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The Pamphlet Collection of Sir Robert Stout: Volume 75

Appendix B

Appendix B.

General manager to Dunedin manager, dated 21st November, 1894—
"In reply to your letter of 17th November, we thank you for this information and copy of balance sheet, which were laid before the board at their meeting today. The board are very far from satisfied at the state of this account. They take great exception to the item £2500 standing as an asset—the money that has been withdrawn from the milling business to strengthen the drapery account of Hood and Co., Oamaru, especially as the dwelling house in connection with the drapery business stands as a security against Mr Ryley's private account. This money must as soon as possible be returned by the realisation of the Oamaru drapery business. Regarding the change in the mode of keeping the accounts, we approve of your suggestion so long as the item £5250 against the Manor place mill, and which is supported by a guarantee and mortgage of John Ryley and the late Mrs Isabella Anderson, be not interfered with. We also approve of your suggest ion to work down the stock by closing the mill for a month, and paying off the hands that can be spared. We think far too much laxity is shown in the credit given. Names will present themselves to you in looking over his list of debtors, but we should say that the credit given to——and——is simply playing up for a loss. The latter name is deserving of no credit at all, and if it be necessary in sending flour to—that it must be sent to him, then you should allow no flour to go that way at all. It is out of all reason that the firm draw on us in the way they do, and you must organise a system of check on them whereby:
"1.They issue no cheques except payable to a name.
"2.That they give you a list of all cheques wished to be issued, with explanations as to what the money is wanted for, and get your permission to get the cheques so issued.
"3.That a special, trustworthy, able accountant in the bank's employ be appointed by Mr Ryley as his bookkeeper, and that reports from him from time to time reach you as to how the business is progressing.
"4.That this man in the bank's employ counter-sign all cheques, and that you have Mr Ryley's authority that any cheques not so [unclear: counten] be refused payment.
"5.That no speculations in grain or [unclear: s] lation in shipment of flour to distant [unclear: pan] allowed.

"If the mill accumulates a big stock, [unclear: th] must just be shut down until the stock is [unclear: wo] off. In addition to this it will be [unclear: necessi] you every month to have a trial [unclear: balance] taken out, so that you see the firm is not [unclear: get] further to the bad. We should like to [unclear: the] next Tuesday, in time for the Wednesday's [unclear: be] what steps you have taken in regard to [unclear: the] matter."

Dunedin manager to general manager, [unclear: d] 27th November, 1894:-

"Noted, and entries have been passed [unclear: a] proved. With reference to this firm's [unclear: acco] duly interviewed Mr Ryley on Saturday [unclear: m] on his return from the goldfields, and [unclear: laid] stipulations before him. At the time he [unclear: n] strong protest against the third and [unclear: f] clauses of your conditions, which he [unclear: has] repeated by letter, copy of which is enclosed might, perhaps, be unwise to precipitate [unclear: t] till we can hear of a suitable and reliable [unclear: t] take up the entire management of the [unclear: bu] should you still decide to adhere [unclear: to] terms after perusal of Mr Ryley's [unclear: b] which speaks for itself. In [unclear: spite,] ever, of Mr Ryley's objection that [unclear: it] destroy his credit and character,' I still that whether you give way on the [unclear: poi] tained in the third and fourth clauses [unclear: or] balance sheet should be cercifted to by [unclear: a] petent outside accountant, which would [unclear: giv] reliable starting point for future [unclear: comparis] cannot see that this would in any way [unclear: ref] Mr Ryley's credit and character. In [unclear: fa] might emanate from himself. If Mr [unclear: Rye] made up his mind, as he has more [unclear: then] assured me has, your conditions can only [unclear: be] plied with by relieving him of the [unclear: manage] This extreme step I did not, of course, [unclear: feel] fied in taking without placing the position you. P.S.—Since writing the above [unclear: we] received a letter from Mr Ryley [unclear: explian] item of £2500 which appears in the [unclear: ballance] as an advance to Hood and Co. We [unclear: e] copy."

