NEW ZEALAND PINE COMPANY.

Otago Daily Times, Issue 11301, 20 December 1898, Page 7

NEW ZEALAND PINE COMPANY.

, The liquidator, after ..detailing-the; circiimslaucca connected with the formation of the .company,.sets out the baJance. sheet" for 1590, "and', says, that in compiling it..pii6vißipii ,'was. rnatie tor 10 per cent, depreciation of 'mill ,property,'but'tlte'direclors, oh May 2, 1890, i-esolved -tbsUi only £1128 13s 7d. (repreaenting :5 per ■ cent.) ■" should' bo written off, and' tliat .£ll2B 13s'8d should bo reserved as 'provision for bad-debts;. £1000 was. credited;, to insur-. ar.ee .and suspense ..account,' through charges .account;, the.mill property .accountwasshown at £21,1.44,19s 2d,..and the 'asset-, freehold • land arid bush account at £7032 3s 9d. ' The net profit for'the'year" was shown at £3652 :2s 6d, and ajdividend.was:declared of 12i per ; cent, for the year. The capital at this date ;w«s £13,K62 10s. Of this amount £6500 was paid in shares for the goodwill, of the bush and. niill properties. ... In..'tho. 1891 balance sheet; the' £1128 13s. 7d.written off mill properties for, depreciation' was "written back,, and mill property' shown at £23,076 7s 4d, and : biish'acdourit at'"3Bßl4B' 10s' Jd: Nothing was . yrfitten ; off for depreciation !of 'either -mill properties or bush,'but £1000 was taken from.- . profits^ and' credited to depreciation reserve account, tO'Wliich.the,£ll2B 13s-7d,written up to mill property Recount was "also ■ carried, creating a, liabiiity of .£2128,135. 7d to that account". . The total reservo created to date •was;£l-257 7s 3d.' The profit for the year wan ■ shown." at- £6457 3s 'Cd; and the' net availablo Balance ;£9630; 17s sd,' out of which a. 15 per. o'ftrit. dividend' was declared, amounting to ;±!1728-ls 9d, leaving£79s2 ;15s 8d to carry for:ward.: ..In the 1892.'balance-sheet the'mill propertyaccouht stoodat £25,616T.7s sd, and the bush and freehold land account at £12,87'r. 6i ;'. The profitfor the 3-ear.was £6428 17s 3d, :increased,by an apparent .net profit, of the • Hardware",'department- for : eight, months, and other sums! to £11,756.6s lOd, and this was. further increased by the balance forward (less dividends)' to: £16,936' 12r 6d:' A: dividend of si> 1-3 sper cent, was'-paid,'but,'nothing was written, off-, for ■ depreciation of 'mschinery: or buslU:, Inl, terms of a 'resolution-.of,'.tne direc'tqrs,1 the-purchase of ttie Southland Finance 'Company's assets was matle^for. £4850. This was. debited to hardware account, but shortly afterwards freehojd land included.in the purchase, and valued at £2160, was debited to freehold": -.-' land '■'■. ■": account,'. !.iand , credited to hardware ' account, leaving tho cost of stock to the latter at £2690. .-The.addition of rpurcl)aseß,: £366B 9s 3d,f from 'August 24, 1891, to Maroh 31,' 1892, arid'the deduction of' Eales ioi\ the-same period from £6391 13s 2d,- left' £1366 105,.ld r on,the latter-date. -The stock taken then was valued air£.723s.l.3.Vand:after. . pro'yisipn for ;cbaxgee, '.the, .net profit,, £4857 6s B<l.'v.':i3'"'carried'to profit' and "loss.. Stock; freehold land, agricultural"' implements,. _and gopcis. in-, transit.; totalled £11,618 18s 6d,. ahd were, sola to the.'Gpldnipl'1 Hardware' Company' and paid for. by 7000 fully paid pound shares,' audi'bills, for,the .balance. /"In the balauceshe.Bi;, for 1893, j the ■ mill •,account, stood ■' at £44,381.8s •10d,:''and..siiaies in other-companies' £7000, representing Colonial, Hardware shares jifst'rc'Correditqr.'