PROVINCIAL NEWS.

Otago Daily Times, Issue 20412, 19 May 1928, Page 9

PROVINCIAL NEWS.

(Feom Oub Special Cobbespondesji.)

RURAL INTERMEDIATE CREDITS. Mr Joseph Snell, Deputy Commissioner under the Rural Intermediate Credit Act, addressed a meeting of farmers in Oamaru yesterday upon the objects and administration of the Act. There was only a moderate attendance of farmers. Mr R. B. Meek, a member of the Otago Board, occiipied the chair. Mr Snell was accompanied by Mr G. 11. Elliffe, district credit supervisor of Otago, and Mr F. E. Duncan, district credit supervisor of South Canterbury. The Chairman expressed surprise that there was not a larger attendance. This was probably indicative of the fact that the .farmers of North Otago were more stable than those of other parts of the Dominion. Still, the Act was a valuable one. It was designed to assist the small man, and not the big man. Mr Meek expressed himself as disgusted that a 'greater number of farmers were not present. He understood that some of the North Otago farmers had already applied for relief, and he was surprised that these farmers were not present to hear the provisions of the Act employed. Mr Snell, who was received with applause, stated that the Rural Intermediate Credit Act was peculiarly applicable to dairy companies., It was, however, also applicable to other farming pursuits. To meet the difficulties which met farmers, there was two modes open—First, the employment of more scientific and improved methods of farming, and more intense production; and, secondly, the provision of better methods of financing. In practical expression of its desire to explore all modern systems of rural finances, so that equal opportunities might be provided to the farming community of the Dominion with those enjoyed by primary producers abroad, the Government, in 1925, set up a Royal Commission on rural credits, composed of the late Mr P. H. Cox, a retired banker of the highest standing. Colonel J. J. Esson, exSecretary to the Treasury, and Mr W. J. Poison, of Wanganui. This commission made extensive investigations of the system of rural finance in the American and European Continents, and the results of its investigations and its consequent recommendations are set out fully in its exhaustive and informative report of 1926. In reading this report one "was immediately impressed with the fact! that in other countries, of which the United States of America is perhaps the oustanding example, the individual lender of moneys upon rural securities was yielding place to the finance corporation, which secured funds for loan purposes by the issue of bonds secured upon the aggregate of mortgage investments. This principal was followed in the present rural intermediate credit scheme. Rural credit was divided into three classes—first, long-term mortgage credit; secondly, intermediate credit; and, thirdly, Short-term credit. Long-term credit meant farm mortgage credit for terms of five years or over for the purchase or improvement of land or its necessary equipment.. Credit of this nature was secured by a mortgage over land. Intermediate credit was credit for a longer ’period than was contemplated in commercial banking transactions, and of shorter duration than the usual mortgage term. It therefore meant credit of from six months to five years. The security for credit of this nature was generally live': stock or non-perishable farm products. Short-term credit was the ordinary banking credit of not more than six months.

The reepmmendatiohs of the commission relating to Intermediate credit had been carried into effect by the Rural Intermediate jCredit Act .of 1927. This important measure represented an effort to provide the means for farmers to obtain security of finance of the particular description dealt with by the Act at more reasonable rates of interest than those which had prevailed in recent years. The means had now been provided by the Act, and the farmers in their turn may take full advantage of the system which had been made available for them, and play their part in ensuring the success of a scheme which, if properly supported, was likely to confer extensive benefits upon the farming community. ■ * The Dominion scheme was controlled by a board consisting of not more than seven members, of whom the Public Trustee, by virture of his office, was one', and the other' six, which the Act provides should includd at least one person with practical experience in farming, were appointed by Governor-General’s warrant. The Public Trustee was the principal executive member of the board, and as such was styled the Commissioner of Rural Intermediate Credit. Under the Act, the board had defined districts for the purposes of the administration of the scheme, to appoint in respect of each such district a district board w;hich was to carry out such functions as the board may prescribe from time to time, and the board was also ao appoint a representative in each such district under the designation of “ District Intermediate Credit Supervisor.” The board had already set up boards in 16 districts of the Dominion. The funds of, the board were to be provided from two sources:—(a) The Consolidated Fund, by way of authorised advances, or grants (b) the investing public, by way of debenture issue. •

,To set the scheme going, power was given to the Minister of Finance to advance to the board, from the Consolidated Fund, by way of loan, sums up to a total of £400,000. Advances of this ndescription were to be for a term not less than 20 years, as might be arranged by the board and the Minister of Finance. For; the first 10 years the advance was to be interest free, and after the expiration of that period the board was to pay interest to the Consolidated Fund at a rate prescribed by the Minister of Finance.

