CLUTHA BUILDING SOCIETIES.

Clutha Leader, Volume IV, Issue 169, 5 October 1877, Page 7

CLUTHA BUILDING SOCIETIES.

TO TEIE EDITOR.

Sir,— Mr Marshall's letter in a late issue on the above subject, is certainly a refreshing contrast of civility and good taste when compared ivith the impertinent letters issued apparently by one ancl the same correspondent under the different names of " Milton" and " Shareholder.' Mr Marshall contradicts -he fabe statement put forth by this i.'idividu*.: to the \ effect that the entry money oC .the Society J had been carried to the credit of fciie Profit ancl Loss Accounts of either 187 0 or 1877. "Milton's" other statemeiifs, which I previously enumerated, a*-*-? e'./.uilly vir*ionary, and when he convs forward wiih Lis real name to sub bautiate them, I will be happy to show iv what respect they are such as I h.-A r e d.-.-'.cribod thorn. Mr Marshall proceeds to criticise the late Mr Russell's r<*atemen.fc for 1870, which he states I consider as perfect. How he knows thife he docs not explain, and as I i never alluded to the statement as perfect or otherwise in the_ present dispute, I am somewhat at a loss to know how he came to know it. To quote from his letter : — " Tho first part of the statement of 1870 purports to be receipts and expenditure, and here we have amounts owing by the Society treated as monies received, and debts due to it as monies expended. Well, nothing can beat facts but figures after all." This way of putting things, namely, that what you owe you must have received, and what other people owe to you must have been expended by you on them, is apparently too much of a mystery for Mr Marshall's comprehension-, but for all that, similar entries occur in other statements besides Mr Russell's. ' For example, in the last statement put forth by the Clutha Property Investment Company, charges due Solicitor-, Ll-5 4s 4d, aro set down among the receipts, while the sum of L 6 14s Od for insurance, which is a debt clue to it, is placed on the other side as an item of expenditure. If this sum were not in realifcy a debt due to the Society, for which some borrower Avas liable, it ! would, of course, appear as an entry of charges in the Profit and Loss -Account where, however, it does not occur. Mr Marshall proceeds to point out an item of 2s 3d, balance from 1876, which ought to appear in my statement of 1877. I fully agree with him with regard to this fact, but I can assure him that. the matter 'received the attention of the Auditors, and the explanation' l gave satisfied them. The exj-danation simply amounts to this, :

that as I did not get this sum paid over to me, on account of the late Secretary's death, I did not see the necessity of providing it out of my own pocket, and I accordingly wrote it pff as an amount not. received. His next objection is of more importance, tie objects to arrears of interest or hues being treated either as receipts or expenditure, and tho .same objection he applies to forfeitures. Aa iv each of these cases, if the sum in question is treated as a receipt, it necessarily follows that it must also be treated as an item of expenditure, I fail to. see what difference it can possibly make. It has certainly made no difference whatever in the result of the amended statement furnished by Mr Marshall, except that his statement conceals tho position of the Society in respect to such arrears, while Mr Russell's and mine are calculated to explain it. He acknowledges that arrears of interest and fines are legitimate profits for the year in which they become due, unless they are irrecoverable. In this instance however, they are perfectly capable of being recovered. He proceeds to state that " the sum of Ll3l 9s 9d forfeitures, does appear on both Dr. and Cr. sido of the account, Mr Stewart's statement notwithstanding." I never made any such statement. I challenged " Milton's " declaration that this amount is debited in the statement as " still outstanding." The very nature of a forfeiture precludes the possibility of its being " outstanding " in any sense whatever. "In the receipts of 1876 there appears opposite Entries Ac. count the sum of L 179 Bs, of which LlO 2s 6d is debited in Profit and Loss Account for. that year, leaving a balance to credit of entries of L 169 5s 6d, which is not taken into account in any way in the statement, of 1877. Perhaps Mr Stewart can explain what has become of it *?" The above passage, and query with which it concludes, is the only portion of Mr Marshall's letter of which I havo just reason to complain. Of course I know he means nothing by it in the way of throwing any suspicion or reflections on mc, but the impression that it leaves on people. who do not understand financial statements, is that a certain sum of L 169 5s Gd, part of the entry money on shares, had to be accounted for by me although it belonged to the statement of 1876, with which I had nothing at all to do. Tho whole of the entry money, amounting to Ll7O Bs, which went through Mr Russell's hands alone, is set down in his statement among tbo receipts, and is duly and fully accounted for in the expenditure column ; and what Mr Marshall really means by the above query is, how was the sum of LIG9 5s Gd dealt with in- the statement of 1877, as far as the Profit and Loss Account was concerned 1 To this I reply that the sum of LlO 2s Cd referred to by him is nu part whatever of the entry money. It is simply the proportion for the year of the sum of L7l 7s, initiatory cxpensas account. Of this account, consequently, LSI ds Gd still remains to be debited to Profit and Loss Account, and the sum of L 179 8s of entries (less amount of entry money included in forfeitures account), also remains to be jilacod to the credit of Profit and Loss Account on some future occasion. The other Society on issuing their new shares, utilised their entries at once to swell their Xirofits ; we have, on the contrary, hold our entries in abeyance, to be used only when smaller profits made such an expedient necessary. "In Profit and Loss, 1877, Mr St'owart is Is. in error in the balance from 1870, and he places to credit of that account Ll3l 9s 9-1 forfeitures, which, as tho value of shares nofc boon paid, has no right to be taken into account not being due." The meaning of the latter portion of tho abovo sentence in Mr Marshall's letter is very obscure, but probably some .printer's error is responsible for the obscurity. As the forfeitures only represented amounts that had been paid, bufc on which fines had accumulated until the payments were forfeited and became the property of the Society, there can be no question but what there was a perfect right to take them into account as a profit. The other Society, on whose behalf and for whose benefit all this row has been got up, seems to have no scruple in appropriating a similar amount (L 139 3s Id) to the credit of the profit and loss account, and I might humbly suggest that what is sauce for the goose is also sauce for the gander. With regard to the error of Is pointed out by Mr Marshall, I scarcely know whether the fault is mine or not. In the MSS. statement for "1876, signed by Mr Russell and the auditors, the balance is 10s Sd, the same as I havo carried forward. In the profit and loss account, I find the charges account stated at L 9 13s, but on looking afc the expenditure column tbis account is ls more — L 9 lis, so that Mr Russell must have made a mistake of Is, which he corrected in the printed statement, bufc leffc uncorrected in the original. I now come to Mr Marshall's .amended statement, and I wish to point out to him that he has made a mistake of 10s in ' the premium account for 1876, whicli is 10s more than he makes it. Taking this into account, the balance he finds due by the Society is correct, being L4B 7s 3d, and j consists of — Secretary, L3O ; rent, LG ; Leader account, Ll2 9s Gd : total, L4B 9s Gd : from' which deduct cash balance, 2s 3d, leaving L4B 7s 3d. This amount Mr Marshall carries to expenditure account 1877, and he arrives at the conclusion that LSB 17s 3d is due by the. Society, from which we have to deduct his error of -10s j leaving LSB 7s. 3d afe the correct balance. This amount he states should be

