REASONABLE PROFITS.
THE TRIBUNAL'S RULING. A PERCENTAGE ON INVOICE PRICE. The Board of Trade has ruled that "a reasonable profit," within the meaning of the anti-profiteering law, must ho calculated on the actual cost of the goods to the retailer, and not upon the replacement cost. Answering a question put by a Dominion reporter, the chairman of the Wellington tribunal (.Mr. C. ST. Luke) said his tribunal up-l held this interpretation of the law. "The margin of profit should be calculated on the invoice cost," said Mr. Luke. "Many retailers had large stocks when the war broke out. Prices went up, and the public was required to pay these increased prices on goods that had been bought at low prices . We are holding now to the principle that a reasonable profit on the actual invoice cost is the right thing. "If traders expect the same margin of profit on the replacement value that they had on stocks held prior to the rise, then that is exploitation of the community. In my opinion it is unreasonable for the trader to claim the same margin of profit on greatly increased invoice values. Some of the balance-sheets examined by the tribunal disclose to us the fact that the net annual profit is considerably higher than in 1914, although the quantity of goods handled has not increased. The increased profit is due to the taking of the old margin of profit on the increased value of the goods. I say that is not fair to the community, and that if business men, in the face of the present exceedingly high cost of living, are not prepared to make sacrifices our social fabric will break down." Mr. Luke mentioned the argument advanced by some retailers, that if they sell goods on the basis of the old in--voice price after a rise has taken place, their competitors will buv them and then sell at the now price He did not think this suggestion need be considered very seriously. Circumstances might make it profitable for a retailer or wholesaler to buy at an old retail price from a shop which carried a stock of low-priced goods. But a retailer holding such a stock could protect his own customers if he wished to'do so. He would not be entitled to extract from them an extra profit by charging the new price on the old goods.
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Taranaki Daily News, 1 May 1920, Page 8
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397REASONABLE PROFITS. Taranaki Daily News, 1 May 1920, Page 8
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