In addition to advances of this nature upon loan, the Minister of Finance was also empowered to make an outright grant to the board of a sum not exceeding £IO,OOO to cover expenditure for general administration purposes. Here again was generous provision for giving the board a good start in its operations. The legislation gave the board power, with the consent of the Minister of Finance, to issue debentures restricted as to total amount in that they might not exceed the sum total of the advances from the Consolidated Fund and the amount of the investments of the board from time to time. There was a further restriction, in that the total debentures issued were not at any time to exceed the sum of £5,000,000. The debentures so issued would constitute a floating charge on the board’s assets, and they would in effect give priority over the claim of the Crown in respect of the advances to the board from the Consolidated Fund. The Act made the debentures authorised investments fer the investment of trust funds, public moneys, funds belonging to various Government departments, such as, for example, the Public Trust office, the State Fire office, and the Government Life Insurance Department, also for certain Savings Bunk money. These provisions all increased the sources from which funds might bs expected to flow to the board.

It behoved farmers with funds to invest to play their part in helping the scheme, by investing in the board's debentures. By doing so, they would he providing funds to assist in the welfare of other farmers, and at the same time they would have security of investment at profitable rates of interest to themselves. LOANS THROUGH ASSOCIATIONS. The first method of lending was one which was important and interesting, in that it would provide scope for collective or co-operative action on the part of the farmers. The Act provided the means for farmers to unite in forming a special class of limited liability companies to obtain advances from the board, to be lent to the shareholders upon approved securities. The total cost of forming an association was £9. Twenty fanners were required to form an association, and the minimum share capital which each shareholder must subscribe for was 25 £1 shares.

NORTH OTAGO.

ACTIVITIES OF THE DISTRICT,

The full amount of the share capital might not be found to be required immediately, and therefore in many associations probably only a portion of the share capital may be called up at the outset. . A shareholder who obtained a loan from the board was required to take up shares to the nominal value of one-tenth of the amount of the loan which he obtained, . provided, of course, that jn any case the minimum share contribution was 25 £1 shares, and a person obtaining a loan of under £250 would therefore have to take up 25 shares. The share capital taken up represented the full extent of a member’s liability in in respect of amounts owing by other members of the several liability. The board had the opportunity of approving each individual loan by an association before it was granted, and this in itself should assist in creating public confidence in the security for the board s debentures. The associations were the immediate debtors of the board in respect of funds invested by it in this manner, and for this reason there were certain statutory restrictions affecting associations, and the board was also given some measure of control over them. For example, the consent of the board would have to be obtained to the formation of a i association, and, once formed, the application of profits made by an association would be under the control of the board, to the evtent that the board might require sufficient reserves built up before dividends were paid. CONDITIONS AS TO LOANS.

The. conditions upon which loans might be granted, >yitli the approval of the board, to shareholders were closely restricted as regards the purposes of the loan, the maximum amount which might be granted in an individual, ease, the maximum rate of interest, and the periods for which the loans might be granted. Loans might onlv be granted for approved purposes, which were set out in the act as follows: —(a) The clearing, fencing, draining, and general improvement of land in the occupation of the applicant; (b) the erection of buildings on any such land; (c) the purchase of implements, stock, seeds, plants, trees, and other things required in respect of the occupation and use of any land; (d) the payment of any mortgage, debt, or other liability of the applicant incurred in relation to farming operations; (e) any other purpose in relation to farming operations that might be approved by the board. Furthermore, no loan was to be granted for a period exceeding five years for a greater sum in any individual case than £IOOO.

For the present the board had fixed the rate of interest payable by associations at 6 per cent., a reduction of 4 per cent, from the rate of interest payable by farmers and co-operative societies borrowing direct from the board. Associations, however, would not be permitted to re-lend the advances from the board at a rate less than 64 per cent., and in respect of the margin of 4 per cent would be i ; red to apply | per cent, towards tin- expenses of management, and the other i per cent, to establishing a reserve fund. The association method of securing loans from the board was commending itself to the fanning community, and already associations had been formed in the South Taranaki district, at Hamilton, Te Awnmutu, Marton, Feilding, and Mauriceville (Wairarapa), and matters were well advanced in connection with the formation of associations at Waiuku and in the North Taranaki district. An encouraging feature in connection with the associations formed was the fact that many prominent farmers of the districts, who are not likely to require loans themselves, had nevertheless joined the associations in order to ensure their formation and to see that they receive a good start. By doing so they were playing their part in fostering the co-operative spirit among the fanning community along the linos provided for in this system. In the case of loans direct to farmers without the intervention of associations, provision was made that each loan granted under that particular part of the statute w r as also, in addition to the ordinary bill of sale and other documents of security, to be secured by a guarantee, from one or more persons approved by the board, to such amount as may be required, not being in any case less than 20 per cent, of the amount originally granted.

