THE FINANCIAL OUTLOOK.

Franklin Times, Volume 9, Issue 620, 1 April 1921, Page 6

THE FINANCIAL OUTLOOK.

(To the Editor.) Sir, —I am enclosing aj few thoughts in reference to the financial outlook. As probably most of your subscribers are interested in the success of the agricultural industry, it should appeal to them as a practical suggestion. I have submitted the idea to several practical men and they are all enthusiastic as to its far reaching and beneficial effects upon the whole community. The main point is that whereas now the farmer is paying big interest and no principal of his enormously increased indebtedness, he would, under my suggestion, pay no interest but principal, so that at, say, 7 per cent., he would repay the whole amount in about ten years, when the current notes could be recalled and replaced with ordinary currency. It seems as though I have written the enclosed at a very opportune time, a*.id I hope something along the lines suggested will eventuate. Had such h system of finance been instituted say ten years ago, I think we would i.ol be in the present apparent bankrupt position,, but on the contrary, rur farming industry would have been flourishing and our exports increasing as never dreamed of. However, it is never too late to mend and I think even yet the introduction of such a scheme would even now save the situation through the improved conditions of the fanning community and the impetus given to our exports. - I am, etc., ' T.H.T.

The important part played in the stability of the Dominion economics by the “small deposit” land holder and the potentialities of the farming industry to save the apparent financial predicament into which we are assuredly drifting is altogether too apprehensive to escape the attention of thinking people. Unfortunately our staple industry appears to have culminated in strict retrenchment so far as development is concerned, and unless some solution can be found to enable the farming community to considerably expand their operations, disastrous consequences must result. With a national debt of some 5:200,000,000, and a still larger amount registered in mortgages against the land-holders of the Dominion—-an-other £100,000,000 capitalised to pay pensions, etc. The interest upon which over-powering burden has to be provided directly and indirectlv “mainly from the land,” it is obvious that sooner or later a great number of present land-workers must inevitably be forced out of action to swell the ranks of the ever-increas-ing and over-crowded cities. It is, I contend, at least unfair to storm against land-holders for neglecting to improve their holdings when rates of interest -are soaring higher and higher, and while the spending value of the sovereign is down below zero. Mortgagees have themselves to biamc if they find the value of their money declining, because they are ever too anxious to charge the highest possible rate of interest to the producers, leaving nothing for them to work and develop their holdings. The agricultural industry cannot prosper under every adverse circumstance, and practical farmers have learned only too well that it is impossible to work and progress when paying from 10 to 20 per cent, for the use of money—-a moderate calculation, considering its. spending value. It is time the Government made a deckled effort to save the drastic situation, failing which they may have to lament the cold fact that in their eagerness to safeguard the interests of the financial, commercial, and industrial world, they foolishly neglected the interests of those engaged in the Dominion’s primordial enterprise. I do not suggest that the Government should in any way burden any other section of the community with taxation and undue risks for the special benefit of producers, as I believe the farmers are well able tu foster their own calling, provided that they are given a fair and equitable share of the benefits accruing from their own family labours. With this purpose in view, and without questioning the necessity of sustaining usual banking methods in commercial enterprises, may I suggest as a way out of the piesent deadlock “That the Government be induced to establish a State Agricultural Finance Bank,” and issue notes as ordinary currency against the farmers’ permanent improvements upon the land, when such improvements are effected in accordance with ne- ! cessary regulations.” Such notes would in a short time be redeemed

by the producers themselves by payments made into a special fund at the rate of,, say, 7 per cent, per annum. In anticipation of being reminded of the evils of inflated currency, I contend that as an equivalent would first have been created there would, therefore, be no inflation, and further, that as such circulation would be additionally supported by a tremendous increase in exports, it would "decidedly be more securely covered than any mere gold reserve could possibly provide. Be it understood, gold is dead matter, and returns no interest on our debt, but by the farmers’ labours such notes would continue to benefit the whole Dominion long after they had been redeemed. Such a reform would, I feel, more than favourably contrast with the usual present day methods of fianace, when we view the enormous sum of over £55,000,000 having been added to the indebtedness on the land, aye '! and in the very short space of 21 months (ending 31st December last) with little or no improvement as assets, and, again, in most cases, no provision whatsoever, made for repayment. In conclusion, as showing the relative difference ir: value between gold and produce, the Dominion has been running for several years —apparently without much discomforture— without gold in circulation, but, note the fact that immediately the farmers’ exports fall below importations, our credit is dishonoured in all parts of the world, and' trouble is assured. Thus the farmer is, then, in reality, the Do-*, minion's banker, and justly deserves the fullest support that can reasonably be accorded, not only as a' necessiticfus inducement to further produce, but in and to the vital interests of the whole Dominion.