SAFETY OF DEPOSITORS

New Zealand Times, Volume L, Issue 11651, 16 October 1923, Page 6

SAFETY OF DEPOSITORS

NEW SCHEME PROPOSED N.Z. FARMERS’CO-OP. DIRECTORS AND CLIENTS. FOUNDATION FOR STABILITY. Per Preas Association. CHRISTCHURCH, October 15. The directors of the New Zealand Farmers’ Co-operative Association of Canterbury, Limited, have issued a circular to free and fixed depositors and bond holder.? of the association, from which the following is taken: “The board of directors and the management havo a deep sense of apnieciation of tho manner in which our free and fixed depositors have so ably assisted in the matter of financing so many of our primary producers in tbe several territories in which the association operates. Wo can say without fear of contradiction that never before has such loyalty and confidence been equalled 'by depositors of a similar institution, which is all the more gratifying when taking into consideration, and reviewing the abnormal conditions under which our association has worked during the past three At this period of the year there is alwavs a considerable drain upon the resources of the association in financing cur large farming connection prior to the incoming revenue from their wool, stock, and other produce. In consequence, the association is still in a position of requiring your assistance m carrying on the business of its extensive*’organisation, with the object of placing our finances on a sounder basis, and thereby creating a greater feeling of security in tho minds of cur clients, and also to provide a measure of security and protection for the depositors. A scheme is being evolved which will necessitate a closer understanding with our depositors, and tho airangeinent of their free and fixed moneys. Every care, however, is being exercised to protect the interests of all concerned and to obviate, as far as possible, all causes which might be the means of creating inconvenience. “We wish particularly to impress upon * our depositors anil clients that the arrangement under review will only affect clients 1 capital which is at present upon our books, and it wrill nave no bearing, whatever, over subsequent moneys coming to the credit of clients or fixed deposit accounts, by reason of which all future tra’ding auction and banking business will be carri<sl on as in the past. The bond issue is being reviewed with the object of giving holders the same measure cf security and protection as depositors. Considerable saving in taxation con also be effected.” THE OBJECTS EXPLAINED. The directors explain the objects of the secured deposit scheme ns follows : “(1) To establish finance by providing a definite form of security for free and fixed depositors, with the ncoes-

drpositors; (2), the security proposed to be given will be in the nature of a charge over certain of the association’s assets and an undertaking to become trustee for the depositors; (3), provision is, of necessity, being made for the fixation of portion of trie free depositors’ moneys; (4), the term will extend from, six months to five years or such period as may be arranged; (5), the association we believe is the first inditution in the histoiy of the Dominion to promote such a scheme to provide a tangible form of security for the protection of it* depositors and creditors, and it should meet with the approval of all classes of clients as well as controllers of finances, whose minds have undoubtedly been working in this direction for some time past. “The proposal is sound in principle, and creates the foundation for stabil ity that should be the means of bring* ing about a much needed reduction in tho present interest rates which, during the last four or five years, have soareu by reason of the more or less frenzied state of finances caused principally by tho efforts of practically every class of 'business concerns, whether company or individual, to raise at any cost, to meet their abnormal obligations in the way of increased taxation, increased cost of labour and overhead expenses, goods, materials, etc., being legacies of tho late war; (7), the bond loan cf £530.000 raised by the association at an abnormally high rate of interest is a fair example, of this class of finance from which practically the whole of the community, at the present time, is suffering. Some form of relief is necessary to enable a speedy return to a more reasonable and normal state ot' finance. It is quite reasonable to Relieve the scheme submitted will be favourably received and considered by those directly interested, as it ia our earnest effort to get back to earth for the ultimate benefit of all concerned.” RELIEF FROM INTEREST BURDEN.

The creditors may take the matte) into theit own hands, and an arrangement or compromise may be agreed to after mutual discussion, and then submitted to the court, to be made genen ally operative, or, on the other hand, a compromise may be agreed to without any reference to the Supreme Court. In the present case, the company is making a proposal for a compromise directly to its depositors and to its bondholders, in the belief that the scheme will be mutually beneficial to depositors and bondholders, on the one hand, and obtaining a measure of security that they do not at present possess, while the awociation is relieved from a proportion of its interest burden.