THE MORATORIUM.

Taranaki Daily News, 2 August 1921, Page 5

THE MORATORIUM.

PROPOSALS FOR AN EXTENSION. THE POSITION EXPLAINED. AIR. H. BEAUCHAMP’S VIEWS. By Telegraph.—Press Association. Wellington, Last Night. Referring to the statement of the Hon. Sir Francis Bell as to rhe action contemplated by the Government in reI spect to the extension of the morator- ! iuin in so far ae it relates to moneys ; on deposit and. mortgages, and also to the fact that any proposed legislation I in that direction will not apply to the i Post Office Savings Bank, the chairman •of the Bank of New Zealand (Mr. Har- | old Beauchamp) points out that (it the | time the moratorium was passed to protect deposits it was estimated that there was some .£10,000,000 owing by public bodies, corporations and firms to depositors, who bad placed with them moneys at call or for comparatively short periods. It was quite obvious that it would have been impossible for the banks to have provided their cusI tomers with the moneys required to , discharge these liabilities, that Is, de ! mand money at call or for short terms. | The banks themselves at that time were I experiencing a heavy strain on account i of the requirements for money to carry I on the trade and industry of the couni tr s r ’ | Strong exception had been taken in i many quarters, Mr. Beauchamp proceedi ed, at the action of the Government in | passing this legislation, because it proi vidcd many people with an opportunity I to use loose money for which the lenders were not at the time desirous of ob- | taining a permanent investment. Those J people thought that having arranged ’limits with their bankers, for which their -bankers received no consideration whatsoever, they could look to their bankers to find the money at any time for them to discharge their liabilities, that is, the deposits, when payment was demanded. When it was found that the banks were unwilling, indeed, unable to do so, it was on the representations of the borrowers that the Government introduced and passed the legislation now under discuseion. 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 m respect to deposits, and fronvthe very ciear statement made by Sir Fran, cis Bell it is clearly to be inferred that he 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 on deposits as well as on mortgages now overdue,” added Mr. Beauchamp. “The question 1 arises, for what period should the ex- i tension be granted? My personal opin- ' ion is that, with regard to deposits, the i borrowers should have the right to re- ' pay by instalments, extending, say, over two years. I believe the majority of ; the borrowers could discharge their ob- ' I ligations at the rate of say 12| per cent. 1 [quarterly, equal to 50 per cent, per an- . | num. As to mortgages it might be i prudent to provide for a slightly longer j i term than this. I note that Sir Fran- ■ | cis Bell suggests 6J per cent, now, and 1 unless a substantial improvement take<s ■' | place in the money market I am" inelin- I ed to think that that rate is unduly I | low. The position, as Sir Francis j points out, does require very careful ■ • consideration. The rates on deposits ' as mortgages ought to be such ar are I I equitable to the lenders. It will be i noted that many public companies have recently raised large amounts of money by the issue of bonds and debentures, partly with th? object of repaying their depositor?. One of these companies was the Wellington Gas Company and it has announced its intention of paying off the whole of its depositors the moneys due and owing.”