TIGHTENED STRINGS

Dominion, Volume 13, Issue 230, 23 June 1920, Page 7

TIGHTENED STRINGS

DAIRY COMPANIES' FINANCE. By Telegraph.—Special Reporter.; Palmerston North, June 22. A complaint that the financial institutions of New Zealand had lately tightened up the strings was made -by tin chairman of'the National Dairy Association at Palmereton North to-day. Mr. Morton said that the banks had altered the conditions on which advances would be made to dairy companies and had imposed new. and stringent conditions. Theso were going, to havo n 6omewhat serious and curtailing effect on tho development of the dairying industry. Tho new conditions would mako it very difficult, if not impossible, for small communities in the backblocks to erect factories. He quoted a circular the association, had received from the' associated banks on the matter. Ascording to this, any new dairy factory company being formed, or any existing; company requiring further accommodation in connection ivith its land, build-

ing, and equipment, must , at-tho outset; put up 25 per cent, in cash. More a Dank will make an advance. The following provisions in regard to subscribed capital, depreciation • and annual reductions were blbo sot'out:—'

"Subscribed Capital—Capital. to be subscribed to the extent of at least two-

thirds of the amount of the advance asked from the bank and that this proportion be maintained by the issue of further shares if- the- bank advance should subsequently be increased. "Extent of Depreciation— Certain amounts written off: for depreciation to be, applied in permanent reduction of overdraft. "' ' ''

"Annual Reductions—Thfit so.long as the company 'is indebted to. bank there should be withheld froni distribution to the suppliers at least one ponny per lb. of butter-fat supplied; this amount to be either appliod in. payment of the supplier's liability for unpaid capital, or written-off . the" rcompany's assets, or credited to thck reserve fund, or some internal account:' Thus if one farthing per pound is held "batik monthly from the milk money and-- credited, to the supplier's share accounts, threefarthings per pound is to be held back before payment of a bonus and dealt with as mentioned."

I "That all advances;be secured by the joint and several guarantees of the sup-: pliers and by security over all the assots of the company. "That in'the.case of existing " companies which are rearranging ' their capital, or reconstructing, they 1)0 required to do so on a basis not less adequate than that laid down for ifcvr companies." Commenting on this the chairman said that seeing the State had a large Interest In the largest Dominion institution, the producers of the country should receive better treatment than: they did at the hands of the associated banks. '