RURAL CREDIT ACT

Nelson Evening Mail, Volume LXI, 4 February 1928, Page 8

RURAL CREDIT ACT

REPLY BY PRIME MINISTER TO MR POLSON HELP WANTED, NOT CAPTIOUS CRITICISM A statement was issued bv the Prime Minister in reply to the remarks made by the president of the New Zealand Fnrmers Union (Mr W. J. Poison) in condemnation of the Government’s action respecting the rural intermediate credit legislation. . Mr Coates said it was clear from Mr. Poison’s statement that the portion of. the new legislation which he objected to was that which provided for the granting of advances to. individual farmers, supported by satisfactory guarantees, “The report of the Royal Commission contained no such proposal,” said the Prime Minister, “but provided that advances to farmers, should be made .through the formation of Rural Intermediate Credit Associations consisting of not fewer than twenty members, each of whom is required to subscribe for shares to a total Value of one-tenth of any loan obtained by him from the association with a minimum of twenty-five £1 shares. The object of the proposed legislation was thus to encourage and promote the formation of co-operative limited liability companies with the object of obtaining finance, for their farmer shareholders, the funds being provided from moneys to be raised by the Rural Intermediate Credit Board and advanced to the associations for the purpose of making loans to their members. The essential feature of this system is, of course, the supervision which can be exercised by members of the association oyer the financing and mode of Wotkihg adopted by those farmers who have obtained loans from "the association arid also the provision of the .*jh£te capital of the association to meet any possible deficiency on the loans.

SPECIAL COMMITTEE’S ATTITUDE •f ... The special committee of the House of Representatives to which the Bill introduced in the. House embodying the rccOmriiendations of the Royal Commission was referred, said . Mr Coates, was satisfied that in a small country like New Zealand with a comparatively scattered population difficulty would be experienced in finding a sufficient number of farmers in any one district to form an association, so nullifying the desire of the Government to assist ’the farming industry with ready finance. The committee accordingly returned the Bill to the House with a new portion included providing for advances to individual farmers on the ..security of their stock and. chattels. The committee considered this. necessary to meet the needs of the farmer, who had a good security to offer and desired to obtain a loan from the board; but who had no opportunity of . forming or joining an association. Full provision, however, was made in the. Bill, for associations to be formed as' recommended by the Commission, and giving them the necessary powers to function. In the regulations already issued Under the Act, full and complete provision was made to enable these associations to operate as contemplated by the Commission. “It> cannot be too strongly emphasised,” said the Prime Minister, “that the : .fullest provision has been made under the Act for the formation of associations exactly on the lines contemplated in the Royal Commission’s report, end the .fullest opportunity is afforded for the formation of such associations.” The Prime Minister said he ‘Lad been already approached from more than one source by . persons who had intimated their intention ' of forming associations. GRANTING OF LOANS ’■ In regard to Mr Poison’s argument that the new portion of the Act added by the committee militated against the co-operative principle, and his reference to a provision which would enable stock arid station firms and other to guarantee 20 per cent, of the loan and push their clients on to the board, the Prime Minister said he thought it, could be taken for granted that the Commissioner and his supervisors, together with the district boards and the central board, would see that advances were made only on good securities, and that investors were fully protected. The success of fhe scheme would be practically dependent upon the extent to which the Rural Credit bonds commetided themselves to investors, and for that reason it. would be essential for ordinary business prudence to be exercised iri the granting of loans. The Government could be relied on to see that such a board was appointed to adtoilrister the Act as would give the fullest consideration to. the claims of farmers, See that they gained the fullest benefit from the working of the Act consistent with the maintenance of confidence on the part of investors. “NOT UNDERSTOOD” Mr Coates said that Mr Poison’s reference to .the evidence he tendered before the Select Cjommitte Was not understood. It was presumed that Mi* Poison had ample opportunity to revise the report of his evidence, and this being so, Mr Poison’s references to inadequate reporting was inexplicable. Regarding Mr Poison’s remarks concerning the chairman of the Commission (Colonel Esson), it was quite correct, that the amended scheme in the Bill, with the additional alternative objected to by Mr Poison, was concurred in by Colonel Esson. The third member of the Commission was ,not available to give his opinion, having died prior to 'the introduction of the Bill. .“In conclusion,” said Mr Coates, “it should be remembered that the legislation of last session is complementary to that passed in 1926, and the two enactments give comprehensive effect to the recommendations of the Commission. Mr Poison's comments reveal his own individual opinions. I disagree with him—and verv r definitely. The legislation- has been designed in the interests of the small primary, producers, and the president of the New Zealand Farmers Union should immediately fall into line, and help those who are striving to assist New Zealand’s stable industry. Unity will help; dis- , sentioh .and captious criticism can onlv ! result in putting back the clock.”