MORATORIUM IS CONDEMNED.

Press, Volume LXVI, Issue 20103, 5 December 1930, Page 15

MORATORIUM IS CONDEMNED.

DANGER TO FARMERS. INVESTORS' POINT OF VIEW CHAMBER OF COMMERCE DISCUSSION. After strongly condemning the proposals for a moratorium in New Zealand, members of the Council of the Canterbury Chamber of Commerce decided last evening to urge upon the Government that before taking any action it should hear the commercial, banking, and legal communities of the Dominion. It was stated that while a moratorium might give temporary relief to farmers it would ultimately plunge their industry into bankruptcy. In giving even temporary relief, however, it would bring hardship to many investors who depended for sustenance upon the interest from their capital investments. Urging that all the proposals were to be deprecated, members said that even the threat of a moratorium was harming New Zealand's credit.

The question was first brought up in committee by Mr W. Bottrell. Mr C. P. Agar urged that the Council should be enabled to express its opinions in open meeting. The Council accordingly decided to go out of committee. Mr Norton Francis said that the question of moratoriums was greatly misunderstood. Many people wished to have rcimposed the moratorium that was put on during the last slump. That moratorium prevented the calling-up of mortgages until a due date fixed by the Government. At present the trouble of the farmers was not that overdue loans might be called up, but that they had not the money to pay interest on those mortgages during the past year.

The Last Moratorium. Last time the moratorium did no good, since it became the tool of unscrupulous men who through the law were able to tie up their debts. His experience at the present timo was that mortgagees were meeting farmers most fairly on the payment of principal on a due date. There were many mortgagees to-day who were not entirely dependent on the interest and who were therefore capitalising it and letting the farmers go on without payment. But, unfortunately, a great amount of capital invested in farming property in Canterbury was the whole source of wealth of widows and children. On the interest from that capital they depended for their sustenance. If it was advisable to have a moratorium preventing interest rates from being paid, what was going to happen to these people who depended for sustenance on their interest! While they wanted to help the farmer, they must find some means of providing for these people. _ It would be of great assistance, continued Mr Francis, if other members would apeak on the question. Many farmers were in the position that if interest could be provided for, many oftheir difficulties would be overcome.

"As a Council," he added, "I do not think we should favour the reimposition of a moratorium. One reason why farming mortgages are so unpopular today is because of the last moratorium. Because of that moratorium, money was taken out of property and put in Government and banking investments and sent to Australia/ That noney is just beginning to come back for investment on the land, and a moratorium at the present time would be very harmful."

Effect on Freehold Mortgages. Mr C. H. Hewlett pointed out that in pre-war days mortgages on freehold property were looked upon as gilt-edged and ranked equally with Government loans. To-day, purely because of the last moratorium, the interest rate on farm lands was at least another half per cent. If another moratorium were enforced it would mean a higher rate for all future loans, and money would be driven away from that kind of investment. The money had gradually been coming Back again, and now the very threat of a moratorium would be suffi ient to hold it up. Speaking as director of a company which advanced a good many small sums, he could say that in many cases mortgages were the whole sources of income for the investors. Another moratorium, he emphasised, would be a most evil thing. The Dominion had not yet recovered from the effects of the last one.

Danger of Bankruptcy. j Mr C. P. Agar suggested that the views of the commercial community should be stated to the Government, either through the Canterbury Chamber or through the Associated Chambers, before any decision was reached. During the past week he had met many farmers who believed that the salvation of the farming industry lay in a moratorium. They believed that a suspension of the calling-up of mortgages would be a great benefit. But what would be the effect t They would simply be saying that the productivity of the land had been reduced by falling prices, and they would simply be asking the Government to peg up the value of tl..u land, so that when the moratorium was removed farmers would be in even greater difficulty than they were to-day. Under a moratorium, if the mortgages and interest were not called up they would have to go on to the yield of the land. If the productivity was not there in the future what would be the position of the Dominion when the moratorium was lifted! The primary producers would find themselves in a state of bankruptcy. To impose a moratorium was the worst thing any Government could do. At the end of the story the farmers would simply have to walk off and the mortgagees could not get their money. If the Government stood aside and allowed the position to be faced by the owner and the mortgagee, the whole problem might be settled. But by such artificial means as a moratorium it could not be settled. Mr Agar moved that the Government be urged to hear the opinions of the commercial community before coming to any decision. Damage to Credit. Mr A. C. Bretherton thought it was high time that the business men took a hand in the question. A disservice was being done to the country by the people who talked of moratoriums; they were damaging credit both publicly and privately. It looked as if the community wanted to go into hospital and malinger, instead of getting down to the problem. If they allowed such proposals to go unchallenged they were Btopping millions of pounds from coming to the country for closer settlement. Mr Bretherton maintained that the present was a good time for farming investment. Wool was so cheap that anyone investing in it had a good