The Moratorium.

Hokitika Guardian, 22 June 1922, Page 1

The Moratorium.

A CRISIS A AVERTED BY THE ACT. YVELLINGTON, June 17.

Mr George Elliott, who was in the chair at tho Bank of New Zealand annual meeting yesterday, dealt in his speech with the question of the moratorium on deposits and mortgages. Last session, he said, Parliament extended the time for full repayment of deposits held by joint stock companies, firms, and municipal corporations, until December 31st, 1922, for sums up to £IOOO, and until June 30th, 1923, for huger amounts. The borrowers concerned are taking steps to meet the deposit liability by tile issue of debentures, by the ronveision of deposits into share capital, by the collection of uncalled capital, or by cash paymnts. The loss depositors will he called upon to face, will, on the whole, we believe. he small.

Jt is to he hoped that the experience ; the jieoplo generally have had of the! danger of placing money on deposit ; with concerns that keep no cash or , liquid reserves, will prove salutary. I It is well, too, for the public to j understand that whilst the hanks keep ‘ adequate cash and other reserves to J safeguard their own deposits, these re- j serves are not available to protect depositors with other institutions. It has been stated that the morn- j torium also covered hank deposits, hut . this was not the case. There was no J necessity for the hanks to seek legis- j lative assistance in this direction. There lias been some controversy as to the wisdom or otherwise ot the Government passing such legislation, blit it is our opinion that, had the Moratorium Act not been passed, many solvent companies and firms would have been obliged to suspend payment, and a sevre financial crisis might have resulted. Referring to the moratorium on mortgages, lie, said:—Parliament has made provision for extension ol this measure until December 31st. 1924. It is hoped that mortgagors nill see the wisdom of arranging well before that date for the pnvincnt or renewal of their mortgages. and avoid the difficulties which must otherwise arise from the fact of so many engagements becoming duo on the same date. Tho various extons'ons of the moratorium have brought mortgage investments into disfavour, and higher rates of interest and larger margins of value than were required in the past will undoubtedly he looked for in the future.