WELLINGTON NEWS

Hokitika Guardian, 20 March 1928, Page 4

WELLINGTON NEWS

RURAL CREDITS. (Special to “ Guardian WELLINGTON, March IT. H seems it is necessary to distinguish between Rural Credits ami Rural Advances, l'or they are two different things. The Rural Advances Act was passed in 1920 and came into operation on April 1, 1927. It deals solely with long-term first mortgages, the borrower paying on the instalment plan, advance being made up to two-thirds ol the valuation of tlm land. In this hrancli lir.st mortgage securities amounting to £OOO.OOO are now registered and lodged in the office, and this enables the present issue of bonds, the amount .T which is iMOO.OOO at 5 per rent. The security that the investor lias is these first mortgages which are based on the. valuation of the land made by the Valuation Department. Mow far is this valuation correct:' liecause the value is being assessed In the Valuation Department it does not follow that it is correct or approximately curivcr. The investor in the bonds could probably make a better bargain with the borrower than ho will get in the investment ol these bonds, and that fact is likely to deter investors in the cities. The bonds will he taken up by the lending departments of the State, hut the bonds should have an appeal to farmers, who by taking up the bonds will he helping themselves and their fellows. Tlie Intermediate Credits Act. passed last session, deals solely with short credit and financial assistance by loan for term not exceeding live year.s to primary producers on the security of their land, chattels and personal, ami for this purpose the State is authorised lei lend the Hoard lip to L‘ I Oft.ooo 1 roe of interest for ten years. Under this last Act no bonds have yet been offered, the capital available Irom the Stale being sufficient in the meantime. The long term advances are financed through the State Advances Office, and the business of Rural Intermediate Credits is administered in a separate account and hv a separate department. This is a pretty big experiment for the Kioto, for it is pawnbroking on a large scale and must accept the usual risk. However, primary producers are enjoying a better time and most ol them will he able to pay accumulated liabilities. The position will lie quite safe, while conditions remain as they are, hut should a slump come there may he trouble, especially with the Intermediate Rural business. These two acts together will about kill the mortgage business for private investors and the loan and discount societies that deal in bills and various personal securities. The State will not now lie able to retire from the position taken up. file long term advances tin first mortgage security may result in satisfactory business, but the Intermediate Rural Credits, which involve much riskier business, may cause loss. However, the country is dependent on the primary producers, for it is thy income from the exports that enables us to pay for our imports and other things. SHAHK INVESTMENTS. Since the beginning of the year the business on the Stock Exchanges has been normal. Most shares show firmness, and some a decided thinness, hut there are certain groups of shares that are very much neglected because the outlook for them is not altogether invourahle. Hank shares continue in favour with investors and most ol the business recorded at all the centres i.s of hank shares. Hank of New Zealand and National Hank of New Zealand are strong favourites anti are in constant demand. Hank til New Zealand shares at Hi’ 19s to L’2 10s Oil and ■National Hank of New Zealand at C: IPs 0d to £<> Ills fid. The shares of the other four hanks doing business in New Zealand are also strong favourites and their shares are constantly changing hands at full market value. Investors, however, look for a wider h«.!d of investment in bank shaves, and > the shares of some purely Australian bank.-, are in good demand. I lie sieves most (idled for are National Hank oi Australasia. English. Scottish ei'ii Australian. Hank of Adelaide, and the Australian Hank of Commerce. 51.... ts of the Commercial Hank of Sydney are in occasional demand possibly because the shares ore high-priced. Government securities have recently met with a poor demand and the same may he said in respect to the debentures oi local bodies. Ihe shares ol ffnaiicial companies have attracted moderate at tention and sales have been few. insurance shares keep very firm notwithstanding that the returns to investors are very small. Investors, however, look for bonus shares and are therefore content with a. small return. The shares of frozen meat companies are quiet. Gear Meat and N.Z. Refrig"iating are favourites and the Southla-i i Frozen Meat Coy. sells occasionally. Woollen shares, coal shares and timber shares generally are neglected, paiticularly the latter, the outlook for which does not impress investors.