CHARGE OF PROFITEERING.

Hokitika Guardian, 16 November 1918, Page 3

CHARGE OF PROFITEERING.

BOARD OF TRADE’S COMMENT.

AVELLINGTON November 9. “The charge of profiteering has also

been carefully considered by the Board,” says the Board of Trade in tlio course of a lengthy report. “This is a term that has never been accurately defined. If it means creating an nrtificinl scarcity by bolding-up supplies with the object, of forcing up prices, then the Board eau definitely state that profiteering in that sense has not been practised to any extent in New Zealand. For example, it has been alleged that some farmers have withheld their wheat from sale as they deemed the price obtainable insufficiently attractive. There may be individual al cases where this lias been (lone, but not on a scale of sufficiently large j to materially affect the position. If, however, profiteering means taking advantage of the market to make money, it is certain that many dealers have made money by sales of stocks which were purchased cheaply and sold on a rising market; which goods, however could not be replaced for sale even at tlio advanced selling prices obtained. THE. PRIMARY PRODUCER.

“The primary producers of the conn, try have also been charged with profiteering and undoubtedly the largest share of the record prices that have been received for our primary products has gone to the primary producers. But these prices have been determined hv negotiations between the Imperial and Dominion Governments and it is now a matter of common knowledge that the prices so arranged have been below the prices that could have been obtained on the. London market had the shipping been available to transport, these products across the seas. Tu regard to butter, the. consumer in Now Zealand since the outbreak of war has never paid the export equivalent price. Burring the first two years of the war, by the voluntary action of the factories in supplying the local trade, the local consumer received.his butter from Ad to l|d ner' pound lower than the export equivalent London price, and under the scheme which the Government sanctioned in October, 1916, the local consumer

received his supplies at a pneo .representing a saving to him ;of approximately £300,000. In its report of September, 191*7, the Board estimated that the primary producers had sustained during the war period a monetary disad vantage of approximately £9,000,000 m regard to butter, cheese, meat and wool. The meat prices for local consumption have been based mainly on the price received from the Imperial nu thorities and this represents an average reduction of at least 2d. per pound below open market 'prices, always assuming that shipping is available. FIXING PRICES. . . “ Unfortunately the burden of rising prices is distributed unevenly over the sacrifice on the part of those least aulc to hear it. Those with fixed or comparatively fixed incomes, many uageearners, a large portion of the smallsalaried classes, and many of the dependants of those at the front find the mcrease in the cost of living during tho last two years particularly onerous, but Sfilftt is comparatively easy ,»pomt tho disease, it is not so simple to find ■i remedy. Tho Government has already taken power to fix prices hut this is m remedy than can be applied onlj with the greatest rare." The danger of fixing prices for any commodity is that the supply may greatly diminish if jj t cease entirely. The general rule should 1,0 against the fixing of prices unless the whole supply of the commodity is controlled, and when this can be done tho control should extend from the hchl of production to the point of consumption. as has been done m the ease of wheat, flour, and bread. Intermediate charges should be limited to fair remuneration for services rendered. The main difficulty in this connexion arises | ill respect to commodities produced i Sei Zealand that can be marketed | both within New Zealand and ahioad. In this category belong all our primary products—wool, meat, butter, cheese, hides, and skins. If a price is fixed for these commodities for consumption in New Zealand below the export value, those producers who supply the local market are placed at a disadvantage . s compared with those who are allowed to export. This disadvantage engenders a feelino- of dissatisfaction and results uj supplies being diverted from the local market to the export trade. “Price-fixing alone is, therefote no a remedy. Last year the Board 1 Trade, in attempting to regulate the price of butter, was driven by the logic of circumstances to recommend tho Government to establish an equalisation fund This incidence of the levy cieating the fund was subjected to serious criticism. The Board respectfully, submits that the principle of equalisation is sound, and forms in the Board’s opinion the safest method of easing tho burden which falls upon our own population, because of the war prices realised by "mIw ESS PROFITS. . “In regard to the commodities imported from abroad, it is impossible, as has been pointed out, to control the landed cost.-hut an extension of the system of permitting import under license on condition that the licensee sells at prices deemed reasonable by tilt Board of Trade, much can be accompli sed to control profits. Indeed, tin control of business profits is the crux ot the problem. Tho precise determination of legitimate business profits tor any undertaking is extremely difficult to assess. Allowance must be made tor

enterprise, risk taken, and unusual skill in management. Everyone knows that, fortunes are made in industries strictly competitive, and are often to bn ascribed to unusual business capacity. Rut the difficulty of assessment is not necessarily insuperable. In a system of price regulation, after all, only rough and approximate results can be expected. “The Board suggests in this connexion that the basis of fair profit during the war might be the pre-war profits in) am- o-iven business, but power should bo o-iven to the controlling authority to vary this basis liould the pre-war rate prove largely in excess of the general average, or' insufficient to encourage

production. CONTROL OF LUXURIES. “The Board emphasises the fact that the time lias arrived to take steps to control the manufacture and sale ot goods that might he considered as luxuries. Valuable labour is expended m the production of such goods, and diverted from the production of essential commodities. The surest methods of reducing prices of necessities is to increase Their supply, and it is possible that much valuable labour now expended upon the creation and the distribution of luxuries might bo employed in the creation of a greater number of ar„ tides in common demand.