RURAL CREDITS

Dominion, Volume 29, Issue 207, 29 May 1936, Page 6

RURAL CREDITS

Liability of Shareholders In Associations EFFECT OF LEGISLATION Dominion Special Service. Feilding, May 28. The Rural Intermediate Credit Associations came in for considerable discussion at to-day’s annual interprovincial conference of the New Zealand Farmers’ Union. Discussing the question of the liability of shareholders in the rural intermediate credit associations, Mr. C. C. Jackson (Masterton) Stated that when legislation was introduced the Government advanced the sum of £400,000 to finance the district associations. Part of that money was invested to meet ultimate repayment, and since then a large reserve fund had been built up. The position he wished to illustrate was that arising from slump conditions. During the good times, when there was no thought of depression, the Wairarapa association bad advanced loans against stock on mortgaged farms. A borrower subsequently got into difficulties and went before the Mortgagors’ Commission, which made an adjustment. That adjustment, however, was not acceptable to the land mortgagee. Rural credits assocition was prepared to stand by the borrower, but the mortgagee took the matter to the Supreme Court and won his case. He then gave notice for the removal of the stock, and the association was compelled to sacrifice at 30/- a bead, cattle that had cost £lO a head. The Central Rural Credits Board, with a view to making good this loss, directed the association to call up unpaid share capital amounting to 19/- a share. This decision of the central board, precipitated crisis, ' and the Wairarapa association was forced into liquidation. Efforts were maue through the late Government to have the loss met out of the reserve funds of the central board, which the speaker considered were specifically set aside for this purpose. The Government was investigating the position when it went out of office. It was a very vital matter if shareholders in the rural credit associations were to be held liable for losses over which they had no control. Mr. James Watson (Masterton) said he happened to have been the unfortunate secretary of this association for _ six years. He said that the associations smallest borrower had borrowed £BO. He had paid an average of 6 per cent., and had paid back £BO. Now he w as being asked to pav a further £2u. while the central board sat on its whlc “ tv pre somewhere between £40,000 and £70,000. . „ .', .. “It is a grave injustice, continued Mr. Watson. “'We feel that we have been done a great injustice by the legislation. It was framed to benefit the farmers, bu. it has crucified us.” After further discussion the following motion was carried unanimously : —“That in order to safeguard their interests, the of liability of shareholders, in rural intermediate credit associations throughout the Dominion be the subject of investigation at the- Dominion conference.”