Debts
p. 25 · Read in the full issue
New Guinea Planters’
Debts Suggestions for Readjustment
THE following official notification was issued early in June: “The Commonwealth Government has extended until June 30, 1936, the mora torium regarding plantations in New Guinea. In view of the improving copra market the Government expects New Guinea planters to resume instalment payments from July 1, 1936.”
It now appears that the announcement was a little premature. For several months the copra market had been im proving and, apparently, had reached a stage which allowed copra growers a sub stantial margin over costs. But almost from the date of the announcement the world copra market —for reasons which still are unknown to all observers —has sagged considerably, with the result that the margin of profit has shrunk to the point where there is really nothing avail able for such purposes as the resumption of interest and capital payments.
It is still a long way to July 1, 1936, and much may happen in the meantime to affect the copra market; but it can be said definitely at the moment that on the pre sent basis of copra prices it is quite im possible for New Guinea planters to resume instalment payments, and it is just as well that the Commonwealth Gov ernment should recognise that fact.
We have been informed by one of the leading firms which assist in financing New Guinea planters that, so far as it is concerned, it will not make one penny piece available to planters, under present conditions, to assist them in resuming in stalment payments. The same firm, how ever, is prepared, if the Commonwealth Government will substantially write down the value of the expropriated plantations in New Guinea, to write down the plan ters debts to the firm in the same pro portion.
This probably will bring before the Commonwealth Government the whole question of the New Guinea planters’ indebtedness to the Government in respect of expropriated plantations. Those planta tions were sold to the planters under a system of tender in years when the copra price was high and profitable; and there is not the slightest doubt that to-day a very large proportion of the capital value of those plantations has disappeared.
The same thing has happened in connec tion with all primary production and it is one of the most difficult problems in con nection with national finance.
The position probably is more simple in
New Guinea than in Australia and it should not be difficult to discover a modus operandi. We have no official information on the subject but we suspect that the big firms which carry on trade and finance in the Territory have themselves built up considerable reserves as a set off against, the obviously depreciated value of the expropriated plantations on which they have loaned money; and if, as indi cated, those firms are prepared to use their reserves in writing off a proportion of the planters’ debts, the Commonwealth Government should not miss the oppor tunity of securing an all-round readjust ment which should be satisfactory to everyone concerned.
We suggest that this is a matter con cerning which the planters’ associations in New Guinea should interest themselves.
There are many people who say that a \vriting down of values now would be most unfair to those who tendered un successfully for the expropriated planta tions and this argument has had a good deal of weight in the past. Unquestion ably, there was ridiculous over-valuation in tendering but that does not alter the fact that the world copra market has altered very much in the last seven years and that, quite apart from all question of over-tendering, the basis on which coco nut plantations are valued has been per manently altered.