FARMERS FREEZING COMPANY

King Country Chronicle, Volume VIII, Issue 689, 25 July 1914, Page 3

FARMERS FREEZING COMPANY

INTERESTING MEETING. ANOTHER STEP TOWARDS SUCCESS. A largely attended meeting of farmers and others was held on Saturday afternoon in the Farmers' Union Hall, Cambridge, to hear statements on behalf of the provisional directors of the Waikato Freezing Company and debate the "paper war," which arose recently through the attitude taKeii up by Mr J. D. P. Morgan, and his letters to the Argus. Considerable interest was taken in the event, and there 9 was an influential gathering. Messrs Ambury. acting chairman, and Makgill, one of the directors of the Auckland Freezing Company, were present by special invitation. The chief pointy at issue was the payment of a proportion of past profits, under the amalgamation agreement, to old members of the Auckland Company, in the shape of bonuses. Mr Richard Reynolds was voted to the chair. Apologies for absence were received from Messrs John Fisher, M.L.C., R. Clephane, chairman of the provisional directors, John Macgregor and White. Mr T. Cooper explained that the meeting was called by the provincial directors, who had invited the Auckland directors to reply to the letter by Mr Morgan in the Argus of 10th inst., on the question of amalgamation and Hellaby's agreement. Mr Milne, one of the provisional

directors, who was first called upon to speak, began by reading the following letter from Mr Clephane, of Churchill, which was addressed to Mr Cooper:—"Your letter to hand enclosing cutting from "Argus," for which I thank you. Am surprised at the attitude taken up by Mr Morgan, and his statements, which are misleading. (1) As regards bonus on shares. It was distinctly understood and explained at the conference of provisional directors of proposed company and delegates from the Auckland Freezing Company, that they intended to distribute in bonus shares about £BOOO amongst the shareholders of their company, such being a bonus of one pound per share; this sum of £BOOO is taken from their reserve fund, which in their last balance sheet stood at £16,000 (and will probably be increased to about £21,000 in their next balance sheet a month hence.) We all thought this was only a reasonable and equitable adjustment to make under the circumstances as the amalgamated company will still have this cash to utilise in, say, additions to buildings, machinery and help in erection of such works. (2) As regards selling meat in Auckland City: As the present company is not a buying company, and it is proposed to work on the same lines by the amalgamated company, I canont see how we are affected by the clause in Ilellaby's agreement, which debars the present freezing company from retailing meat in Auckland city. One of the most successful freezing companies in New Zealand, the Canterbury Frozen Meat Company, does not buy a hoof or retail any meat. (3) As regards canning The net result for canning purposes, under the present system of selling by public tender, is equal to the best results of any other company as regards tinned meat. Why, then, should we go to the expense of erecting canning works, if it can be disposed of to such advantage under the present system. Mr Morgan's remaiks that we stated Hellaby's agreement was a "bogie" is not correct. What we found out by explanations from Auckland delegates was that Hellaby's did not control the works (as it had been currently reported that they

did so); this was the "bogie" that was disposed ot. These iyatters will, I am sure, be fully explained at the public meeting to be held in Cambridge on Saturday. Hoping that we will have a large attendance, and that you will be able to. dispose of a great number of shares at conclusion of meeting. Continuing, Mr Milne said the Cambridge Dairy Company, one of the leading companies in New Zealand, had decided to go in for cheese. The reason was that cheese was a requisite article of food; butter w really a luxury and so far the only competitor in cheese was Canada, whose surplus would be taken up by America. All the other part of the world took butter, and margarine was playing a part. There was no substitute for cheese, and meat was going to rise to a very high value, the production decreasing to some extent owing to close settlement. Cheese was a food that would

take the place of meat when the latter got to an excessive price. With reference to the freezing

works, the man who really deserved credit for starting the project was Robert Darling, after whose letter a

meeting was called in Hamilton which came to the conclusion th<

the Auckland Company could hanule all the meat. The chairman had stated a fortnight later that the company could handle a greater production if needed. After referring to the loss of £2 to £3 p3r head on cattle through all the stock not being promptly handled, the district having lost £40,000 or £50,000 in one year, he said that when this was realised, at a meetng in Hamilton it was decided to start separate works in Waikato. He had full sympathy with the whole undertaking, but reports had been circulated that the works at Auckland were not being handled as they should be, and that Hellabys had a controlling influence. After they made a start, and bad a prospect of raising the capital, he went to Auckland to see hew they stood. He got an absolute surprise. A good £many of the difficulties, he found, were bogus, and the gentlemen handling the business were good men who had the interests of the farmers at heart,

