Nelson Evening Mail WEDNESDAY, MARCH 23, 1921 THE MORATORIUM EXTENSION

Nelson Evening Mail, Volume LIV, 23 March 1921, Page 4

Nelson Evening Mail WEDNESDAY, MARCH 23, 1921 THE MORATORIUM EXTENSION

ONE of the most surprising steps taken by the tlovernnienf for a Inna: time is the extension of the moratorium to envoi- depositors of money at call. Under the new elanses, it is now provided that, excepting hanks and savings hanks, any firm corporation society or loeal body which has taken sums of money onj deposit at a ]o\v rate of Interest at call need not return the deposit when demanded until 31st December next, or afterwards, unless a depositor’s application to the Supreme Court for return of the deposit is successful. This is drastic legislation and the results may lie different from those calculated hy the framers of the measure. But conditions have arisen necessitating something being done to prevent Iho constant drain on the banks, and this extension of the moratorium is the. method adopted. There is no doubt, however, that hmny people, particularly farmers, have endeavoured to deprive the hanks of their legitimate, business by placing money at call in their own and kindred concerns, and that this is one of the factors in the present position. Depositors have been railing up their money to such an extent that they have forced to go to the banks for the necessary amounts and the consequence of it all lias been that the ordinary business of the country lias been seriously interfered with, and if the process continues real trouble lies in store for ns

Thorp are many ways in which the extension <*>!’ the moratorium may do a great deal of injustice and harm. Many depositors who placed their money at a low rate of .interest at call, may have to meet engagements here or elsewhere. flow arc they to get the money, and at what rate of interest? The hanks may or may not advance. If they do advance it will he at the market rate, whereas the. deposit -at - call rate will be only about *1 per rent., including the 1 per cent, additional. This will ho placing the depositor-at-call in an unenviable position. Bub, as Mr M assey stated in the House, “They knew perfectly well that there were large firms who had taken large deposits in this way. This was what would happen. The money of these firms was exhausted —he did not say their capital—and they wore unable In moot the demands of the depositors coming for their money. The firms so situated would close their doors. And who was going to lose? The small depositor, in all probability, and the storekeepers .who dealt with them. He felt that they were up against a very serious condition. |Je did not mean that these people were not, sound financially. They were, hill- their money was locked up; I heir cash was noi there, and what was wanted was time to find it. The Government knew the grave responsibility resting on it. By agreeing to the proposals the House might lie averting a. very serious crisis. They had in deal with the matter one way nr the other that night.” Parliament dealt w'ith the matter in two hour

I lie lime was necessa rIK red rimed to preveni unfairness, 'l'he de.slre e. in a \ ei| an\ i liing m ihe na ■ in re ni a panic. Doubtless ii will do good m I his respccl, bin '-ernei lung more should. have been dune to preveni injustice.