ALLEGED PROFITEERING.

Taranaki Daily News, 23 July 1920, Page 6

ALLEGED PROFITEERING.

MILK AT Sd A QUART. A NEW PLYMOUTH CASE. FURTHER HEARING TO-DAY. , The information laid under authority of the Board of Trade Act against John Hale, dairyman *New Plymouth, of having sold to C. N. Johnson two quarts of milk at Sd per quart, which was held to be an unreasonably high price within ;the meaning of the Act, was heard at the New Plymouth Magistrate's Court yesterday before Mr. T. A. B. Bailey, S.M. It was the first, case of its kind in New Plymouth, but the second in ,Taranaki. The Board was* represented by Mr. H. R. Billing, and Mr. R. H. Quilliam conducted the defence. THE CASE FOR THE BOARD. The portion of the Act under which the charge was laid was subsequently read by Mr. Billing. The point for decision, he said, was as to whether the person supplying the goods received a ,return of an unreasonably high profit. Unlike previous cases the present concerned not an article which was purchased end retailed, for defendant might be said to have grown the article, j Evidence would be adduced as to the price received by other vendors and also as to that paid by dairy factories. The defence would need to demonstrate that Mr; Hale was not getting an unreasonably high profit, or failing this, that there were spelcial circumstances fentrtling him to charge 8d per quart; another alternative would be that the vendors charging 7d were getting an unreasonably low profit. He understood it might be -urged that Hale's Jersey herd gave a rich milk and that he was justified in asking a higher price for the superior article. An aspect which would have to be decided was whether the Court could go into this phase or whether all milk was to be regarded as of the same value.

Counsel said that at the end of Janu-' ary last a number of dairymen met and decided to increase the price from 6d to 7d per quart and the increase was notified in the papers. Counsel read the advertisement. There were other persons in ihe dairy business, lie said, who did not join in the increase. They would be called but had not come forward to help to prosecute Mr. Hale; they had been sought out by the Department who had ascertained their reasons for not increasing. One of the witnesses was Mr, Butler, who bought milk from the farmers and was able to retail it at 6d per Another was Mr. Richards, who had a farm, milked a herd and retailed at 6d per quart, so that there were two kinds of- businesses represented in the evidence. Evidence of a dairy factory secretary would be adduced to show what milk was realising "per quart in the,case of cheese and butter, and it would be seen that the farmer received considerably les3 than the milk vendor. He admitted that the vendor had more expense because he had to take the supply round the town. The point might be raised during the ease as to whether the price should vary during the year. In the winter time a dairyman had to provide artificial feed, and while the farmer's herd was in for a certain number of months the dairyman had to keep cows in all the year. After hearing evidence on these points, however, and Mr. Hale had given his figures, the Court would be able tq ascertain what were his profits. At the present time they could only go by what the others charged. Mr. Billing emphasised that this was a prosecution by the Board of Trade and not by an individual, and that in the first instance it was the Crown Solicitor who was instructed to take up the case. The reason that Mr. Johnson's name was was really only for the purpose of the information. At present the informant was ill in hospital, but counsel for the defence was admitting A3 correct the facts of the sale of two quarts on February 7th at the price of 8d per quart. Evidence in support of the case for the prosecution was then adduced.

PRACTICAL EVIDENCE. Frederick S. Butler, milk vendor, residing in New Plymouth, said he did not possess' a herd of cows but bought his milk from farmers living near New Plymouth. He had three delivery carta. In February last he was buying milk at 1/1 per gallon delivered at his dairy; this prjce had been in force for about fifteen months previous to that date. It was retailed at fid per quart, which left a gross profit of 2|d. Out of {hat rent.awages, interest and delivery expenses had to be met. When the milk vendors were in favor of increasing the price in January last, he did not agree as he was satisfied with the'profits' he was making. He had now increased the price to 7d per quart on account of the wholesaic price being raised. In reply to His Worship, witness said he was paying 1/3 per gallon to suppliers on contract at present and to additional ones he had lo pay as high as 1/6. Continuing, he said that the expenses of Mr. Hale and himself should be about tiie same, considering that the farmers who supplied him would have similar expenses as the former. Cross-examined by Mr. Quilliam, he said that the tests were as high as ever. He had a separator and made a little butter in the spring in order to deal with the surplus milk." He also sold cream but did not bother much with butter-making, as he sold the extra cream to a Wangamii company. The skim milk was taken back by the farmers and some of it was sold to customers. There was a certain demand for skim milk and he was now paid lOd a gallon. His profit included the ice business. He submitted statements of his business returns to the Court. Witness said his average daily supply was 160 gallons. He agreed that milk of a high quality was worth more than a lower-testing product, from a butterfat point of view, but not to such an extent to the consumer. •To His Worship: Nearly all the milk was pasteurised. In his opinion it was the only commercial way of handling milk for a town. Mr. Quilliam: You don't sell the cream separately?— Certainly not. Edward W. Garner, accountant, ol New Plymouth, said he was secretary tc a number of butter and cheese factories The average price for the past season for butter-fat was l/7Jd. It was generally Tecognised that two gallons wen needed for a pound of butter-fat; this worked out at 2'/id, and of course th( skhn milk was given back. Cheese fac< torifi* paid out 2'/,d per lb, whlah work'

