MONEY LENDING.

Stratford Evening Post, Volume XXIX, Issue 110, 30 June 1911, Page 5

MONEY LENDING.

A /NEW SYSTEM DESIRED. CHAMBER OF COMMERCE DISCUSSION. Some time ago Mr J. V B. Richards read a paper before the Chamber of Commerce in which ho asked that steps bo taken to the end that all money lent on land should be lent I'm a given period and should not be repayable on demand as was the case at present. 'Jim matter was discussed at tlie annual meeting of tho Chamber last night when it was moved time the Chamber take such'stops as would result in tho principle of the paper being brought into force. Mr Richards said the executive had treated the paper in a non-committal manner. If "there was any good in his contentions there could be no harm in them being discussed. ..It was proved that there was something in it by the fact that the Taranaki Farmers’ Union had consented to circulate the paper. The paper only dealt with advances on land. Farmers were not expert in matters of finance and it behoved other people, to give tho farmers a helping hand* in regard to their loans . .It was necessary to have organisations for the distribution of money on goods; but tbe most important .thing was to look after the interest of the .producer. In conclusion Mr Richards asked for criticism of his paper. Mr Kirkwood seconded the, motion, chiefly for tho purpose of getting criticism. From a banker’s point of view, the banks liked short-dated loans because their depositors- put their money in for short terins. One solution of the difficulty would be for the Government to borrow more money. But if The Government tried to borrow more they.would meet hard criticism. His own opinion was that tho Government was hardly borrowing .enough. It was impossible for a young country to get forward without borrowing. Ho hoped the paper would ho circulated further than it. had beon.

Mr King said ho did not agree with ■Mr Richards as to the innocence of the farmer. Pie thought that Taranaki farmers wore as hard to . get over as anybody? He thought all business men should be protected in the same way ns the farmers were, because everybody was a producer in one sense or another. ( Mr James, while approving the paper, said be was afraid the principle was beyond the power of the Chamber to affect. He had never heard of a case in which a bank had hebn arbitrary in dealing with a mortgage repayable bn demand . Mr King said it had been assorted that, land was the best security. He thought that if the Bank of New Zealand had lent money on stock they would have done better than by lending, as they did, on land valued over ite proper value. •Mr V'oung said he supported the motion, but could not see that any good would bo done. The banking system of the prse.nt day had been in vogue for many years and Mr Richards’ idea would upset the whole of that system. Ho thought tin legislature of the Dominion could not interfere in the matter. The banks did not make advances unless they saw the farmer was going to make a success of things. it was very rare to hear of a bank calling suddenly on a client. The banks arranged their business so that such a course would not 100 necessary. For those reasons he opposed the principle of tho paper. Mr Richards, in reply, thanked members for tho interest displayed in the paper. If his idea were adopted tho owners of money might suffer, but he did not think that would matter much. If the principle wore adopted in the Dominion there would, no doubt, be a cry of driving capital out of the country. He did not think it world be practicable to extend the principle to business people. He had no intention to state that nobfedy but fanners ueve producers. Stock could .easily be turned into cash, hue the same condition did not obtain in regard to land. The returns of the business of banks in New Zealand showed that tho advances were slightly below tho deposits, which showed that the policy of tho banks was not dictated from Home. , Possibly it was true that the banks did not suddenly call in their advances, but why should the banks have tho power to call in advances if they did not exorcise it. While the banks had that power they would use it wherever and whenever it suited their purpc.se. His idea was merely to have the matter brought before the legislature. They should endeavour to get tho House to appoint a committee to go into the matter. Ho would suggest that that committee consist largely of producers. It was an advantage for a man to pay interest . n a daily balance, but that advantage did not counterbalance the liability to repay on demand. It scorned fair enough that the borrower should have the right to pay off at any time and that the lender should have the right to call up bis capital, but be thought the disadvantage was on thq borrower. Mr Young bad said the banks arranged their business so that they were under no necessity to call tip capital. If that were so, why did the banks need the position for repayment on demand. The ideal way for a farmer to borrow money was to borrow it oyer a.long term. Nobody could get the ideal, but they should endeavour to come as near itas they could. Ho did not suggest that he was capable of nutting forth a complete now system of money-lend-ing. He merely desired that more capable people should go into the matter. All ho desired was to see some system under which the time of repayment was set forth. While repayment was at Cidl a farmer was lulled into a sense of false security. If the farmer know when the repayment was due iie could make provision for it. He took it that tho banka wore controlled by shrewd people. If it was forced on the banks to make advances on set terms, no doubt they would take deposits only on set terms, thereby balancing matters. ■Ho thought the producers demanded the most attention. If there was a time of stringency, was it fair to cripple the producers? He thought it was not. Tho present system seemed to bo making a chopping block of the producer. It seemed that tho producer was sacrificed for the benefit of the distributor. On a division Mr Young was the onlv dissentient.