14
Outstanding credits and advances at 31 st December 1951 totalled fl. 146.4 million as compared
with fl. 110.0 million at 31 st December 1950. Of this amount fl. 44.0 million represented credit on
current account as against a sum of fl. 102.4 million in fixed advances repayable by regular instal-
ments. Of the total fl. 78.5 million was advanced to individual farmers and market gardeners,
fl. 28.7 million to agricultural co-operatives and agricultural associations, the balance of fl. 39.2
million (26.8%) being amounts out for investment with persons outside agriculture and with muni-
cipalities and polder boards.
In the future we shall undoubtedly have to allow for an increased demand for working credit
and fixed advances from the agricultural banks. Increasing prices for operating expenditure, parti-
cular attention being called to the increasing use of synthetic manures and higher cattle food
prices. will lead to increased applications for working credit on current account. In addition to
this there is the necessity for executing all kinds of business improvements, while the pressure to
increase home fodder production is necessitating new investment which will give rise to new ap
plications for advances. During the year for instance various agricultural banks were already con-
cerned in financing so-called drying installations for drying grass and other products suitable for
animal food. Thanks to financing regulations, which included official participation with subsidies and
partial guarantees, the relevant agricultural banks were able to make available the necessary credits
and advances for installing this expensive equipment which has to be written off within a comparat-
ively short time and thus really lacks adequate earning capacity. The formation of agricultural imple-
meent co-operatives made further progress. Our affiliated agricultural banks are now concerned in
financing them in 200 cases. Finally in the North East Polder there was again a leasing of newly
issued farms, covering a total area of 7428 hectares. For working finance for these, which makes
heavy demands on the tenants, our agricultural bank established in the Polder was again called upon
with a partial guarantee by the State and by the North East Polder Fund created by the agricultural
organisation in co-operation with us.
Considerable attention was also paid to the traditional financing function of the agricultural
banks during the year with regard to local co-operative buying and selling. It is becoming increasingly
evident that the central co-operative trading institutions have their hands full financing stocks and
installations and cannot contemplate financing, in addition, the local activity of the farmers' unions or
co-operative buying and selling societies, apart from customary short-term suppliers' credit. The
local co-operatives are therefore being increasingly compelled to provide the necessary finance them-
selves and they can obtain this from the local agricultural banks provided their own capital position
or liability basis keeps pace with the increase in the credits and advances required. Fortunately
efforts are being made in all directions to bring about an increase in co-operative liability and it is
realised that in view of the vastly ncreased demands for finance the old liability arrangement is
inadequate.
All in all it is clear that the local agricultural banks are still faced with a heavy task of
financing. Also in rural capital transactions which closely affect the agricultural banks in con-
nection with land transfers by sale or inheritance demand for mortgage advances will have to be
taken into account if land prices are gradually increased, which seems inevitable. If this develop-
ment is considered in the light of the savings movement at the agricultural banks which in recent
years has continued to produce a negative balance, it will be clear that if the agricultural banks are
to be in a position shortly to meet demands for finance which will be made by agriculture and horticul-
ture, considerable reserve is now necessary in regard to advances for non-agricultural investment.
In this, the agricultural banks have a collective duty and responsibility towards agriculture and hor-
ticulture which must take precedence over considerations of a local nature aimed purely at greater
gain for the agricultural banks, with the preservation nevertheless of the possibility of maintaining
reasonable earning capacity.
Aware of its duty in this respect the Central Bank early in the year sent a number of directives
to local agricultural banks, the purpose of which was to restrict non-agricultural advances for in
vestment. In order to avoid a number of agricultural banks with comparatively limited scope for
investment in agriculture being adversely affected, it was at the same time decided to enable such
agricultural banks to participate in the financing of several central co-operative institutions which
had hitherto been carried out by the Central Bank entirely on its own account.
It should be added that the increase during the year in rates of interest charged by the agri
cultural banks as a result of the increase in the bank rate by De Nederlandse Bank and the in
creasing interest on capital had no noticeable influence in the way of mitigating the demand for
credits and advances. This fully conforms with the viewpoint given above that the increasing de
mand for credits and advances from the agricultural bank is in harmony with agricultural policy as
conducted by the authorities and is fully justified and even inevitable.
To conclude our review of the agricultural banks' operations during 1951 we refer to the
Consolidated Balance Sheet based on the affiliated agricultural banks' monthly return figures at
31st December 1951, which we have included after the Balance Sheet of the Central Bank.
THE CENTRAL BANK S OPERATIONS.
As last year the increase in outstanding credits and advances by the agricultural banks was
again partly financed by drawing upon balances at the Central Bank. Whereas these balances de-
creased during 1950 by fl. 24.5 million, the reduction in 1951 was fl. 18.4 million.
(guilders) 31 Dec. 1950 31 Dec. 1951
Deposit receipts348.609
Participation account3.110.000
Savings reserve account31.000
Deposits, 1 year's notice41.202.020 46.153.120
Deposits, 6 months' notice721.000 1.467.300
Current accounts413.286.132 385.595.839
455.159.152 436.705.868
As the statement shows a number of new forms of saving were introduced during the year.
The agricultural bank deposit receipt is an attractive form of saving for people who wish to set
aside a lump sum; upon payment of fl. 734 an account is opened upon which fl. 1,000 is repaid ten
years later. Interim repayment is also possible but the interest is then computed at a lower rate.
The savings reserve account is a form of tied saving, whereby investors are paid a higher rate of
interest, viz. 3%, if the balance is maintained until one of the events referred to in the rules oc-
curs. The Participation Account relates only to the position as between the Central Bank and certain
agricultural banks and has the purpose of enabling the latter to participate in Central Bank finan
cing so long as their own credit and advance business has not been developed.
During the year there was a general increase in interest on savings by the savings banks. The
Post Office Savings Bank increased its rate to 2.28%. In order to enable our agricultural banks to
adjust their interest on savings, the rate of interest on the agricultural banks' current accounts with the
Central Bank was likewise increased as from 1951 from 2.4% to 2.5%. For term deposits too the
Central Bank's interest rate was increased for 6 months deposits from 2.75% to 2.875% and for
one year deposits from 2.87% to 3%.
AFFILIATED AGRICULTURAL BANKS' BALANCES AT THE CENTRAL BANK
