Canterbury economists and the market for agricultural finance during the 1920s

Abstract

Canterbury economists were enthusiastic reformers devoted to spending much of their time discussing policy issues. In the early 1920s economists were motivated by current economic events to investigate the state of the rural economy and the provision of agricultural finance. Condliffe and Belshaw described the market for agricultural finance in terms of excess demand, interest rate rigidity and incomplete information for lenders and borrowers. They argued that an increase in the amount of finance to farmers could result in high risk projects receiving finance. However, the extension of credit also meant that some productive farmers, initially excluded from the market, received finance. Economists argued that a more efficient allocation of resources could be achieved if institutional structures were altered to provide more complete information about borrowers and to allow interest rates to vary more freely with the trade cycle.

Notes

Department of Economic History, Australian National University.