TEMUKA LINSEED OIL, CAKE, AND FIBRE MANUFACTURING COMPANY.

Temuka Leader, Issue 1320, 28 March 1885, Page 2

TEMUKA LINSEED OIL, CAKE, AND FIBRE MANUFACTURING COMPANY.

The annual general meeting of the above Company was held last Wednesday evening in the Wallingford Hotel, Temuka. There ware only about 12 shareholders (out of about 72) present, Mr John Talbot (Chairman of Directors) presided, and read the annual report, as follows:

“ Annual reporfof the Temuka Linseed Company for the year ending 28th February, 1885,

“ Your Dirsctors have the honor to place before you their annual report and balance-sheet for the year ending 28th February, 1885. When we last met at the general meeting, twelve months ago, we informed you that a site had been purchased for the works, and that we intended to get scutching machinery as soon as possible; also, that enquiries would be instituted with a view to ultimately introducingspinning machinery for the production of binding and other twines.

“We regret that the views which were then held of the Company’s prospects with regard to the profitable preparation of fibre for export have not been realised, and that the balance-sheet shows a considerable loss on the year’s transactions, some explanation of which will naturally be expected. As you are aware, the initiation of any now undertaking always involves mere or less expenditure which after experience shows to have been avoidable. This has happened in our case, but it is, perhaps, the mors excusable in consequence of there being no similar industries in the colony sufliciently advanced to act as a guide. We have also been led into some costly mistakes, notably the preparation of the native flax fibre, which will not recoup the Company for more than half the amount expended on its preparation. The experience we have gained also goes to show that European fibre cannot be profitably prepared for export, the returns from a small trial shipment only netting about £23 per ton. “Your Directors early recognised the fact that in all probability it would not pay, and therefore instituted enquiries as to the cost of a small spinning plant, being of opinion that if a plant capable of turning out.binding and other varieties of twine could be procured at a cost within the Company’s means, it would without doubt prove remunerative, as it would enable the Company to convert the fibre into a valuable and readily saleable com-,

modity. This laads up to the most important subject of our report. “It will remembered that when Mr Hayhurat was leaving for England last year be kindly undertood to look out for machinery for the Company, with especial reference to the preparation of fibre. Mr Hayhurst was also written to later on, asking him to make enquiries about such a spinning plant as has already been alluded to, the cost not to exceed £IOOO. The Directors were at the same time making similar enquires in other quarters. “Mr Hayhurst, as it appears, having made enquiries, and being satisfied as to the description of plant most suitable for the requirements of the Company, and in order to expedite matters, made arrangements at once for the purchase, and we were accordingly advised by him in a letter which came to hand by the mail leaving London on December 4th that arrangement* were almost completed with Messrs Carroclough, of Manchester, for the machinery, the cost of which in London would be about £I4OO ; the additional cost of setting up at Company’s works, buildings, freight, etc., would probably be £6OO or £7OO. “These advices took the Directors considerably aback, especially as grave doubts had existed as to the advisability of taking up the spinning unless a plant could be obtained at a coat here not ex ceeding £IOOO, the available capital, it was deemed, not warranting a greater expenditure. In accordance with this opinion, a cablegram 1 ' was immediately despatched that Mr Hayhurst must not purchase. A reply was received, followed by a letter from Mr Hayhurst, saying that the order not to purchase -came too late, and that the machinery would bo forwarded in February, and may therefore be expected in about two months from date. .

“In order that you may thoroughly understand the position, it is necessary to explain shortly our financial position. On reference to the balance-sheet it will be seen that one-half of the capital is called up. There is, however, some £SOO unpaid, and the Bank overdraft is £874. It would therefore require another call of 10s per share in addition to the unpaid calls to pay off our present liabilities. There will then remain £2 per share available for ths extension of the works. There are 759 shares on the register, but a considerable number of these are doubtful and we deem it prudent to rely upon only about 650 of them. This would give an amount of £I3OO. It will therefore be seen that unless some special effort is made we cannot proceed with the spinning. “ The Directors, while stating that Mr Hayhurst in proceeding to the purchase of machinery without further reference to the Company icloarly exceeded their intentions and instructions to him, at the same time recognise that he has acted with the best intentions to benefit the shareholders and the district generally, and are therefore greatly averse to causing him. any trouble or expense. They are also fully persuaded that the plant he has purchased is a most suitable one, and have very little doubt that the manufacture of all the varieties of twines and small rope, which the specifications of the machinery provide for working will prove remunerative. That it is an industry well suited to the district, and would prove of great public benefit, is beyond all reasonable doubt.

