"THE RING ROUND THE HOUSE."

Pukekohe & Waiuku Times, Volume 9, Issue 538, 8 June 1920, Page 2 (Supplement)

"THE RING ROUND THE HOUSE."

MULTIPLICITY OF PROFITEERS. In a recent issue of the Waikato Times, a Hamilton architect (Mr. J. W Warren) drew attention to a system which he declared has grown up in that district, in common with other plates, of paying a foreman builder or supervisor of works a percentage on the paysheet. To this "method Mr. Warren ascribes the intense competition for workmen and the high rate of wages paid for certain classes of labour—rates far in excess of the Arbitration Court award, and infers that the system is responsible in a large measure for the high cost of huilding and quently enhanced rents. As our Hamilton contemporary says, Mr. Warren no doubt has good grounds upon which to base ln> views, but opinions as to whether the system he arraigns "is a legitimate method of business Will be largely divided according to the viewpoint of the individual concerned. The supervisor or foreman will be disposed to defend it to the last trench; the woflcman who benefits by the enhanced remuneration obtainable for his labour incidental to the keen demand for his services, will not be inclined to \pte the system pernicious, though the prospective tenant of shop, office, or dwelling erected under such conditions may be inclined to condemn it in toto, as he will recognise that the greater the cost of building the higher will be his rent, for the owner naturally appraises that to return him interest on the amount of capital invested. The Waikato Times is not disposed to combat Mr. Warren's views, for it says: "The system probably does, in a degree, contribute its quota to the high cost of building—and, incidentally, rents —though we are inclined to think that it is only a minor cause. The chief reasons for the ruling rates will be found in other directions, and one of these is the excessive profits < made in the maninpulation of material, We have before us a prospectus for a timber company, and the special inducement held out to investors is that they may reasonably anticipate a gross profit of at least 110 per cent, on the output of timber. This may or may not be an unjustifiable rate, but we would point out that a Wellington retailer was fined a fairly substantial sum for exacting a margin of over 40 per cent, less, and if a grocer is to be restricted to less than 60 per cent, justice demands that the Board of Trade should keep an eye on that timber company should it ever get into active operation, for it does not require much logic to establish a connection between timber, equally w:th Mellins' food, and the cost of living. A profit of 110 per cent, at the mill will be materially increased ere the site of the house is reached for all agents take their "pickings," which are all based upon, and added to, the initial cost, and as all other material has to go through the same process, by the time the residence is erected and occupied the aggregate price will have reached an almost staggering figure and one out of all proportion to the first cost of materials.' That this fact is recognised and commented upon in other countries is shown by the report of a meeting of the National Building Trade Federation held at Manchester recently. The conference declared that nothing in the increased cost of labour or transport justified the prices asked by builders' merchants or dealers for building trade material. These prices were declared to be the result of conspiracy by rings and trusts out to exploit the national need. It was said the position had been made additionally acute by the Government bonus or premium, which gave the speculative builder an advantage over the local authorities not to proceed with housing schemes until the Government assumed responsibility for the control of all building materials in the country. The Federation, in its findings, was accentuated by the knowledge that a ring of manufacturers had been formed with the object of raising and keeping up the price to the buyer of goods and articles made or supplied by its members by pooling arrangements, and "so controlling production that prices will rise naturally and inevitably as they always must when supply is brought into equilibrium with, or is ever so little below, demand." The Association included in its membership over 90 per cent of those interested in the building trade, and it affords a concrete example of the operation of the first purpose of combination —the limitation of competition, the control of output, and the increasing of prices. The foregoing throws a stream of light upon the reason for the increased cost of building in the Old Country, and our Waikato contemporary voices the opinion that there is more than a suspicion that similar influences are at work in the Dominion.