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Duffus, William M. / Report on agricultural settlement and farm ownership. Part I: state loans to farmers

Chapter I. State loans to farmers in New Zealand,   pp. 14-31 PDF (4.8 MB)

Page 14

                        CHAPTER I.
  The government of New Zealand has made a practice of lend-
ing money to farmers since the year 1895. In that year it'
opened the Advances to Settlers Office, authorized by the Ad-
vances to Settlers Act of 1894. Since that time it has loaned in
round numbers-up to the 31st of March, 1912, $60,000,000
on 32,000 applications for loans accepted by the office.
  *The Advances to Settlers Act was passed to-relieve settlers
from what were felt to be unnecessarily heavy burdens imposed
upon them by private money lenders from whom they borrowed
the capital needed to improve their holdings when they were
able to borrow money at all. The bill was introduced by the
Hon. Joseph G. Ward, later prime minister of the dominion. lt
was said in support of the bill that rates of 7 and 8 per cent
were exorbitant charges in view of the prices then prevailing for
farm products. It was also pointed out that these rates, high.
though they were, by no means represented the full cqst of the
loan. In many cases the borrower had to pay a commission. If
the loan were only for 6 months at a time and a commission of 2
per cent were charged twice a year, in addition to the nominar
interest at 8 per cent, the actual cost of the loan would be 12 per
cent per year.'
  The credit situation in New Zealand in 1894 was therefore
similar, so far as interest charges are concerned, to the credit
situation existing at present in upper Wisconsin and other new
farming districts in America.
  The plan proposed on behalf of the government by Mr. Ward
was not wholly -without precedent. The principle of state
advances to settlers was already established in the Land Act of
-This illutraton n taLken from Pent: 2'k ftor" of XeVW 59
Sad, page 238.

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