South Canterbury Times. TUESDAY, DEC. 2, 1879.

South Canterbury Times, Issue 2089, 2 December 1879, Page 2

South Canterbury Times. TUESDAY, DEC. 2, 1879.

The establishment of farmers’ banks with the view of relieving the agricultural population of the difficulties, dangers, and disadvantages which at present surround them in the money market, is a matter that deserves the early and earnest attention of those who have at heart the interests and prosperity of New Zealand. It may be asked, what do we want with farmers’ banks ? Are not present facilities for investment and borrowing sufficient? To this we must emphatically reply that they are not! In proof of our assertion, we need only point to the fact that three-fourths of the farmers of New Zealand are deprived of their legitimate profits and earnings by the pawnbroking system which their necessities have introduced. It is owing to the want of proper facilities for realising on their crops and prothat liens and mortgages have of late years grown so plentiful, and that careful, prudent, plodding farmers, suffering from the exigencies of the seasons, have- in many cases, between deeds and extortionate rates of interest, had their prospects of success utterly blighted. In good seasons the farmer feels his legs fairly beneath him, and if he is disposed to be enterprising, as we are proud to say most New Zealand farmers are, he invests freely in land and also in the means of improving it. But when heavy rains or long droughts mar his prospects, he finds

himself crippled, and, too late, he begins to lament his want of foresight. If he applies to the Bank, he finds that the money market, so easy and accommodating while he was independent of its assistance, has fluctuated, and that it is closed against him. Under such circumstances he has no help for it hut to place himself at the mercy of moneylenders, financial middlemen, grain dealers, grocers, and bill-discounters. Of course, having abandoned his anchor, he immediately finds himself beating against a head-wind —like the schooner John Watson in this port the other day —and he is fortunate, if by the most skilful navigation, he escapes the reefs, and comes out of the ordeal any better than did that ill-fated vessel. We don’t blame the grocers, the grain dealers, or the bill discounters one whit. In accepting liens and holding mortgages, they arc merely protecting themselves and accommodating their clients, and they would be generous to a superhuman extent if they did not secure a good fat profitable rate of interest on these transactions. But while imputing no blame whatever to these sharp, shrewd, intelligent men of business, we cannot help extending a little sympathy for the farmer, who, in the meantime, is being, in a financial sense, bled and blistered to death at their hands. And if our sympathy is to assume a practical shape wc must point out to the producer a method of escape —a means by which his great want, cheap money, may be secured. The moans wo suggest is the establishment of “farmers’ banks.”

’ It must not be supposed that by “ farmers’ banks ” we mean institutions that will compete in any serious degree with the ordinary banks ot cvci’y da}’ commerce. We simply refer to institutions that will supersede the ordinary trader or dealer in agricultural produce in giving advances when necessary to farmers on reasonable security. The banks we refer to will partake of the nature of a “Trust Agency and Loan Society.” The instihxtiou woxxld be of a special charactcx 1 , and its object would be to advance on the cash credit system, with the understanding that xxo proceedings would be taken against the box Tower until after the harvest. The institution, if considered advisable, could dispose of the fax'mers’ produce, and the latter would thus be in a position to secure the best possible price for it, while the bank would know how each of its clients wex'o progressing, and whether the advances demanded were reasonable and not doubtful. Gilbart, who is an excellent authority on this system says “ Cash credits arc loans ; the amount of the loan varies every day, but the maximum is fixed. If a trader who lias a cash credit for £SOO has always £3OO drawn out it is ncai’ly the same thing as though he had a loan for £3OO. The advantage to him is that lie can draw exactly such a sum as he may need, that he can replace it whenever he pleases, and in such proportions as lie may find convenient and he pays interest only for the sum drawn out.” This system would enable farmers who at present, and all during the late season of depression, have been unable to get advances without paying almost ruinous rates to bill discounters or middlemen, to obtain accommodation at a reasonable interest, instead of having to pay a double commission. We observe by our telegrams that the South Australian Government have matured schemes for the establishment of Trust Agency Companies, aud in a colony like ours, where the national prosperity of the people hinges so much on agriculture, it is desix’able that steps should be taken for the establishment of similar institutions.