MORATORIUM.

Press, Volume LIV, Issue 16405, 27 December 1918, Page 7

MORATORIUM.

QUESTION OF ITS REMOVAL,

The removal of tho restrictions imposed by the Mortgages Extension Act, 1914, appears, from enquiries made in Auckland, to be desired generally by business men (says tho "Herald"). Those who suggest this argue that the Act is purely a war measure, and that to allow it to remain it? force any longer than is absolutely nocessary will give borrowers unfair advantages. "I seo no reason why mortgagors / should not be given, say, six months' ! notice of the Government's intention to remove the restrictions of the Act," said one local authority on finance. " "That would give the people affected ample time to make thoir arrangements. I don't see why there should bo any fear that the calling in of these mortgages would have any serious effect on the money market, for from what I know of the financial position in New Zealand, I foel certain that tnero ample money to meot any fresh demands. One factor that will keep che money market steady is the indemnity which we seom certain to secure from Germany. That is tho key to the financial position of the Dominion for years to come, for by that means we will be able to recover the amount expended on the war. Supposing this indemnity, which Germany is well able to pay. is spread over a period of 50 years, we will be recoiving an amount as interest and . sinking fund that will entirely alter the conditions of our finances. For instance. on an indomitv of £75,000.000, we would be receiving possibly £3,250,000 annually, which would mean that instead of the people of the country having to nay lienvv income taxes, Germany would be bearing tho burden. It certainly seems to mo that no harm can result from tho removal of the moratorium. It would do no injustice and would have no harmful effect on the local money markot." MONEY AWAITING INVESTMENT. A similar opinion was expressed bv Mr C. J. Parr, M.P. "To my mind," said Mr Pair, "it would be in tho bo3t interests of tho whole community to free the investment of mouey in mortgages from tiie present restrictions imposed by th« moratorium. Mortgagees and investors will not invest largely while tho moratorium exists—quite naturally so, because thoir securitv and remedies have been most seriously impaired by the Act. No injustice would reßult from its repeal, provideu nix months', or even only four months', aotice was given." Mr Pair adued mat there was at present more money lying comparatively idle than ever before, and that, of his own knowldge no knew that large loan institutions had boen most anxious during the last two years to obtain a market for their funds, but, ■ owing to the moratorium, had taken ap war bonds. No doubt this had ueon to the advantage of the State, but it would have been far better for the Auckland district, for instance, if these hundreds of thousands had boen utilised as they would have been in normal times, by / the farmers and producers in developing the province. He know that private investors had some hundreds of thousands of pounds lying at call with local bodies, companies, and private firms, waiting suitable mortgage investments.

NO FEAR OF INCREASED RATES. "To my mind there is no risk of an increase in thß rate of interest should the moratorium bo lifted," said Air Parr, "for money is abundant at prowar rates, with no prospect of an early jy,vTiße. Under present conditions, howJ ever, people are disinclined to lend money on farms and other securities in view of the fact that their remedies, in case of need, if not taken altogether, are seriously prejudiced by the restrictions of the Moratorium Act." Agreement with the views quoted W{W expressed by. Mr J, F. Buddie, . chairman of directors of tho Auckland Co-operative Terminating Building So- , oiety, who, however, pointed out that the Act did not affect the operations .of his society to any great extent. Other business men also agreed with the opinions expressed. The idea that, 'nBtead of the moratorium being lifted completely at the one date, the restrictions should be romoved gradually, was scouted by those interviewed, the opinion being expressed that this was scarcely practicable. "If, for instance," said one. "you were to give the man whose mortgage dated from August, 1914, one month's notice, and so on accordine to the dates of the mortgages, the thing would go on for years. Much tho best way is to give a few months' notice to all mortgagors aborted.' There need be no fear of the cffect." A FAR-REACHING ACT. The principal provision of the Act, which, came into lorce on August 14tii, 1914, is that, *o long us a sitae of war exists in Now Zealand and tor a period -not exceeding six mouths after tue war oeases, it siian not bo Jatviul for a mortgagee, Witnout the leave of ti»e supreme Court, (a) to call up or dumana payment from any mortgagor of tiio principal sum or any part of. tno principal sum secured by mortgagej (b) to oxercise any power of sale or en wji into possession conferred by any mortgage or by statute; (c) to commence any action or proceeding for breach of any covenant, agreement, or condition, expressed or implied, in any mortgage other than a covenant, agreement, or condition for the payment of interest; (d) to commence any action or proceeding for any rate of interest higlier than tho reduced' rate —if any—provided in the mortgage in the case of punctual payment. In September, 1914, an important amendment was made to tho Act. Under this amendment it was provided that "nothing in the principal Act shall apply to any mortgage or to any agreement for sale and purchaso. or to any lease containing an option or compulsory purchasing clause, executed after th© commencement of the principal Act, if the mortgage, agreement, or 'ease contains a condition or covenant expressly excluding the provisions of the principal Act." This amendment, howover. was cancelled in the April session of this year, and the provisions of the principal Act were made to apply to all mortgages exocuted since the outbreak of war and during the currency of the present legislation.