REQUEST REFUSED

Gisborne Herald, Volume LXVI, Issue 20079, 27 October 1939, Page 4

REQUEST REFUSED

TRADERS SELLING BASIS “REPLACEMENT VALUE” MINISTER’S ANSWER CPer Press Association.l AUCKLAND, this day. The principle that traders should be allowed to .sell at “replacement value" on a rising market, is definitely rejected by the Minister ol Industries and Commerce, the Hon. D. G. Sullivan. in reply to a request by the Auckland Chamber of Commerce that the Price Stabilisation Emergency Regulations be modified to meet the recent increases in the landed cost of imported goods and that the "replacement value” be adopted as the basis. The chamber wrote to the Minister on September 1!) to this effect and. after considerable delay, it has received a reply. In this. Mr. Sullivan points out that in a statement issued on September 211 he let it be known that the Price Investigation Tribunal would consider applications to increase prices where it could be shown that the landed costs had risen.

After enumerating the chief causes of increases in the cost of imported goods, Mr. Sullivan continues: "The Government, has laid it down as a general policy that such extra costs may be added to the September 1 prices if it is considered that the industry or trade is not in a position to absorb some or all of these extra costs. Check to Profiteering “It was realised by the Government that if approval had not been given to some increases in prices, then merchants might have been faced with the necessity of selling goods at lowcr prices than those they themselves paid. The Government had no intention of forcing people out of business through unreasonably rigid control of prices. On the other hand, it had no intention of permitting profiteering to take place. “It is noted that it is suggested that the regulations should be modified so as to permit of replacement costs. You will appreciate that the application of this principle would have meant that the prices of all stocks in New Zealand of imported goods would have been raised quite considerably, and that consumers would have had to pay considerably higher prices for goods which had not cost one penny more to merchants and retailers. The merchants and retailers would have reaped a handsome profit had this been allowed, and the Government did not consider the application of the replacement cost principle was justified under the abnormal circumstances brought about by the war.” Effect When Trices Drop

The Auckland Chamber of Commerce, in reply, states: “When the war is over and prices fall, traders will have to sell at reduced prices the commodities they have purchased at the high prices of the war period. This olT.sels the ‘handsome profit’ referred to in your third paragraph, which alleged handsome profit is. in any case, mostly illusory, as high prices mean reduced quantities sold, so that the fixed overhead costs of business have to be spread over fewer articles handled. The replacement cost is, therefore, quite equitable as a basis for charging and, on a long view, confers no ‘handsome profit’- at all on the dealer.”

The reply adds that the Government's scheme is inherently too unwieldy and cumbrous. It might be replaced by laying down some simple principle such as that of replacement costs, and having complaints by the public investigated by a competent tribunal in association with people having some practical business experience.