FINANCE FOR FARMERS

Hokitika Guardian, 19 August 1929, Page 2

FINANCE FOR FARMERS

“STERILE MONEY.”

ADVANCES SHOULD BE SPENT ON IMPROVEMENTS.

DUNEDIN, Aug. 15

, ' “Money for -the purchase of land or .for .the iifting-.-or..'replacement. df mortgages becomes'- absolutely sterile, but ‘.money for.(definite improvements of pro duction would be, of immense benefit. In studying the finance problems carefully,; the Farmers’ Union should .separate its- own interests from the long run .interests of the farming industry. I am perfectly satisfied that the benefit of cheap loans has been capitalised; We have had the concession for years,^and no one can say that thte farming industry to-day is in a satisfactory condition, as it was fully expected it would be a few years after the Advances to Settlers Act was first passed. The stimulant has passed, and we must look for other means of directly increasing production to put the farming industry back into the position it'should Occupy.” That summarises the onipions of Mr ■James C. Begg, expressed in a critical-ly-destriictive"address to the executive of the Otago-branch of the New Zealand Farmers’ - Union to-day, on the Advances to. Settlers 5 Act, and other Government • financial concessions. The Farmers’, Union was originally a Ifree-trade body, said Mr Begg but pro•bably finding that a return to free trade was not within the bounds of practical politics at present, it had abandoned its original position, and now, in addition to its old claims for Government, cheap loans for farmers free railage on certain goods, etc., it had secured protective duties on wheat and some other products, and was clamouring for - subsidies on other exportable products, and for more cheap Government loans intermediate credits agricultural banks. The Union . honestly believed these _ things were necessary to farmers to counter-bal-ance the advantages that had .been conceded to manufacturers by means df protective tariffs;- Be this, as it may, the union had abandoned a position from which it could attack high protection with effect', and with safety from counter-attack, and had taken up a new position -weak from attack and , subject to successful counter-attack from all sides. One man might say that cheap money 'had been a great benefit to him and had enabled him to double his money.'No argument would convince him that cheap money was

not of great benefit to the farmer. Let them look a little further into it, however. Their friend, having sold out, was no longer a farmer, but there was another in his place. Mow did the latter stand? His annual charge was still 10s per acre, the same as his predecessor paid. Lowered interest rates had not lessened his charges. Rising inferest rates might rirrt him, and ini any case he required twice as muchi money as his predecessor required to enable him to start farming. It would seem that the actual owners of land at the time interest rates were reduced had been able to get enhanced prices when they sold their farms, -but subsequent owners got no benefit what ever. The whole benefit'was capitalised and removed by the original owner.

“ A whole generation of farmers has passed on since the Advances to Settlers Act became operative so it is a reasonable assumption that little, if any benefit from the introduction of the Act remains to-day,” said Mr Begg “it has vanished with the farmers who owned the land when it was introduced. Landowner? to-day paid in advance/ when they bought their land, for all benefits which the Act confers and 'for this reason it would be wrong to assume that the Act could now be safely abolished. Such action would cause a fall in the price, of land, and by reducing the equity of the owners in many farms which show but small margins at present many farmers might be ruined. The position is that farmers are no better off than if the Act had never been introduced hut might be ruined if it were withdrawn. Tne only purpose served bv it i\ow is to maintain land at a somewhat fictitious price. The borrowed millions merely help to aggravate what is very generally regarded as a somewhat dangerous level of land values.

“Protective duties'on wheat and subsidies on exported pork and apples would affect the price of land “in exactly the same way as other, concessions,” said Mr Begg. The only reason that they had not yet had if nil effectin this direction was that they were not regarded as secure and permanent Given security of tenure of these concessions, it was inevitable that land values would speedily absord the full annual value received by the apple wheat and pigs industries.

“So far my remarks have been merely critical and destructive. I will now try to indicate how the Government can give really permanent help to the farming Industry without inflating the price of land unduly,” concluded Mr Begg. “Short-term credit to be used solely for effecting improvements such as having recently been instituted, is a step in the right direction. If all the money which has been advanced

to settlers for the purpose of buying land or replacing mortgages had been spent on improvements. in the shape cf clearing, draining, fertilising, liming and grassing, the ..farms; antli in the purchase! of well-brra the country would be much more productive than, is the case to-day. If mdney were made available in large sums, and at low rates of interest for these purposes a slight inflation of land values could not he avoided, but there would be a valuable set-off in the increased fertility and progressive improvement of the farms.” ~ ? < 1