FARMERS AND FINANCE

Taranaki Daily News, 26 November 1925, Page 15

FARMERS AND FINANCE

AFTERMATH OF MORATORIUM. INCREASED STABILITY. Hope, <r rather that sturdy optimism that embraces hope and so many more of the admirable characteristics of a British farming community, is returnino* to the farmers of the Dominion, foTlowing a period during which the prospect was dark and the future apparently had little promise for the man on the land. With rather hasty generalisation and a somewhat confusing intermingling of cause and effect the farmers’ bad time is described by some as the same as the aftermath of war. Others define it as the reaction following the boom in land values. Plain men who take things at their face value and do not probe for obsecure causes simply call it “the slump.” Mortgages have little hesitation in blaming the moratorium, or at least its prolongation, for the length of the dark days that hovered over the farmers. The last-mentioned cause is at least worthy of consideration, as with its extinction the prospects of the farmers are manifesting progressive improvement. RURAL INVESTMENTS The s withdrawal of capital from rural investment, which was the inevitable result of the reaction following the boom, was a serious blow to the farming community. More serious still was the prejudice created in financial circles by the prolongation of the moratorium. “The aftermath of the moratorium has hardly yet been realised,’ stated a prominent .financial authority in Auckland on Saturday. “As far as the private mortgagee is concerned he has practically ceased to exist. Capital previously considered to be safely invested in broad acres has been turned to other channels, and it will be many years, if ever, before rural mortgages again become popular with private investors.” The latter, it was stated, had turned their attention in many instances to the Stock Exchange, where sound investment securities were to be found in abundance. As far as financial institutions are concerned it is beHved in some quarters that here has been a wholesale withdrawal of mortgage money in rural districts. Inquiry among experts failed to substantiate this suggestion. There is certainly a difference in the attitude of all 'capital toward farm securities, but it is more a change from over-confidence to a rational attitude than any suspicion or suggestion that such securities are unsound. The channels through which the great bulk of the mortgage money of the country flows are controlled by men of sufficient vision to realise that if the farms are starved for lack of capital the effect will be reflected very shortly in the cities. EFFECT OP MORATORIUM. . Asked what he considered had been the effect of the ze I moratorium the head of a j>- - • usurance company stated that Luc ternination of the moratorium was"so "recent that it was impossible at present to ascribe to it any particular effect. It had been stated quite frequently the interference moratorium legislation had made with private contracts would result in a striking dearth of money for rural investment. This prediction was not being fulfilled. Investors did not like the moratorium and he considered the Government in future would be extremely chary of introducing such legislation even in the -t acute emergency. It was recognised as a basic principle in financial circles, said, the authority quoted, that capital had to be made available for the primary industries. That principle was being observed by his company in all respects. Legitimate demands w’ere being met to fullest extent but any tendency toward speculation was not encouraged. The question of the extension of land settlement, it was admitted, presented something of a problem. To a country such as New Zealand, that depended so largely on its primary industries, extension of settlement and increased production were essential. Private capital could not be expected to undertake the responsibility of new settlement. That was clearly a matter for Government action, and financial institutions could be depended upon to take the legitimate responsibility of finding capital to finance the farmers. AN ALL-ROUND IMPROVEMENT. Confidence in the farming industry due to a combination of circumstances including the extinction of the moratorium was expressed by the representative of a leading firm of stock nn' 1 station agents. Right through country, he said, there was a mar increase of stability in all branches of farming. (Money was more freely available and the majority of people had go't down to a proper working basis. In regard to expiring mortgages, Il was stated that there was no great difficulty in arranging renewals. 'More eaio was now exercised in making valuation for mortgage piuposes bu‘ this, he emphasised, was a further contribution to stability’. A property was not now valued on the nr ice tbr’’ ’’nd been paid for other land '»> ity, but on actual pro iucintr ’rah:e. On such basis, which was the only safe standard, there was no difficulty in arranging finance. Prices for stock and other primary products, it was added, were good, with a tendency to improve. An indication of this was afforded by the fact that there was a certain amount of inquiry being made privately for -wellknown wool clips. This was a satisfactory manifestation of confidence in the prospects of one of our chief primary products at the opening of the new season. Farming operations were somewhat backward in some districts, the informant stated, owing to the -spring coming rather later than usual, but this was merely temporary, and in no measure affected the cheerfulness with which the farmers generally now regarded the outlook. Increased confidence in the future was an outstanding feature among those associated with the farming industry. Thi-s feeling had become more marked with the extinction of the moratorium. Other contributory' causes no doubt were stability in prices for primary products and a satisfactory general election.