WELLINGTON NEWS:

Hokitika Guardian, 2 August 1927, Page 4

WELLINGTON NEWS:

RURAL CREDIT bonds.

(Special to ” Guardian. ) WELLINGTON, July 30. So far back as May 9 the Minister for Finance (Hon. W. Dotvnie Stewart) in his speech at Feilding announceu that an issue of Rural Credit Ronds would he issued very soon, and it was stated by another Minister that the amount would he £200,000, and more recently in Parliament it was stated that, the issue woui'd he made immecliatei'y. The delay it) causing the issue to he made is rather significant, more especially as the Rural Credits Branch is in need of funds. The question that appears to he troubling the Government is whether the bonds should carry a State guarantee, or whether they should be issued without such guarantcOj and incidentally it may be said that the matter is oi importance to investors. Mr . .1. Poison. President of the Dominion Farmers’ tTiion. and a member ol the Rural ( red its Board, states that the bonds will be issued Itv the I reasury and would have the Government behind them, but that does not neces -a lily follow. The party issuing a loan does not necessarily guarantee it. There is reason to believe that the Government is unwilling to guarantee the bonds, because stieh a guarantee would not be viewed with favour by London financiers, and mat make trouble for the Government wher it. goes to London in May next fot another six million loan. Ihe Govern incut is apparently desirous of settins up ti loan hoard in connection will this matter, at all events that is ini plied in the remarks of Mr Poison who said: "It would he a serion i blunder if the Government gives w:r to pressure and sets up an independent hoard of hankers and quasi-hankers t< deal with long-term loans. They wouh then be quit of the whole thing; th bonds woni'd lie a board issue, and th Government would he free and not rc sponsible for success or failure.” Th Rural Credits Branch was established . for the farmers and is very largely | controlled by farmers. Tbe State. should not be asked to guarantee the i bonds of this branch. The Stale has | made an advance of £->OO,OOO to on-1 able the branch to be started, and the branch must work out its own destiny without leaning on the State. Mr Poison maintains that the Government j should stand behind the bonds as it j does, to the tune of half a million behind the Bank of New Zealand. Olio Government does not guarantee the Bank of New Zealand. Li 1891 the Bank was authorised to issue iu London £2,000,00(1 in 4 per cent bonds guaranteed by the New Zeai’and Government. The whole of the guaranteed bonds except about £22,000 has been repaid by the Bank. For its help to the Bank the Government demanded and received preference shares and secured the right to appoint four of the directors. The Government is not guaranteeing the Bank to the tune of half a million, but holds preference shares to that amount on which good dividends are received. With or without Government guarantee the Burn! Credit Bonds are likely to meet with a chilly reception because the money is not- available in the Dominion, or rather it should he said that what is available is needed for carrying on the current business of the country. There is really very little surplus funds available for investment, and the merits of the bonds are not in question.

LAND VALUATION. It is the general opinion tliaL the sooner the Vnlniiiion Depart men t gets busy and revalues the land the hotter. The inllated Ideas of land values that were current in 1919-1021 have been greatly modified since the slump, hut values are still too high, and this includes other lands besides broad acres, it is one tiling to order a valuation to be made, and quite another thing to get a, .-.cientilie \ nictation. In the past values have been based on average sales in the locality or district and an optimist with little knowledge and less discretion could easily affect the values by paying a fancy price for a farm. The property in the Poverty Bay district which was purchased by the Government for close settlement, and at the value placed upon it by the Valuation Department is a case in point showing the faultincss of the Government system. Where possible values sboui'd he based on the production returns of say five years averaged, and capitalised at hank rates. Kverv effort should he made to arrive at the true economic value. ft some cases the prospective value would have to he taken into consideration, at all events the present system of the Valuation Department must he abandoned and a hotter one adopted.