THE FARMERS' CO-OPERATIVE ASSOCIATION.

Press, Volume LXI, Issue 18422, 1 July 1925, Page 11

THE FARMERS' CO-OPERATIVE ASSOCIATION.

to .the rriTOR ov ''rnr. thess. Sir,—The treud ot' the di.^ussiou taken by your correspondents has been in favour of Jhe preferential sharehoidS ers being: urged to attend thesharehoid- ! ers' meeting. if it is honestly inI tended to sec fair piny, it need not oe • •objected to by the original promoters j and tliosj who' bore the burden and re- ' sponsibiiities of starting the company. • It is not only an old company, which ! Ims placed many -people on their feet, [ but raided ;t needed company in the I p.-jst t" help the-farmers when no one I was prepared to do so, and by its siiei ,-ess over many years gave the man on ' the land a chance to create an influence '■ whi'di has helped more than any institution to bear the cost of railways, liar--1 hours, public works, and loans to this ' country of New Zealand, making for it not only a name, but a. substantial assistance' in creating the wealth of the Dominion. The Co-op. began by showing that the men on the laud were being heavily taxed for their implements — plough.", reapers, fencing materials, etcetera. The promoters only wanted to get. their requirements for grain and crop-producing at a fair price, compared with the exorbitant demand of merchants. It. was no desire to push tho merchants off. but merely to ect -a. chance to succeed. Jn this tho Co-op. succeeded vastly bevond expectations. Of course it' created much jealousy, a.nd regulated matters commercially beyond the most sanguine expectations of the promoters. For how many years did the New Zealand Farmers' pay its way and give its original shareholders a profit of interest on their investments, to such an extent, that, the produce of Canterbury in meat, wool, and wheat gained a world-wide reputation? The articles of association, against, tho wish of many of the original shareholders, were allowed to be enlarged, and the war eame, and created a reason for more capital. The company then went be-' yond its means, the bank overdraft had i to be enlarged to its limit. There is j no present evidence that the Bank ever objected or raised any warning as to a | departure from the original articles of I association, and ; so the Co-op. now is found to be in such a financial state that winding-up and other plan's have j been suggested, i Unlike the case of the Bank of New Zealand, when it was in '' Queer street,''. the Government which has benefited by the prosperity of the Association of Farmers in many ways, including advances to settlers, which the original shareholders never Intended to deal'with, together with the vast sums claimed and paid for incometax, has not offered, so far as I know, to legislate for amendments to the Company Acts. I therefore think that the original shareholders should not be allowed to be unprotected and threatened by'the appeal of your correspondents. Where- would the Co-op. be but for the first proprietors? And where might it be if wound up or if taken over by the "preferential" ' It is, indeed, too serious a question to deal with at an excited meeting.—Yours, etc.. A SHAREHOLDER OF THE FIEST FIFTY STILL PAYING Tjp. TO -TEE EBrTOB OF "THE rEESS." Sir,—l have read with keen interest tlio letters which have appeared in your journal recently hearing on the j proposals submitted by the directors j and management for the consideration j of the'shareholders. ! Unlike, your correspondent "Manager/.' I have been connected with, the Association for a great number of years, being a bondholder, preference ' "and ordinary shareholder, and in can-, sequence have .. watched. the .meiit closely. , I have before me - a summary compiled covering forty years' operations,"j and-1 notice that for the whole of that period. a dividend .was regularly paid oh-ordinary capital ranging from seven j to eleven per cent., which averages ', eight and/a half per cent, per annum I —certainly a most remarkable performance. This,. to my mind at least, indicates a valuable. goodwill, which should assist in the early return to more ■ normal • conditions. However, the "world slump" came along, and the. Association, in common with all businesses, suffered in. ratio to its turnover; the' main difference being that others (including many large concerns throughout the were able to reconstruct within themselves without • undue publicity. The greater number were private concerns who had built up large reserves and wore able to meet the shrinkage caused by the slump without disturbing *±heir capital account. This, to.my mind, emphasises th.'i inherent: weakness of the past cooperative enterprises in New Zealand, namely, tho insatiable desire on the part of the shareholders to demand dividends, plus bonuses and rebates, thus influencing the directors and management 'in the past to distribute the major portion cf the profits earned, leaving a miserable balance for reserve account.

Had the Association, in The first twenty years of its existence, built up a Teservo. account in the same ratio as the last twenty year?, it would have accumulated approximately £400,000. Por an example, the Wholesale Cooperative Association ill Great Britain (whose losses amounted to £3,000 000) had built up a reserve account which enabled them to meet the heavy losses, and to-day are beginning to show a satisfactory profit. Tbo N.Z.F. were not fortified in this direction, and so tiiie directors and management /are forced to" appeal to those shareholders whose dividends are derived from profit to shoulder a reasonable responsibility. In.view of the modification of the proposals submitted, I feel il my duty, as a slia.rcholder and true cooperator, to support the amended suggestions. Although an ardent supporter of the Association. T must admit that I was at one time of the opinion that the Association would not he able to weather the financial gale of 1921 without the adoption of a much more drastic step, which would have seriously interfered with my invested capital. _ I am a. believer in equality of sacrifice, and despite the arguments adduced bv some, as an ordinary shareholder I mii willing in give vip los of my capital, .and further, as a preference '.shareholder (so long ns they do not interfere, with my capital), I feel it is an 'equitable suggestion to !>~.k me to waive the interest accumulated which the Association has not bpen able to earn. Further. I realise that the directors and management, in presenting the sngaestion=. arc imbued with the linn belief that if they are carried the shareholders can look forward to payment of a dividend much earlior than would ]>o pr:vsiK!o under the present weighty conditions.—Yours, etc-., LOYAL SUPPORTER. June 80th.