|Administrative / biographical background:
The Rhodesia Cold Storage and Trading Company Limited was registered on the London Stock Exchange in 1903. It changed its name to the Rhodesia Trading Company Limited in October 1908, and was put into voluntary liquidation in August 1926.
The company was the creation of Major (later Sir) Frank Johnson (1866-1943). He had two objects in view: firstly, the amalgamation of a number of cold storage and trading companies in the new colony and Portuguese East Africa and, secondly, their association with a ranch in North Western Australia whence they could draw on supplies of fresh meat, transported in their own refrigerated ship. It was a grandiose plan that misfired badly. The papers of Philip Lyttelton Gell, who was chairman of the company from its beginning to within two years of its liquidation, elucidate many of the causes of its failure.
The chief participants in the amalgamation were two Rhodesian trading companies, H.J. Deary & Company Ltd. and Arthur Suter & Company Ltd. Both were run by their original founders, but each had Boards of Directors and shareholders to support them. Deary & Company was quoted on the London Stock Exchange, but Suter & Company is not mentioned in the handbook of dissolved companies although it had many English shareholders. The other African businesses involved were the Beira Cold Storage Company and the Rhodesia Supply and Cold Storage Company. In addition, the extensive cold storage plant at Beira owned by the Mashonaland Railway Company and formerly leased to the Beira Cold Storage Company was brought into the new company. The Australian company was the North West Australian Land and Cold Storage Company Limited. It was owned chiefly by Frank Johnson and R. Tilden Smith, and possessed rights to a two million acre estate called Napier Broome in the Kimberley district of Western Australia. It was the intention of the Rhodesia Cold Storage Company to start a subsidiary company wholly owned by itself, the Austral-Rhodesian Steamship Company, to carry meat from Australia as well as general cargo on the return trip from Africa.
The economic rationale of the company was complex. There was a real need for cold storage facilities in Southern Rhodesia, where the climate necessitated the refrigeration of dairy products and other perishable foods. The incidence of cattle disease meant that there were many occasions when a farmer would need to slaughter his cattle before they became infected and place the carcases in cold storage. The addition of a retailing organisation to an existing infra-structure of cold stores was expected to result in an increased consumption of meat in the colony. Secondly, there was a body of opinion in favour of the development of Beira as the principal port of entry for Southern Rhodesia so as to overcome dependence on Capetown and Port Elizabeth. This was in turn linked to the construction of the Mashonaland Railway line to Beira. Cecil Rhodes himself had been interested in Beira and had suggested the connection with Australia taken up by Frank Johnson. It was hoped that Australia might one day be a source of live as well as dead stock. There was, thirdly, an expectation that the greater availability of meat would alleviate the problems encountered in the recruitment of native labour for work in the mines. It had been found that money payments were an insufficient incentive to the Africans, but that improved rations might persuade them to stay for longer periods. It was therefore proposed that cold stores should be erected at the mines, supplied by the Rhodesia Cold Storage Company, so that meat could be regularly included in the labourers' diet.
The arrangements made for the formation of the company were generous to the participants in the merger. Each was given a large block of shares. The valuation placed on these separate businesses was excessively high, in the case of the Beira Cold Storage Company outrageously so. The payments made for good-will were in all cases too much. As the company recorded increasing deficits, the original agreements came in for much criticism. Ultimately that with the Beira company was disputed in the courts, it being maintained that the Rhodesia Cold Storage Company had been deliberately misled as to the Beira Cold Storage Company's profitability. In truth, Johnson had been so eager to complete his amalgamation that he and his colleagues had not enquired too closely into the backgrounds of the parties to the merger before floating his promotion. Johnson himself had personal reasons for haste. His Australian company was in need of capital, which could only be provided by the subscriptions to the Rhodesia Cold Storage Company; and it was unlikely that the estate in Western Australia would prosper unless it was linked to a reliable outlet for its produce. The fact that one of the vendors was acting as the promoter of the purchasing company was looked on with disfavour in certain City circles.
The British South Africa Company had no financial interest in the Rhodesia Cold Storage Company apart from underwriting part of the first stock issue through the Charter Trust. Johnson had approached the British South Africa Company in 1902 to discuss limiting competition in favour of the proposed amalgamation in Southern Rhodesia, but this idea had not borne fruit. It was, however, in their mutual interest that the British South Africa Company should have a representative, albeit informal, on the Rhodesia Cold Storage Company board. It was first suggested that the British South Africa Company Secretary and Joint Manager, J.F. Jones, should join, but in the event P.L. Gell was persuaded to tender his services at the instance of Jones and B.F. Hawksley. solicitor to both companies. Gell was to regret having listened to their blandishments. Certain other links between the two companies can be traced in these papers. The British South Africa Company acted as guarantor for bank loans at least until the end of the first World War; in 1918 Wilson Fox, manager of the British South Africa Company, was involved in negotiations between the Rhodesia Trading Company (as the Rhodesia Cold Storage and Trading Company had become in 1908) and Sir Harry Samuel about a possible merger. It is not clear from the correspondence what part was played by Fox in this negotiation nor what interests Samuel represented.
