RURAL CREDITS.

Waikato Times, Volume 103, Issue 17385, 23 April 1928, Page 8

RURAL CREDITS.

ADDRESS TO FARMERS. BY PUBLIC TRUSTEE. There was a representative gathering of farmers in the Te Awamutu Town Ilall on Saturday morning to hear an address hy Mr P. J. Moore, Public Trustee, Hamilton, on the Rural Credits sc-hemc. Mr C. M. Alexander, chairman of directors of the Tc Awamutu Dairy Co., presided. in opening the meeting, the chairman said he thought there was no better district l'or starting a Rural Credits Association. He called on Mr Sinclair .to detail some aspects of the scheme. Mr Sinclair stated that on looking into the question he found that one of ihe points was that the application had to come through a Rural Credits Association, or else direct, if it went direct it had to bo guaranteed to a certain percentage. In bringing this matter before his directors he found i'they, were not in favour of it, unless so directed by the shareholders. However, if an association were formed, there would be no necessity for the companies to guarantee the loan. Although his company were the promoters, the association would be open to farmers from any company and any class. Mr Wynyard said his local branch of (he Farmers’ Union is largely interested in the scheme, and the union had been- instrumental to some extent in bringing this forward. it seemed to him the management expenses were cut down far too low to give any adequate return for work done. Jt seemed that a good deal of technical knowledge would be required , but why should even farmers give their knowledge and experience l'or practically nothing? He thought they should he given a fair remuneration for (heir services. Details of the Act. Mr Moore then |ave some of the details of the Act. It originated with Ibe Royal Commission that went abroad to obtain information regarding Rural Credits. The report, on being put in, was a very valuable one, and was the basis of the present scheme. It is a new thing ns far as New Zealand is concerned; hut it is certainly no new thing as fax as rural credits are concerned. The late Lord Kitchener first established it in Kgypt. and though people reckoned he was mad, the scheme proved successful from the start, and was extended to India and othe'r places. The main board was set up by the Governmont, and these were* ad winced IbiOO.OOO by the Government to give them a start. In reply to Mr Wynyard, Mr Moore said the members of the main board are paid travelling expenses and £3 3s a day at the meetings. The reason is because they hope to malic this scheme an ideal one. A district board j was set up in Hamilton, of which he was chairman. The Public Trust Office is using its organisation to help the scheme along. The board advances loans on general improvements to the land, such as buildings, fencing, etc., also for repayment of advances. However, the maximum loan was £IOOO. One man could not obtain more. Four hundred thousand pounds would'not go far; so debentures were being issued later to enable a continuous stream of money to go through the scheme; and this was where the city man and wealthier farmers could help the scheme, by investing in these debentures. The Direct Method. Dealing with the direct method, he pointed out that the loan had to he guaranteed to a certain extent by some company, approved by the main’boanl. Such did not exist under tic Rural Credits Associations, which were practically limited liability companies. These had to consist of 20 members. As these associations obtained loans from the main board, (he district supervisor (usually the Deputy Public Trustee) .was automatically a director of all these associations. If a member wanted a loan he must take up shares to the extent of lu per rent, of his loan. At first, on application for shares, only 5 per cent, would he called up; and if properly managed there might not he any necessity for calling up. When a Joan is paid up il would be possible for such a member to have his shares valued and repaid at such valuation, so that if Ihe association were run properly there was no reason why the capital paid up should not he repaid in full. Loans are to he repaid in five years, the instalments to he fixed to coincide with each individual farmer, as far as possible coincident, with the security offered. It was not compulsory for a shareholder to obtain a loan, and that is where the true system of co-opera-tion came. in. Those who did not want loans could help the. scheme along; but there would be no dividends. The main board would lend at 0 per cent., and associations would lend it at <U per cent. The 1 per cent, would 1m split up, } per cent, for management expenses, and .} per cent, towards the. capital. In his journey round the district he- had found many men were willing to give their lime for nothing, ! and that was the spirit they wished to encourage in (his scheme. Mr Moore then gave details of the formation of an association. The idea of the scheme is not to make divi'dends, hut to give the farmers a loan at a reasonable rate of interest. Each association elects four members as directors. He himself would be exofficio the fifth director. After’ the original money advanced by the Government is utilised they had to look to the general public Lo keep the scheme going. The chairman then asked if any further information was required. He thought those farmers who did not require loans would naturally be welcomed to the association. What he j was doubtful about was the payment j of the secretary, who, to his mind, must be competent and should be fairly well paid. Reply to Questions. In response to a question, Mr I Moore stated the interest on the do- j ben lures was. to be fixed, but could not. be higher than the original loan, as | the margin would be small. As the association grew, the income would naturally increase, and therefore they would be in a better position to as time goes on. . In response to a further inquiry' he said the Government s original advance would rank after the debentureholder. The main board would then be the only guarantee. The Govern-j m cut’s advance would act as a. reserve i for the debenture-holders. After the original 5 per cent, application, the < further calls woulckcome (if at all) at ■the authority of the directors, v.ach association would have its own solicitors, who would prepare mortgages, etc., but the scale of fees was pro-r. vided for in the regulations, which ho read, and pointed out they were cut down to a minimum. A general dismission arose regarding the working expenses, and it seemed that for a start the saMry of the (Continued aa next column).

secretary would be inadequate. W hether legislation would increase it later was unknown. Mr Sinclair suggested that llic directors should be men of standing, who did -not require loans. These were the men who should be on the hoard. Mr Moore pointed out that the first thing is to get 'the association going. Anomalies will be rectified later. The chairman moved that steps be taken to form a Rural Credits Association in Te Awamutu. This was seconded by Mr Parish, and carried without discussion. A list .was then put in hand, and many signetU^-