“ From the foregoing remarks on the position, it will be seen that the capital of the Company is inadequate to provide for the extension of the plant, and it is doubtful if any increase of the capita! can be effected in the face of the present commercial depression. Your Directors, however, having strong faith in the utility and ultimate success of the undertaking, are willing to give their personal guarantee in order to obtain the necessary balance of funds, provided the shareholders will allow the repayment of any amount that the Directors who guarantee may be called upon to pay over and above the amount of their shares to be a first charge upon the assets of the Company. “ In filling up the vacancies on the Directory it is necessary that the shareholders should only elect men who will join their co-directors in giving the requisite guarantee. It will be necessary for you te elect an auditor for the ensuing year. “John Talbot, “ Chairman of Directors.” Continuing, the Chairman said this was a very important report, and more might have been added, but all the facts would come out in the course of discussion, in answer to questions, or in any shape the shareholders desired. The Directors did not wish to conceal anything from the shareholders. A few had grown flax and the Company had given them £2 a ton tor it, which was not a paying price, but was as much as they could give for it under the circumstances. If they went into the spinning he had no doubt but they could pay a good deal more for next years crop. He next read the Manager’s report, and the balance-sheet which showed a total loss of £720, and continued to say that the balpnce-sheet was not a favourable one, but there were many things (o be considered. In starting a new industry mistakes were always made and losses sustained which greater experience would enable persons to rectify. There were losses sustained last year which would never occur again, for instance, the native flax was a source of great loss. He would not, however, like to see it fall through and for that reason the Directors were ready to give (heir personal security to the bank so as to carry it out to the fullest extent. It was an industry al should feel an interest in, because it would employ labour as well as produce a commodity which was very much used.

Mr Postlethwaite asked how it was that on the balance-sheet it appeared that £lO5 worth of seed had been imported whilst only £2 14s worth of it was sold. The Secretary explained that the Company had planted the seed and obtained a crop from it. Mr Postlethwaite asked whether the Directors could give any information as to the price they would give for flax next year. Farmers would not glow it unless they got a better price than they did last year. The Chairman said if it was decided to go on with the spinning, the Directors would have to fix a pa)ing price and stand or fall by it. Farmers would not grow it unless they got a paying price for it, aa all depended on that. Mr R. A. Barker : We are all farmers, and of course have an interest in the matter. You nuy depend on it that]

farmers will get every cent for their flax that the Company can afford to give. Mr Postlethwaite said he was glad to hear that, so that it might go forth induce farmers to grow the flax. Them could rest assured farmers would grow' the flax if it would pay them. Mr Twomey thought the first question to decide was ; Would it pay to spin the flax into twine 1

The Chairman said it would be useless to go any further with it unless it would. It would not otherwise pay. They got £4O a ton for flax sent Home, but only £23 of it was returned to them after all expenses were paid. It could be seen that would never pay. The fact was that Mr Hayhurat having ordered the spinning machinery took them by surprise. They had been seriously considering whether it would not be wise to wind up the Company when Mr Hayhurst’a letter intimated that the machinery had been bought, and there was nothing for it then but to go on or throw the machinery on Mr Hayhurst’s hands.

In reply to Mr Twomey, Mr Talbot said they had not very reliable information as to the cost of manufacturing a pound of twine. Their Manager estimated that preparing the flax for spinning would be l|d per lb, and he had been told that Id per lb would spin it, but at the same time he would not undertake to say these figures were reliable. He believed, however, that spinning would prove profitable. They had sustained a loss now, and be thought they might as well test the thing fully. It would be better to lose a little more than give it up now.

A. conversational sort of discussion then took place, in the course of which it wan generally understood that twine could be manufactured—including cost of straw, retting, scutching, and spinning—for between 3d or 4d ; also, that as binding twine was now sold at about lOd there would be no difficulty in getting between 7d nndßd wholesale for it, especially as a pound of flax twine would go further and be more valuable than the imported article.

