WELLINGTON NEWS

Hokitika Guardian, 5 November 1928, Page 3

WELLINGTON NEWS

LOANS AND THEIR USES

[Special ‘To The Guardian.]

WELLINGTON’, November 2. The policy Sspeecli delivered by Sir Joseph Ward in Auckland, the main feature of which was a proposal to borrow £70,000,000 has given rise to a great' deal of discussion in .commercial circles throughout the Dominion, but most of those who have ventured to express opinions: have not based their views bn an accurate statement of the facts. The proposal of Sir Joseph Ward was to borrow £70.000.000 over a. period of ten years.and he estimated that the loans "would be floated at 95 with interest at 4-J per cent. In any ene year it would not be necessary to raise any'more than £7,000,000 and it seems obvious that Sir Joseph had in mind raising this money in London. It would not be a difficult matter for the Dominion to do that, for our last loan floated in May .carried 4} per cent and was issued at £95 yr £9O. On the score of raising the money there does not appear to be any difficulty. Of the £70,000,000 Sir Joseph proposed to devote £00,000.000 in loans to farmers and home builders, and to devote tho balance of £10,000,000 to complete trunk railways and other public works now in an incomplete state so as to bring them to the pro-fit-earning’ point. The bulk of the Jon if suggested ’ by Sir Joseph is to he devoted to loans to farmers and others on long-term basis. Sir Joseph suggested re-lending the money at 4jf per cent plus one per cent sinking fund, which he declared would enable the borrowers to wipe out the loans in .‘12.2 years. Whether lie is right as to the years of amortisation one cannot say for it -is a matter for actuarial or mathematical calculation, hut presumably Sir Joseph has carefully considered this point.

The scheme is by no means absurd, or impossible, it is not nearly so absurd as placing soldier settlers on land two or three times beyond its productive value. At the outset, it is necessary to got a much broader view of the essential services of agriculture to the human race, and to appreciate the iact that all future human progress depends entirely upon an industrialised and more prosperous agriculture. In recent years the obsessing and excessive industrial development throughout the world with its vast accumulation of wealth in a comparatively short time, has been partly responsible for the present plight of agriculture,

and is the reason why so many young agriculturists seek work and fortune in the more profitable fields ol business and industry.

The principal fertiliser required by farmers in New Zealand and elsewhere is finance, they want money on long terms and want it at a cheap rate. The farmers operations are seasonal and there is a big interval between seed time and harvest, and innumerable risks. This is one reason why be wants long credit. In the early days it was no uncommon thing for a storekeeper. to give a farmer (list inner credit for six or even twelve mouths. The necessity of helping ihe farming community, and especially the small farmers is recognised by every Government. in every country, and a multiplicity of schemes exist to help the small man.

In Wellington sonic bankers and alleged financiers have been confiding their views to a representative of the “Evening Post.” One such authority is reported to have said that there is plenty of money available for rural requirements. providing the security offered is sufficient, and the applicant is satisfactory. .Moreover, rales of interest in New Zealand are not increasable-. Another authority stated that “it is as absurd as it is untrue tliai farmers should be helped still more in regard to finance. There is no reason at all why the Government should be urged to provide or candidates should promise further financial assistance tor rural industries. There are many millions available for loans to farmers either by way of long-term or short-term mortgages or on chattel securities.”

There is no doubt that at the moment there is available several millions of money, but when reservations arc made for financing exports and import* and the distributing industries, the surplus is not so very large. Farmers and others have no difficulty in obtain ing short-term loan at hank rate ol O' per cent., hut there is not so much money available lor long-term loans. The private lender does not come intthis, and institutions unless specie!!' organised for this prefer investment in long-term Government securities. I is mainly because of these lads ilun Governments have come to the aid ol farmers. Sir Joseph’s loan proposal i* feasible and sound, but whether it is politically expedient is a matter, o opinion.