THE FARMERS' CO-OP.

Press, Volume LXI, Issue 18426, 6 July 1925, Page 11

THE FARMERS' CO-OP.

10 TH3 XDITOB or "THB PUSS." Sir, —I am only a very small, ordinary shareholder in this institution, but I am very much oppose 3 to any. confiscation, voluntary or otherwise, in the interests of any class of shareholder. .Personally, I think it would be much better not to pay any dividends for the next five or even ten years, but to use the surplus profits in paying off the liabilities of the Association, and in building tip a genuine reserve fund. not_ a reserve fund invested in the business, too often just a pseudonym for "bad debts," but a cash reserve invested in Government securities, which in case of emergency could be at once, drawn upon. A genuine reserve fund would do more to raise the price of the. shares and to establish public confidence than any small dividend will do. As the reserve increased. so would the shares rise in value. —Yours, etc., C. A. TOBIX. July 4th, 1925.

TO T1I«5 EDITOR OF "THE TEESS." Sir, —I did not intend to write fur-.j ther on tho matter Tn question, but I ! am constrained, if I may by your per- ' mission, to reply to Messrs T. N. Gibbs j and W. M. Everist. The withdrawal of the drastic motion { to forfeit cumulative rights'is given l>y Mr Gibbs as a reason why the preference shareholders should forfeit their cumulative dividends for two and, a-. half years. J: don't believe tho directors ever hoped to have the preference rights forfeited: they just proposed it to frighten tho shareholders to accept { the lesser evil. No person of ordinary reason would believe that the directors of the company would, a. generation hence, have any interest in paying tho two and a half years' forfeited dividends to tho heirs or legafees of the present shareholders. Human nature will probably be the same then as it now is with the present directors, who would themselves, if the law permitted, have forfeited everything as they at first proposed without saying "Jiy your leavo" to the shareholders. By the advertised statement of the company,' and Mr Gibbs's advertisement of same date, it seems to be an arrangement that ho will move his motion of legalising the payment in the distant future, which would bo just as effective as tho proposal of tho company to forfeit the dividends in question, for all time, and I shall give Mr Gibbs the credit, as a stock broker, of being aware of this fact, subject to his optimistic opinion of the voluntary generosity of directors thirty or forty years hence. I shall treat with civility, Mr Everist's statement that the reduction, in name, of ordinary shares from £5 to i'l 5s will lessen the future dividends payable on such shares. >Sueh a stute'ment is not correct. There will be certain funds available, after paying preference dividends their fixed 0 per cent., and their available fuuds will, in name, only be a greater percentage on ordinary shares, iho holders of which will receive neither more nor less than if their shares were never written to £4 ss. 1 don't believe the company is in such diro distress as we are . given to suppose. After .the present- call of one pound per sharo on the 170,000 odd ordinary shares, there is still two pounds per share of uncalled capital as an asset which was freely quoted at tho time of issuing tho preference shares. Moreover, the company had never, during its existence, so much capital at its disposal as it has had' the privilego to use during tho past I five years, viz., over a million pounds of preference and debenture money even, if the original eaUed-uo capital

had all been lost before the issue of this -million pounds. Methinks tiic directors do proclaim (lipir alleged povcrtv too much. wherebv'tlwv hope to "frighten preference shareholders to make them a present of seventy-iivc thousand pounds, which if grantorl. would not be a bad day s profits.- Yours, etc.. ' _ PR KFEREXCK SHAREHOLDER. Christchurch. July 4th, 102-5.