RURAL CREDITS.

Auckland Star, Volume LIX, Issue 236, 5 October 1928, Page 8

RURAL CREDITS.

STILL AN EXPERIMENT.

LABOUR MEMBER CRITICAL.

PRIME MINISTER OPTIMISTIC.

(By Telegraph.—Parliamentary Reporter.) WELLINGTON, Thursday.

It is taken for granted that the member for Raglan (Mr. W. L. Martin) is a member of the Labour Opposition who knows what he is talking about when matters a.ffecting the land are before the House, since he is a farmer of long practical experience. This afternoon he was very critical of the operations of Rural .Intermediate Credit Associations, although he prefaced his remarks by saying that he was not against anything that was going to help the farmer to get finance.

"When these Acts are placed on the Statute Book for a certain purpose, and that purpose is not achieved, we can only complain that we have been deceived," said Mr. Martin. He knew a certain number of associations—about a dozen—had been formed throughout the Dominion, but it was almost an impossibility to make them a success. The spirit of co-operation which was to be the underlying principle was absent, and there was plenty of evidence to show that the farmer was getting his finance from the dairy companies. Stock agents in his district had not availed themselves of the provisions of the Act, but the big dairy companies had. There had been a terrible lot of red tape obstructing the operation of the Act, and until quite recently a farmer was unable to get £100, was unable to get it on a promissory note. Mr. Martin said he believed the operation of the Rural Credits scheme had forced up the rate of interest. Expenses Margin Too Low.

Mr. Martin said it was impossible for local associations to work on a-half per cent expenses margin, when one-quarter per cent of that amount had to go into reserve. It meant that an association did not have sufficient money to pay for a secretary. To carry on successfully on one-quarter per cent for expenses would be impossible, unless the associations were handling thousands of pounds, which they were not. Mr. A. M. Samuel (Ohinemuri) said the first thing to be remembered was thatcthe board was advancing the money of investors, and it was the duty of the board to see that every security was beyond reproach. It was useless for anyone to apply without having a security to offer. The Act was now in its experimental stage. The big co-opera-tive companies, composed mostly of men of the Framers' Union, were of opinion that they could" carry out the business without the assistance of the association, and Mr. Samuel knew that such companies had been the means of blocking the formation of associations in several districts. Whether this would be to the advantage of the farmer remained to be seen.

"Pretty Good Going."

Replying to the discussion the Prime Minister (the Rt. Hon. J. G. Coates) said that he would like to congratulate the Commissioner of Rural Intermediate Credit, the members of the board and the officers of the Public Trust Office for the excellent way in which they had tackled the job of initiating the scheme. They had gone into it with enthusiasm and a very good machine had been established. Since the end of June £100,000 had been lent out to over 3000 settlers, Which was pretty good going. Sixteen groups of associations had been formed, while others were being formed, and 23 companies were advancing money to their clients and three or four stock and station agents were taking advantage of the Act. The Leader of the Opposition (Mr. H. E. Holland): Has the Prime Minister worked out the average of these loars to farmers? Mr. Coates replied that between £200 and £400 had been advanced to individuals. Mr. Holland: It is an average of about £33 per settler. Mr. Coates said that he was not taking the actual number of settlers who had got their money, but those for whom credits had been authorised. On Its Own Feet.

The board had been able to cany on without going on to the market and there had been numerous applications for bonds. In regard to finance for farmers they must realise that it should be provided at the cheapest possible cost, but in his judgment there was a very great difference between lending money under a system whereby it did not become a charge on the State, as against the system under which the State raised the money and it became part and parcel of the National Debt. The advantage of the present scheme was that the bonds were a good security. They were gilt-edged, and that saved the Government from going on the open market for money which would become part of the National Debt. The intermediate scheme stood on its own feet. The test of that was that the bonds had been applied for and the board had been able to meet the applications.