Ed out at 3.Jcl per quart of milk. In regard to home-separation butter 3d per J quart was paid out. To Mr. Quilliam: The farmer who supplied a town was put to a greater expense than the dairy farmer. It was also becoming a recognised fact that winter dairying was not a payable proposition and farmers, as a rule, were discontinuing dairying for about three months uf the year now. EFFECT OF NEW RATING. Leslie Richards said he was manager of his father's dairy business on Avenue Road, which was in the borough. The business had been going for about N 'thirty years and witness had been in charge the last seven or eight years. In January last witness was selling milk at Cd and did not fall in line with some of the retailers who raised the milk to 7d. They had decided, however, to raise to 7d from the Ist of this month. The chief reason for their action in raising the price was on account of the system of rating on unimproved value, which had been inaugurated, and which was rather heavy. They- herd was a Jersey-Hol-6tein one and the last Health Department test was 4.1. This year's borough rates were £54 6s lOd, compared with [.last year's, £23. | To Mr. Quilliam: Another increase was horse-shoeing, of 2s a set. "It seems to me that he has made out a clear case for <yi increase of another Id per quart," said Mr". Quilliam after witness had been questioned on various matters relating to the business. "Do you consider you would be profiteering if you put on Snother penny per quart?" asked counsel.—No, I don't. The Magistrate remarked that witness had not allowed for overhead charges. In reply to other questions, he said no labor was employed and all the feed was grown on the property. Mr. Billing handed in a copy of the March number of the Abstract of Statistics giving prices of milk in various parts of the Dominion. The price of milk at New Plymouth was given at 7d (which was the highest on the list). Other prices were: Rotorua 6Jd per quart, and Hamilton 6Jd per quart. This concluded the case for, the prosecution. THE OTHER ASPECT. Mr. Quilliam remarked that there was no evidence to justify the allegation of profiteering, but now the prosecution had been instituted it was just as well that the whole of the circumstances be gone into iri order that the real position might be explained to the Court and tq the public. It was probably the first prosecution of the kind connected with an essential commodity, which made it all the more interesting, and if it be proved, more serious.

In this case, however, they could show that Mr. Hale was actually making a loss on his milk business, taking into account everything that should be considered in a business. Regarding the right to charge more for a superior article than one of inferior quality, counsel said he did not think he need stress the point. It was a well-recognised trade custom. Another feature of the case was that the whole business of tne defendant was concerned. If a .trader was.challenged on the sale of any particular article and found he could not 6ell at a reasonable profit, he could drop the line, but in contending that Mr. Hale made an undue profit by selling at Bd, was striking at his business, ior he maintained he could not sell at less.

During further remarks, council intimated his intention of applying for costs if the profecution failc'd. Mr. Hale had been farming for about thirty years and had built up a reputation with his pedigree Jersey herd, and there was probably none better,' for its size, in Taranaki. For many years he had gone to considerable expense and trouble over his business. He generally charged one penny per quart more than the others, and the care taken justified the increased price. The butterfat test was 6.30 and the percentage of «folids 9.4. For the last two winters tio customer had gone short, and to-,en-sure this the herd had to be fed particularly well ahd also rugged, these being two essentials to good supply. To provide extra feed meant ij, very big outlay, to say nothing of the discomforts of winter milking, most of which the average factory supplier generally avoided. AN UNPROFITABLE BUSINESS.

The defendant had a property of 31a acres, of which IBS acres were used for milk supply, and the balance was used for running young stock on. There was no time to devote to it, as Mr. Hale, three sons and a daughter, were occupied full time, and Mrs. Hale part time, to keep going the milk business. There was a herd of 50 cows, the average during the year being about 35. A public accountant had gone into Mr. Hale's position, and counsel proceeded to give the figures which had been compiled. They found that the total receipts from June 1, 191,9, to May 31, 1920, were £1399 lis 4d. Against this, feed, seeJs and manures cost £509 is 2d; proportion of interest on part property, £179 13s 3d; rates and taxes (proportion), £42; wages, £6S9 13s 7d; repairs and renewals, £Bl 3s. This demonstrated that the expenses were £IOO more than the proceeds. He pointed out that in the above no allowance wr.s made for wages for Mr. Hale personally, or for other items such as interest on capital, cart and horse purchased last year, repairing and renewing sheds and additions (£105), and other incidentals. It was evident that Mr. Hale would have to adopt some other method or increase the prices. From experience of the present case, however, counsel was of opinion they would not be able to continue getting milk at the present prices for much longer.

Letters were read from a number of Mr. Hale's customers, acknowledging tlieir satisfaction with the supply and willingness to pay the rate of 8d per quart. A. H. Kendall, Health Inspector, produced the analysis. The standard of solids was 8.5, 'Eric Hale, in evidence, said he drove the milk cart for-his father. In January he was instructed to interview customers and notify them that the price was being- raised. At this stage the hearing was adjourned till 4 p.m. to-day.