RURAL FINANCE.

Thames Star, Volume LIX, Issue 16623, 20 October 1925, Page 5

RURAL FINANCE.

A FIRM’S ANNUAL REPORT. _ j VALUABLE CONTRIBUTION. LOANS TO THE SMALLER FARMER The twenty-fifth issue of the annual review of Messrs Pyne, Gould, Guinness, Ltd., a well-known Canterbury stock and agency firm, deals with this important question in fin interesting manner. It is a really valuable contribution, and is of more than passing interest. The land question has regained all itd old time prominence as an issue at the pending election. Finance is a vital factor of prime consideration. Its satisfactory adjustment to the changed condiitons of the present day is of the first importance. ■ v The reference is as .follows: “The Government’s decision to send representative men abroad to study theg question of Agricultural Banks is regarded with favour, although jt is not considered that the establishment of such institutions will solve the present difficulty. It is suggested that : some system of Joint Stock Land Banks (as now operated in the United States of America) be initiated, and in order to popularise the Land Bank bonds, in preference to a reduction in taxation or Government guarantee, a bonus or bounty of .some sort should be given to investors until they have experienced the. benefits of having their money invested under a security covering a large number of farms instead of one, the security being represented by bonds, one or all o.f which could be readily converted into cash as required. The necessity for compulsory sinking funds in connection with local body loans was, remarks the writer, recognised by Parliament many years ago, and we are satisfied.that similar legislation is equally desirable for fqrm loans, although it is admitted that the system would be better initiated when the world’s price for money is lower than at present. The amount of sinking fund repayable each; year in reduction of the mortgage ioan should be ‘ not less than one per cent., but in the; event of bad seasons payment of sinking fund instalments might be ted.to stand over and foreclosure made' impossible unless these instalments were five years in arrear. The retire-v ment each year of bonds to a value of the amount collected .for sinking fund instalments should usually'be sufficient to provide cash for these bondholders requiring repayment of their bonds for exceptional reasons before due date, and thus prevent bonds falling below par unless interest rates had risen meanwhile. There is a further advantage in paying out bonds by sinking fund instalments, as it avoids the; difficulty of re-investment of these sums at possibly lower rates of interest than are payable on the bonds.': Once firmly established, the system of Laud Bank bonds for investment Of trust funds in preference to the present system of loans on mortgage would probably soon become as has been the case in other coun-t tries, but we consider it should not be worked under any State guarantee or in conjunction with any Government department except for ,the< individual banks formed by the Public Trustee,’ Government Life insurance Office, etc. It is contended that a system somewhat on the lines outlined above would, , in conjunction with the Government Advances to Settlers Department (which should be confined to loans for, the smaller farmer, so that all demands within the authorised limit can be met without delay), provide the most satisfactory conditions possible.”