SECOND EDITION. CHEAP MONEY ON FARMS

Poverty Bay Herald, Volume LIII, Issue 16364, 11 June 1927, Page 6

SECOND EDITION. CHEAP MONEY ON FARMS

ENCOURAGE PRIVATE LENDER

SUGGESTED GOVERNMENT

SUBSIDY

A scheme to popularise lending at lowrates of interest' on rural securities by private persons, who would be subsidised by tlie Government, was outlined in a letter from" Mr. H. E. Kent, of Makaraka. read at to-day's meeting of the Poverty Bay executive of the New Zealand Farmers.' Union.

The letter was as follows: "It appears to lie admitted by all of our public speakers' that cheap money is one of the present day essentials of the farmer. Cheap money, to me, means money below its 'normal rate. How can that be obtained?

"I suggest that the Government be petitioned to encourage private persons and others to advance cheap money, say, at 4 per cent., on rural security by undertaking to pay an additional 2 per cent, or 2£ per cent, on loans approved by them, the maximum period for such loans to be of, say, 10 years. Now that gives the lender a normal rate of interest for his money, and at the same time improves his security, which is one of the vital points to the lender, for the borrower is more likely to be able to pay 4 per cent, than 6 per cent., and having obtained money at a cheap rate will certainly encourage him to do his very utmost to meet his obligations, with the big hope of eventually freeing himself. "Now, to secure the Government advance of 2 per cent or 2£ per cent., 1 suggest that before registration of a wile, transfer or discharge of a property carrying such a loan, it should be incumbent on" the borrower that the. annual 2 per cent, or 2£ per cent, be either repaid, or secured on the property. On this scheme the Government is not called upon to iind a very large amount of capital, and the extra amount of production, rates, taxes, etc., created by these loans would surely compensate the Government for any monetary loss they might sustain, and, moreover, the. money having been advanced by private parties instead of through Government officials, the security would ho on a sounder basis, having had the personal inspection ami supervision of (ho lender, and money more quickly obtained after approval." It was decided to write to Mr. Kent, telling him that tlie matter of rural finance would be fully dealt with by the Dominion conference.