DESPITE DIFFICULTIES.

Waikato Times, Volume 103, Issue 17407, 21 May 1928, Page 6

DESPITE DIFFICULTIES.

' New Zealand has had a good year. Dairy farmers in the Waikato have received a higher total income than last year, and sheep farmers throughout the country have been even more fortunate. The result, is seen in the striking increase in the Dominion's income from exports. For the ten months, July to April, the exports were worth £47,600,000. or about £10,700,000 more than for the corresponding period of last year. This improvement is mainly due. to higher prices ruling in the world markets, but credit must be given to the farmers for maintaining production at a high stanadard. The president of the Waikato Farmers' Union pointed out in his annual review last week to the good season's record which had been achieved "in spite of the increased bank rate and.the fact that practically all the money-lending institutions" have kept clear of rural advances." If is beyond question that the high interest rate is a hindrance In productivity just as is any other oppressive cost. Credit is necessary not only for the man on the land but for the various Operations of transport and marketing, for local bodies' works, and in fact for every productive operation. A rise in the interest rate tends to raise costs indirectly as well as directly. In such circumstances it must be galling to farmers to note in some quarters an inclina- . tion not only to condone the banks' action in raising the rate but actually to give them credit for the improved financial position. If there has been any beneficial result of this kind, it has been through inducing economy. Possibly the reduction of imports by £2,300,000 in the period mentioned may be due in part to the discouragement placed in the way of extravagant borrowing for the purchase of imported goods, but as imports showed a much larger decline (over £5,-, 000,000) in the preceding year, it is evident that the need for economy was realised before the banks raised their rale. The Government disclaims any responsibility for the banks' action, but a.s long as the State is itself engaged in borrowing and lending, through the Savings Bank, the Advances Department, the new rural credit schemes and other activities, it is necessarily an interested party. If the present high rates of interest are maintained, the effect will spread, as new loans will tend to be at a higher rate than those maturing. New Zealand is not so well "out of" the woods" that her people can afford to allow such hindrances to continue. There is no guarantee that prices in London for butler and wool will be as good next year, however much we may hope so. In any case, we find if difficult to see any reason why the bank rate should not be reduced immediately.