Thank you for correcting the text in this article. Your corrections improve Papers Past searches for everyone. See the latest corrections.

This article contains searchable text which was automatically generated and may contain errors. Join the community and correct any errors you spot to help us improve Papers Past.

Article image
Article image
Article image
Article image
Article image
Article image
Article image
Article image
Article image
Article image

PROPOSED AGRICULTURAL BANK.

HOW IT WILL AFFECT THE . FARMERS. H. In our'last article we outlined Mr. Poison’s scheme in general terms, it is obviously based on some of many useful forms of credit, loan and Banking Associations, especially designed to assist in financing farmers, which exist in other countries, and, if we may say so, it: shows a failure to understand and thoroughly study all the factors which govern a very difficult question. The scheme in operation abroad differ in very material points and operate with varying success, and there are many failures. Local conditions have to be taken into account, it is therefore dangerous to advocate any particular scheme simply because it has succeeded under conditions totally dissimilar to our own. We believe that the individual farmer will not only not benefit- by the scheme, but may b •■.-•'>ine involved in personal loss. In saving this we are confining our criticism to Mr. Poison’s proposal not only in relation to the borrower-share-holder, but also to the abnormal conditions, financial and other-wise, which exist at present. Dim of the main pleas put forward by the promoters of the scheme is that the farmer cannot obtain credit on reasonable terms—vve doubt whether ibis proposal really helps in tins direct ion. TUP. BORROWER'S POSITION. Lot us examine thi>. I lie mors - gagor who borrows £2,000, only icceivcs £I,OOO advance as lie has in take up r> per cent. <>| his loan in shares, in addition to this he may be called upon to pay another r| mi nr f> per cent, it one ot his fellow members makes di-laall, Ihu-, he .-an only safely reckon on £1.8(10 free of liability, and lor this be jiays interest (at f>i per •••ml pl'ts i;|, 1,, l ]ier rent, for administration) oil the whole £‘2,000. h is tl'Ur that |he value of the shares is ml imairly repaid to him when his mortgage expires, but he receives no interest on this value though ha has paid in iciest to the bank on that immev for many years. lie mav. however, lose the value o| these >l,ares’ altogether if a fellow sliaiv-

lioi.h • defaults or if the Bank is not well managed, and the constitution of the Board does not inspire confidence. In the event of the Bank having no cash in hand it mav make the ioiiii by handing Bonis, wiili face values of £2,000- In this

. ase the borrower must first pity the Bank £IOO for shares, he then |,as to raise cash oil the Bonds. As these cannot carry more than 51 per cent, interest, and as money is light, he is not likely to get the face value, but he still pays the Bank interest on the full .Ci.t'Om If the Bond is unsaleable he ran only go 'to his usual Banker for an overdraft which he is sure to be at less than face value, and on which lie must pay the overdraft ra'.e, which would" certainly lie higher than 5i per cent which the Bond carries. Taking the cumulative effects ol these conditions, especially the fact that he is personally liable up to .1.0 per cent, of his loan for his neighbour's default, we do not see how the Bank proposal past him in a better position than he is now. This mutual liability for default is doubtless a fine ideal and if all farmers were equally capable and hardworking it would involve less risk, but we uu;st look at things as they are, aml_we fear that m practice it would mean that the capable and hardworking farmers will have to “carry the iuexpeiieneod and incapable. DOES IT RELIEVE THE FARMER .' Another [ilea put forth by its advocates is that many millions of cash will be required to renew mortgages when the moratorium expires. As a matter of fact the lilting of the moratorium (which is the principal cause of the trouble) will release a great deal ol cash now tied up and anyone with reasonable .security will hnv ■ no ddlicully in re-arranging or renewing his loans: if the security has depreciated in value and a farmer finds a difficulty in financing his obligations, the Agricultural Bank Scheme cannot help him —because under tales it can only lend up to tVo-thirds of the pipseii! value. On the other hand, if the renewal oj loans is diilicull because there is ;i -earcitv of "liquid money" m the Dominion, the scheme is n.-micss ns i| does tn>t create one sixpcunv worth of “new" cash; at the most it onIv creates “paper" credit of a dangerous type. This is so obviously lute that we cannot understand why the promoters of this scheme suppose that it will attract- cash mi Bonds secured by mortgages Irma investors who are loth to lend direct to a mortgagor. WILL INCREASE INTEREST. In one direction it must adversely affect the producers and, indeed, the whole country, because-the advent of another borrowing- institution on a market already short of liquid cash will inevitably make money dearer and raise the rate of interest. Had the promoters of tinpioposnl been able to issue their Bmtds abroad and so introduce fresh capital the institution of such I hank woukl he beneficial if smindy managed. In our next article we shall en- j flavour to deal with the proposal ! Ycm the Dominion’s point of view. . 'Contributed by the N.Z. Welfare League).

According to a statement as to the position of housing schemes under the Housing Act. 1023. issued l,v (he British Ministry of Health, to August 0. 54,08(1 houses had been authorised to he erected by local authorities and 90.004 by private enterprise. On August I there was a total of -10.042 houses \nder construction: while 21.052 had been completed.

Permanent link to this item
Hononga pūmau ki tēnei tūemi

https://paperspast.natlib.govt.nz/newspapers/MH19241028.2.29

Bibliographic details
Ngā taipitopito pukapuka

Manawatu Herald, Volume XLVI, Issue 2803, 28 October 1924, Page 4

Word count
Tapeke kupu
956

PROPOSED AGRICULTURAL BANK. Manawatu Herald, Volume XLVI, Issue 2803, 28 October 1924, Page 4

PROPOSED AGRICULTURAL BANK. Manawatu Herald, Volume XLVI, Issue 2803, 28 October 1924, Page 4

Help

Log in or create a Papers Past website account

Use your Papers Past website account to correct newspaper text.

By creating and using this account you agree to our terms of use.

Log in with RealMe®

If you’ve used a RealMe login somewhere else, you can use it here too. If you don’t already have a username and password, just click Log in and you can choose to create one.


Log in again to continue your work

Your session has expired.

Log in again with RealMe®


Alert