AFFORESTATION

Stratford Evening Post, Volume IV, Issue 224, 2 September 1936, Page 6

AFFORESTATION

o TO BE INVESTIGATED,. COMPANIES’ METHODS Immediate Government Action Contemplated, SHARES SOLD IN INDIA. Press Association —Copyright. Wellington, September 1. Immediate investigation of forestry activities and methods of afiorcstatioa companies will be made by the Government as a resuit of the recommendation ot the Industries ana Commerce Committee of the House of Representatives in a report winch was adopted by the House this afternoon.

When the Whakatane Paper Mills Ltd. Water Supply Empowering Bill was before the House a statement was read by the Hon. D. G. Sullivan, Minister or Industries and Commerce.

“Before he left New Zealand on a tour abroad Mr. J. S. Barton. S.M., chairman of the bondholders’ commission, 'waited upon me and told me he was very worried concerning the operations of afforestation companies,” the statement said. “He urged upon the Government the very urgent necessity that existed for a thorough investigation into the activities of these companies. After discussion 1 suggested to Mr. Barton that he put his submissions in writing, and this he undertook to do. After a considerable interval as a result of ill-health, Mr. Barton wrote to me, embodying in the letter some of the submissions he had made to ms in our conversation. “‘‘ln his letter Mr. Barton said, inter alia: ‘ln my opinion an inquiry by the Government into this industry is much overdue. 1 recopmend it to be undertaken for the following reasons: (a) A large amount of capital, probably exceeding £8,030.000, has been invested in it, and further capital is being sought within and without the Dominion; (b) a large proportion of this sum of £B.OO-3,000 has been suppied from abroad, and the credit of the Dominion tends to be involved; (c) inquiries into certain aspects of the subject are being pressed for in Australia, and I think it would be wise for the Government to anticipate a re- j quest from abroad; (d) officers of the j department have given a great deal of I time and attention to the subject matter, j and I know that they also hold the above j views strongly.’

In India

“In the same letter Mr. Barton referred to sales in India of New Zealand afforestation bonds and said this was an urgent j matter calling for legislation, for certain companies were actively pushing selling campaigns in the East based on wholly misleading statements and creating a problem that was bound, in his opinion, to result in the demand for an inquiry in future. A remedy would then almost certainly be impossible, and he was anxious to prevent such practices. “Whakatane Paper Mills Limited was net referred to by Mr. Barton, for that company appears to have confined its sales to New Zealand and Australia, but inquiries have reached the New Zealand Government from overseas Governments in response to representations from their various citizens concerning the activities of the afforestation companies of this country. “In regard to re proposals of Whakatane Paper Mills Ltd., both the Government and the Industries ~nd Commerce Committee, to which the company's Bill was referred, are faced with conflicting and, indeed, diametrically opposed viewpoints. The majority of the directors, perhaps all of them, appear to have complete confidence in their advisers and in the prospects of establishing a successful industry.

j Conflicting Opinions. “On the other hand both the Forestry Department and the special committee of investigation which was set up by tpyself have reported to me that the proposed mill which the company desires to set up will be definitely uneconomic in operation, that it could not get even a fair proportion of the available local market without the protection of a pro- I hibitive tariff, that it would mean price increases to New Zealand consumers, that the available market is not sufficiently large for economic production, that such a large proportion of the ! company’s capital has been expended on j excessive company promotion expenses that that factor in itself would probably j alone be sufficient to destroy the chance qf success;, and that if the company is allowed to proceed the loss of shareholders’ capital would be inevitable. “These conflicting viewpoints, supported by masses of evidence on either side, in addition to other considerations referred to, including the advice of the chairman of the Bondholders’ Commission and representations made by overseas Governments, seem to make it highly desiraole that there should be an independent investigation concerning forestry activities and methods of afforestation companies to determine as far as possible what course it is desirable to follow in order to ensure economic and commercial developments of the exotic forest., of New Zealand.

“In the 1 event of such an investigation as recormpended by the Industries and Commerce Committee being decided upon by Farlia ment. it is the intention of the Governin' mt to give immediate effect to the recommendation and to appoint a tribunal j to examine and report pn the issues submitted at the earliest possible moment.”