REPLACEMENT COST

Dominion, Volume 13, Issue 224, 16 June 1920, Page 7

REPLACEMENT COST

ALLEGED PROFITEERING

CHARGES AGAINST CHRISTCHURCH FIRMS

By Telegraph—Press Association,

tt • » .{''"■'' Church, June 15. Hearing of tho charge against local hardware merchants and Brown and Dweau Ltd., of Wellington, of selling Big Ben alarm clooks at an ajicodly unreasonably high price was continued to-day. John Wilmot Duncan, • manager for .™. and Dureaii, said the factory price or "Big Bens" was withdrawn on December- 12, 1919, and the company would only accept orders at .the price ruling ■it tho famo of shipment. Any ndvanco exceeding 10 per cent, would bo leferred back fcir the buyer's confirmation or cancellation. The last definite quoted price was 1 do.hr 87 cents., plus 10 per cent, advance on the f.o.b, American price. 'J'ho Tate of conversion was 3 dollars CO cents, io- m, g pn ? e *° tlle P l| Wic fixed at Jos. Ilie price wag bnsed tn tho landed cost of 15s. 4d. Tho wholesale price ISs- 3d. in case dots, and J, in broken lots. That meant to the wholesaler n turnover profit amounting on case lots to 13.75 per cent., and on broken lots to 1G per cent. That meant to tho retailer a profit on hia turnover of 29 per cent, when he bought in ense Jots and 27 per cent.' when ho bought in broken lots. Supposing that upon new shipments the conversion rnto had been 3 dollars IS cents instead of " dollars GO cents, on which they figured, the Sanded cost would have increased, but the wholesaler and retailer would have had to bear the reduced profit. They had to take the risk. Notification was received after tho issue of tho March schedule that tho Westclox Company had withdrawn altogether the factory price, and the 10 per cent, limitation itself wns withdrawn. In March, Brown find Bureau received n letter from tho fuc•"vising that the price then was 2 dOiffars. still subject to indefinite advances. That meant an increase in landed cost above that figured In the March schedule of Bd. per clock. On top of that, thero would be, say, 4d. per clock on account of increased duty, 60 that the 1? j i which the Maroh schedule had been based was increased by about Is. per clock. People dealing under the March schedule had to tako this risk, jh® replacement cost to the wholesaler after March 1 was 16s. id. Witnoss could l " 10 P resea t replacement price. Witness's firm took orders or in dents from wholesalers. Such orders were based upon the factory cost, consequently wholesalers and retailers had not always »«de the profits which tho schedule given in evidence showed. They never made more, but sometimes less. Witness quoted the policy of the firm in regard to stocks rf "Big Bens." The firm was .strongly of opinion that fair prico fixation was to the advantage of the public, and that the •price-cutter was detrimental to the public. Tho price-cutter only used l cut prices to gain larger profits in other directions. The "Columbia" alarm clock of similar construction competed on the New Zealand market with "Big Ben." This clock was sold retail at 275. Gd. m New Zealand. There wag no fixation of price in regard : to the "Columbia" in New' Zealand.

George W. K. Morley, managing director of Mason Struthers, Ltd., detailedhis firm's dealings in "Big Bens," which had been in accordance with the schedule issued by Brown and Bureau, "he recognised practice of merchants in respect of goods tlmt could not be replaced except at an advance in price, was to price goods in stock at the price at which they could be replaced. In April the replacement cost of "Big Bens" was 15s. 4d., and the 255. retail price was a profit on turnover of 29 per cent. The wholesale profit was 13.75 per cent., a total of 42.75 per cent. Tho firms working expenses were 22.15 per cent.

Edward T. Reece, managing director of h. fleece, Ltd., said his firm purchased two dozen "Big Bens" at 15s. 9d. on March 8. and sold them at 255., making a gross profit of 9s. 3d. each. In the circumstances that profit was fair and reasonable. "Ho agreed with the previous witness's statements on the replacement basis of fixing prices. William T. V. E. Bottrell, director of i. H. Green and Co., merchants, said he had been chairman of'the Advisory Committee to the Board of Trade, dealing with lnadters chiefly affecting the p'ocery trade. The general practice in business was that the cost of replacement must be the governing factor in determining the price of goods la stock. 1 he changes of the market were so varied that the adoption of any other system was impossible. Samuel'R. Beveridge, manager for A. J. Vi lute, Ltd., said his firm had purchased a gross of clocks at 13s. lid', and all bat eight or nine had been sold when the price was raised in March last. He agreed that the basing of prices on average cost was that generally used in business. •

William Bull, of Hastie, Bull, and Pickering, said that this firm had only seven clocks in stock whon the schedulo was revised in March. In fixing tho Be ling pnee, merchants were entitled to tako into fconsideration the replacement value.

George W- Drayton saidl ho had purchased 'Big Bens" at 14s. 3d. and sold them at 255., which wag at the rate of 424 per cent, on cost and 25 per cewfc on turnover.

The hearing of evidence had not concluded when the Court adjourned till to-morrow.