RURAL BANKS.

Southern Cross, Volume 2, Issue 8, 26 May 1894, Page 10

RURAL BANKS.

(to the editor.) Sir, — I read with, a considerable amount of interest your leader in last week’s issue in reference to Rural Ranks, but in the absence of details as to working, etc., it is impossible to give a decided opinion in reference to the matter. You rightly quote the Southland Building Society as an example of what can be done by cooperative effort, but 1 scarcely think that Rural Banks could expect to attain the same position. The secret of the success of the Southland Ruilding Society is not far to seek. I find from a perusal of the rules that ifche Society lends on first mortgage onlt. The rapid turn-over and the prompt investment and reinvestment of funds is an important factor in its success. Careful and personal inspection of properties has already been referred to by the President in liis address to the shareholders. These are the three principal elements which have placed the Building Society in the proud position it occupies to-day. I gather from your remarks that Rural Banks would not compete for loans on land, but rather devote attention to small amounts required by farmers for cultivation, etc. But what security would the farmers have to offer ? Probably liens on crops and bills of sale on stock, etc. This business has been tried here by several companies and individuals with disastrous results, and it is not likely that farmers themselves would be more capable money-lenders than those who have tried and failed. Your argument that because farmers can manage dairy factories they could manage a rural bank I do not think is tenable. Unless very clearly-defined rules were laid down as to what class of securities were to be advanced upon, I am afraid that the co-operation of farmers would end in failure. I have the very highest respect for fanners as a class, but I do not think they will ever become capable bank managers and bank directors. It appears to me that farmers as well as other people will have to provide their own capital by saving, and if the rural bank scheme can educate the people to save then I wish it success. There are many ways in which I can understand that the associated capital of farmers would be productive of immense good to the community, such as draining and fencing large tracts of land that could not be accomplished by individual effort. These large areas, when drained and fenced, could be let to tenant farmers who could never have ventured to go on to the land in its natural state. If the rural bank scheme provides for enterprises such as these, then I venture to predict for it an assured success, provided it is capably managed ; but as a purely money-lending institution I am afraid it would be a failure. The details as to the working of rural banks will be looked for with interest.—Yours, etc., x.y.z. [in the light of recent events it is difficult to say who can manage a hank — Ed. S. C.]