WAR TIME AND PRECEDENTS

Evening Post, Volume CXX, Issue 38, 13 August 1935, Page 8

WAR TIME AND PRECEDENTS

i Reply is made by Mr. James Begg 1 today to the leading article in which 'we commented upon-his submission that.the Mortgages^ Extension Act and the Banking Amendment Act of 1914 were precedents for the con-tract-breaking measures of the depression period. Mr. Begg does nol, however, meet the objections we raised: that the War and the depression presented entirely different conditions. What might happen in the War was wholly unforeseeable. What actually did happen economically was far different from what was anticipated. Instead of the primary producers of New Zealand, being in desperate straits through inability to i market their produce, they found an assured and highly profitable market. Had this been foreseen the Mortgages Extension Act might never' have been passed. Because it was not foreseen and could not have been foreseen the Government of which Sir^ Alexander Herdinan was a member acted prudently in suspending the enforcement of contracts until the course of events became clean Admittedly the Government afterwards erred in delaying the repeal of the moratorium; and that should have been a warning to later Governments to be ' extremely wary, in intervention;

£ c have never suggested that die 1914 moratorium was not a limited suspension of contracts, and if Mr. Begg, ' arguing that "time is the essence of the contract," terms it a breach, it is merely a fine point in terminology. Where die difference lies between 1914 and 1932-34 is m die conditions, sudden and unforeseen disturbance in 1914, and in die spirit in which the Government intervened. The Government of 1914 did not step in to equalise ■ incomes for die benefit of a section iof die community during die War, except to the limited extent that it permitted and granted cost-of-livin<>-bonuses (a precedent' for die depression cuts). 'It certainly did nol manipulate the currency or audiorise the complete, rewriting of contracts so diat people with fixed incomes should have their value restored-to die pre-War value or persons holding mortgages should share m the added value of the mortgaged property. The War-time Government did not attempt to redistribute property and income, in entire disregard of agreements. The difference m die motive and the, spirit of die interference, as well as its degree, is such diat die late interference cannot be excused by reference to die measures of 1914, If additional evidence of die difference were required it could be found in the results. The War-time measures did not undermine public confidence or create a widespread feeling that contracts might be revised at convenience. The depression.dealings widi contracts have certainly dealt a staggering blow at confidence and weakened the foundations of firm principle upon which the edifice ,of commercial security and integrity is erected.