FINANCE FOR FARMERS

Otago Witness, Issue 4049, 20 October 1931, Page 25

FINANCE FOR FARMERS

REDUCTION IN INTEREST RATES.

EXPLANATION BY

WELLINGTON, October 13. The difficulties which faced the Government in considering the arbitrary reduction in the rate of interest throughout the Dominion when framing the Supplementary Budget were explained by the Minister of Agriculture (Mr D. Jones) when speaking in the financial debate in the House of Representatives to-day. As .a great many of the mortgages were held by small lenders, he said, the effect of an all-round reduction would not provide equality of distribution.

“ If the Government had given a statutory reduction of 20 per cent, over the total amount,” the Minister said, “ we would have been giving a reduction to many people who did not require it at all. We have to remember that the great bulk of the big lenders have gone out of the mortgage business. The State, as near as we can calculate, holds one-third of the mortgages in this country and the small money-lenders, largely through the Public Trust and other Government offices, are the principal people to lend money on mortgage, and we find that there are many people whq have lent money to farmers in good circumstances who are in more difficult circumstances than those to whom they have lent the money. Consequently, we were up against this fact: That a compulsory reduction in interest would not give benefit to fanners, but would take it from the small lender. The Government proposes to deal with the situation in an entirely different way. We propose to ensure that the man who is in difficulties can take his case to the court, and the court can give him whatever relief is considered essential. In addition to this, we find many people who have sold farms have paid large sums for them and cannot now

carry out their obligations. The Govern-' nient now proposes that the vendor-mort-gagees who are in this position may secure J a reduction in interest and principal through the court.” Mr H. T. Armstrong (Christchurch East) : You called that robbery last year. Mr Jones: It is not robbery. It is a most important thing so far as the farmer is concerned to provide for a reduction in capital as well as in interest Continuing, Mr Jones said that the State Advances Department was vitally interested in this question. Many people had paid off most of their State Advances mortgages, and while a reduction in interest would benefit them only on the unpaid balance, the State, having borrowed the money abroad, would have to continue paying a high rate upon the whole. The proposal to reduce the interest rates arbitrarily would not work out as equitably as some people thought, the Minister added. A 1 per cent, reduction all round would not get the average man out of his difficulties to-day. “ I would like comment, however.” he said, “upon the manner in which the mortgagees in New Zealand are meeting the position of the farmer to-day. It is remarkable that, they are recognising the farmer’s difficul ties and are meeting him well in the adjustment of mortgages.” Mr E. J. Howard (Christchurch South): Some of them. Mr Jones: Quite true, but we propose by legislation to take steps to deal with those who are not going to be reason* I able.