FARMERS’ MORTGAGES

Taranaki Daily News, 20 February 1935, Page 12

FARMERS’ MORTGAGES

CORPORATION BILL PROPOSALS VOTE OF UNANIMOUS OPPOSITION JOINT STOCK CONTROL ATTACKED “THAT this meeting of west coast farhiOrfe assembled foT the purpose of discussing the measure, excesses its deep sense of disappointment and dismay at the form in which the Morts&te Corporation Bill has bOen presented to Parliament, and its entire opposition to the principle of joint stock control contained in it, and urges Parliament even at this late hdur to amend the measure to provide for co-operative, or ip the alternative State control, being satisfied that no organisation run for profit either can or will raise money as cheaply or lend it to farmers or anybody else at as low a rate as the State. This resolution was carried unanimously at a large gatheiing of farmers of the west coast convened by the Farmers Union and held at Hhwera yesterday. There was an attendance of over 500 farmers. Mr. J. E. Campbell, Mayor of Hawera, presided, and there were also present on the platform Messrs. W. J. Polson, M.P., Dominion president of the Farmers Union, H. 0. Mellsop, Auckland provincial president, Lloyd Hammond, Wellington provincial president, H. E. Blyde, North Taranaki provincial president, E. J. Betts, South Taranaki provincial president, T. T. Murray, Stratford sub-provincial president, D. Le Cren Morgan and E. K. Cameron, North and South Taranaki provindal secretaries, T. Currie and k G. Seddon, Wanganui provincial president and secretary.

“MIGHT MAKE HISTORY”

FARMER leaders speak LOW INTEREST RATE WANTED. CONSTRUCTIVE CRITICISM. . “This meeting might vary easily, make history,” remarked Mr. Campbell in extending a welcome to the farmers present. He commended the South Taranaki executive oi the Farmers’ Union on having arranged the rally and bringing before them speakers with an inside ’ knowledge of what the legislation proposed Would mean and what it should mean. Few people at present knew very much of the provisions of the Bill, which affected not only the faming community but the Whole Dominion. He hoped that the deliberations of the meeting would be noted, and that the results would be fob the benefit of the Dominion. . , The-meeting could be claimed as a thoroughly representative one, said Mr. H. E. Blyde, for there were farmers present from as far north as Mokau, as far south as Wanganui and es far west as Opunake and from inland. There was no question that the position of th<b farmers was such that some legislation was required for their relief. He held that the Associated Chambers of Commerce was incorrect when it decried the statement made by farmers’ representatives that 50 per cent, of the farmers wefe in a bankrupt position, because if farmers to-day were called upon to meet their accounts hardly one of them could do so. Mr. Blyde also denied that the legislation proposed was for the benefit of only one class of the community, because the Farmers’ Union had always been careful to ask only for legislation that would benefit the people of the Dominion as a whole. It had also been stated by sdme that-there had been no need for legislation, because the mortgagees as a class would have been pre* pared to. meet the mortgagors and make private arrangements. He, however, knew that the legislation placed on the Statute Book regarding mortgage adjustments had given relief to thousands of' farmers who had come before the cbmxpissiop, and had also resulted in private arrangements being made in thousands of other cases, with the result that thousands' of farmers who would have been pushed off their farms were still carrying on. ASSOCIATED BANKS’ FIGURES. Mr. Blyde said that the figures of the Associated Banks showing that only 6 per cent of their farmer clients were in difficulties grossly misrepresented the position, for banks were very conser- > vative institutions whose clients were the most financial of the farmers. Moreover, it was said that many farmers had credits in the banks, but that did not disclose what money farmers owed elsewhere to stock and station agents, etc. He made it clear that the farmers as a whole were not merely putting forward destructive criticism} they recognised that « long-term mortgage system and sinking funds would be beneficial, and if amended the Bill would be of great value. The criticism of the farmers was to be constructive. It had been stated that the farmer should stick to his farm and leave the finance to business people, but he submitted that in Mr. Polson the farmers had as a leader one of the greatest authorities in the world on rural finance, of which he had made a first hand study. The big point with the farming community was the rate of interest, as unless the rate was comparatively low it would place any benefits out of the reach of many farmers. They claimed that if the bonds were State guaranteed they would be a gilt-edged investment and money would be available at a very low rate of interest. That was the big factor if the scheme wa§ to be beneficial to the farmer. • They also objected to the principle of private share capital. Why should they bother about £500,000 private share capital when the ramifications of the board would be over £50,000,000? Private share capital merely meant that there would be three private directors. He held that there was a real danger in having a domination of private shareholding interest. Farmers must awaken to what the Bill meant to them, as their whole future was at stake, and they must therefore fight whole-heartedly tor what they considered right. “TREMENDOUS SIGNIFICANCE.” “I regard this as a particularly important meeting.” said Mr. Polson. The measure we are considering is of tremendous significance, and it will be much wider in its ultimate effect than in helping those in need to-day.” The Farmers’ Union for years had been advocating a co-operative system ‘ of finance, continued Mr. Polson, who detailed the history of the. Royal Commission, of which he was a member, in its consideration of the methods of interest reductions some years ago. The chief opponent of the plan then was

