RURAL CREDITS SYSTEM.

Shannon News, 19 November 1929, Page 2

RURAL CREDITS SYSTEM.

GROWING BUSINESS IN HOROWHENUA DISTRICT. Very satisfactory progress was reported at the first annual meeting of the llorowlienua Rural Intermediate Credits Co-operative Association, held in the Whakatane Club-room on Tues day afternoon. In the unavoidable absence of the chairman (Mr R. G. Wall, of Kuku), Mr S. A. Broadbelt presided. Among those present were Mr R. J. Law (Shannon) and Mr J. H. Taylor (Levin), who were largely iustru mental in the establishing of the Association, Mr Muirhead (acting District Supervisor, Palmerston North), and Mr G. W. Wilson (District Officer, Levin). e ANNUAL REPORT.

The year’s operations were described in the follownig report, which wa« adopted: — “Your Directors have much pleasure in submitting the following report to the shareholders of the Horowhenua Co-operative Rural Intermediate Credit Association, Limited, for the year ended 31st October, 1929:—The Association, with the assistance of a number of well-known farmers in this district, was duly incorporated as per N.Z. Gazette No. 82 published on Ist November, 1925, and the statutory meeting ■was held on 13th November, 1928. After the formal business of the Association Avas completed and meetings of Directors called to consider applications, onlv two applications Avere received and dealt Avitli prior to the Christmas holidays. “The Association reneAved its meetings on qth February, and, from and including that date, 19 meetings of the Board of Directors have been held, making 22 meetings during the year. Since its inception, 29 applications which Avere successful, AA r ere dealt with, amounting to a total of £10,430, of which one loan of £250 granted has been held over by applicant and the moneys not applied for. “The difference betAveen the aboAm nett amount £IO,IBO and the amount due as advances to members, is explained by the fact that several balances of loans were held up pending the completion of certain conditions re the expenditure of the loan moneys, and to actual repayments of principal by borroAvers. The difference in the balancesheet betAveen advances to members and acWances by the R.I.C. Board, is explained by the fact that interest payments, together Ayith instalments ot principal, are paid immediately they are received to the R.I.C. Board Account, the Association only Avorking on a very small credit balance. “In conclusion AA r e Avould state that the result of the first year ’s operations is A T c-ry gratifying, and the extent. to which the resources of the Association have been utilised gives positive proof that the establishment of the system of rural intermediate credits lias fulfilled a long-felt Avant amongst certain members of the farming community of Noav Zealand. We have no hesitation in stating that, as the benefits of the scheme become more AAddely known, its usefulness Avill still groAV further as a factor tOAvards developing the farming industry of this district.” FINANCIAL STATEMENT.

The balance-sheet, which was also adopted, slioAved in the profit and loss account an income of £199 Is 7d, the principal item being £174 15s 5d for interest on advances to members. The expenditure amounted to £195 9s Id, leaving a nett profit (transferred to the appropriation account) of £3 12s 6d. The main expense Avas interest totalling £157 10s Id on advances by the Board to the Association. The statement of assets and liabilities shoAved the former to be £8225, including advances to members £7991 3s 4d, accrued interest on investments £75 11s 6d, investment pf paid-up capital in Savings Bank £54 3s, preliminary expenses balance £ls 4s, cash balance £B2 16s 6d. The liabilities amounted to £8221 7s 6d, lea\ r ing a balance of £3 12s 6d to profit and loss account, The chief liability Avas £7956 11s lid for advances by the Board. The subscribed capital Avas £1503 in £1 shares, the paid-up capital being £75 3s, leaving £1427 17s uncalled.

Election of directors. The Directors were elected as follows for the ensuing year: —Messrs R. G. Wall (Ohau), S. A. Broadbelt (Ilia kara), R. V. Brown (Weraroa), R. JLaw (Shannon), and G. W. Wilson (representing the District Supervisor). LAPSE OF TIME AFTER APPLICATION. In reply to Mr Taylor, who sought information as to the time that should elapse between an application being put in and a loan granted, the actingchairman said that the interval should not be more than two or three weeks, under ordinary circumstances. An application might have to be in the office for a' few days, awaiting a meeting of the directors. They had , then to consider the application and whether the security offered was sufficiently sound for a* valuation to be taken. Now that the Association had got into working order, the applications would go through more readily than the first few had done. The directors met every fortnight, and weekly if necessary. Sometimes delay of a loan was caused through the applicant (not supplying the full particulars. The secretary (Mr G. D. Hamilton) stated where a loan had been held up it was the applicant's fault.

