17

8.—14

30. Conditions on which Loans are granted.—So that a proper conception may be obtained of the conditions on which loans are made available by the Board, and the reasons underlying the principles laid down, the succeeding portion of the report sets out the main requirements of the Board. It has first to be emphasized that the finance provided by it is intended not to be of a temporary nature, but to cover the borrowers' requirements over a period of years. A number of misconceptions which exist will disappear with a proper understanding upon this point. For the reason just stated the Board in dealing with loan applications specially investigates the financial position of the borrower and his ability, as disclosed by the information submitted, to carry on his farming operations successfully and comply with his obligations to the Board, including the repayment of the loan or a substantial portion of it within the statutory period. The applicant's probable requirements for the development of his farm property are considered in relation to the total extent to which the Board would be able to grant assistance to him. Where the borrower's position is reasonably sound and may be expected in normal conditions to continue so over the period for which he requires the loan, and there is substantially the margin for the sum he requires in the security offered by him, the Board has had no difficulty in making the moneys available to him promptly. In addition, as will be mentioned later, the Board has in a number of cases financed the development or extension of the borrower's farming activities during successive years. In some cases, however, it has been evident that the conditions under which the operations of applicants were being conducted were financially unsound, and that the amount of the loans which could be provided by the Board would not afford them any real relief in view of the obligations with which they were faced as lessees or mortgagors, or of separate liabilities which could not be discharged from the loan or out of any other resources of the applicants. In other cases the amounts which have been required immediately could be provided by the Board, but on account of the security available the total finance required by the applicant in the near future could not be made available. Any temporary gain to the borrowers from the lower rate of interest charged for intermediate credit loans would be outweighed by the subsequent expense of rearranging the farm finances, and in such cases it would not be in the interests of the borrowers themselves to take up any loans which could be made available. Where such circumstances have existed it has not been possible for the Board to grant the loans applied for. Applications have, however, not been declined arbitrarily, and the Board has willingly investigated any proposals for the rearranging of leases or mortgages or provision for other liabilities or for improved arrangements for the working of the properties which will place the applicants in a more favourable position, and it has in a number of cases held over a final decision in order to give them the opportunity of bringing to finality proposals which would enable them to secure intermediate credit loans. In dealing with border-line cases special importance is attached to the personal element, as much depends there upon the ability, energy, and integrity of the particular farmer. The Board has derived considerable assistance in these cases from the district boards which, being composed largely of practical farmers with knowledge of local conditions, are in a position to weigh the prospects of the ultimate success of the farming ventures, and the protection which would be afforded in the meantime for the loans applied for, and borrowers themselves have, in many instances, benefited from suggestions made by the district boards in regard to the improvement of their financial arrangements or methods of farming. The recommendations submitted by directors of associations have also contained evidence of thoughtful attention to the various features of the applications recommended by them. An important requirement is therefore that the borrower should be reasonably assured of his finances in respect of his existing operations and his tenure of the farm property throughout the period of the proposed loan. This does not, however, mean that he will be subject to any restrictions if he desires to terminate his operations during the period of the loan, as all loans granted by the Board may be repaid at any time without formal notice. If the borrower has no definite tenure

2—B. 14.