LYTTELTON HARBOUR BOARD.

Press, Volume LXV, Issue 13374, 16 March 1909, Page 8

LYTTELTON HARBOUR BOARD.

MR T. E. TAYLOR AND THE SINKING FUND.

TO THE F.DITOK OF 'THE TRESS." Sir,—l should probably not have referred to the vicious and unwarranted attack made upon mc by Mr Taylor at the Board's last mooting, had he not put the matter in an unfair light solely ivitli the intention of casting

doubt upon my integrity as a puuHc man; but under the cireumstance.s 1 have decided to let the public too the other sido of the question.

At the time the Harbour Board (i> cided to alter it.s policy, at it-s meeting m .March, IVO7, and invest its Miry'itis lunds upon treehold security, as ieeommenued by the !• inance C o>lll mil too, ot which J. was chairman, very largo isunid 01 money woiv invented, or seeKliig 111 vestmoms, at from 4i per cent. to 0 per cent, interest. 'ilie great diliicuity was to obtain an undoubted isifiiriiy. As chairman ot the l'liianco Committee, 1 felt the great re.>iK>u.MbniLV or finding an absolutely sale investment, and ai the Board, had left tiio matter in the hands, ot that comimtiLO (April 10th, VMT), and the latter again gave no instructions how to proceed, to place the money out, the matter was thus left in my hands as chairman. With my knowledge of the values 01 land, i was then (as I still am.) of opinion that land investments were, and are, comparatively speaking, t-aier in the North than in tin- .South Island; at any rate, at that time values in the North had not reached the high level they had in Canterbury, and while any likely financial depression in the colony would scarcely affect the nominal values ruling in tho North, the prospective increa.so in values would certainly bo in favour of the lender or the would-be mortgagee. Thus I reasoned.

I was interested about that time, in a joint stock company. This company Jia<l bought an estate near Auckland, and paid £32,038 in cash. Tho directors were going *n for extensive improvements, and had virtually made all their financial arrangements in Auckland, Knowing the undoubted security it Jiad to offer, I suggested to the Br>ard of Directors to apply to tho Lyttelton Harbour Board for a loan. In due course this was done. When the application came ui> for consideration by tho Finance Committee, whu,(j/ consisted of Messrs Kayo, Graham, AVaymouth, Richardson, Ivaurenson, Qunive, tho Hon. G. J. Smith, and myself, I explained my relations to the company, and told the members I would not vote on the matter, and tho chairman of tho JBoard carried on all tho negotiations. Even if I had not dontj so, such honourable and such Khrewd men of business would not have lent themselves to anything which was likeJy to cast a reflection on their integrity. Indeed, having boon made aware- that 1 had an interest in the applicant company, they would' naturally bo more cautious still, and would not be likely to let that company benefit at the expense of the Harbour Board and their own reputation. So entirety was tho whole transaction conducted on strict business lines that after long and most careful consideration, the members of tho committee decided not to accept the valuation from an Auckland land agent, who (they thought) might or might not bo prejudiced in favour of his own district, but resolved to ask the Board to appoint Mr John Lambie, on account of his special qualification to do the work (May Ist, 1907). Then tho company were to guarantee his fee and all travelling expenses, whether the application was granted or not. Mr Lambie's report reached the committee in duo course, and they sanctioned the loan, subject to apnr'oval by tho Board. I again declined to take any part when tho committee reported, and Mr Laurenson (as chairman of the Board), instead of myself as chairman of the. Finance Committee, presented the report, and explained why I did not do so. The Board approved and sanctioned the loan (June sth, 1907). Messrs Harper and Company then got the necessary instructions, and the transaction was completed.

The public will see that the intention of the Board to invest a considerable sum of money on mortgage was first considered in open meeting in March, 1907. The matter again came up for discussion at the regular meeting of the Board in April, May. and June. It was therefore over three months before anything definite was done by the Board, and the intention of investing the money was therefore more, or less before the public all that time, and yet Mr Taylor accuses mc that I have taken advantage of inside knowledge 1 possessed as a member, and manipulated sums for my own business advantage. Perhaps just here it will be s.itkfactory to the public if I mention that adjoining properties have since been sold at £'8 per acre, and land adjoining in its native state, without' being fenced, or the slightest improvements, has been sold by public auction at £3 10s per acre. The company itself has snent several thousands of pounds, and the concern stands in their books at nearly £50,000, while the Board has advanced less than £2 per acre on the company's estate. In view of these facts, I think I may leave the public to judge whether such a security is v safer investment than fluctuating bonds, debentures, or even consols. At any rate, Mr Taylor himself has suddenly changed his opinion in my favour. At the first meeting he attended he distinctly condemned the Board's policy of investing its surplus upon mortgage on broad acres, but a fortnight later he moved a resolution unreservedly endorsing the Board's new policy; and as the resolution was carried, the Hoard's integrity is now assured for the future! The policy it has planned before Mr Taylor's advent was at first vehemently denounced bj' him ; but now it has received his august approval. With reference to loan Xo. 2. every member of the Board and the Finance Committee (as in the case of loan No. 1) knew of it. The public knew, or should have known, of it. as the Finance Committee's recommendation of lending another £10,000 was discussed in open meeting on December 4th, 1907, and sanctioned, subject to tJie approval of the Board. Here are the facts:—

A Mr McKendry (per Friedlander Bros., Ltd.) wrote to tho Board tliiit he was ju.st completing the purchase of a block of land, and asked if tho Board would lend any money, and it so irhnt amount. (I may mention here that it i=. part of that firm's business to negotiate loans, and thousands and thousands of pounds are annually raised on loans by them for clients.) The chairman of "tfic Board had fhe matter in hand, and Mr Lambio was again asked to value. Meanivhilo -\lr McKendry had be-en approachea by one of the local banii*. nnd had actualIt- been promised the money he required, and the loan would most assiiredly been taken from tho Board had ] not wind of tho negotiation, and personally persuaded the applicant to let his application stan<i.

