FARMERS’ FINANCE

Evening Star, Issue 19794, 18 February 1928, Page 6

FARMERS’ FINANCE

INTERMEDIATE CREDITS SYSTEM PREMIER REVIEWS LEGISLATION DIRECT LOANS JUSTIFIED [Peu Uwitbp Paisa Association!.] WELLINGTON, February 17. The Rural Intermediate Credit Board, recently appointed under the Rural Intermediate Credit .Act of last session, held its first meeting to-day. Before proceeding with formal business the board met the Prime Minister (Mr J. G. Coates), who took an opportunity of outlining the underlying principles and objects of the legislation which was passed by Parliament making provision for financial assistance to primary producers by way of a system of rural intermediate credits. “There can bo no doubt,” said the Prime Minister, “that the meeting this morning of the Rural Intermediate Credit Board marks a, very important development in the history of the farming industry of the dominion, and as the welfare of that industry is the foundation of the country’s prosperity the occasion is necessarily one which vitally concerns all classes of the community. The object of the legislation is, as yon are well aware, the securing of a flow of capital on the security mainly of farm stock or produce at rates of interest which will make well-conducted farming operations reasonably profitable. It is a further step in fulfilment of the Government’s settled policy of securing from time to time the best possible conditions for the man on the land consistent with the welfare of all classes of the community.

“Il is appropriate that on fhis occasion I should briefly survey what has rteen done of rerent years to attain this object, and to demonstrate what has been done by progressive legislation to meet the changing circumstances affecting our farming community, whose welfare has been the constant concern of the Government. The acquisition of Crown or settlement lands has been made easier by the introduction of a new system of payments of principal and interest spread over a period of J-H years on an amortisation basis. Further, special facilities have been „ provided for the taking up on very easy terms of poor pumice and gum lands, and much has been done by the State to drain and improve swamp lands, or in the granting of financial assistance for those purposes. Extensive relief lias also been granted to Crown tenants, borrowers from the Crown, occupiers of kauri gum reserve lauds, and other holders from the Crown in cases where the land has gone back through reasons beyond the control of the occupiers; and discharged soldier* settlers JiavGj through the operations of the Dominion Revaluation Board, been given the benefit in deserving cases of the reviewing of their current account mortgages. “In conned ion with the Railway Department freight agents have already been appointed, and are operating in close touch with the farming and business community. The information obtained by this means will be utilised in making further adjustments in tariff, and in the provision of additional transport facilities where they are considered necessary. “Contemporaneously with fho developments iu these directions measures have been passed with the object of providing increased financial facilities for our farmers. One of these measures which has proved very welcome in practice to the farming community authorises the Public Trustee to make advances upon land on the amortisation principle by which repayments of principal are made by instalment together with the interest. This system lias proved very popular with borrowers upon rural securities. “With regard to the rural intermediate credit scheme, with which particularly we are concerned to-day, I may remind you that the measure initiating this system of rural finance 'had its inception in the year 1925, when the Government set up a commission consisting of Colonel J. J. Essin, C.M.G., who is your present chairman, the late Mr P. H. Cox, and Mr W. J. Poison to inquire generally into the question of the financial assistance afforded to farmers in other countries, and the means by which such assistance was made available to the farmer. As you know that commission visited, and made investigations in Canada, North and South America, England, France, Germany, Denmark, Holland, and Belgium. On its return it presented a very comprehensive report, and many of its recommendations have been given effect to in the Act as finally passed, others having been embodied m the Rural Advances Act of 1920, which provided for the establishment of the rural advances branch of the State Advances Office with the special function of making Jong term advances on land on the amortisation basis. One of the proposals of the commission was that both long term rural credit and intermediate credit should be administered by a new and separate branch of the State Advances Office, but the Government felt that if the scheme were to he successful and economically administered it was essential that the services of some existing organisation extending and represented throughout the dominion should be available to enable close contact t j be kept with the securities for investments of the board’s funds. Hie Public Trust Office, the operations of which have earned the confidence of all classes of the community, met ail these requirements, and accordingly the board has been afforded the opportunity of employing its organisation for the more effective administration of the scheme.

“ Tho Rural Intermediate Credit Bill was presented to Parliament on September 16 last, and placed the administration of intermediate credit under a special board of five members (now increased to seven), with the Public Trustee as chief executive member under the title of Commissioner of Rural Intermediate . Credit. The Bill provided only one means for the individual farmer obtaining a loan—that is, by taking up at least twentylive £i shares in an association of twenty persons, and paying immediately in cash not less than 20 per cent, of the value of these shares. The Bill was referred to a special committee of the House of Representatives, and during the proceedings of that committee an important and altogether new principle was introduced into the Bill, and is now embodied in Part 111. of the Act. This provision enables a farmer, on obtaining a satisfactory guarantor of at least 20 per cent, of his loan, to borrow direct from the board without having to join an association. The desirability of this amendment was felt on two grounds—first, that in small communities it might easily prove impossible to find twenty farmers willing to join together and form an association; and, secondly, that it would appeal more strongly to the independent nature of the average New Zealand farmer if he were able to go to the board for a Joan without first having to reveal his financial position to his neighbor, as he must necessarily do if he joined an association. The Government, moreover, considered that it would be most unfair if the very fact of a man having been willing to become a pioneer in the snore isolated districts of the dominion

should preclude him from sharing 11 the benefits of rural intermedia!' credit, and 1 submit that this in itscl is sufficient answer to those critics win have accused, the Government of wreck' ing the principles of the Bill by Adopt ing this amendment. It must not be forgotten that the Royal Comtnissioi did not recommend tho repeal of the provisions of the State Advances Oihc< Amendment Act, 1822, which authorise! that office to grant direct loans upoi chattel securities up to a maximum amount of £SOO. The operations of the department in regard to this class of its business have been conducted with financial success, and it u interesting to note that the direct loans portion of the board’s business will bo on even a sounder basis, as, in addition to the actual securities, the loans will be guaranteed to a substantial proportion. It is to be remembered also that tho fullest opportunity has been preserved for persons desirous of promoting the co-operative spirit to do so by forming rural intermediate credit associations. “ As an indication that the fears that the introduction of tho direct method of applying for loans would lead to the association method being neglected m practice are groundless, I need only mention that the formation of one association in the South Taranaki district is now well advanced, and that there are indications that other groups of farmers may also join together in a similar manner. “ You will have noticed that arrangements are being made for a special committee of the Council of Scientific and Industrial Research to consider the question of rural economic investigations. The committee will be widely representative, and will consist of representatives of the meat and dairy producers, two or three departments of State, and several economists. The scope of the inquiry will probably involve such matters as costs of production, farm management, rural finance; and other matters of importance td our' primary industries, and the investigation will be of far-reaching benefit to the dominion as a whole.

“I will conclude,” remarked the Prime Minister, “by saying that it is only after very careful thought, that Cabinet has decided on the personnel of this board, and that it is satisfied that it has assembled a board as competent to administer the Act as it is possible to obtain in tho dominion. 1 need hardly say that the success of the Act will stand or fall by the manner in which it is administered, and X-leave it in your hands in perfect confidence as to the result.”