PRICE CONTROL

New Zealand Times, Volume XLVI, Issue 10616, 15 June 1920, Page 2

PRICE CONTROL

PROFITEERING ALLEGED CHARGES AGAINST SEVERAL CHRISTCHURCH FIRMS. MB PRESS ASSOCIATION. CHRISTCHURCH June.U. Tho charges instigated by the Price Investigation Tribunal against several commercial firms came on for litanna before Mi- S. E. McCarthy, S.M., at tht Magistrate's Court today. Hastie, Bull and Pickering, of Christchurch, weic charged with having sold to Georgt. Hart Christie, the Price Investigation Tribunal's investigating oiheer, a a*h Ben" aiarai eloeK at tie price ot te, which was unreasonably high. bnmia, oharges were heard against the ioddoning Christ-church firms :-G M.DraytOi. and Co., Ltd., Maaon, Sbruthurs and Co., Ltd ' and E. Reeoe, Ltd. The oftencc. were alleged to have occurred on Apn 20th A. J. White, Ltd., were with offering for sale, on the date 111*11tioned, a "Big Ben" alarm clock at and tho Drapery Importing Co., .01 Christchurch, were charged with bavin. offered for sale, on April 27th, to George iHart Christie, a coat at 455, which pwc t _ iwas unreasonably high. Brown an. ' Bureau, Ltd., of "Wellington, were charg ied with having unlawfully counselled «»■ o-her person, Hastie, Bull, Pickering, iLtd. on March Ist, to commit an oi- ■ fence under section 32 of the Board 01 Trade Act, 1919, by asking and advising I Hastie, Bull and Pickering, Ltd., .to ioned- for sale alarm clocks at a pn* which is unreasonably high. Brown land Dureau were charged also with 1. 'similar offence on the same date, it helm" alleged that they aeked and advise. A." Minaon, of Christchurch, to oH« lalarm clocks at an unreasonably hig,i .price. * j I ~u- W. C. McGregor, of Dunedin, and Mr A. T. Donnelly, Christchurch, a-p- ---£' eared for the Crown. Sir John Fmdty, K.C., appealed alone for E. Reecs, Ltd., Mr C. R. Skerrett, K.C., appeared alone for Drayton and Co., Ltd., and they appeared jointly for A. J. White. Ltd., Hastie, Bull and Pickering, Ltd., and Mason, Struthws and Co., Ltd. OPENING FOR THE CROWN. . The case against Hastie, Bull and Pickering was taken first. In opening the case, Mr MacGregor said that in addition to the charges against ivca) firms there were two charges against Brown and Dureau, who controlled the trade iu New Zealand and brought clocks from America, of counselling and procuring their sale at unreasonably hiKh prices, which were fixed from time to time by circular. Mr M. Myers appeared for Brown and Dureau, and an arrangement had been made that he should have the right to appear in all the cases, and that the evidence against Brown and Dureau, wherb admissible, should be acoepted in the first cases. Mr MacGregor added that he was prepared to take all the cases together, but for the moment he would open in regard to the first charge. After defining the Act, counsel said that for tho purposo of the Aot a price was unreasononable if it produced "more than a faw and reasonable rate of commercial pro fit." A "Big Bon" alarm clock wan sold for 25», and three main considerations emerged: (1) For what sum of money was this clock bought? (2). l'or what sum of money was this clock solar and <8) is the difference between these two sums more than a fair and rea ?.V"' able rate of commercial profit? Ihe evidence, he declared, supported twr o separate and . distinct charges: (1) Ono against Hastio, Bull and Pickering, »l selling at an unreasonably high price, and (2) against Brown • and Dureau of counselling and procuring an offence. There was, in the first case, a clear breach of section 32. The purchasing and selling prices and profit in each case were as follow:—Mason, Strutters 12s 255, 108 per cent.; Hastie, Bull and Pickoring 125,.255. 108.per.cent.; A. J. White lis, 255, 78 per cent.; Reece, Ltd., 15a 9d, 255, 58 par. cent.; Drayton » Ua 3d, 255, 75 per cent. Counsel pointed out that every trader was now Forbidden, under heavy penalties, to sell any article at a price whioh was unreasonably high, no matter at what -price he may have sold, or mig-ht be content to sell, the remainder of the stock. An alarm clock was a household necessity, and if it was bought at lis and sold at 255, without any real reason for the successive rises, surely it was a typical and flagrant case of profiteer ing—the very transaction that this Act was designed to prevent. His Worship would doubtless bo told all about the cost of replacement, average profits, and the hardshjip, of - isoda*fc>B particular articles, but there was a plain meaning to tie section and the wider relation 01 business custom misht becomo ap» plicable only in considering the question of penalty. • Evidence as to the purchase of clock* at 25s was given by George H, Christie, secretary of the Christchurch Price Investigation DEFENDING COUNSEL'S OPENING Sir John Findlay, for the defence, eaid that if the Crown's contentions were right then section 32 had brought commercial chaos and the cad of legitimate business. The fixation of prices was no new system; it was done in connection with motor-cars with beneficial results. Ho contended ithat the effect of fixing prices had ibeen to keep tho price of "Big Ben" lat a lower price in.tho market, notwithstanding all the war conditions, than all other clocks competing againsit it. He detailed th© causes, pi the rise in price of "Big Bon" and said that at 25s the profit was lees than before the war. No increase had been made In the price till the etocks bought ait a low figure had been depleted. The question, why dad Mason, btruthors and Co., who bought at 12s, sell-at 255, seemed diffibult to answer, but the firm had bought under a moral and legal obligation to sell at the prico fixed by tho manufactuxere, and tho only honourable course open to them was to complv with that obligation. Only bv so complying could the firm be assured ' of getting futuro supplies. That was what was differential in the present caees from ordinary cases of profiteering. The* courts had already laid down that such contracts were legall-v unassailable, and that any departure from the conditions imposed could be made a basic action for damages. The net profits made by hardware merchants in the period 191410 averaged 7i por cent. Coimsel -iv-ent into the question of replacement values and depreciated currency, and in his concluding remarks Bald that, somehow or other, it suited a certain class of public man to make profi tear-bunting tho tru» and radical remedy for tho cost of living-. ' If they wanted to cure the high cost of living they must get, down to fundamental causes. He had a profound respect for Mr W. G. McDonald, of the Board of trade. Lot such a man as Mr McDonald have his way and prepare regulations under section 20 of the Act and then o real advance would be made. Section 32 would succeed in killing the Empire's honest industry and commerce. It would not affect the cost of laying and would leave the root causes untouched. Counsel for the defence were not present to meet this case alone, but to fight for an important commercial principle. They asked that to the extent that section 3D killed business it would find no acceptance from Hie Worship, but that a broad and fair view should be taken of tho whole of the circumstances. EVIDENCE FOR DEFENCE. John Wilmdt Duncan, manager fo« Brown and Dureau, said that owrag to the trodo in alarm clocks generallv being disorganised by price cutting, the roftCMnatativM of. the manufacturers of;

