BACON COY. DIRECTORS.

Waikato Times, Volume 98, Issue 15321, 23 August 1923, Page 6

BACON COY. DIRECTORS.

QUESTION OF REIMBURSEMENTS.

DAIRYMENS' DISCUSSION.

DECISION BY REFERENDUM

■One of the most important subjects for consideration at tho annual meeting of suppliers to the New Zealand Co-operative Dairy Company, Ltd., in Hamilton yesterday, concerned the proposed reimbursement of certain directors of the New Zealand Meat Packing and Bacon Company, who have been required to meet a joint and several gu&rantee of £50,000. Mr Goo-lfellow said the real matter which had brought him to the meeting t&at day was to speak in connection with the Position of the guarantors to to the Meat Packing and Bacon Company. "I feel very very keenly on this question," said Mr Goodfellow, "and I think a large number of suppliers will agree with me when I say that it is our absolute duty to do something for the guarantors of the' Bacon Company. Neither the directors of the Dairy Company nor myself have been in any way responsible for the legislation that is to come before the House. That legislation was introduced in Taranaki; the idea came from Taranaki. Those companies got together and decided that it would be a fair thing to underwrite the loss of the three dairy directors from their district, and they proceeded to Wellington and conferred with Mr Massey and Mr Wilford, and introduced legislation. Our Board discussed the matter, and we decided to wait until the question of the uncalled capital was settled, but our hands were forced recently by certain resolutions passed by our suppliers aiming at the legislation referred to. The Board then discussed the matter and it was decided that it was their duty to support the Taranaki, movement. "The position is that certain directors of the Bacon Company signed a joint and several guarantee in regard, to £50,000 at a time when it was considered there was every .prospect of the business being a success. The Directors had to face the position that the whole bacon business had either to close down or money be found with whicn to carry en in the interests of the farming community. They discussed the matter with their banks, and the conclusion was come to that there was a reasonable prospect of the business being a success. The Directors decided in the "interests of the producers to give this guarantee, although none of the Directors could have benefitted had the business proved to be an unqualified success'as was hoped at that time. Subsequently very heavy losses were made, and the position became so serious that the company was forced into liquidation. The Taranaki men realised their moral obligation m this matter and without hesitation they agreed to underwrite the loss of their local directors. "There are three local directors in the Auckland province," said Mr Goodfellow, "viz., Messrs Jos. Barugh, E. C. Banks, and T. Paterson. So far as I am aware, none of these men are by any means wealthy, and if the amount of £SOOO has to be paid by at least two of them it will practically mean ruination. A resolution to come before the meeting later is that the directors should be authorised to make a payment of £IOOO a year to each of these directors for three years. This means underwriting .their loss to the extent of 50 per cent. The cost on that basis to the individual supplier will amount to one-sixtieth of a penny per lb butterfat in three years, or if paid'in one lump sum to the 3motint of one-twentieth of a penny in one year. This will amount to only a few shillings each on individual suppliers. "The question, however, for you to consider is not so much a question of £ s. d., but a question as to whether it is right and proper for you to underwrite the loss of these gentlemen. A committee has been set up representing all the interests of .the Auckland province, but so far they have done nothing; they have been waiting a lead. A number of other dairying companies in the South Auckland Province have undertaken that they will subscribe, and I have no doubt that both tho Bast Coast and the North Auckland factories will pay something, and also that the meat people—the freezing people, will also contribute. It seems to me, looking at the matter quite impartially, that if the shareholders of this company agree to find half the amount they will be doing a fair thing by these directors. Personally I do not think we will be doing our duty if we do less. To my mind .this is by far the most important resolution that has come before any body of co-operators in the South Auckland district.. It is a question of Principle. Are we going to support co-operation or are %ve not? Are we going to keep the name of co-oper-ation good and clean or are we not? We have to remember that we cannot in business afford to ignore the moral lews. They have a nasty way of hitling back ir the same way as lcg.il laws. A negative vote to-day will cast a nasty blot on the South Auckland producers for all time. Your decision will either mean a very big step forward for co-operation or a very big step backward. I commend the resolution to your favourable consideration, and believe you will do the fair thing by these people." (Applause.) Mr C. R. Spragg (Opatekc) moved: "That the directors of the New Zealand Co-operative Dairy Coy., Ltd., be authorised to pay in equal amounts to the Auckland directors of the New Zealand Meat Packing and Bacon Co., Ltd., a sum not exceeding £IOOO a year to each for a period of three years." The mover had looked into the position of the men affected and found that the shares they held were inflnitesmal compared with the liability they undertook in respect of this guarantee. Mr Goodfellow had gone so fully into the matter, that there was no need for him to elaborate, but he did consider there was a moral obligation on the part of all farmers to support these men'(Applause). Mr F. M. Strange (MangaiU) seconded the motion and spoke strongly in support, outlining the position since the inception of the movement and the good work done by the Bacon Company throughout its history. (Applause). Mr R. Watson (Waiuku) said they should be sporting enough io support these men who had endeavoured to support the fanners. He had been supplying for only 12 months, but" he was quite prepared to give his portion to help these men. Hear! hear!) Mr P. H. Saxton (Waitoa) asked when the money responsible for the failure had been lost and argued that Ihe dairy fanners were not concerned to reimburse these men for the loss they had sustained. It was a wrong principle to advocate what was being done.

