AID TO FARMERS.

Auckland Star, Volume LXII, Issue 306, 28 December 1931, Page 4

AID TO FARMERS.

MORTGAGES AND DEBTS.

CANTERBURY FINANCE SCHEME. GENERAL ADOPTION URGED. "At the end of last year it was realised by all interested in farmers' finance that the low prices being received for most products from the land would make it impossible to pay mortgage interest and other debts, and must result in ruin for a large proportion of Canterbury farmers unless some protective measures were provided.'' said Mr. Norton Francis, of Christchurch, in an address to members of the Wellington Chamber of Commerce on the subject of '"Farmers' Finance and Mortgagors' Belief." The speaker referred to the undesirableness of a renewal of the wartime moratorium, and outlined the initiation and adoption of a voluntary scheme which had received the approval of chambers of commerce, the Farmers' Union, bankers, members of the Government and others. Briefly, he said, > the proposals were:— (1) That the farmer, his mortgagee and the banking firm which found his working capita] (to be called the lender) should enter into an agreement to stand together for one farming year. (2) The lender agreed to open a new account with a credit limit estimated on a "budget form" which showed the various headings of outgoings and estimated income. This budget had to be approved by the mortgagee, and was to provide for working and living expenses of the farmer, and any" extra live or dead stock required to maintain average production. The total estimated expenditure must not be exceeded without the formal consent of the mortgagee. (3) Where the whole or part of any property was held on lease the landlord was required to act similarly to the mortgagee to prevent any possibility oi distraint for rent.

(4) All advances made by the lender on the new account, as provided for in the budget, were with interest ;:t current rate to be a first charge on the following season's products. The maintenance of the ages of the live stock was to be included in the first charge on the season's products either by the sale of old ewes and purchase of similar quality one year younger or by a per head allowance, also an agreed upon amount to cover depreciation on tractors,_ reapers, threshing machines and the like. When these liabilities had been cleared, land tax and local rates for the current year were to be the next charge on the season's returns. Interest and Valuations. (5) The balance, if any, of the available returns were to be divided, so far as overdue interest payments were concerned, between the mortgagee and the lender proportionately to the values of the land and the stock and plant, which were to be fixed when the agreement was made. The rate of interest payable to the mortgagee was to be limited to the normal rate (not the penalty rate) due under the mortgage. (6) If after above payment's had been made any surplus income was available, it was to be paid to the creditor or creditors entitled by law to receive it. secured creditors necessarily receiving preference, or it was to be divided as was specially provided for in the agreement. (7) The values of land, stock, etc., as provided for in paragraph 5 were to be determined by mutual agreement or_could be left to arbitration under the 1925 Act. For the benefit of any who might prefer to use the services of an independent board, the Commissioner of Crown Lands, the president of the Canterbury District Law Society and a representative selected by the North Canterbury Stock Auctioneers' Association have been appointed the. Chamber of Commerce representatives, but so far the interested parties have had no difficulties in arriving at acceptable valuations. (8) To enable trustees to adopt the scheme and also to find some income for the beneficiaries until the deferred interest payments were received, the Canterbury Chamber of Commerce requested the Prime Minister to bring down the necessary legislation. The latter agreed to this and the necessary powers were given under Section 46 of the 1931 Finance Act No. 2, which provides for the anticipation of overdue income by the raising of a loan by the sub-mortgaging of a mortgage if approved by the Court. The scheme, said Mr. Francis, had been widely adopted throughout Canterbury. "There is probably," he added, "over £100,000,000 cf private capital invested m farm loans in New Zealand to-day, and despite the great assistance given by the various Government lending Departments in the past it would be quite impossible, and if possible very detrimental to the credit of the Dominion, for the Government to find even one-half of this sum. The best investment for the savings of the people of New Zealand should be on its farming lands, from which is derived practically the whole of the wealth of New Zealand. , "Let us all help in this direction by a reasonable and common-sense handling of the present unprecedented difficult position of our farmers, which is evidently not to be overcome in one year," said Mr. Francis in conclusion. "Canterbury has largely temporarily solved it during the past season b3 r the adoption of the Chamber of Commerce Farmers' Finance Scheme —why should not some general voluntary scheme for the whole of New Zealand be evolved which may be equally successful for the coming year?" Replying to questions. Mr. Norton Francis said that probably about three--1 fourths of the farm mortgages in Canterbury were now running under the scheme or some form of it. The scheme related to farm lands only; the question of applying it to cities or towns had not been considered. The arrangements made related to one complete farm year. In some cases interest had been reduced from 6 per cent to 3 per cent; in many cases the reduction had been to 5 per cent. The scheme had so far proved very successful.