DELUDING THE PRODUCER

Evening Post, Volume CVI, Issue 8, 10 July 1923, Page 3

DELUDING THE PRODUCER

TO THE. EDITOR.

Sir, —JuEt now, when tho idea of a Producers' Bank is in the air, there is an organised attempt being made by the officials of banking institutions to persuado the public in general, and the farming community in particular, that tho banks have met the situation satisfactorily, that ample money is availablo for investment in land, and that there is no nocassity for any change in iho present svslein.

We aro allowed to peruse tho exalted opinions of "Loading Banker." and "Financial Authority" printed in some cases with a reverential white border round them in the principal columns of our leading newspapers, which makes them almost hallowed.

"If a borrower only requires a reasonable proportion of a reasonable valuation, and is prepared to pay a rale of interest which fairly represents the present value of money, money is still available." stated one expert recently. Unfortunately, he did not define what ho meat by "reasonable." If his interpretation is 50 per cent., of the Government valuation, which in many cases is Jess than half the producing" value of the land, and if his suggestion is that on such security the farmer should pay 6j per cent., our "Leading Banker's" criticism leaves us unimpressed. - But at all events this authority is explicit as to what constitutes a fair rate of interest. He declares that Australian Government bonds aro returning investors over 5£ per cent, and that private borrowers on lauded security must expect to pay more. Tho producer, having in view the experience of other countries where agricultural banks have been successfully established, sees no reason why he should pay more. Facts culled from the statistics of rural economics show that if bis bank is properly run ho should pay considerably less.

But the suggestion that ample money is available fqv all the farmers' needs, based on the Year Book's figures, is the most disingenuous of many dishonest arguments. What was the' large increase in mortgages shown in 1821, so complacently referred to?- Nothing more than the recording of vendors' mortgages. In many of these cases no money passed at all. The mortgages represented nothing more than P.N.s, and 50 per cent, will, ere this, have been written off in many cases. In any case, it would bo interesiing to know, what proportion of bank advances aro secured by land.- Not a very largo one, I'll be bound. Tho plain fact is that_ money is unprocurable for investment in land to-day, except on a low valuation .with an unreasonable margin and at' high interest.

But the most extraordinary feature about the attitude of our banking magnates is their keen desire to boom the Advances to Settlers Department as the salvation of the farmer. Recently^ leading Auckland farmer published a table showing the comparative amounts lent on rural land by the Advances to Settlers Department and other lenders, thus: — Ordinary Advances to Mortgages. Settlers. ." ' £ '■£ T"tal , 160,000,000 -' 4,G00,000 Average advances 1,271 615 Registered in J922-23... 20,000,000 805 975 uibdiarget! 14,50t),0tiU 5(13,2(17 Kelt increase 11,500,000 250,000 Number i entered ... 40,703 1,62-4

There is no need to say more. On the face of it, the Advances to Settlers Department represents an insignificant share of the total. We know, also, that hundreds of applicants for even the meagre amounts advanced by the Department are annually ■ refused.

Apart irom this aspect of the question altogether, the Advances to Settlers Department possesses the following disadi vantages, all of which are overcome by the- agricultural 'banking systems of ftther [countries: — (1.) It is subject to political control, and at the whim of Ministers. (2.) Changes .of Government mean changes of policy. . (3.) The limitation of advances makes it available- to only a small proportion of those farmers who require its aid. (4.) Whatever his equity may be, the applicant has no assurance of success. (5.) Its methods are slow and cumbrous. (6.) It does not provide an investment for.tho investing public, nor a channel for the national Mow of capital ; to agriculture as in other countries, (i.) It can only lend when it itself succeeds in raising a loan. (8.) It has no earning power as a bank so consequently is compelled to charge a higher rate than that at wh:ch it- borrows. (9.) It cannot, lend for prospective improvements. (10.) It is totally inadequate to meet the requirements of- .agriculturists. _ Apart from .these ten objections there is the sound argument that is mado use . of by the British Board of Trade in it« recommendations to the British Government, when it describes our Advances to bettiers Department as merely "some <o-t of substitute" for agricultural banking. Ihat is the position in a word Agricultural banking has been adopted by most of the progressive countries of the world. Even Great Britain is st last seriously dealing with it. But in New Zealand we see the spectacle of a Government posing as a, producers' Government, ' and, at; the bidding of vested interests, bolstering ,up a. substitute in the hope that the producers will be deluded into quiescence.—I am, etc..

UNIMPRESSED.

10th July.