MR ROWLAND’S EVIDENCE

New Zealand Times, Volume LII, Issue 12092, 20 March 1925, Page 7

MR ROWLAND’S EVIDENCE

NO TRUST METHODS.

Anthony' Rowlands (.aucmana; ««» that he was general manager to tlx Westfield Co'., Ltd., Auckland, W. an< it Fletcher, Ltd., Auckland, and Nelson (N.Z.), Ltd., Hastings and Gisborne Vestey Bros., Ltd., had no interest n New Zealand, but these companies wen controlled by Lord Vestey and- Sir Ed mund Vestey. He gave evidence as t< the date of establishment of the vanoui companies and as to their shareholders W. and RS. Fletcher, Ltd., he stated was agent for some years of the Whan garei Freezing Co., which was n 1914, but ceased operations in 1921. Nel son’s (N.Z.), Ltd., was established in 192< to purchase the Hawke’s Bay and tlx Gisborne Works of Nelson Bros. . H 1920, he was summoned, by the Ministei for Agriculture to 'his office, at Welling ton; where the Minister spent severa hours closely interrogating him as to tlx operations of Vestey Bros., Nelson’; (N.Z.), Ltd., the Westfield Freezing Co. W. and It. Fletcher, Ltd., and th( Whangarei Co., before he consented t< the transfer-of the Hawke's Bay and th< Gisborne Works to Nelson’s (N.Z.), Ltd The works were SO years old when pur chased. The company had considerably improved the Hawkers Bay and the Lis borne works, and there had been no ob jection that he knew of raised to their doing so. The company gave preferenct to the farmers who wanted to pui through stuff on their own account ere to exporters who bought stock for kill; ing. i when the farmers and exporter! were putting a lot of stuff through the works it was not neoessary for the tompany to b\£’ to the same extent as wher such business was slack. That accountec for the so-called "in and out” buying with wmich the oompany was charged. WORKS WERE PUBLIC UTILITIES. Their works and stores were open foi the use of all. They were public utilities open to all and sundry; and, so far ; at he knew, they had had no complaints except Mr Lysnyu’s, about anybody nol being able to get killing space in their works. None of the trust methods mentioned by Mr the previous day were ever' in existence here, in their organisation at any rate. From his knowledge and experience of the trade, it seemed to 'him that >an - organisation .which kept its capital liquid, so that it co aid. buy up stock in large quantities when it saw an advantageous oppqrI tunity, would be in a far better position |to “bull" or "bear" the market, and would thus be. a far greater danger to the producers and to the public, tt an an organisation which locked up its capital- in providing public utilities as their eompany did. They had never 'had any resistance to the renewal of their ticenses.

"SAM® METHODS AS FARMERS’ i WORKS." The works operated in New Zealand by Vestey's were all operated under the same methods as the farmers’ freezing works as regards killing for people, methods of oharging and accounting, etc., their operations being carried, on to make a reasonable profit. Their meat was generally sent to London. There were some 40,000 retail meat shops in Britain, of which Vestey’s owned 2800; and they had three ont of the 41 or 42 freezing works now operating in New Zealand. As to grading, they complied strictly with the requirements of the Meat Board, which had perambulating jnspeotora; whose sole duty was to see chat grading of’' the,' freezing companies throughout the Dominion was uniform: They had the usual occasional complaints as to’grading, including those from Mr Lysnar. At the time the. Poverty Bay Meat Works were bought by/the comnany, the 'company's\oivn works in the Gisborpe district were 85 years old, end. ju very bad condition—quite out-of-date:; When they took over the Poverty Bay Works, they found them. in a disgraceful condition, and their engineer estimated that - they would have ..to (spend £IB,OOO m the first. year, and £28,000 in all within 1 18 months to put the works' in order. The bulk of that money had now been spent, and it seemed that the cost would be nearer .£30,000. VESTEY'S AND WAR BEEF.

