AGRICULTURAL BANKING.

Northland Age, Volume 25, Issue 16, 13 August 1925, Page 7

AGRICULTURAL BANKING.

(By Kerikeri).

Agricultural banks are nearly universally found in the civilized countries of the world, farming in some of the principal agricultural countries being almost completely financed by their means. Even in the less civilized countries, Land Banks have made great progress. They are not a new idea; the first land bank was started a century and a half ago. By pooling the securities of those requiring loans and by issuing bonds to cover the value of the loans, the farmer is enabled to get long-term credit at the easiest possible rate of interest whilst any man can have five pounds or twenty-five pounds worth of “interest” in New ZealAi farming by investing that required amount in bonds. The investor can sell his interest the day after he buys it, he can quit it at any time. Agricultural Banking bonds are favourite investments, almost al ways ranking above State bonds. The method of valuation is so sound that land values become stabilised. The security is so good that once the scheme is “swinging” (usually achieved by a first push from the Government of the country which starts the bank) it never looks back. In practically all cases, Government assistance is refunded in the first few years of the bank’s existence.

Land banks do away with all the host of charges consequent on frequent renewals of mortgages. They let a man sleep at night, because his mortgage is never

due. It pays itself off in its lifej time. Land banks cannot finance a maa who is hopelessly involved, but they bring down the rate of interest and, by so doing make the man more financeable. It is a better proposition to finance a man at five per cent than it is to carry him if he is sailing close to the wind at seven and a half per cent. Indeed, one half per cent may make all the difference where the mortgage is heavy. Besides financing the farmer, a properly constituted Land Bank will finance the farmers’ co-oper-ative companies, etc. This'is an extremely profitable business ahd it is little good forming control boards unless finance is controlled —as well chase a shadow. By reducing costs in all directions to the farmer and enabling him to profitably increase production, land subdivision is encouraged and production is still further increased. Land banks at first, but with increased momentum and weight as time goes on. Profits stick to the land instead of leaving it. Thrift is encouraged, instead of being discouraged. Settlement is increased. Price of money and consequently cost of living are reduced. Prosperity is coupled fast behind a powerful engine with full steam up and a clear run ahead. GO FOR IT!