INTEREST ON OVERDRAFT.

Poverty Bay Herald, Volume LIII, Issue 16340, 14 May 1927, Page 16

INTEREST ON OVERDRAFT.

(To the Editor of the Herald.)

Sir,—lt is impossible for any thinking person to blind himself to the fact that New Zealand in general and farmers in particular are not only passing through a very nard time, hut also that the prospect is Jar from bright. This is borne out by the statements made recently by various Government Ministers. „

In your leader of 12th inst. you gave the gist of the recent address of the Hon. Downie Stewart, Minister of Finance, at Feilding, but in it he apparently found it advisable to ignore the increase in New Zealand of overdraft interest recently made by the banks operating m New Zealand/ I am aware that by banking law, practice and precedent, the banks may be able to justify the course they have adopted, but on moral grounds they are quite unable to do so. Many years ago the Government came to the rescue of the Bank of New Zealand, and at the outbreak of war the Government guaranteed, i.e., the people of New Zealand guaranteed, the note issue of the banks to enable them to carry on and make huge profits for their shareholders. The Bank of New Zealand, in which the people are interested through the shares held by the Government, has on its board of directors two appointees of the Government and the supporters of the present banks continually refer to it as being tantamount to a State Bank. Don’t yon think that the Government,' through the Bank of New Zealand, should have some control over this iniquitous increase in the overdraft rate of interest at thq present time, when everyone has as much as they can do to carry on? I am certain that if something is not done by the Government in the matter it will" not receive the same support at the next elections. I cannot help feeling also that the present financial straits in which the country is placed is somewhat due to the extravagance of the Government and of local bodies in the expenditure of public moneys and the diversion of funds for this purpose.

The present Government poses as being sympathetic to the farmer, but I have heard it remarked many times since the notification of the increase appeared that unless something is done to relieve the farmer, the present Government majority at tho next election will ho considerably reduced. I think farmers throughout. New Zealand should hold meetings and publicly voice their protests against the Government. A very practical farmer states that 27s 6d per acre gross is a fair return over an average of years from a pro oerty carrying, say. one sheep and a half, comprising tho usual proportion of breeding ewes and dry sheep, sav one ewe and half a dry sheep. Say the capital value is £l2 per acre, tDo difference of a half per cent, would mean 1 s 2d per acre. The ordinary farmer does not appreciate what a difference a half per cent, makes. The great number knows that if he is leasing land on n basis of 5 per cent on £ll2 per acre lie is paying 12s per acen rent, lint does not realise that on a 61 tier rent, lias's his rent would he Ids 7d, and on a 7 per cent, bads 16s °d. 0,. a difference of 1s 2d per acre for tlie increase of a half -per cent. T think- tmne's with this ’nformnt'no v ; ’l realise what a "rent difference the h n, f per rent, makes on the capital value of their property. —T am, etc. ' ECONOMIST.