THE MORATORIUM

Evening Post, Volume XCVIII, Issue 40, 16 August 1919, Page 9

THE MORATORIUM

LEGAL ASPECTS OF ISSUES INVOLVED

(BI TELEGRAPH.—SPECIAL 10 THE POST.)

AUCKLAND, This Day

Ono of tie reasons making it imperative that Parliament should meet before tlie end of the month, is that the last period of the extension of the Moratorium comes to an' end on 31st August. Failing Legislative action, all mortgages which ripened for repayment during the war, but were affected by the Mortgages Extension Act, would become immediately repayable. The effect of this would be that a largo number of mortgagors would require simultaneously to find the money to pay off then.' liabilities, and a huge sum would become available at once for reinvestment. Speculation has been aroused concerning the measures which the Government may take to mitigate this circumstance. A number of opinions have been obtained by the Herald from business men and professional men in close touch with the money market and with the legal aspects of the issues involved. Tha manager of the Bank of New Zealand, Mr. A. P. Green, said that- doubtless arrangements would be made for the gradual calling up of money duo under mortgage ; otherwise considerable financial disturbance might result. Given that, he did not anticipate that the extinction of the Moratorium would produce much effect. Money was plentiful, and he considered that the demand which might arise wonldl be met without trouble. Thero might be a further rise in the price of money. The larger financial institutions accustomed to lending money had increased the rate of interest for new loans entered into during the war. That rate might be increased a little more, but beyond that he did not expect any particular, effect would be produced on the money markets by the inevitable removal of the Moratorium.

A prominent business, man with considerable experience in finance said he could not conceive that Parliament would allow the shelter of the Moratorium to be removed suddenly, or, in other words, as a guillotine measure. The only course open in order to avoid considerable financial disturbance, was to remove the Moratorium on the system of graduation after the fashion of the Australian plan. For example, mortgages which would have matured in 1914, but for the Moratorium, would now mature immediately. Those which would have matured in 1915 would .now mature six months hence, and those which would have matured in 1916 six months later still. And so on. In that way, mortgages could be rearranged without imposing an undue strain upon finance. As a matter of fact, the maturing of tho whole bulk of overdue mortgages at one time might result in a rather serious victimisation of the needy borrower. One aspect of the matter was that a number of borrowers had adopted an unreasonable attitude towards the mortgagees, in the way of resisting the' adjustment of interest at current rates, and again, only agreeing at a later period, when the Court granted relief to the mortgagees._ These borrowers would probably receive _ no more consideration than must be given them under the statute. The desirability of the termination of the Moratorium was urged by another business man. He pointed out that money had been lent out of many estates wherein the beneficiaries were" concerned, and these naturally desired to be able to call in the sums out on mortgage,, to enable the capital in an estate to be distributed among them. He considered that borrowers had had a good rest, and plenty of time in which to make arrangements for the refunding inf. sums borrowed, The term of the Moratorium having been fixed originally for six months. after the declaration of peace, there would undoubtedly be a very large number of mortgages, expiring when the Moratorium was removed, and the sum involved would, he thought, run into hundreds of thousands of pounds.