Mr. Cbates, who hid n<sw 4v<slved a £>lan “tying the farmers to the chariot wheels of high finance.” • Mr. Cbates had nOt accepted an invitation to be present at the rally, afid the speaker regretted that he was unable to be present In his speech in the House Mr. Coates had made a. moving appeal for the farffiers and had then gone dii tb defend a Bill that wAs indefensible. The Sheep farmers were in almost as sorry a plight to-day as the dairy farmers. What farmers were hoping for was a lower rate df interest. He detailed Mr. Coates’ plan, aS explained in his pamphlet, and criticised the scheme of making the farmer pay as high as 7 per ceht. interest. Money was cheap to-day in New Zealand as well as in other parts of the world, said Mr. Polson. He detailed the rates of lending to farniers in other countries, and said Mr. Coates had admitted that the interest- rate could be 3 per cent, if the amortisation period were lengthened. If the loans were State guaranteed, or the State provided the reserve fund, he was satisfied it would be possible to get money at close to 3 per cCnt., which with other charges would not cost more than 4j per cent, or 3} per cent. “DAN&EROUS TO FARMERS.”

By the Bill a corporation was to be set up, taking over £50,000,000 of State and private securities. The organisation should not, he declared, be in the hands of private interests, which would fix interest rates dangerous to farmers for all time. He was satisfied, said Mr. Polson, that the farmer who had always pinned his faith, to the co-opera-tive system was , interested in having lower interest rates, hot higher. The Intermediate Rural Credit Board in all its yehrs of successful running had lost only £2OO, yet it was to be put into joint stock control hands. It was impossible to tie a tb-bperative system to a joint stock machine. The proposals had started in an -extraordinary Way. When the Dairy Commission was sitting the work was divided, ahd the Southland representative, knowing nothing about the matter, was struck with the brilliant idea Of joint stock control. Mr. G. A. Duncan, a Dairy Commission member sitting in the bddy of the hall: That is uniair and incorrect, Mr. Poison. (Applause). Mr. Polson:' Well, I was ted to believe it by the man in question. If f have iftade an error I will withdraw. (Applause). Continuing, Mr. Poison said two-thirds of thO members of the House were opposed to the Bill, and yet because of party discipline they would vote for it. The Minister had hbadfed his pamphlet “Service, not profit.” A voice: Is this the Rotary Club?

Mr. Polson: W6ll, it’s something pf a Rotary project. It was difficult to believe the slogan, and it was probable that the payments to shareholders would result in the pride of money being kept up and forced up rather than it would mean low rates. The shares would be taken as investments. It had been urged that the State woqld have the majority of directors, but he instanced the cage of the Bank of New Zealand, where the State had four directors. The bank’s slogan was certainly not “service before profit,” and he did not blame the bank. In every great crisis the State had to interfere, and in the present instance it would have to interfere again. The State must recognise its responsibilities. He recounted the history of the State Advances Bfil, when the banks had taken a step after the Bill had passed and the printing of a notice that the State did not accept responsibility had been put across the face of each bond. NEED TO REDUCE COSTS. If a machine consisting of men devoting their whole time to the work had been set up New Zealand farmers would be in a much better position. When the Dairy Commission’s report was received it 'was realised that the farmers had to get lower costs. Those having control in the corporation, including shareholders, would contribute about £1,000,000. Yet those borrowers paying in £2,500,000 would have no say in any way. Providing the shareholders with buffers against loss, the farmers were putting up the real capital. If £500,000 of share capital entitled some consideration of control, surely £2,500,000 Of borrowers’ capital deserved some say. He could quote instances of this in more than 30 countries. The borrowers took the first risk of loss; the shareholders the next. The share capital was being provided “to inspire confidence,” according to Mr. Coates. But the State could raise money more cheaply than anybody, and the talk of inspiring confidence was all moonshine, destroying the confidence of farmers more than anything else. “This plan is a skilful twisting of the co-operative system to fit a capitalistic plan.” said Mr. Polson. "Give the mortgagors’ adjustment Commissions power to attack capital as well as interest. If the drive for the co-operative system continues we have a chance of changing the Bill; members of the House will become aware of the dangers of the Bill, and even Mr. Coates, who has been fighting for this Bill in the House, may. have trouble in getting it passed in its present form.” Mr. D. Wards (Okaiawa) said that as Mr, Duncan had flatly contradicted a

