VESTED INTERESTS

Otago Daily Times, Issue 22498, 16 February 1935, Page 14

VESTED INTERESTS

DOMINATION OF FARMER BURDEN OF INTEREST RATES IMMEDIATE RELIEF URGED (From Oub Parliamentary Reporter) WELLINGTON, February 15. “ The farming community has been too long chained to vested interests not to desire some form of relief which will give some hope for the future.” declared Mr W. J. Poison (Stratford) during his speech on the Mortgage Corporation Bill in the House of Representatives to-day. “ The farmer wants to know when the Government will approve-of a plan to rid him forever of complete domination by financial interests.”

Mr Poison said that the farmers were up against such conditions to-day and that they could not possibly carry on without immediate assistance. They could not pay the rate of interest with which they had been faced for the last few years and their most urgent requirement was to have the interest rates reduced. The farmer wanted to know how he was going to square his accounts at the end of the year and also what interest and principal reductions were to be made within the next few months. If this problem had been fairly met in the past the country might have escaped some of the proposals in the present Bill. For instance, the powers of the mortgagors’ relief commissions might have been extended, but. many farmers were now glad of the Government’s plan provided it gave them immediate and urgent interest relief and principal readjustment. 1 “But the farmer,” added Mr Poison, “was also concerned with the attitude of the State and his prospects for the future. The, proposed corporation will dictate the interest rates, and if it succeeds it will occupy the position of enormous bond-loan associations on the Continent—in Germany and Denmark — which actually determine the price of land, so it is only natural that the farmer, and particularly, the young farmer, should feel anxious about the corporation.”

Mr Poison said that the fanner was not a Socialist. His calling made him believe in individual effort and convinced him that the competitive system gave him the best of opportunities, but he considered that the system needed improvement and that it should apportion its rewards more justly. The farmer wanted to see the Government’s plan managed by the Mortgage Corporation to keep the interest down and not to raise it. In the past, he added, the farmer had pinned his faith to co-opera-tive principles. Labour voices: Is that individualism?

Mr' Poison: Oh, yes. Co-operation and individualism go well together and are by no means mutually exclusive, hut of late the farmer -has begun to realise that co-operation has received a* body blow—almost a death knock—-in this Bill, and he is, now prepared to support the principle of State aid. Mr Poison said the co-operative plan did not antagonise any other section of the community. He was afraid that the proposal in the Bill meant the end of the co-operative financial system at present operating in this country, and which had been the hope of the primary producers elsewhere. He was satisfied that the co-operative plan would have aroused no antagonism. It was said the aim of the corporation would be service and not profit, but that was not generally the object with which financial people entered into such concerns. Surely the fact that the dividend was to he 1 per cent, above the bond rate was an incentive to keep up the rate. Mr Coates: Would you prefer a fixed interest rate?

Mr Poison: I am merely discussing the Bill and not exploring the question of a fixed interest rate.

“If the State has a majority of directors on this organisation, how can the State escape the responsibility and step back and say it is not behind/the bonds ? ” asked Mr Poison. Some years ago the Government repudiated the responsibility for rural credit bonds, which were State bonds issued by the Treasury, with the result that they went on the market at a 1 per cent, higher rate of interest. Because of that action the farmer had to pay an extra 1 per cent. He did not want to see that state of affairs again, but he was bound to do so if the State were not behind the present plan. Mr Poison pointed out that the Dairy Industry Commission had shown that 3’} per cent, was the maximum that the farmer could pay. Even then the commission admitted that the accounts it had investigated were those of farmers on better land than many other producers. The mutual guarantee fund of £2,500,000 ultimately subscribed by 4 the borrowers, would undoubtedly be the properly of the shareholders. They would use it to protect their own share capital, and the £2,500,000 would stand between them and a loss. Although the borrowers were to subscribe five times the £500,000 share capital foundry the shareholders, they were to be given no representation. The £2,500,000 found by the borrowers would take the first risk ox loss.

Mr Poison said that if, instead of the share capital being issued, the State were to provide a further 3 per cent, on top of the mutual guarantee of 2 per cent., bringing it to 5 per cent., it would result in cheaper money being available and would prevent powerful interests faoin gaining the control of the affairs of the corporation. As the Bill stood it appeared to represent a skilful twisting of the- machinery to fit a capitalistic plan. Speaking of the plan to combine in the Mortgage Corporation the operations of several Government departments, Mr Poison emphasised that other departments were being left out, departments in which there was over £2,300,000 of Government securities. Why, he asked, should persons- who were mortgaged to those departments —the -Public Trust, the Government Life Insurance, and others —not receive the same treatment as those who were to benefit from the operations of the corporation?

The Minister of Finance; Are you opposing the Bill?

Mr Poison: I am not going to vote against it on its second reading, but will criticise various aspects of it and move amendments when it is in the committee stage. I have a perfect right to express the view officially expressed by the farmers, and will do what I think is my duty. Mr Coates: I don’t see how you can support the principle of the Bill in the light of your remarks.