As a general rule, the board would require guarantees of loans of this description to be given by financially strong companies, such as stock and station agents, dairy companies, and the like, but it would also agree to consider the acceptance of guarantees from private individuals whoso financial position was established to its satisfaction. The restrictions applying to loans granted through associations applied equally, with one exception, to loans granted direct to farmers. The. purposes of the advances must be the same as those which have already been enumerated. The maximum amount was also £IOOO, and the maximum rate of interest payable by a borrower 7 per cent. The loans were, however, to be granted repayable on demand, and if no demand was made, then within five years from the date of granting. It was the board's policy to require loans to be reduced by instalments, in amounts and at times arranged as far as possible to suit the borrower's convenience.

For the present the board had fixed the rate of interest payable in respect of loans of this description at 6J per cent. The third avenue of investment for the board’s funds was by way of advances to co-operative societies, meaning by that term bona fide co-operative limited liability companies, the principal object of which was the production or sale of staple, agricultural or pastoral products, including live stock, and including also goods manufactured from any such products. To be competent to receive a loan from the board, a co-operative society of this description must have subscribed capital of not less than £2500 and be composed of not fewer than 30 members. To a co-operative society fulfilling these requirements the board may grant advances on the security of any live stock or produce, belonging to the society, of an amount not exceeding 80 per cent, of the fair market value of such live stock or produce. Loans so granted were to he for terms of from six months to three years. The provision of the Act would enable the board to finance farmers’ co-opera-tive dairy companies,. farmers’ freezing works, and all other genuine co-operative farmers’ concerns, handling agricultural or pastoral products. Th board had under consideration the question of assisting wheatgrowers ,by advances upon the security of wheat in store, either by way of financing a wheat pool or some such organisation or by individual advances. It was understood that the Wheat Committee had under consideration the formation of a wheat pool or company on lines which would enable the organisation to be registered as a co-operative society, and that concrete proposals in this connection would probably be put before the wheatgrowers at an early date.

When these proposals were definitely known the board would consider the question of providing finance for any such organisation, and the terms on ‘which such finance could be made available. The broad idea of the scheme was that the board would secure a flow of capital through debenture issues, and it would re-lend those moneys through the permitted channels, at rates of interest only so much in excess of the borrowing rates

