WELLINGTON NEWS

Hokitika Guardian, 11 December 1930, Page 7

WELLINGTON NEWS

A MORATORIUM. (Special Correspondent). WELLINGTON, December 8. The community, and especially the farming section, just now remind one of a rat in a trap, making frantic but futile efforts to break down the bars and so escape. The most recent proposal and sponsored by the Dairy Farmers’ Association, is that the Government should declare a moratorium. Nothing could be more detrimental to the credit of New Zealand and more disastrous to the farmers than a moratorium. It would be far better to allow mortgagors and mortgagees to find a way out of the difficulties than for the Government to interfere.

Mortgagor and mortgagee are on a business, footing, neither party wants to lose money, and if there is a loss they want that loss to be as small as possible. The mortgagee who forecloses on a mortgaged property before making the fullest enquiry and exploring all prospects must be 60 per cent a fool. But mortgagees are not fools if they can see their money safe by extension of time the extended time will be given. There is no doubt, however, some mortgagees have advanced above the value of the land mortgaged, and in such cases a clean up would be in the interests of all concerned and for the benefit of the Dominion. The demand for a moratorium at a time when the exports of primary products are steadily rising is ridiculous, It is a dangerous proposal to the fnvmerß themselves for it will dam up the flow of credit to the farmers. At one time, as most people will remember, a mortgage on broad acres was considered ns good as a gilt-edged investment, but Since the last moratorium which was to some extent justified by the war, but which through extension became obnoxious, resulted in funds being withdrawn from the mortgage business and diverted to Stock Exchange business. To again declare a moratorium would tend fo accentuate this transfer of funds from niortgage securities to Stock Exchange securities/ : ■ "I . It is very .desirable that there'should be. no interference in tlje relations of mortgagor, and mortgagee, and if severely left alone they, will solve their own difficulties and problems. They are both to blame, and it would be unfair of the Government to side with, one or the other. After the. slump of 1920-21 there was a persistent demand on the part of farmers for abundance of cheap credits, and complaisant Governments helped to meet this demand. In the two or three years after the slump commodity prices rose to/giddy heights and all kinds of securities responded. Stock Exchange .securities steadily advanced and as an illustration'the shares of the. Bank of N.S.W., always regarded as a hi ah grade investment, rose' as hi ah as £52, while to-day, though still a first-class security, they can be Bought at £3O. Investors made no appeal to the Government for assistance, thev lost their money and that was the end. Farmers are not farming from a spirit of altruism or philanthropy but for the purpose of earning a living and competency.

Some farmers engage in the the business with inadequate or no capital and expect to be financially nursed by the State; others engage in the business badly equipped as to knowledge and capacity and these expect nursing r there are others again who have taken up more land than they can farm Profitably, either from want of capital or from other causes, and they also insist on financial assistance. The ethics and economics of the farming business are no different to a distributing business or a manufacturing business, and cannot be treated differently, .

The present fall of commodity values is disclosing the weak units in farming as in other businesses and it is inevitable that the weak ones should suffer mortality, for the mortality of such is in the interests of the whole community. A multitude of financially weak tanners or grocers or builders is a distinct detriment.

It is not a moratorium that the farmers, nnd the dairy farmers in particular need, but a definite load in the reduction of costs. That is the key to the position. The present slump is very distasteful because it is very disastrous, but good will ultimately result from this very fact. There is much food for thought for the statement made recently by M. Paul Zeeland, Director of the National Bank of Belgium, who said: “Everything tells us that the crisis is general, that all nations together feel adversity, as they feel prosperity. Yet all the solutions contemplated still bear the mentality of by-gone days. Mankind is passing to a new stage in its economic evolution and one might almost be led to think that men dread this.”