The Leading Article referred to (Wednesday December 7, 1892.)

The British shareholders in a company trading in the colonies, with a colonial board and manager, often find themselves at a disadvantage, real or fancied, in being-unable to control the use of their money with the precision they desire. We say real, because there have been cases in which English and Scotch money has been spent unwisely, and possibly, in some instances, carelessly. We say fancied, because it seems, judging by experience, to be not a very difficult task to persuade Directors resident in Great Britain, behind the backs and without the knowledge of the local men, that affairs out here are being mismanaged, when there is absolutely no grounds for such an imputation. We are led to make these remarks because of a case in point that is at the present moment exciting a good deal of interest in business circles in this city, and which we think is not only fair matter for, but demands, public comment. The Colonial Investment & Agency Company some years ago began the difficult task of realisation of their properties with the view of withdrawing from New Zealand. The process is necessarily a somewhat slow one unless valuable properties are to be slaughtered; but the local Board, it is generally admitted, have been carrying out instructions with much discretion and success. The men, indeed, who constitute the Board are, we may say without flattery, among the best men in matters connected with land in this part of the colony. We do not think there is anyone in the South Island who could teach the Board as a whole very much about land values. Meantime, however—about two years since—the Scotch Directors employed a Mr Dobson, a resident in Napier, where he represents the Northern Investment Company, to value the properties of the Colonial, which are situate in South Canterbury, Otago, and South-land, Mr Dobsons's fee and expenses being one thousand guineas. His valuation of 34 properties at £36,38l is given in a pamphlet—of which we republish a portion to-day—issued for the information of shareholders by the management which he has now superseded, and in a parallel column is given the amount actually realised by the late Board, viz., £51,584. Seeing that the total sum loaned on these properties was only £46,075, we have no difficulty in arriving at two conclusions—first, that Mr Dobson as a valuer was not a success; second, that the late management thoroughly understood page 10 their business. It may be alleged, perhaps, that Mr Dobson's orders were to value for prices likely to be obtained at a forced sale, or possibly that values of some of the properties had risen; but this is the only extenuation we can conceive of as accounting for the difference between his values and those subsequently obtained, and indeed it is safe to say that the second explanation can hardly apply to any material extent. But apart from the question of the valuations, it is difficult to use language sufficiently strong to properly characterise the action of the Scotch Directory towards their local Board—men who not merely had been excellent servants, but who, we believe, are largely interested as shareholders in the Company. Without warning:, without notice or complaint, Mr Dobsoa has been appointed to relieve the Directors and managers of their duties. The pamphlet issued by the local Board contains the following paragraph, with which we desire to express our cordial concurrence:-" They think the substance of the private correspondence between Mr Lawrie and Mr Dobson to which the minute refers should have been communicated to the local Board, so that they might have had an opportunity of replying to any strictures Mr Dobson may have seen fit to make in regard to them, and they think the Directors have not acted in a straightforward way in listening to ex parte statements without giving them an opportunity of replying." In securing his succession to the local Board, we are quite willing to believe that Mr Dobson has done nothing which could be thought incompatible with a fine sense of honour. But it does seem that the Scotch Directory have offended against the most elementary rules of commercial propriety—that they have condescended to lend an ear to tittle-tattle, to criticism, to specious representations of one kind and another, without having the common decency to submit such criticisms to their trusted servants in the colony for their comment and reply. We have not the pleasure of knowing the names of the men composing the Directory in Edinburgh of the Colonial Investment & Agency Company—neither do we want to know them; but we desire explicitly to say that they have acted very culpably in the manner, at any rate, in which they have discharged their functions. We do not believe that there is a public or quasi-public body in this colony which would have treated its meanest servant in the same dishonourable and discourteous fashion page 11 as that chosen by this precious Board. We can hardly doubt that when shareholders receive the modest and studiously temperate announcement of facts disclosed in the pamphlet issued by the late management, and when they realise the very serious loss likely to ensue on the late changes, they will want to know the reason why from their Directors. No doubt the ablest men often find themselves in considerable perplexity and doubt in controlling funds belonging to those at a distance: the sense of responsibility is a very serious one to every honourable man. But when the local directors of a company who are faithfully discharging their difficult duties learn that the management on the other side of the world is open to approach in an underhand and secret way, their position becomes absolutely intolerable. The case under notice is one in which the action of the Home Directorate is so clearly against the interests of its shareholders, and so utterly discreditable to men presumably of some standing, as to fully warrant the plainest of plain speaking, and they are certain to hear a good deal more of their extraordinary conduct.