BANK’S PLAN TO FINANCE FARMERS.

Star (Christchurch), Issue 17879, 22 June 1926, Page 8

BANK’S PLAN TO FINANCE FARMERS.

APPROVED BY LOAN AND AGENCY FIRMS. Per Fress Association. AUCKLAND, June 21. The scheme of the Bank of New Zealand to raise additional capital to finance farmers has been. very favourably received in Auckland agricultural circles and also by loan and agency firms. The latter do not apprehend any competition from the bank in their business, and consider that in making available funds for long term mortgages on the amortisation principle the bank is meeting a real need. It is considered that the scheme should make for greater stability of rural finance and give farmers a real incentive to stay on the land, which would automatically become theirs. One of the chief difficulties of farmers has been the short term of the usual mortgage, with the attendant feeling of insecurity and lack of provision for repayment. “ Any idea which aims to restore confidence and give assistance to the man on the land is to be welcomed,” said Mr J. Boddie, managing director of the Farmers’ Trading Company. “At first sight the scheme seems to me to be excellent. Its success depends entirely on how it is administered- Whether or not it will be of use to settlers remains to be seen. A lot will depend on the basis of valuation, and also on, what proportion of valuation the bank is prepared to make advances. Anyone who knows anything about the economic conditions of the Dominion must realise that the Government or someone else must come to light.” “ Sir George Elliot and his co-direc-tors are to be congratulated on inaugurating the scheme, which obviously is. in the interests of the primary producers ” stated a prominent business man in close touch with farmers and their requirements. “Of all the ups and downs which farmers have to contend with there arc none which cause more anxiety than the due dates of shortdated mortgages, with the inevitable uncertainty and expense attending new mortgages and renewals. In my opinion a few of the advantages of such a scheme are: (1) Security of tenure with all its accompanying encouragements. (2) Enforced saving and the satisfaction of feeling one’s head a little further above water at the end of every six months. (3) The farmers’ ordinary trading credit will be considerably improved. (4) The scheme will assist in stabilising land values. Many farms are on the market only because of the farmers’ anxiety regarding mortgages.” He added that he could see no reason for even the most conservative shareholders of the bank objecting to thej scheme on grounds that the new lending department might require assistance from the large profitmaking department. With one-fourth shareholders’ capital and three-fourths debenture capital, which, partly owing to the precariousness of industrial investments, could at present be raised on favourable terms, together with collateral advantages, the new department was one that could safely be left in the hands of Sir George Elliot, his colleagues and advisers.

The scheme was also approved by Mr W. W. Massey, president of the Auckland Agricultural and Pastoral Association). He declared that the more money farmers could get >at a reasonable rate of interest the greater would be production. As far as the Bank of New Zealand was concerned, it was the most progressive policy the institution had put forward in regard to the development of land. The Do minion had readied a stage when the value of imports was closely approaching the value of exports, and he felt that with the assistance of the scheme the possibility of increased exports would be considerably enhanced. “The Government is embarrassed for want of money, and this scheme comes along at an opportune time to give assistance to people on the land,” declared Mr John Massey, of Mangere. “There is great need of such a scheme. People who are applying for loans at present are unable to get money on favourable terms. I think the terms proposed in the scheme will meet with the general approval of all farmers.”