LOANS FOR FARMERS

Waipa Post, Volume 38, Issue 2286, 28 March 1929, Page 6

LOANS FOR FARMERS

ADVANCE ON 6 PER CENT. BASIS.

The banks and the Government in Britain have loist no time in giving effect to the provisions of the Agricultural Credits Act which received the Royal Assent in August. The second part of the Act, which deals with the provision of short-term credit, has been in force since October, and the Agricultural Mortgage Corporation formed under the provision of the. first part of the Act began operations on January 14. The chief object of this institution, which was registered in November, is to provide the cheapest possible lofng-term credit facilities for the farmer for the purchase or improvement of agricultural land. The capital of the corporation, of which Sir Harry Gaschen is the chairman, has been fixed at the nominal j sum of £650,000, which has been subscribed entirely by the banks, includin the Bank of England, and four out of the "Big Five" of which all, except the Midland Bank, are interested in the new venture. The Minister of Agriculture was empowered to make advances to the corporation for the purpose of establishing a guarantee

fund. These advances, Which are limited to £750,000, must not be exceded by the paid-up capital of the corporation. They are payable by instalments up to a limit of £250,000, on incorporation, £500,000 by April 30, 1929, and £750,000 by April 30, 1930. This sum is free of interest for a period of 60 years, and the Treasury has also undertaken to contribute £IO,OOO annually for 10 years towards the cost administration and

to provide for the underwriting of debentures, ranking as trustee securities, which will subsequently be issued, to a maximum of £5,000,000. The Treasury also has power to invest up to £1,250,000 in these debentures. The dividend of the new corporation is limited under the Act to 5 per cent., and it is understood that the directors have generously agreed to offer their services without a fee.

The farmers under which long-term credits will be granted to farmers are similar to those of the New Zealand State advance system. Under the latter, loans are granted for periods not exceeding 36J years up to threeforths of the value of the freehold securities or of the value of the lessee's interest in the leasholds. The rat© of interest is 61 per cent., with a rebate of I per cent, for prompt payment. The half-yearly payments in respect of a loan for 36S years commence at £3 4s lid (net), and gradually increase to £3 9s 9d. For 30 years the rates are from £3 9s 3d toi £3 14s Id. These payments cover both the principal and interest. Under the British scheme, loans on mortgages of agricultural land will be granted for periods up to 60 years, and may not exceed two-thirds of the value of the land. They will be repayable by equal half-yearly instalments, which cover interest, repay-

HE

ment of principal and all charges (other than the valuer's fees and the stamp duty on the mortgage). For a 60-year loan the half-yearly payment will be £2 15s per £IOO for the full period of the loan. Loans to landowners for improvements will be granted, subject to approval of the Minestry of Agriculture, for a period up toj 40 years. For a 40-year loan the half-yearly payment will be £3

per £IOO for the full period of the loan. Applications must be forwarded through one of the nine banks which are shareholders in the corporation.