RURAL CREDITS

Hokitika Guardian, 11 October 1928, Page 8

RURAL CREDITS

FIRST ANNUAL REPORT. REVIEW OF HOARD’S OPERATIONS. WELLINGTON, October 4. The first report' of the Rural Intermediate Credit Hoard, that for the year ended June 30th was presented to Parliament to-day by the Prime Minister (Mr Coates). The report is a lengthy one, covering the history ol the rural credits scheme, but a large period covered by the report was occupied m setting up the organisation and completing the detail to enable the lending operations to be effectively commenced.

The Commissioner (Mr J. W. MacDonald) states that the response of the farming community to the facilities provided has been sufficiently marked to establish beyond doubt that the system meets a real need in the economic life of the Dominion and has every prospicct of reaching considerable volume in the future as its advantages and possibilities become more widely known. The interest charged by the Hoard for advances under the Act and its discount rate also have been fixed at fbj- per cent per annum. In the case of loans to co-operative rural intermediate associations, the rate charged is 6 per cent., so that assn, iations may be in a position to' make advances to their members at per cent., and the Hoard has imposed conditions as to the manner in which this margin of } per cent, is to be employed by the associations. The above rates of interest and discount will, it is estimated, provide a margin above the cost to the Board of funds raised by debenture issues enable suitable reserves to be set up. The advance of £400.00 to the Board from the Consolidated Fund being free of interest for the first ten years, this concession will enab'e the Board to build up reserves of security for investors. Continuance of the rates stated above will depend upon the conditions prevailing from time to time, and, moreover, i the Board i.s not vet in a position to ascertain the public response to its debenture issues. The private enquiries which have been received by the Board up. to the present encourage it, however, to believe that the existing rate of interest can at least be maintained.

The report deals at length with the formation of co-ordinate rural intermediate credit associations, loans to farmers without, this intervention of association, s, loans to co-ordinate societies discounting business', and finance and accounts. Under the latter heading it is stated that temporory investments of the Board’s funds pending the granting of loans have been arranged for, and the funds will remain in these temporary investments until actually required for the completion of loans granted to applicants. These arrangements for close temporary inves+rrm of the Board’s funds Will undoubtedly result in ■ a substantial benefit to the Board, particularly where loans to meet the future, requirements of the business are raised by issues of debentures, and large sums of money would otherwise he lying idle pending investment loans.

Arrangements for the first issue' of debentures are Well forward, arid the Bank of New Zealand lias agreed to make payments of interest on debentures and repayments of principal on maturity on the same terms as are enjoyed by the Treasury in respect of Government bonds and debentures. The arrangements for the payment of interest and principal on due dates at any branch of the Bank of New Zealand in the Dominion will, it is sad, be appreciated by investors, and should prove of great advantage to the Board.

. In regard to dairy companies, it is stated that the increasing extent to which they are utilising the system augurs well for the Board’s business in the future, for not only may it he antiepated that the suppliers will he anxious to secure the benefits oif the low rate of interest charged by the Board, and the feeling of confidence that a loan when granted will not he arbitrarily called up, but the close interest of the dairy company organisations in the loans granted by the Board under arrangements such as those described above will l>e an added measure of protection to the Board. The statement of transactions up to August 31st., 1928, says that investments (including loans made and face value of bills and notes discounted) were £3O 899. loans granted but not completed £34,214 and applications entertained and in course of consideration £31.510—a total of £96,623. The investments were made up as follows: Advances to associations £13,655, advances to farmers £15,979. bills and notes discounted (face value) £l26s—a total of £80,899.