1.—16.

[J. J. ESSON ; W. J. POLSON.

Mr. Eliott: In all probability this money will be raised in England or outside of New Zealand. I do not know whether it would be wise to make provision for a Government guarantee to carry the Board over should they find they are short of funds for the issue of the debentures. Colonel Esson : Well, the securities of the Board will always be available. The Chairman : Under the long-term scheme the money may not be wanted for twelve months but under this scheme the men will want their money almost as soon as their applications are in and the bonds sold. Right Hon. Mr. Coates : Well, is it all clear now in connection with the share capital ? The Chairman : That has been pretty fully explained. Mr. A. Hamilton : There was one matter which was referred to previously, and was in connection with the share capital. Many of these men will be hard up, and may not be able to find the share capital. Right Hon. Mr. Coates : Suppose a man wants £500 and applies for £550 because he has not the money for the deposit ? Colonel Esson : If he has credit behind him he will be all right. Mr. A. Hamilton : Most of these men will have the money from the stock and station agents now, and they will have to hand over the security ? The Chairman : They have to find a small percentage of the share capital, and it is a very small percentage. Mr. Poison : He does not buy the share capital until he gets the loan, and the loan provides the cash and the share capital. Mr. H. E. Holland : All he provides is a deposit which is easily arranged. Does he not pay his deposit before he gets the loan ? Mr. A. Hamilton : No. He has to reinvest the share capital at a cheaper rate of interest than he is paying for it. It is a wise-enough scheme, but it sounds foolish in some ways. He borrows at 6 per cent, but reinvests his own money at 5 per cent. A Member. —Yes, it would work out that way. Mr. A. Hamilton : That means that a man borrowing £1,000 has to find £100 himself. Mr. Poison: Yes. Mr. A. Hamilton : It is quite good from a security point of view, but it is creating a lot of work, this reinvesting of money. Mr. Poison: What do you suggest ? Mr. A. Hamilton : It is wise from a security point of view, but it is creating a lot of work. Supposing he cannot find the money ? Colonel Esson: He has to be solvent when he joins the association. Mr. Walter : If a small farmer applies for £1,000, can the Board let him have £900, and supply the £100 required in cash ? Colonel Esson: Yes. He would get £980. Mr. Walter: It might be difficult for him to find the £100. Colonel Esson: Yes. The Chairman : The point is whether the whole of that 10 per cent, is going to be called up, Could 20 per cent, of the share capital be called up, leaving the other liability as ordinary business ? Mr. Walter: His liability would be the £1,000 in any case. The Chairman : Oh, yes ; but his liability to the association is that 10 per cent. Mr. Walter : If the association went wrong they could call in all the capital ? Mr. Poison: Oh, yes. The Chairman : In Part II it states that twenty persons can form an association. What do you think about the twenty persons, Mr. Poison ? Do you agree with that ? Mr. Poison : Yes, I agree with that. Right Hon. Mr. Coates : I know of quite a number of localities where you could get ten, but perhaps you could not get twenty. Mr. Poison : We were afraid of making it too small. You might get ten people to put their heads together in a thing of this kind. We thought that twenty was safer than ten. Right Hon. Mr. Coates : It is definitely in my mind that twenty in many localities would not be workable. Mr. H. E. Holland : Is it not a fact that in almost any locality to-day you can easily get fifty settlers up against it in the matter of finance ? Mr. Forbes : I think quite sufficient will be found to go into it. The Chairman : We will now take the objects of the association, as set out in clause 43. Clause 43 reads, — " The principal object of an association incorporated under this Act shall be to procure loans for its shareholders from the Board, or from any bank or other approved financial institution, on the security of mortgages or other charges on land or chattels, or on approved personal security, for any of the following purposes, namely : — " (a) The clearing, fencing, draining, and general improvement of land in the occupation of the applicant: " (b) The erection of buildings on any such land." Now, is not the erection of buildings really a security of the mortgagee ? That does not belong to this part at all, unless we confine it to realizable stock, and it is not a liquid security in a sense. It is pretty difficult. Mr. Poison : As a matter of fact, it is. The Chairman : How can you realize a security that is part of a man's property ?

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