cerned, the principal difficulty is in the stability of the values on farming properties. We, in our bank, appreciated the possibilities I think of Western Australian Farming in advance of a good many others, and we propounded a set of conditions to apply to pioneering banking, from a banking point of view, some 8 or 10 years ago. They were published in a book, of which I happen to be the author when I was secretary of the banks, and sets forth the principles of banking advances in respect of farming. The essentials were, briefly, good land and a farmer in charge of it, sufficient living area, and the distance from a line of not more than 12 miles. We followed these conditions and we found them very satisfactory and successful. Like many other banks we had difficult accounts, a good many of them, but taking them all round they are improving, and it will take a considerable time for many of these men to get on their legs, but when you ask me what is the ultimate future of farming in Western Australia I should say it will be a stable and profitable subject of course to certain safeguards. One difficulty is that we have encouraged men on the land who should never be on the land, who would never become farmers, and many of them have selected land which is not suitable for selection. Those difficulties are the usual concomitant of pioneering conditions, and they are being improved by the elimination of wheat men in favour of farmers and better men. That process is going on and it is emphasised since the drought. The wheat men going out and the stronger men taking their places.

8916. You mention just now the question of stability of values, can you enlarge on that topic? - Yes. If a man comes to Western Australia and wants a farm he can go on, say, east of Tambellup are at Doodlakine and get a farm that will suit him at either place. If he goes in for wheat farming - the eastern belt is very sparsely settled: it runs for nearly 400 or 500 miles and for a very good width, and in this country we have one million square miles, while we have only a little over 300 people in possession of it . We have not the large built-up centres that they have in the East; the well settled localities which give stability to values, and the consequences is that from a financial point of view the main asset is the man. Take Katanning in the early days and the Great Southern district where they developed earlier than in eastern districts. The Whole business has been a process of choose your men to lend money to. You are reasonably certain if a man knows the job and has got good land, he will survive and prove a valuable citizen and a prosperous man. The poor man in charge of good land or the good man in charge of poor land will arrive at the same result, doing no good, so that in this country where values are paper values, a great deal of attention has to be paid to the character of the men and the capacity of the men. In other words it is only desirable or safe to lend to farmers who know their job. I am speaking of the time before the drought 1914-15, when all the lending companies and the banks took up the business of lending on C.P. leases. The values were on the rise as seasons had been good and then we struck a drought, and since then the banking and financial institutions generally have been reduced to keeping men on their farms and getting them gradually out of their difficulties. I think the National Bank was the first that framed a scheme for the carrying on of farmers. It was the frame work which the Government subsequently adopted for the Industries Assistance Board, and it has been a great success. It is quite a new departure in farming finance, and, briefly, the position of the bank's scheme is this: we find the necessities for putting on and taking off the crop and put everything through a separate account, a crop account, to which is debited all the expenses of the crop and crediting all the proceeds. Then we set aside so much of that to carry on the man for the succeeding year. We give so much to the outside creditors and we take so much in payment of Crown rent, taxes, and so forth and interest. That scheme was very successful. The bank took nothing out of it off its old debt the first year. The second year - last year - we took half the surplus after paying the crop account, the creditors taking the balance. Now we are carrying these men on under the bank's scheme this year. This is the third year of its operation. The main difficulty that the scheme overcame was the forced system of credit; this generous granting of credit to farmers by everyone - merchants of all descriptions, machinery and otherwise - and the farmer is being protected against himself. He cannot buy machinery unless it is absolutely essential and the money is approved of by the bank. Merchants are heartily in accord with the scheme now, and the tendency with farming accounts is to keep a much stricter supervision over not only the man's operations on his account but his operations on the farm. Our managers have to report monthly on the man's doings on the scheme. He has a schedule showing what the man undertakes to do in cropping and fallowing, and he has to show at the end of the month how much he has done. These are scrutinised in Perth and we have a close touch on these men. This scheme is welcomed by farmers who are independent of the scheme asking to be put under the scheme. They are relived of all their worries and anxieties of dealing with creditors, the demands monthly for payment of debts, in fact they are at peace for 12 months until the harvest is assured or garnered, and then the money is automatically distributed through the nominees of the creditors and the farmers. The farmer is being protected against debt or the incurring of further credit. One of the weaknesses of the average man on the land is absolute fearlessness of debt. He will take on anything he can get credit for. When good seasons prevail he can carry on but when he strikes bad times he is in trouble. I do not think we shall have these conditions again. Merchants have concluded that credit was rather pushed here and that state of affairs has been remedied. There is no doubt the system of cropping accounts with farmers, particularly those who have not become thoroughly established and have not a reserve to make them independent of their tanks, the system of crop supervision has come to stay in the country, and probably we shall continue it even when there may not be very much reason as far as risk is concerned for a continuance.

8917. Plainly you regard excessive credit is detrimental to farming progress and you hint that it is probably one of its drawbacks? - I can give you the case of a man in one of the new districts, a good farmer with a good little farm. he had an advance of about £1,000. His place was worth about £2,000;