FARM FINANCE

Taranaki Daily News, 20 February 1935, Page 7

FARM FINANCE

CORPORATION PLANS OPINIONS SHARPLY SPLIT PARLIAMENTARY DEBATE ARGUMENT ON BOTH SIDES By Telegraph—Press Association. Wellington, Last Night. - Continuing the debate on the Mortgage Corporation Bill in the House of Representatives to-day Mr. F. Langstone (Lab., Waimarino) said no Government could stand by and see tens of thousands of farmers going to ruin. He contended that the Government could borrow and lend money at a cheaper rate than the corporation could hope to do. Interest was not the’ farmers’ problem at the present time; the problem was that , income and prices had fallen because the bankers, in common with the Government, had followed the policy of deflation and money had been taken out of circulation. The reason that the Bill was brought forward, Mr. Langstone claimed, was not to help the farmer but to save the face of the Government. When Labour came Into power, as it looked like doing‘next election, it would solve the mortgage’ problem, and it would not need a corporation. There was nothing in the Bill that would assist farming, but it would cause consternation. . Mr. H. M. Rushworth (Country, Bay of Islands) said everyone would endorse the Minister’s statements of good intentions and sympathy, but that would not improve the position. It had been suggested the money to be issued would carry 3 per cent, interest, but that required explanation, as rural credit bonds, which would be in competition with corporation bonds, returned 4 per cent, to the investor. ' . PROBABLE INTEREST RATE. He thought the corporation rate could not be less’ than 4 per cent., and taking all charges into consideration it was probable the rate to borrowers would be about or 616 per cent. It seemed to him that in framing the legislation con* sideration had been more for the lender than for the borrower. The proposal meant putting the farmer under, budgetary control, which meant robbing him permanently of 'his initiative, self-reli-ance and self-respect and would reduce him to a state of peonage. In his opinion the first requirements were to secure an arrangement under which the debtor could meet his full obligations and to foster a free and -independent spirit among those engaged in the primary industries of the Dominion., Mr. H. G. Dickie (Co.,Patea) said that what seemed to be worrying members most was the Bill that was coming afterwards, and that was arousing interest throughout the country. He contended the farmers had been consulted when the legislation was framed; Budgetary control involved concessions by everybody and would enable the farmer to get back on the rails. He thought the farmer could have been assisted by giving him another cut in his interest rate and bringing the relief commissions up to date. He considered the number of shareholders’ directors should be reduced by one and that the tenure of office should also be reduced. He also thought the dividend ' should be limited to 416 per cent.

Mr. D. G. Sullivan (Lab., Avon) said that even supporters of the Bill were very half-hearted, and that must be disappointing to the Minister in charge of the Bill and his colleagues. On the Minister’s own admission the corporation bonds were not equal to Government bonds, and he doubted if they would be equal to the best local body investments. He thought' the Government had not met its obligations as far as local bodies’ rates were concerned, as the loss of rates meant half a million pounds to the local bodies of New Zealand. OPERATION “NOT FAIR.” Mr. R. A. Wright (Ind., Wellington Suburbs) said the measure appeared to be building up a huge corporation which seemed to aim at controlling all mortgages from one end of the Dominion to the other. All the Government measures so far assisted all the farmers whether they needed assistance or not, and that was not fair. For the unemployed or. old-age pensioners a needs test was applied, but farmers benefited whether they were in extremis or not. He contended that two joint managing directors was not a good thing and urged that there should be one managing director and one assistant as in the Reserve Bank. Mr. J. O'Brien (Lab., Westland) said he was convinced the Bill was merely another gesture to the farmer that in future there would be cheap money for them, but the same advice had been given them for the past 13 or 14 years. The farmer would be at the mercy of’ the corporation and would have not a chance if he failed to make good. He had failed to find one big organisation 1 that supported the measure, and if the Government wanted to do. something to assist the farmer it should do something to assist him to get rid of his liabilities. If there was a writing down of his liabilities the mortgagees and mortgagors should share equally in it, and the farmer could then make good. Mr. A. E. Jull (Co., Waipawa) said he approved of the Bill and thought, the amalgamation of the lending institutions was all to the good, as table mortgages should all be under one control. The corporation also got away from political and departmental control, which was a good thing. The farmers of the country were entitled to. assistance for they were the people upon whom the country re- . lied for its prosperity. The Government was not creating a lending monopoly, and there was fiothing to prevent any. person from lending money in a similar way. Mr. Jull said he thought it better to do away with private shareholders. A big measure of that nature would not be perfect at first, and when changes had to be made those private shareholders would be found to be irksome. He could not believe the Minister was serious when he said he thought the presence of private shareholders would give investors greater confidence. There was possibly another motive, and that the private shareholders were there because they were afraid of another institution being set up which might tread on their corns. He did not think the calling up of half a million capital would influence the investor one iota. The easiest way to give the bond-holders confidence was to give them representation on the board. They w6re the people who would find the money and they should be represented on the board. He also saw no need for the presence of a Treasury official on the board. Mr. W. A. Bodkin (Co., Central Otago) said there was need for an institution such as was proposed- in the Bill, and he congratulated the Minister of Finance on bringing the measure down. A man vzho was in difficulties could not get any assistance from the existing financial institutions, and. the Minister recognised that. The debate was adjourned and the House rose at 10.30 p.m.