A DOUBTFUL MEASURE

Evening Post, Volume CXI, Issue 66, 19 March 1931, Page 12

A DOUBTFUL MEASURE

When a deputation of producers, during the Prime Minister's absence, asked for a moratorium of mortgages Mr. Forbes perceived how damaging such a course would be, and gave an assurance that it would not be followed. He has now, against his earlier judgment, made a.partial surrender. Possibly h* has done so as an answer to the Labour accusation that he' proposes to interfere with wages but will not touch mortgages. We are doubtful if the step will prove as beneficial to borrowers as: some advocates believe. It will certainly put a check upon the unreasonable mortgagee; but we do not think the. majority of mortgagees are inclined to be unreasonable. The Prime Minister admitted yesterday that a great many were meeting mortgagors very liberally. The harmful effect of the measure will be in the setback Jt will give to the reestablishment of confidence in the mortgage as an investment. The war-time •moratorium which took so long to lift certainly had this effect, and rural finance has been long in recovering. To be sure, the new mea-J sure is more restricted in its scope, and its harmful results should therefore be less; but its benefits will be at most temporary and confined to exceptional cases. The relief of the ! great body of mortgagors can be secured only by replenishing the funds available for investment and restoring confidence in rural security. As we have said previously, the Government can make its most direct ccr.lribif.ion by keeping off the local

loan market as far as possible. If the Government's demands for loans are so insistent that 5^ per cent, or an even higher rate is set as the return on gilt-edged stocks, that rate controls the market. When Government and local authorities borrow less the interest rate is naturally eased for other loan-seekers.