8.—14.

Temporary investments of funds not required immediately for payment of loans authorized amount to £153,480. 46. The figures published in Appendix I to this report show that the volume of advances outstanding or under consideration is considerably less than at the end of the previous year. The advances in the course of the Board's ordinary business amounted to only £72,078 for the year, compared with £127,035 advanced during the previous year. Repayments of advances, in accordance with the terms on which the loans were granted, were considerable, despite the difficult conditions, and they account for the decreased investments. Owing to the large number of small loans and the necessity for the greatest care in the investigation of applications, and, especially under existing farming conditions, in the supervision of the current advances secured mainly on live-stock and chattels, the business is necessarily somewhat costly to operate. This was apparently anticipated by Parliament when it provided for £400,000 to be advanced from the Consolidated Fund free of interest for a period of ten years. It is due to the use of £266,666 of this sum, free of interest, that it has been possible again to show a profit on the year's working. 47. Issue of Debentures. —Owing to the large excess of repayments over advances, it was found that the Board could not profitably use all the funds available. The sale of debentures was therefore suspended, and debentures to the value of £32,500 were purchased by the Board from the holders, and, in addition, the balance— £4,500 —of the £10,000 special advance made by the Treasury in May, 1931, to enable advances to be made to farmers for purchase of fertilizer was repaid. 48. Accounts of Associations. —The officers of the Board continue to supervise the accounting work of the associations, and to render such assistance as the secretaries require. AMENDMENTS TO RURAL INTERMEDIATE CREDIT ACT. 49. Shares in Associations. —Section 50 of the Rural Intermediate Credit Act, 1927, provided that no loan should be made by a co-operative lural intermediate credit association to a shareholder so that the amount for the time being owing thereunder exceeded £2,000 or ten times the amount of the nominal value of his shares in the association, whichever was the less. In order to enable a shareholder to obtain a new loan of an amount in excess of that which his present shareholding would sustain, or a further advance which would make the amount of his loan more than ten times his existing shareholding, it was necessary for him to apply for and be allotted the required number of further shares in the association. Although subsection (3) of section 40 of the Rural Intermediate Credit Act in its original form made provision for the increasing of the share capital by the allotment of shares to applicants who were not shareholders, it did not make provision whereby the share capital of existing shareholders might be increased, and the amount which might be advanced to them was limited by the number of shares then held. It was apparent that provision enabling existing shareholders to increase their shareholdings was required, and accordingly section 30 of the Finance Act, 1932-33 (No. 2), enables additional shares to be allotted to shareholders. Many associations, in accordance with what was considered to be the spirit of the original legislation, had allotted additional shares to members on the granting of new loans or further advances, and their action was validated by the amending legislation. 50. Repayment of Loans. —Section 31 of the Finance Act, 1932-33 (No. 2), repeals sections 49 and 65 and subsection (1) of section 53 of the Rural Intermediate Credit Act, 1927, and defines the terms and conditions which the Board or an association may impose in granting loans, and brings into uniformity the provisions of Parts II and 111 of the Act dealing respectively with association and direct loans. Whereas section 65 of the Rural Intermediate Credit Act, 1927, referring to direct loans, provided that each loan " shall be repaid " within five years after the date of the granting thereof, section 49, referring to association loans, provided merely that no loan " shall be granted " for a period exceeding five years. It was considered that section 65 imposed a definite obligation on the Board to compel repayment within the five-year period unless this was clearly impossible in any

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