FALLING PRICES

Evening Post, Volume CXI, Issue 84, 10 April 1931, Page 9

FALLING PRICES

MORTGAGORS' PLIGHT

CRITICAL POSITION

BILL FOR ALLEVIATION

SANCTITY OF CONTRACT

The proposal of the Government to prevent mortgagors from harsh and unfair treatment at the hands of mortgagees was debated in the House of Representatives last night. It was generally agreed by all parlies that legislation on the lines of the Mortgagors Relief Bill was desirable, but it was also contended that the Bill would have to be amended before it would give equitable treatment to all parties. The debate on the second reading was proceeding when the House rose at midnight.

Moving the second reading, the Prime Minister (the Bight Hon. G. "W. Forbes) said that the Bill sought to enable mortgage contracts entered into prior to the slump to be protected. On the whole, he thought that mortgagees had shown that they were only too willing to afford assistance during the depression. A good deal of criticism had been directed against mortgagees and stock and station agents, and they had been called hard names, but when one saw -what had been done in. the majority of cases it was apparent that (hero had been fair and equitable treatment, on the whole. Mr. Forbes said he felt quite confident that wherever ji man had been doing his best to live up to the terms of his contract he was being met reasonably and even generously. It was said that in some cases stock and station agents had acted harshly, calling upon farmers to sell their stock when it was very low in value. The Prime Minister said he had had a good deal of experience in regard to stock and station agents, and he believed that the last thing they wished to do was to disturb the business relationships between themselves and farmers' who were trying to _do their job properly. He did not think there was a single stock and station agent in the country who, where a man ■was endeavouring to do his best, was not prepared to afford assistance. But there were all sorts of men, and there were cases in which action had had to bo taken. THE FARMER'S PLIGHT. The Prime Minister went on to stress the seriousness of the present position of the man on the land, and said he did not remember a worse time for the farmer, and particularly the sheep farmer. He did not think anyone who ■was dependent on sheepfarming for his income could say he had made anything but. a loss this year. Many farmers'felt a good'deal of anxiety as to •their financial position, and the Bill would give them a feeling of greater confidence and a. sense of stronger protection. The Bill was directed against those who would not look at mortgage contracts in. a reasonable light. The various commissioners of lands had been, made conciliation commissioners to act in disputes between mortgagors and mortgagees, and he believed a good deal of valuable work had been clone already in effecting settlements. The measure differed from tho Mortgages Extension Act of the war periodj in that it was only to be brought into operation by Proclamation. When it was passed the question of putting it into force at once would be considered by the Government. It was not proposed to interfere with mortgagees' rights to the same extent as previously. A mortgagee was not prevented from suing a mortgagor either for interest or principal, but he was prevented from taking steps against the property itself. It was left to the Court to decide and determine the rights of mortgagors and mortgagees, and to see that no injustice was done. The idea was, if possible, to keep the farmer on the land and maintain production, and that would be kept in mind by the Court. Mr. Forbes said ho believed a reasonable amount of protection would be given by the Bill. Those who sought to make use of the Court to establish an unfair, position so far as the mortgagor was concerned would find they would be unsuccessful, and the same would apply to mortgagees. All the cases would be dealt with on an equitable basis after full consideration of the facts. In ordinary conditions, the Government would not have thought of introducing such a Bill; it was only required because, of the exceptional circumstances.

Mr. C. E. Maemillan (Reform, Tauranga) said that farming was at such a very low ebb at the present time that it -would Hot pay the average mortgagee to take over a farm, from a mortgagor, bnfc there wero cases in which a mortgagee, who was a farmer, might be tempted to step in. However, the Bill would make the stook and station agents extreme]y careful about advancing, money on a stock mortgage, and some adjustment was required in this direction. Magistrates ought to be given power under the Bill to deal with sums up to £1000, in order to prevent delay. The whole object of the1 Bill should be to work not only on the present-day mortgagor and mortgagee, but on future lenders and borrowers, and by shortening the time of application, this factor could bo safeguarded. LABOUR VIEWPOINT. Mr. M. J. Savage (Labour, Auckland West) said that the Bill put the onus on the mortgagor, who had to go to the Supreme Court for redress. All realised the rights of mortgagees and the natural lights of investors when any attempt' Wm« wade to interfere with contracts, bu\, 'Jhey were face to face with economic conditions that could not tie brushed aside. The placing of the onus on the mortgagor to make the .first move involved him in considerable expense before he could get justice. In fact, this onus made the Bill scarcely worth the paper it was written on, and would result in hardship to a largo number of farmers. The measure did not provide the way out. If a mau was without money or credit what chance had he to make out a case before the Supreme Court? It would be far bettor to set up a special tribunal which was easy of access and which would includO' representatives of tho parties involved. "The Bill looks like the old game of giving the appearance of doing something without any intention of carrying it out," said Mr. Savage. The very fact that the average mortgagor was not able to approach the Supreme Court was sufficient to assuro that he would not get any relief. It had beon stated by the Prime Minister that the Bill would bo retrospective from 18th March, but it would havo been better to have fixed the date at Ist January. There had been much discussion over the provisions of the Bill, and in gome instances action had been taken by mortgagees already. Could any tribunal bo more practical than experts in tho different districts? After all, it was not a matter of law alone, and tho legal side could be safeguarded by the appointment of a legal man on the tribunal. It w<is regrcttablo that the Bill did not hold out much hope to the average mortgagor. A moratorium or any extension oC time was not a solution to the problem. They

