ABOUT PROFITS

Dominion, Volume 13, Issue 31, 31 October 1919, Page 6

ABOUT PROFITS

THE MERCHANTS' CASE

REPRESENTATIONS TO MR. MASSEV

INTERESTING STATEMENTS A deputation representing Wellington merchants waited.upon the Prime Minister on .September -22 in order to make .suggestions regarding prices and profits. A report of the proceedings of the deputation is included among documents attached to ii report issued by the Legislative Council's Statutes Ucvision Committee, which " recently considered the Board of Trade Bill.

| Mr. Warnock (Messrs. L. Nathan and Company) introduced the deputation, which he said consisted of merchants' representatives who wished to place before the Prime Minister certain matters in connection with the Board of Trade Bill at present before the House. Whilst, everything might be all right, liny ieit that they shoui'.d have some measure of security in connection with some of (ho conditions provided for.

Mi'. W. A. Mowbray (Messrs. Levin and Company) said that the merchants were gieatly concerned over some of the conditions in this Bill, and had asked.Mr. Warnock to bo good enough to try ami arrange for an interview with the Prime Minister. Ho thanked Mr. Mass?y for. this privilege. The Prime Minister would understand their concern when they read things like this in Tin: Dominion-. "Mr. Massey said the House would mako it an offence for one wholesale house to sell to another at any profit at all. Kxor'bitant profit was covered by the Bill ai'ready."

Mr. Mnsssy: I.said I could not accept that.

Mr. Mowbray stated that (heir particular point was that they would like to have some definition about the question of selling bass—whether they were to sell on their actual cost or on the cost of replacement. It was a most difficult proposition. The Board cf Trade had laid down the rule that; the selling basis was to be on the cost of replacement, and while that hedy was in existence they felt quite secure.

Mr. Massey: These people are going to be here for some lime. I think lhe ; r term ends on May 31 next. Mv own opinion is that if anv changes happen to be made they will be replaced bv business men who have had a" thorough business training, Mr. Mowbray quoted, a letter which he said he had received from an outride merchant who bought oil in !-!)17 at a cost in the vicinity of Gs. landed in Wellington. The market price- of linseed oil was now 10s., but he could not sell at 10s., as that would be making an unreasonable profit. It apneared to him that a clause should lie inscrM in the Act providing that profits should be unreasonable on the market cost and not on the actual cost of goods. People seemed to forget thnt markets fell sometimes, and only by using their brains wee the merchants able to make a profit. If Ms suggestion was not carried out a probable effect would be thai: merchants would sell chean abroad and. there would be a shortage in all classes of sowls in New Zealand. There would also be a ireneral rise in all prices of imported foodstuffs. As he had said, the Board of Trade hid laid down the "lie that profit was to be calculated on Ihe pr ; e» of replacement, and in the meanwhile they had no immediate fear. If Mint principle could lie included or hud down in the Bill that would -be satisfaclorv.

Mr. Mnssey: Of course the Bill i-- a drastic one, but the protection Jo- the merchants consists of a sub-clause, which I put in almost at the last moment, to Hie'effect that 'no information could 1>» laid except with the consent of or through the Board of Trade.

Mr. Mowbray: Trading is a most diftV cult proposition, particularly during the last few years. Some lines are going mi and up and up. An equitable, method would have been to take the actual turn* over of a firm and (hen have a look at the actual profits. Mr. Massey: It would certainly be absurd to take one. article and ignore others where, there .was a. made.

Mr. Muir said he could give one very daring instance of what had happened. TTo supposed most of those present had been caught in connection with cream of tartar, which they had bought at from Bs. 9d. to is. Od. a pound, and which thev could now only sell slowly at 2s. !)d." Cream of tartar ran into big money. Ke would like to ask if it was possible io have a clause inserted in the Bill, or an amendment to the Bill, providing for selling price to be based on cost of replacement. It really would enable them to get along .much easier if it could be arranged that the firms' profit was looked into at the end of the year,, and if it averaged over what was considered reasonable, then it misfit be gone into and the lines dissected, otherwise it was fpnlo impossible to keep tally of any parhcillad line and work it out. Mr Massey: I quite understand that. Mr; M.uir; Would not an amendment meet the case? Mr. Massev: Yes, certainly, if they are willing to do it. There arc many good business men in the Upper House. Mr Longu.el. (Messrs. A. S. Patersnn and Co.) stated in connection with benr.ino that when the big people had put the price up his firm had sold for a period at a small profit. The consequence was that all the trade was thrown on their shoulders, and they had done as much trade in a fortnight as they should have done in two or three months-at the lower rate. They were simply faxed to put their price up to save stock for their regular trade. . Mr Press (Messrs. Thompson Bros.) laid in connection with rice, that merchants throughout Now Zealand wero selling'rice at .£32 per ton when a .regulation Mime down gazetting the price at m His own firm had a fair stock for'which they should have received (■V per ton, but under the regulation this was sold at J3O. Naturally they ran out of rica fairly quickly. Attei they had sold the regulation was .reviewed and free selling existed, but they had no stocks. -They had managed to buv a. little at M and had sold at that price. The impression created atng'st their clients, was that they had been hoarding the rice to sell at JSb, whereas the true position was that the> had no stocks. Others present had spoken about selling cream of tartai at. »Oil.; he had sold at 2s. The same with salt; he had sold at .fcl Jos. which cost £1 10s. If they were free to chaU the cost of replacement' he thought it would clear the air and make tr out that there «, a 'very strong feeling on. the part of the Lblic that profiteering was rampant; thev believed that nil merchants were nothing but the present eplatioii would satisfy them. He though now they had thYlc"Matiou they would probably find, out that there were other causes. l*o fur as impelled goods were concerned the Government bad very little control— thev'could only see that the merchants did" not charge a more than reasonable profit. He' thought they would find that this thing would work out all right. .Mr. Muir (Mcssr.-s. J'. Nathan and Co.) said thev had cverv confidence m the Prime Minister. They had had very close connection with the present Board of Trade fiul evervthing had worked smoothly. The board was convinced of the jiisiie'e id' the claim they were putting forward. , , , , .Mr. Mowbr.iv added that he had been invilH bv the' Roval Commission on the Cost of Living to give evidence, and ho was there for about an hour. When the discussion was finished he had asked the chairman for permission to hand in, in confidence, statistics regarding Levin and Co.'s business for the pastfiv« years—the actual turnover, analysis, and 'actual profit. Tliis had not: been prepared for the benefit of the eommw sion, but for the benefit of the directors of the company. Mr. Stathnm had. slopped the reporting and he had reacV (he figures. Those present would not. credit • the .figures, and had asked him to remember that lie was on oath. Ho bad invited the commission to bring an auditor to go through the whole statement and check it. They would not credit the small amount of profit made. ~ . ~ \ delegate: I think it is generaby recognised that.the merchandise side of the business has not been profitable for a long time. . Mr. Massev assured the depot' '■* that the Hill was going to receive lul consideration.