THE FARMERS' CO-OPERATIVE ASSOCIATION.

Press, Volume LXI, Issue 18419, 27 June 1925, Page 17

THE FARMERS' CO-OPERATIVE ASSOCIATION.

TO Tffiß EDITOS OF "THE IVBZSS." Sir, —Tho : affairs of the , Farmers' Co-op. being of., general interest, I should bo pleased if you can publish tlie following. : ; '■'.'...■■■"'■'•"' It seoms to. me the position of preference shareholders is purely a business one, and not a question' of.equality of sacrifice-: 'flio public invested in preference shai;es at a low. rate of interest, with early claims on . assets of, the company in preference to chancing a larger return with more risk. For a reputable firm to repudiate part of its liability will have a very unfavourable effect on the public, in"regard\to investing in!arty.other public company., I think a reduction of liaibility by any resolution at a general meeting, without consent of individual shareholders would be" illegal.' Each '■'preference-' shared holder has a specific and individual contract with the.company, and no adding to, or ■ reducing, the meaning of the Contract, years, after the contract is made, could be legal without .written consent, of each concerned. As the Cooperative Company's circular frankly admits:,that the increasing, liability, is top great to admit of paying accumulating' interes.t and pay dividends, its proper course" is to face. liquidation and live up to its bond as t° preference shareholdera having a claim on the assets-of the coiupany.

Are shareholders justified : in- allowing -accumulating -' interest ■' oh prefer-euee>;-,shares indefinitely, arid '•'tih'eVeby weaken their security in face of the company's present admissions? I would point out there is a large amount of. Capital not "called •up," which- would extinguish liabilities. The holders of shares with, a contributing liability .took the risk i» happier years, .for the prospective benefits, wliile preference-shareholders were content with' a fixed interest.' The present proposal means that in. a time of stress these people must not bo .hurt. - In other words, they'are .to "escape/their/liability to the,company by-- the company repudiating; its liability to nioro cautious investors.; Now, sir, the position ii 3 this: If the company wish the preference shareholders .to help them,.let it make..a favourable ibusiness offer. I suggest,..say, : a proposal for shareholders to waive accumulated interest, leaving share capital iinaltered. Tho Association, on the other hand, to bind itself to fwy.preference shareholders an increasing rate of interest in excess of 6 per cent, as the position improves, coupled with a definite .undertaking to liquidate in a given time if business does not improve to a stated degree. This, or some more considered proposal being submitted in writing to each- individual preference shareholder, any not acceptin,? being bought out, by uncalled capital beins called .up for the purpose.— Yours, etc., FIRST PREFERENCE,