Farmers’ Finance.

Hauraki Plains Gazette, Volume XXXIX, Issue 5261, 11 April 1928, Page 4

Farmers’ Finance.

RURAL INTERMEDIATE CREDIT. ADDRESS BY MR. SAMUEL. .M.P. An interesting address on “The Rurial Intermediate Credit Act” was delivered by Mr A. M. Samuel, M.P., at the Soldiers' Club, Paeroa, on Wednesday evening last. Mr W. F. Johnstone, president of the local bran'ph of the Farmers.’ Union presided over an attendance of between, forty and: fifty farmers from all parts of the district. Mr F. J. Moore, district public trustee, Hamilton, was also present by invitation, and explained the method of forming groups or small associations.

Mr Samuel, who has made an intense study of the Rural Intermediate Cred’t Act, 1927, which. contains 78 clauses, gave a comprehensive survey of farmers;’ finance, and the difficonfronting primary producers. Through the courtesy of Mr Samuel we have been able to obtain, a copy of his address, and owing to its interesting nature it is intended to publish the whole in serial form in theise columns. CONFRONTING DIFFICUTIES. “A worldi-wide difficulty to-day affecting primary producers directly, and other classes of the community through the producers, has been the lack of proper facilities, for marketing produce. An, added! difficulty to the farming classes in the Dominion has been tlie considerably increased cost of all farming requisites, including labour, while the farmer has not bee;n able to increase his prices correspondingly because he has been bound by the prices ruling in. distant markets, where his products have to compete with those from other countries with a lower istanidard of living and consequently cheaper production. It, indeed, says much for the productive capacity of our country and the application of our farming classes that, notwithstanding th© difficulties confronting them, they have been able to carry on with some measure of success, and through their efforts! to consolidate and maintain the pos'tion which the Dominion has. won in markets abroad. . SOLUTIONS TO DIFFICULTIES. “To meet the difficulties which face our farmers there are, speaking of solutions of most general importance and application, two modes open. Firstly, the employment of more scientific and improved methods of farming and more intense production, and, secondly, the provision of better methods of financing. PAST AND PRESENT SOURCES. “Though a discussion of the efforts directed to the investigation of the sc'entific problems affecting the farming industry would be both interesting and instructive, the main, purpose of the present ramarks. is to deal with the financial aspects of the. situation and particularly to explain the objects and provisions of -he progressive legislation of the Rural Intermediate Credit Act, which has been paced upon the. Statute Book during the, past session. Before, however, dealing with this matter, it would be interesting to refer briefly to the statutory measures which have been passed from time to time! to provide, improved .financial facilities for the primary producers, to refer to other prominent sources, of rural credit, and also to explain the c'rcumfttances which led to the passing ’of those two important financial .measures vitally concerning farmers —tlie Rural Advances Act of 1926 .and the Rural Intermediate Credit Act of the past se.'.Vion..

STATE ADVANCES OFFICE. The Advances to Settlers Act of 1894 initiated a scheme applying both to rural and urban properties , which lias teen a means of providing extensive finance to primary producers at reasonable rates of interest. Starting w’th a capital fund of £3,00'0,000 and a maximum advance limit in individual cases of £2,500 ( now £3,500) the scheme has been developed and extended from time to timei until we find that at the 31st March last the sum of £17,110,025 was outstanding upon current advances to settlers of a total number of 25,534. Of loans 15,147 approximately th.reeflfths, totalling £11,036,333 were outstanding on the security of rural property. The funds provided for making these advances were moneys raised by the Government upon the security of the public revenues, but a new departure is marked by the Rural Advances Act of 1926, which, as it represents legislative effect to the re.ommendation|s of the Royal Commission on Rural Credits in 1925, will be referred, to in greater detail when dealing with the work, and the recommendations of that commission. The securities for the advances made by the State Advances which have just been referred to are in. each case land. The State Advances Office Amendment Act of 1922, however, initiated a new development in that it authorised thej State Advances office to grant, loans on the security of chattels. Advances of tlrs description are limited to a maximum amount of £soo' in individual capes. Up to the 31st March, 1927, a total sum of £79,265 lhad been advanced by the department, of which £39,596 had been repaid, leaving total advances of £39,669 still outstanding, it will' be seen from these figures that the system has not yet been used to any appreciable extent. It is n'ot affected in any way by the present rural intermediate credit scheme, and still continues in operation. Apart from State funds made available for investment upon rural securities, there are institut'ons which advance large amounts upon the security of .rural property, and in this connection I desire to refer particularly to two sources of this variety of credit —the Public Trust Office and the Long Term Loan Department, of the Bank of New Zealand. PUBLIC TRUST OFFICE. Tlic Public Trustees, by virtue of the numerous capacities in which he acts, such as executor, trustee administrator, agent for private individuals, Investing authority for public and other funds, controls vast sums of money for investment. As at the ,