The commercial record of the Rhodesia Cold Storage Company, later the Rhodesia Trading Company was poor. A profit was not returned until 1908-9, when it was only £1,452. In 1904-5 there was a loss of £23,648. From 1909 to 1912 the company showed a profit, the best figure being £12,991 made during the eighteen months from September 1910 to March 1912. This trend was not maintained during the years 1913-15, losses of £8,418 and £6,394 being reported in the two latter years. During 1916-19, the last four years for which P.L. Gell's papers include annual accounts, small profits were again recorded. It is believed that this position was maintained until the company's liquidation. A measure of the smallness of the profits and the magnitude of the losses is that the trading turnover for 1912-13 was in excess of £240,000. The causes of the company's failure were evident from the first years of operation. Most remedial actions, of which may were attempted, were piecemeal or hindered by conflicting interests within the company itself. The chief problems are outlined below.
Although Frank Johnson's original intentions seemed commercially promising, they did not prove practicable. They presupposed a large capital investment not only in on-going trading enterprises but also in expensive plant for cold storage, stock and buildings for the Napier Broome ranch and the purchase of the steamship. Such a capital-intensive organisation had therefore to be assured of immediate high profits or financial resources far in excess of the preliminary investment costs. In the event, the Rhodesia Cold Storage Company could rely on neither of these. Profits were depressed by the down-turn in the Rhodesian economy soon after the formation of the company. Capital was insufficient because the promoters of the company went to allotment with little more than the minimum subscription to their first issue. When forced to look elsewhere for capital, the company had to pay high interest to the Bank of Africa. Slow liquidity entailed inadequate stocking of the retail and wholesale outlets in Rhodesia, a general incapacity to meet emergencies, and inability to take full advantage of bulk ordering. The only remedies were the disposal of the non profit-making and capital-consuming sectors of the company and the writing down of assets and shares. Both operations were largely completed by 1908, the first year that saw a profit made on the African trading ventures. The Beira cold store was partially closed down not long after the completion of the legal action concerning its original purchase, and other cold stores were relinquished; the steamship was sold without ever having contributed to the credit balance of the Rhodesia Cold Storage Company; finally the Napier Broome estate itself was taken back by its original vendors, and their holdings in the Rhodesia Cold Storage Company were liquidated. The chief vendors, Johnson and R. Tilden Smith, stood to lose considerably by this action which may be an indication of the guilt they felt over the losses already sustained by the Rhodesia Cold Storage Company at their instigation. A more realistic valuation of the company's assets was made in 1908, and preparations were put in hand for the writing down of the value of issued stock. In conjunction with this, some of the original vendors, in this case Arthur Suter & Company's and Deary & Company's shareholders, surrendered some of the shares given them at the time of amalgamation. Arthur Suter himself made a sizable sacrifice of shares in underwriting trading losses in Rhodesia as a gesture of faith in his own management. After the company had been reconstructed in these various ways, its name was changed to the Rhodesia Trading Company to reflect the shedding of its cold storage business. A new debenture issue was planned for 1909 to afford the company a fresh start.
The company, however, was never strong enough to ride out the extreme fluctuations of the Rhodesian economy without loss, although it did not actually go bankrupt as many smaller trading ventures did in Salisbury and Bulawayo. Hopes for a solution to this problem were concentrated on making the company less dependent on Rhodesian consumers' purchasing power. The calculations centred on the office maintained in London which acted as broker for all English goods bought by the local branches. It was expected that the business of the Buying Department, as it was called, could be extended to other South African firms as well as to British interests overseas. For example, there was a proposal to act in concert with the South African firm of Dunn & Company, and an effort to join in a contract to supply cement to South America in conjunction with Sir James Sivewright. After many years the Buying Department did make enough to cover the expenses of the London office, but its profits were never significant. Other projects, much favoured by Gell, were the supply of coal to the British Admiralty at Beira and the agency for the advertising in Rhodesian railways, both of which might have cushioned the Rhodesia Cold Storage Company from the harsh effects of a trading depression. The former came to nothing, but the latter was taken up by both railway companies in the colony. There was also a move from retail to wholesale trade as well as an attempt to concentrate business in fewer and larger branches. Both measures would have limited losses and would have given resilience in times of economic decline.
No matter how correctly the overall policy of the company was laid down, unless its execution was satisfactory poor balances would result. Although the infra-structure was set right by 1908 the management, especially in Rhodesia, was of execrable quality. The gradual development of central control of branch managers and accountants is well mirrored in these papers. The company had not only to deal with corruption and inefficiency, but also with ignorance of the systems required for the proper functioning of a business that had as many as thirteen branches at one time. Adequate controls over stock and accounting were not developed until 1915. Blunders in purchasing policy, such as being caught with immense quantities of timber or kaffir goods, were too often made. Much of the fault for this lay with the successive general managers in Rhodesia. The first joint managers were Arthur Suter and H.J. Deary, who both entered the amalgamation on the condition that they were so employed and, in Suter's case, given a place on the London Board. They also arranged inflated salaries for themselves. Neither was satisfactory, and there were many attempts to dipense with their services. Deary was eased out of his place just before his death in 1907, but Suter was more tenacious. He retired as Managing Director in 1908 but reappeared in the same position, jointly with D.N. Shaw, in 1913. He was not displaced until 1915, and was voted off the Board in the following year. It is significant that during 1903-08 and 1913-15 when Suter had some executive control, a loss was recorded. Suter's successor, Robert MacGregor, began promisingly but came in for criticism for ineffective control and administration. Those who followed him were of better quality.
