PRICES & TROFITS

Dominion, Volume 13, Issue 173, 17 April 1920, Page 7

PRICES & TROFITS

RETAILERS SEEK A RULING QUESTION OF REPLACEMENT tiFFICIAt VIEW STATED A -.correspondent of The Dominion, describing 'himself as a. boot dealer, asks ■ for a ruling •regarding'...the." relation between profits and . replacement '.values. "Ty'e.lhave a line of boots' in stock selling at 455. '6d.i .but the wholesale price to-day is 485... 6d'.," ho' says. '."I'.can. • -give you the maker's : name and milliner of the,boots.', We are having more .-arriving. :at. 48s. Gd. to make oW, sizes complete; having sold out of some sixes. • What .shouldl, do with' those already, in stock? I can multiply this, ease .many ..times.' I asked' a. .rueniber.. -of ..;thtj ■Board of -, Trade's, tribunal, -niiofScinlly, what was my- position, and "his opinion -was that, we -.should'-sell purely..oii: .the •■invoice cost of the particular pair •of , boots .that was being, sold. '. /,....' •■. ~- "Then -again 'a.'men's .'.football 1 boot, which we are selling at 17s. 6d., is 19s. wholesale, to-day, and a local dealer, lifts purchased at 195., selling them, at 2'>s. 6d. .. He is selling at .a. 'fair profit, . whereas,-jf I sbhUthe. same iboot at. .the •game price,l would be 'profiteering.' A local dealer came. into' my. shop 'i for goods, which I refused to sell. When . I asked , the tribunal whether this dealer would be> justified in. putting' 33 1-3 per cent, on my' retail price; the .answer, was' that -he could; yet. for hie ; ■ to charge an,advance on the same'boots, as my,more' expensive.', competitor'..,could 'do'.quite be profiteering. "The position, it seems to. ine v is. an, impossible one. for the public is not protected at all, because any dealer can - cpine .and buy my stock,at my retail price,.'and then, put his profit'on . and . Bell,to the, public in the usual; way. Bo will escape thfi.teriri 'profiteer.'" ,; A Dominion .reporter who made some!' . inquiries . oir this' subject - yesterday , gathered that the correspondent whose, letter, is -quoted..above.'was-voicing" tho opinions of many business men. Retailers are.' cautious, about expressing, opinions' in public, 'because' they ■ fear . that,they will be dubbed profiteers, if ;they advocate the basing of/retail' prices on ' replacement costs. 'Yet a substantial section of the- retailers' be-'. ■ lievo that, the replacement cost is'thiv proper basis. "People jump' to conclusions without tfliinking 'the matter.' out for themselves," ' said one -retaileryesterday.' "If I'buy; goods'for- SIM. and-sell'them for .2125, I have immcu : gross profit of 25 percent. But supposing the" wholesale- price' of the goods, rises to .£lso'while they are still on mv shelves.'' . If I-still sell .1it.,£125 I must, use all that money (including my profit), plus another <£25, in order to replace Wiu stock. t If I charge, tho replacement cost., .with' an ordinary trade profit,. I get that- profit and then .have cnougirmoney, to replace the spnris.These higher Tpriced-goods then produce Hie ordinary'.trade profit on the'next transaction. ...The book'.value of , my' : stock-in-trade "has increased, but that is' a pappr profit that I cannot realise at .present, and it may.be absorbed-later .when I am trading on ti -falling mar--' .ket. • ....

• Mr. W; G, M.'Donald,-chairman "of-'the' Kiiard, of Trade.-.-stated.' yesterday that tli?. points -raised •. by. the •-, correspondent' were, quite familiar- to v the members of

the board. The question, of, replacement costs-bad .been discussed in every ;ph'aso durrns the. last-yean..or two. He'expected Unit air official 'announcement would :be made-on the subject during the next u, ?; vs - T He cou,d ' sa y in tlle taeantime that the. Taw of : New" Zealand provided <imte definitely that the seller of goods was not entitled to make more-than a reasonable trade profit on each trans- . notion. The cost of replacement might bo. greater than the-sellin-r price under this rule, ,buf then'the seller would"»et •'■' ■': nn. 0 trade P roflt «n that cost, he Board of Trade, said-Mr. M'Donnlc had -been told recently-that-if the ■ Lfi;„ l ei ? ],lc ' eme " t was to determine-the selling p rlCB of mtg tlie' i-otriil prides . about 05 per cent. aSe. ■ . told that iner- ■'- ma Jff°i ,nI %., t( >• b "y the 'iritis ■■■'■S if Vf T ? tall -e« at the retail '1 ? m, ost , and not the c °st of replacehad also teen told that ' r - mS 5' d i lld 'W-V from the i" mi W» !f n^\ ncrea , Eed "™,Vr lh^ b °a l J 1 heheved that a, retailer could protect his,own customers from" oo so. If -the right, of the retailer to action m order to. cover cost of replacement , vas admitted, then the bSrint of any goods Bnai , b" <leem P ,t t?? pnCa ' • reasonably hieh.if if VJ Ji cd to "*■■•- cul»fe,i L g -i ,t P r °auces or is cal'■'■■^a?^!?B*r' MAS*'™,! ''*S»ft ' the '.(S m. reasonable advance over ■ Legislative Coi.Mil 5J7 m,tteß of tb ° at length on "hn ™ t- e gnve eTl '< le "«<» ment cos s; « t % '>l*L tm . ° f replace: P'acementVal„e'; n ho,dd,mrbef! lat^ 'f'fsSo^'thilr^ to rely upon repl ac emen t l l3 s ? le '■■"!yonthV^ d V r «« ,tn ' ,I l :o . reconstruction that fa™ m 'f pei!od of not.be. able to ™iv ~^ mi V v<! sball ' . take boots: The landedTl T " I * t; " s . type of En<4h Zt« °? d «rtain • ' the Now .&^^.' l ?'toM. i "5.193. 6d. to 21s t\A -wi \ • se noots -oK l^^r"^r^' "H the p inciple o a LT St off > article, admitted Sr,,oa r / P if C n enfc Mste "os ■to„Fo fe t thlp , ublfc W ° llldnotbea^ W for tie Gov n Spealf- " m I have talked Swilh 1 !?'"^ 6 ?; 5 ; Honourable tho Prime Mnister if lght both convinced thut what Jl! e "55 has said s right J 'sa hs;. w' M . Do nald .'"K/ou introduce li fe . nc f~? 6ll '' nised, wherea,, inTan? 6 e„ -mentioned thefact that n 191R-S 'Jm' 1 by f i' Tep a L CO . men '-' "S increased - ment o,t t, r o ahan Str ke ' and the mo'™.. ment cost the consuming public vfil'ViOPO'