FINANCE FOR FARMERS

Hokitika Guardian, 5 June 1929, Page 8

FINANCE FOR FARMERS

v RURAL CREDIT SYSTEM. (Auckland Star.) There arc various ways of' raising money—provided that one can show some measure of security—and an excellent way is per medium of the rural intermediate credit system which has came into being sinejb the passing of tne%ural Intermediate Credit Acl of 1927. In the Northern Wairoa district the credit system has been taken up enthusiastically with a success that should be an object lesson to other, parts of. the Dominion. Of late there lias been a good deal of criticism in regard to the operation of the system, but judging from the experience of Norther'll Wairoa settlers it has proved a splendid mean® of pioviding finance on very easy easy terms.

How the system works was explained to a “Star” representative by Mr I). L. Ross, of Dargaville, secretaryof the Northern Wairoa Co-operative Rural Credit Association, Ltd., a gentleman with a legal training, who is admitted to be one of the best authorities on the particular method of finance. Mr Ross said that the passing of the empowering legislation in 1927, opened up a new avenue of financial facilities on a satisfactory basis of security to provide lor a system of credit for periods ranging from six months to five years at a reasonable rate of interest, a measure which was intended to asspre for the primary producers some at least of the advantages of an agricultural bank. Mr Ross explained that there were two main branches in connection with the rural credit system, of finance, direct loans from tile Rural Intermediate Credits Hoard to farmers, and loans guaranteed up to twenty per cent by an accepted guarantor, persoi or firm. The second system was the medium for co-operative intermediate credit associations of farmers, con sistmg of twenty or more members who had combined themselves into a limited • liability company in terms of the Act. The minimum was 2d shares per member of a nominal value of .id each. A member borrowing through the association was required to take up ten shares of £1 each for evorv '£l9o of a 'loan. The association received applications for loans fiom members, or intending members, and after a valuation was made the application was dealt with by the directors of the association. Finally, the recommendation of the directors wa® sent forward to the Rural Intermediate Credits Board at Wellington. On the loan being approved the board lent the money to the association at 6 per cent interest, and the association in turn lent the 'money to the members at 6) per cent.

REPAYMENT OF LOANS. Proceeding, Mr Ross said that the loans were payable' over a period of five years. That was the spirit of the system. The combined share capita 1 of the association was behind tinloans received from the Central Board, and the half per cent (the difference between 6 per cent and 6< pe cent) would create a reserve fund against any unforseon losses on securities.

Continuing. Mr Ross said that the first statutory meeting of the Northern Wairoa Association was held last November. A total of 1162 shares had been taken up by members so that the association had a subscribed capital of £1162, of which only Is petshare had boon called up. The money was invested in the Public Trust Off ice as a reserve fund. Twenty loans had been made to members, totalling £7875, an average of nearly £4OO petborrower. Applications were pondin’at the moment for a total of £I.OOO He said that the particular class of financo was meeting a great nerd in a growing new district like the Northern Wairoa, and the cheap money had been very much appreciated by the people who had taken advantage of the scheme. The limit for an advance was £IOOO, generally speaking, being fifty per cent approved valua tion on dairy stock, or seventy per cent in the case of sheep or implements. It was chiefly reliance or chattel security, although in som<oases it might he supported by collateral security by mortgage over land. .Mr Ross went on to say that the valuers were practical farmers of the district. There were five farmer directors, and *tho meetings were attended by the district supervisor, whose headquarters were at Whangarei. Personally he considered tha 1 there were wonderful possibilities -under the system, much for the reason that in New Zealand and North Auckland particularly, there were not the same hazards as in some other countries with less equable climatic conditions. It meant that a farmer to, get a loan had to have it approved by his follow farmers, and there were no better judges of another man’s industry and requirements. It had long been realised that cheap money was necessary for the district’s progress. It meant finance that could be devoted to bush-felling, grassing, top-dressing, improving stock strains procuring additional stock and even to paying off money borrowed at a higher rate of interest. SECURITY OF FINANCE. Referring to the security of the finance Mr Ross pointed out that where a member or intending member obtained a loan it was obligatory to take up one share for each £lO or I