.'ThaVniount of £4257 7s 3d; staliding to |he credit of depreciation, reserve," suspense, bad debts, 'and insurance Buspenss accounts, wna transferred to profit and loss account, andra*.dividend:of 33 1-3. per cent, was declared.•• At this -date a, spocial reserve ; and contingency account .was-opened in the 'bookß with two credita-ramount taken from ;vear's profits £4924-,' portion of amount written up to bush account £2589. .12s 6d, totnl , £7513 12s-'6d;"'. and debts of £1614 7s sd. were •charged to thi? account, lestviiig abalance of £5399.55.1 d brought to.credit.. Although thisdid'noi appear in the/balance-sheet, it was de'ducted.fro^iiho'Jist.pf book debts,.stock, etc., and the only item, in tho balance-sheet .as a reserve is £500 in insurance reserve account. The'.sum'of £3451 16s 8d .was written'up to ;biish,-:acco.unt,;, of. which; £25E9 jl2s ;6d was credited '.to special .reserve ■. and contingency- . acbunt,. and "tho balance, £863-.4s 2d, ;tq'l?rp[|t and loss.account.,.. The.£34sl -16s SA : ■ represented worked-out bush at this date..-In-, eluded'in.tile year's, profits'.Was'.£76o, charged to the. Duhbdin T.imber,and. HardWarb Com-, pany. foi'guaranteeing; payments due, for thepurchase" of their, premises, stock, etc. ~«-.On Ap'^rii' _7, .1893,7..the .directors ,■ resolved '; that .-'as ■'they.had ihncl. monthly^statements,, it ..was iiiiinec'esfaiy ,■' to,".prepare ,'a' .formal • balance'-. : BheeV' after talcing: stock, and. a., dividend.; of : 33i!pe_r'cq'!it:'.was declared:1 "The capital 'was increased :"by, £500, Svliich was carried, to 'credit. of profit and.loss. account.'.■ The year's profits ■ in'ciuded .-£2897 18s' sd,' repreeehting. a.'dividend .on'shares in the Colonial Hardware and, ;Implemont'Cqmjany,-'alsq'£500 •recoivod. from: tivb insurancc'.'compariifcs in seltlemeht of a •JQl^.in:< 'fq^''"'a 1 .l^;^t'";^ongbtisli;^'"/rjiis.'.anipijnt. ishquld'liay.e'gohe to. crbditT of mill property, account?', 'in1 1.894, the balance sheet of mill, : property; 1. account stood at £50,414 '6s :;10d,""aria:ihter'est iti other companies at £3737 lOs'.;"''Fromthese'companies' divi.dcnd3 v pf £744 2s 63 were1 received, And credited to profit and lo^V Qn Bapjeinber",ll,.lß93,' an'agreement. 'fqr''the. purchase of shares 'in the Pine Com-' ■pftriy '(by'V Walter • Guthriei- and CqmpaUy, 'liiiniteajj 'for'£80;000; payable' iri'deberitures;,' SvAs executed by the directors; The specialref' serves rand ■contingency' account: was this year debiteii''with'•Walter'-'Guthrie's' expenses to. L6iidoni'£lso, J'and an 'allowance':bf £230 to the sawmilling- company, leaving a',balanci of £5091'5g-ld,'which was agrtin deducted ftom. Ithe- total- of-book":'debts "aiid-'stbck.- -In 'the interest account-a'debit was made of .£4Boo' '.for-debenture-interest oil £80,000, but:.so'far as "the:' Pine -Company's books ~ or' balanc'fl sheets sliow N there-was no reason why interest Islibiildbe paid bh the amount; !.In the balance sheet for 1895 the mill property- and bush ac-count-stood at;;'-£61,294.- 13s;-'arid shares,.ih ■.other, companies -at £9737..'1051-' At a shareiholders' -meetirig on^August;29, 189.4, it was; resolved that the dividend for'the ydarshould Sbff at such, a rate as would absorb £5662 55,; \being thef-net'. profits 'for.'Hhe .year. Again 'nothing.Was written off forrdepreciationi/'ln the.1896 balance sheot'.the mill property and-•bu'sh.