GREAT FIRM'S DECLINE.

New Zealand Herald, Volume LXVI, Issue 20385, 14 October 1929, Page 11

GREAT FIRM'S DECLINE.

NEW BLOW TO BEARDMORE'S

COMMITTEE IN CONTROL.

HEAD OF FIRM RUINED

STEEL AND ARMAMENTS SLUMP,

Australian and N.Z. Press Association. (Received October 13, 5.35 p.m.) LONDON, Oct. 12,

The Bank of England and several joint stock banks interested in the famous Clydeside shipbuilding and steel-making firm of William Bcardmore and Company have appointed Sir James Cooper and Mr. Frank Hodges to represent them on the control committee of the firm whose capital was drastically written down vrecently. Tho recont raising of tho bank rate was followed by an increase in tho amount of interest on the banks' loan, to tho firm to tho extent of £20,000 a year.

During the war Bearcjmore's was ono of tho largest armament firms in Britain arid employed 40,000 hands. In recent years its unemployed havo been upwards of 3000. Glasgow city circles express tho opinion that tho present reorganisation will enable the firm to turn the corner. Lord Invernairn, former head bf the firm, lost his entire fortune in attempting to savo the firm, and is now penniless and broken by tho post-war shipbuilding slump.

William Bcardmore, created Baron Invernairn of Stratlinairn in 1921, entered tho Farkhead Forge, near Glasgow, as an apprentice at tho ago of 14 years, and at llie ago of 29 assumed solo responsibility for tho management of tho business. Undpr his direction, it was developed into one of tho greatest of British engineering enterprises, from which ocean liners, completely equipped railways and mighty battleships were produced. It was formed into a limited liability company in 1920. During the war tho activities of the business were extended to include tho manufacture of aircraft and enormously expanded. Lord Invernairn will be 73 years of age next Wednesday. Tho reference to capital reorganisation is presumably to the scheme announced in October, 1928, and approved by the various interests concerned. Addressing tho special meeting called for tho purpose, Sir Gilbert Garnsey, chairman of the investigating committee appointed in 1927, stated that during tho five years ended December 31, 1920, the company niado profits amounting to £2,411,020. Small profits were made in tho 1920-21 slump years, but in tho following five years to the end of 1927, losses were incurred aggregating £1,900,000 before making provision for depreciation of the principal assets of the company. The committee proposed that the issued capital should be written down by £2,885,112, the 2,050,000 ordinary shares being reduced from £1 to Is each, and the 1,875,224 preference shares from £t to 10s each. With tho addition of various other sums, the committee produced a total of £3,391.000 for the writing down of assets, which were accordingly reduced from tho book value of £7,364,728 to £3.973.000. Arrangements were made for the extension of liabilities to three banks. All claims for arrears of dividends and interest on various classes of debentures were extinguished. Sir Gilbert Garnsey stated that 98 per cent., of ordinary shares were held by Lord Invernairn, who had given large guarantees, supported by collateral securities, to enable the business to bo carried on. Lord Invernairn himself said that he also held 435,000 of tho preference shares for which he subscribed at par in 1926 and 1927 when the company's need of ready money was most acute.

As to the cause of the comnanv's troubles, Lord Invernairn said: —"Wo had. an awkward post-war period with the handicap of having taken over war extensions at prices which are far above their market value to-day. We were very extensively equipped for the manufacture of warships, armourplate, guns and other war material, and for the production of steel far in excess of the possibilities of the market to absorb fo-day. We have had the coal strike, the general strike and other difficulties. . . Then the Washington Treaty further curtailed armament expenditure, and this coupled with the falling off in the volume of the trade in the steel industry. A reduction of prices followed to make tho position still more difficult."