§ Order of the Day for the Second Beading read.
§ THE EARL OF ANCASTER
My Lords, in asking your Lordships to give a Second Reading to this Bill, I may say at once that it is not intended to interfere in any way with the ordinary manner in which farmers at the present time obtain and have been accustomed in recent years to obtain advances. The object of this Bill is to fill up certain gaps in the credit system available to our agriculturists, and to enable them by such means to cultivate their land to better advantage. The Bill practically divides itself into three parts. Clause 1 provides long term credit facilities to meet the special case of those farmers who bought their farms during the period of the operation of the Corn Production Act; that is to say, between April 5, 1917, and June 27, 1921.
Sir Theodore Chambers' Committee, which investigated the subject, reported that there was a strong case for some special measure of assistance in these cases. In the majority of cases the banks have behaved very reasonably, but it cannot be expected that they would wish to keep their money locked up indefinitely in these mortgages on land, especially if trade improved and they found they could put their money out to better advantage. 880 It is, therefore, the opinion of His Majesty's Government that these men should be given, as soon as may be, the greatest possible measure of security and confidence. Under Clause 1 of the Bill it is proposed that a man who has bought his farm during the period I have named will be able to obtain a mortgage up to 75 per cent. of the present value of the holding and that the interest he will have to pay, including the sinking fund for sixty years, will be £5 10s. 7d. per cent. per annum.
Then Clause 2 of the Bill deals with the provision of short term credit -through the establishment of co-operative credit societies. It is well known that in practically every continental country, as well as in India and in the Dominions, systems of co-operative credit have played a large part in agricultural development. In this country, however, and despite many attempts, it has not hitherto made any very great progress. This is due partly to the fact that our banking system is better and more widely spread than in other countries, partly to our system of land tenure, and partly to the fact that previous attempts at establishing co-operative credit have been based on the German system of unlimited liability, which seems clearly unacceptable to our people. The Government for three years will advance to any properly constituted agricultural credit society a sum equal to the share capita' subscribed by the members, on which only five shillings in the pound need be paid up. That is to say, if there is a capital of £2,000 the Ministry will advance £1,000 and the members will have to find another £l,000 in shares, but only 5s. will be called in and they will, therefore, have to find only £250. The loans from the Ministry will probably be made in the first instance at 5 per cent., and if the society is economically managed, it should be able to grant short term loans to its members at under 6 per cent.
§ Clause 3 deals with the facilities for obtaining advances for permanent improvements which are usually carried out by a landlord. The Credit Committee, to which I have already referred, reported that the machinery of the Lands Improvement Acts would be admirably adapted to meet this need, as it would enable the landlords to borrow money for the purpose from the lands improvement 881 company. The limit of 5 per cent., which was all the lands improvement company was, under the Lands Improvement Act, able to charge as interest, has been done away with by this clause, as the limit has hindered business owing to the rise in the value of money. They could not be expected to be able to raise money and lend it at 5 per cent. now that money has become more valuable, The Minister is given the discretion as to the rate of interest that may be charged by the company. The objects for which money may be advanced are extended to include all those objects enumerated in the Law of Property Act, 1922.
§ Those are the main provisions of the Bill. As I have already said, it will enable those farmers who bought their farms during the time in which land was fetching very high prices when the Corn Production Act was in operation, to get mortgages on their land at the rate of about 5½ per cent. including sinking fund and up to 75 per cent. of the present value. That. I think, must be of enormous benefit to them as they will not always be under the perpetual fear that the mortgage may be foreclosed. In addition to that, I believe it will give assistance to many smallholders and others who require short term credit for the cultivation of their land, and will also enable landowners to make necessary and permanent improvements upon their property. It is for those reasons that I ask your Lordships to consent to the Bill being read a second time. I hope it will receive favourable consideration at your hands.
§ Moved, That the Bill be now read 2a.—(The Karl of Ancaster.)
§ EARL BEAUCHAMP
My Lords, it has been my lot to comment on various Bills introduced by the noble Earl, and I hope that he will allow me to say that on this occasion I am in favour of the measure which he has just introduced. It is part, of course, of the piecemeal legislation in favour of agriculture which His Majesty's Government are introducing by various instalments, and is, I think, one of the most fortunate portions of then-general programme. It will carry out, undoubtedly, a promise which they have made to the farmers, a promise of much benefit and one of which I hope they will take considerable advantage. Indeed, one of the first criticisms I should venture 882 to make about this Bill is to express my regret that a measure of this kind was not introduced into this country many years ago. It would have been of very great advantage to those who are engaged in agriculture. Naturally measures of this kind take some time to get into operation. It takes some years for people to become accustomed to them, and those of your Lordships who know and have had experience of an attempt to make use, of co-operation in agriculture will know how difficult it very often is. I think that as a class farmers are generally willing to enter into co-operation for the purpose of purchasing things, but it is very much more difficult to make them enter into co-operation for the purpose of selling things. I only wish that they would look upon co-operation with equal favour in both the one case and the other.
The noble Earl mentioned what, of course, will be one of the stumbling blocks in the way, and that is the rate of interest which will be charged by His Majesty's Government. A good farmer who is well known to the bank will be able to get a loan at a rate of interest which he will regard as more favourable than that which he is likely to get from His Majesty's Government, or through the associations which are sanctioned under this Bill. But we must remember in this connection that the rate of interest which he would get from the bank would probably not include the amount for sinking fund. That is one of those matters which people so often overlook. They do not see the advantages which they get if they put the additional one per cent. into the repayment and thereby secure a sinking fund. If we can persuade them to look upon it in that way I am sure we shall be able to induce them to realise what the advantages are which they will get in coming under this Bill rather than in making personal arrangements with the bank. But I am afraid that in a great many cases, for the present at any rate and until they have learned the advantages of this Bill, we shall probably find that the good farmer will prefer an arrangement with his bank to an arrangement made under this Bill.
For my own part I hope very much indeed that this Bill will be made use of, particularly by labourers. There is nothing to help labourers if they want to get a small capital whether to build a pigstye or to buy a pig. We want something of 883 that kind in our rural life if we are to help the labourer. I hope that as a result of this measure there may spring up all over the country a number of local societies which, knowing the character of the individual who applies to them, will give him, with the help of His Majesty's Government, just that little assistance which will enable him to put his foot perhaps on the bottom rung of the ladder, but which will enable him eventually to climb a long way up it. Co-operation in other countries has been proved to be of so much use that it can hardly be overestimated in trying to persuade the farming community to take it up in this country.
The other day I read a report of the visit which was paid by the British Dairy Association to Denmark, where they had the advantage of listening to a most interesting address from the Danish Minister of Agriculture, Mr. Nygdal, in which he explained the tremendous progress that has been made in Denmark in the produce of milk during the last forty years. It will interest your Lordships if I read one short passage from what he said—In connection with freehold the credit associations system must be mentioned. In some other countries there are only very small mortgages on the farms, and the farmers have to pay in cash nearly the whole value of the farm when starting. In Denmark possession requires only a comparatively small outlay, and the farmer's own money is, in a larger degree, available for the cultivation of the farm.He went on to lay stress upon the benefit of these co-operative credit associations—which are provided for in this Bill—and the advantage that they have been to the Danish farmer. What has been of use in other countries we may well hope will be of use in this country too, but it will be, as some noble Lord said just now in regard to the last Bill which we were discussing, of comparatively little use unless it is backed by public opinion. I hope His Majesty's Government may be able, in some way or other, to make known to the agricultural community the advantages which they are offering to them, and that those interested in farming will make use of those advantages.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.