statement by Mr. Polson he should be asked to make an explanation. _ The chairman considered that it would not be advisable at the present Stage, as there were other speakers. Mr. Duncan might possibly make an explanation later. “YOU HAVE BEEN STUMPED.” “Your land had been stumped and so hav6 you. since I visited Taranaki 38 years ago,” said Mr. H. 0. Mellsop in opening his address. “Reform has done it,’ answered a V °Mr. Mellsop said that Auckland had not always agreed with Taranaki in its opposition to the Bill. It had been stated that the Rehabilitation Bill could not give immediate relief, but. that would come later with the Mortgage Corporation Now, however, that they had seen the provisions of the Mortgage Corpoiati6n Bill he asked what help they were going to get out of it. He considered thd Hon. S. G. Smith at. New Plymouth had covered the whole position in hiS last paragraph, when he stated that the Bill was going to make a safe investment for money. One important aspect had not been touched during the discussion. Returned soldiers’ money had been lent by the State under definite contract to the soldiers, and this legislation now proposed to hand over to a semi-privately controlled concern all State mortgages. That was the whole basis of the proposal, and he held that it was repudiation by the Government of a contract. Many men were averse to any financial institutions getting any share of the control, as they were well satisfied with their treatment by the State Advances Department. He would like to say' something about the Dairy Commission, as Mr. Duncan was present. He had no objection to the commission’s findings, but he strongly opposed the commission being held in camera. He held that the farmers did need the Mortgage Corporation. The primary producers must leave aside the party question and vote solidly for the measure, and thCn any political party would listen to them. That was the only hope the primary producer had. He believed if the same measure of control as was how proposed had not been given to the Reserve Bank it would have been possible to get the farmer out of his difficulty without any repudiation of contract. If the farmer got out of his difficulty the whole community also got out of its difficulty, and that was the reason why the matter should be State controlled. Mr. Mellsop objected’ to the phrase that the farmer was “the backbone of the country,” rather the produce of the firmer was the life-blood Of the country. He asserted emphatically that the farmers Of the Auckland province would never agree to their mortgages being handed over to a semi-privately controlled corporation.