Mr Twomey said he understood from the report that the Directors were willing to give to the Bank a personal guarantee for the sura that would be necessary to pay for the spinning plant, provided the amount of the guarantee they would give would be allowed by the shareholders to be made a first charge on the assets of the Company. He thought that very reasonable, and also thought it very good of the Directors to undertake such a risk. They should also consider that the plant was on its way out, and that one or other of two things should be done : either the Company should throw the machinery on Mr Hayhurst’s hands, or take it up and work it. Perhaps it might be no great loss if it were thrown on Mr Hayhurst’s hands, for without doubt he would set it going himself, but at the same time he did not think this desirable, and ho also thought they were now bound in honor to take the machinery. Mr Hayhurst probably had not full instructions to purchase, but he had general instructions to look out for machinery, and if ha did look *out, and got it, it would not be honorable on the part of the Company to throw the machinery on his hands. Taking this, together with the feet that the Directors were willing to guarantee personally the necessary bank overdraft, he believed the best course was to empower the Directors to proceed with the spinning. The Directors had studied the matter, they were ia a better position to judge than outsiders, and they must have some faith in it when they were willing to become personally responsible to the bank. Mr Postletlnvaite did not think that the Directors were either morally or legally bound to take the machinery. Ho certainly would be in favor of taking it, but he ivould like it tested by a thoroughly competent man before accepting any liability with regard to it. it would be better for the Company to take the machinery than allow it to remain in Mr Hayhurst's possession. The letters to and from Mr Hayhurst in reference to the machinery were then read. The first instructed Mr Hayhurst to look out for a spinning plant which would cost about £1000; bis reply was that he had seen Messrs Barroclough, who could supply machinery that would spin all kinds of twine, from (he finest to the coarsest, for about £I4OO. A cable message was (hen sent to Mr Hayhurst instructing him not to purchase the machinery, to which he replied that it was too late, as he had already given the order. He expressed much regret if he had exceeded his instructions, and said the machinery would be found extremely suitable, as he had spent weeks with the engineer preparing plans of it, Mr Talbot said that oniy for this the directors would probably have come to the shareholders with a recommendation to wind up the Company. They had already spent about half the shares, and he thought now it was well to risk the other half. Ho could not afford to lose, any more than other shareholders, but he was disposed to risk it. If tney succeeded it would be a grand thing, and as they bad gone so far he was inclined to go the whole length now. He moved the adoption of the report.

Mr Postlethwaite seconded the motion. He knew from experience it was not a nice thing to be a director in establishing such institutions. There was a great deal of trouble and very little thanks for it.

The motion having been carried unanimously, Messrs Wright, Brown, and Miles were re-elected Directors for the ensuing year.

A motion was also carried to the effect that in the event of the directors giving a guarantee to the bank the amount of such guarantee should be made a first charge on the assets of the Company. Mr Rout was re-elected auditor on the motion of Mr Tsvomey, Mr Twomey said they were very near forgetting a very important duty. It was ) their duty to propose a vote of thanks to the Directors for the past year. They £ certainly had not produced a very able report, but he felt convinced they had given them a honest one. They had evidently dope tjieir best, and they gave them an assurance they would do it ip the future also by becoming personally liable to the bank for the amount necessary to carry on the business. The shareholders owed them sincere thanks for this, and he trusted they would not regret it, but that they would have a far more favorable , report to bring forward next year. He congratulated the meeting on the unanimity which existed amongst them, - especially in the face of such poor prospects, and said it was a very good thing

that Mr Hnyhurst bought the machinery, as it might lead to great results.

Mr Postlethfvaite seconded the motion. He did not think they could give them thanks enough, because there was no doubt but that they had had « good lot of trouble, He had every faith in the ultimate success of the industry, and felt sure the spinning would turn out very remunerative.

The Chairman was glad the shareholders present believed they had done thsir best Considering their report, he did not think that they would have been let off so easily. Be had faith in the spinning, and hoped they would have a better report for them next year. The first intention was that not only spinning but oil-making should form ft part of the industry, but they had not sufficient capital for this. He could not conclude wiithout bearing testimony to the efficient manner in which Mr Ashwell had fulfilled his duties. They bad been very ably assisted by him, and be felt great pleasure in expressing his appreciation of the way he attended to his business. Mr Ashwell thanked Mr Talbot, and said it was an additional pleasure to him to have his services thus recognised. A vote of thanks to the Chairman terminated the meeting. At the meeting ot Directors afterwards held Mr Talbot was re-elected Chairman. Mr R. H. Postlethwaite was elected Director in the room of one of the Directors who had forfeited bis seat by absence.