RURAL CREDIT PROPOSALS.

New Zealand Herald, Volume LIX, Issue 18234, 30 October 1922, Page 6

RURAL CREDIT PROPOSALS.

A literal interpretation of the Rural Credit Associations Bill seemed to offer small encouragement to those who. have advocated the establishment of " land banks " in New Zealand. There was no suggestion of State assistance, beyond supervision of the purposes for which advances might be made,, and it was evident that lack of capital would be a formidable obstacle. But a new importance is given to the Bill, which has already been passed by the House of Representatives, by Mr. Massey's announcement that the State Advances Department will provide funds for associations complying with the provisions of the Bill. Hence the amendment of the State Advances Act authorising loans on chattel security is apparently not competitive but, at least theoretically, co-operative with the rural credit societies. It is manifest that if the State Advances Department is to develop lending operations along the lines pioneered by the Repatriation Department it will require a fairly elaborate local administration, a,nalagous to the repatriation boards. Such assistance might>be found in a thoroughly reliable form in tho associations contemplated by the Bill. Whether that is the role assigned to them by Mr. Massey he has not stated; nor has he given any indication of the terms upon which loans will be made to them. There has been some misgiving regarding the Government's association with experiments in co-operative banking, but there seems to be little risk in its present development. With the double check of the usual supervision by the State Advances Board upon loans made to a rural credit association and of the scrupulous care demanded of the latter by its liability under a joint and several guarantee, money lent by the State through this channel should be a thoroughly sound asset. But the impression still remains that the rural credits scheme, so far as the special measure is concerned, has little more than academic interest. The capital funds may be available for approved societies, but they must first enrol a membership under a joint and several guarantee. And if the State Advances Department is willing, as the latest amendment proposes, to lend money for similar purposes, on equivalent security and on not less favourable terms, will the borrower possessed of securities acceptable to a credit society not go straight to the department instead of encumbering himself with the liabilities of hie neighbours?