WELLINGTON NEWS

Hokitika Guardian, 31 July 1928, Page 4

WELLINGTON NEWS

AGRICULTUR AL. CREDITS.

(Special to “ Guardian.”)

WELLINGTON, July 27

The farmers of the Dominion are not altogether satisfied with the agricultural credit scheme now in operation, at the same time'it must lie admitted that the schemes though not perfect are better than nothing at all. It is somewhat singular thnt in every country agriculture, the oldest industry in the world, has needed help of a special character. In England an Agricultural Credits Bill has been before the House of Commons for some weeks and has probably passed into law by now. Two important facts had to be considered with the measure—

(1) That as the great bulk of banking resources are represented by deposits repayable on demand or at short notice, it is not in accordance with sound principles thnt the banks should provide permanent capital for industry within reasonable limits, they should confine themselves to loans of a more or less short term character.

(2) The only means of taking a charge on farming stock and crops is by bill of sale which, apart from its legal technicalities and drawbacks as a security, is usually regarded as a sign of financial weakness. The Minister of Agriculture stated in the House of Commons that some of the leading banks bad arranged to subscribe £650,000 of paid-up capital for the purpose of farming a new Agricultural Mortgage Bank, the principal business of which would be to make loans—(a) on mortgages on agricultural land, (b) under the Improvement of Land Acts. 1867 and 1870, for agricultural purposes. Loans on mortgages are in no case to exceed two-thirds of the estimated value of the mortgaged property at the time of the loan and shall bo repayable by equal yearly or half-yearly instalments of capital and interest spread over a period not exceeding 60 years.

In order that the cost of borrowing to the farmers shall be as low as possible, interest on the share capital of the new bank is to bo restricted to 5 per cent per annum. The bill makes provisions by means of which it is anticipated that the bank will he able to borrow money from the investing public on specially favourable terms. For this purpose debentures issued by the bank arc to rank as trustee securities and are to be secured upon'' the whole assets of the hank, including the mortgages and the improvement charges, the share capital, the guarantee fund, and any other reserves.

The guarantee fund is to be formed by advances from the Treasury to the bank up to a sum not exceeding in the aggregate £750,000, or the paid-up share capital of the bank, which ever is the less, and these advances are to Tit free of interest for a period of 60 years. The bill also provides that the Treasury may procure the underwriting of debentures to be issued by the bank to such aggregate amount as may be necessary to raise a sum not exceeding £5,000,000, and may subscribe for debentures issued by the bank up to an amount not exceeding one-fourth each issue of debentures and not exceeding' in the aggregate £1,250,000. In addition the Treasury is authorised to make payments £IO,OOO per annum for ten years as contributions towards the cost of administration of the Bank, it is not intended that the new hank should cater for short term credit requirements of farmers, existing channels being considered sufficient for the purpose. The Bill provides that the farmer may create in favour of a bank as security for an advance a fixed or floating charge upon farm stocks or crops, agricultural vehicles, machinery and other plant, and sundry other farm assets. | It is not intended that the charge shall, except in case of default, interfere with the farmer in the ordinary conduct of bis business or in the marketing of bis crops, but lie will be under a legal obligation whenever lie sells any security comprised in the charge forthwith to pay the bank concerned the amount of the proceeds of the sale except in so far as may be otherwise agreed. Agricultural charges, or chattel mortgages under the Bill must be registered within seven days, but it will be illegal to publish any list of agricultural charges or of the names of farmers who have created agricultural charges, but anyone may have access to the register on certain conditions. There is not much difference between the British legislation and our own, and if anything the British measure is more liberal.