John Ryley to R. £wing, Colonial [unclear: Bank], Dunedin, 24th November, 1894:—

"In reference to our conversation this [unclear: fo] I beg to make the following statement, [unclear: whi] show the adverse circumstances with [unclear: wh] have had to contend ever since we [unclear: con] business as millers. We started when [unclear: whe] 5s per bushel and flour £13 per ton, and [unclear: th] not been one good year since. It has [unclear: be] stant drop every few months. Anyone [unclear: aoy] with milling knows well what that [unclear: means] have now, however, reached the [unclear: bedrock] cannot go lower, and any movement [unclear: most] the upward direction, and from the [unclear: positi] character of our mill we are bound to [unclear: sha] in any advance which may take place. [unclear: I] doubtless aware that we suffered [unclear: severely] the floods in Brisbane and by [unclear: consignment] other side, while the wreck of the [unclear: Lain] £800 to our loss. The consigning [unclear: bus] simply ruinous, and we have entirely [unclear: given] Our flour has secured such a name [unclear: that] no difficulty in disposing of all we [unclear: manu] in our own colony. If we sold at the [unclear: san] page 15 [unclear: a] most of the brands in and around Dunedin [unclear: ll] at we could not supply the demand. Although [unclear: ices] have been cut so fine we have not [unclear: st] in the milling trade proper. There [unclear: as] been a margin of profit, owing chiefly to [unclear: e] fact that we do a good cash trade at the mill. [unclear: nr] losses are attributable to the causes above [unclear: ated], and to the large purchases of oats made last [unclear: ason]'Em. which resulted in a heavy deficit. We [unclear: nkly] admit having committed a great mistake [unclear: t]buying so extensively, but the great bulk of the [unclear: en] in the trade looked upon oats as splendid [unclear: operty], and had it not been for the financial [unclear: isis] in the other colonies they undoubted would [unclear: ve] turned out profitably. We have come to the [unclear: in]lusion, however, that, taking one year with [unclear: other], it is safer to buy as necessity requires, [unclear: nd] this line of policy we intend to follow. We [unclear: ve] gained experience which, although at con-[unclear: erable] cost, ought to be of advantage in the con-[unclear: cts] of the business in future. Looking at all the [unclear: cts] of our case, and taking the state of the mill-[unclear: g] industry in the colony into account, we are [unclear: ther] surprised to find that our position is not [unclear: orse] than what it is. It is true we have made [unclear: thing], but we have established a first-class [unclear: siness] of sound connections, which will bear [unclear: nit] in time to come. Our mill is second to none [unclear: the] colony. All our expenses with buildings [unclear: nd] improvements are over. Unless, therefore, [unclear: e] whole trade is going to collapse, we believe [unclear: ere] is a good future before our firm. The ques-[unclear: on] of forming a flour trust has been under con-[unclear: eration] of millers for some time, and there [unclear: every] prospect of the scheme becoming an [unclear: complished] fact in the course of a few months. [unclear: Then] this is effected we will be able to do with 10,000 or £12,000 less of capital, while the risk of [unclear: nd] debts will be reduced to a minimum. If the [unclear: nk] will kindly allow existing arrangements to [unclear: ntinue] we will do everything in our power to [unclear: ake] the business a success. We will also consult [unclear: on] on every important matter, and furnish you [unclear: ith] all information as to the working of the [unclear: usiness]. I must, however, respectfully, but at [unclear: e] same time firmly, in fairness to myself, de-[unclear: ine] to accede to the proposal of the bank to put [unclear: n] accountant into the office to countersign [unclear: eques] and generally to look after the bank's [unclear: terest]. Were this done it would destroy my [unclear: edit] and character, and, I am persuaded, [unclear: ould] seriously injure the business, and so [unclear: n] detrimental to the bank's interests. For the [unclear: ne] reason I cannot agree to allow any-[unclear: e] outside the office to examine the firm's [unclear: oks]. We have two competent accountants, [unclear: r] whom the balance sheet was prepared, and it [unclear: s] been duly signed by myself. It the bank is [unclear: t] satisfied now with what it has always re-[unclear: ved] without question. I am prepared to retire [unclear: d] hand over everything to the bank on receipt [unclear: dis]-charge from future liability. I have always [unclear: en] frank and open with the bank, and never [unclear: ce] refused any information or returns required. [unclear: d] man in Dunedin has worked harder in the [unclear: terests] of the business than I have done, and I [unclear: n] quite willing to continue my efforts so as to [unclear: ke] the undertaking a success. My one desire [unclear: that] the bank may come out all right in the [unclear: d]. All your other suggestions I heartily [unclear: opt]—viz.: To close down for a month; to [unclear: ke] cheques payable to a name instead of to [unclear: nu]umber; and m every respect to work with [unclear: u] for the advancement of the business in which [unclear: are] mutually interested."

