RURAL CREDIT SYSTEM

Taranaki Daily News, 8 August 1930, Page 4

RURAL CREDIT SYSTEM

’’STRANGLED BY RED TAPE” ’•COMMENT AT FARMERS' MEETING. I I . : ■ STRONG DISSATI SFA< T’J' >\. i Dissatisfaction with the working ol I the rural intermediate credit system ■ was expressed at a meeting of the South j Taranaki provincial executive of the I Farmers’ Union at Ha wcra, . yesterday. ; The view was expressed that it was "being strangled with red tape ’ and that the conditions iinjiosed by the central board were such as would discourage business. It teas decided to bring the j question before the Dominion executive, j The subject was introduced by Mr. !j. Cocker, who said that tho system i could be of very great benefit on acl count of the rate of interest, GJ per |cent., on chattel security. The loans (were now so hedged round with absurd ! conditions that they were practically ! useless, however. | The secretary . (Mr. E, K. Cameron) Igave instances of . the stipulations made. The first was an application for £750 io repay a stock charge of £2OO and £550 off a first mortgage. The stock and chattels were valued at £l3Ol and ‘the land at £5670. There was a mort(gage of £5200, which it was proposed to j reduce by £550 making the equity £lO2O. 'The man had about 100 acres, freehold land was leasing a little less. 'The loan I was offered on the following conditions: | Applicant to obtain lease for as long as [possible, terminating at the end of a !milking season; collateral second inortIgage over freehold subject to a first imortgage of not more than £4250 (Mr. Cameron here commented that if the Iman had the extra £lOO necessary to I reduce the mortgage he would not want ,'a loan); milk order sufficient to cover irents, interest and instalments of princiipal at the rate of £l5O per annum. DEMANDS FROM. APPLICANTS. Another applicant was a man in receipt of salary of over £5OO per annum, who ran a dairy farm more or less as la hobby. The. valuation of his dairy [stock was only £370 and lie wished to borrow £3OO to purchase further stock. The conditions in this ease were: Security over present stock and stock to be purchased; £250 to be expended in the purchase of additional stock under the supervision of the directors of the association and £5O to be applied for purposes approved by the district sup-r--visor; the applicant’s step son, who is managing the farm, to be joined in as a guarantor (Mr. Cameron remarked that the lad, who was under 18 years of age, was only working on the farm and was not the manager); that as portion of the land is a native lease with only one year to run, a new lease is to jc obtained before the loan money is paid over (Mi - . Cameron considered it was well-nigh impossible to secure a renewal of a native lease 12 months in advance. The lease did not affect the security, as, failing a renewal being obtained, portion of the stock would have to be sold. The proceeds were secured to the association, and the loan in this case would be paid off before the expiration of the lease); the loan to be repaid at £lOO per annum plus interest and secured by. a milk order, and rental to be collected under’ order on applicant’s milk cheques and paid direct to the lessor, or a waiver of the lessor’s right of distraint obtained. (Mr. Cameron remarked that over £lOO had been paid in rent in advance). A GUARANTOR’S ROS IT TON. In a third case the applicant purchased i freehold and paid £1509 cash. Requiring ! £lOOO to purchase stock and chattels, lhe offered the following security: Charge lover stock and chattels, mortgage over equity in farm property, guarantee joint and several of persons, whose collective financial positions were over i £10,500. The loaix, was offered on the following terms: Valuer to certify that purchase price of farm property is reasonable and that stock and implements to the value of approximately £SBO have been placed on the property and are suitable for working the place;’ security is to be taken over live stock and implements; a mortgage is to be taken over the equity in farm property; loan to be guaranteed in full by the two persons named; one of the guarantors to execute a charge over an amount of £lOOO which he has on fixed deposit in support of his guarantee (“This person,” said Mr. Cameron, “is one of two guarantors for a total sum of £lOOO and yet he is required to tie up his fixed deposit equal to the total loan”); an order to be taken over milk cheques to cover repayments at £2OO per annum with interest. INSURANCE STIPULATIONS. The fourth instance cited by Mr. Cameron was in connection with insurances. Milking machines, chattels and motorcar were insured for £450. The district supervisor for six months was insistent that a fire insurance policy was neeessary for the remaining chattels. The secretary refused to have these insured and the central board ultimately withdrew the requirement. The chattels in question were two ploughs, dises, two sets of harrows (in the open), wagon, gig, mowing machine (in an open shed) and a water plant working in a concrete tunnel submerged in water. “No doubt,” added Mr. Cameron, “the insurance companies would gladly accept premiums for fire cover on such items. ’ A "TRUSTEE EQUITY’’ IN PROPERIAHow could any association get any business on those lines? asked Mr. Cocker. Formerly loans were offereu without all these stipulations. The whole trouble was that unless a man bad a trustee equity iu his property the equity was not considered of any value by the board. Very few farmers in Taranaki had a trustee equity. He was satisfied that under proper management the Rural Credits Association could be of distinct benefit, but as it was it might just as well shut up shop, .the Act was no good to the poor man and was, j in fact, 9 a rich man’s measure. It wasj harder to get money from the board- 1 than from the banks. He moved that the subject be referred to tho Dominion executive to go fully into the matter with the central board. Mr. L. F. Bell seconded the motion, supporting Mr. C-ocker’s statements. PUBLIC TRUSTEE CRITICISED. * “He thinks he’s Napoleon,’’ said Mr. Cocker, referring to the Public Trustee, Mr. MacDonald. “The only thing that will shift him is publicity.” The president (Mr. E. J. Betts) con-

sidered that if the board was short of money it, should announce the fact to save applicants valuation costs. It, appeared that the .scheme was being strangled by red tape. Mr. Cocker drew attention to. another aspect. Any man who leased or bought hind from the Public Trust Office could quite easily get a loan. No differentiation should be made, and Mr. C. Freyberg, District Public Trustee, said that it did not exist. Mr. Cocker, however, insisted that it did. A recent instance was that of the district supervisor sending an application down to tho central board before the local board had even met. In another case a man had applied for £75 and the application had been refused. Later there had been a re-ar-rangement of mortgages with the Public Trust and the man bad then no trouble in getting £l3O. Mr, JI. Thrush considered that the Dominion executive might be able to do something.

The president: The Dominion executive will give it a fair deal. The motion was carried unanimously.