-iaccount-:stood lat £62)827 • 19s Id, '■ 'and: shareß in other companies at the same amount as the previous year, While the item special Reserves- and contingencies account,-which was included-' ; in > the.. 1b95 balance..'sheet,'- disitp;-. pearedi,.-During the year the. saip of• £2429 3s 6d was received tin respect pf; a, elahn'ifpiv a ifire^at <Colac,r'a«d £2165 Is; Id'was credited to mill plant account, leaving a debit of £5140 ;15s-6d, which, was-takeu.into .mill prtjperty ad-, .count for the year.. ■ ■■•-.• v ',/ 'i\- '. -'■ . COLONIAL"; HARBWARE;: WOObWARE, j;:;;'A^D''iaiPL^rENT,cosiPAi?T ; ■"•'. ; The. liquidatpr,'recit"es" thejeircjimstances. of the fprmationipf jjie compahy, and.stat6?-'t]iat .'df..3,0,000"; shariss. -.originally, held--.by '.the '.Ping Company, ..7000,..w6r8 issued -fully, paid to £1 ~a nd.3ooo. paid tp.'Sd^.it.beinjj, agroecl.that no further, call-oh: the 0600 should be. made, for 'fpuiCyearai, the. Pine, Company .agreeing, to liaiid these shares, tp the Ba,nk of. New .Zealand, ;as. security for .a fluctuating q!. "iS'sOjCfO. Iti, -Was resqjyed,; for the purcljasahf stock, plant, .etc., from' Guthrtfi, ana Co., to■. gi.^'e bills for., the amount,.' £18,1^5, 'Is', id, divided into!eight payments falling .duo on. May..14:;.i893.;,1E94, .1695;. 1896', 1697', ,1898, 1899; aiicl .1900, and .covered.by' J. 6 promissory. r rio{os., BejriDg -interest at S^pe^'cenjij. Wilh !re(erence to "tlie puroliase of stock, Etc., from ■the -Pifie,.Company, amounting toj £11,618 1S« 6H,.it was arranged that paid-^ip scrip,'£.7ooo, should be issued,.and the balancd SiblH IBs 6cl paid to'ihe.Pine Compariy'.bvi'prSjiA'iosovy' .notes.. Tfie.'original purchases;, by -the cbm-' ja'riy'Were thus £29,783 19s.7dMn' the'balance, shoet-fpr 1893, ..ibe^factories, stores,'and land ■account, j(qbd'sit'£l6,226 4s lOd.ahd ,- stocknt;'£23,2is.2s".6d... The_, profits for tho yeai-: ■T<ere"'liicr,cMod'..by inflatiiig the value of two sectipps to the extent of £2620, ijnd iiqthing 'was'-MTitt'en off,'for depreciation pf. plant'-'or stoplc, but the. latter', was. inflated by the addi,tjori'.'of.:.6 per^ceri^..,.'amounting, to'£ll94. 6s.' Thesg' inflations.-enabled, t]ie company to show '.n;'iiet",profit. of.£23o.B,os'ld^put:;'j>f whic]i. a diV'iclendiand- bbrius to shareholders; amount-' ing" tp '£2905' iOa was paid. .On April 7,' 1893, i^.was agreed! to. 5e11../or £10,il8 18s 3drthe implement factory,.-stock, arid' certain book"dbbU^to the.Southland Implement;Company,phynient being made 'by the "iss'iie'of. 10.1.1? fully, paid-up/ shares' iv.- that,. cbnjpaiiy. '-.The item, ''.Shares"in.' qther,."companies" in .the. 'b^l«inqs.'.shse't stqod'at £il,Bl8 v .aiidv'.tho :dbqr ahd sashfactpry'a't. £13,427 16s ",6d,. while the^ pfeirrnihary expenses account,',iiicurred in tlie1 ■first|yea*,!'iwas'-giifilw iajignin'.:at £lip!3s 9divand, iho;' liability)rHpije'arihg r as ..Wailter",G.Utilrie" Oompanyl'. funded , accdiirit . amqunted,, to ;£fr,227'ls'7d." the. year's, trading a.loss of £1705 16S 7d 'was' made, which Was' concealed, :by. dividel)d.s" frprn' other. : compiinies.'.being, bredlted-to. profit".and loss accpuiit. ,* Nothingwa3'.Syritton.off for depreciation, pf, plant.