5

8.—14

long-term mortgages upon the security of rural lands. The Rural Intermediate Credit Act of 1927 gave effect to the recommendations of the Commission for the adoption of a scheme of intermediate credit conforming with modern developments and being largely upon the lines of the system in force in the United States of America, which, in turn, is based upon European systems. The recommendations of the Commission provided for loans being granted to farmers only as members of a special class of limited liability company called co-operative rural intermediate credit associations, and in order that settlers in outlying or sparsely settled districts, where the formation of associations might not be possible, should not be deprived of the benefits of the system an alternative method of application now appearing as Part 111 of the Act was added, permitting direct applications where supported by independent guarantees acceptable to the Board. Thus scope is provided for collective or individual action upon the part of farmers in regard to the class of credit provided by the Board. The system makes provision for loans to farmers for periods not exceeding five years, mainly on the security of stock and chattels, at the lowest rates of interest and with the most economical service in every regard. To set the scheme in operation provision was made for advances to the Board from the Consolidated Fund, on loan and free of interest for the first ten years, with a currency of not less than twenty years, up to a total of £400,000. This sum has now been received in full by the Board, and, in accordance with statutory requirements, one-third has been placed to the credit of a redemption fund which, with resulting income, may be applied only for the purpose of redeeming debentures issued by the Board ; the remaining two-thirds has been employed in the Board's lending business. Under the provisions of the Act a sum of £10,000 has also been received from the Consolidated Fund as a grant to cover expenditure involved in the establishment and preliminary administration of the scheme. The main and permanent source of the Board's funds will, however, be the issue of debentures secured upon the assets of the Board, which has power, with the consent of the Minister of Finance, to issue such debentures restricted in total so that they may not exceed the aggregate of the amount of the loan received from the Consolidated Fund and not repaid and the amount of the investments of the Board from time to time. A further restriction is also imposed in that the total amount of debentures outstanding is not at any time to exceed £5,000,000. The debentures may be for terms of from six months to five years, and may be at rates of interest not exceeding 6 per centum per annum. They constitute a floating charge over the Board's assets, and are, in effect, given priority over the right of the Consolidated Fund to receive repayment of the sum of £400,000 referred to above. Repayments of the latter advance are restricted so that they may not exceed in total the aggregate amount from time to time of the accretions to the redemption fund and the amount at credit of the Board's reserve accounts. The Board is authorized to provide financial assistance to farmers in the following ways (a) By advances to farmers as members of a special class of limited liability company termed " co-operative rural intermediate credit associations " (Part II of the Act). (b) By advances to farmers individually, the loans being additionally secured by the partial or entire guarantee of a company or private individual (Part 111 of the Act). (c) By loans to farmers' co-operative organizations (Part IV of the Act). (id) By discounting farmers' promissory notes or bills of exchange (section 15 of the Act and para. 46 of the Rural Intermediate Credit Regulations of the 21st December, 1927, as amended by para. 5 of further regulations issued on 17th September, 1928, and para. 2 of regulations issued on the 13th January, 1930).