RURAL CREDITS

Hokitika Guardian, 14 August 1926, Page 1

RURAL CREDITS

PROFESSOR’S VIEWS. DUNEDIN, Aug. 12. Doctor Fisher, Professor of Economics at Otago University, in an interview on the report of the Commission on Rural Credits, said: “The real problem of agricultural credit is the difficulty of establishing direct contact between the people u*ho need credit and those who have funds available for investment. This has been observed in all parts of the world, and is one of the numerous instances in which free competition fails to bring the results which are socially desirable. This is not to say that there is a reservoir of credit available for agricultural purposes, which is' at present lying idle. It is a question of getting funds that is the difficulty.”

Dr Fisher said the objection that had been raised to the Government borrowing for advances to settlers on the grounds that this would have a tightening effect on the local money market, applied equally to any other purpose for the raising of money. “Sir George Ei’iot, chairman of directors of the Bank of New Zealand,” lie continued, “seems to imply that the raising ol capital by the Bank of New Jealand would not have the same effect as the borrowing of money, by the Advances Department. The real problem in either case is to make the conditions sufficiently attractive to divert funds that would go elsewhere. The Commission appears to suggest that new funds could lie raised charged directly against the public revenues as at present. It seems doubtful however, whether the funds required would lie forthcoming without the Government guarantee.” " lie contended that the danger of agi icultural banks was that some people were hypnotised by the word “bank, and appeared to imagine that those institutions had peculiar powers in creating funds for investment which were denied- other persons. AA’hile a good case could be made out for the making of credit available to solid farmers, it. was very necessary that care should be taken to avoid the bolsteringup of those who had purchased land at prices that were universally admitted to bo too high. He emphasised that the farmer was in a similar position to the heads of other businesses who had capitalised their assets at too high a figure. The only sound policy was io write them down to their reiv value. Though this policy was drastic and unpleasant, ft should he applied to farming.ns to any other business.