- ;In the 1895' balance sheet,' shares in"! other com-. paiiies ificrcised to £.12,918 and the property account was shown at.£13,511. On,the,year'.", trading-'a'net lO3s of"£3i9S.lss 9d.was shown.". liV'!the.lß96 balance sheet thejassetj; shares' in btlior compaliies, , was unaltered. /The! 'property account stqbd at"£l3js46'l6s'and at £14,361. 'On'the year's trading a loss .was shqwh' "of, £3862' 16.3. 7d. which;, added to; the prpvipjis year's balance,'; less!; a'dividend'from tlie InipTement Company^ made.'a net balanen, of! £6375 9s 9d.-' Prpiiiiiiriar.v"..'exjlensbs £110. j» 9'd' Were. written off and also bush account i£399 Is.. !Nqthing'was''Written off.'for.depre-. 'ciatioii"of plantj' but "the systeni of inflating etoclc by 6 per cent;' was.continued. . ~...: ;. SOOTHLAisrb, FARMJSRS't, lii^LEMENT AND "ENGINEERING COMPANT.,: ; Tho liquidator «|iows: that this ccJmpany started by taking over from tho Colonial Hard Wars and Woodwaro Company plant,'-'stock,' etc., amouri'tina to,£lO',llß 18a 3d,'paid, by the israo of ip.llS fuHy'Tpaid £1 shares tp. the Colonial 1 Cnianxay. Apparcnyj ,the: company stKt-id

operations on April 1, 1893, but no,capital account was opened .until March,3l, 1894, and no shares were issued .till Juno. 14, 1894, when an .allotment was made and calls were" resolved upon, of which the amount subscribed was ouly £110. In August 1893,. however,; an agreement; was executed, .whereby the Bank, of New ■ Zealand • granted an overdraft .of £3000 on the company, with the Pine and Colonial Hardware' Companies -jointly and severally guaranteeing debentures .to be issued, by the Walter Gulhrie' Company, and .agreeing, to mortgage the Southland Implomont Company's assets. Jri. the balance sheet for. 1894 the item shares'in other companies, £425, appears. Slocks, machinery, plant, and buildings were taken in at book value,, nothing being written off for depreciation. In the 1895 balance sheet, shares in other companies are shown at £675, and preliminary expenses at £354 Us' lid. Of the latter item, £500 15s 9d'was!th<? cost of running shows, and shoul.d have been dbbited to charges account. Last year: this amount did .not appear, in..the balance sheet, but was included in.book,debts. A dividend was declared amounting to £1923 13s lOd, which absorbed the whole of tlio supposed profits, brought forward from last yea*. Nothing was written.off for. depreciation of plant, stock, etc., The balance of the. profit : (£432 7s Id) for the year was transferred to Ulio Colonial Hardware Company. In the 1596. balance sheet, "preliminary expenses" remains as an asset in the balance sheet, only £50 being written off. No, allowanco was made for. depreciation!.' ..■-.. .. :.. . 'goeetimber and hardware .-'.'■ ■■- \.', COMPANY/ '"; ';;.'. ;';' 'To" December 31. 1892,, this was '.ft. .branch4 establishment of the Pine Company, but on that date'whs sold to. Stout, Mondy, and Guthrie'for £1571 163 Id, being the value of the branch as it stood in. tho books* of the sell; iiig compauy. Wheri'merged into the Walter Guthrie Company (Limited) in 1893 it. was funded for £2115 4s, or an advauce of £543 7s lid over, what it was acquired .for a few months bofore. . The result, of tho operations for the year .ended March 31, .1894, showed au apparent profit of £315 ,11s, wJuch was : credited-to-tho Walter. Guthrie Company (Limited). Next year it lost £211 Bs, and for the year ended March, 1£96, £252 4e 4-d, both of which amounts were embodied in tho balance sheetij of the Walter Gulhrie Company . (Limited) for the. same yoai-3; -This .. business :• held : shares in other ■ .companies amounting to £405.'