RELIEF FOR FARMERS

Taranaki Daily News, 29 November 1934, Page 14

RELIEF FOR FARMERS

INTEREST AT 3f PER CENT. ELTHAM FARMERS’ RESOLUTION. lost capital written off. ADDRESS BY MR. C. A. WILKINSON. “That the Eltham branch of the New Zealand Farmers’ Union is of the opinion that the rate of interest , to be charged by the proposed farmers mortgage corporation should not under any circumstances exceed 3J per cent., also that suitable provision be made for writing off lost mortgage capital. This was the text of a resolution passed by the Eltham Farmers’ Union after Mr. L. A. Wilkinson, M.P., had addressed the meeting on the proposed mortgage corporation aiming at the financial relief of said the Government considered the money question so big that it could not be dealt with during the past session, although some of the members had offered to stay up to Christmas to put through the necessary legislation. The Dairy Industry Bill m its present form would not lighten the burdens of the farmers, but would actually increase them, said Mr. Wilkin son, and in connection with the A 1131 1" cial aspect the Government did pot teei disposed to grant much concession. The idea of the proposed Bill was to TO-financa farmers’ loans at lower interest rates by public mortgage, and the amount of the farmers’ present indebtedness that could not be covered by a new first mortgage would be held in suspense to act as a sword of Damocles with an indefinite debt over the heads pf the farmers. It was really a form, of financial slavery and the farmers would be in debt for all time. It would, Perhaps, be better for the farmers if they let the mortgagees take over the land and run it themselves. NEED FOR ADJUSTMENT. Mr. Wilkinson proceeded to stress the need for financial readjustment, his opinion being that much of the money lent on land was only a bad debt and should be written off as any tradesman would do. There was a grave danger of the whole financial system breaking down if the tension was not lightened, and all would go over the. precipice. That he was not a repudiationist, was affirmed by the speaker, who considered that men should pay the amount of mortgage debt • that was supported by real value. The Government itself was one of the largest mortgagees and the taxpayers would have to tax themselves to make up a certain amount of lossesIt was, however, going to be a fight between people who lent money and people who owed it. ' In 1928 butter was worth 175 s a cwt. To-day it was nearer 70s. This was a colossal drop. Cheese was 70s in 1932. It had been as low as 45s and was now round about 50s. These prices were “murderous’’ to the men on the land who had financed on the previous prices. He was not one to condemn the Government for the position, 'said Mr. Wilkinson, but he was trying to help the people out of their troubles. But in fighting these battles for the farmer much hostility was incurred from the cities against those who were trying to assist, and the attacks were even directed against the Government itself. There would be a grant of 12J per cent, relief on rural rates this year, but this was objected to by some of the towns which were very heavily rated themselves and would receive no relief. „. . Mr. Wilkinson referred to the efforts made by Mr. J. Cocker and others to bring the necessity of financial reliet for farmers before the Government two years ago, and considered that thede steps had atMast helped to awaken the Government. His opinion was that money was not worth 4 per cent, to-day, and if anyone offered him £20,000 at 3

