POSITION OF THE KAURI TIMBER COMPANY.

Auckland Star, Volume XXXIV, Issue 239, 7 October 1903, Page 2

POSITION OF THE KAURI TIMBER COMPANY.

INTERVIEW WITH THE SECRETARY.

In view of the remarks made in Parliament by the Minister of Lands, with regard to the Kauri Timber Company in relation to .the new regulations for the disposal of Crown forests, a "Star reporter wailed on the secretary of the Kauri Timber Company (Mr Milroy) to elicit the company's repiv lo these allegations. The reporter drew Mr Milroy's attention to the fact that the Minister had stated that he was led to adopt Ihe new regulation* because -the Kauri Company had taken up a block of forest, at Hie upset price immediately a tier the company's representative, with others, had refused to bid Ofc the sale. Mr Milroy: 1 confess that T cannot see Hie point of the Minister.* objection lo our action in Ibis matter. The Crown Lands Department had surveyed the Awakino block, and Ms experts had estimated the value of (he limber on if. and I hen fixed what the Commissioner considered a fair price. The bush was necessary lo keep our mills going, and the Mitchelson Sawmilling Company also entertained (he idea of buying it. On the day of Ihe sale we were represented, hut objection was taken by the representative of the Mitchelson Company to the Government valuation on Hie ground that the bush contained a good deal of totara. The Kauri Timber Company, having been informed that if (his objection were made the timber would be for the present entirely withdrawn from sale, supported this objection, and no bid was forthcoming in the auction room. Mr. Mueller, however, called attention to the fact that no bid being received the timber was now open to be purchased by any applicant at the upset price. On the Kauri Timber Company asking if, under the circumstances, the timber could not be entirely withdrawn pending consideration by the department, the question was referred to Mr. Duncan, who was present, but the. Minister replied that he could not see his way to interfere with the regular course. The representative of the Kauri Timber Company at once informed Mr. Mitchelson that this decision entirely altered the position, and that the company could not take the risk of an outside speculator coming in and securing the timber, so that the company must purchase it to keep their mills going. Mr. Mitchelson looked upon the fears as groundless, but gave a somewhat unwilling assent to this course being adopted. In order that there should be no suspicionof having attempted to "steal a march" on our trade rivals, we offered the Mitchelson Company a share of the block at -the upset price, and the offer was declined, that company apparently thinking that we had paid too much for the bush. We have documentary evidence to prove this, which we can place at the disposal of the Minister. If, as Mr Duncan says. it was this transaction which led him to abandon open sale in exchange for the syustcm of private barter, I must say that the reason is a most inadequate one.

What about the. suggestion thtvt yon desire to make a corner in kauri and raise the price?

The best answer to that is the undeniable fact that there is no instance on record anywhere of a successful coup having been effected in the timber industry. There are too many timbers of one class in the world to permit of this being carried out: and, further, the Kauri Company have not the resourcf the Steel Txvsj* As hadug *

direct bearing on the suggestion that the Kauri Timber Company desire to apply such tactics to the kauri -timber industry, it may be pointed out that in the early years of that company's existence, when they owned three times as much timber as they do vow, and almost the whole of the kauri trade was in their hands, the prices obtained for timber were so unremunerative that for six or seven years the company was carrying on operations without being able to give the shareholders a penny piece cither as interest on the capital invested or by way of return for asset that was being consumed. As further evidence of the futility of attempting to force prices to an artificial level, it may be stated that in the test of all tests—the British market—<the prices obtainable for kauri today, notwithstanding a shortage in the supply of the near competing timbers, Quebec and yellow pine, are little different from what they were fifteen years ago. Any suggestions on the part of the producer that the price of standing bush is now greater and the cost of production much increased are met with the reply that prices are governed by the inexorable law of supply and demand. Have you any strong objection to the new regulations?

