THE MORATORIUM

Hokitika Guardian, 3 August 1921, Page 3

THE MORATORIUM

STATEMENT BY MR HAROLD BEAUCHAMP. WELLINGTON, Aug. 1. Referring to the statement made by Sir Francis Bell as to the action contemplated by the Government in respect to the extension of the moratorium in so far as it relates to moneys on deposit,, and mortgages, and also to the fact that any proposed legislation in that direction will not apply to the Rost, Office Savings Bank, the chairman of the Bfink of. New Zealand (Mr Harold Beauchamp) points out that at the time the moratorium was passed to pro. tect deposits, it was estimated that there w<i s some £10,000,000 owing hy public bodies, corporations and firms to depositors, who bad placed with them moneys at call or for comparatively sljort periods. It was quite obvious that it would have been impossible for the banks to have provided their customers with the money required to discharge these liabilities. The banks themselves at that time were experiencing a heavy strain on account of the requirements of money to carry on the trade and industry of the country.

“Strong exception has been taken in many quarters,” Mr Beauchamp proceeded. “ at the action of the Government in passing the legislation, because it provided many people with an opixvrtunity to use loose money for which lenders were not at the time 'desirous of obtaining a permanent investment. Those people thought that having arranged limits with their bankers for which the bankers received no consideration whatsoever, they conld look to their banks to find money at any time for them to discharge their liabilities. that is deposits, when payment' was demanded. AVhen it was found that tip. Ranks were unwilling, indeed unable to do so .it was on the representation of the borrowers that the Govern, ment introduced and passed the legislation now under discussion.

“ At the end of this year, when the moratorium expires, it is quite obvious that the banks will still be unable to find all the money for their customers to discharge their liabilities in respect to deposits, and from the very clear statement made by Sir Francis Bell, it is clearly te be inferred that lie fully understands and appreciates the position. No doubt in the early stages of next session legislation will be introduced with the object of providing for the continuance of the moratorium in respect of deposits as well a s mortgages now overdue.

“ The question arises for what period should the extension lie granted ? My personal opinion is flint with regard to deposits, lenders should have the right to be repaid by instalments, extending say, over two years. I believe tile majority of borrowers could discharge their obligations at the rate of say 12} per cent quarterly, equal to 50 per cent, per annum. As to mortgages, it might be prudent to provide for a slightly longer term than this. T note that Sir Francis Bqll suggests (LV per cent. Now. unless a substantial improvement takes place in the money market, j am inclined to think that that rate is unduly low. The position, as Sir Francis Bell points out, does require very careful consideration. The rates on deposits and mortgages might to he such as arc equitable to the lenders. Tt will be noted that many public companies have recently raised large amounts of money by the issue of bonds or debentures, partly with the object of repaying their depositors. One of these companies was the Wellington Gas Company. It has announced its intention of paying the whole of its depositors the moneys due and owing.”