FARMERS’ LOANS.

Hawera Star, Volume XLVIII, 1 November 1924, Page 6

FARMERS’ LOANS.

NEW LENDING SCHEME. LOANS ON FARM SECURITY. PREMIER EXPLAINS PROPOSALS. (by TELEGRAPH —PRESS ASSOCIATION* WELLINGTON, Oct. 31, 1 The Prime Minister issued a lengthy i statement to-night on the subject of i the Farm Land Mortgage Associations ■ Bill. “As there seems to be a good ’ .deal of misapprehension on the part of i people taking both sides of the ques- ' tioii with regard to tlie Bill, I have decided to hold the measure over for the present in. the hoiie that it may be carefully considered in the recess,” said Mr Massey. “It. is intended,” he added, “to assist the finance of farmers who require borrowed capital, and it provides for the setting up of what are called Farm Land Mortgage Associations. Any 20 or more farmers intending to borrow. money on the security of farm lands from an association to be formed under the provisions of the Bill may, by complying with the requirements of the Companies Act, 1908, in respect of registration, form an incorporated company with a limited liability. The objects of the associations shall *be: (a). The lendng of monky to farmers upon.the security of farm lands; (b) the raising of moneys by the issue and sale of bonds; (e) the receipt of moneys upon the contract of a deposit. “The finance of the associations will be based upon an advance in each case from the; Government for the first year’s expenses of a sum not exceeding £-2000 free of interest for a term not exceeding 10 years. Interest, however, is payable at 5 per cent after the first 1.0 years. Under section 10 (3) the Government may also lend, to an association £50,000. without interest for . a term of not less‘than 10, bnt not | jporh than 20 years, the limit of lend--1 fug in this way to he not more than • £150,000. PROVIDING THE CAPITAL. _ “Permission is given to an associa- | tion to extend its lending operations by authority to issue bonds of not less than five years’ currency at 5-J per centj although in committee I propose to increase the maximum rate to 6 per cent. The Bill also provides for deposits for not less than five years at a rate of interest not exceeding 5 per cent. Auditors will he provided by the Government, and their salaries aind expenses will be paid by the Crown. Farmers borrowing from an association will give mortgage deeds therefor, and these latter will be held by the association, and against them bonds may be issued hearing a- face value of ' £lO I or some integral multiple of £lO. ! “The working capital of an association is intended to. be provided by: (1) Contributions from tire Government; (2) money lent without interest by the Government; (3) deposits; (4) borrowers become shareholders to the extent of one share' for every complete £IOO advanced, and are liable to that extent for uncalled capital upon such shares until the whole amount of such advance has Been repaid to the association; (5) the issue of bonds. The amount that may be borrowed by any one individual is 'limited by the Bill to £SOOO, and no loan shall he made to an extent exceeding 70 per cent of the value of the lands to be mortgaged as security. WORK OF STATE ADVANCES. “In New Zealand some very extravagant demands have been made on the Government by persons asking for a bank with a nominal capital of £20,000,000, of which £5,000,000 is to be guaranteed hv the State and the maximum amount of a loan is to be £22,000. Such demands are hot only unreasonable, but if agreed to would most certainly end in disaster. The plain fact is that in New Zealand; we have to-day, in its present form, one of the best lending institutions in the world, namely. .the State Advances , Department, which is advancing money at the present time to farmers and workers and locaL bodies, the rate of interest being from D, per cent to 5] per cent. . The following figures show the extent of the operations of the department from April 1, 1923 : Loans authorised.—Number, 11,564; amount, £10,332,752. Loans paid over.—Number, 9472amount, £8,608,426. “This department is now established on a very solid basis with a capital htt.e short of £25,000,000 and growing steadily. My own opinion is that no other organisation can compete successfully with-it, and if necessary I would prefer to increase the capital still further from time to time. But if farmers want lending institutions on lines similar. to those existing in other countries, then, so far as I am personally concerned, they al‘e welcome to them, but the last word rests with Parliament.”