THE MORATORIUM.

Taranaki Daily News, 3 January 1922, Page 5

THE MORATORIUM.

EFFECT OF THE NEW LAW. CURRENCY THIS WEEK. IMPORTANT PROVISIONS. Probably the most important piece of legislation passed by Parliament during the session, which has net yet been completed, is the Mortgages and Deposits Extension Act, to come into operation with the beginning of the new year. The principal effect of the measure is to extend, with certain modifications, to December 31, 1924, the protection over existing mortgages conferred by the Mortgages Extension Act of 1919. Provision is also made to secure that, generally speaking, <6%per cent, shall be the mimimum rate of interest on extended mortgages.

The legislation of the short session this year, giving protection to the holders of money -on deposit has also been amended, the new conditions obtaining from the beginning of 1922. It is now provided that deposits aggregating £lOOO or less are to be repayable at December 31, 1922, and those exceeding £lOOO at June 30, 1923. Six and a-half pei - cent, is established as the rate of interest on deposit loans after the new Act comes into force. Unless the lender objects, the borrower is to yieet his obligations by instalments. In the case of deposits of £lOOO or less 5 per cent, is to be paid back on April ], 1922, 5 per cent, on July 1. 1922, balance on the due date, December 3.1, 1922. Where deposits aggregate more than £lOOO there are to be four instalments of 5 per cent, each on July 1, and October 1, 1922, and January 1 and April 1, 1923, leaving the balance payable on June 30, 1923.

Not only is a limit placed to the protection over loans on deposits, but it is provided that borrowers holding money on deposit who receive further loans in that manner must make the repayment of their old obligations a first charge on the new money. Similarly, companies holding deposits, which borrow further by debenture issues, have to utilise the proceeds for repaying their borrowings on the deposit system. CHANGES MADE BY ‘THE COMMITTEE.

The moratorium legislation this session had a somewhat chequered career. The Bill as originally introduced provided that mortgages to which protection was extended, should, generally speaking, become repayable on June 30, 1922. There was, however, an arapgement whereby a mortgager desiring an extension beyond that date, should notify the Public Trustee. In the absence of’objection bv the mortgagee, an extension to June 30, 1925, was automatically to be granted. Should the mortgagee have availed himself of the means of objection provided, the matter was to have been refered for adjudication to the Land Board for the district in which the mortgaged land was situated.. The whole of these clauses were swept away by the Statutes Revision Committee when the Bill was before it. It was the committee which reurned to the procedure of the 1919 Act, with the extended term. While committee proceedings are private, and may not be divulged, it was understood that such strong objection to the original Bill was raised by the law societies, associated banks, ana financial institutions generally, that it was felt the Bill could not be supported by the House. The amendments were made accordingly and accepted by the Government. Even then the changes were not ended, for minor alterations—in detail but not in principle—-were made by both the House and the Council before the measure finally passed into law.

PROBABLY LAST BILL OF THE KIND.

When the House was considering the revised measure, the Minister in the Hon. E. P. Lee, said the whole position, as affecting both mortgages ana deposits, had been carefully considered by the Statutes Revision Committee, aJd as a result of inquiry, 31 1924, had been, fixed for the termm ation of the moratorium. This.did not affect any mortgages e-xeented after th . coming into operation of the Act ol It was intended that this was to he the last Bill of the kind the Hom>e would be asked to pass, as !t was l' o P« d the financial conditions would have im proved by the end of 1924. The Bill had been carefully considered by the ' legal and commercial world, and he thought U wi. old meat all requirements.