THE GIFT SYSTEM

Evening Post, Volume CXII, Issue 87, 9 October 1931, Page 7

THE GIFT SYSTEM

EXCESSIVE PROFITS

REPORT TO THE HOUSE TEE COUPONS BILL The Trading Customs Bill was reported to tho House of Representatives last night by the Industries and Commerce Committee, with a recommendation that it be allowed to proceed with minor amendments. The alterations restrict the redemption of the coupons to tho issuer or his agent in the caso of those issued by manufacturers, packers, importers,' or distributors, and prohibit the seller ...from redeeming tho coupons. Commenting on the report, the Chairman of the Committee (Mr. G. 0. Munns) said that nearly all the evidence centred around the question of gifts, and most of the witnesses asked that the giving of gifts in ordinary trading should be prohibited. The giving of gifts seemed to have been carried in some cases to limits beyond all reason. As an. instance, he quoted from an advertisement in a provincial paper offering to every purchaser of a half-chest of tea during a sale period tho following goods:—one 701b bag of sugar, one 2001b bag of pollard, one bushel best fowl wheat, six tins of sheep tongues, six tin 3of pineapple cubes, lib best butter, lib best pork sausages, lib best loin rashers, 121b best' whole head rice, 2 Jib best sago, 2Jib best tapioca, six packets jelly crystals, one large tin custard powder, one bar of first-grade soap, half-dozen cakes of soap, one 21b carton of honey, six white and gold china cups and saucers, and one English aluminium teapot or kettle. Mr. S. G. Smith (Government, New Plymouth): "Who got the empty shop?" FIFTY PER CENT PROFIT. Mr. Munns said that as an alternative the purchaser was offered half a ton of pollard or bran, or four bags of sugar, also one copper bottom bucket and three 41b tins of petroleum jelly. Tho goods were so comprehensive, he said, that the Committee got samples of the actual tea which was being supplied. It was valued by officers of the Industries and Commerce .Department, and also separately by others, and it was found that the cost of tho tea was lid per lb. At the rate at which it was being sold it was being retailed to the public at 2s 8d a lb, and taking into consideration the cost of the tea and the cost of the goods being given, away, it was found that the question did not admit of argument; it "was an absolute fact that the firm, after giving away tho gifts, was making 50 per cent, profit on the tea. The recognised profit on groceries was about 12J per cent., and under the cut-rate system about 4A percent. Mr..F. Langstono (Labour, Waimarlno): "Did you get other tea to compare with it as to quality and value." Mr. Munns replied in tho negative, adding'that tea was a commodity which was recognised throughout tho country asi being of specific quality and value. DEPARTMENT'S REPORT. He went on to quote from a report from the Department of Industries and Commerce, which he said showed how difficult it was to deal with the question. The report stated that to prohibit or endeavour to prohibit tho giving of gifts would be a very cxtremo step. It Was virtually impossible "to .draw any lino of demarcation between what was clearly a-recognised and accepted legitimate trade practice and what was now in some quarters objected to as being unfair, uneconomic, and illegitimate trading. "In comparison with the coupon method of distributing gifts," the report continued, "the 'straight' gift system does not'- involve any serious possibilities of deception. One of the objections to the coupon system is that it may bo the means of securing trade virtually by false pretences based upon an exaggerated description of the value of the gifts ultimately to be secured by tho purchaser. With.the straight gift system the .purchaser is usually able to see and reasonably assess the value of the whole of his purchase—gift or concession included. The straight gift system does not, as in the caso of tho coupon system, tend to tio the purchaser up to continued buying of one brand or quality in the desire to avoid loss of gift value oven when the purchaser may be in some degree dissatisfied with the quality of that particular brand. In other words, the straight gift does not lend itself to the sales promotion of inferior jquality articles as a continuous process." The report stated, in conclusion, that the step of trying to prohibit the giving oi gifts had never been taken in any other country. NO POWER, . Mr. Munns said that, on behalf of tho Committee, he had approached the Industries and Commerce Department and had asked them, in view of the fact that the profit made in the caso quoted seemed to be excessive, whether there wag any chance of prosecuting thd firm and getting a conviction. Mr. P. Fraser (Labour, Wellington Central): "What for?" Mr. Munns: "Tho profit appeared to be excessive." The Department stated that the Magistrate, or whoever heard the case, would consider all tho facts and probably would not return a conviction. He remarked, in conclusion, that there appeared to be no power to deal with the gift systom, but only the trading coupons system.