THE MORATORIUM

Evening Post, Volume CVII, Issue 145, 20 June 1924, Page 4

THE MORATORIUM

BANKER AGAINST EXTENSION,

Observing that the moratorium on mortgages would expire at the end of the year, Mr. William Watson, actingcWman of the .Bank,of New Zealand, said today that as the Act had now been m force for ten years-some of those years- the mest prosperous the Dominion had ever experienced—thereiore, logically, mortgagors who had, been sheltering under its' provisions should now be left to face their positions. New Zealand was the only country in the British Empire, if. not in the world; in which a moratorium on mortgages had been renewed from time to time for such a long period, so.that it cannot be said that mortgagors have not received a maximum of consideration. ■ The artificially high range oHand values, largely the result of the moratorium, prevented investment, by many possessing the capital and energy to further increase production. ... "

Many lenders on mortgage, had lost heavily from depreciation in values of their, securities j others had narrowly escaped loss after a period of meat anxiety, besides being so long deprived ot- their capital for other uses. These conditions had cansed lenders to look askance on mortgages as means of • investment except when large margins' of security and high rates of interest are ottered. -, ...

. "It. is in the best interests of the country that the mortgage on broad acres should again become a favourite form of investment," said Mr. Watson, "but it will not, if there is reason to1 fear that the contract between lender and borrower may be set aside by legislative interference with scant consideration for the lender.

Ihe Advances to Settlers Department of the Government has lent some ?£■ millions on farm lands during the twelve months ended 31st March. Much 6f this amount has no doubt been applied in clearance of mortgages affected by the moratorium, but a considerable sum must have been obtained- simply because the Department charges a lower rate than other lenders.'

"While on the one hand it is known that some mortgagors have taken advantage of'the, law to retain money for other purposes than paying ' off their overdue mortgages, it is inevitable that a number will have to surrender their properties, and there is but liC.j reason for the majority of them to hope that extra time would do more than postpone the evil day. It may be safely asserted t.iat, except in very few cases, the causes of failure are due to purchasing land at inflated .prices, acquiring more land than purchasers' capital Warranted, and incompetent farming. For such it -would certainly be against the interests of the country that further extension should take place. It may be ? however, that a very few cases merit consideration, and these might well be referred to the Supreme Court as is now done in some cases of arrears of interest, the Court io decide as to an equitable arrangement between the parties according to the special, circumstances." i