THE MORATORIUM.

Timaru Herald, Volume XCVIII, Issue 18084, 21 June 1924, Page 6

THE MORATORIUM.

BANKER’S POINT OF VIEW

(Special to the “Herald.”) WELLINGTON, Juno 20. In the course of his address at Jne annual meeting of proprietors or . iBank of New Zealand to-day, Die act-mg-chairman of directors (Mr \v mini i Watson) made reference to the moiatorium on mortgages. ~ “Tho Moratorium on Mortgages, Mr Watson explained, “will expire A the end of this year, and the. public mind is exercised as to whether there will be any extension of it or not. Iho Act has been in force for ten years some ol those years the most prosperous the Dominion lias ever experienced —therefore, logically, mortgagors who have been sheltering under its provisions should now be left to face their positions. 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 Hie result of the moratorium, prevents inventment 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 tho 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.”

Mr Watson went on to say that the Advances to Settlers Department of the Government had lent some millions on farm lands during the twelve months ended 31st March. Much of this amount had no doubt been applied in the clearance of mortgages affected by the moratorium, but a considerable sum must have been obtained simply because the D e P ar tment charges a lower rate than other lenders. While on tho one hand it is known that somo 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 moro than postpone the evil day. “It may he safely asserted,” Mr Watson added, “that, except in very few cases, the causes of failure are due to purchasing land at inflated prices, acquiring, more land than purchasers’ capital warranted, and incompetent farming. For such it would certainly bo 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.”