LOANS FOR FARMERS

Manawatu Times, Volume LIV, Issue 6864, 20 March 1929, Page 10

LOANS FOR FARMERS

British Plan in Operation ADVANCES ON 6 PEE CENT BAfalS The banks and the Government in Britain have lost no time in giving eiitet to the provisions oi Ihu Agricultural Credits Act which received the Koval Assent in August. The second part Of the Act, which deals with the provision of short-term credit, lias been nr Toree since October, aud the Agricultural Mortgage Corporation formed under the provisions ot the first part or the Act began operations on January Pi. The chief object ot this institution, which was registered in November, is to provide tne cheapest possible long-term credit facilities tor the farmer for the purchase or improvement oi agricultural land. The capital of the corporation, oi' which Kir Harry Goschcn is the, chairman, has been fixed at the nominal sum of £OSO,UUO, which has been subscribed entirety by the banks, including the Bank of England, and four out of the “Big five," of which at), except the Midland Bank, are interested in Uie lieiv venture. The Minister of Agriculture was empowered to make advances to the corporation for the purpose oi establishing a guaranteo fund. These advances, which arc limited to £7SIV 000, must not exceed at any time the paid-up capital of the corporation. They arc payable by instalments up to a limit ot £2-5U,U00 on incorporation, 1500,000 by April 30, 1029. and £750,000 by April 50, 1030. This sum is free of interest for a period of 00 years, aud the Treasury mis also undertaken to contribute i. 10,000 annually for ten years toward the-cost of administration and to provide for the underwriting of debentures, ranking as trustee securities, which will subsequently bo issued, to a maximum of £5,000,000. Thu Treasury also has power to invest up to' £1,250.000 in these debentures. Tne dividend of the new corporation is limited under the Act to 5 per cent., and it is understood that the directors have generously agreed to offer theii services without a fee. The terms under which long-tcim. credits will be granted to farmers are similar to those of the New Zealand Ktate advances system. Budcr the latter, loans are granted lor periods not exceeding 30$ years up to threefourths of the value of freehold securities or of the value of the lessee’s interest in leaseholds. The rate of interest is 0i per cent., with a rebate of * per cent, for prompt payment, fhe half-yearly payments iu respect oi a loan for 36$ years commencing at £3 is. lid. (net), and gradually increase to £3 9s. 9d. Bor 3(1 years, the rates avo from £3 9s. 3d. to £3 14s. Id. ihese payments cover both the principal aud interest. Under the British scheme, Joans on mortgages of agricultural land will be granted for periods up to 00 years, and lurjv not exceed two-thirds of the value of "the land. They will be repayable by equal half-yearly instalments which cover interest, repayment of principal and all charges (other than tne valuer's lees and the stamp duty on the mortgage). For a 60-year loan the half-yearly payment will bo £2 15s. per £iyo for the full period of the loan. Loans to landowners for improvements will be granted, subject to approval of the Ministry of Agriculture, for periods up to 40 years. For a 40-year loan the half-yearly payment will be £3 per £IOO for the full period of the loan. Applications must be forwarded through one of the nine bunks which ore shareholders in the corporation.