In <hie course Mr I,ambie\ v.-luation v.-as received .->nd considered by the Finance Committee, and passed on to tho Board for its approval. The Board piantixl the loan on December 3Ofh, IS'O7. for three or five years, at applicant's option. It will be satisfactory for the public to hear that (he property lias since beon resold at -CI per :icro over and above Mr Lauibio's valuation.

And now to come to the third loan authorised by the Board on September 3rd, 1908. I was getting tired of tho responsibility of having to find sale

investments, nnd I especially instructed, tho treasurer on September oth to see what he could do in Christchurch. He reported to mc that he made enquiries in several likely quarUrs, and eventually brought under mv notice one application from a Christchurch firm of solicitors, the s-ecurity being down .*>outh. Simultaneously another application came in from a Mr Cox. ot .\shburton. Botli applications were considered. The Southern s-ocurity waa and i< well-known by nearly all the monoy-lending institutions in Christclnirch, and wns. and is. to my mind not a very de-irnhle one. The committee knew all about this, and so <i.~ the Board's secretary and Mr Larabio. Tho committee thought it would hart.iy be fair to pnt the applicant to the cost of a heavy valuation fee. especially a«. ia the faro of what they had heard, ttie loan was Hkelv to be refused.

Tndcr these circumstances, tho application from Ashbnrton was definitely taken into consideration. It was understood thr.t Mr I.nmbie -was to value, and he was accordingly instructed. His report was con.-id-red and the li-an granted, t.> the approval of the Board. The Board sanctioned tlie loan at its regular moetiivj; on Octo'ricr Tth. Parenthetically I may state that tho property adjoininsi of the same <|i':\litv of land with improvements, perhaps not so fj;ood, but with land in similar state of cultivation, was valued only recently by another valuator at 10s" per acre more than Mr Lam bio valued the property the Board lent on. As to tho question of Governmentland valuation, whoever may take Mr Taylor's remarks seriously, no in-> knows better than ho himself that those valuations are not to be trusted as guide* to the actual selling value of the land. Only recently two cases came under my" notice where, a property lras sold at eighty odd thousand pounds, resold again at over £100,000 within two mouths, ana yet th.-* Government valuation was .€32,947. Another property was sold at thirty odd thousand pounds, and yet the Government valuation was. I have known cases where properties were valued for Government rating purposes b." tho owners in excess of their market values, in the hope of their being able to rai.se. bigger loans. And now let mc say this, and I am proud to be able to do so quite truly and without vain glory: For thirtyeight years I have served tho public. I have been connected with ahn<vst every local body in the Ashburton district, and with nearly every financial and joint stock compajiy there. 1 have also been connected with local bodies and with joint stock companies outside Ashburton. In all these I have in every instance, ivitb the unanimous accord of my foLlow-members, been honoured with the highest and most responsible, positions in their power to confer on mc, as on each other as member of important co-operate bodies. There is not a man among all those hundreds of able and honourable men I have worked with, ono who lias ever hinted that my integrity as a

public man, or my honesty of purpose, was in doubt; .md for the first time in my public Jifo I have been deliberately insulted in the manner of which Mr Taylor has been guilty. If I had -wanted to hide anything in connection with tho loans., I would not have placed written records among the Board's papers to enable such a passionato pilgrim of platitude and Pocksniffian Puritanism, or such a genius for the discovery of mare's nests as Mr Thomas "Edward Taylor to make use of them. "What I have dono I have dono openly, with tho lull knowledge of tho committee and tho Board. I have done the work nt great personal inconvenionoo, and solely in the interest of the Harbour Board. As chairman of the Finance Committee, and for the credit of my own reputation as a man of business, the Board's interest was my first and only consideration : and bocau.se the Board as a whole and the Finance Committee, consisting of ablo and honourable men, have loft to mo the onerous and responsible task of finding safe investments, and because T have dono this to the best of my ability and with no ulterior motive, 1 have been grossly misrepresented, and my unselfish action has been so referred to that it has been made to appear as if I had done a dishonourable thing. But I have stood tho test of time. Will the man who accuses mc be able to do so? I may have erred technically in the matter of final procedure in allowing the joint stock company I w«s interested in to apply to the Harbour Board for a loan, but in excuse, if excu.so is necessary, I can say that, having initiated tho change of policy of investing tho Board's surplus in the manner already ]X)inted out, my greatest anx-etj- was not to take a false step. If I technically erred, my error ended in benefit tr. the Board, and I cm fearlessly say that I personally have not benefited a einglo penny by those investments of the Board—absolutely safe investments they are—which have been initiated personally by mc. I may say, too, that while. tho security for tho loans in question is frkwo than ample, and of the first order in stability and soundness, the interest paid by tho borrower is at the rate nominally and current ruling at the dates of the transaction. —Yours, etc., HUGO FIUEDLANDER.