H.—3o

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of £340,000 secured by mortgage over the company's works and the " Codrington." The final terms were reduced by Mr. Lysnar into writing. Mr. Carney did or did not communicate with Chicago about this proposed arrangement. Mr. Jones, Chairman of the Meat Board, intimated that the proposal was not one that would commend itself to the Meat Board, because it would bring about such a state of affairs as would give Armour and Co. a moral right to claim permission to carry on the freezing-works if default were made by Mr. Lysnar's company. We are also of opinion that at Gisborne Mr. Lysnar, on behalf of his company, discussed the possibility of Armours lending £225,000 on mortgage of the works of the company ; that Mr. Carney thought that would not be entertained, and that some further proposals regarding Sims-Cooper, Borthwick, and Co., and Armours taking up preference shares was discussed ; that the proposal about preference shares, for whatever may have been the amount, was not gone on with because Messrs. Sims-Cooper and Co. refused to entertain taking up their quota. There is considerable doubt as to the amount of preference shares which Mr. Lysnar was endeavouring to get these three firms to take up. Negotiations with Vesteys. Apparently, in the early part of the year 1923 it was fairly well known among the shareholders as well as among the directors of Mr. Lysnar's company that the outlook for this company was anything but hopeful. Rumours reached the ears of Vesteys' representatives, and according to the evidence they delayed rebuilding or reconditioning their Taruheru works. Two of the directors of the Waipaoa Company —Messrs. Matthews and Witters — went to see Mr. Tolerton, the representative of Vesteys at Gisborne. Mr. Tolerton got into touch with Mr. Rowlands, and an appointment at Auckland was arranged. Mr. Witters then communicated with Mr. Lysnar, who was then in Wellington. He was asked by Mr. Lysnar— What did you communicate to me ? —I forget exactly how I worded it. I worded it somewhat guardedly. I telegraphed you in Wellington, and without giving anything away I worded it very guardedly and asked if you could meet us in Auckland on a named date. Visit to Auckland. The result was that Messrs. Witters and Matthews met Mr. Lynsar at Auckland on the 20th February and discussed the position with him. They then learned from him that a Mr. Hetley had previously been in touch with Mr. Lysnar at the hour fixed for their appointment with Mr. Rowlands when they went to that gentleman's office. There is considerable conflict of testimony regarding what happened there. Mr. Rowlands said that at the outset of the interview they wanted £650,000 for the works and the steamer, and that after a private discussion among the directors, which took some time, they then offered the works alone for £500,000. That consequently showed that at that period they estimated the steamer as worth £150,000. Mr. Witters confirms that £650,000 was mentioned for the works and the ship. As this matter is of considerable importance and there is a conflict between Mr. Lysnar and Mr. Rowlands, it is interesting to see what the views of Mr. Witters are. He says that Mr. Matthews and he had in mind a sale. He was asked, at page 959, " So that you do not complain about the works having been sold to Vesteys, as far as you were concerned ? " His answer reads : "If they were sold, but they were sacrificed." At page 961 the following appears : — Do you remember that when you were in Auckland in February you brought the price down a bit, or Mr. Lysnar did, by a sort of Dutch auction ? —That is right. He would not entertain the steamer at any price. That left £500,000 for the works ? —Yes. Did you not then gradually come down to £300,000 I—We never made an offer. I did not say your offer. You first of all placed an offer of £650,000 for the whole thing, the steamer being out at £150,000. She was eliminated, and the works were brought down to £500,000. Was not that brought down by stages first of all to £400,000 and then to £300,000 ? —I could not say, but we never got down to making an offer —to " tin tacks,"

4—H. 30.