GRAVE GHARGE.

Taranaki Daily News, 1 October 1921, Page 5

GRAVE GHARGE.

CEMENT TRUST ALLEGED. MR. R. MASTERS’ DISCLOSURES. AN INQUIRY ASKED FOR. A charge that certain cement companies had entered into an agreement in restraint of trade, and had combined to force the price of cement up to &n unreasonable figure, was made in the House of Representatives on Thursday by the member for Stratford (Mr. R. Masters).

Mr. Masters said that he knew nothing of the oil trust, but he was going to refer to, the question of the cement trust. He was going to lay on the Government the whole blame for the present absence of competition in the cement industry, and for the high prices ruling. The Minister in charge of the Board of Trade had recently said that there was still ample provision, which would be exercised by the Government, for stopping profiteering, and that if any matters were brought under his notice, then action would (be taken to see that the wrong was righted. Mr. Masters asked the Minister to deal with the question he was about to enter into. SELLING OF GOLDEN BAY WORKS. He would refer to what had taken place in connection with the Golden Bay cement works. He looked upon it as one of the most criminal commercial transactions that had ever been perpetrated in the Dominion. The works had been started by a body of men who were anxious to devejpp the industries of this Dominion. They had got on very well after years of hard struggle against very great difficulties. The venture proved a financial success. It was recently purchased by a syndicate of speculators. He did not blame the shareholders for selling. They were given to understand that the works were to be developed, that fresh capital was going to be put into them, that huge machinery was going to be installed, and that as a result the people would get cheaper cement. After the purchase things went along nicely for a Short time. Then came the opportunity, with the demand there was for cement, of fleecing the public. The company approached the Board of Trade. That was in December, 1920. He would ask the House to follow the course of the price of cement for the last few years. In 1918 it was £2 3s per ton at the works; in .1919 it was £3 17s; in the middle of 1920 it had risen to £6 Os 6d per ton. In spite of these heavy rises the companies approached the Board of Trade for a further rise. In reply to interjectors, Mr. Masters named the companies he was referring to as the Milburn Company. Wilson’s Company, aijd the Golden Bay Company. He said that in spite of the rises • that had already taken place, the Board of Trade agreed to a further rise of 'SOs per ton, which brought the prire .up to. £7 10s 6d per ton. Thus there was a rise of £5 7s fid per ton between 1918 and the end of 1920. The peculiar part of the position was that when the companies were selling cement at £2 3s per ton they were paying a dividend, and he would venture to say that \ the costs of labor and material had not 1 increased to an extent warranting a rise from £2 3s to £7 10s 6d in two years.

“A GRIEVOUS‘ERROR.” The board undoubtedly made a grievous error. One of the companies was opposed to the rise. It did no<t want the rise because it did not consider the rise justified. In that fact, the Board of Trade, “that wonderful institution that had been set up to look after the interests of the people,” allow’ed the price to go up. What was the position of the Wilson company in 1920 when the price tyas advanced to £7 10s Gd? From the balance-sheet it appeared that the sum available for distribution was £47,000. After £37,000 odd had been paid for land and income tax, after a sum had been set aside as reserve, after £26,000 had been paid for depreciation, the company showed this huge amount of profit and paid a dividend, on a watered capital, of five per cent. Immediately the last-mentioned rise occurred in the price of cement, it had the effect of bringing to New Zealand cement from all parts of the world. The result was a glut in the New Zealand market. . Local works were short of orders. When the cement came in from outside, the companies voluntarily’ dropped the price by 30s 6d per ton. That proved conclusively, to the speaker’s mind, that the Board of Trade had not given the matter the consideration it should have done before allowing the rise. Things were then getting fairly iseriottfl for the cement companies. They had a meeting and came to an agreement. The Board of Trade knew about this agreement. He was going to read it. A DOCUMENT QUOTED. From a paper which he had before him, Mr. Masters quoted as follows: — An agreement made between the Gulden Bay Cement Company Limited of the one part, Wilsons (NjZ.) Portland Cement Company Limited of the second part, and the Milburn Lime and Cement Company Limited of the third part. Whereas the contracting parties are of the opinion that the demand for cement in New Zealand is likely for some months to be considerably less than the supplies that are at present being manufactured by the contracting parties, and whereas the contracting parties desire to enter into an arrangement whereby the said parties may derive the most satisfactory results possible, and for this purpose have agreed to enter into this agreement: The Golden Bay Cement Company shall close down the manufacture of its cement on May 14, 1921, oi’ as near thereto as possible, in order to clear out its present stock of clinker.

The Golden Bay Cement Company. Ltd., shall have a period of one month from the above date to sell the stock of cement which may be at its works or in the hands of its agents.

From and after June 14, 1921, the Golden Bay Cement Company shall not manufacture cement for a period of twelve months, unless the other companies give notice of their intention to terminate this agreement under the powers hereinafter contained.

