LICENCE REFUSED

Evening Post, Volume CXI, Issue 26, 1 February 1926, Page 6

LICENCE REFUSED

MEAT COMPANIES AND

BANKS

"A SERIOUS POSITION HAS

ARISEN"

THE VALUE OF .SECUKITIES.

Opinions/of bankers on the refusal of the Government to sanction the transfer of the 'Wellington Meat Export Company's license to Messrs. Thomas Borthwick and Sons (Australasia), Ltd., were sought to-day by "The Post." In every instance it was stipulated that the opinion was purely personal, but in every instance, too, it was unanimous in re: grctting that such . drastic action should have been' taken by the Government in this matter. It is too early to say whether the bankers will discuss the refusal of the license'as a body and in association, but there was not a particle of difference of opinion among those interviewed as to "the serious position that has now arisen with respect to banks and all New Zealand freezing companies"— to quote the, words of one banker. The head of a bank not particularly interested in freezing works saidj: f Meat works as a security have gone phut!" That appears to express -every banker's conviction. Not only the Wellington Meat Export Company, but all New Zealand meat companies, especially co-operative companies, they agreed, would be affected by the Government's action.. The value of any meat export company's assets is bound up with the license. Its buildings, plant, machinery, and landhavo a value as a banking seeur- j ity only in so far us they arc employed in the freezing industry. If that industry cannot be carried on, except under license, and a license is refused them, the assets of that com- ! pa.ny are valueless to the banks. Not 1 only is the credit of the whole of the'meat companies in the future jeopardised by the action of the Government in the case. of the Meat Export Company, it was said, but a blow has certainly been struck at a legitimately British firm—Borthwick, and; Sons—with large capital invested in the freezing industry of New' Zealand. It was pointed out, too, that when Vcstey's were under discussion in Parliament in 1924, towards the end of the session, that refusal to permit the transfer to that British freezing firm of the license ,6£Ta,N.e,w;Ze.a);ind freezing'firmwould be considered by the Government as being' not only '.inimical towards" Britih capital but unjust. "If that was so in Vestey's case (it was remarked) nothing has beeu shown to the contrary in the case of the Meat Export Company's proposed transfer of its license to Borthwick's."

The Minister of Agriculture had said-the.granting of the transfer- was disapproved on the grounds of public policy; but he had given no apparent reasons to the Meat Export Company or to anyone else for his action—nothing at all, except that the Meat Board had advised the Government not to permit tho transfer. Explanations of this attitude are due to the company, in the first instance, and to the public.

The letter of the Meat Export Company iri acknowledgment of the. refusal was generally held to be clear in setting out the right of the company to have its application to transfer reconsidered. The shareholders' property included the license which the company had done nothing to forfeit, and no evidence had been offered that Borthwick's were not entitled to take it over. .'

The action of the Government in blocking this transaction was one that opened up to bankers a series of grave possibilities, considering the trend of control of produce-exports generally. No banker could now think of making advances to meat freezing companies.- . : "It is a rotten position to have created just now," was the blunt fashion in which'one banker expressed himself. By "just now" he meant the difficult circumstances in which some of the co-operative freezing works are carrying on after their admitted heavy trading lcosses last year. Tho farmer, as producer, may have benefited by the high prices, but as shareholder in co-operative freezing works he was heavily out of pocket.

The hope was' also expressed that the Government would thoroughly reconsider the whole matter, and take other authorities .besides the Meat Producers' Board and Department of Agriculture into its counsels. In any case the Meat Export Company should have been informed beforehand of the reasons that wo.uld influence the Government in not acceding to its request to permit the transfer. In this case there was no proposal to hand over a New Zealand enterprise to a foreign firm, for Borthwick's are a British firm of long standing. In any case; Borthwick's need not be so seriously concerned. Their interests are widespread in Great Britain, Australia, and New Zealand. They are too, believed to be financially strong; but it is very different with the great majority of New Zealand meat companies, especially co-operative meat companies, who are now liable to have the Government refuse the transfer of their slaughtering licenses to British firms, without giving good and sufficient reasons for such refusal, thus rendering their assets virtually valueless.

Moreover, the impression that such Government action will', make upon London, it was suggested, will inevitably be most unsatisfactory so far as the reputation of. the Dominion •is concerned.' ........