RURAL FINANCE

Hawera Star, Volume XLVIII, 8 November 1928, Page 4

RURAL FINANCE

ASSISTING SMALL MEN. INTERMEDIATE CREDITS SCHEME STATE ASSISTS LIBERALLY. “The intermediate rural oi-edits scheme is .on© of the finest- pieces of legislation that has been put on the statute book of uliis country, and in it w© have the nucleus of a rural!, or agricultural bank,” declared Mr J. N. iUaesey, Reform candidate for the r’raniilyn seat, held for many years by uis lather, the late Mr W. E. Massey, and representative of his father on the board controlling the operation of the Act, .in a recent speech at Pukekohe. Mr Massey said; that because the Government did not swallow holds bolus the rpport of the .commission which had inquired 1 in various parts of the world into schemes for providing 4 easier finance for farmers, the Country * Party and the Panniers Union, headed oy Mr W. Poison, who was a member of the commission, wexp going, round condemning the measure which had been passed. “As a matter of fact-,’ 1 Mr Massey continued, “the Intermediate Rural Credits Act is- much super.or to the scheme, advocated by Air Poison. He suggetsed that we should commence operations with a capital of £100,(XX) provided by the Government. We have £400,000 for 20 years and free of interest for the first ten years. Mr Poison proposed loans up to £20,000, with a minimum of £SO, .and rate of intei est was not specified. Wo have fixed a. limit of £IOOO, and there is no minimum as to the amount which may lie borrowed. I would like, to know,” ‘Mr Massey said, “how Air Poison ©r any other of our opponents can say t heir scheme with loans of £SO to £20,000 will help the small farmer. With, a capital of only £IOO,OOO 'and! loans of £20,000 their funds would be eaten up in no- tilde. • Air Poison a l ,so advocated loans of up- to only 60 per cent, of the value of the securities, -but the scheme adopted by the Government allow® advances to be made up to 80 per cent .of the value of the security offered. For overdue accounts Air Poison woo'd charge 8 per cent interest, but the board charges only another half per cent, on the interest ruling for the time -being. The fanners could get inonev from the banks at a lower rat© than that proposed by Mr Poison, Mr Maissev added. Dealing with ‘the rural intermediate credit associations Mr Massey pointed out that 20 or more persons could form an association and, in a sense these associations were banks in themselves with farmer backing another and rend- ~ ering assistance and giving advice, so essential in malting for success in farming. Among several strong associations there was a good example in Taranaki where remarkably good business was being done. The board advanced money to" the associations at six per cent, and it was re-loaned to the farmers at 61 per cent. One quarter of one per cent, was allowed to the associations to build up a reserve to cover possible losses and another quarter per cent, to cover working expenses. Under P'art IH. of the Act an individual or a company could guarantee an -applicant for a loan. Illustrating how this worked Air Massey said that the New Zealand Co-operative Barry Company, had applied to the board for authority "to act under this part .of the Act and, in accordance with the regulations an auditor had been soot to ex-... amine the company’s books. Such reports were always treated as confidential. The board had willingly accepted the company’s offer to guarantee up to £75,000. The company had already a registered finance company of its own with a capital of £75,000 and it, had been in the habit of lending money to its suppliers on '-fclie security of their stock at eight and a half and nine per cent, interest, repayment of the advances being made by deductions of one-third from the borrowers milk cheques. Under the Intermediate Rural Credits scheme the money was 1 loaned at six and a half per cent, and the terms of repayment were a master o arrangement. If an applicant could not repay one-third out of each milk cheque he could repay the amount in such sums as he could reasonably- atford. There were cases where appneacants were hard up against it and arrangements had been made t<2 deter repayment for a month or so. . Part IV.of the Act which contains the discounting proposals, was described by Mr Massey as being tbe best scheme, for under it the promissory note system was introduced. About eleven dairy companies were now using this system. The rate of interest- was the same, six and a half per cent., but the system had decided advantages which were most acceptable to the farmers. The fees- for a mortgage bin of sale and registration and valuation. charges totalled about £5. Under the PN system the loans for the time being were limited to £IOO and the cost of stamping the PN was only 2s 6d. 1 e big advantage was that the borrower received bis money immediately and by paying cash he was able to obtain tne discounts which were worth while. The borrower made his own arrangements for repaying the loan with the company ; or individual guaranteeing him, and interest was payable only on the balance Mr Massey said that tributes to tne whole scheme of intermediate rural credits as brought into being by the New Zealand Governments were to be found in the fact that the Imperial Government had thought so highly of it that it had adopted it while Sir Josepu Ward had spoken favourably of it. Ihe board intended to extend the scheme, put so far it had only got the machinery working smoothly, although considerable business was being done Seeing that the members of the board were strangers to a new business, was need to act with prudence so that the scheme would command the confidence of the investing public Reck'lessness would mean failure and for the •time being the board had limited advances to the district advisory boards to 50 per cent, on the value or dairy stock and t© 70 per cent, on the value of sheep and cattle. r ~ „ “All that is wanted now, Air Massey added, “is ’that the farmer should s get in behind the scheme and push, it along in the true spirit ofco-operatjon.