The Milburn Lime and Cement Company, Ltd., and the Wilson’s (N.Z.) Portland Cement Company, Ltd., agree that during the said period of twelve months from June 14, 1921, they will pay the sum of 4s per ton on all sold by

the said companies respectively, up to oft combined annual output of 60,000 and if the output of the said cjompainesl for the y&Ar is over 60,000 tons, the companies will pay to the Golden Bayfl Cement Company the sum of 2s per ton? on the amount by which the output ex J coeds 60,000 tons per annum. The Milburn Company and Wiloan’e; (N.Z.) Company shall be entitled after,' this agreement has been in operation feef three months to terminate the said’ agreement by giving the Golden Bay Ce-. tn ent Company three months’ notice in writing of intention to do so. While this agreemet shan be in forcer the Golden Bay Cement Company, Ltd.,, shall take no steps towards reorganising its capital or improving or recons structing its works or machinery.

As between the Milburn Company and the Wilson’s Company the selling percentage to which the said companies shall be entitled during the currency of this agreement shall be 22 per cent, for the Milburn Company, and 78 per cent« for the Wilson’s Company, all other provisions of the existing agreement to remain in fpree. Wilson’e Company shall take over the stock of bags at present held by the Golden Bay Cement Company, Ltd., at the c.i.f. price, main ports New Zealand, current at this date.

Dated this sth day of May, 1921. For the Milburn Lime and Cementi Company, Ltd., (Signed) C. G. WHITE, Chairman of directors. For the Wilson’s (N.Z.) Portland Cement, Ltd., (Signed) GEORGE ELLIOTT, Chairman of directors. For the Golden Bay Cement Cow pany, Ltd., (Signed) E. S. LUTTRELL, . Managing director, RESTRAINT OF TRADE?

When he had quoted as far as th( third clause, Mr. Masters asked thfe Min ister of Industries and Commera whether or not this was an agreement ii restraint of trade. To his mind, he said it was a clear case of restraint, and 2 was a criminal thing that when th» Government knew—and it did that the agreement was in operation, it did not take action to combat the move in any way, but acquiesced in “this scandalous commercial immorality.” Clause 4, said Mr. Masters, was ;tha vital clause. The annual consumption of cement in this country was approximately 90,000 tons. The two companies were paying to-day a sum of £15,000 per annum to the Golden Bay Company to close down its works and keep them closed for twelve months. The public was paying the £15,000. It was one of the greatest pieces of bribery ever perpetrated in this country— £15,000 a year being paid by these two companies, to keep the works closed down, to stop people getting cheap cement, to stifle competition —ll per cent, on the capital of the Golden Bay Company, including its watered capital, to keep the works closed It was hampering industries all over the Dominion at the present time. At Onakaka, iron, and steel works were trying to develop a new industry, and were needing cement. They were within ten miles of the Golden Bay works, and yet had to send to Auckland, pay the fictitious price, and pay freight from Auckland to get the cement to develop a new industry. The building of homes was being hampered by the action of the companies. If the same thing was going on in the timber industry and in other industries connected with building, was it any wonder that the people could not build houses in this country? Men were out of work as a consequence of the process he had described. The Government had built up a price against itself, and the people had to pay. Public works, bridges, and other things, had been affected. As a result some of the

works had to be turned into relief works, and because the works were so converted men were being paid 10s and. 12s a day in place of the 15s a day they might have got. MR. ELLIOTT’S POSITION. Referring to the signatories to the document, Mr. Masters said he understood that Mr. Elliott had been appointed a trade commissioner, to go to Samoa with the members of Parliament. If Mr. Elliott was going to develop industries in Samoa on the lines on which 1 , he developed the industries of the Dominion, those industries would have “a very poor show indeed.” Mr. Elliott was also the Government nominee on the Bank of New Zealand directorate, and members had reason to look to him to develop industries in this country through the bank. They should not expect him to do his best to stifle and strangle the industries of the Dominion. Mr. Masters said that “a man who had no higher ideals commercially than to be a party to such a transaction should not be the Government nominee on the directorate of the bank.” The member concluded with the assertion that a 'committee of the House should be set up with the right to call for persons and papers to inquire into the whole position as he had laid it before the House. ' i A COMPANY’S REPLY. By Telegraph.—Press Association. Dunedin, Last Night. Mr. J. H. Stewart, manager of the Milburne Lime and Cement Company, speaking to a reporter with respect to the alleged combine for controlling the price of cement, stated that his company was equally willing with Wilson’s Portland Company to have the fullest investigation into the position. Mr. Masters had made a serious charge, and should have taken the trouble to be accurate in his facts. From the figures quoted Mr. Masters was evidently speaking of the Golden Bay Cement Company. The highest price ever charged by the Milburn Company was £7 4s per ton, which was entirely due to increased cost of production and other charges to be met since the war. The present output was much below its maximum.