LOANS FOR FARMERS.

New Zealand Herald, Volume LXIV, Issue 19779, 28 October 1927, Page 13

LOANS FOR FARMERS.

BLAN JO RELIEVE STATE* MONEY FROM PRIVATE SOURCES INVESTMENT OF SMALL SUMS. [BY TELEGRAPH.—PREJJS ASSOCIATION.] WELLINGTON, Thursday. Ihe debate on the Rural • Intermediate Credit Bill -vvas continued in the House to-day. Tho Minister of Agriculture, Hon. 0. J. Hawken, said the bill was the second instalment of the Government's programme for providing money for farmers and it had been adopted only after most, exhaustive inquiry. The difference between this system and that of tho State Advances Department was that the latter had never lent money on secondclass security. Some peopfo seemed to think this lending by the State should go on, but there must be a limit to the amount. Since 1918 the State had lent to private borrowers £64,329,771, which was proof that the State had done great service in providing finance for people. The time bad now come when people should be able to get their money elsewhere than from tho State, because public necessities must come before private needs. If the State had to go on providing money for both public and private requirements if would have to borrow so freely that its credit would speedily be destroyed. In these circumstances some other system in which the State did not enter had been found, and hence this bill.

Encouraging Investments. "Credit ia all very well, but capital is very much better," said the Minister. "I believe that investments are wanted by people who have small sums and do not know what to do with them. It is easy to put them in the Post Office, but it is also easy to get them out. The investment of small sums of money in New Zealand is one of the things we should encourage. If we can encourage people to invest capital in the securities under the bill we will have done a very great thing." The Leader of the Opposition, Mr. H. E. Holland, said the bill was a compromise, and was not in line with the Royal Commission's report, which recommended that the State Advances Department should control both long and short term mortgages. The State Advances Department should control rural credits, and as it already controlled long date mortgages it should have been allowed to control intermediate credit as well.

Mr. D. Jones (Ellesmere) said since 1922 the Government had advanced over £26,000,000 through the State Advances Office and £750,000 under the rural credits scheme. It was absurd to suggest the money would be lent on insuflicient security; the board would take care of that. Stock and station agents were doing precisely the same class of business and there had been no failures among those firms in the last 20 years. Security of the kind involved in the bill was perfectly safe so long as the supervision was good. Discount on the Loans.

Mr. W. D. Lysnar (Gisborne) said it would be far better to let farmers have an agricultural bank of their own, which was what was wanted.

The Minister of Lands, Hon. A. D. McL-eod: Who is stopping them from starting it 1 Mr. Lysnar: Your Government, by not permitting the necessary legislation to pass. Sir Joseph Ward (Invercargill) said he was not altogether opposed to the bill, but he would have preferred an agricultural bank. Extension of the State Advances Department -would have been better than the system proposed in the bill. That department was now well established, everyone had confidence in it and, given sufficient capital, it would have been better than the bill. The fact that discount would have to be paid on loans raised under this scheme had evidently been overlooked. This would probably absorb £200,000 and would have to be provided for. If Government officers signed debentures that niade the Government morally responsible for their redemption, said Sir Joseph. Although they were going to put this legislation on the Statute Book he predicted they would not be able to get money under it cheap enough to let it out again to farmers at under six per cent. The rate would probably bo seven per cent., and that was too high for any farmer in New Zealand to pay. Three Groups o! Opponents.

The Minister of Finance, JHon. W. Downie Stewart, said he understood stock and station agents were not unfriendly to the bill, which was meeting with opposiTion from three quarters—those who wanted an agricultural bank, those who preferred an extension of the State Advances Department, and those who, like the Farmers' Union felt it' would interfere with co-operation among farmers. There was nothing to stop farmers starting an agricultural bank if they did not like the Government's proposals. All they had to do was to show that they were able to do so on a thoroughly sound basis. Personally he would welcome such a step. The Minister said A!lr. VV. J. Poison, who, as president of the Farmers' Union, had persistently urged the establishment of an agricultural bank, had, after going abroad and seeing conditions, signed a report stating an agricultural bank was not necessary. With regard to the second point, the Rural Credits Commission reported that while the State Advances Department was the best institution of its kind they had seen, they reported that some system of finance should be devised which would relievo continual borrowing t>y the State. The proposal to provide loans to individual farmers was a wise one and was supported by a.report he had just received from the Land .Board in Massachusetts, in which the directors said if they had to redraft the Act under Which they operate they would make provision for loans to individual farmers, which was what was being provided for m this bill.

The bond issue under the Rural Credits Bill was being delayed because farmora were slow in sending in their documents, but he had every reason to believo the bond issue would be a success. They already had offers of large sums of money from abroad, but they would prefer to raise the money locally if possible. He thought the initial advance made by the Government would be more than sufficient to finance the scheme in the bill when supplemented by the bond issue. The second reading was carried after midnight and the House then went into Committee on the bill.