the i whole, responsibility and risk. The 1 speaker snil tb~t in this country the i Government which had no hesitation in j coming to t!;e r^icitaucc of a bankrupt ! jo'nt «tofiv company to the tnne of j £2.000.000 should have no hesitation in i cominjr to the assistance of the pro- | d-ncers. _ When the Government came to the assistance of the Bank of New Zea- ; land it was the investing class that it ' assisted. This proposed agricultural j bank would assist the producing cla,ss. : However, he was not going to rely on I either of these two points. Two wrongs | did not make a right. What he did ■ say was that as the producers on the I' land produced 98 per cent of the j -wealth of New Zealand, and as New ! Zealand was entirely dependent on its agricultural pursuits, if it could be ■ shown that by agricultural banking we ; could pet similar results as those) obtained in other par-ts of the world it was the duty of the Government to come to the assistance of the producer. When the banks were formed each borrower was asked to find 5 per cent of the amount he had borrowed for subscription as share capital, and to severally assume another 5 per cent liability. This would mean that if a farmer borrowed £1000 his total liability in shares and guarantee would amount to £100. Then each year the security became more valuable, because as the borrower paid off his loan his security remained the same. » In establishing a bank the farmers concerned forwarded a requisition to the authorities. On permission being given the farmers then appointed three of their number as a valuating committee. It might be said that this com- , mittee would % ralue securities too high, ' bnt their guarantee of several liability , acted as a brake in this respect. A . boom in land values was thus prevented, in fact the whole action of the ibank^was to stabilise land values and prevent anything in the nature of a , boom. The farmer knew that only on i the producing value of his land could he obtain a mortgage. Mr. Poison then proceeded to deal with what he termed Mr. Massey's "red herring." Mr. Massey had de- ' cided that the producer could be very much better assisted by the increasing >of the activities of the State Advances ;to Settlers' Department. He (the speaker) did not want to say a word against that Department, and he was satisfied that Mr. Massev bad done a lot for the producers of this country by liberalising that Department, but it had been everywhere shown that the L State was not as efficient as the farmer himself. State valuations were always on the extremely safe side. They were now, and the difference was not sufficient for the requirements of the | fanner in consequence. Also State ' methods were cumbrous. Also the State Advances to Settlers' Department could have no earning power as a bank. The speaker had outlined a bank which did have earning powers. Then they should not less sight of the fa-t that' Governments weve continually changing. We in New Zealand had "a stable Government at the present time, but in all Governments the Opposition eventually l^eca-i-e the Government. \t was ?aid that in Great Britain it was very likely that the next Government would be a T-obour Government. They knew what the Labour Government in Queensland had done, and the day might come when we would have a similar Government in New Zealand. It was absolntelv essential that the Government should not have control. That was the reason why they were asking not for 'an /rlvrinces to Pettier?' Department, bnt fov the establishment of a produce's' bank. Mr. Poison said that he, as a lay^ man, had compiled an Agricultural Banking Bill, and the opinion of experts was that it was a sound one and the most satisfactory and up-to-date \ agricultural banking measure that had j been submitted. At the same time he ! did not suggest that it was perfect. I lhey had first of all to get the broad ! principles of agricultural banking estab. I hshed. i\o uoubt the Government would chop the Bill about when they got it. lie did not want to see the farmers' organisations engaging themselves over minor details and forgetting the broad principles. Their opponents would be prepared to take remarkable steps when they saw their charges and profits decreasing but when the agricultural bank got on its ■ reet the farmers would be independent j Mr. Poison then dealt briefly with ! taxation. He pointed'out that sinee1 the war concluded New Zealand had increased its debt by £63,000,000, ! while Great Britain, which had fought the war and .financed other countries, I had reduced its debt by £400,000,000. I Ihere -was only one class of individuals : who could not pass taxation' on and i they were the producers. The producer ! paid land tax, income tax, and com- : pany tax-. The company tax was passed on to the farmers. It was necessary' that the incidence of taxation should! be changed and that we should have more economy. As an organisation the Farmers' > Union was out for marketing control. I recently a meat export control Act had been passed, and the union was j supporting the principle of a dairy ex- ! port control Act. They found that every branch of the producing com- ' mumty was asking. for some measure " ot control of their industry It was necessary that the producers should be able to step m and secure regulation of shipments and methods of disposal Dealing with wages, Mr. Poison' said he was not out against the wage-earner He had every sympathy with the farm worker, who had been loyal right through the slump. In order to reduce

wages they must reduce &c coat of' luuig, tiiia tuey could d* that by! ciioaper production, more scientific lnetiiocls, and better distribution. The speaker took as an example an ounce of KOid. Aommaily it was worth £4 os. In Germany it bought 2Uo~ hours of labour, in France 110 hours, in Great Britain 90 hours, in the United States 50 hours and in New Zealand 47£ hours. The wage-earner of New Zealand was the highest paid in the world; the people were taxed enormously; w« were i 2,000 miles from our mariset; we did 'not have the advantages ox cheap mouej, and we still got along. As an organisation the Farmers' Union was determined to bring about closer settlement.in New Zealand. Today the town population of Aew Zealanu was greater than the country population, and he held that it wa* tie duty of the Government to embark on a sound immigration policy. Farm schools .should be established, and tkose who went through them should be afforded facilities to settle on the land. By lower taxation, easier finance, and cooperative control this country could be made in reality what it was in name. "God's Own Country." (Applause.) Tho chairman then asked for questions. Mr. Dunn asked how it was that, if values would become stabilised by an agricultural bank, Denmark's land values had risen to the extent quoted. I Mr. Poison replied that land values in Denmark were actually stabilised at the figures quoted. Under agricultural banks the producing value of the land became the actual value. In Denmark the land had been increased in productiveness, the whole of the added pro fits going back into the land. A farmer present asked in the event of a man having land worth £70 an acre and mortgages to the amount of £50 an acre, what chance had he of getting money from an agricultural bank? Mr. Poison said it was proposed to limit the amount a fanner could borrow to not more than 66 per cent, of the value of his land. If his land was mortgaged more than 66 per cent he was afraid there was no hope of further advances. A voice: You will get no business in Taranaki. In reply to a further question Mr. Poison said that at the commencement the bank could not advance on stock. That would have to be done out of assets of the bank. Mr. Ward said he understood that the bank advocated putting people on the land. If a man had to find £34 an acre and his stock before lie could borrow money it was not much good to those wanting to get on the land. Mr. Poison said he had said 66 per cent in an endeavour to make the thing safe. He noticed that the Prime Minister, speaking of the advances to townspeople on their chattels, had been criticised because the Government were advancing up to 95 per cent. The Prime Minister pointed out that it was safe, because every half-yearly payment reduced the amount owing and so made the value of the security greater. Mr. R. Dunn moved: '''That this body of farmers affirm the principle of estab. lishing an agrciultural bank in New Zealand. ' Mr. G. H. Buckeridee seconded, nnd the motion was sarried without dissent. j i i J j i l