There were also problems at the London office. Here it was not so much inefficiency as high cost that taxed the minds of the shareholders. This too was a result of the arrangements made at the amalgamation. Frank Johnson secured for himself high fees for a quasi-executive position, as well as supplying the secretarial and Buying Department staff and accommodation partly through his private company, Secretariat Limited. Successive attacks forced him to reduce his fees and in 1910 to give up any connection with this work in favour of D.N. Shaw. The Directors were also given large fees, but were forced to renounce them as loss followed loss.
Not only did the company suffer from manifest problems of direction and administration, but it was also rent by the disputes of various factions within the body of shareholders. The original Board of Directors was a confederacy of representatives of interests in the amalgamation, weighted in the first place in favour of the Australian connection in the persons of General Sir Frederick Forestier Walker and W.G. Elder. Johnson was influential both in the Australian company and in Rhodesia; Gell was brought in as an independent chairman with potentially useful contacts. The commercial failure of the Napier Broome estate resulted in the replacement of the first two Directors by David N. Shaw and Arthur Humbert. Shaw, a business man with interests in southern Africa, was involved through his position as liquidator of the Scottish African Company which had extensive holdings in the Rhodesia Cold Storage Company; Humbert, a member of the sherry importing firm of Williams, Humbert & Company, was connected with Suter & Company through the family firm of solicitors, Taylor Son & Humbert, legal advisers, members of the Board and shareholders in Suter's company. After this, the only change before 1912 was that Shaw became Managing Director in place of Suter, who remained on the Board. In 1912 Suter was reappointed to his position jointly with Shaw, and Humbert was forced off the Board by a combination headed by Johnson, Tilden Smith, W.H. Stentiford, A. Lawley and George MacGregor, The last named was elected in Humbert's place. MacGregor was the brother of the General Manager in Rhodesia, and was presumably acting as a representative of the Suter & Company faction, Humbert having lost favour during previous years. In 1914 MacGregor was also to fall out with Suter, as was shown by his vituperative speech at the general meeting of December of that year. In his place Suter's supporters wished to elect Mr. Latilla, who seems to have taken his seat on the Board. However, he held it for less than a year (the papers lack information on this point) and MacGregor held his place throughout. In 1914 and 1915 first Johnson and then Suter was removed from the direction of the company by a group led by R.S. Taylor and A. Humbert: the latter thus gained his revenge for 1912. Much of this conflict was due to a clash of personalities, especially between Shaw and Suter. The likelihood of financial advantage to supporters of Suter must have been remote, and one can but assume that they were governed in their actions by a warm regard for the capacities and character of Suter himself. Shaw's supporters were fewer and more calculating. In the end the canny Scot was the only person to gain from the gloomy progress of the company, as he gathered to himself all the tasks to which profit was attached, ousting both Johnson and Suter in the process. He allowed his friends or enemies to take the centre of the action, while he himself took the pickings.
Whether the situation calmed down after Suter's disappearance cannot be discovered from P.L. Gell's papers, for they are particularly scanty for the later years. There was certainly an extensive reconstruction of the company after the first World War, for there is a reference to a local Rhodesian Board of Directors in a letter from Shaw, probably dated 1923. The only episode of significance which the papers illuminate during these years is the proposal for a merger with an unnamed company made by Sir Harry S. Samuel. It is possible that more papers relating to the Rhodesia Cold Storage and Trading Company will come to light among P.L. Gell's papers, but it is unlikely that any subsequent discovery will be extensive.
List of chief officers and directors of the company
Note: this list is compiled from the surviving annual reports and correspondence in the MSS. Owing to the gaps therein, some of the dates must be taken as approximate.
Directors: listed in date order of accession on the board
P.L. Cell (chairman), 1903-ca.1924
P. Johnson, 1903-14
General Sir Frederick W. Forestier-Walker, 1903-04
W.G. Elder, 1903-04
Arthur Suter (managing director or joint managing director 1904-08, 1913-15), 1904-15
David N. Shaw (managing director or joint managing director 1908-?26), 1904-?26
Arthur Humbert, 1904-12
George MacGregor, 1912-?26
[Mr. Latilla, 1915?]
General managers in Rhodesia; listed in date order of appointment, some were joint appointments
Arthur Suter, 1903-04, 1907-?10
H.J. Deary, 1903-07
A.W. Suter, 1904-?06
Robert MacGregor, 1907-13
W.H. Smith, 1910-15
Mr. Gibson, 1915-?18
A.G. Wood, 1918-
Secretaries in London
S.W. Bartman, 1903
F.J. Asbury, 1903-11
C.C. Willson, 1911-15
George Elder Levie, 1915-