wishing to keep them together. Their financial position was even better than their balance sheet Bhowed. The Auckland people were anxious that they should amalgamate. Amalgamation ~was brought about, without waiting for the formation of a separate company. It was a first-class thing for the Waikato. Large sums had V>een placed to reserve—sound business. Works were unquestionably needed in the Waikato. Before three years had passed, for every sheep or head of cattle they would be sending two or three. Before long fat sheep would be £2 5s to 50s per head. People had been paying for two-tooth stores as they did for fat sheep today. If they could get the prices they could produce more. Today they might have had the surplus in their pockets. An unbiassed opinion would be that they had done the best in going in with a sound company. With a separate company, while they were learning they would be losing part of their money. The company could if they chose have paid 21§ per cent, last year. Was it not reasonable that farmers who put their money into that company and who had a fight to make it pay, after they had brought it to a successful point and made it pay, should say that the reserve was their own money? The shareholders were receiving back what they had earned by their own capital and business ability. They were only taking £BOOO, whereas many would have taken the whole lot. Mr Miine then instanced the Wellington Meat Company, with reference to the Marton branch. The Auckland Company were issuing so many shares, paid up, and the balance would be paid into capital. They would have one manager, one set of dircetors, and with the works in Auckland and Waikato fully going, the whole could be run. In the slack season they could close down one and keep the other running the whole time, saving much expense, and using up all the surplus stock. With both running separately they would not be able to handle the stock. While one of the works was being cleaned up the other could be kept open. On the other hand they might have got at loggerheads and started cutting prices. To handle the whole concern, including butter, they could cut down the working expenses to the lowest and pay a dividend. He always liked to see a dividend. There was going to be a great expanse in the export of meat, butter and cheese. In a very few year 3 Waikato would have double the present amount of production of butter, and that part of the business was a very good asset. If Hellabys were to sell out he could form a company in a week to take it over. The main point was combination by all means and sticking together. On the question of Mr Morgan's letter to the Argus taking exception to what had been done, it was a great surprise to him. Mr Morgan was a leading settler and he thought he would have been able to look at the thing in a fair and businesslike manner. Mr Morgan took credit for originatng the amalgamation.

Mr Morgan: No. Mr Milne, continuing, said Mr Morgan had stated that he was the means of bringing the company and the provisional directors together, and farther that he asked permission to attend the meeting wben a deadlock occurred, of so much benefit he considered amalgamation, and one would conclude from his letter that the agreement was entered into through his permission. He fully concurred in the amalgamation. All the directors were satisfied and he (Mi Milne) had thought they had done a verv wise thing in joining their forces. Why now should Mr Morgan take exception to the amalgamation? He took exception to certain clauses in Hellaby's agreement. If he did not know about it he should not have supported amalgamation. Had he any new suggestion? They could not ask Messrs Hellaby to cut out a certain part, otherwise Messrs Hellaby might say there were other parts they wanted cut out. It was unreasonable to find fault with the child one had brought into existeme. He looked forward to seeing the Auckland Freezing Company one of the biggest in the whole of New Zealand in a few years. People were finding out that land in Waikato was selling more cheaply than in other poorer districts. Combination was the key to the problem. In conclusion, Mr Milne said 15,750 shares had been applied for and applications were coming in fast. The prospects were bright. (Applause). The chairman said he was glad the searchlight had been turned on. Mr Ambury, who was next called upon, congratulated Cambridge settlers on the honour bestowed on Mr Fisher. (Applause). Proceeding, he referred to the conditions on which amalgamation was discussed; first of which was the reserve fund, a part of which, out of £16,000 received, with £4OOO carried forward, £BOOO was to be given to the old shareholders. Since then it had been agreed, as only reasonable, to give them two £1 debentures for every £5 share held, reserving the company's right to redeem these debentures by ballot. They had only 19 years to run, and that was the reason for writing iown rapidly. But the Harbour Board demanded certain concessions, and as a quid pro quo in fair play everythng was done to save expense, and they got an extension of the lease for 50 years after the lapse of two years. The extensions on hand were to be completed. They were spending! £30,000 this year whether the Waikato works were going on or not. Mr Ambury then repeated some of the details of the extension works, and storage capacity. The directors were to be increased from seven to nine, and if they sold sufficient shares the Waikato could appoint as many directors as they liked. He had also told the provisional directors that the nominal capital was to be in-

