INTERMEDIATE RURAL CREDIT.

Putaruru Press, Volume VI, Issue 234, 26 April 1928, Page 6

INTERMEDIATE RURAL CREDIT.

WORKING OF THE SCHEME. Explanation by Controller. Large Morrinsville Meeting. The Morrinsville Parish Hall was packed to its utmost capacity on Saturday evening, when Mr. J. Snell, of Wellington, controller of Rural Intermediate Credits, addressed farmers on the principal features of the recently introduced Rural Credits Act, with a view to forming an association at Morrinsville. Mr. F. J. E. Moore, district supervisor of Rural Credits, Hamilton, was also present. The Act has been translated several times for the benefit of Morrinsville farmers, but it is safe to say that the farmers came away with a very clear knowledge of the principle features of the legislation on Saturday. The general opinion seemed to favour the formation of an association, but the difficulties arising from its successful working through dairy companies, as explained by several factory managers, resulted in a committee being appointed to go more fully into the matter.

Criticisms had also been made of dairy companies and stock agents guaranteeing individuals up to 20 per cent. It was pointed out by Mr. Snell that in the loans a corporate guarantee replaced an individual loan. The board felt that it should have more than an individual guarantee, as a man might die or other things might happen. Some dairy companies found difficulty in accepting the securities. This, he maintained, could be got over with a little ingenuity. In some instances dairy

companies had signified willingness to guarantee the loans up to the board’s requirement. There might be conditions in the Waikato making it difficult for the factories to guarantee. It was really a matter for the directors.

“If the dairy companies won’t guarantee, why not form associations among suppliers ? ” Mr. Snell asked. The secretary of the factory could act as the secretary of the association and could do the work economically. It had occurred to Mr. Moore and himself that this would be an economical idea as the secretary would have knowledge of the position of members.

At a meeting of Matamata farmers a member had raised a point that should be cleared up. He thought that if a man had a herd and wished to sell a cow it would be necessary to apply to the board at Wellington. “ The scheme will not be run on these red-tape lines,” said Mr. Snell. “ Arrangements can very easily be made with the district board when it is proposed to reduce the security by such a small amount. It will be a matter of sound business without any red tape.” With reference to sheep the same principles would apply. A farmer would come along with his flock and fill in the application, the stock would be valued, and the same provisions would apply. The guarantee in the case of an individual would not be by a dairy company but by a stock agent. In reply to a question by Mr. H. Herbert, Mr. Moore said the charges for securing a loan were kept at a minimum, while the valuation fees were very reasonable. The cost of obtaining £250 was set down in the Statute at £2 2s, varying to £3 3s for £IOOO, not £9 as was stated in an Auckland paper. It cost £9 to form an association. With reference

to valuations, the Waikato board had decided that local valuers should be employed in various parts of districts to keep travelling costs at a minimum and to make for rapidity in valuing. Mr. J. L. Faulkner asked would the guarantees by firms or companies which were fixed at 20 per cent, be reduced in proportion to the amount borrowed. Mr. Snell said he had no doubt that the original guarantee would stand until the full repayment was made.

Mr. Wylie : What is the basis of valuation ? Mr. Snell said this was a matter that could not be finally determined until the views of the district board were secured. Loans made would be on a conservative margin. He understood that it was the general practice to lend up to 50 per cent, of the value of a dairy herd.

Mr. W. Darrall said the Tatua Company had a standard lending value of £5 a cow.

Mr. Snell : The valuations would he the same as those of any other sound lending institution. With a lower rate of interest the same valuations at least must be expected. Mr. Wylie asked how a farmer was to secure finance if he proposed to increase his herd. Mr. Snell : That is a difficulty to be considered. Mr. Darrall : A weak man will find it difficult to secure finance. The Tatua Dairy Company lends on practically anything. Dairy companies generally, with their intimate knowledge of their suppliers, should, he contended, be availed of to borrow small sums.

