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Progress, Volume XVI, Issue 6, 1 February 1921, Page 125

English Trading Ethics. His Majesty’s Trade Commissioner for New Zealand, Mr. R. W- Dalton, has forwarded to Progress a lengthy letter in reply to our criticisms of English trading methods published in these columns last month. As Mr. Dalton indicates that he furnished the leading newspapers with a copy, there is no occasion for us, late in the day, to reprint his arguments in full. However, it is fair to Mr. Dalton to summarise his most important conclusions, for we have something further to say on the question, seeing that over-importing has precipitated a rather severe financial crisis in this country, forcing many traders to make great sacrifices of recently-bought English goods which they are quite unable to sell in the ordinary course of trade and at prices returning them a reasonable rate of profit. “Per head of the population,” writes the Trade Commissioner, “New Zealand is a very important buying market, but its total trade is relatively small. It is essentially a market to be cultivated not for its present actual size, but for its great potentialities. In last year the exports from the United Kingdom to New Zealand, which were the largest which have ever been recorded, were only about 4 per cent, of the total exports from Home; or, to put it in another way, the total exports from the United Kingdom to all countries in one month of last year were more than double the exports to New Zealand in the whole of the year. It seems hardly reasonable, therefore, to suppose that manufacturers in the United Kingdom could think that they could ease a difficult position by unloading on a distant market such as New Zealand, goods which were an embarrassment at Home. I have heard this suggestion made more than once, and I can only counter it by pointing out from the above figures that relief could certainly not come that way. If British firms had shipped three times the quantities which they did actually ship, this would still have made very little impression on their stocks even if they did have big accumulations, which is by no means proved.” Mr. Dalton goes on to refer to the difficulties in securing delivery of English goods last year, the pressure put upon the. manufacturers by colonial buyers to

ship supplies, and he concludes by suggesting “that the fact that these goods were shipped at the highest prices in many cases was merely coincidence. Great Britain had not previously been in a position to ship in great quantity, as we all know, and in response to the insistent demand from New Zealand, to which I have referred, she shipped at the earliest possible moment. Free shipment of goods could not be possible until general demand from all markets, but chiefly from the Home market, was becoming less urgent. This again would only be when prices had reached the top.”

Misleading Impressions.

We congratulate Mr. Dalton upon making a very restrained and plausible case for the British manufacturer. However, he rather conveniently ignores some of the outstanding facts. He also forgets that high-priced goods are still coming to hand from England, to the despair of those who ordered them under the belief that they were providing for the possibilities of their business more than a year hence. It will ruin many a New Zealand importer if he cannot promptly turn a good proportion of these dumped goods into money, for he cannot otherwise remain in business. What sacrifices these unfortunate traders are making to-day, Mr. Dalton ought to know. We have had some bad cases brought to our notice, and we fear that the Receiver in Bankruptcy will eventually have to investigate the circumstances of some of the victims. Mr. Dalton’s suggestion is that New Zealanders pressed the English manufacturer for supplies. This is so, but they were told time and time again during the past year that deliveries were not being guaranteed, that leading producers of goods were booked up for the whole of 1920, and that deliveries could not be guaranteed for many months. The impression was sedulously fostered by English buyers—who seem to have been as badly misled as the business people at this end—that orders put in during 1920 would not result in demand drafts being presented for many months. But New Zealanders have somehow had to find the money for fifty millions wor f '

imported goods during the ten months of 1920 ending with November, whereas the importations for the corresponding period of 1919 were little more than half that value. What seems to have happened is that the English manufacturer, by creating this impression of tremendous work ahead, loaded up his order list and worked it off at high prices. While the world was ready to buy at exorbitant figures, under an impression of continued scarcity in production, the “boom” continued. However, it commenced to burst over four months ago, while Mr. Dalton was talking in New Zealand about a mere temporary depression, and foolish traders at this end were swallowing stories from their buyers about the impossibility of prices droppng for many months. Prices did drop, but most of the goods are now in New Zealand warehouses, landed at the peak of th, market. As we said last month, colonial importers “have had to carry the baby.” It has left a bad taste in the mouth which Mr. Dalton’s gentlemanly methods of controversy will not readily dissipate. The whole proceeding is reminiscent of the disclosure some years ago of the fact that “patriotic” British shipowners were giving special rebates to German and other continental goods shipped to New Zealand and Australia from Rotterdam and Antwerp, a fact referred to in the report of a New Zealand Royal Commission. If the silken ties of Empire were solely in the hands of traders, we fear that they would soon become somewhat frayed and threadbare. We must be thankful that stronger and finer considerations attach us to the Motherland. Mr. Dalton would be wise not to make himself too much the special pleader of a class at present somewhat under a cloud in this loyal part of the Empire.

Breaking the Circle

Credit is due to the Federated Sawmillers’ Association of New Zealand for its decision not to pass on to the community the latest increase of three shillings awarded the timber employees by the Arbitration Court as a cost of living bonus. Timber prices have been so carefully “regulated” by the Board of Trade during the last few years, that no doubt this evidence of increased cost of production could have been added to quotations with an official certificate of fairness; However, the timber traders decided that someone had to break the vicious circle, and we hope that their good example will lead to rapid demolition of the artificial basis of our socalled prosperity. The world’s prices of staple commodities are coming down to a normal level, and the movement is beginning to be reflected in New Zealand. Home builders complainand we have specific details to support their contentions that the average cost of a well finished dwelling today is scarcely less than £350 per room. Careful calculations of the increases in timber during the last few years of soaring quotations in every variety of material show that the increase in the cost of

timber works out at about £SO per room. The remainder is made up in higher costs of hardware, paints, and labour. It is well known that private building for letting purposes is an impossible financial proposition, and the experience of the Wellington City Council in erecting a few dwellings which it sold by private tender proves that a reasonable rent is not possible under present-day cost of building. Our definition of “reasonable” is that which the Railway Department can fortunately afford to adopt in connection with its dwellings for the staff. No matter what the capital cost, a week’s rent payable by the railwayman does not exceed the amount he can earn in one day. A courageous stand on the lines of the sawmillers, if repeated in other leading industries, will bring us back to normal quicker than all the pleadings of the politicians or warnings from prosperous bankers.

Tendering Problems.

When the educational system of New Zealand gets into difficulties owing to shortage of buildings, there must be something seriously wrong with the industry. Shortage of materials will not account for the whole of the trouble which has led the Minister—himself an alert business man with a good knowledge of the world urge Education Boards to throw the contractor overboard and carry out the work with their own staffs. A few of the Boards are following out this system, but as a result of a conference of those most concerned in providing buildings for education, it has been decided to give the tendering system another chance on fresh terms. The development is something more than the expedient of war times, when owners were sometimes glad to let a job to a contractor on a percentage basis. The weakness of that system was that even with a keen architect to watch his interests, the owner was largely in the hands of the builder. Honest as the builder might be, there was a false relationship which bred the suggestion that the builder’s interest was best served by piling up the account. An improvement on this tendering system, adapted to New Zealand conditions by Mr. J. T. Mair, the Education Department’s architect, is fully described in this issue, for we consider it of vital importance to the industry that the scheme should become well known in building circles. We need not cover the ground of Mr. Mair’s article, save to say that the objectionable element to which we have referred is eliminated, and the builder has an incentive to make the job economical. One phase of the system of outstanding importance is that in letting this form of tender the owner should have good professional advice, not only on the job, but before the contract is placed, otherwise fie might allow the work to be started by a builder who has not the resources to carry it out on the most advantageous terms. His organisation might be weak, and his buying capacity not equal to that of other firms in the trade-