had to face up to the fact that some people had paid too much, for their farms. It was not impossible to write down mortgages with the proviso that they should rise again in the evont^ of prices increasing once more. This would safeguard both mortgagor and mortgagee "A DETERRENT." Mr. C. A. Wilkinson (Independent, •Egmont) said the Bill would act as a deterrent to those who proposed to sell up the securities they held. At the same time he was agreeable that this should bo done. He was glad that the Bill would apply to the Crown as well aa anybody else. The limit of £500 should bo raised, as it seemed they wore using a very large hammer _to crack a very small nut. Everything 'that was possible to be done should be done to help the producer, and ho hoped tho State would act generously. If the Bill were dated back it would interfere vrfth a number of existing contracts. Mr. A. Hamilton (Eeform, Wallace) said it was unfortunate that they had to introduce such a Bill again, but m view of the abnormal conditions that could not be avoided. It was necessary that they should endeavour to re-ad-just existing conditions, and he agreed that the Bill was necessary. Mi\ Hamilton asked if the Bill would refer to workers as well as farmers. Mr. Forbes: "Yes, it will apply to everybody who has mortgages." Mr. Hamilton said he believed the Bill would have some good effect in keeping people on the land. He did not like the idea oi: people who were- in a financial difficulty being asked to go before a Court. He would prefer to see a tribunal of a business man and a farmer. Tho Supreme Court, ii necessary, could make the finding of the tribunal legally binding. Mr. W. X Barnard (Labour, Napior) said ho realised there was need for some action on the lines proposed. Ho did not think the guarantor of a mortgage- was sufficiently protected, and that some amendment was necessary, because there had been cases recently in which the mortgagee had sued the guarantor of a mortgage and Had taken judgment, and in each case the mortgagee had pursued his mortgagor by issuing bankruptcy proceedings. Ho thought there should be a right of appeal to the Supreme Court from the decision of a Magistrate. He regarded the Bill as a palliative measure, and he wondered if it was not possible to go more directly to the root of the whole trouble. He thought Parliament would soon have to face up to the main question. HARDSHIP TO FARMERS. Tho Minister of Lands (the Hon. E. A. Bansoni) remarked that the Bill was duo to a fall in the prices of products of such magnitude as to throw every farmer into financial difficulty. It was therefore necessary to tide over the time until conditions improved. In many cases the sheep farmer had not received more than sufficient to pay working expenses and taxation, leaving nothing for interest. It was necessary, therefore, to have some provision for adjustment on the assumption that within two years the producer could meet his obligations. This prospect of relief applied to all classes of mortgage, and would enable- many business men to carry on'over a period of difficulty. It would conserve to the farmer the equity in his land. There were signs of recovery. For instance, ■he knew of fat ewes being sold some months ago at 4s Gd, while in tho same market recently they fetched 10s to 12s. Not only in this respect, but in regard to shares, there were signs of improvement which justified the belief that the period of two years set down in the Bill as a time during which relief would be given was adequate. The number of applications made to Crown Lands Commissioners .to adjust difficulties between parties to a mortgage was so small as to suggest that the pressure put on mortgagors was not so extreme as had been imagined.

Answering a question as to how far the Crown would go in relieving Crown tenants, the Minister declared that, in. his experience as a private member, ho realised that the Crown treated its mortgagors more liberally than private lenders could afford. If there was any fault at all it was that of overindulgence. Mr. W. L. Martin (Labour, Itaglan) said the measure had already given some security to those who were likely to suii'er as a result of the mortgages they carried. He was satisfied that the Bill was a step in the right direction.

Mr. K. S. Williams (Eeform, Bay of Plenty) said he believed the amount that could be dealt with, by a Magistrate could be enlarged. He was satisfied that the moral effect of the Bill would be to do away with much of the work which the Court would have to do.

The Rev. Clyde Carr (Labour, Timaru) said the Bill should provide for something more than an extension of time for the payment of interest and principal. The problem would have to be tackled in a permanent, manner. CONFIDENCE IN DECISION. The Minister of Defence (the Hon. J. G. Cobbo) said that the matter involved might be vory considerable, and if anyone but a Supreme Court Judge was to adjudicate the parties might not have the required confidence in the ultimate decision. Many of the mortgagees wore meeting the position, but it. was only fair that tho mortgagors should be protected in cases of hardship, and should be given an opportunity to retrieve their' positions. It was a serious thing to interfere with a contract between two persons, but the Bill was designed to prevent harsh, unfair, and unwarranted treatment to the mortgagee who had no control over the circumstances.

At this stago the Minister was interrupted by the adjournment -of flic debate to 2.R0 o'clock this afternoon.