creased from £75,000 to £150,000. The North Auckland people wanted to be put on the same footing as the Waikato. He did not want to make too much of Mr Morgan's letter, which was a very weak criticism of the position. He was surprised and sorry. He agreed with Mr Milne that Mr Morgan had done a very unwise thing. If he did not know when be recommended amalgamation he should have let sleeping dogs lie. He was sick of this kind of thing. He did not want better businessmen than Hellaby's representatives. The agreement was not drawn up by Mr Cotter, but by the company's solictor. Mr Morgan also said the argeement had not been seen for seven years. That said something for the agreement, but it was not true. The agreement was under discussion two years ago. They could not go into the retail meat business in Auckland, but they had a quid pro quo. All the export meat Hellaby had ever frozen had been frozen by the Freezing Company; but for two years they had not frozen a hoof for export. The Freezing Company could kill meat for any butcher, but they could not buy meat themselves. They could not tin meat either in Auckland or Waikato for sale or export. Seeing the price they got for beef that was not a serious matter. Messrs Hellaby were sick of the pinpricks they had been subjected to, and asked why don't the farmers buy us out? When they have paid the bonuses they can have the shares back at par. He had never referred to a "freezing war," though he had said that the establishment of separate works might lead to splitting rates. Last year was a very good year, and £2,000,000 worth had gone through for export this year. He did not Know any company in a sounder position. They had kept down their values very much, and the farmers had got the best thing offered in Auckland for many years. If they were dissatisfied with any director they could appoint someone else as he dropped out. He strongly advised them to take up as many share 3 as possible. Were it not for the extensions going on he would advocate a rebate, and a considerable reduction of rates.

At the request of Mr Morgan Mr Ambury read the clause of the agreement bearing on the selling of meat and canning, etc, reject meat and offal being excepted. Mr Morgan said the secretary of the company had told him Mr Cotter was acting for Messrs Hellaby, and drafted the part about canning at any rate. Mr Ambury said Hellaby's had their own solicitor, but the company's solicitor drew out the deed. Mr T. Cooper asked, for the benefit of the settlers in the King Country and backbiocks, whether dividends would be paid pro rata. Say they only called up £2 10s in the first year, after allotment would they pay dividend on that £2 10s? Mr Ambury: Yes. If only 2s was paid up whatever dividend was paid on fully paid-up shares would be paid on these, but you would not expect a dividend on £5 if • only 2s were paid up.

Mr Cooper said those who asked him about it wanted to know if they were going to get interest on the money they put in, or whether, in holding back, they kept back the interest of the money they had put in. Mr Ambury: The dividend is always paid on the capital that is paid up.

Mr Makgill emphasised the absolute advantage of the farming community sticking together, and referred to the importance of having secured to the farmers the control of the freezing industry in the Auckland province, compared with the giving away of small items. (Hear, hear). By sticking together they could maintain that position. He reminded old shareholders that they were to use their debentures to pay their shares up to 10s, and then they would give a guarantee that no call would be made on that 10s, which was not paid up for at least twelve months.

In reply to Mr Morgan, Mr E. Goodwin said he had understood from the very first that £BOOO was to be divided amongst the old shareholders. Mr Jackson corroborated. Mr Morgan: I must have misunderstood. I understood there was to be no bonus, and that Waikato should simply find £30,000. I distinctly understood that. The chairman said he was sure Mr Morgan would not willingly hurt anyone's feelings, or make a statement, but they all got misinformed sometimes. Mr Morgan said he was also under the impression that in conversation

afterwards with individual directors they confirmed his impression. That was very much why he had taken exception to what had been done, because it had seemed to him that they agreed to something quite contrary to what was understood. They should have been informed in the circular letter that the bonuses were to be paid out. It had not been made clear right through. Mr Cooper said that at all the meetings of settlers which he had been asked to address he had brought out the fact of the £BOOO bonus shares.

Mr C. C. Buckland said that was so. The chairman said there had been some misundstanding. They had better forgive Mr Morgan and make afresh start. (Hear, hear). Mr Goodwin, referring to Mr Milne's statement that Mr Darling had first moved for freezing works in Waikato, said it was only fair that the man who mcved first should have the credit or the blame as the case might be. Two years before Mr Darling moved at all, at a meeting in Hamilton Town Hall, he (Mr Goodwin) suggested that the time had come for having freezing works in Waikato. He was then put down fiat, and told that he was "off his rocker." (Laughter). He moved a vote of thanks to the speakers. This was seconded by Mr Powlson and supported by Mr C. C. Buckland, who said the amalgamation was going to be a splendid thing. A vote of thanks to the chairman, on the motion of Mr Ambury, terminated the proceedings.