The Daily News. FRIDAY, OCTOBER 6, 1922. MONEY FOR FARMERS.

Taranaki Daily News, 6 October 1922, Page 4

The Daily News. FRIDAY, OCTOBER 6, 1922. MONEY FOR FARMERS.

The statement made at Levin by the Premier on Tuesday relative to small advances on loan to farmers, on chattel security, can hardly be expected to arouse much enthusiasm among the farming community, although the proposal is designed to be of service to the small men who, for want of the necessary funds, are severely handicapped in making the best use of their labor and enterprise. Taking Mr. Massey’s explanation of the Government’s intentions as a whole, the inference appears to be that, while the Government is prepared to authorise the establishment of agricultural banks, because it considers they will not be worth much unless the Government either provides a State guarantee, or puts money into the venture. This attitude is quite consistent with the declared policy of the Premier to be content, so far as State banking is concerned, with the financial interest held by the country in the Bank of New Zealand, and that no action of the Government shall in any way be taken to prejudice the business of that bank, directly or indirectly. At the same time Mr. Massey is not quite correct in his statement that the principle behind agricultural banks is that of the “joint and several,” although co-opera-tive action must inevitably involve that principle -to a certain extent. The fundamental principle on which foreign countries have made a success of agricultural banks is quite distinct from the method adopted by co-opera-tive dairy and other kindred companies in obtaining money from a bank by a joint and several by the directors. The process partakes more of the • nature of a pooling of properties, against the value of which debentures are issued and sold in the open market, the security being ample to engender confidence on the part of the public, and it is with the money obtained by the sale of these debentures that advances are made to the farmers. All business people will readily understand that, although it would be of very great importance to start an agricultural bank With money provided or guaranteed by the Government, yet to be successful it is imperative such banks must be largely managed by the farmers themselves, for the simple reason that in making advances they are able to accurately estimate both the bona tides of the borrower and whether the loan will be put to the best use, or will merely land him more deeply in difficulties. This local and expert knowledge is practically the point on which the whole scheme of these banks revolves. What Mr. Massey proposes is to hand over an additional two million of new money to the State Advances Office to strengthen the funds of that Department, and by providing machinery for small loans on chattel security, be of service to needy men on the land. The manifest disadvantage of this proposition is that the State Advances officials are tied down by rules and regulations that permit of no discretion ; they have no expert knowledge of what farmers need, or the circumstances of the applicants as regards their ability to make good or not, hence they are not in the same position to judge of the merits of an application as would be the practical . farmers advising an agricultural bank. Yet these small loans which Mr. Massey proposes are to depend on the suitability of each ease. Naturally the State Advances Office will have to obtain the advice in each case of officers of the Agricultural Department, and possibly of the Lands Department as well, and if these services are to be pa'd for by the borrower, then the fws will be an item. The question at once arises whether far more benefit would not accrue to the needy farmers if the Government, instead of taking the course proposed, helped to initiate agricultural banks on the lines that have pi -,.ved successful elsewhere. Once these banks have been set going on a good basis, repayments and deposits will help to keep up and extend the capital, assisted when necessary by the sale of debentures. That the Government are well advised in strengthening the Advances Department goes without saying. The department has been of very great service, and should not have its scope of usefulness restricted for lack of funds, but that emphasises the contention that with the department ’s efforts and the institution of agricultural banks working in harmony with another, would achieve far-reaching results in

promoting the progress and prosperity of the backbone of the country.