ALLEGED PROFITEERING

Southland Times, Issue 18850, 16 June 1920, Page 6

ALLEGED PROFITEERING

; ALARM CLOCK CASES. I EVIDENCE FOR THE DEFENCE. (Per United Press Association.) CHRISTCHURCH, June 15. The hearing of the charges against local hardware merchants and Brown and Bureau, Ltd., of Wellington, of selling “Big Ben” alarm clocks at an alleged unreasonably high price, was continued to-day. John Wilmot Duncan, manager of Brown and Bureau, said the factory price was withdrawn on December 12, 1919, and it would only accept orders at price ruling of “Big Bens” at the time of shipment. Any advance exceeding ten per cent, would be preferred back for the buyer’s confirmation or cancellation. The last definite quoted price was 1 dollar 87 cents, plus 10 per cent, advance on f.o.b. American price. The rate of conversion was 3 dollars GO cents, and the selling price was (ixed at 255. The price was based on a landed cost of 15s 4d. The wholesale price was fixed at 18s 3d in case lots and 18s Od ; n broken lots. That meant to the wholesaler a turnover profit amounting on case lots to 13.75 per cent, and on broken lots to 16 per cent. That meant to the retailer a profit on turnover of 29 per cent, when he bought in rase lots, and 27 per cent, when he bought in broken lots. (Supposing that upon new shipments the conversion rate had been 3 dollars 19 cents instead of 3 dollars 60 cents on which they figured, the landed cost would have increased, but the wholesaler and retailer would have had to bear the reduced profit. They had to take the risk. A notification was received after the issue of the March schedule that the Westclnx Company had withdrawn altogether the factory price, and the 10 per cent, limitation was itself withdrawn. !u March Brown and Duncan received a letter from the far ton* advising that the price was then two dollars, still subject to indefinite advances. That meant an increase on the landed cost above that figured in the March schedule of 8d per clock. On top of that, there would be, say, 4d per clock on account of the increased duty, so that, the landed price on which the March schedule had been based was increased by about Is per chick. People dealing under the March schedule hud to take this risk. The replacement cost to the wholesaler after March was 16s 4d. Witness could not quote the present replacement price. Witness’ firm took orders or indents from wholesalers, and retailers had not always made the profits which the schedules given in evidence showed. They never made more, but sometimes less. Witness quoted the policy of his firm in regard to stocks of Big Bens. The firm was strongly of opinion that a fair price fixation was to the advantage of the public, and that the price cutter was a public danger. The price cutter only used cut prices to gain larger profits in other directions. The Columbia alarm clock, of similar construction, competed on the New Zealand market with the Big Ben. This clock was sold retail at 27s lid in New Zealand. There was no fixation of price in regard to (ho Columbia in New Zealand. W. K. Morley, managing director of Mason, Strothers, Limited., detailed his firm's dealings in Big Bens, which had been in accordance with the schedules issued by Brown and Dureau. The recognised practice of merchants in respect of goods that could not bo replaced except at an advance in price was to price goods in stock at a price at which they could be replaced. In April the replacement cost of Big Bens was 15s 4d, and 25s was the retail price. There was a profit on the turnover of 29 per cent. The wholesale profit was 13.75 |>er cent, a total of 42.75 [Kt cent. The firm’s working expenses were 22.15 per cent. Edward Reece, managing director of E. Reece, Limited, said his firm purchased two dozen Big Bens at 15s 9d on March 8, and sold them at 255, making a gross profit of 9s 3d each. In the circumstances that profit was fair and reasonable. He agreed with the previous witness’ statements on the replacement basis of fixing prices. William T. V. E. Bottrell, a director of T. 11. Green and Co., merchants, said he had been chairman of the advisory committee to the Board of Trade rivaling with matters chiefly affecting the. grocery' I rude. The general practice in business was that the cost of replacement must be the governing factor in determining the price of goods in stock. The changes of the market were so varied that the adoption of any' other system was impossible. Samuel R. Beveridge, manager for A. J. White, Limited, said his firm had purchased a gross of clocks at 13s lid and all but eight or nine had been sold when the price was raised in March last. He agreed that the practice of basing prices on the average cost was that generally used in business. William Bull, of Hastie, Bull, and Pickering, said that his firm had only seven clocks in stock when the schedule was raised in March. In fixing the selling price merchants were entitled to tnKe into consideration the replacement value. George W. Drayton said he had purchased Big Bens at 14s 3d and sold at 255, which was at the rate of 42; per cent, on cost, and 25 per cent, on turnover. The hearing of evidence had not concluded when the Court adjourned till tomorrow.