Manawatu Evening Standard. MONDAY, JULY 6, 1931. LOANS AND INTEREST.

Manawatu Standard, Volume LI, Issue 183, 6 July 1931, Page 6

Manawatu Evening Standard. MONDAY, JULY 6, 1931. LOANS AND INTEREST.

The discussion at the meeting- of tlie Manawatu Provincial Executive of the New Farmers’ Union, on Saturday, on the subject of interest rates followingthe moving- of a remit, is illuminating-. The remit was intended to urge the Government to bringdown legislation to require mortgagees to write down interest charges in the same proportion as the fall in produce prices. The remit was freely discussed and it was eventually withdrawn as the delegates realised the danger of legislating along the proposed lines. While some mortgagors—and others—favour intervention between mortgagee and mortgagor there are others who realise such action would ultimately be to the disadvantage of those seeking to borrow or renew mortg-ages. It is fully recognised that practically all products of the land are disposed of below cost of production, in cases quite 75 per cent, below cost. The result is that many land owners—the occupants of the land —are unable to meet their liabilities. Their wages have suffered a “cut" of anything- up to 100 per cent. ; they are remaining on the land on sufferance only. This is not only unfortunate for the individual but is bad for the country. A reduction of mortgage liability' by legislation would, however, do more harm than good. Even the talk along these lines has done —and still is doing—harm. Those directly or indirectly connected with farm lands know the difficulties being faced and they know that some occupants cannot for the time being- meet their engagements. Some may weather the storm; others will not. This is recognised—especially by those holding mortgages, and who are much concerned. Many individual mortgagees have already met the mortgagors and treated them even generously; and many more will similarly act before conditions again become normal. Even lending insitutions are “nursing" mortgagors in the hope of a recovery. Eew if any lenders on farm securities will escape unscathed. Talk of State interference through legislation will completely discredit farm lands as a security and if given effect to would make a lasting impression on the present generation. Public discussions such as that under notice have the effect of causing those with loanable money to become still more frightened of lending on the security of farmingland ; they create a fear of repudiation during a slump which might only be brief. Indeed, far too many investors have already been. impressed with the risks attendant on land as a security. The shrinkage in the values of the products of land, the high costs of production (whioli the farmer cannot help), and the pos-

sibility of the security partly or wholly vanishing 1 as a consequence of economic .conditions and the drift of public thought are amongst the reasons for a lack of confidence in farm land as a security for loans. Already the war-time moratorium legislation and the more recent Mortgagors’ _ Relief Bill have assisted in the destruction of confidence, and further confiscatory legislation, will only add to the difficulties of those who can. only carry on with borrowed capital. There was a time when land was recognised by lenders as g-ilt edged security—however, confidence has been lost and' that day is past; confidence may, liowiever, be restored by a more correct public opinion and by more careful and economical administration of public affairs along less Socialistic lines than have been followed in recent years. Country lands burdened with mortgages and other liabilities could be materially assisted by a degree of de-rating. Probably this could not be complete, for most land is subject to mortgage as security for special road, bridge, and drainage loans.' It might not be practicable to relieve land from all special rates on these loans, but it should be possible for the State to accept the responsibility of constructing new roads in rural districts and maintaining- all country roads. Already motorists are providing, through special taxation and licenses, a fairly substantial sum for road work. This could quite properly be subsidised from the Consolidated Fund as every individual benefits directly or indirectly from roads which serve a national as well as a local purx)ose however remote they may be. The State is interested through the extent of production which provides the National income and the land tax. Should the latter be abolished in favour of an income tax on farmers the State would be still more interested in their prosperity and incidentally in the provision of reasonably good roads to serve all farm lands in order that production and profits might increase. As the profits of land owners increased, the revenue of the income tax department would increase. The day when a farmer’s isolation was of no concern to anyone has passed. It should, therefore, be apparent that it is of concern to all that the man on the land should be placed in the position of working- out liis own salvation without injustices beinginflicted on other equally worthy members of the community. Apart from repudiation, there sorely must be a way of assisting those in need of consideration.