"Big Ben" had visited tho Dominion, as a, result of which a bettor system of selling the clock had been adopted. It provided for the fixing of the price for tho wholesaler and the retailer based on a fair margin of profit and keeping the price as low as possible to the customer. He detailed 'the various rises in the landed cost of the clocks,'but had not concluded his evidence when tho court adjourned tili to-morrow.

IMPORTANT PRINCIPLE INVOLVED.

Writing on this subject recently, a Christchurch correspondent stated: "These cases have been arousing considerable interest in trading circles, for they are likely to be fought largely on the question of whether firms, in selling goods, may take into consideration the cost of replacement. Actual charges have been made in respect to the sale of a standard line of alarm clocks, but as the court is expected to make a pronouncement on the much-discussed question of 'replacement costs/ the cases have an importance quite c'ltside that of the articles involved. A straight-out decision- on the 'cost of replacement' question has not yet: been made by the courts in New Zealand.' "Pour of tho firms concerned were said to have been drawn into the matter in a rather peculiar way. Complaint was mad© by a private individual to the tribunal that a retail hardware merchant had sold certain alarm clocks at rates 5b higher than another man. The tribunal, utter investigation, decided that the profit made by the first man was -excessive, being apparently based on ■ what would soon he the, importing cost. In order to verify .' the information, the tribunal ' investigated the books of other hardware concerns, throe of which conduct retaiil departments in connection with their wholesale businesses. ' Tho result was that these firms were believed to be selling at a higher price, and they have also been charged. In addition, a case against a man in respect to tho sale of an overcoat, and two or three further cases, are pending."