as necessary to cover administration expense, and enable a sufficient reserve to be made against contingencies. Ihe maximum borrowing and lending rates of the board were restricted by the statute at 6 per cent, and 7 per cent, respectively, and it must be remembered that, according to the extent to which the board was able to raise funds at less than 6 per cent, per annum, it would no doubt be able to reduce its lending rate below the statutory maximum. It was interesting to record that a similar system was introduced iu the United States of America in 1923, and though the period of its existence has been short, satisfactory prograss has been ,made. Debentures issued by Federal intermediate Credit Banks in America, which were in the same position as the Rural Intermedito Credit Board occupies here, wore popular investments commanding very good prices upon the stock market, and a satisfactory inflow of capital for agricultural purposes was provided by these debenture issues. The experience of the system is America spoke well tor the succes.s of the scheinq in this country. In answer to a question. Mr Snell stated that a board was already in existence in Otago, and -any individual who had sufficient security could obtain an advance without the formation of an association. Mr 1. Cuthbertson, in moving a vote of thanks to Mr Snell for his information, stated that the Act appeared to be a step in the right direction. Although he would not find it necessary to take advantage of the Act himself, he would have no hesitation in recommending the Act to any person requiring assistance. Mr J. W. Petrie seconded the motion. He stated that he had been much impressed by the information given by Mr Snell. Mr Cuthbertson remarked that there did not appear to be many hard-up farmers in North Otago. Mr Dalziel remarked that the advances proposed were for only small amounts. Mr Snell stated that at present the maximum advances amounted to £IOOO. This was only a beginning. As time went on, the maximum would probably be ii,'reascd. Mr Petrie: It would not be of much use to sheep farmers. The Chairman stated that sheep farmers had gilt-edged securities just now. After further discussion, in whicn the high price of fertilisers was commented upon, the motion of Mr Cuthbertson was put and carried unanimously. Mr Snell, in acknowledging the vote of thanks, stated that opportunity was being taken to address the provincial conferences of the Farmers’ Union. ST. BATMAN'S GOLD. The Oamaru syndicate that recently purchased gold mining interests at St. Bathans is said to he well satisfied with the investments. During the last three or four months about 200 oz of gold have been won by sluicing operations. Ihe concentration of the water upon sluicing has been attended with very-satisfactory results. BUSINESS MOVEMENT. An important sale of Thames street property is reported to have’recently been made. A mercantile house is reported to have purchased a 45ft frontage to the main thoroughfare at the corner of Eden street. On this section- it proposes to erect an ornate two-storey building. ANOTHER GOOD WEEK. The farmers of North Otago have been favoured with another week of congenial weather. On Monday and Tuesday there was a slight rainfall, hut keen frosts have been experienced during the last three days, followed by bright, warm days. As already stated, this weather will have a most beneficial effect upon the pastures. The sowing of early varieties of wheat, such as Velvet, is now in progress, and team work is being actively pursued in all directions. The freezing season for lambs is drawing to a close, and the drafts reaching the works are becoming smaller. It is not expected, however, that the works -will close down until the middle of June. The dairy season is well advanced, and the supplies of* butter-fat reaching the local factories are now almost at a minimum. With the abundance of grass and green feed, the outlook for stock for the winter is remarkably good. GOLF. The North Otago Golf Chib will play a Canadian bogey foursome to-day. Members arc to arrange their own partners. The partners will add their bogey handicaps, and halve the total, the number tees,’ and the best ball of each pair, either being the strokes allotted, with a maximum of 18. Each player drives off the in length or lie, is to be played alternately. The strokes are taken where allotted on bogey cards. OAMARU CADETS. The Oamaru Cadet Company, which is competing at the end of the metith with a North Island company for the coveted trophy which is given to the most efficient company in the Dominion, was inspected on Thursday night by Colonel Murray Gard’ner, commanding the Southern Command, and Captain Hunt, acting commander of the Otago Regimental District. There -was a good turnout of the company under Lieut. Kennedy, and was examined in every branch of its work, which included musketry, infantry drill, and physical exercises. At the conclusion, Colonel Gard’ncr addressed the company, not only giving the lads words of encouragement, but complimenting them upon the spirit, condition, and work of the corps. He also made reference to the honour it had gained in being chosen to represent the South Island in a competition with the North Island for the Campbell Statuette. PERSONAL. Mr Jules 0. Malfroy, who has been awarded a fellowship in law at the Columbia University by the New York Commonwealth Fund, was educated a« ,1 boarder student at the Waitaki 'Boys’ High School, where he was a prominent athlete. He left the Waitaki School about seven years ago, and carried on his university course at Victoria College, Wellington, where he graduated LL.B. and LL.M. with honours, and was awarded the law travelling scholarship. At Waitaki he won his football colours, and proved himself a fine track athlete. He represented Victoria College and the New Zealand University at Rugby and at track athletics, being mainly prominent as a hurdler. He left New Zealand two years ago for post-graduate study at Trinity Hall, Cambridge, where he has been specialising in shipping law and private international law. He was selected for the British Rugby team to tour the Argentine Republic last year. OAMARU TROTS. Money More has been scratched for all engagements at the Oamaru trots, while Omaha has been scratched for the President’s Handicap. A large number of visitors arrived in Oamaru yesterday, and the meeting to-day promises to constitute a record for the club. AMATEUR OPERATIC SOCIETY. At the first practice of the Oamaru Amateur Operatic Society of the opera “ The Arcadians ” over 50 members were present, and the utmost enthusiasm was displayed. Twenty new active members have joined. MAORI FOOTBALLERS. At a special meeting of the Management Committee of the North Otago Rugby Union, presided oved by Mr R. Young, it was decided to accept an offer of a visit by the South Island Maori team on June 4, the terms being that the visitors receive a percentage of the

gate takings and pay their own expenses. A conformation of this arrangement must be received before Friday next. ACCIDENT ON WHARF. During the progress of the loading of the steamer Wingatui at the Holmes wharf yesterday afternoon Mr Jack Bain fell under a railway truck and suffered rather severe injuries. He was attended by Dr Scott, and was removed in the ambulance to the public hospital.