31st March last the value of the estatep and funds under ihis administration reached the truly astonishing total of £41,000,000, and of this sunt the investments made through his office represented over £26,000,000, of which £15,583,706 was invested upon mortgage securities. The business of the Public Trust Office is, increasing -apidly, and it is patent Hat the Public Trustee has in the past been a prominent factor in financial matters, and is dejstined to be .of still greater influence. Of the mortgage investments a considerable portion has been advanced upon, the security of farming properties, and consequently his activities and policy are of direct concern to farmers.

“During recent years the application of the long ter m mortgage system upon amortisation bapis has marked an important development in. investment work in the Public Trust Officer The Public Trustee’s annual reports to Parliament explain the benefits; of, this system of mortgages and give other interesting information in this connection. In his 1926 report the following statement is m,ade :— “ ‘Practically thei whole of the new loanjs are now being granted undeiq an instalment system providing for the repayment of principal by half-yearly instalments together with the interest. This principle has long been applied in the case of loans on house properties and over buildings situated in the cities, but the extension of the system to rural properties is of recent adoption by the Public Trust .Office. Generally speaking, the new system has been welcomed by those members of the farming community who are clients of the investment branch of the office. Many of the farmers have come to realise that the short term loan is a most expensive one from the point of view, of the borrower, involving as it does tire, recurrence at comparatively short intervals of the expense of a valuation and,, the legal expenses incidental to the renewal of the m’ortgages. - Bes'des being less expensive, the instalment system acts aft a mode of compulsory saving on the part of the farmers, and many have expressed their appreciation of this special feature.*

“The Public Trustees 1927 report show, that out of a total of £1,247,756 lent from the common fund during the previous year, on mortgages, securities tihe sum of £818,410 (or apP''ioximately two-thirds) was advanced on. this class of mortgage ; and that the favourite table with, tlie farming community is the twenty-five; year table, in special case®, however the Public Trust Office investment Board is prepared to grant loans on a t'hirtyyear table, under which, the annual payment to the sinking fundi fori redemption cf principal ifs. the small sum of £1 to. 6d per cent, on the sum borrowed.

The report proceeds to remark that, in certain cases where loans are granted for the purpose ’of effecting impnovements which do not show any immediate return in increase of productivity of the land, thei Public Trustee is prepared to meet, the wishes of berrowers by granting loans on the usual flat mortgage. Elsewhere in his reports the. Public Trustee makes special mentfon of thei fact that no procuration fees are permitted to be charged to borrowers in regard to loans obtained from his department, a provision which is a substantial benefit to clients of the investment branch of the office.

The remarks just quoted set out the advantages which accrue to farmery and other, borrowers through the adoption of the, long term mortgage system o£ investment which the) Public Trust Offi’pe has adopted largely in the interest of the borrowing clients of the office.

LONG TERM LOAN DEPARTMENT.

In the case of the. Bank of New Zealand an Act of 1926 gave effect to a scheme put' forward by the directors of the bank to enable it to rafcc further capital, for making advances on the security of land upon long term mortgages with amortisation payments. These activities ofrthe bank are under the, control of a separate blanch, the Long Term. Mortgage Department, and provision is made for the furn’shing of funds for this, department both by means of snare capital issues, and also issues of |debentures secured upon the assets of this branch alone. The accounts cf the bank show tliat at March .31 last the capital of this particular department of the bank was £374,197, of which ' £97,000 had then been, advanced to borrowers. ■' DISCHARGED SOLDIERS’ SCHEMAS “Before leaving this subject b//ief referenve, may be made, to the Discharged Soldiers’ Settlement advances. Under this scjiemq a F,um of approximately. £20,000,000 was advanced to soldier settlers to rissist in the purchase of land, discharging mortgages, effecting improvements and the purchase of stock,, cf which scji. £2,500,000 was advanced upon stock and chatted securities,. Though these operations were so extensive they do not vitally concern tlie prerent discussion, as; the nivanee so provided was not, of course, available to the farming community ’in gqn B ral. (To be continued, in issue.)