AGRICULTURAL BANKS

Waikato Independent, Volume XXII, Issue 2577, 27 July 1922, Page 6

AGRICULTURAL BANKS

DANISH AND GERMAN SYSTEMS ADAPTABLE FOR NEW ZEALAND At the Dominion Conference of the New Zealand Farmers' Union the president, Air W. J. Poison,, in his address, referred as follows to the subject of agricultural banking:— During the recess, at the suggestion of the last Dominion Conference, I published a pamphlet explaining and i outlining the great agricultural banking .system of Germany, which has taken root in the United States of America. I need not again cover that ground here, but I am more than ever convinced of the great necessity for pushing on with our agricultural co-operative banking proposals in conjunction with our general co-operative plan. Upon easy and practicable finance depends the success as well as the prosperity of the producer. I do not wish to appear as a carping critic of our banking institutions. They have done as well as •it lies in their power to do. I believe that in most cases our banks have strained every nerve to carry the load which in the last year or two has been placed on their shoulders. My humble criticism is directed at the system —a system which is admittedly imperfect, and which criticism au„d constructive proposals for reform must be of some value in improving, li' we can. build up with Government aid an agricultural banking system in New Zealand we shall have laid the foundation of prosperity that,shall not be ephemeral. What is needed is an educative cam-

paign. so that the whole question may be more fully understood. AVc are entangled in conservatism. The system which served our fathers is one which we arc loth to disturb. We are slow to realise that there can be any safe system of finance that is not entirely based upon a gold currency basis, and when any proposals are made to us which contemplate changes in that respect we arc apt to imagine that it is the bale of paper and printing press idea under another guise. Nothing ofthe sort is suggested. The Danish and German systems have stood the test, and are adaptable to our needs. Modern ideas go very much further than the suggestions the Farmers' Union has put forward. The proposals of Professor Irvine Fisher, which have received world-wide attention, may serve as an illustration of the trend of .modern thought upon these subjects. Professor Fisher suggests not merely land, but goods as the security of paper money. Professor Fisher's plan does not eliminate gold. His money would be redeemed in gold, but on a basis of value,, not on an arbitrary and artificial basis like the present, which rakes no official cognisance of the fluctuation of gold values. Professor Fisher's paper money in short becomes something which can be exchanged for commodities as well as gold, because on the date of redemption that commodity will have a legal value, and may be exchanged for gold in the open market. The result would provide the world with all the money it required "redeemable," to quote one of Professor Fisher's critics, "as fast as presented by value commodities and in fair and honest amounts." With plenty of money interest would fall. There is nothing new about the priciplo. Our Government recognised it when it permitted our banks to issue notes against i wool. The German Government has recognised it for a hundred years in the support and assistance it gives to the German Land Bank system, which provides in the bonds issued on tlie security of their lands and their produce to its members a form of paper money based on other security than gold, and of enormous value to the German producer. All that is required to make such a system absolute is the certainty of redemption. Professor Fisher's plan simply states the value of the paper money in gold, and redeems in commodities of the same value, which in time may be exchanged for gold in the open market. Of course such an exchange would never actually take place because the value would be there in goods, and it is goods, not gold, which industry and commerce require.