NEW PROPOSAL

Southland Times, Issue 21832, 8 October 1932, Page 6

NEW PROPOSAL

FARMERS’ RELIEF CANCELLATION OF INTEREST ARREARS MEETING AT LUMSDEN An original proposal for the relief of mortgagors holding farm lands was brought forward by Mr G. P. Chewings, of Mossburn a member of the executive of the Southland Crown Tenants’ Association, at a representative meeting of farmers and run-holders held at Lumsden last evening. The proposal which provides for the cancellation of arrears of rates, interest and taxes and for the re-crediting of interest collected by the banks on stock and chattel securities, was supportedby the meeting and it was decided to send it on as a recommendation to the Crown Tenants’ Association. As a return for the concession demanded in Mr Chewings’ proposal, it was provided that the mortgagors on their part would guarantee to keep up production to its present standard and in no way to jeopardize the mortgagees’ securities. Properties to Stand on Merits. The proposal is as follows:— (1) All properties are to stand on their own merit. That is, where a man has interests outside his farm, the profits, if any, from the business are not to be placed to the credit of the property. (2) The farmers are to keep adequate books, (This is now compulsory for taxation). (3) Where the books show that the properties have not been able to pay rates, interest, taxes etc, in part or in whole, whereas before the depression they were able to do so, the arrears of rates, interest etc., are to be cancelled. (Private mortgagees are already doing this in some cases). (4) When making calculations sufficient working expenses and living expenses are to be allowed, so that the farm will be kept up to its full production.

(5) Where interest has been collected by the banks on stocks and chattel securities etc., and where the mortgagee has received no interest, the interest so received by the bank is to be re-credited to the account.

(6) Interest re-credited as in “5” is not to be used for the reduction of overdraft, but is to be used for production, really creating working capital. (7) The interest collected by stock and station agents on stock and chattel securities, etc., are to come under the same headings “5 and 6.” (Where the money has been advanced to the stock and station agents by the banks the banks are to re-credit the stock and station agents with their interest). (8) Interest charged on money for goods supplied is to be paid in full, and all money for goods supplied is to be paid in full. (This is in distinction to paragraph 10). (9) The above is to apply from the 1929-30 season, each year to be taken separately. (10) When prices stabilize a _ revaluation of all land, stock, etc., is to be undertaken, and the mortgages are to be adjusted to the new valuations. Rents are also to be re-adjusted.

The Mortgagors’ Guarantee. We on our part agree to do our utmost to keep up production to the present standard, and increase it if possible; to keep our properties and stock in good order, and in no way jeopardize any of our mortgagees’ securities.

“More production of exportable goods is absolutely imperative,” said Mr Chewings in introducing his proposal. “The primary producers are bankrupt and their financial position is daily getting worse. Why all the struggling on when-they know that every sheep, lamb and pound of wool they produce is hanging a greater burden round their necks? They are doing it to try to keep their homes together and because they know that through more production of primary produce lies the only way to a return to prosperity. “The primary producer is certainly keeping up his end of the stick. If he had sat down and not exerted himself he would be no worse off personally, but the people of New Zealand would have been worse off. The primary producer is the goose that lays the golden eggs and through him, and him only, will prosperity return to the Dominion. This being the case, it is up to all those who can do so to help him to their utmost, for by doing so they all safeguard their own interests and help to keep New Zealand afloat. “As long as the farms are occupied the mortgagees’ equity is being safeguarded. How can the farmer be given encouragement to carry on? The most important thing is to give him security of tenure and to give him an assurance that he is not going to be the only one to suffer through causes over which he has no control. He is quite prepared to stand his fair share. Give him these and you give him contentment and confidence to carry on even though he knows he is not being recompensed adequately for his labours. “The farmer’s greatest bugbear is interest in all its forms. Mortgages on farms and stock, rates and taxes of all descriptions his income is quite inadequate to pay. The big majority of farmers are strictly honest regarding their debts but, owing to circumstances over which they have no control, they cannot meet their obligations. The farmer produces the real wealth of the country, in exchange for which he cannot get sufficient money to meet his obligations. Recapitalization Of Interest.

“Recapitalization of interest is of little use. It only creates insurmountable hurdles and makes the farmers’ position untenable. As for the mortgagee, it creates a fictitious value for the property. The fact that the farmer has not paid his interest has given him a certain amount of working capital with which to carry on operations' on a restricted scale. The gross income from sheep returns is not sufficient to pay the working expenses of keeping the property in full production. Had it not been for the fact of the farmers failing to pay their interest they would have been off their places long ago and production would have ceased.

“To the mercantile firms are due the grateful thanks of the whole com-; rnunity for the way they have stepped into the breach and helped to keep up production by their assistance to the primary producer in supplying him with manures, seeds and stores. Without their help production would have been very much curtailed. These advances have practically no security behind them as the majority of the securities held by mercantile firms are second mortgages, and when one considers that the equity on first mortgages has practically disappeared, the precarious position of the firms can be imagined.” Every Farmer in Same Boat.

The only other security which the mercantile firm had for its advances was the very doubtful one that every farmer was in the same boat and that it was very unlikely at the present time that the mortgagee would force a sale, continued Mr Chewings. The mercantile firm must be protected. The

mortgagee had been helping by not collecting his interest, the counties had helped by not enforcing the payment of rates and the Government by not enforcing the payment of taxes. “Thus it will be seen,” he concluded, “that it is imperative to carry on primary production. The only way to do this successfully is to give the primary producer security of tenure and equality of sacrifice, for by so doing you will give him encouragement to carry on in face of adversity. You will also give the mercantile firms, who are to-day standing behind the farmer (and, incidentally behind N.Z.), security for their advances. An agreement on the lines I have suggested seems to me the only solution of the difficulties facing the whole country.” Advantages of Agreement.

Mr Chewings explained that the agreement would have the advantage of being able to run on indefinitely. In a prosperous year everyone would be paid in full. In a lean year the various interest-bearing moneys would receive a part or none of their interest and the farmers would have security of tenure. The costs of production would be made the first charge on the proceeds. Another advantage would be that the agreement would safeguard the second and third mortgagees’ interest as far as possible in the circumstances. The chairman said he desired to support the proposal. He appealed to the meeting to pass it. Mr H. F. Blatch, of Lynwood, said Mr Chewings deserved credit for his efforts. In some ways the proposal was weak and in others drastic. It provided in one part for the remission of county rates. He represented a riding on the Wallace County Council and in that riding there was £B5O of arrears in rates. If some ratepayers defaulted the others would have to cariy the burden. It was unworkable and if carried out the counties would go bankrupt. Mr Chewings said the proposals provided that everybodys books should be open for inspection and that an adjustment should be made on a just and reasonable basis.

Mr Blatch then moved that the proposal be forwarded to the executive and this was carried. After the chairman, and Mr Blatch had emphasized the need for mortgagors to organize and to make their demands in a body it was decided to form a Lumsden sub-branch of the Southland Crown Tenants’ Association.

Mr Chewings was elected chairman and a committee was appointed.