R. Ewing, manager Colonial Bank of New Zealand, to R. Anderson and Co., 27th December, 1894:—

"With reference to my conversation with your Mr Ryley this morning, I have now to say that the bank cannot acquiesce in your recommencing operations at the Manor place mills until after a complete balance sheet up to and including 31st inst. has been made up, with fresh stock sheets, all to be certified to by an independent accountant in the usual way."

John Ryley to R. Ewing, manager Colonial Bank of New Zealand, 3rd January, 1895:—

"Your letter of 27th ult. came duly to hand, and in reply I can only refer you to my former communication, in which I decline to allow any outside party to interfere with the business so long as I have charge. I take up this position not because I fear any investigation that could be made, but because I object on principle to this new condition that the bank wishes to impose. Had it been made a stipulation at the beginning that every balance sheet should be certified to by an independent accountant, and had 1 agreed to such stipulation, then in that case I could not raise any reasonable objection. This, however, was not done, and I am not aware of anything in my conduct to warrant the bank in making a new departure in this direction now. I beg to say once for all that I will never submit to such an indignity. The only possible mistake that could be made in the balance sheet which the bank could not detect would be in the stocks. At our last balance we showed about 800 tons of flour on hand. It will be five weeks on Saturday since we stopped, and during that time we sent out on an average close on 120 tons per week. We have to-day in store about 200 tons, or perhaps a little more. This you can see for yourself if you wish to visit the mill. The wheat we represented as having in stock is still in the store, and can be inspected by you at any time you wish. Personally, I have no object in making the stock more or less than what it really is. I can honestly say that very little of the bank's money has been lost, while all the time we have been in business interest has been paid on the whole capital employed. One or two good years would more than recoup any deficiency. P.S.—Am arranging to start work on Monday."

R. Ewing, manager Colonial Bank of New Zealand, to R. Anderson and Co., dated 4th January, 1895.—

"While we verbally acknowledged to your Mr Ryley at the time the receipt of your letters of 24th and 27th November, formal replies to them were delayed until the return to Dunedin of the inspector of the bank (Mr W. B. Vigers), who was in charge of the Dunedin branch while the events under review transpired. After conferring with him it appears only necessary here to state that the knowledge of your having advanced £2500 to the drapery business of J. Hood and Co., Oamaru, was obtained first from the balance sheet submitted to the bank in your letter of 24th November. Mr Vigers was not aware the cheques were drawn for the purpose of investment in such business. The bank neither sanctioned nor contemplated that any such amount of money should have been so applied by you, and any deficiency arising from the recently-arranged sale of this business to Messrs Gibbard and Brown we can only look upon as money by you misapplied."

page 16
John Ryley to K. Ewing, manager Colonial Bank of Mew Zealand, 5th January, 1895:—

"Referring to our conversation yesterday evening, and to the interview 1 had with Mr Mackenzie after parting with you, I now beg to state that I am prepared to have all future balance sheets certified to either by an independent accountant or by two of the clerks in our own office. Further, I am quite willing that you should visit the will at any time it suits your convenience, on your giving me due notice of your intention to do so. On the above understanding, Mr Mackenzie has agreed to the starting of the mill on Monday, 7th inst. P.S.—I hereby acknowledge the right of the bank to demand from me a balance sheet at any time it thinks proper."

R. Ewing, manager Colonial Bank of New Zealand, to R. Anderson and Co., 9th January, 1895:—

"I have to acknowledge the receipt of your letter of the 5th January, and duly note that the future balance sheets of the firm will be taken out at any time the bank desires, and, further that their correctness will be certified to by independent accountants. I would, merely for the sake of record, remark that everything which took place during the interviews which the general manager and I lately had with you, and everything in the correspondence which recently passed between us, is without prejudice to the bank's right at any time to call up such sums of money as are now owing by your firm on open account and payable on demand. The bank is under no obligation to carry your firm on beyond what in the bank's own discretion it elects to do. This said. I beg to confirm the sanction of the general manager to the Manor place mill being started again as and from the 7th January, 1895."