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The Pamphlet Collection of Sir Robert Stout: Volume 75

Appendix A

Appendix A.

On the 28th February, 1893, the branch [unclear: m] at Invercargill reported as follows:—account, which is taking well with the [unclear: fan] At present 4200 shares have been allotted, [unclear: w] as the capital assigned to us, gives us a [unclear: se] of £16,800. More shares are being [unclear: take] every day."

page 13

On 31th August, 1893, he reported: "Large, valuable business account, doing remarkably well, and giving us some good British bills." Is working higher than anticipated, owing to the purchasing of large drafts of sheep at per pound dead weight to keep Mr Ward's works going. His is a very profitable part of the association's business, and is of such a nature that there is next to no risk in connection therewith. The association hold large stocks of manures, cornsacks, woolpacks, and general merchandise, and their debts are heavy. This account I consider perfectly safe, as at the present time it has a share proprietary of 5780 shares, distributed amongst 464 shareholders, making an uncalled capital of £23,210."

On the 28th February, 1894, he reported:—"Very valuable business account, with a large connection, doing a first-class business, and holding large stocks of manures, cornsacks, wool-packs, and general merchandise. Their book debts are very heavy, but the harvest proceeds ought to reduce them very much, as a lot of money is expected from that source. The account is higher than anticipated, owing to more money being required to take over and carry on the business purchased from W. Carswell and Co. and that of the United Farmers. However, I consider it safe enough, as there are 871 shareholders, who hold 7135 shares paid up to £1, which leaves an uncalled capital of £28,540 "

On the 31st August, 1894, he reported:—"First-class business account, doing a large and increasing trade, chiefly among the farmers. Bills under discount well spread, and mostly all the large ones are secured to the association. Promissory note for £10,099 in on account of the Carswell account, which stood as an overdraft last half. Past due bills are merely temporary, being secured by mortgages over a vessel and produce to come in for sale, &c. This account carries valuable British bills. Shares sold, 12,108, uncalled to £4 each, or £48,432"

And on the 28th February, 1895, he reported:—"Very valuable business account, having a large connection with the farming community, which is being gradually curtailed so as to bring the figures to more moderate amounts. Promissory note for £10,000 is on account of the Carswell account, as a great proportion of the stocks taken over are still on hand and unsold. Past due bills look heavy, but most of them are of a temporary nature, and grain and stock will come in to retire them. This association issued £50,000 worth of debentures, of which we hold £30,000 and the Bank of New Zealand have purchased £20,000. We get good British bills. Uncalled capital, £49 898."

On the 18th April, 1894, Inspector Burns reported as follows:—"The book debts and goods in stock are merely an estimate of Mr Fisher's as on 2nd April, but taken from the books as far as possible. As the association has taken out no balance sheet since June 30 last, and only does so annually, it is impossible to go into the association's affairs or to gather any reliable idea as to how the association stands until their next periodical squaring up. It may be inferred, however, from the large business they carry on and the amount of money put through their banking account that with proper care and supervision the association is capable of doing remarkably well. This very matter of supervision, however, is of the greatest importance to all concerned. The figures in our books may be large, and are so, but if the detail of the business is thoroughly overlooked there should be no reason for the bank to have anxiety as to the safety of the account. Mr Fisher has altogether too much thrown on his shoulders, and, although he is in constant communication with Mr Ward (telegraphic or otherwise), still, with all the lines of business into which the association has thrown itself, he has too much to do. No doubt Mr Fisher may be an able man, but he is neither old enough nor has he had sufficient experience to grasp and hold the details of such a business, or to layout definite lines of action with the firmness to stick to them. He may not be in any way to blame for the gradual swelling of the association's advances, but at the same time it appears to require the greatest effort on his part to keep within the limit, which he has been trying to do, the figures as at 28th April, 1894, for instance, being far and away above what he anticipated only last September. At that date he stated that the bank overdraft from January, 1894, would not necessarily exceed £40,000, with £20,000 or £30,000 of bills discounted, of course there may be reasons for this of which the writer is not aware, but still there are the facts The remarks, however, re Mr Fisher are only made in a general eense. So far as our advances to the association are concerned, we have been carefully through bills held and discounted The great bulk of the bills discounted are stock and produce bills taken from the farmers for advances in settlement of open accounts, mostly payable at the association's office. In many cases the makers keep no banking account, and it is difficult sometimes to analyse their worth, but we have examined them critically. The number of bills (excluding British bills) current on the 14th March was £27,000, spread over 242 obligants, or a total of £27,100, or giving an average of about £110 to each obligant—a fact which materially minimises any risk of any bills of which I was in doubt. The manager of the association has furnished particulars, and I send you a copy of his remarks against the names (a list of which was made out by me). You will see that they were pretty nearly all secure. From the fact of this being so, may it not fairly be assumed that the other advances to the association general and open account are made on similar lines, and that the business is, on the whole, carefully looked after? Mr Fisher states that he reckons only a few hundreds as bad." Then the report makes reference to the dividends payable, and suggests that anything over 7 per cent. should be put to a reserve fund.

On the 22nd May, 1895, Mr Vigers reported as follows:—"The bills under discount are chiefly farmers' paper, and in most cases security is held. We hold a letter agreeing to take any securities offered to us if called upon to do so. The promissory note to the bank is in connection with the purchase of H. Carswell and Co.'s business, and I am told that Mr Fisher says they have stocks in hand of Carswell's almost sufficient to cover this. The British bills are documentary. I have gone through the past due bills with Mr Fisher, and if his statement can be relied on they are all of a good class, mostly secured, and £1000 will be sufficient to meet any loss in connection with them. Many of these bills are really current accounts, and Mr Fisher says that to insist upon page 14 their all being paid up would spoil one of the most profitable portions of the company's business. He estimates that within the next three months overdraft and past due bills will be reduced £15,000, besides providing for the London bill (£3000). The credit for £5195 has been paid off within the last few days without increasing the overdraft. The London bill is secured by bill on Brooks and Co. held. The grain account is fully covered by warrants for grain stored on our account. The securities held are as follow:—Guarantee by Hon. J. G. Ward, £20,000; debentures (over and above £20,000 account). £10,000;—total. £30,000. The weakest feature of the company's account to my mind is the advances to farmers, as past experience all over the colony has proved conclusively that this class of business is very risky and often attended with the most unfortunate results. The account generally is a most profitable one to the bank, and may be considered safe, but the figures are too high, and we should insist on a gradual reduction, which will no doubt mean a curtailment of their business."