TOO MUCH CREDIT.

Auckland Star, Volume LVII, Issue 305, 24 December 1926, Page 7

TOO MUCH CREDIT.

CAUSE OF BANKRUPTCIES 179 FAILURES THIS TEAR. ALL CLASSES AFFECTED. No fewer than 179 persons, of many trades and callings, ranging from labourers to picture show proprietors, have filed in bankruptcy in the Auckland province during the year 1926. Last year bankruptcies totalled 162, and, in •1924, 178. On the figures, it would appear that there has been more depression in trade than in any year since the outbreak of the Great War. The fact that the word "slump" appears less frequently in the newspapers than it did in 1920 and 1921, means little. In plain language, things have been 'bad this year, mafnly owing to the unfavourable balance "in exports and imports. People generally have been too prone to live on credit. In a great number of bankruptcies which have been investigated in Auckland, it has been found that motor cars —disappearing assets at the best — bought on the time-payment eysteni have been worn out long before the final instalment was due. Such a car, shown on the statement as an aseet, would seldom produce an equity. Motor cars were not the only things which some of ~ those who failed bought in haste and repented of in instalments. From the reeults of investigations, it would seem that a large number of people are content to buy almcet anything on the periodic payment plan, without thought of their ability to discharge their obligations. Over-valued Farms. Thirty-seven farmers have failed during the year. This is a larger figure by one than that recorded last year. In 1924 there were 41 bankruptcies among farmers in the district. Generally failures were attributed to the same old cause —too much had been paid for the land. One property in the Bay of. Plenty actually resulted in three sue- . ceeeive bankruptcies! Investigation showed that there wae no equity in the majority of properties on which farmers who had filed had been struggling te make ends meet. In one case, a farmer was asked for a valuation of a neighbouring block in which he was interested, and it turned out to be worth less than, the amount of the mortgages by £10 an acre! Another instance of the impossible burdens which some folk on the land have shouldered was afforded when a mortgagee elected to clear the title of a property, although there were no assets, and to prove as an unsecured creditor. The case was thoroughly investigated, • and it was found that there was no hope of making a success of the proposition. A man would have required a bonue to work the place. There have been instances where farmers have taken their places back from purchasers, and have endeavoured to work them on the same old terms, only to meet with failure. From this it would not appear that there is much hope of immediate diminution in the numbeT of bankruptcies among those on email farms. '"Tinker, Tailor, Soldier, Sailor." For several years past the Official Assignee has issued warnings concerning the over-developed tendency to purchase recklessly on credit. To quote the Deputy Official Assignee: "The position seems to be growing steadily worse in this respect, rather than better. People do not appear to be sufficiently strong ito resist the many temptations to buy i anything and everything on time payment." Failure to make a success of undertakings was not common to one class, as the official list shows. Among those who finally went to the expense of filing their schedule were three clerks and accountants, two drapers, two furniture manufacturers, two gumdiggers, two garage proprietors, two hotelkeepers, six land agents, two manufacturers, three motor bus proprietors, six motor drivers, four mechanics, two painters, two plumbers, five bakers, two butchers, four carpenters, five confectioners, and two busmen. A comprehensive list. Add to it a company manager, four contractors, a barman, a caretaker, a blacksmith, a civil servant, a horse-trainer, a miner, a mariner, a milliner, a racing club handicapper, a restaurant proprietor, a sharebroker, a tramway man, and a wine merchant. Almost as many callings as one would find in a directory. Nor is the list complete with these, for two tobacconists failed to sell sufficient tobacco to keep the wolf from the door, the saddlery trade yielded two victims, and two sawmillers and two sharemilkers had their affairs investigated. Seven storekeepers kept shop with disastrous results, and twenty who styled themselves labourers failed to fully satisfy their creditors' demands. Speculation Cause of Builders' Failures. Speculation proved the undoing of several builders. Two years ago seven builders failed, while there were ten last year and twelve this. Here, again, the impossibility of fretting rid of equities, in both town and country, played its part in several instances where builders went to the wall. Gloomy as these figures are, official returns show that the increase in bankruptcies is not so large proportionately in Auckland as in some other districts. The melancholy fact is, however, that, following a hard winter, there have been 20 bankruptcies in November and 15 in December, a greater number than those recorded in previous years. The situation was reviewed to-day by Mr. G. N. Morris, who has been temporarily appointed to the position of Official Assignee at Auckland, following on the retirement of Mr. W. S. Fisher, after fifteen years in the position. All things considered, there is no immediate prospect of a material improvement, he said. The fact that there were so many failures was caused mainly by the overvaluation of properties, the alarming tendency to run businesses and households on an insecure and unwarranted credit basis, and. fundamentally, by the excess of imports over exports. Mr. Morris said he was glad to see that merchants were becoming cautious, and that efforts were being made to reduce importations on an extensive scale. That the position with regard to the excess of imports was improving was demonstrated by the fact tiiat, according to authoritative figures recently published, the trade balance, though still unfavc-ie- - ablo, was £2,500,000 better for the year ended September than for the year ended ■Tune last. Mr. Morris explained that tne figures regarding bankruptcies given above do not refer only to Auckland. The district in which the 179 bankruptcies occurred extends from Dargaville and Warkworth. in the North, to Tauranjra and the Bay of Plenty. Tt is practically the whole *of tlie Auckland province, with the exception of a small area in t.ie North, and the area served by the Deputy-Official Assignee at Hamilton. J