approximately correct when compared with fche cam boo-:, and 1 am happy to inform him tliat such is the -caw. I fall, however, fco see the superiority of Mr Marshall's way of making out iho statement. It seems to me intended to hide tho sfcate of the different accounts, while Mr Russell's plan, which I .have followed, gives evory requisite information regarding thorn. To wavu a score or so of file auok • ing financiers of the other Society from rushing into print with their hair on end, I may as well explain in what way Mr Marshall's balance agrees with the balance as shown in my statement for 1877. He carries his balance of L4B 7s 3d into the expenditure column, but ho also includes on the same side from my statement some of fche items of which this balance consists, thus expending them twice over. Those consist of Ll2 9s Gd (included in LIS) paid to the Olutha Leader, and LG included in account of L 7, rent paid to the Town Council. He also omits from his amended statement the amount of rent due for 1877, viz. L 6. The account will therefore stand thus : — To Balance duo hy Society — £%* 7 0 „ Kent for July and -lua;., 187(i 10 0 „ Balance per statement; 187(5 ... 2 3 „ » „ „ 1877... 10 3 £55 9 6 By Casli Clutha Leader .£l2 9 6 „ Rent paid Town Council ... 7 0 0 „ Rent due 1877 0 0 0 „ Salary due late Secretary, '7(> 30 0 0 £55 <J G He will be glad to learn thafc the two amounts due as per above statement wore passed for payment at last meeting of the Committee. 1 have now to thank Mr Marshall for the courteous style of his letter, but at the same time I can assure him "the Auditors were much more likely to be correct than a few individuals (or was there only one after all ?) temporarily afflicted with a severe attack of measles on the brain.