METHODS OF ADVANCING MONEY

Mr Muirliead explained the different methods of advancing money. He stated that a farmer could make an application direct to the Board, in which case he had to get a guarantee from a substantial person as to one-fiftli of the loan. The Board had additional security in the case of loans through an Association; it had the collective security of the wholo Association. In that case the Association borrowed the money from the Board and lent it to the farmer. The Bpard’s debtor then was the Association, which had to

satisfy itself that it had adequate security. Another method of raising money Avas on the discounting of promissory notes, but this ivas only allowed to the extent of about £2OO, and the majority of farmers required more than that. Referring to the time which it took to deal Avith applications, Mr Muirhead said that with all netv schemes there Avas a certain amount of trouble at the start. New Zealand had “been one of the first countries to take up this systef of rural advances. It was only by getting the scheme under way and receiving a certain amount of criticism that it could be improved. The system Avas uoav functioning very well. The local Association had really good directors and a live secretary, and everything Avent through very promptly.* The speaker instanced a ease Avhere a man made his application on a Tuesday morning, the security Avas valued the same morning, the application Avas .dealt With by the Association ’s directors in the afternoon, the secretary sent the particulars to Palmerston in the e\ T ening, after AA r hicii the Supervisor had the case investigated, the accountant sent his report to the Board, the loan Avas granted on the Thursday, and the money was available on the Friday. ONE-TWENTIETH OF THE WHOLE

BUSINESS. Mr Law stated that the total amount that had been lent by the Avliole of the Associations in NeAV Zealand Avas between £210,000 and £211,000, and of that amount the local Association had lent one-twentieth, Avhich Avas a splendid record for the first year of business, and this Association Avas to be commended for the work it had put through. Its district Avas a large one, extending from Paekakariki at the southern end to the F-itzherbert bridge, near Palmerston, at the northern end. The acting-chairman said that Avhat Avas going to help the Association in" its business Avas the satisfied borrower; that Avas going to be one of the best, assets it could get. He thought that all its borro Avers, up to the present, were Avell satisfied.with the treatment they had received. ’ The central Board had informed this Association that the type of business it had put through in HoroAvhenua aa’us as sound as the business anywhere. . LOANS MAINLY FOR STOCK. The secretary stated that the majority of the loans granted by this Association liah been for the acquisition of stock. It was mentioned that loans had been made, not only to dairy farmers, but also to people Avho handled both sheep and dairy stock. Mr R. V. BroAvn remarked that, now that the limit of an advance had been increased to £2OOO, he thought it Avould be ample Ifor some of the farmers to lift their mortgages with, and that in time the Association Avould have applications from that class of borroAver. Mr Broadbelt stated that the directors Avould do everything in their poAV-t-r to extend the business,' for the sake of the local Association. WHY THE ASSOCIATION SHOULD BE SUPPORTED.

Mr Law said he A\ r ould like the supervisor to send Avhat business he could to the Association. In the speaker’s district several applications had gone direct to the Board. To put the applications through the Association Avas better business from the farmers’ point of vieAv; it AA r as just as cheap to the farmer, and the Association AV'anted the business and should have it. He would like it to go as a recommendation to the directorate that the Association do its best to get the business available in its district. Mr Muirhead said it Avas found that the Association loans suited liis office much better than did straight-out loans to applicants. The Associations had a far better control over the borrowers’ operations than the district office had. A hearty vote of thanks AA T as passed to the secretary for his efficient services during the year.

REASONS FOR INCREASED LIMIT An amendment to the Rural Intermediate Credit Act, increasing the maximum loan to farmers to £2OOO in each case, w'as agreed to by the House of Representatives recently. The Commissioner (Mr J. W. Macdonald) in the course, of his annual report, which was presented to Parliament said:—• “In estimating the prospects of future business, it must be borne in mind that many valuable points of contact have been established by the Board with the farming industry, and that from these a steadily increasing volume of business may be anticipated. Up to the present the scheme has been almost exclusively utilised by the dairying industry, the loans granted to other classes of farmers, such as sheep farmers ana grain-growers, being very limited in number and amount. This result is attributable to a number of special causes. “In the first plac*, the limit of £IOOO fixed under the existing legis lation, has proved inadequate for the requirements of sheep-farmers and grain-growers during the ‘dead' season of the year, when no revenue is being obtained and the expenses connected with farming operations, including the planting of crops, have to be met. In the second place, it would appear that the same facilities have not been at the disposal of the sheep-farmer* as was the case with the dairy-farmers in obtaining guarantees. of loans to enable the provisions of Part 111. of the Ru* ral Intermediate Credit Act to be util ised. The third cause is probably to’ be found in the fact that, whilst a fixed loan to be liquidated; over a period of years is usually suited to the requirements of the dairy-farmer, who is able to pay his interest and the im stalments of principal required by the Board by deductions from his milk cheques throughout the productive season, such a loan is.not equally applicable to the circumstances of the sheepfarmer, whose indebtedness steadily increases during 1 the major portion of the year, and is then rapidly liquidated either in, whole or in part during the production season."