. . ■■■■■ ' '"; DEBENTURES. [ .. The'amount1 of liability ■ shown in the balance sheet to March 16913,. in respect of debentures, was £195,200.: The amount of. debentures claimed and allowed by the Court was £223,200, a difference of £25,000, consisting of 250 .debentures .hypothecated to the .Bank,of New. Zealand. ~ . ... ''■'■' INFLATIONS. ' .Under this., heading the _ liquidator deals 'separately .with the companies. !..,. ... ,'As to the Pine Convpany, he says that pf the'-aseot of mill property, etc., £62,827, in ti,e last "balance sheet, "£46,567. represents, mill properties, plants; and accessories. Nothing ■vv.a3-ivntt.en off,for depreciation at.,any time during, tho .company's, existence, -buty on tho •oonfrary, large.Amounts! for 'repairs..and suadries,. which.. should havo been charged to working account, had been debited to the plant, and thus inflated the value- of the axsets. Several of the mills had been closed and dismantled for years, and in March, 1896, only three,were in active existence. Iheso, with accessories, stood in the books at £23,799, ■oltwliich a .Urge-amount should have been 'written for depreciation, the. balance, of the :miirproperty account, £22,788, being represented by portions of old plant of-the probable value' of. £788. The bushs account- stood at £16,260. This represents: the original cost, including £5000: which was paid by fully, paidup -shores, and consisted chiefly, of goodwill. Though many million feet of timber had been cut out, no writings off.had taken place since tho formation of-the company to cover depreciation- contequent upon the denudation of the.lands from which timber had been cut. In 1893, the interest of the shareholders .was £14,502 10s.Id.,representing paid-up capital,' and these, shares and the Gore timber business, valuod at £2105 4s, were sold<to the Walter Guthrie Company for £80,000 payable .in debentures.' '•■■ ■■■•■••■• -; •;• '■'"■'■' ''' : Respecting the Walter Guthrie Company, the Hquidatbr-repeats the statement that by the value of-tho purchase of the Pine Company shares at £90,000 :an inflation'of £10,000 was mado,''and says that much of.this com-1 pany's stock was old and damaged, off which nothing had been written for depreciation; but, on the contrary, au inflation of-3 1-5 per cent, had been mode.1--■'•■■. •■'■'■■- ■■■'."■ •■■• -Regarding the Colonial Hardware Company the " liquidator states , that a" considerable amount* of the'i^tock consisted of Gbwper and Wilson's" stock (bought byU-hVPirie Company for hbb'Ut' 10s iil-the' £;■'and-sold to this 'company for about 20s). also a quntrtiiyof damaged and obsolete stdek.. There'was rib allowance for depreciation, but the whole-stock' had' been inflated\by~ 6-pbr' cent..';; -Iri'the Woodwar'e factory plant that Mtl b'ceii iii'iiSe for many years,' Was sot' down', at' .original cost.' Freehold properties'were appreciated; in value to the extent of £2620. ..'