Mr J. B. Thomas (Morrinsville) said he was sorry to hear the word "principle" so misused. It was lack of principle not to support the proposal to support this proposition. (Applause). He pointed to the benefits the share-

holders had derived from the company's operations. The directors may have made a mistake but they were all liable to make them. The speaker, in closing, said that if these men were not assisted he would feel thoroughly ashamed to be a shareholder of the New Zealand Dairy Company. (Applause). Mr F. Phillips (Otorohanga) said it was contrary to principles to support this resolution. Other companies had gone to the wall and there was no talk of compensating the directors. It was quite unfair that shareholders in other companies should bo called on to pay. They should be logical In the matter, he contended.

Mr T. Walker (To Kuili) said they must be just before they were generous. With all their sympathy for the directors who had signed the joint and several, they had to recognise that in business affairs business must come first. He was sorry for the directors, but they signed for themselves as well as for the shareholders. If gentlemen took on the responsibilities of directors on a board they should and must be prepared to take on all the responsibilities. If not they should not take office. (Hear! Hear!) ' The only security for the shareholders of cooperative companies was for them to do what they were authorised to do and not act by themselves. The whole principle of the movement lay dn the security which they were prepared to give the shareholders. To pay over the monley would be forming a precedent. .The directors, and they had some good ones on the hoard, would not be there always and the policy might alter. (Applause). Mr F. W. "Walters (Waitoa) said the motion was either right or it was wrong. (Cries of Wrong 1) He had never had a share in the company, neither had he a pig, and if the motion went through it would hit him as hard -as anyone.

Postal Ballot Favoured. Mr H. Old (Tatuanui) moved an amendment to the effect that decision on the subject be taken among the shareholders by postal ballot. Mr T. Weal (Hamilton) seconded the amendment.

Mr J. W. Taylor supported the argument for a postal ballot and said he would do everything towards exercising the shareholders in his district to contribute their small amount.

Mr P. Quinlan (Matamata) admitted that he had made money out of pigs and had profited by the abilßty of the directors of the company. He referred to the good work done by the company and if they were Britishers they would not let the directors lose 3 penny over their guarantee. It would only cost them, individually, about 20s or 255, and they should indemnify the directors concerned from losing a penny. Mr Walters said that the ones -who should pay were the ones who had benefited by the operations of the company. The Bacon Company was ramified into every corner of the North Island and they had all benefited from it pro rata. (Chorus of No! No! Nol).

Mr Walters added that on the score of 00-bperation and justice they should help the directors out. (Applause). Mr Tomlins (Otorohanga) contended that the bulk of the money was lost in the meat canning industry and not in the bacon industry. Mr Dynes-Fulton (Taukau) contended that the proposal should be looked at from the moral point of view and also from the viewpoint of co-operation. 'He regretted that feeling was being shown over the matter. The speaker referred to the progress of cooperation and the necessity for men to act as these directors had acted in the interests of their fellowmen.

Mr E. G. Land (Manawaru) denounced the Dairy Company being "a father to every concern that came along." The matter should go to the postal vote, as advocated by l the amendment.

Co-operation v. Proprietary. Mr G. Buchanan (Paeroa), after referring to his portending action against the (liquidator of the company in respect to the cancellation of shares, said that he realised that there was at stake the principle of co-oper-ation as against proprietary concerns. There was no doubt that every dairy farmer had benefited by the operations of the company. The point was that they had proprietary concerns endeavouring to break up their Company, and as co-operators they must stand behind a co-operative concern, (Applause). Mr G. P. Ewing (Whangarata) said that he was probably the eldest cooperator in this northern province. He had watcihed its progress since 1885. As far as the proposal was concerned, they had to remember that the directors signed up purely for the satisfaction of their neighbours. They were to get nothing out of it even if it was a huge success. The Bacon Company had been unfortunate, but that was no reason why they should /shirk itheir responsiblity. The responsibility was incurred on their behalf, and if they were going to take something for nothing they were a mean crowd. (Hear, hear!) Mr P. 11. Saxon (Waitoa) contended against Mr Buchanan's argument that if the directors were not reim-. bursed it would help the proprietary concerns. He tihought it just the opposite. Mr Walters talked about repudiation, but before there could be any repudiation it should bo first established that there was a debt. Business must come first and this was a business proposition. Another speaker said that the notice of the business was only sent out the previous day, and there were man? shareholders who had not received the notice, otherwise there would be a greater attendance. Therefore, it was liis contention, the decision should be reached by referendum. ■Mr names said that' the chairman had no option but to accept the notice of motion at the meeting. Mr W. G. Macky (Patcrangi), and one of the directors of the original Waikato Bacon Company, pointed out that the directors concerned were pressed unwittingly to sign the joint and several, and if they were to leave them without recompense they would be doing a great wrong. (Applause.) The speaker referred to the valued efforts by the directors, and especially by Mr Barugh, in the interests of the farmers.

The amendment, "That a vote by postal ballot bo taken," was then put and declared carried by a good majority. Mr Taylor said that he hoped that in reaching their decision shareholders would be ruled by their hearts.

Mr Spragg retorted that the question was one of business integrity and nothing else.