208 WHEAT PRODUCTION IN NEW ZEALAND 
general policy to grant such loans on an extensive scale. 
They prefer to give a farmer only temporary assist- 
ance on the understanding that in a season or two 
he will be in a position to cancel the overdraft. A 
departure from this conservative attitude is an infringe- 
ment of the laws of good banking, as was well demon- 
strated during the optimism of the ‘‘seventies.’’ The 
advent of several land and mortgage companies was 
threatening to deprive the banks of some of their com- 
mercial functions, and during the ‘‘seventies’’ a keen 
rivalry sprang up between the banks and the firms. The 
ultimate issue was that in the ‘‘eighties’’ many of our 
banks could almost be classed as land banks, with the 
disastrous results well known to those who remember 
the crisis of 1894, when the Government had to come 
to the assistance of the Bank of New Zealand. It is well 
that the banks have now realised the risk involved in 
granting credits too extensively on such non-liquid 
assets as land. 
The pioneer work in providing capital for farmers 
is left to the enterprise of ‘‘finance and auctioneering’’ 
firms. While, from the point of view of waste of energy 
and labour, the competitive system is seen here, probably, 
at its worst, the total net result of the operation of these 
firms is distinctly beneficial to the community. An 
enterprising and efficient man, with comparatively little 
capital, has at his disposal the full confidence of the 
firm which supplies him with adequate working capital, 
provided he maintains his efficiency and enterprise. But 
at the same time the firm makes the stipulation that his 
produce shall be bought and sold through its agency, 
and thus the firm reaps a double gain. But in providing 
the young farmer with the necessary capital at the risk 
of losing a great part of it, the firm is performing an 
extremely useful function viewed from whatever stand- 
point. 
