CANTERBURY FARMERS' COOPERATIVE ASSOCIATION (Limited).

Temuka Leader, Issue 2670, 9 June 1894, Page 2

CANTERBURY FARMERS' COOPERATIVE ASSOCIATION (Limited).

TO THE EDITOR. Sir, —I must say that the clever letter of “ Shareholder,” iu your Tuesday’s issue, has opened my eyes, and I think it is not very pleasant reading for poor farmers. Just twelve months ago the Loan and Mercantile put up its shutters, and when it is taking them down again up go the Farmers’. Is there to be no end to the troubles of the poor farmers 1 I think it is time the law was so framed that they can be protected from kite-flying companies. Over twelve months ago anyone would trust his last penny to the Loan and Mercantile Company. Over a fortnight ago the farmers of this district would as soon doubted their own existence as the Farmers’ Co-operative. Time has proved how misplaced this confidence has been. It is always the way with companies. By publishing audited balance-sheets they secure public confidence, but the moment the crucial test is applied the bubble bursts, and the dazzling figures vanish into thin air. Look now at the position of the Farmers' Company. According to their last balance-sheet, dated September 30th 1893, their paid-up capital amounted to £14,911 6s, and this they had invested as follows: il s, d, * Freehold property ... 16,129 19 4 Leasehold 1,327 16 0 Heaton street plant ... 319 3 8 Mill street plant <l4l 14 9 Office furniture 429‘ 19 0 £19,048 12 9 Now take a note of this : They had in September last a capital £14,911 ss, but their property and plant cost £19,048 12a 9d, leaving them £4137 7s 9i in debt. Thus they not only had not a single penny to buy goods with, but they started with a debt of £4137 7s 9d on the roof over their head. They had at debt of £4137 7s 9d before purchasing a pound of sugar, and the question is, how were they able to carry on the large business they have been doing ? Let me now show you. On the strength of their balance-sheets they got the farmers to p].ace their savings in their hands to the tune of £16,000. They got £34,000 credit from the bank; they had capitalised bonuses amounting to £4600, and they got credit for another £IO,OOO, making; up a grand total of £55,500. IV.tr Talbot says that the necessity for reconstruction has arisen through the articles of association not giving the directors power to borrow or give credit. I have shown that they have borrowed to the tune of £55,500. Let ns now see what credit they have given. Their owa figures are as follows: £ e, <J. Sundry creditors 21,700 0 0 Advances on grain ... 4,QiK) 0 0 Promissory notes and bills of sale ... ... 5,000 0 0 Auction account ... 15,000 0 0 £47,500 0 0 Fq* & company whose articles _ of Association impose on it the obligation to conduct its business on a cash basis, and has neither to give credit nor borrow money, I think this beats the record. They h&ve borrowed £55,000 and given credit to the amount of £47,000 illegally, and the question is, supposing they had borrowing and credit-giving powers, what amount would they have borrowed and lent? Mr Talbot, in effect, says : “We have a surplus of £45,000, and we don’t want money. All we want is power to give credit and borrow more.” I will now make up a balance-sheet for them, so that they may see themselves as others see them: — LIABILITIES. £ s. d. Paid-up capital ... ... 14,911 5 O B snk overdraft ... ••• 25,00*3 0 0 Bills uuder discount ... 9,003 0 0 Deposits ... ... ••• 16,00) 0 0 Sundry creditors 1,000 0 0 Capitalised bonuses ... 4,500 0 0 £70,411 5 0 ASSETS. £ s. d. Sundry creditors ... ... 21,700 0 0 Advances on grain ... 4,900 0 0 Promissory notes... ... 5,000 0 0 Auction account... ... 15,500 0 0 Stock goods 22,000 0 0 Freehold ... ... ••• 15,000 0 0 Plant and furniture ... 750 0 0 £84,850 0 0 Loss depreciation, 20 per cent. ... 16,970* 0 0 £67,880* 0 0 The only question here is, is 20 per cent, too much to allow for depreciation? To put uncalled capital down as an asset is nonsense, for the moment it was paid it would become a liability. Summing up the whole affair, therefore, I find the following result; Liabilities, £70,411; assets, £G7;880 ; deficit, £2531. Verily the shareholders cannot say to their directors, “ Well done good and faithful servants, because you have been faithful in administering a small capital wo will now give you a larger one.” Yet this is exactly what the directors are asking. They want more capital to give more credit and borrow more money,

and have a rare old time of it for a while lpnger. So far as I am concerned, although I may lose by it, I certainly Bhall not give them any more. I think the first loss is the best. 1 trust that the shareholders will insist on a most searching inquiry into the whole business. —I am, etc., Another Shareholder. [This letter ought to have appeared in our last issue, but was crowded out.—Ed.]