.,// '. V Respecting "the Southland "Implement' Cony. pany, the liquidator .says that "nothing was Written ;off ,'tor .the' depreciation' of '.stock' "or plaint,'," and 'very', large, amounts .'that should ha,y'e' gone to'charges were debited'to plant account to 'inflate the assets.' ...,'. ''_.' _''■."' : These inflations enabled . the" principal shareholders and directors to draw from the . companies' for dividends, .'etc. (excliidini* £3105" '9s. 3d, . which . was. conceded to, Wolipr Guthrio and Co.), ~£34.915 .135," -made up as follows: —Mr Walter Guthrie' £21,198 7s Id, Mr.W.'R Gulhrie£lß76-6s"6d, Mrs 'A.'.' N. Guthrie £693 Is 3d. Miss. M. W. Guthrie. £150. 'Is 3d". Miss C. Guthrie £150,, Sir R. Stout £582? 12s, Mr Mondy.£l23B 16s lOd.Mr J. C. Colbeck £1753 12s 9d, Mr W. B.'"Scaudrott.£llo3 7? 7d, Mr Joseph Stock £531 6s .ldj Mr Sim £330.,18s'5d;—total,' ;£34,9i5 i3s.. ;:' ~ ....... ~; .. . -~;.' • The Pine Company proprietors or th'qir re-. presGntativ.es. now hold 535 debentures of tho face .value, of £53,500... • . .'. .. ,v ..--.. As to the Dunedin Timber,and Hardware Company-find the City Sawmiiling Company," the liquidator states that tho shares held by the Gutbrie Company and allied companies' • shares were taken into the balance sh^et an good assets for the.full amount, £22,180, but he is informed that the whole of tho shares are Worthless, and that.a call will bs.madc'on contributing shares. "'' '"'" '". CAUSESOF INSOLVENCY. The causes !6f insolve icy are tlrua'cfcated by ilia liquidator:—(l) Insufficiency of" capital. None of the companies had sufficient capital for the requirements of a busir'oss which nece?oit;tt'sd costly financing. (2) Lnrgo losses made in trading which had Been, bidden.by inflation,- and failure' to make proper provision for depreciation^ (5) .Payment_ of dividends an.d.bon.uße,-5-qu.t;of.suppoaititious profiis. ,(4), Expsnsive'manngeinont and, direqtorafl IiiPLY OF THE biRBCTORS:";' .'."■' ' The" reply of the late directors. deals most exhaustively, with Mr Cook's statement, and in aecottlpahied by elaborate reports inwhich ' Mr Cook's conduct throughout the enlirßliquidation of the companies is made the subjest of tnuch adverse "cbniinent,." It-is-stated in these reports that an erioi-moiis amount of money has been loat to the debenture-holders through the reckless and ruinous mode adopted by. the liquiclatpr in disposing of .the assets of the companies. The reply of thp late directors, which is vouched for by two expert accbuntautn and supported by reports and vshntions, is most voluminous. " '. ;' The directors state, inter alia-, that the bnsiness of Walter Guthrra~and Go. (Limited) originally belonged to the Bank of New-.Zeal land, and tbat a bank-partner was associated in its purchase; The business was floated into a' company, at. the .urgent request of.the bank,the person who had'previously been a partner, representing the. bank being appoiuted ,!its nominee director in the company. The bonk stipulated as' part, of the arrangement that Miss' Guthrie should accept payment for her' interest in share's of the-new com.pa.ny, and that Mr Guthrie : should take up £4000;' of contributing shares, the full amount'of which had beou called up and paid. The bank also required that the capital of itsreprepentative partner should be paid in cash. The JPine Company,, which belonged almost-exclusively. to,9ir.-J&; Stout,, Messrs Guthrie, Mondy.