A FINANCIAL EXPEDIENT.

Taranaki Daily News, 30 March 1921, Page 4

A FINANCIAL EXPEDIENT.

Probably few measures passed by the Government in recent times have evoked the same interest or criticism as has the extension of the moratorium to cover deposits at call. It is a fair-reach-ing measure, and only the direst necessity could have justified its enactment. Excepting banks and savings banks, any firm, corporation, society or local body which has taken sums of money on deposit at a low rate of interest at call need not return the deposit when demanded until December 31 next, or afterwards, unless a. judge orders it to do so on the application of a depositor. Mr. Massey stressed the importance of the immediate passing of the Bill, and members, even the Leader of the Opposition, seemed to have been much impressed by Mr. Massey’s statement. There can be no question but that the Government has undertaken a grave responsibility in practically converting deposits at call into fixed deposits. It is an extreme step to take, and one that may entail a great deal of hardship. At the same time, it may have been the only way out of an extremely dangerous position; indeed it may have averted a financial crisis the like of which has not before been experienced in the Dominion. It is impossible to form a correct judgment of the wisdom of the course taken without that knowledge which necessarily Cabinet and the banking institutions alone possess. But that the banks favored it shows the situation to have been critical. The circumstances leading to the stringency that has produced the .crisis are known. Most of the available credit lias been absorbed in paying for the excessive stocks , of commodities that have been into New Zealand during the past nine months, and in the payment of the heavy income tax, whilst the creation of fresh credit has been gravely affected by the comparative collapse of the London markets, together with the delay in shipments from New Zealand. Concerns that accepting money at call—and, we are told, would have come to grief had depositors called in their money at once, as was apprehended —will now have the opportunity of putting their houses in order, and by the end of the year should be able to meet all demands made upon them. On the other hand, there are many firms which will not take advan-

tage of the statutory protection, but will discharge their obligations to customers who have entrusted them with their spare money. The (measure is acknowledged to be but an expedient, designed to meet a condition that may never again arise; but it should be a lesson to those firms which have been accepting money at call in large sums. Indeed, we do not know but that the Government would be justified in insisting in future on their providing similar safeguards as banks are obliged to provide, and which ensure their stability in the worst passible times.