The statement that Vestey's bought the w stocks of 'beef to depress tlie jnkrket was a very .wrong misstatement of the facts. The existence of those stocks was a cloud hanging over the whole meat trade at that time; and, under pressure, Vestey’s bought the, beef for disposal on the Continent. They started moving those stocks, and the trade immediately improved. But vestey’s action was nullified by that of the Reparations Committee, which took exception to the British Dominions getting for their meat German gold, .which might ultimately be available for tbe payment of reparations. . Germany had to pay in gold marks for the beef; but she wanted to pay in paper marks, and the meat had to be returned to London at great expense. The result waa a huge lose Vestey s, but the British Go-yernment shouldered a portion of that loss. POVERTY BAY CO. NEGOTIATIONS. Before buying the -Poverty Bay works he had heard that there was some talk of selling them ta„ Armour’s. The first approach made with regard to the sale of the works to Vqstey’s, was by two directors of the company (Messrs Black and Witters), who saw Mr Tallerton (Gisborne manager for Nelsons, N.Z.. Ltd.), and asked him who whs the proper person to see in regard to a safe to Vestey’s. He referred them to ,-witness, and in February, 1828,'Messrs Matthew, and'Witters, saw him, with Mr Lyßnar; and the last-named, said that they were anxious to sell the works'and the Admiral Codrington, all of which he. offered at .£650,000. Witness said that the amount' asked was ridioulous; and • that, ih any case, it would bo useless offering the Codrington ; she would not bp useful under any conditions whatever. .The other two directors seemed, inclined to sell the works without the steamer, but Mr Lysnar objected. However, after some discussion' amongst themselves, they offered the works alone for £500,000. He understood from that that they valued the steamer at that time at £150,000. The £500,000 offer, however, was eo absolutely ridiculous that: he told, them it Was hopeless discussing it; he thought that VCsteys could build, similar , works for £150,000. • Certainly, for not more than. £175,000. Between March add April, 1923. he saw Mr Lysnar both in Wellington and Auckland. Mr Lysnar at Auckland) again stressed tho offer of the works and the Codrington together, offering to make a big reduction on the £650,000 first mentioned. He would hot come down to anj reasonable figure on the works alone, eo nothing was done. "FLUIDS AND SOLIDS."

In May, 1923, Mr Trott and a eon of Sir Edmund Vostey visited New Zealand. They went to witness to see the Gisborne works of Nelsons (N.Z.)., Ltd, and Mr Lysnar strongly pressed' them to visit the Poverty Bay works. They did so, and the directors treated them very generously in the matter of both fluids and solids. (Laughter.)' On that occasion, Mr iysnar offered the works for £400,006, with a fairly obvious influence from the conversation that the directors might come down to £350,000. He said, however, that ho would not submit, the matter to his principals, unless there was a firm offer of the works alone, along with the license, for round about £250,000. Mr Lysnar again brought up a suggestion he had made at the first interview at Auckland that Vestey's should take shares in tho Poverty Bay Company. Mr Lysnar also asked' what price Vestey’s would put on their own works in the Gisborne district, urging that there was not room for three works in the district. Mr Lysnar afterwards repeated in writing tile offer to buy Vestey's Gisborne works; but witness did not take it. seriously. On June 25th, 1923, he saw Mr Lysnar at the Midland Hotel, Wellington. and Mr Lysnar then offered the Poverty Bay works for £300,000. Mr Lysnar urged that there was a considerable amount of goodwill involved; but witness refused to put the works at such a price before his principals. On September 6th, on instructions from Home, witness offered £225,009 for the works;

