THE MORATORIUM

Nelson Evening Mail, Volume LIV, 23 March 1921, Page 5

THE MORATORIUM

SOME DIVERS' VIEWS OK authorities Views of those qualiliwl to -speak on the subject of the application of the moratorium to deposits nt cal! wove elicited bv the Rost yesterday, 1 hose fully qualified to rvpenk on the subject, wove asked for opinions, and the replies wer e ■varied. It was generally held, however, that the Government was taking a bold step, a step Mint might or might not be wholly justified by the circumstances. But the circumstances, ns they appeared to the public, might be rather different from those known In thp Government. “So far as houses of our dinraclcr and standing go," remarked the head of a largo company, “we take money mi deposit at call, and it is forced upon ns. We do not really want it: but it is a convenience to our clients for us to take it. As a. matter of (act, we have very little now. This legislation, it seems ,to me —although it concerns such companies as ours—has been rushed through at express speed to meet some special cases. What' those are one can think, but the Government, very properly, docs nob disclose' all it knows. What is of interest to know is, how Is the depositor, who wants Ids money, which is at call to got on. without. i(T He can, go to the Judge. True; but. then-.again that -may take, time, whereas be wants his money at once. Another authority thought the idea of the Government was to prevenr. any- , thing like a “run’’ on deposits at call: hut this measure would certainly tend towards uneasiness on the part ot depositors with money at call rather than allay it. It might produce the very state of affairs the Government seemed so anxious to avoid. A different view was taken by another authority, who warmly commended tho Minister for boing guided in tin’s matter—as seemed plainly evident —by the banks. Th© extension of the niorn-

torium to cover money' at call was, it was held, a wise and statesmanlike thing to do in the present circumstances. Another view was held that, some isuch chock would bo effected by the legislation referred to would ultimately make for greater security than had of late been apparent for deposits placed with certain trading concerns. It. was pointed out that too much banking business had been done bv firms, oompaniesy or associations that were not hanks, and which had not the strength of banks. . The extension of the moratorium to deposits at cal] with business organisations would ultimately have the effect of diverting money to the banks that would bo placed out on a low rate of interest at call. In instance where views were expressed and obtained they wore given with the: stipulation that they wore of a. superficial description in the absence of time to carefully .study and criticise the new legislation.

A NELSON VIEW

A Nelson business man emphasises that even if the Government has information to warrant such drastic legislation, there can be nothing to justify the robbing of depositors’ with money at call in order that the firms or municipalities might bo saved inconvenience or difficulty. It should be self-evident that those reaping (lie advantage. namely, companies and municipalities, should at least pay the rate of interest to the depositors that the said companies nr municipalities would have had to pay the bank, or the rate which the people with money on deposit may have to pay the bank to replace their own capital.

THE DEFINITIONS

Some of the definitions contained in the Hill make interesting reading, 'the new section does not apply to a or to any contract of deposit *vi (!', hy or with a bank, “bank” meaning and including the Post Office Savings Hank, and any savings bank establish ed by statute in New Zealand, and any bank carrying on business in New Zealand and authorised by law m issue hank notes. “Borrower” means and includes any firm of partners, company, or association, whether corporate' or unineorpprate (other than a bans), who or which at the. commencement of this Act holds moneys upon contract of deposit, and also includes any public body authorised expressly cr impliedly by law to receive money on deposit where such public body at the commencement of this A(it bolds money nporl contract of deposit. “Contract of deposit” means any contract or agreement, written or verbal, express or implied, relating to the receipt of money by a borrower, upon the terms that the same shall he repaid either at a fixed date cr by instalments or at call and bearing interest until repayment at an agreed rate, except that no contract or agreement shall be a contract of deposit for the purposes of this Act if—(a) .Such contractor agreement is ex pressed in a mortgage; or (b) such contract or agreement is expressed in debentures issued in service by -m incorporated company or public body; or (c).tho borrower has, as part of tl e contract of deposit or ns collateral thereto, made and delivered to the lender any negotiable bill of exchange or promissorv note for further evdencing or securing the repayment of such money or any part thereof. “Lender” means any person, firm, company, or association who or wnicli has font money to a borrower on .; contract of deposir.