per cent, he could not invest the money profitably. Money was accumulating in banks very rapidly and soon would be very cheap. He was afraid, however, that the mortgage legislation would fix the rate for money too high and at a level more than it was really worth. It was not the county rates in Taranaki that were a formidable item. Most of the local county rates were very low, but it was interest on high land values that was the chief trouble. “TWO LOTS OF PEOPLE.” Suppose every farmer said he would walk off his land; that would create a far bigger slump in values and mortgagees would be bound to lose even more extensively than by adjustment. He did not think New Zealand farms would sustain two lots of people. Increased prices would not keep the farmers as much as they thought because if butter went up in price it would mean that more margarine would be used. The lower price of butter certainly stimulated its consumption. Without wanting to criticise the Dairy Board he said it did appear as if New Zealand had made a mess of its marketing and lost the favour of the British buyer. They had been led to believe politicians that New Zealand was one of the best customers of British goods, and that Britain should buy our goods, but this was wrong. New Zealand was actually a very poor customer of Britain. In the year ending in 1934 New Zealand sold to the United Kingdom about £40,000,000 worth of goods in New Zealand money values, and bought only £13,000,000. This was equivalent to £1 for every £3 New Zealand sold. For the six months ending July, 1934, the figures were even worse. New Zealand sold £25,000,000 worth and bought £6,000,000, or about £1 in every £4. Where did the good customer come in? he asked. They were told they should buy from those who bought from New Zealand. Last year New Zealand sold £604,000 worth of goods to Belgium, but bought only £lOO,OOO worth. If anyone objected to New Zealand buying Belgian goods let them stop selling to that country. New Zealand sold to France £1,340,000 and bought only £120,000 worth of goods. When anyone objected to French goods let him cut out sales to that country. New Zealand sold more goods to Japan than it bought from that country. Why this howl against Japanese goods? Mr. Wilkinson blamed the high exchange as one cause of making goods too dear and thus preventing importation. The exchange had acted as a protective tariff and made it easier for goods to be made in New Zealand, and there would be built up a vested interest that would not want the position altered. EFFECT OF HIGH EXCHANGE. Mr. Wilkinson showed the effect of the exchange on the importation of slag. In 1929 28,000 tons had been imported through New Plymouth. Last year the amount was 554 tons. The Harbour Board had lost a large wharfage revenue and had to pay a large sum in exchange on loan interest. The British manufacturers said that the high exchange had added to the cost of their goods and they could not keep their factories going. If their workmen were kept employed they would be able to buy New Zealand produce. It might be thought that phosphates would take the place of slag, said Mr. Wilkinson, but this was not so. Ne.w Zealand imported less phosphate than it did five years ago. In 1929 20,000 tons came through the port of New Plymouth, but this year. only 15,000 tons was imported. Mr. Wilkinson said that in 1934 the United Kingdom sold to India goods to the value of £33,000,000 and bought to the extent of £37,000,000. This was nearly an even exchange. Yet New Zealand bought from Britain only to the extent of £1 for £4. But to mislead the public the figures were worked out on a population basis and it was made to appear that the extent of India’s purchases was only 2s a head. Th?. Irish Free State sold to the United Kingdom £19,000,000 worth of goods and bought £lB 000,000; France sold £19,000,000 and bought £18,000,000. These countries bought practically £1 for £L Where did New Zealand’s wonderful custom come in with only £1 for £4? The

Chinese bought £6,000,000 and sold £5,000,000 so they were relatively better customers of Britain than New Zealand was. The worst customers of Great Britain were Argentine, Denmark, New Zealand, Canada, Australia and the United States. Farmers also suffered from high interest on stock loans, continued Mr. Wilkinson, this being up to 8 and 10 per cent. No farmer could pay those rates of interest, and when he brought the matter up in Parliament several people said this was not correct. Mr. Cocker: I know of a farmer who is paying 10 per cent, on quarterly balances, equal to 12 per cent, on the money. • COMPANIES’ AGREEMENT. Mr. Wilkinson quoted his speech on the subject in the House, averring that 8 per cent, was being charged and that stock mortgage companies were not keeping the agreement that their rates would be one per cent, higher than that of the banks. Mr. Wilkinson said that when the mortgage corporation came into operation it would mean the end of the moratorium. He wanted to obtain money for farmers at less than 4 per cent. Another important point in the legislation mentioned by Mr. Wilkinson was that the Crown as money-lender could now effect a settlement with its clients in regard to financial transactions without a court order. This was a thing he had recommended three years ago; it would enable the State Advances Department to compromise with a borrower in arrear and so save the expense of a court action. Mr. Cocker expressed the opinion that with money accumulating there would be no difficulty in selling bonds at 3 per cent. He was opposed to a high rate of interest and considered money was not worth more than from 3 to 31 per cent. If the rate were fixed at 4 per cent, by the Government that would become the minimum for money in New Zealand. He would not mind paying a higher interest if prices went up. He then moved the motion that was carried. Mr. Wilkinson added that farmers would not get out of their troubles if the lost mortgage capital was to be. held in suspense. He advocated that it be written off, and this clause was added to the motion.