FINANCING PRODUCERS.

Waipa Post, Volume 32, Issue 1788, 29 July 1926, Page 5

FINANCING PRODUCERS.

Sir —Would you alloAV me ispace in your columns to criticise a statement reported in the press to have been m'ade by 'the chairman of directors of tine Bank of-'New 'Zealand, in .regard to -finance for producers. The statement concluded thus: “ In entering into this new activity avb believe and 'trust that Ave are -serving the very best interests of the country.” Well, sir, I consider that statement very Avide of the mark. The new activity is, I understand, the issuing of new capital with a fixed dividend of 7| per cent, quite a rosy investment for all shareholders, and the Government, I understand, has a right to one third. This neAV capital is to be let out to the producer at 6 per cent. Is Mr Coates going to allow -the Government to lend its share to the bank at 11 per cent? When the- Government borroAvs money ;to-day at 2 per cent less, the same money to be let out ■to 'the producer at 6 per cent, thereby making a goo'd margin of profit indirectly out of the producer. Why cannot this new capital be raised at 6 1 ; per cent and let out to the producer at 5 per cent? And if 'the directors mean wlia't they Isay when they say they are acting “ in the very best interests of the country,” they certainly would be if they could supply money for the producer at 5 per cent. _ The biggest obstacle the primary producer has to contend Avith to-day -i s dear money, -and are not the directors simply helping to keep np the price of money and purely acting in the interests of the shareholders in raising money at -this high rate of interest? They know very Ave-ll that the pickings from neAv business Avould more than justify their letting It out at the loAver rate anti the shareholders Av-ouild get the extra profit from their previouslyheld shares—l am, etc., SUBSCRIBER.