NOT FAR ENOUGH

Poverty Bay Herald, Volume LII, Issue 17132, 7 September 1926, Page 12

NOT FAR ENOUGH

NEW BAN KINO LECH SI. ATI ON

oiTOsrriON comm lint

(Per Press Association.) WELLINGTON, last night

When the Bank of New Zealand Bill came u-p for the second reading in the House to-night Mr. H. E. Holland, Header of the Opposition, said the measure went some of the way towards establishing an agricultural hank, hut not so far as he would like to see. lie expressed the opinion that a limit or 66 2-3 per cent on advances would Be a heavy burden on small farmers, who could not. get assistance through the ordinary channels. He urged the Government to )re-consider the proposal, and made it 75 per cent. It would be as well, .Mr. Holland thought, if the Minister made it clear that, in the event of the depreciation of securities, the State must hack the scheme. If aslump affected the securities, the State, in the, last- resort-, must come to the aid of what was virtually a State Department. It was true the Public Trust Office, State Insurance and State mines were in much the same position, but- the difference was that, under this Bill, a subsidiary body was authorised to raise money by bonds, which would be issued by them, hut. would not be backed by public, credit.

The Nationalist lender. Mr. G. W. Forbes, thought that if Hie Minister found it necessarv he slnm-ld' include a clause in the Bill giving the State’s guarantee and backing to the money raised. This should not be done unless it was found difficult- to raise the money without- such a provision.

Sir Joseph Ward said that the reason that the alteration in the margin was made in ibis Bill was that- the Government intended to prevent another £10,C00,000 being added to New Zealand's public debt of £239,000,000, which would make the Dominion appear to other countries as the mostprofligate country in the world. At first, he had been inclined to think the Government should guarantee up to 20 per cent. but. later, had changed his mind. In view of the fact that tlie bonds would he signed by two of the State's most responsible officers, no thinking man would suggest that the State could repudiate stich a document. STATE .BORROWING. Sir Joseph Ward referred to the suggestion by Mr. Forbes that a certain amount of money could be raised in New Zealand by short dated loans. Such a course would prove disastrous. ll did not require much thinking to -see that if it were not for our marvellous productivity we could not stand np against the public responsibility, which was placed on the Government’s shoulders. What was wanted was stability, and, if stability was wanted, Ihe State must keep off tlie market for short periods. While New Zealand was emerging from her infancy, she could not afford to lend money out at short periods, and then go on the Home market for more money to cover it. He thought the Bill met a very difficult position, and. while some thought a limit of £20.000 should he fixed as a limit of advance, there was no doubt that if that was done many small fanners would have to go without sums such as £4OOO or £SOOO, of which they mk'lii lie in urgent- need. Mr. Adam Hamilton said the Bill was a very satisfactory step forward, considering the late hour at which the report of the Commission was available. It dealt- with one of the most- potent problems <if Ibe dav. namely, how to keep the people on Hie land. It was a fact that the people were leaving (lie eonnfry for the towns, and if was a question how to cause the popula.tion to (low (hi) other way. Country life was not attractive, because tho financial return from the, land was not so great as from city investments. Yetthe- greatest value of New Zealand’s exports came from the land, and, failing maintenance of that production from Hie land, financial disaster must overtake the country. He did not think it was safe to lend beyond a margin of 66 2-3 per cent, otherwise the bonds necessar? to raise the capital fund would not sell. NO CHEAP MONEY. Mr. 11. G. R. Mason said that instead of this Bill establishing a- rural bank, it was the means of avoiding that enterprise, land was worthy of the Government which had raised tho rate of interest to the fanners. It provided no cheap money for the farmers, and practically said that itwas impossible to do what- building societies all over the world were doing. It would come n-s a bitter disappointment to many people throughout the country. It was a miserable result for the commission, which had (gone all over the world to find a satisfactory solution of our problems. Cheap money was being left- to private banks to exploit, because there was no class for which the Government- had any consideration, except the money-lending class, and there could be no escape from that position until the people woke up and realised what, tho policy of the Government was.

The. lion. A. D. McLeod said that it was impossible to keep Die rates of interest- down, and so provide cheap money, while there was a .shortage of money, because money would always go to the market where it could get its best return. Mr. J. H. Hamilton contended thatthere should he greater provision for the man of small means, provided he was the right kind of man.

Mr. 11. T. Armstrong said the Bill was pure camouflage and humbug. It would not assist farmers, luff would cause many people to he sorely disappointed. NO BETTER. SCHEME. Mr. D. Jones stated that on the Royal Commission which went abroad there was one member who was a supporter of an agricultural hank, but he returned evidently convinced that it- was not all that he thought. The commission reported that the Advances Department was the best system of lending in the world, and in no part of their report did the commission say that an agricultural hank was the remedy for our troubles. This Bill had' been described by one of the Labor members as “ humbug.” But what was tho alternative basis of Labor's policy? Was it land nationalisation which struck at the foundations of the creylit of the people of New Zealand?

Mr. .1. McCombs said the Bill would be more or less useless and be n dead letter, and was not- worth discussing. The Bill would be a tremendous disappointment, for the Government lmd failed in their promises to the people by this legislation. The Minister of Finance, replying, stated tb;d the Government realised the anxiety of the farmers to secure greater credit- facilities, and, as there was not much time (hi? session, the Select Coin mittee looked for some immediate way of giving relief. Therefore they took out the kernel of the Royal Commission's icport: the recommendation for the issue of long term mortgages on a system of bonds which had been tried out in other countries. They wcie leaving over ft he more complicated c|iiestionsof intermediate credit and warehouse securities. He agreed with the Leader ol the Opoosition llie.t no Government could iilford to allow anything to ban pen to this or any other large puli lie undertaking in which the interests of

till- mass of the citizens was involved The Rill was read a second time.