THE MORATORIUM

Waikato Independent, Volume XXIII, Issue 3072, 19 June 1923, Page 6

THE MORATORIUM

SHOULD BE ENDED TIME TO GET BACK TO NORMAL Sir George Elliot (chairman of directors of the Bank' of New Zealand) made another- plea for the ending of the Moratorium, in'his address at Wellington on Friday la.H. The Moratorium on Mortgages Act, said Sir-George Elliot, passed as a temporary expedient during the war, has been extended from time to time far beyond the period its most ardent promoters anticipated. The Act has now been in force for nearly nine years and does not expire until 31st December, 192-1. Whatever may have been its advantages originally, and it had advantages, it has outlived its usefulness, as it is generally recognised that its continued existence has an unsettling influence on land values in the Dominion and on financial conditions generally. Before and after 1914 land was selling at high prices, prices which were not warranted by financial results; and larger sums were borrowed than the actual values of the land warranted. It is understood that a number of mortgagors who are sheltering under the Moratorium, have made no provision whatever for the repayment of their loans when the Act'expires, as the prospect of an extension has lulled many of those borrowers into a false sense of security. As a consequence, they take the risk of holding all their land in the hope of realising at -a price somewhere near cost, instead of getting rid-of the whole or .part, even at a loss. It is to be hoped, in the best interests of the'‘Dominion, that no further extension of the Act is contemplated by the legislature.

Indications point to considerable pressure being brought to bear on the Government for a further extension, but. in the opinion of the. board of directors of the bank, any extension

would be,-a'grave mistake. It is true n number of Mortgagors will inevitably have to face the result of ill-advised land purchases undertaken with inadequate capital; hut, in the.

great, .majority of cases, mortgagees

may be relied upon to renew the mortgages at rates of interest proportionate to the security offered. In New Zealand it is estimated that well over two hundred millions are lent on mortgage, a great proportion of this being loaned by persons of moderate moans. It is fortunate that little of this large amount has been obtained outside the Dominion for, whenever it is repaid, it must naturally be reinvested here.

Broad acre freehold securities have been looked upon from time immemorial as a most solid form of investment; but, without a doubt, the passing of the Mortgages Moratorium Act in New Zealand, necessary as it was at the time, dried up to a large extent the source from which moneys for mortgage investments sprung find drove investors to look in other directions for an outlet for their savings.

Provided there is no further risk of legislative interference, and provided the margin of safety is sufficient, mortgages on freehold lands must again be-

come as popular as they were in the past, for they offer many advantages; they ensure repayment in a given period, and, in ordinary circumstances, there is little loss if reasonable precautions are taken.

New Zealand, in common with nil other parts of the Empire, has, since August, 1914, passed through a phenomenal period. Prom time to time circumstances have arisen that have called for exceptional legislation. ft is, however, now time to got back to normal conditions, for if has been proved over and over again that, as a general principle, legislative interference with the natural ebb and flow of business has ail ill-effect, reacting far beyond tin* immediate present.