SUEDE SHOES FOR LADIES

Dominion, Volume 13, Issue 251, 17 July 1920, Page 8

SUEDE SHOES FOR LADIES

AUCKLAND FIRM'S PRICE SUBJECT OF PROSECUTION CASE NOT CONCLUDED By TeleKr»Dh-l'ress AsuocUtlon. Auckland, July Ifi. _ Out of many complaints of profiteering in Auckland, the first actual prosecution to emerge onmo before Mr. Wilson, S.AL, to-day, when a prominent firm of boot and shoe merchants, Dadly's, Ltd., was charged with having sold on April 1 hist a pah l of ladies' suede 6hoes at an unreasonably high price. Mr. Hunt (instructed by the Crown Prosecutor) appeared for the informant (the secretary of the Auckland Price Investigation Tribunal), and Jlr. E. M'Veagh conducted the defence.

In his opening, Mr. Hunt stated that the case had been • brought because the Board of Trade had deemed it expedient that tho defendant company should bu prosecuted. To show that tho hoard had not entered lightly into the prosecution, counsel, stated that tho Price Investigation Tribunal started operations in Auckland only in March last, and though, up to June 19 it had received and had investigated 165 complaints of profiteering, so far in only three cases had it asked tho Board of Trade to prosecute. So far the board had sanctioned a prosecution in only one case—the present one—but no doubt other proceedings would be authorised. He had said enough to indicate-, however, that the matter had not been lightly entered into. The complaint made in this caso was that the defendant company sold a. pair of ladies' black suedo court shoes, including the price of a. pair of buckles, for ,£3 lis. 3d. Tho company explained that the price was ,£3 7s. 6d. for shoes, and 3s. 9d. for buckles. The company stated that the shoes were purchased from the firm of W. A. Grant, Ltd., in Sydney, the gross price paid in Sydney being 30s. a pair. Off that the defendant company received a discount of 3J per cent., making the cost slightly under 2Ss. lid. per pair in Sydney. In reply to the tribunal tho defendant company gave the price as 80s. in Sydney. Whatever the price in Sydney was, thero had been added to it Bs. 3d., stated by the company to be the recognised cost of landing the goods at the shop in Auckland. A further addition was then made of 50 per cent, on tho gross cost (the cost in Sydney plus the landing charpo). The company then added 19s. 2d., which 1 was described as provision for overhead charges, in order to provido a price which would return 33 1-3 per cent. That made £2 17s. sd. In this case, the company made additions of 4s. Cd. and ss. 7d., bringing tho price up to ;C3 7s. Cd. They explained that the added 4s. Gd. as a 6iim intended to ewer the extra risk of dealing in a high-grade article that might go out of fashion; and the added lis. 7(1, the company claimed to be entitled to as the result of direct buying, having given them an advantage of four months at the old price. Counsel remarked that no doubt it would be urged that a portion of the extra profit was intended to meet possible loss on stock in handling a highgrade lino subject to the whims of fashion; but tho allowance here provided for the loss of ono pair of shoes in every four. The balance-sheet of the defendant company's last completed year of operations would bo put in, and that showed a profit on actual sales of 36.27 per cent., or a net profit on actual trading for the y«ir on the total money employed in that trading, of 34.22 per cent. The not profit on paid-up capital of tho defendant comnany was 75.92 per cent., and tho net profit o'n selling prices, after providing for everything, was 15.62 per cent., or 3s. on ovetv £1 handled.

Charles E. Phillips, secretary to the Board of Trade, gave evidence regarding the complaint that the pair of shoes in question was bought for £3 7s. fid., plus 3s. 9d. for buckles, and that on the shoes alone that showed a profit of 54.9 per cent. The Board of Trade was so'isfied' that Ss. 3d. was a fair landing charge, but considered tho other charges added w»re unreasonably high, Ephraim Kitchener, manager for Pearson and Co., stated that in arranging sjile prices his firm fixed a profit of 3,1 1-3 per cent, on high-grade shoes of extremo fashion. That was on the selling price. It amounted to about 50 per cent, on thp cost price. On children's boots <tnd other everyday lines, the margin of profit was out to 12J per cent. Tim'higher profit on other lines was iustified by the greater Tjsk of loss, At the moment l'n his shop lines on which lie had added 50 per cent, or more were suede shoes and extreme fashion court shoes. They were marked at 50 ner cent, profit oil landed cost, or S3 1-3 per cent, on selling prife. After some further evidence had been heard, tho case for the prosecution closed.

Defence Opened, In opening for tho defence, Mr M'Veagli said that the defendants had been carrying on business as a joint stock company for seven years in Queen Street. They specialised in boots and shoes of high grade quality. Their place of business was in one of the most expensive parts of tho city, and their overhead charges were consequently as high as, or perhaps higher than, those of any other business of a similar kind in Auckland. The article in regard to which the charge was laid was one of a very special and peculiar character, inasmuch as the only persons who made a demand for that class of 6bloe were thoi-e who were in a position to indulge their desire to be in the fashion. It was a shoe which came into existence simply and solely because of fashions. The shoe had to 'be considered from an entirely different standpoint from a boot told every day mid characterised as n "bread-and-butter line." It was dependent entirely upon tk« whims and vagaries of fashion. Ladies wore such a shoe not because of its utility, but to attract attention. Being subject to the demand of fashion, the line iu miestion must be sold at a loss should fashion die out. As cue witness pointed out, it might do this suddenly. Continuing, lie said that one. final factor was that from the time the shoe was bought to the time it was sold there was an increase in tho price of the wholesale commodity. The defendants claimed that they were entitled to take that into consideration as a factor when fixing tiio retail price of tlirt shoo. The of replacement had to be considorcd when fixing the. price. The Magistrate: If that is allowed to go on, profits might go up to 1000 per cent., and it might not lie considered an unreasonable price. ' Mr M'Veagli: It is an economic question.

Continuing, he said that tho- shoes were bought in Sydney for 30s. The question of disennnt had been raised. It ought fo ho eliminated. If the defendants chose to buy at 30-day credit, that was a matter of interest. They therefore stated that the purchase price was 30s. Dealing with the matter of profit, counsel said 'he company's showed it was something like 15.C2 per cent, on an aver-. age. This covered the whole trade, and did not represent tho very.special cln«s of goods which was the subject of the proceedings. Ho submitted that a trader would be justified in asking for a great denl more than 1G per cent, for such a special class. The shoes were bought wholesale in Svdncy. The landing charges were £X 18s. 3d, and the retailer paid £2 7s. 9JJ. To this was added .1,11 per cent, for overhead charges, and this raised th» price to within a fraction of ,fi,l 3s, 9d. The shoes wero sold at £1 is. 0d„ and the profit would bo 3s. Od. That would be a 10 per cent, profit, and was nothing like a reasonable profit, having regard to the nature of tho shoes. Evidence was called in support of the defence outlined, nnd tho case was adjourned 6ine die.