RURAL CREDITS.

Hawera Star, Volume XLVI, 17 August 1926, Page 5

RURAL CREDITS.

SELF-RELIANCE, A FEATURE. VIEWS OF BANKING AUTHORITY. In the course of an interview with a Star reporterupon the report of the Royal Commission on rural credits, a local authority on banking said: LONG-DATED LOANS. The farmers’ best mortgage in the past- has been the one provided by the Government State Advances Office. This office has not had enough money to meet all the farmers’ requirements. On this account many applications have had to he postponed, or rejected. That is the present -state of affairs. The banks’ advance system is not intended for long loans, which mean a lock-up of capital. The private lender generally lends on terms varying from three to' five years. At the end of that period the farmer is often faced with the necessity of raising money from another private individual to pay off the previous mortgage. That generally means procuration fees and legal expenses everv time the short term mortgages fall due. This simply handicaps the man on the land. The present proposal seems to offer a good solution, by extending the function of the State Advances Office. This office will lendmoney through a farm loan branch ot the State Advances Office, constituted under the control of a Farm Loan Board. It appeared from reading the commission’s recommendations that the Government will guarantee these loans. Hie farm loan branch will put the lands on the market- and sell them to the people of New Zealand, who will find the money for developing the land, instead of reference being had to the London market. One of the advantages is that the Dominion would not increase its indebtedness in London. It is not advisable to unduly increase theloans on the London market when the money can be obtained locally. That is, if' it can be raised; and the commission seems to think it can. An important matter for the Government’s consideration will be securing the confidence of tlie investing public. To do that the Government will have to be very careful indeed in the -selection of ,tlie men to constitute the Farm Loan Board. These should be free from all political interference and “wire-pull-ing.” The proposals of the commission should meet the requirements of the farmer as regards long-dated loans. There was a repayment clause for the extinguishing of the loans, such as exists in the present system. INTERMEDIATE CREDIT.

The intermediate credit system, is to allow the farmer to finance the .nonperishable. farm produce an.d live stock. This is to be effected by the organisation of the co-operative rural credit associations, with share capitaL and 'liability. The bona fide co-op. society should participate. A\ 7 airehou.se receipts will also be accepted as .security for moneys advanced, against stored produce. This is backed up by the Farm Loan Board. The intention seems to be to take an equivalent t/o a chattel mortgage upon .stock and produce, at the discretion of the board. The Land Board' issues collateral trust debentures to the amount (of these, .advances on chattels, and the amount .realised by the sale off these debenbentures goes to the credit of the .association to provide working capital. It is also proposed to take advantage of the existing banking facilities for the first .six months of the; .penhd for which intermediate credit .is given by 'arrangement with the. commercial hanks and other institutions to discount hills of the local associations endorsed, by the Farm. Loans Board’s accredited representatives in their respective districts. , . , There is one' thing, which appears certain—the idea lof a farmers’ bank lias been very wisely abandoned. SHORT LOANS. The basic principles, of the scheme is that the State Advances Office, the Farm Loan Board, and the hanks should work in harmony. It seems that no dmprovemerit has been found on the present short credit .system (for terms of up to, .say, six months) as offered by .the. present banking institutions, and the State Advances Office,