THE MORATORIUM

Southland Times, Issue 19276, 21 June 1924, Page 6

THE MORATORIUM

A BANKER’S OPINION. GOVERNMENT INTERFERENCE SHOULD CEASE. Referring to the pending expiry of the Moratorium on Mortgages, Mr William Watson, acting-chairman of the Board of Directors of the Bank of New Zealand, said that the public mind was exercised as to whether there would be any extension of the moratorium or not. “The Act has been in force for ten years—some of those years the most prosperous the Dominion has ever experienced therefore, logically, mortgagors who have been sheltering under its provisions should now be left to face their positions,” he went on. “New Zealand is the only country in the British Empire, if not in the world, in which a moratorium on mortgages has been renewed from time to time for such a long period, so that it cannot be said that mortgagors have not received a maximum of consideration. The artificially high range of land values, largely the result of the moratorium, prevents investment by many possessing the capital and energy to further increase production. “Many lenders on mortgage have lost heavily from depreciation in values of their securities; others have narrowly escaped loss after a period of great anxiety, besides being so long deprived of their capital for other uses. These conditions have caused lenders to look askance on mortgages as means of investment except when large margins of security and high rates of interest are offered. “It is in the best interests of the country that the mortgage on broad acres should again become a favourite form of investment, but it will not, if there is reason to fear that the contract between lender and borrower may be set aside by legislative interference with scant consideration for the lender. The Advances to Settlers Department of the Government has lent some 2L millions on farm lands during the twelve months ended March 31. Much of this amount has no doubt been applied in clearance of mortgages affected by the moratorium, but a considerable sum must have been obtained simply because the Department charges a lower rate than other lenders. “While on the one hand it is known that some mortgagors have taken advantage of the law to retain money for other purposes than paying off their overdue mortgages, it is inevitable that a number will have to surrender their properties, and there is but little reason for the majority of them to hope that extra time would do more than postpone the evil day. It may be safely asserted that, except in very few cases, the causes of failure are due to purchasing land at inflated priies, acquiring more land than purchasers’ capital warranted, and incompetent farming. For such it would certainly be against the interests of the country that further extension should take place. It may be, however, that a very few cases merit consideration, and these might well be referred to the Supreme Court as is now done in some cases of arrears of interest, the Court to decide as to an equitable arrangement between the parties according to the special circumstances.”