FARMERS’ FINANCE

Otago Witness, Issue 3862, 20 March 1928, Page 36

FARMERS’ FINANCE

SHORT AND LONG-TERM LOANS.

EXPLANATION BY MINISTER.

WELLINGTON, March 13.

The Minister of Finance (Mr W. Downie Stewart) stated to-day in tegard to the bonds at present on sale for farmers’ finance that inquiries reaching him indicated general confusion of this issue with the intermediate rural credits. The Minister considered it important to explain the objects and machinery of the two Acts—viz., the Rural Advances Act, 1926, and the Intermediate Rural Credits Act, 1927. Tile Rural Advances Act of 1926, which came into operation on April 1, 1927, said the Minister, deals solely with longterm first mortgages on the instalment plan, advances being made up to twothirds of the valuation of the land. Up to the present loans of about £1,000,000 have been dealt with by the board, funds having been temporarily advanced from other accounts for the purpose. First mortgage securities amounting to £600,000 are now registered and lodged in the office, and this enables the present issue of bonds to be made. The Act provides that no bonds may be issued without equivalent securities or assets being held. The Intermediate Rural Credits Act of last session, on the other hand, deals solely with short credit and financial assistance by loan for terms not exceeding five years to primary producers on the cecurity of land, chattels, and personal, and fop the purpose of assisting such business the State is, by the Act, authorised to lend the board up to £400,000 free of interest for 10 years. Under this Act no bonds have yet been offered free, the capital available obviating the need for capital issues meantime. . It would have been preferable, remarked the Minister, to have named these two Acts more distinctively, as the term “ rural ” is apparently conveying the impression that the two Acts are one scheme, whereas they are financially distinct and unrelated Long-term advances are financed through the State Advances Office and the business of the Rural Advances Act is therefore quite apart from the more recent Act, which is administered in a separate Account and department. The Minister emphasised this point, tos in some instances the coincidence of the bond issue amounting to £400,000 has

erroneously been connected with the £400,000 limit of the initial capital granted by the State for' the intermediate credits scheme.