AGRICULTURAL BANKS.

Otago Witness, Issue 3611, 29 May 1923, Page 28

AGRICULTURAL BANKS.

EXPLANATION BY MR W. J. POLSON. FARMERS’ UNION AFFIRMS THE PRINCIPLE. m, hAWERA, May 22. Ihe annual conference of the Taranaki jarmeis Union was opened yesterday. Mr W. J. I olson, dominion president,' spoke mainly on agricultural banking and referred to the growth of farmers’ organisations during the past 18 months. New Zealand’s produce was equal to the best the world produced, yet we were being beaten in the matter of price by other countries. The truth was we must organise, we must have cheaper finance, and better methods of handling our produce. To this end some measure of marketing control and better methods of distribution at the other end were needed. Until taxation was reduced and a more economical method of public expenditure found we could not hope to <mt out of our difficulties. He referred to the success of Denmark, which was now one of the wealtlllest countries. It had been said that the Danish agricultural banking would be unsuitable for New Zealand owing to the moving population and our larger areas. However, he considered the best system had been found for New Zealand. Original. y it involved all the nobility of Germany, who were large landowners, but gradually it had adapted itself exclusively to the use of smaller farmers. Mr Poison referred to the Cahill report and America’s adoption of the system, where it had met with wonderful success. Mr Poison also spoke of the New South Wales State Bank He considered that nearly the whole of New Zealand s wealth came from the soil, ihere could be no argument about the need ter cheaper money in New Zealand. In when times were bad, our interest rate was 7J.. That year Germany’s farmers were not paying more than 4 per cent., and their bonds were at a premium of 101 lo 104. In Denmark a similar state of things existed. At the same time State bonds in Germany Were only £64. Continuing, Mr Poison referred to the farmers’ difficulty in raising mortgages. If agricultural banks existed tney -would be able to raise money not for three, but for 36 years, with the’ right to pay it off at a totil charge of £5 or £6. The keynote of agricultural banking Was contained ,n the word amortisation The farmer’s land became his bank. He would be able to borrow at a low rate. Mr Poison denied the recent report that the Danish Landsmen’s Bank had failed It was a joint stork bank that had whatever to do with the Landsmen’s Bank. He considered the Government which had no hesitation in coming to the assistance of a joint stock company to the tune of £2,00*0,000 should not hesitate to come to the assistance of the producers. It was the duty of the Government to come to the assistance of the producers. Mr Poison outlined the working of agricultural banking. Each borrower was asked to find 5 per cent, of the amount borrowed for subscription, us a share of the capital, and to severally assume another 5 per cent, liability This meant that if a farmer borrowed £IOOO his total liability for shares and guarantee would become more valuable, because the borrower paid off the loan and the security remained the nitp. lie thought the result of the guarantee would prevent anything in the nature of a land boom. He spoke of Mr Massey’s decision to improve the State Advances to SeMl-rs as a red herring. Mr Poison did not want to speak against (he department. He was satisfied that Mr Massey had done a lot for the producers by liberalising the department, but it had everywhere been shown that the State was not efficient as a farmer. The State valua tjons were always on the extremely safe side. The State methods were cumbrous. The department could not have earning power like a bank. Also Governments were subject to change. The next wacs likely to be a Labour Government. They knew what Labour had done in Queensland. They might have a similar Govern merit in New Zealand. That was wiiy it was essential that the Government should not control farmers’ finance. Mi Poison claimed for his scheme that experts considered it sound, and that it was a most Satisfactory and up-to-date agricultural banking measure. Firstly, they wanted to get

■he broad principles of agricultural banks I established. When such a bank was on its feet farmers would be independent. Mr Poison also spoke of taxation, closer settlement, marketing control, and other matters. It was resolved that this body of farmers affirm the principle of establishing an agri- j cultural bank in New Zealand. This was carried without dissent.