FINANCE FOR FARMERS.

New Zealand Herald, Volume LXV, Issue 19916, 9 April 1928, Page 8

FINANCE FOR FARMERS.

The announcement that the first issue of rural advances bonds has been fully subscribed, although the achievement of that result has taken six weeks, marks the successful inauguration of a system which promises to overcome the obstacles that have latterly impeded the flow of investment into rural securities. The need for a constant supply of capital assistance to settlers undertaking tho development of primary production is apparent; nor is there any necessity to recite the causes of the widespread misgivings with which the lending of money on individual mortgage is regarded. This position can be met by the rural advances system, which is designed partly to permit an extension of the State's management of loans to farmers and partly to provide a means by which investments may be made on the security of broad acres without the risks or the trouble of single mortgages. Reduced to its simplest terms, this system provides for investors an agent to deal with farmers seeking loans, £.nd not only are the details of management undertaken by the agency, but the risks of investment are spread over the whole extent of the lending operations. In practice, judging by- the record of the State Advances Department, of which the new organisation is a special department, the risk of loss in the aggregate is negligible, and the State's guarantee to bondholders mex-ely a formality. The development of this promising experiment will depend upon the steps taken by the department to gain public confidence in the system so that the constant demand for loans will be supplied by a steady subscription of bonds. There need not be any fear that such investment will diminish the supply of capital for other purposes. Prudent financing of the primary industries is the most useful purpose to which savings can be applied, since they will immediately become reproductive; while money lent to farmers will necessarily at once become available for investment a-gain, since the greater part of it' will be spent within the country.