D. BATES.]

111

8.—5.

There does seem to be a tendency, then, for the farmers' requirements to come down in price now ? —Yes. I am glad to see that. You made a point that the, interest on mortgages has increased from 5 per cent, to 6f per cent., 8 per cent., 10 per cent., and even more ; but you would not suggest, would you, that on mortgages with a satisfactory margin there; is any great difficulty in obtaining money at 6J- and 7 per cent.? — Yes, there is difficulty in doing that. Lot me; give you a, ease. .1 will not give the figures very definitely, because it might be known who this man is. He paid £18,000 deposit, and the balance owing was £28,000. Well, he- cannot borrow that money. He is asked by the mortgagee who sold the property to reduce his indebtedness by £8,000, to bring the amount down to £20,000, and he cannot possibly borrow it or get the money on second mortgage. May that not bo a property for which a very high price was paid, and now, farm lands having depreciated, he cannot finance ? —No ; he has not paid too much for that land. He is making an income out of it. The Chairman.] There, is a margin of £18,000 on it ?—Yes. Mr. Shirtcliffe.] How king is it since he bought it ? —I do not know that. It was probably during the war period. Probably when land was more or loss inflated as compared with to-day ? —Yes, it would be. So that probably the, lanel itself has depreciated in value, rendering it mere difficult for him to arrange his finance ? —I cannot see that. The owner of that land reckons it is worth what he gave for it. We might say then, might we: not, that the farmers' difficulty in seem ring loans to-day is largely attributable to the uncertain value of the land ? —No ; the uncertainty eif creelits. There is no money for them. That is tho difficulty. Mr. Begg.] You suggest that by the incidence of deflation all de:bts lire automatically increased, and you gei en. T take it that the scheme you suggest would be intended to spread the effects of that eleflation between the mortgagor and the mortgagee, instead of their all coming upon the one party ? —Yes. But, did not the 1 farmers get all the benefit of the inflation when it occurred ? —This is the difficulty : the farmers who got the benefit of that inflation are now living in retirement in the cities, and those people who are taking the brunt of it are, the men who are working the farms now. Those people who have: taken mortgages to secure the balance of the purchase-money are not only getting the big price for the land, but they are going to maintain their -position by the increase in the purchasing-value of their money. But there are a large number of the original owners still on the land ?— There is £242,000,000 owing on mortgage: now, and there was rather more than £97,000,000 before the war. Those, increased millions of mortgages are held —a large proportion of them —by men who have sold. In other words, the buyers paid too much for tho land ? —That may be so; but that was not tho point. It must be: so, must it not ?■ -That is so ; but that was not the point. They paid too much and they owe too much now. I suppose you would not contend that any legislation erf any kind whatever can ever protect a fool from the- result eif his folly—in a general way ?—Yen must remember that farmers, as a rule, do not understand economic conditions, and they had no information or signal given to them when the banking Acts were suspended. The:y elid did not understand the effect of that. And how many traders knew the effect of the suspension of the banking Acts ? It meant an inflation of the currency and high prices of everything. You cannot expect a farmer who is working from twelve to eighteen hours a day to understand that, and if you put it before him he could not understand it. What the farmer does is this :he says to himself, " Brown gave so much for his farm. Well, this land is just as good." He can discriminate as to the difference between the farm he wants to buy and the farm that is purchased by someboely else, and he takes it for granteel that if Brown gave £40 an acre: for a farm he: can do so. The: economic conditions underlying the matter, such as the inflation of values —you cannot expect a farmer to take any notice of that. Then, 1 take it that in a, general way, except in very normal, placid times, a farmer should not be allowed to buy lanel or sell it ? I mean, he, cannot lie trusted ? —The farmers were not the cause of the inflation. It was the, Government that was the cause, There should have been some one to advise the farmers about these matters, probably. The trouble is that you can hardly pick out individual farmers. Farmers as a class got the benefit of the inflation, and now they are seeking to escape the- penalites of eleflation. Now, jibout the trouble with bank exchanges. Tho farmers' credits pile up in London, and it is difficult and expensive to get them realized here. Is not Government borrowing a very large factor in that ? Say there is a credit of £6,000,000 or £8,000,000 piled up in London, The Government, by borrowing £4,000,000 at that time, increases the: balance in London to be transferred by another £4,000,000. Is not that a exmsidorable factor in increasing the' producers' difficulties in getting remittances ? — It depends from whom the Government borrows. In the, case eif legitimate borrowing by Government, if they borrow from those who control those creelits in London, automatically they would transfer the, credits here. The Bank of New Zealand might have; £10,000,000 of credits in, London anel lend to the New Zealand Government the £10,000,000. They would give: it to the Government there to spend. That is, if it was all lent out of those funds belonging to New Zealand that were accumulated in London the position would remain the same ; but, as we know, that is not the ease. The money is borrowed from Lemdon sources, principally ?—Yes. Does that not automatically increase: the; producers' difficulties in getting his remittances out here ? —Yes, of course it does. The proper way to borrow then, would be, at this end, to balance it up.