RURAL CREDIT SYSTEM.

New Zealand Herald, Volume LX, Issue 18299, 16 January 1923, Page 8

RURAL CREDIT SYSTEM.

OVER-INFLATION IN PAST. ''. """" / CAUSE OF PRESENT TROUBLE [BY TELEGRAPH.—-PRESS ASSOCIATION.] .. WELLINGTON, Monday. A brief survey of rural credit in New Zealand was the subject- of a paper prepared for the social, and statistical etc-' tion of • the Science . Congress to-day by j .Professor J. B. Condliffe and Mr. A. . Pelshaw, M.A., both of Canterbury College. >v The conclusion arrived at was that the rural industries are suffering not so much from shortage of credit at the moment as from unsound finance resulting from too much credit in the immediate past, and that no economist' could view with equanimity tho schemes which offer even j the danger of further inflation of credit. A solution of the Dominion's economic difficulties would not be found in a further era of cheap money based either on I borrowing or on internal inflation. ''' The Rural Credit"" Association's scheme v was admirable within limits, hut could do little or nothing to assist .present diffi-j culties, arid much the same may earn of the State bank. If such schemes were used to provide more liberal credit facilities in an endeavour to evade recognition of the plain fact of the present situation the result would be disastrous. It must be remembered that/ the longest and moat severe financial . depression experienced b\ i,ne Dominion was th period. of falling prices from 1873 to 1895, the difficulties of which were very largely dim to unwise \ borrowing and the consequent land boom •in the early seventies, resulting in overcapitalisation, which finally recoiled upon the banks.