The Hawera Star. SATURDAY, AUGUST 23, 1924. FARMERS’ MONEY.

Hawera Star, Volume XLVIII, 23 August 1924, Page 4

The Hawera Star.

SATURDAY, AUGUST 23, 1924. FARMERS’ MONEY.

Delivered every evening by 5 o’clock in Bawera, Manaia, N^rmanby. Okaiawa, Eltbam, FateA, Waverley, Mokoia, Wbakamara, Ohangai, Meremere, Fraser Road, and Manutahi, Alton, Burleyville, Mangatoki, Kaponga, Awatuna, Opunake,

We publish in another column an editorial from the Mercantile Gazette, which deals very accurately with the question of money for farmers, a matter which is causing considerable concern not only in New Zealand, but in Australia and other parts of the world. It appears that in times of financial depression primary producers suffer rather more severely than other people and recovery is a slow' and difficult process. Yet in countries depending for their welfare upon primary industries,' it is very important that the producers should be able to obtain the money required to conduct the industries successfully. Many farmers made mistakes in the boom period and failed to take into account-the possible difficulties of the future, but did not the great majority of people make similar mistakes during that period? The problem now is to find the way out of their difficulties and to reach a sound basis. A gieat deal of harm has, we believe, been done by overemphasising the poor mouth side of the position. It is true that many farmers were placed in a bad position through the heavy fall in the prices of produce on the markets and through land being quoted at an absurdly high price. But since the 1920-21 bursting of the boom there has been an improvement in conditions and a considerable part of the inflation has been wiped off. The position now is that money at a cheap rate is needed by the primary producers, and the question is how to obtain it. There aie various avenues through which it may be obtained—State Advances, special loan, and the establishment of an agricultural bank. The State is advancing money, but necessarily its power to lend lias to be kept within certain limits. A special loan would increase the national debt and add to the annual interest bill, which is already quite heavy enough. The Agricultural Bank proposal \s criticised by bankers and financiers and it is

said that it would not be a success. We think that the suggestion made by the Mercantile Gazette provides a new and attractive outlook. It says: “We put forward a suggestion that persons lending on agricultural mortgages at five per cent, or less should not be called upon to pay income-tax. If the Government were to exempt such mortgages, we are quite certain that money would flow into the Dominion from outside quarters and there would be large sums offering from local sources. We think that the farming section of the community would benefit immediately, as money would be in full supply for mortgages and at a cheap rate.’,’ To us this suggestion appeals strongly. It is well known that there is plenty of money in New Zealand, but those who own it are not willing to lend it under the present conditions upon farm lands. Some say that if farming land is brought down to a reasonable price they will be more disposed to lend money upon broad acres, but unless the rate of taxation is reduced they cannot lend at a cheap rate. That is the point in the suggestion made by the Mercantile Gazette. "We suppose that the opponents of those who have money to lend will say that exemption from income tax on money lent to farmers at five per cent, would be in the nature of class distinction, but it seems to u« that it would be far better to induce those with money to lend it to farmers than to raise loans and for the State to have to pay away more in interest each year; it would relieve the pressure' upon the State Advances Department, and it would, if the results were as anticipated, give the farmers the assistance which they need, without undertaking the possible risks attendant upon the establishment of art agricultural bank. All that the State would lose would he the amount of income tax from the earnings of the money lent to farmers at five per cent, or less. The gains, if the suggestion were adopted and proved successful as there is every reason to believe it would, should far exceed the loss of income tax. To increase the output from the farms money is required for improving the land and the herds. If the State raises loans to provide the money, every section of the.people will be called upon to bear some of the burden; if an agricultural bank were established and it failed to come up to requirements it is possible that the producers might lose heavily. But if the people having money for investment can be induced to lend to farmers at a low rate of interest each transaction would be independent and between lender and borrower only, not involving the State or the farmers as a whole in liability. We commend the suggestion made by the Mercantile Gazette to our readers, and we hope that it will receive the attention which it deserves, that the Government will give it full consideration and, if investigation shows that by this means there is every prospect of the problem of providing money for farmers at a cheap rate, that the necessary legislation will be passed.