The Daily News WEDNESDAY, FEBRUARY 20, 1935. FINANCE FOR FARMERS

Taranaki Daily News, 20 February 1935, Page 4

The Daily News

WEDNESDAY, FEBRUARY 20, 1935. FINANCE FOR FARMERS

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Acceptance of the machinery and disapproval of the manner in which it is to be controlled is a fair summary of the attitude of a meeting of farmers at Hawera yesterday towards the Mortgage Corporation Bill now before Parliament. It was a large and representative meeting and indicated the keen interest being shown by the farming community in the Bill. The speakers were drawn from the districts of Taranaki, Auckland and Wellington, and their position in the executives of the Farmers’ Union gave greater weight to their utterances. Naturally at such a meeting criticism was more emphasised than agreement, but in their own interests farmers should ponder just as seriously upon how far they can co-operate with the Ministry in its efforts to rehabilitate rural finance as upon what they consider proposals which vitiate the Government’s plans. There is fairly general agreement that the need for assistance exists; it is agreed also that there is money awaiting investment in the' Dominion, for which rural securities have in late years had little attraction, and that if interest rates are to be brought down it must be by a method that will restore the attractiveness of “broad-acres” security. For borrowers the long-term mortgage repayable by instalments is undoubtedly the best form of raising money, and machinery must be devised that will make such mortgages liquid enough to appeal to the investor who may not desire to see his funds locked up for many years. Insofar as the Bill attempts to meet those needs it should have the hearty support of the farming community, which will, if it is wise, take into full consideration the effect of defeating the measure. It is all very well to assume that an extension of the powers of the present Mortgagor Relief Acts would be preferable to the Corporation Bill as submitted. Have farmers any surety that such action would follow the rejection of the Government’s present proposals ? They, or any other suggestions, must be financially sound or the borrowers will have to pay more for accommodation, and the means intended to help may do harm. The Government thinks soundness can be better assured by the capital of the corporation being shared between the public and the State. Admittedly, this is a compromise, and like most compromises will not please all the parties concerned, but instead of condemning the proposal root and branch the search for further compromise might prove the wiser course. The chief exception to private share capital, with concomitant representation on the directorate, appeared to be that it would divert the corporation from the purpose of rehabilitating rural finance to that of making profits for shareholders. But as those profits will depend upon the successful resuscitation of the farming industry, is not the danger more fancied than real? Complaint was also made that although borrowers will eventually supply the reserve funds stabilising private shareholders’ security they are to have no representation on the directorate. Provision for such representation could surely be made without wrecking the Bill, even if representation were postponed until the reserves accumulated equalled the amount of share capital. As regards a State guarantee of the corporation’s bonds, Ministers have admitted that the guarantee will exist in effect, aiid if it would make for cheaper money or for better working of the scheme to accept the principle openly it would be worth further consideration by the Ministry. Criticism was also levelled at the Bill because it did not legislate for a fixed rate of interest on mortgages. That is to be left to the corporation. It would have to be left to the corporation if the organisation were under co-operative or State control or under the control suggested in the Bill. It was asserted that with State guarantee a co-operatively run corporation could without difficulty raise money at 3 per cent. There is and can be no proof of this possibility until it is put to the test; and the same applies to the other estimates that cost of instalment repayments and corporation management could be kept at one and a quarter per cent. Everyone would like to think the estimates sound, but all concerned must remember they are estimates only, and if proved unsafe might leave mortgagors ill a worse position than ever, The Bill is not perfect.

and the Minister in charge of it has said he will accept amendments based upon constructive criticism. Farmers or any other section of the community are entitled to show in the plainest possible manner what they consider are the defects in the measure. But to stigmatise it as an attempt to worsen the position for the benefit of monied interests does not help to improve the Bill. . Something more constructive is necessary as an alternative, and something that is as definite as the proposals it is desired that alternative should supersede.