-and Sim, was a highly lucrative concern, aud had given ' haiidsdme 'results' to' the pfoiVriotqrs. The jirofHs had been "lat;p;ely expended .'in ex.tentlihg'and lmprbvihg' its plant, machinery, andv bußiness■ conorally.'' The' company had' earned 'during' the'four, years previous to amal-. Baihatioh'with the Walter Guthrie Company <Litnited), and:from that time up'to the date of the .liquidation;- jnifnoient to-pay yearly interest, on over £ISO,OOOi The "Walter Guthrie Company (Limited) was not earning interest at the time owing to the-general depression. and other troubles: caused, by. the financial orisis; in' Australasia, and accentuated by Dunedin hohses opening branches and keeping stoclw in Invercargill. The Pine Company nropriotors.had very little interest in the .Walfor, Guthrio Cpnipanj' (Limitocl) : :at the time, but. the bank was largely interested iii that. qqmpany. In ordei to help Walter Guthrie aiid..Co. (Limited) to p.ay interest a,-nd'! dividends during.depressed times, ;ind. to strengthen it for the future,, t-J-e Pine- Gompany proprietors offered to sell..their, shares to.tho Walter Gutline .Company for £100,000. but subsequently, reduced the ni-ieq by £20,000 , so that the.reduction might be, used for the benefit pf .the.Burcha.siPij .conipany,, and the 'directors^used £10,000 of this,£2o,ooo,cpnpes-. sion accordingly., The Pine Company was valued by competent valuers at £150,000, and aftßr paying away two years' profits, the. former proprietbrß .offbred 'to' repurchase the. company.for £97,000, being £17,000, more than they got for it! ~.. .>, . ... ... Tho charge;, of adding percentageto London co3t was a charge.to-coyer..cartage, shelving, lanrVijie. indent-ins, and,a tipHion of intorofit.

and •■ Percentage- was > added when the business ..was mainly, the :tmhk?Sc before flotation into.a.p.ompany......The..genoral.,managor of the bank was aware of the addition of percentage,. and saw no objeotibn. to it. 'i A similar, company owned, by .the .bank,. or> Estates Company, added a larger percentage. Thd percentage was not cumulative, and could only affect one year'B balance sheet, even.if.it was incorrectly, charged, ..which the' direotors deny.- ..- ■■ ;. ?<..■ : ■ '.-;., '.■■■"' -.. ■'.'■'■*■

The charging as profits concessions.made by some, of the. directors and, the..bank.and Estates Company was made, to Jreduce interest,. and tho'company-was bound to.tako. the benefit: just as-if it, like othqr. companies, .got itH money at a lower rate than the ordinary bank rate. . A..concession of £4-000 was made to the Walter Guthrie Company beforo the, Pino Company was sold to tho former company, and the usual rebate-was provided for at each balancing period. Tho directors scout the suggestion that dividends woro improperly-paid away, and state that the total amount paid away in dividends by the Walter Guthrio Corhpa.ny was £2751 19s 9d, and in all the other companies not more than £100. They also point out that the liquidator did not find fault with any payment of;dividends by the Pino Convpariy before tho amalgamation, and say that he could not do so/ fAs to the "charge' that" thY director's' Kail stated-in the report accompanying one of the balance-sheets that they-had-gc-t, a/cash offer ■for the woodwa,re 'foiiDtory and . foundry 'of £18;165, arid that they had boon paid in bills having 12 to 96 months' currency, instead of cash, - the '■directors .-• aliswer^ byj.stfttjhg .that the'•bills"'were endorsed "without'recourse," .and the bank accepted them aa cash, without any rebate, in full, and that this was done i in. pursuance of a written agreement with the bank. , ■ ■ ■ ■ .