Well, in view of the opinions expressed so emphatically by the Minister, the Kauri Company could hardly be expected to extend a cordial support to the change from open sale by auction to the appraisement aud local allotment principle, as it is but natural that a, fear should be entertained—although, let us hope, an unfounded one —that these expressions of opinion will find their corollary when it comes to the actual allotmeut of bushes to the various timber millers. Apart from the political issues which have been raised in this connection with which the company does not concern itself, there are the business objections that the appraisement method may induce speculators to secure bushes on the chance of making a resale to the millers at a profit which would have gone, to the Crown if the timber had been sold at auction; or, what would even be a greater loss to the colony, that those s.-inw speculators would' purchase the timber and send it out of the country in the log without spending a shilling in wages to the New Zealand sawmill workers. This is not a mere suggestion, it is being extensively done to-day in spite of the 3/ export duty on log timber. Do you mind giving me some facts with regard to your company's operations? Mr Milroy: Certainly not; I will do ko with pleasure. At its formation the company sent to New Zealand €720,000 in gold, which sum we feel sure some of our banks and financial institutions will acknowledge was just then (1888) something more than acceptable. Since that time the company has made further bush purchases, mostly from the Crown, to the extent of between -00,000 and £70,000. To the Government and local bodies £54.000 has been paid in rates and taxes, over £100.000 in miscellaneous expenditure, and nearly £2.000,000 distributed in wages. In addition t<> these amounts there have been huge payments for freight, in other words, wages, for the conveyance of logs and sawn timber within the colony, to which should be added a considerable proportion of the freight for transport of timber to Australia, many New Zealandowned vessels being employed. Store purchases of which four-tiftha have, been made in New Zealand, have amounted to £302.000, and the company now pay annually over £ 1000 to the Government for postage, telegrams and license fees; yet. in face or this enormous expenditure, the figures of which are made up to August 31. 1002. the company has only paid to its shareholders during its 14 years' existence a sum equal to less than 2 per cent, per annum on (lie subscriber! capital, and it is to be borne in mind that this represents not. only interest, 1 hereon, but a return of capital consequent upon .the wasting nature, of its main asset tlie standing timber. Is there any serious rivalry between the Kauri Timber Co. and the other kauri millers? » Mr Milroy: None whatever. Of course we all push our business to the best advantage, but otherwise we are on excellent terms. That Ihe other companies have managed to get nlon? very well by themselves, indeed marvellously well if we are to believe that (hey have been opposed at nil points by ;i powerful monopoly 1 need only point to the fact that the Lev-land and O'Brien Company's £1 shares now fetch £2 2/. Tt doesn't appear that they want any riovernment dry nursing, and T fancy that. Mr David Goldie. who lias been quoted by the Minister as favouring the new regulations, is very well able to take care of himself in the open market. Every miller in Auckland has either come into existence or ma,terially increased in prosperity since the Kauri Company was formed. Are there many New Zealand shareholders in your company? There, is a coin mon idea that it is mainly a Melbourne concern? Mr Milroy: That is a total mistake. The holdings of the New Zealand shareholders, not by any means Northerners only, in the Kauri Timber Company represent as much as the whole subscribed capital of the other two local kauri milling companies combined- The Kauri Timber Company has not asked in the past, and does not now ask, for special favours, although such a claim might well be preferred in view of the enterprise, displayed and the risks taken in testing the markets throughout the world- Instead of receiving a direct bonus or special facilities in the shape of being able to take advantage of subsidised steamers, the company has been left to bear the whole burden itself, and has at its own expense introduced this New Zealand product to mnny parts of the world. Some of these ventures bave been very interesting, and have been rewarded with high expressions of appreciation of the merits at New Zealand timber, but very poor account sales—China is an example. But assuming that the Government really desire to parcel out the timber fairly among the mills, will not the new regulations meet your requirements? Mr Milroy: The Government, under these regulations, really put the entire control of every mill at tne discretion of the Minister of Lands or officials working under him. who may or may not be in possession of sufficient data to enable them to undertake such a responsibility. To those with any knowledge of ] the kauri industry it is unnecessary to dilate on the difficulties and uncertainty, attached to getting the timber out to en- ! sure steady supplies coming forward to the mills to keep them profitably em- j ployed, but it may not be superfluous j to mention that year by year the timber! available for disposal will be more inac- 1 anesft costly- it* _sos-k_ and. :wiul

take a longer time to reach the mills; indeed, in some cases it will be necessary to take the mill to the timber instead of waiting for the timber to come to the mill. It is therefore essential that the quantity offered should be sufficient to justify 'the large expenditure necessary to ensure anything like regular and certain deliveries, or to warrant the heavy initial expenditure in erecting a new mill close to the bush; and this cannot be met by one or two million feet this year, even with the promise of getting a similar amount a little later on. In years gone by the timber was easily get-at-able, and small or large mills could r.eadilv be kept going from little patches of bush worked here, there and everywhere, but the condition of things is now entirely changed, and a miller now requires some assurance that he will secure sufficient timber to warrant the heavy outlay attendant on getting it out and converting it.

Then you resent the assertion that your company desires to set up a monopoly? Most emphatically we do. That the Kauri Timber Company has no Intention of standing out for the unearned increment, either in holdings of limber or land, is shown by its present dealings. With regard to the timber. We are forced to recognise that it can only be used once, and that the deterioration constantly going on, destruction by forest fires," which are increasing in frequency as settlement advances, heavy taxation, and loss of interest on capital invested, tire all quite sufficient to convince any sane man that standing timber is not to be kept to be looked at. As to the lands. Except where land carries timber, or is actually required in connection with their timber operations, we do not own one acre of freehold which is not in the market, and only waiting a purchaser at present value; indeed, in some instances, such as the recent sale of Walton's Block, in the Northern Wairoa, the land has been sold even before all the timber was cleared. Large areas of leaseholds also have been surrendered to the. Crown. In conclusion, all the Kauri Company ask is for the chance of securing such a proportion of the Crown timber as will enable it to discharge its liability to its debenture holders and make some sort of a return to its shareholders of their capital, the investment of which has proved of so much benefit to New Zealand. This we cannot hope to do unless we have some, reasonable assurance (hat we can obtain a fair proportion of the kauri timber coming into the market, so long as Aye arc prepared to pay a failprice for it. instead of being subject at any moment, through lack of supplies, to have our plant converted into old iron, our markets destroyed, and our workmen thrown tint of employment.