PROVISION OF BORROWING FACILITIES. 



4G3 



I have already explained that, in order that these operations 

 should be properly conducted, it is necessary to employ a somewhat 

 expensive agency. I am convinced that there could be no greater 

 mistake than to employ very cheap and, therefore untrustworthy 

 agents. I do not think that 6 per cent., including bad debts, can be 

 held to be more than a reasonable profit for the Bank. Moreover 

 I greatly doubt whether the fellaheen would confirm the statement 

 that they can, without the assistance of the Bank, obtain money at 

 so low a rate as 10 per cent. Even the loans, which the small 

 money-lenders make nominally at 10 per cent., generally involve 

 paying in reality interest at a far higher rate, the reason being that, 

 throughout the currency of the loan, full interest is charged on the 

 total sum originally advanced. No allowance is made for a reduction of 

 interest on account of the annual repayments of portions of the 

 capital. I give an illustration of the two proceedings, riz. t that 

 adopted by the Bank, and that very commonly adopted by the 

 usurers. Suppose the Bank to advance E. 100 for five years at 10 

 per cent., the instalments due to the Bank would be as follows : 



The borrower would thus, in the course of five years, pay E. 30 

 for the use of the money advanced to him. 



Under the alternative procedure, he would pa} r five equal instal- 

 ments of E. 30, making in all E. 150, of which E. 50 would 

 be on account of interest. 



In point of fact, to the fellaheen the Bank's charge of E. 30 

 is equivalent to a loan contracted from the usurer at (5 per cent., and 

 I do not think that money is ever obtained at so low a rate as this. 