“but this was refused, and he heard afterwards that the- National Bank in England had interviewed his principals in , London to see if they would improve the offer. The bank eventually put up the works at public auction through the Registrar of the Supreme Court; and on 1 October 3rd they were bought by Nelsons > (N.Z.), Ltd., for £225,C00. The license 1 for the works was transferred) to them i I on condition that they dismantled their • ! Gisborne works i and that had been done, i Replying to Mr Myers, the witness said > that prior to the purchase of the Poverty - Bay Works, ho hod no detailed estimate > as to the repairs that would be required, i If he had known that repairs and renovations were required to'the extent of , £28,060, he would' have strongly opposed • his company paying £225,000 for the i works. As a matter of fact, he was al- . ways opposed to tho company paying I more than £200,000 for the works. ’ WHAT "GOODWILL” MEANT. ; During the negotiations Mr Lysnar. constantly referred to the item of good- ■ will as of considerable value. There would he only two works in the district, ’ said Mr -Lysnar, and they would carry 1 with the works a large number of share- ■ holders. Further, tbe other company ! was subject to heavy liabilities, which 1 would compel them to make high > charges; so that Vestey’s could make > higher charges to the farmers, and could. - therefore, afford to give a higher price for ' tho works. Witness, however, told him - that he was not prepared to put his com- - pany in that position. CROSS-EXAMINATION.

Cross-examined by Mr Lysnar, witness said that the few shareholders in the Westfield freezing works got nothing whatever in profits for their interest in the company. The £IOOO standing in their names was not put in by them, but by Vestey’s. Mr Lysnar: So they were only dummies for Vesttey’si Tl;e witness added that the profits of the company were shown in the ordinary way in the tax papers of the company; but the profits, like those of other freezing companies, had not been large for gome years past. There were, he thought, too many freezing works in the Dominion. There had always, he stated, been 50 per cent, of the meat in the Gisborne district graded second; even when the Poverty Bay Farmers’ Company owned the works. It was entirely a question of the quality of the stock put through in ‘the district. He denied that at the beginning of last season his company -had adopted as a general principle that it- would not buy stock in the Gisborne district. He denied, also, that the company’s buyers acted in conjunction with the buyers for other firms- as to prices. They went on their own and acted on their own judgment. They were always on the market—of course, at their own price. ~ Did you not some time ago take up the position that you would only take stock from people woo wouhlgive you the selling of their stuff at Home? Did you not say that they must put their stuff through the Colonial Consignment Company? The witness: That is not quite a time statement of the position. The quantity of stock offering from our old customers who were in the habit of dealing through the Colonial Consignment Company was then quite sufficient to keep the Works going; and we naturally gave preference to our. old customers. That is all. COMMISSIONS TO MERCHANTS. Replying' further to Mr Lysnar, Mr Rowlands said;that they had refused to freeze for Armour and Co. in Auckland. That was during the war. Their refusal was not because Armour's were in competition with them, hut beeause they did not wish to appear to be associated with Armour’s, ! as tho Government was asking questions about them—as to who was giving them facilities. Questioned as) to Vestey's transution in regard to war beef, Mr Rowlands said that he did not. know that Vestfey dropped the price of. beef by 3d a- lb, or by any other amount at that time. He understood that the pricq was controlled by the Imperial, Government. Ho thought it was all a mare's nestHq added that the company drew‘some of its meat for the. works from the Waifarap a find, ’the Hawke’s Bay districts, when they bould buy-to advantage. It gaye commissions to merchants, stock and station agents, and others,. who 'could influence the putting of meat their way., That was- the general custom of the trade in New Zealand—not only -in the Gisborne district, but in iother districts: where the company did not' operate. The commissions, 3d or 4d per head, were for procuring and drafting the stock—sometimes one or tho other, sometimes both.' The total amount per annum would be afew hundreds of pounds only—not the cost of one motor-car. Mr Lysnar asked for the items-of repairs and renovations to. the Poverty Bay works effected by Vostey .Bros. Witness said they covered two foolscap pages. He could not rive them from memory, hut would supply a copy. He .did not remember Mr (Lysnar saying at the first Auckland interview that it was a auestion of their buying the Poverty Bay Farmers’ Company out ot'the company buying them out. -If it was mentioned at the time he attached no weight to it. He did not then promise to cable his people at Home about the sale of their works to the Poverty Bay farmers. He did not regard it as a practicable proposition at all.