The Waikato Times With which is incorporated The Waikato Argus. WEDNESDAY, AUGUST 3, 1921. THE LATEST MORATORIUM

Waikato Times, Volume 94, Issue 14715, 3 August 1921, Page 4

The Waikato Times With which is incorporated The Waikato Argus. WEDNESDAY, AUGUST 3, 1921. THE LATEST MORATORIUM

We were advised some time since that the Acting Minister of Finance was preparing a Bill for the continuation of the latest moratorium, and the particulars have now been published. Sir Francis Bell begins his statement by a declaration that no limitations will be placed upon any deposits not now' subject to restriction, but when we look at what has already taken place that seems a bold thing to say. On the whole it would perhaps be more prudent not to prophesy. The present Bill is to apply to companies and ' municipal corporations, and extends the date to which they may retain deposits to December 31st, 1922. A mortgagor who desires to extend the term of his mortgage may give notice to the mortgagee, specifying a term not exceeding three years, and the rate of interest he proposes to pay, and if the mortgagee objects he must file a summons in the Supreme Court calling on the mortgagor to substantiate his claim. The judge will then refer the matter to a Stipendiary Magistrate for decision. So far as mortgages are concerned, a rearrangement of interest will in very many oases be all that is required;, the trying cases are those in which money has been placed with companies or local bodies for a limited period, and which cannot now be recovered.

In proposing legislation of this nature it must be presumed that the Government have information respecting the financial conditions which is not open to outsiders. It is difficult, therefore, to offer any opinions on the measure other than the general observation that legislation of this kind will have a most deterrent effect on the general condition of the country. Our present condition is the result of past action, which cannot now be reversed. In 1919 money was plentiful, hut the moratorium was not abolished. Later on the price of wool dropped, and growers were assured that it would lie folly to sell at such prices, and arrangements were made to guarantee the banks against any loss made on advances against, wool. At the same time they were authorised to advance against Soldiers’ Loan bonds. Neither the wool nor the bonds are particularly liquid securities, and the banks would probably have curtailed the advances but for llic Government guarantee. Their difficulties have been immensely increased by the over-importation of drapery ami oilier goods. A great deal lias been made of the British manufacturer executing orders extending over the. previous 12 months or two years, but although these charges may be true, they do not absolve the importers from the suspicion of conducting business in a lax manner. Profits bad been exceptionally good, and they were anxious to have.as much stock as possible to handle while conditions, were favour-.

able. Such firms were in most instances old and valued customers ot the banks, who felt bound to carry them through the trying times. Unfortunately that policy did not make for drastic reductions in price, and without such reductions the process of realisation was slow. The maintenance ol prices means the maintenance of a high rate of wages, although it cannot guarantee employment at the high rate. The locking up of money and the high rates of wages combined have already led to unemployment, and are likely to lead to much more. Having set our feet on the path of financial ease, wc must continue to walk therein, and shall probably find that we should have done better to face the situation at first. With money scarce and wages high there will be a difficulty in starting any fresh enterprises, or even in continuing the amount of public works which are now carried on. The money in the country is devoted to financing produce and imports. It is deliberately designed to maintain the prices of the produce, and has the same result with drapery where there is no deliberate intention. If produce prices are to recover at any early date we shall be set on our feet again, if not we shall remain in a depressed condition indefinitely. At our end of the country the question has not been brought home to us, because dairy produce is the one item that has maintained its' price. Wool and meat, however, have suffered badly, and the districts where these are carried on show the results. Wool in particular is in a most uncertain condition. The Board which has been instituted, in imitation of Australia, is intended to maintain the price, but that is a proceeding beyond the power of Boards. Until we get the returns of the wool position after a year’s experience of control we cannot say what the effect will be. It is, however, quite conceivable that the world’s production of wool is in excess of demand, in which case the control will do more harm than good. If it proves so, the moratorium will not come to an end in December, 1922. The stocks of wool will still be large, the growers will find wool slow of sale, the companies will not be in a position to repay deposits, the lockup of money will keep interest high, and local bodies will be unable to obtain funds for necessary work. Of course if the demand has kept pace with supply we shall see a prospect of better times, but they will not come at once. In any case it is a mistake for the Government to participate in what is practically a speculation on the future condition of the wool market. There would be considerable suffering involved in such a drop as recently took place, but when that had been accepted tiie way would be paved for a return to business on remunerative lines. Our present methods of finance have the effect of keeping up the rates of interest and of wages, while they arc powerless to keep up the prices of produce. Low prices could be borne with greater ease if money and labour were cheaper. It is to be feared that the effort to maintain the price of produce, although it is intended to help the farmer, will have the contrary effect. It will keep his outgoings high, without affecting his incomings. So far as the proposed Bill is concerned, Sir Francis Bell could scarcely be expected to reverse the financial policy at the time when the Prime Minister was out of the country. At the same time it would be a good thing if the Cabinet would seriously consider the necessity of freeing ourselves' from these artificial conditions. It would, of course, be necessary as a first step to abolish the Board which controls the sale of wool. It is their function to put a drag on realisation, and realisation is the first requisite to putting business on a sound footing. When the stocks of imported drapery have passed into consumption the financial position will improve, but it will not become really satisfactory until we can sell our produce as it comes to market.