BANKING AND FARMING

Southland Times, Issue 21361, 6 April 1931, Page 3

BANKING AND FARMING

HOW THEY ARE INTERWOVEN. Paradoxical as it. may seem, states the Monthly Summary of the National Bank of Australasia, the history of primary production in Australia is very largely the history of Australian banking. Primary wealth and a sound banking system have been interwoven with the fabric of our national growth. In close combination they have been responsible for the building of roads, bridges, railways, and cities, comprising colonisation achievements which aroused the wonder of the world. All phases of trade and commerce are based upon these two main factors of the economic structure, and there is little doubt that the well-being of the entire community rests upon the stability of the rural population and prudent finance. That, surely, is the true relationship between the existing banking system and the land industries of Australia. They are inseparable, and it is of extreme importance to the country as a whole that in days of trial such as those through which we are now struggling the banks should be afforded every facility to function with confidence and freedom to render men on (he land the maximum assistance in their work of production. The manifold calls on their resources, including, in some cases, borrowings by improvident Governments, have of late restricted the banks in their efforts to function in the best interests of the community.

Farmers and graziers are persuaded to believe that the severity of the depression is caused by unwarranted action on the part of finance institutions to curtail credits. When funds are scarce and credit low, banking policy is held up before embarrassed citizens as deliberate determination to intensify the crisis. Sinister attempts are made to drive producers and those in charge of finance into separate and hostile camps. These attempts, political in their nature, are designed to undermine confidence; so as to pave the way for alluring experiments or delusive schemes to promote prosperity. Those who have given impartial thought to the actual position appreciate how fallacious are these proposed experiments and how noxious tne schemes of finance sponsored by ambitious doctrinaires;- but glib tongues and facile pens are doing their destructive work among the uninformed; and it is by these agencies • that . great damage is inflicted — indirectly perhaps—upon producers throughout the Commonwealth. Even high exchange rates are frequently pointed to by those unaware of the facts as something from which the banks derive special benefits. The actual position, however, is that practically the whole of the monetary advantages accruing from favourable exchange goes to the'producing interests, the banks receiving for their services only the small margin of about one half per cent. Far from curtailing credits or embarrassing men on the land, the finance institutions are straining their resources to help them in their difficulties. That such difficulties are unprecedented there can be no doubt. One of the factors overlooked by those who seek to win popular applause byattacking established banking practice is that the banks often make more liberal advances than can be obtained under fixed mortgages, and, compared with mortgagees, the banks are therefore in a less favourable position to protect their loans. Perusal of banking returns over the past year or two reveals the truth that deposits, reserves, and capital funds have been used close to the limit to carry on not only the wheat-grower and the grazier, but all branches of primary production, as well as to provide for the requirements of secondary industries and the needs of Governments. . Nevertheless, to ameliorate the plight of the farmers, various banks are now rendering special assistance in their own sphere and by their own methods. The National Bank has inaugurated a plan to cover the 1931-32 wheat year. Under this plan it is proposed to subsidise self help in cases where particular need exists, and reliable, capable farmers are concerned. The principles to be followed are co-operative in their objective. Storekeepers, machinery merchants, fertilizer companies, and others are asked to join in this effort to assist the wheat-growing industry. Though the measure of succour must be made on banking lines, limited to bare necessities, and rendered only to those known to be trustworthy, it is hoped that by this plan of assistance, not only' will the wheat-growing industrv benefit, but allied activities feel the salutary effect.