INTERFERENCE WITH CONTRACTS

Otago Witness, Issue 4085, 28 June 1932, Page 5

INTERFERENCE WITH CONTRACTS

COMMERCE EX-STUDENTS’ DEBATE “ That under no circumstances is Government interference with private contracts justified ” was the subject of a debate at a meeting of the Otago University Commerce Faculty Ex-students’ Association on Thursday evening. The president (Mr W. J. M. Grant) occupied the chair. The affirmative side was taken by Messrs H. R. Wright and F. R. Thompson, and the negative by Messrs J. Denford and W. S. Gilkison. Mr Wright said that a private contract was an agreement in which a legal obligation was constituted and defined between the patries to it. The traditional policy of the British Parliament had been to protect private contracts and agreements, and as a result the British judicial system was the envy of the world. The fact that foreign peoples knew that a contract with a British firm would be protected had led to confidence and stability in trade, making Loudon the great trade centre of the world. Recent Government legislation tended, for the sake of a temporary expedient, to undermine the whole system upon which business had been built up. It also aided unscrupulous people in the evasion of their responsibilities. Money was a sensitive commodity, and interference with contracts tended to weaken confidence and bring business stagnation in its wake. It must also weaken respect for the law. The speaker claimed that arbitration would be preferable to compulsion. Mr Denford said that all that the Government of New Zealand had been able to do was to devise expedients, and it must see that under present conditions there should be equality of sacrifice. The circumstances demanded that difficulties should be met in accordance with common sense. There had been no suggestion ot repudiation. Mr Thompson said that the aim of the Government in reducing costs had been to bring about prosperity, but the end did not justify the means. The mere threat of a reduction of interest had made the holders of capital afraid, and they had been unwilling to invest in mortgages. The legislation had defeated its own end —prosperity—-and the country was sinking further into the mire. There had been a great world depression in 1830, but England had not - interfered with private contracts. Yet from that time had started a golden era of prosperity such as the world had never previously seen. Interference with contracts would cause a flight of capital from New Zealand. Mr Gilkison claimed that legislation must be based on the principle of “ the greatest good for the greatest number.” The main purpose of government was the regulation of the private relations oi mankind. Non-interference with contracts would result in greater injustices than would interference. Many lenders of money had, out of sympathy, reduced the obligations of ‘-enants and mortgagors. It was only common justice that the Government should bring the others into line..

Mr Denford. in reply, said that the recent legislation was a temporary expedient to protect the economic life of the community from collapse. It protected credit and made capital safe. Mr Wright, in reply._ said that the powers of governments should be limited as far as possible. Society, it was recognised, was greater than government, and what the Government did was not necessarily right. Once the principle was admitted that Government interference with private contracts was justified nothing would be safe. After a general discussion, the judge (Mr E. J. Anderson) gave his decision, placing the affirmative side first with 58 points and the negative side second with 55 points. He placed the speakers in the following order: —Mr Thompson, Mr Gilkison, Mr Wright, and Mr Denford. He said that those present had listened to a very fine debate on probably the greatest question that concerned people in business at the present time.