SSSSU Others
The decrease in the agricultural banks' balances was financed by limiting short term invest-
ments, chiefly Treasury Bills and Cash Advances. In addition to this the Central Bank had to
provide operating finance for the central co-operatives. A heavy demand had been made upon the
Central Bank for this purpose and the relevant debit item increased by fl. 20 million. In part these
investments were likewise financed by limiting liquid funds and in part by realizing Government
stock, the amount outstanding being decreased by fl. 8 million.
The increase in debtors by over fl. 20 million referred to related as to fl. 5.5 million to current
accounts and as to over fl. 14 million to investment finance with a currency of ten to not more
(as an exception) than twenty years: Investments financed by the Central Bank during 1951 related
to dairy factories, marketing associations, co-operative meat packers and sugar mills. The central
co-operative buying and selling associations in particular called upon the Central Bank for higher
current account credits in consequence of a considerable increase in turnovers and prices. In finan-
cing co-operative buying and selling a large part is played by advance financing of fertilizer stocks
which largely has to be provided beforehand. This financing made such heavy demands upon the
Central Bank that it was decided to counteract the investment finance of these central trading
bodies, which was originally also provided by the Central Bank, by means of debenture issues.
Besides this we paid considerable attention to the capital position of businesses obtaining
finance in the light of their increasing requirements of finance. In many cases liability arrangements
were augmented. This is not sufficiënt however: self-financing must be applied on a greater scale.
Under present fiscal conditions the obvious but not necessarily ideal solution is for the co-opera-
tive undertakings to introducé a so-called members tied debt account, in which subsequent pay-
ments are locked up and bear interest for a specific period for the benefit of the members. With
properly regulated members' liability, self-financing on members' debt account can be regarded as
a suitable capital construction for farmers' and market gardeners' co-operatives, which will have
to be adopted on a greater scale under the present conditions of constantly increasing requirements
for finance.
We also believe we should draw attention to another feature closely related to the financing
problems just referred to, viz. the growth of co-operative undertakings into medium and large-sized
enterprises. We do not feel that this development is being properly allowed for in all cases, i.e. the
demands made upon an up-to-date large-scale business. Working co-operatives undergoing such
a development will do well to add specialists either to their business managements of their com-
mittees in good time, who will be able to give advice on modern business organisation and busi
ness administration. A rapid response to economie conditions is necessary in order to be assured
of lasting earning capacity. For this purpose periodical internal economie and business reporting
at short notice is indispensable; some working co-operatives are deficiënt in these respects.
30-r
6o--
70--
6o-~
5o--
4o--
3o--
20
17
DEVELOPMENT OF THE ITEM "DEBTORS" AT THE CENTRAL BANK
(fl. million)
Currents Accounts
1939
1946
1947
1948
1949
1950
1951
The Central Bank's Profit and Loss Account bears evidence of the bitter fruits of the low in
terest policy. This had disastrous effects on our Central Bank's investment business which can be
looked upon as an extension of the agricultural banks' saving business. The Central Bank's credit
business bore the burden of the credit restriction measures. Out of what is left the fiscus takes
over 50%. At last then we are experiencing the effects of solvency and liquidity control regulated
by law. We consider it high time that the reorientation of financial and fiscal policy which we ad-
vocated early in this report should be extended to the excessive burdens which the business of the
Central Bank has to bear.
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