The Timaru Herald.

Timaru Herald, Volume LVII, Issue 6058, 18 September 1894, Page 2

The Timaru Herald.

TUESDAY, SEPTEMBEK 18, 1894. The shareholders in the Canterbury Farmers' 00-operative Association are to be congratulated on the very satisfactory result of the reconstruction process. There were many fears and doubts expressed that the operation could not be carried through, but snob fears were proved to be, if not groundless, at all events unnecessary, by the statement laid before the shareholders by the direotors on Saturday. Even the directors themselves felt such fears ; at all events that appears to be a fair inference from the fact that the chairman thought it well to thank the shareholders for " sticking so loyally to the Association;" as if the direotors recognised that the loyalty of the shareholders had been subjected to a certain amount of strain. The statement of accounts presented, though not so favourable as the shareholders have been accustomed to receive, ought to be considered satisfactory in view of the reduced bnying and selling power among the shareholders. Mr Talbot remarked that the position was not so unsatisfactory as might have been expeoted; that the condition of the business must reflect to a certain extent that of the business of the shareholders. Assuming the reflection to be a faithful one, and not given any pleasanter colonring by the reflecting medium, we begin to see that a good deal of the regrets we had felt for the farmers losses through bad. crops and poor prices has been largely thrown away, as their position, as seen by reflection, appears to be very little the worse. The shareholders made no real comment upon the state of their institution, and their loyalty to it embraces the directorate, for though the meeting was called two monthß earlier than has been usual for 'the annual meeting, "to allow shareholders to elect whom they pleased as directors/' they did not take advantage of the opportunity to infuse any new blood into the management. This is not surprising, for it is manifest that the burden of responsibility thrown upon the direotors is not one. that Bteady-going shareholders would with a light heart seek to share. While the directors claim that the institution is sound, the old complaint was repeated of lack of sufficient capital to carry on as profitably, as could be wished. The balance sheet exhibits this lack very dearly, in the large amount of working capital in use which participates in the profits but net in poßßiblo losses, and worse still, is insecurely held in use. The chairman remarked that the weakness of the Association was that it. has so much capital looked up in buildings. More than half its own capital is thus locked up, and though the investment returns good interest, a better return would be obtained from the same sum applied to fluent business. The Association is now doing a considerable proportion of its business for the benefit of non-share-holders, and the chairman might very well have emphasized this fact when asking them to take up more shares. He might have pointed out that if the Association has its duties towards shareholders, the latter have duties towards' the Association, and among these is the duty of replacing the props of borrowed funds by solid bricks of share capital. If this is not done it would have been better for the Association to have made baste more slowly at the outset. Speaking of responsibilities, we are reminded that the directors of such an Association, have a duty towards the proprietors of

ho business which they do not seem nolined to perform. There is a pestilent r endency in boards of management to 0 :reat the proprietors as strangers, in whom cariosity as to the state of their ?wn business ie a sort of impertinence. Mr James Gaild voiced a common complaint when he said the directors kept the shareholders very much in the dark, and they were a very docile lot to put up with it. At the previous general meeting there was a good deal of anxious inquiry about the condition of the auctioneering business, and shareholders would naturally expect that the directors would take the hint and prepare a statement for them regarding that branch of the business. But no, there was not a word said about it, except a reply to questions, and then the information given was extremely meagre, and even a request for a separate balance sheet was only accepted provisionally. We do not ourselves want to know anything about the auction business; we are merely using the treatment of the Bubjeot by the directors to illustrate the tendency of directorates to keep shareholders in the dark. Then some information might very well have been given as to the change in the banking account, what led to it, and whether present arrangements were quito satisfactory. We observe with regret that the auditors' fees have been cut down, and we understand that the reduction was made at the suggestion: of the directors. One would have; thought that the remarks made by Justice R. V. Williams on the auditing of the London accounts of an important company which has a branch here, would have suggested that the shareholders in the Association would insist that the auditing of their accounts should be thoroughly well done ; but they approved of a cutting down of the remuneration, with pleasure perhaps, without stopping to think whether that pro* cess was not calculated to lead to a cutting down of the services performed for it. The late auditors earned their fee by one little thing alone — by pointing out a loop-hole in the arrangements by which hundreds of pounds might some day have leaked away, and on their advice the directors have promised to close it up. Their other recommenda> tions were not exactly merely formal, but they passed without comment from anyone. The auditors are the share' holder' check upon carelessness in the management. Their remuneration is a premium of insurance against losses by carelessness in accounting, or worse, and the shareholders should take more interest in that branch of the accounting than they do, and recognise its importance and value.