THE New Zealand Herald AND DAILY SOUTHERN CROSS TUESDAY, MARCH 12, 1935 MORTGAGE ADJUSTMENT

New Zealand Herald, Volume LXXII, Issue 22056, 12 March 1935, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS TUESDAY, MARCH 12, 1935 MORTGAGE ADJUSTMENT

The second stage in the Government's ambitious scheme for the reorganisation of mortgage finance will be entered upon to-day with the introduction in the House of Representatives of the Rural Mortgagors and Tenants Final Adjustment Bill. There is an agreeable sound about those words, "final adjustment." Both mortgagees and mortgagors would gain a new sense of security and confidence if by some fair and reasonable method they could be sure where they stand. They would like to cut a way out of the present morass of mortgage finance to firm ground. Some people say, of course, that the State would never have had this problem on its hands if it had allowed "things to take their course" through the normal procedure of foreclosure and bankruptcy. Present troubles generally, they contend, are due to the efforts of Government's to guard all kinds of interests against the consequences of lower prices. The political difficulty was, however, that the extent and duration of the price fall were unprecedented in all recorded economic history. Normal procedure would not have met abnormal circumstances. So Governments, not only in New Zealand but in every part of the world, passed measures in 'support of the farmer, just as they have had to do in the case of the unemployed, whose economic foundations were similarly undermined. To have let "things take their course", with these two primary elements, land and labour, might have resulted in "restoring their values to rock bottom," but it might also have been far otherwise. Politically, at any rate, it was essential to take action to save the primary producers from the risk—probably not so great as imagined—of wholesale foreclosure, and to enable them to carry on an industry vital to the country, while getting a living themselves. The measures taken were of an emergency nature, and therefore temporary, but as the new price level begins to assume the aspect of permanency, the desirability of placing the affairs of both mortgagor and mortgagee on a firmer basis becomes apparent on every count. So, having erected a new financial framework in the mortgage corporation, Mr. Coates is setting about the far more complex business of the final adjustment of these difficulties. It is a heroic endeavour, because experience and all nature shows that there is nothing final in this world. Still the attempt must be made to give relative if not absolute certainty. So soon as a beginning is made with actual proposals, difficulties come crowding in. To everything suggested there are obvious objections. Of course the best way would be for creditor and debtor to steer clear of the administrative machinery proposed by Mr. Coates by privately making a voluntary composition. Provision is to be made for the legal ratification of such agreements. Ideal though such a method may be, it is natural that mortgagees should shrink from writing down their capital to the level of present low prices. They cannot be sure when values may take a turn upward, causing them to regret having made too early a composition. Similarly the mortgagor may hesitate to enter a binding private arrangement, in case prices fall still further, or, more likely, because he hopes to get better terms by reference to a Mortgagors' Relief or an Adjustment Commission. Both these agencies will still be open under Mr. Coates' scheme, and, if an agreement can be reached voluntarily, its terms can be ratified. It will be seen, therefore, that reasonable provision has been made for voluntary settlements and it may be hoped that a majority of cases will be finally decided in this way. It is only when these means fail that the parties are referred on to the proposed Court of Review, accompanied by the report of the district Adjustment Commission. The Court will still strive for an agreed settlement, and its prestige, backed by the knowledge of the powers with which it is to be armed, should often be decisive in the desired direction. If not, and the Court is satisfied that there is a chance of the mortgagor's rehabilitation, it is to be empowered to issue a "stay order." If the mortgagor's position is hopeless, the "stay order" is to be withheld and apparently the mortgagee will be free to foreclose. Problems of every kind—complex and difficult problems going down to the roots of human nature, equity and practical administration—gather thick about these "stay orders" and the subsequent procedure under them. Moreover, they postpone that "final adjustment," which would be so welcome and beneficial to the parties, for ten years. Under the order the mortgagor for the first five years will be farming under supervision on a budgetary system with his income so allocated as to give him reasonable living expenses, the remainder being apportioned among his creditors on a predetermined basis. In applying this provision alone there will obviously be some nice points for the Court to decide. Moreover, if the farmer is of a free and independent spirit he may find this close supervision galling, if not insupportable. Yet that type may be

the best to keep on the land. At the end of the'five years, the land will be valued, mainly on the basis of its productive capacity in that period. Eighty per cent of the valuation will usually become a fixed charge in favour of the creditors and 20 per cent, if deemed fair and reasonable, will represent the mortgagor's equity. The latter provision opens up many objections and it should certainly be made elastic to cover widely different cases. On the other hand, if the mortgagor is to have an incentive to work the property under 'stringent conditions for a long period, he must have something to hope for —a stake in the joint effort. The method of fixing the valuation is also open to grave objections. It will depend on prices during a period fixed arbitrarily and may visit injustice on either party, although on present expectations the mortgagee seems more liable to be victimised. Moreover, what inducement has the mortgagor •to put forward hi's best efforts when, by raising productive capacity, he increases the fixed charges finally debited against himself? How this thorny problem of valuation is to be resolved is noteasy to discover. A firmer basis for discussion should be provided on the disclosure to-dav of the actual provisions of Mr. Coates' bill. THE CRISIS IN GREECE Reports concerning the Greek situation are conflicting, an inevitable outcome when they come from different and sharply antagonistic sources. The evidence indicates fairly definitely that the insurrectionary movement has tiroused little response in Athens. Apparently the civil population is as little moved now as it was when, in 1933, General Plastiras tcied, by a coup d'etat, to neutralise the effects of the general election which finally loosened the grip of M. Venizelos from Greek affairs. For all that, it is not quite so certain that the Government is having the triumphal march against the rebels in Macedonia and elsewhere that it claims. The outside world is inclined to be apathetic toward disturbances of this character in the Near East, provided they do not threaten to spread, or to set aflame the many combustible elements in the Balkans. So far, fortunately, the Greek rising does not seem to carry that threat. Yet the world does not remain indifferent. Its interest is stimulated because of one personality concerned, that veteran of Greek affairs, M. Venizelos. According to its course, as revealed so far, this is his revolt. It can easily be construed as the desperate bid of a man who feels the power he has so long wielded slipping finally from his hands. If so, it must be the last bid. It could have but one justification, success, and it does not at present seem to be succeeding. Failure can leave little more before a man whose seventy-first birthday is not far ahead, even if he does not meet the drastic retribution that does not uncommonly follow such desperate throws in his country. M. Venizelos has had the name of a great statesman and a great patriot. He has fought for his country both in the field and in diplomatic encounters. Y'et there are moments in his career, in domestic politics, when neither his statesmanship nor hi' 3 patriotism has shone undimmed. Linking the present rising with what happened just after the last election, M. Venizelos seems to have struck for power on the assumption that the end justifies the means. The end may not be attained, an outcome that will leave the means without justification. <