The directors "charge" the liquidator with wrecking the Pino Company and selling it for about £15,000, when there was a bona fide offer of £10,000 for one-seventh of it. The-directors" onl# received a few hundred pounds in dividends, and made, nrnomitinjr to over £18.000, and fiTso Rave up in addition over £16,000 of debentures to tho. bank as security to help, the, companies, and further reduced lh,eir ; fees by one-half in all the companies from tho <nd of 1894, and from one company drew no fees from that date. No shares were sold after tho first issue, and no dividend was- declared after 1894, at which time thero was a good balance to credit, of profit and loss, as well as 'seme reserves. . .. , ■ : . ~

■ .'The. directors charge the liquidator' .With maJcinir tho following..manifest errors and inaccurate .or misleading statements: —That the bauk wrote off £10,000 to .the .Walter Guthrio Company,' Limited,'" after its .flotation into.a- company, when it was the firm that conceded £10,000 of a £20.000 claim it had against the bank; that there was .tn inSation of stock yearly; that by manipulation Mr Gnthrie was able to draw £491 12s, .when tho fact was.that the sum was part/of his salary as per agreement, and . that he, during the. same-year,-,made.a present to the company of shares Valued at £1500; that ho' stated the profits of tho Pine Company (wrongly, oven according^ to his own,fi<rures,* if'set' out as an accoknthnt should have set them' out; in regard to the sale of Cowper arid Wilson's stock, in, stating the Colonial Company's dividend in such a manner as to make' it'aj3pea'i''that it was paid 'away, wlien the fact was that it was paid.to, the JL-ine Company, and* afterwards handed by that company to the Walter Guthrio Company, Liniited, along with the Pine' Company's profits ; and the same a? regards -the Southlo.nd Implement .Company's profit,-?, .which also went ultimately to the Walter Guthrie Company, Limited ; iv mixing .up'the purchase of the Gore business with funded account, ■ the one account having nothing to do with the other. ■ ' ■ •

The late drroctors also all ego that the liquidator suppressed all mention of a. number of favourable features, arid say—"lt is very remarkable that there are omissions of reference to every favourable feature regarding many important acts done and suffered by the directors in order.to carry the companies over the troublous times which beset tho colony for so Ions; a season." They, complain that no special, mention is made of credit balances,. of profits, nn.d reserves. They say that in* 1896, when the liquidator took charge, there were reserves, specially created for writing down assets, amounting to £12,492 (and other sums) which had not been dealt with, and that,tho total reserves wore £26,093; and that no mention was mado of the steady improvement in the businesses during 1894. 1895, .and 1896.- b .".- The directors also e.bniplain-.b.'f. the large and wci'l-nssdrted" stocks of.- the Walter Gtuthrie'' Company, Limited," am6unting *o £W;000, being kepyocked.up. from :'s"ale for fivo mouths;' and then sacrificed -by'fa sale iri one line 'in a small place .like Tivrercnrglll. They 'allege that the "liquidator purchased 'from1 the Ba'nk'bf New Zealand £7000 worth of goods, putting-' them into the Colonial. Company, when the ironmongery stock of ■ that -company' was . only £7000, , arid kept I that/coinpaiVy running' for very' lriariy .rnont.fis 'in Order to,sell the. bank stock, while he only, sold about £140(3 \o( the Colonial Compaivy's ■gdfids. The bank's ibods were,'.purchased at full, prices, arid potjcl,,at the.expense and .'loss''of. tho , Colonial Company. .. They, also allege jtbat'.'ltie liquidator, r.ah the Southland Irriplement .Cgriipany,. at'.al'loss, at the. same time . iiioreasmg. t^e amount 0f.., turnover .lip'on.which'.commission will be.claimed. -

The directors. state that the actual causeof. insolvency was tho policy adopted'bi- tho Bank of. Now Zealand . arid that the reason must be sought.outside prudent,or>profitable1 or :business ■ considerations. ■ The " bank, was warned thai wrecking the -com,'panies by forced liquidation -would ■ .entail ■heavy, loss to the bank, as well.as.to other debenture-holders, • but the president said that tho bank had. its contingent loase3 of ;£200,000 dealt with,, that the new banking arrangements iri ISBS made ample provision for even ruinous liquidation, and that it could, therefore, with equanimity face such a proceedinj;." .;■'■''. ■'.