" Shareholder's" letter iii the same issue is of such a nature that it scarcely deserves j any notice. I have received a letter from a gentleman occupying a high position in Balclutha, repudiating any connection or sympathy with it, and describing it as "evidently the production of some one having a personal animus or grievance against you." This letter has induced me to withdraw Avhat I had at first sent fco tho Editor for publication, as 1 have no wish to give unnecessary pain to possibly innocent persons. As tho authorship of " Shareholders" letter is narrowed clown to at most two or three individuals, and my reply to it was necessarily doubleshotted and slightly personal, I prefer to miss altogether rather than hit the wrongman. Re accuses me of using strong language in reply to " Milton's" first letter, which I deny ; I merely called a spade by its historic name. His allusion to Homer . and the Iliad, I am unfortunately incapable of comprehending. Who was Homer I and what was the Iliad? And what connection have thoy with the Clutha Building Societies ? He also confuses me with a Mr Allan Stuarfc, who contributed a poetic effusion to your columns. I must say I feel dreadfully flattered, aud I deeply sympathise with my unfortunate namesake in his affliction iv being mistaken for such an unqualified ignoramus as myself. He advises me (or Mr Stuarfc, it is nofc \ r wy clear which) to procure a simple work on book-keeping and study it, to which, for my own part, 1 reply that with the slender knowledge of book-keeping I possess, I have effected more business uf my own, and clone more for the advancement and prosperity of the Clutha and other districts, than he will ever accomplish should he live to be as old as Methuselah and as wealthy as Mr Clarke. By timely assistance, I have saved scores of settlers, and even a few squatters, who are now well-to-do and Wealthy, from being ruined, at a time when, owing to extreme depression in produce and stock, without such assis banco ruin -was almost inevitable. Probably if " Shareholder," with all his financial ability and skill in balancing accounts, had possessed the same power and opportunities, he would have used them Very differently, and with considerably more advantage to himself. I feel that ifc would be waste of time to ask this financial genius fco poiufc out in what way my balance-sheet was either incorrect or ridiculous, and to be good enough to put his name to the production. . He says, however, that it prevents anyone from arriving at an understanding of the true financial position of the Society. I append herewith, by way of contrast, a copy of the last statement of the Clutha Property Investment Company, and as I presume " Shareholder" bas some knowledge of its operations, I also ask what possible light does the statement throw on j the true position of that institution ? The only thing clear to my mind after a careful study is thafc when the Society had fco . pay tho JSational Bank L 903 9s Id, they had to borrow the trilling sum of LIB9O 13s to pay it with ; and similarly, when debentures came down head (foremost 1 suppos A) to the tune of LIOOO, they had fco send another little batch of kites aloft (properly balanced of course, " Shareholder's" schoolboy experience proving ii -.valuable on the occasion), amounting altogether without couufcing commissions, stamps, and other expenses, to the modest litfclo estimate' of L 2500. These little matters, I fancy, deserve the attention of the shareholders as well as tho affairs of the rival Society. • If this simple and lucid style of doing business, by borrowing -50s [ to .pay 20s, is continued for any length of

time, are any or many of tha shareholders aware how long it will be till the inteiest on borrowed money exceeds the profits, of fche Society'/ Ifttir n,fc. c Shareholde >' concludes liis le'.ier by a v :.*rence to my "powerful physique." hor the reasons abovo stated, I do nofc wish to retaliate. He has carefully concealed his name, so tliat for fclio present his own peculiar puybicai cun.itriic<iio»*t CsCiipOi-j notice. I may calm liis fears, however, on the boot question. My present pair I bought from our worthy ex-Mayor, and 1 may say thafc I have more -respect for his handicraft thau utilise either of them in a way which, to say the least of it., wonld not be at ali nice — for good, honest leather. I now come to "Milton's" letter in your last issue, and would again remind him that " Milton" is nofc his own name, and that he is travelling a little too fasti In his first letter he made certain statements, which I characterised as simply untruo. That . was plain enough, and if he had a spark ef honour left, ought to have brought it out. ' In his last letter ho quietly forgets to substantiate the several statements in his first, and proceeds to make fresh suggestions. One of these is that tho Society should place thou* books in the hands of Mr Leary. I can cap that with a better suggestion, and that is that the members make Mr Leary a present of the whole concern. I would also adviso that the affairs of the Clutha Property Investment Company be placed iv the hands of Mr Ceo. Capstiek, who would probably redeem them from the state of chaos into which they are afc present in danger of drifting. "Milton's" idea seems to bo that a large debt on tho part of the ono Society is a sign of strength, and a small debt a sign, of weakness on the part of the other. A tyro in finance, he says*, can see the advantage of borrowing in anticipation of revenue at 8 per cent., and lending ib out at tho usual rate. The usual rate in other Societies, apart from the premium, , being also 8 per cent, , I confess I do not see the advantage of borrowing very largely in that way, particularly where, as in the case alluded to, losses are occasionally incurred, and have to bo provided for. What I wish to draw particular attention to, however, with regard to the Clutha Property Investment Company, is the Avay in which the interests of tho old shareholders and borrowers have been sacrificed in order to bolster up by extensive borrowings and large advances, the new issue of shares. The old shares ought to have been by this time nearly paid up, and thep aro little more than half paid. The unfortunate borrowers are engaged in a labour resembling that of Siryphns, which consisted iv rolling a large stone up-hill, which, however, continually fell back on his hands and prevented him making any progress in tho useless struggle. The only way to place tho old borrowers of this Society on a footing of equality with the now, is for them to get fresh loans from tho Society, not indeed to the amount of the present value of their properties (which may be' very little), but to what their nominal values ivere twelve, eighteen months, or two years ago, when the new loans were granted under tho new issue of shares. In conclusion, if "Milton " writes again 1 havo to ask him to go back to his lirst letter, and explain tho rash statements with which he started the dispute. Till he does this and put*, his own name to it, I contend that his opinions and suggestions arc not worth a brass farthing. I | may also point out to him thafc he is slightly in error as to which Society, if I any, public confidence requires restoration. — I am, &c,

A. Stewaiit,

P.S.-— Since writing the above my attention bas been drawn to another of " Milton's " " little iagouuities." Referring fco my previous letter, he says — "* his statement that the Committee have decided not fco allow members to withdraw, only shows his and their ignorance, &c." Now I never made any .-such statement, as any one can see by reading my letter, ancl I. leave " Milton " to add tlua also fco the other " statements " he has failed to explain.