EFFECT ON COMPANIES

New Zealand Times, Volume XLVII, Issue 10966, 30 July 1921, Page 7

EFFECT ON COMPANIES

X>N SI I> KIIAB I. E INCONVENIENCE TO DErOSITOHS. CNI.OOKED-FOR EFFECTS. Some interesting remarks upon the effect of the moratorium over deposits was made at the utKulul meeting of the Wellington Investment Company by the managing director, Mr H. G. Smith. The company, ho explained, in the course of his address to the shareholders, has been very reluctantly compelled to avail itself of the moratorium. There were two very important reasons that had impelled the directors in so doing. ‘ First, it is obvious,” he said, “that had we continued paying when other companies ceased doing so, wo should have had to meet a quite abnormal number of withdrawals, because many of our depositors are also depositors in other companies, and, their money with those companies beng held up. they would naturally have fallen back upon ,us. “In the second place, we ourselves had considerable sums on short deposit with other companies and local bodies. We had counted upon this pioney as readily available to meet withdrawals, but by the operation of the Act we found ourselves temporarily deprived of it. “Then, again, our mortgage investments (all carefully selected and well secured), instead of being repaid at short intervals, as they had been previously, were extended by the moratorium until the end of thus, year, and conditionally for another year thereafter. So you see the unlooked-for effects brought about by this legislation.

“I am not presuming to criticise the action of the Legislature,” concluded Mr Smith; "but merely to explain how the best-conducted and most solvent concerns have been compelled, much against their wishes, to inflict what, I fear, must be an inconvenience upon their customers.” Mr Smith went on to say that it was hoped that noxt session’s legislation would enable normal conditions to be resumed. New deposits, from March 31st, however, were not affected, and were payable at the end of the period for which they had been lodged.