“100 PER CENT. OPPOSITION.” It was impossible to know what the Bill all meant, said Mr. Lloyd Ham- ’ monds, Hunterville, president of the Wellington executive of the Farmers Union. The Farmers’ Union was 100 per cent, opposed to shareholder control. The second thing was that interest must be more than 3% per cent. All New Zealand, except Mr. Coates, realised that. Something had to suffer and it would have to be the mortgagees’ capital. One great point was the huge amount of money awaiting investment. With the prospect of cheaper interest all the time the corporation would fix interest rates. There were men waiting to take 4 per cent, who would not do so if the corporation stabilised rates at 4/4 per cent, or 4% per cent. . The third great point was that the rate of interest could not be lowered unless the Government took steps in the launching of the corporation. He hoped the views o fthe Farmers Union would be broadcast from end to end of New Zealand. He then moved his motion. In seconding Mr. J. Cocker (Eltham) said that the farmer must do something even at this late hour. A rally at Eltham had been responsible for the setting up of the Dairy Commission, and it was possible that rallies such as were being held might prove successful in preventing the Mortgage Corporation Bill being placed under control of a joint stock company, . Before the motion was put, Mr. Campbell invited pertinent questions. Mr. H. Hughes, Normanby: In the event 6f this going through, ate you in favour 6f the cheap re-sale of land? Mr. Polson: The fact of this huge corporation controlling things ensures that there will be no land value booms. There are many Ways in which the matter could be controlled so that a man could n6t sen bn his shoestrings. ANOTHER BILL TO FOLLOW. Mr. W. A. Sheat, Pihama, asked if it were true that another Bill was to fol’°Mr. Polson Said it was true, but as he had been told in confidence and as the Bill had not been released he could not give any details. Mr. Sheat: Can you tell us why Mr. Coates travelled from end to end of New Zealand consulting with financial heads, and generally leading the farmers into the hands of the financiers? . . Mr- Polson: I cant tell what is in Mr. Coates’ brain. Replying to Mr. Muggeridge, Mr. Polson said he had strenuously emphasised the fact that the crux of the position was a bedrock rate of interest for farmers. He had asked Mr. Coates to prepare a table which he had had investigated and that led him to believe that the total of interest, working expenses and administration would be 414 per cent. He therefore could not understand why Mr. Coates had been quoting higher rates, unless perhaps he considered that it would be mbre pleasing to come down later. , Replying to Mr. McGregor Mr. Polson said that a trading bank and reserve bank had entirely different responsibilities. He had never considered it wise for the Government to control trading banks. The Government had all the necessary powers to control monetaiy policy, etc., if it had the control of the Reserve Bank. Replying to Mr. McGregor as to where the money would come from Mr. Polson said there was now £45,000,000 locked up in banks earning nothing which could surely be obtained at a low rate of guaranteed interest. Moreover, he did not consider a great deal of money would be required. Mr. Sheat: Don’t you think that to get out of the wood the financial control should be State-control, and the monetary reforms should be made as regards the Reserve Bank? P«r. Polson: Oh, yes. That is the Farmers’ Union policy. Replying to Mr. A. B. Muggeridge Mr. Polson said that no definite statement could be made aS to the proposed rate of interest, etc., as that would be fixed by the corporation. ' Mr. Browning (Midhirst) asked what definite action Mr. Polson would recommend farmers to take to offset the action ' of the Minister of Finance. He also asked whether Mr. Mellsop would recommend : farmers to vote for the Labour Party. FARMERS’ PROPOSALS. t Mr. Polson said that the farmers were ■ now taking definite action with a view ; to seeking public sympathy by holding ■ meetings in various centres. As a result i it was hoped to so influence some mem- : bars of Parliament that they would “wob- • ble into the right lobby for once.” : Mr. Mellsop said he must have been a i little misunderstood. He believed the sole • aim of the Farmers’ Union should be ! to support the measures, and their deI monstration would end in Parliamentary . members realising the right course of , action. The Labour Party and the Far-

mers’ Union could never agree on certain points. Replying to Mr. G. J. Bennett the chairman said that not only was Mr. Dickie asked to be present, but he was also asked to speak. A voice: What about Mr. C. A. Wilkinson? Mr. Hughes: He can do what he likes; the other has to wait for the whip to crack. The motion was then put and carried unanimously. Congratulations to thh speakers on the way they had presented their cases were extended by Mi'. Campbell, who said the lack of copies of the Bill had made the speeches interesting and instructive. On'behalf of the speakers Mr. Polson thanked Mr. Campbell for his chairmanship of the meeting. On the motion of Messrs. W. A. Sheat and McGregor it was resolved that copies of the resolution be forwarded immediately to the Prime Minister, the Minister of Finance, the Leader of the Opposition and the members for the districts covered by those present. Subsequently the visitors were the guests of the South Taranaki executive at luncheon at the Carlton, where they were welcomed by Mr. E. J. Betts, president of the executive. The toast of the South Taranaki executive was proposed by Mr. H. E. Blyde and responded to by Mr. Sheat. Cheers were given for Mr. Polson. INQUIRIES IN CANADA

PROVISION TO RETAIN VALUE. REPLY TO CABLED QUESTION. By Telegraph—Press Association. Wellington, Feb, 19. The Associated Chambers of Commerce of New Zealand recently cabled to Canada as follows: “The New Zealand Government proposes legislation for farmers’ rehabilitation. It is reported here that similar action is being taken by the Canadian Parliament. The New Zealand proposals include allowing certain mortgagors where the court so rules to retain at the expense of mortgagees up to a maximum amount 20 per cent, of the value of the land ascertained after a supervisory period of five years. Is there a proposal similar to this in Canada.” The following cable from an authoritative source has been received in reply: “While the meaning of your cable is not quite clear to us, the Farmers’ Creditors Arrangement Act, a copy of which we are sending you by mail, contains no provision similar to that described by you/