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Do Associations Need By Big Financial Reserves? " Tantalus "

10th September 1943
Page 31
Page 31, 10th September 1943 — Do Associations Need By Big Financial Reserves? " Tantalus "
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Which of the following most accurately describes the problem?

Where a Purely Representative Body Piles Up Large Sims the Members are Entitled to Know the Full Reasons Why These are Not Returned to Them in the Form of Reduced Subscriptions

ANNUAL reports—whether of industrial undertakings or of organizations—never fail to provide interesting reading, and that presented at the a.g.m. of the A.R.O., which was held recently, proved no exceptiOn, Two items contained therein merit special attention,. i.e., the financial report and the 10-point policy outlined bY flie president _and published in the issue of "The Commercial Motor" dated August 27 last. The hon. treasurer, in kesenting his report, revealed -a strong financial position with reserve fufids totalling over £29,000, which information, quite naturally, was received with acclamation. Nevertheless, there are people—perhaps of a more serious turn of mind— who ask the question "What is the purpose of building • Up such a large reserve and in What particular manner. will this financial strength be employed?"

It must be conceded that to create large reserves is a sound policy, the purpose, ,generally, of which is to provide against unforeseen contingencies which may arise as, for example, trade slumps, expansion schemes, etc. If, however, an.undertaking be fortunate in escaping any serious degree of setbacks such as assail trade and corn; merce, in such circumstances it is customary for shareholders to benefit by way of increased dividends, bonus shares and the like, whilst, in exceptional cases, capital is returned tt the investors. So much for they common practice,. as relating to commercial undtrtaking,s.

Difference Between Company .

and Association Objectives

A trade association, however, has been regarded always in an entirely different light, as the principle and objects are substantially apart from those obtaining in commerce. In the one case profit and loss are the governing factors in all stages right through from the raw ' material to the consumer, and the success of a company, accordingly, is judged .by the dividend record which it bears. In the case of associations, however, it is always recognized and strongly•asserted that such is neither the principle nor ambition. , So far, throughout transport history, it has never been kndwn for a road-transport organization to reduce the

■ • rate of subscription, using its reserves for this purpose. On the contrary, the ,custom is to appeal for financial

aid in order to supplement the subscription income.

Amongst the membership of the A.R.O. there is considerable speculation as toe the particular purpose for which the large financial reserves are earmarked. Is it the deliberate policy for those in control to seek still• further to increase' the reserve with the sky as the limit; or, is the aim a target figure to be used for some speci fied and, as yet, undisclosed purpose? Whether the strong position has _ been achiev'ed froin subscription • income alone or co-jointly from the Meat Pool, the fact remains that the custodians are, in 'effect, trustees for the membership as a whole: The latter, then, is merely exercising a prerogative when asking these questions. No member will, object to the increasing of the revenue figure to very substantial proportions if, as a result, the members themselves will derive benefit therefrom:

All warfare is costly, whether it be fought on the battlefront, in the political arena or elsewhere, and this, doubtless, is recognized by association members as by other sections of the community. If they are .given assurance that the money which they themselves have subscribed is to be used in fighting for the removal of severe restrictions and in an attempt to, obtain for them freedom of action, most certainly they will consider the investment a sound one and worth while.

Regarding the speech of the president, there is no caus-G for disagreement regarding the 10-point policy, which was fully outlined. There has been expressed considerable disappointment regarding the lack of reference to the C licensee and the post-war status of the haulier. However well-meaning the president may be and however carefully he has thought out his policy for road transport, these omissions cannot be regarded as being of no significance. No plans or schemes for the organization of the industry can be shccessful or satisfactory so long as these two matters remain unsolved. Is it to be deduced that the omission to include :these items was deliberate? If so, what is the reason?

On the detailed points of the policy, readers, doubtless, already have formed their opinions. Attention is drawn to the 10th point, which reads, as follows :—" Arrange co-operation between individual concerns within the industry and with other transport agencies,. to provide the maximum efficiency and simplicity in meeting the needs of all productive and, trading concerns in the country for transport within our boundaries, the British Empire and,where found practicable, to other countries."

Is a Scheme of Unlimited


There exists much food for thought in any attempt to analyse the details of this particular item. Read from almost any angle there would appear to be only one interpretation. Take, for example, the wards "arrange co-operation between the individual concerns." Surely, if that means anything, at all, it means power, to buy and sell, to trade in the fullest sense of the word and, maybe, power to become a huge operating concern not confined 'to this country nor, even, to the British Empire, but extending also to other countries. If this assumption be correct the 11.kth point disclos'es a scheme of unlimited ambition to which should be paid the closest attention.

Is it possible that there exists a connecting link between the financial' policy of building up large resources and point 10? There are further questions regarding this statement of policy which cannot be overlooked. For example, has the policy been adopted officially by the A.R.O. and endorsed by the membership?If so, will the A.R.O.-'–in seeking to implement the policy—do so as an isolationist body; or, alternatively, will the implementation be. carried out by the Lord Perry Federation' (if approved) as the reorganized corporate national organization the establishment of which already has received the support of the A.R.O.?


Organisations: Lord Perry Federation

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