MORATORIUM

Hawera Star, Volume XLVIII, 17 September 1924, Page 8

MORATORIUM

FEELING AGAINST EXTENSION. INDIGNATION, DISGUST, EXASPERATION., AUCKLAND, Sept. 12. Feelings of indignation, disgust, and exasperation were encountered in every quarter where inquiry was made in Auckland concerning the recommendations of the Public Accounts Committee of the House of Representatives on the subject of the moratorium extension.

One business man said the Bill should be entitled, the Perpetual .Uncertainty Bill. “It is simply inviting further agitation and further revision,”! said another. “Parliament fails to understand that every time it monkeys with the moratorium it f urther reduces the confidence of the lender in a private contract, and the result is that instead of farmers being helped they are further hampered. The extension of the moratorium has had a most unsettling effect upon investors, who, with-: out it, have every reason for nervousness over mortgage investments. Inflation of the price of land and the slump are quite sufficient in themselves to make capital shy, particularly when the cream of farm land securities is skimmed by the sinking fund commissioners of local bodies which donot pay taxation. Faced with what is left, private lenders seek for other means of employing their capital,, and find it in war loans and public body debentures, on the latter of which taxation is fixed at half a crown in the pound. The effect of the diversion of money into these channels is againstproduction, but lenders cannot be blamed for seeking safety. But. safety is not the only attraction. The return is greater for those; who pay income tax at higher rates. Compare •taxation at 3s 6d on each £IOOO of income frqm public body debentures with the taxation at 5s lOd, less the recent-ly-announced reductions on eqch £IOOO from mortgage investments—it is £125 against £243. Thus there are several i]iAlienees combining with the influence of moratorium interference; with private contract that are acting . against the interest* of the farmers, whose prosperity everybody desires, seeing primary prpduction pays for everything. Lenders who still consider farm mortgages now demand a far greater margin than formerly. They are hound to do so ; and again the Government is to bla'me, for to a large extent its soldier settlement scheme caused the. inflation., 1 know of a good fawn, the present value of which is between £7OOO and £BOOO, for which only £4000: can be secured. . The reason probably is that most firms do ’as we do—they: refuse to touch mortgages on any consideration.; and one of our reasoiis is that the history of the moratorium; has destroyed our faith in Parliament'. Those who clamour for an extension of the moratorium are hopelessly in-: volved, and nothing can be gained by, prolonging their agony.”