Suggested Revision Of New Guinea

Expropriated Plantations Values.

WHEN the world’s economic re-ad justment is complete and we are able to carry on with practically a new basis for all enterprises, one of the first tasks to be undertaken in the Pacific Territories will be a re-arrange ment of values as between the holders of New Guinea Expropriated planta tions and the Commonwealth Govern ment.

About 182 plantations taken over by the Commonwealth Government from their former German owners, as part of the War Reparations scheme, were ultimately disposed of to returned sol dier planters on a system of auction bids.

The sales were made in three groups.

The first group were disposed of at reasonable prices. Slightly higher prices ruled at the second sale. Some ridiculous prices were offered and ac cepted at the third sale. The price of copra had been steadily rising and this gave many people an entirely false idea of plantation values. The result was that a considerable number of compet ent and experienced planters, who sub mitted reasonable prices for plantations in the third group were shut out alto gether by the ridiculously high bids of inexperienced men.

For a few years after the completion of these sales, copra maintained good prices and the majority of the new sol dier planters were able to carry on.

Then came the depression, and copra fell to unheard-of prices. It was essen tial that all planters, wise and unwise, should have assistance if they were to remain on the job. The New Guinea Administration practically wiped out the Export Tax and the Commonwealth authorities granted a Moratorium, so far as payments of interest and princi pal on the expropriated plantations were concerned. Those conditions rule to-day.

It is pretty clear that copra will never return to the extraordinary prices which were ruling when the expropri ated plantations were sold. In other words, it is most unlikely that the nor mal earnings of the plantations in the future will justify the capital value that was placed upon them at the three auction sales. Inevitably, therefore, there will be a demand for a revision of these capital values, if the soldier settlers are to remain in possession.

The question that is at present agi tating many minds is how the re-valua tion of the plantations is to be ap proached. It obviously would be un

fair to simply re-value all the planta tions on the new basis of earning capa city, fixed by copra values, while per mitting the present owners to remain in occupation. That would simply mean that the various men who submitted absurdly high bids for their planta tions, thus shutting out possibly more competent men, would be allowed to escape the results of their folly. This system, while sound enough in a gen eral way, would in practice operate most unfairly.

A system that we understand is fav oured by the more careful thinkers among the planters is one based on a percentage reduction. For example, if it can be shown that the fall in copra prices over a period of six, eight or ten years is equal to a fall of 20 per cent, in the earning capacity of the planta tons, then the capital value of the plan tations, as fixed at the series of sales referred to, would be similarly reduced by 20 per cent. Under this system, the men who offered excessive prices for their plantations, based on foolish esti mates, will still have to bear the cost of their folly. The men who took over their plantations at a fair value would have their plantations reduced to a fair value.

The planters believe that in asking the Commonwealth Government for re lief regarding capital valuations, they will have the support of the big trad ing firms, which have been financing them in this crisis. It is pointed out that the security taken by the big firms is simply the equity in the properties after the Government’s first mortgage is provided for, and the big firms’ in terest in this equity is recognised by the Custodian of Expropriated Planta tions. It is obvious that, if the Gov ernment insists on the old valuations standing, while the possible earning ca pacity of the plantations is permanently reduced, the security of the big firms will tend to disappear. It is, in fact, probable that the planters will suggest to the big firms that, as a gesture to secure the goodwill and co-operation of the Government, they (the big firms) should further reduce the rates of in terest for the accommodation they have extended.

Nothing is likely to be done until there is more permanence about the fluctuating economic situation; but as soon as there is some stability in sight, there will be a move made in the direc tion indicated.