Mr. S. A. Ferguson asked why the work should be duplicated when dairy companies have lending facilities and could carry out the scheme far better than an asso-

ciation could. “ Why not lend to the dairy companies at the lower rate and let them advance the money to suppliers ? ” he asked. Mr. Snell : That is a question that should be directed to the Prime Minister. Mr. Snell himself was only administering the Act. The answer seemed to be that the companies would get money from the association with only a 20 per cent, guarantee to lend to farmers, whereas if they lent on their own they would have to guarantee up to 100 per cent.

Mr. A. J. Sinclair (Te Awamutu) asked how would an association operate formed from dairy company suppliers comprising several hundred in number and working over a wide territory.

Mr. Snell : Any twenty farmers can form themselves into an association, and there is no limitation on territory. It is largely a matter of convenience to have the farmers comprising the association living adjacent. Mr. W. McLachlan pointed out that dairy companies often lent on the man and advanced up to 80 per cent, on his securities. In his opinion this was a far better idea than the rural credit scheme, which kept the security within such high limits.

Mr. Snell stated that as well as considering the interests of farmers the Legislature had to consider the investors who provided the finance. If the scheme was to prove successful it must be run on sound lines and create a feeling of confidence among investors. Mr. Darrall said the scheme appealed to him as being sound but it should be dissociated from the dairy companies if the 20 per cent, guarantee was insisted upon. Mr. E. McGregor pointed out a defect in the Act. A weak man might

join an association and be refused a loan. He would be involved to the extent of £25 in shares, and in the event of the scheme proving unsuccessful he would lose his £25.

Mr. Snell said the man could withdraw provided his withdrawal did not reduce the number in the association to below 20. The objection would relate only to the original 20 signatories of the articles of memorandum. The point was not definitely clear in the Act, but he felt sure that it was not intended to deprive of his £25 a man who was unsuccessful in securing a loan. He would investigate the position on his return to Wellington. Apropos the matter of companies’ guarantee Mr. Sinclair said he had taken the liberty of circularising 24 dairy companies in the Waikato with the object of a representative meeting discussing the position fully with Mr. Snell or a responsible officer.

Mr. Snell said the idea was an excellent one and if adopted it should let more daylight on to the matter. Mr. S. Ferguson moved that a committee be formed with a view to determining the best method by which the Rural Intermediate Credit Act can be worked to the fullest advantage to the farmers of the Morrinsville district.

Mr. J. B. Thomas, in seconding, expressed approval of the legislation. The chairman (Mr. J. Allen) opposed the motion on the grounds that there was no justification for delay. He felt convinced that the scheme was sound and would be of great use to farmers in the district. Mr. McLachlan urged against “ rushing in.” It would be wise to fully consider the matter before taking any action. Mr. A. Walker supported this view. Mr. J. L. Faulkner said farmers had had ample time to consider the matter, it having been explained previously, and it was unlikely that a meeting as large as the present one would again be secured. He moved an amendment that an asso-

ciation be formed in Morrinsville. jj Mr. G. Pirrit seconded. The amendment was lost by votes. lai^ The resolution was then put carried. | The following committee was ap« pointed : Messrs. S. Ferguson, At Walker, W. Darrall, E. C. N. Robin, son, J. B. Thomas, F. W. Seifert, J, L. Faulkner, E. McGregor and J. M. Allen. |

A very hearty vote of thanks ttf Mr. Snell for his able address was carried by acclamation. The chair*« man said the farmers in the Morrinsx ville district felt themselves honoured in that the Commissioner had seen' fit to sent Mr. Snell specially front Wellington to explain the working o£ the Act. ij

Mr. Snell said it had been a great pleasure to him. He had learnt a lot at the meeting and had been privii leged to see the practical side and hear exactly the farmers’ views, There were some matters raised that would require consideration, but did not think they were insuperable, A hearty vote of thanks wafl passed to the chairman. jßt