PRICES AND PROFITS

Dominion, Volume 13, Issue 271, 10 August 1920, Page 6

PRICES AND PROFITS

TRADERS AND THE ACT

DEFINING A REASONABLE PROFIT

REPRESENTATIONS TO THE

PRIME MINISTER

A deputation representing wholesale and retail tradeis throughout New Zealand interviewed the Prime Minister (Mr. Massey) and the Minister of Industries and Commerce (Mr. Lee) yesterday to ask for the amendment of the Board of Trade Act. Tho Ministers were informed that the traders had conferred in the various districts and had held a general conference in Wellington. The deputation had come to put forward the requests of that conference, which was entitled to speak for wholesalers and retailers throughout the Dominion. It was introduced by Mr. J. P. Luke, M.P.

Mr. E. H. Wiles emphasised tho representative character of the deputation. It was entitled to epenk for the men engaged in trade from the North Capo to tho Bluff. These men claimed that tho Board of Trade Act in its present form was a menace to the ordinary usages and customs of trado as carried on for- generations past, and was offensive to business people, who were doing their business in exactly the same way as before tho war. Tho Act tended to create suspicion of the merchant and the retailer in the mind of the general public. Mr. Wiles argued that section 32 of tho Act, making it an offence for a trader to'tako an "unreasonable profit" was not capable of fair administration, since such a profit could not be'defined in an Act of Parliament. High! prices were not due to profiteering, but to such factors as shortage of supplies and high wages without increased production. Yet the Board of Trade Act had been passed in such a form as to appear to place the 'blame to'' high prices on tho retailer, who reallv had less to do with them than anybody concerned. The Government should have looked further back, towards the manufacturer, and the producer. He did not wish, to suggest any unfairness on the part of tho men administering the Act but the Board of Trade and tho tribunal* could not do justice to the traders, sine* they lacked trade knowledge. Profits and Replacement Value. Profits, said Mr. Wiles, had to be assessed on tho replacement value. No other system of business waa possible for the man. who wished to maintain pound financial position. It was a well established fact that with tho markets in their present chaotic condition profits had to be averaged. Nothing but the result of a year's trading would show whether or not the trade had made unfair profits. New Zealand merchants and retailers could not be responsible for th» manufacturers' prices or for the transport costs. They could not control the rise of wages and salaries. They contended that as long as they conducted their businesses in a normal way they ought not to be subject to investigations which caused irriation, waste of time, and expense to a class of honest and straightforward men. These, trader* would hnve to face considerable loss when a general drop in prices came. Mr. Wiles stated that ho was firmly convinced that, taking the traders as a body, thnre had been no profiteering in New Zealand. There might have been a few isolated cases, but not enough to justify the Government in casting a slur on all traders. No rato of profit could be fixed beyond which- profiteering would begin. The profit must be dependent on tho conditions of the trado and tho business. If a trader was not allowed to equalise his profits over all the goods handled, he might as well go out of business. Ho contended that to drag honest men before the tribunals and niako them prove that they were honest was an indignity which, regarded in its proper light, would not be tolerated by any section of the community. The tribunals wero unnecessary and useless, The deputation asked, said Mr. Wiles, that traders should not be subject to interference in tho ordinary course of trade. If tribunals had power to consider the qu»tion of profits, and to pick out one article from among many others without considering tire circumstances in which tho profit was assessed on that article, then nothing but gross injustice to the trader could ensue. No tribunals could say what would be a reasonable profit in any particular ease without knowing all the details of the 'business. He thought that the public ought to be made to understand that high prices were due to economic conditions.

Definition of Illegal Profit, The most important amendment of tho Act desired by the traders, Mr. Wiles indicated, related to section 32, which deals with unreasonable profits, The deputation requested that the words "which in view of all the circumstances is unreasonably high" should be used in the definition of an illegal profit. This amendment and other amendments on the lines indicated by Mr. Wiles were necessary, in the opinion of the traders, to make the Act just in its operation. The amendments were taken from the British Act. The deputation, added Mr. Wiles, felt that section 21 of the Act infringed the ordinary principles of British justice by requiring traders to supply the Board of Trade on request with intimate details of their business and authorising tho board to publish this information. Mr. Lee: Do you complain of tho administration of that section?

Mr..Wiles: No. We are not aware that the board has done anything of the kind. We don't think they should have the right to do it. Mr. W. Gow said that the board had the power under the present Act to require a trader to supply information about his business and then, use that information against him. These men should have the right to defend themselves.

Mr. Massey: That has been done. Mr. Gow: "It does not need to be done under the Act. I am not one of those who say thero is no profiteering. There is profiteering, but unfortunately tho people who are uttacked are for the most part those who are not guilty of it." The profiteers, said Mr. Gow, had to be sought further back than the retail trade. He believed they were to be found at the sources of supply. Th 6 Prime Minister himself had declared that the producers were entitled to a free market. But the business men were not allowed a free market; they were placed under control. Ho agreed that the development of the export trade was highly desirable, but the prices of New Zealand produce had been raised against the local consumers to a much greater extent than tho export prices justified. Mr. Massey: Would you keep the produce in the'country? Mr. Gow: Certainly not, but I would take care that it was not so dumped out of tho country as to raise the prices against ourselves. Two Prices for One Article, Mr. Massey: Do you think it possible, as a business man, to have two prices for on« article in tho same country?

Mr. Gow. "There are two prices now. The price which tho consumer has lo pay in the retail market for his moat is much beyond what the meat is realisms for export." If a profiteor was a man who made large profits, said Mr. Gow, the producers were profiteering. Tho people wore told that the farmer had to paT high prices for his lajid. I)ut these high prices were due to the high prices the farmer was getting for his produce. Some of the producers, lie agreed, were carrying a very big "baby" and might expect to have troublo when tho prices of produce fell. Mr. Leo: Perhaps they will ask for replacement value then. Jlr. Gow; "The replacement value asserts itself very quickly among traders when prices fall." Mr. Oow also said that n transaction did not end when the consumer obtained his article. The trader was in business as a permanency and lie had to replace that article. A firm- that did not sell goods on the basis of replacement value was headed for tho Bankruptcy Court. Mr. E. H, Dennett said that the amondment of clause 32 was the crux of the question. Ho could take the officers of the Board of Trade to hi 6 own business premises and show them goods

offered at prices that, under the Act, would lay him open to conviction for prolitrriiig. Yet lie was conducting the business in a normal way. The Act did not operate fairly, and it exposed every trade to prosecution. Mr. A. J. Eutrican agreed that there had been some profiteering. He did not blame the Government for bringing, down the Act, but amendments were required to make it operate fairly.

Prime Minister Welcomes Traders' Views,

The Prime Minister said it was well that both sides of the case should bo heard. The Government hud been hearing chiefly the consumers' side, and he was glad to listen to the views of the traders. He agreed that profiteering was merely one cause of higli prices. The most important causes were reduced production, increased demand, shortage of supplies and high_>'nges. It had Jdcome flie business of the Government to show the people that profiteering was not the sole cause of high prices, and that, if profiteering existed it would be punished. He had been interested to hear what Mr. Gow had said about what the Government should do to the producers. . .

Mr. Bennett: It is not our opinion. Mr. Massey said Mr. Gow had been mistaken. He reminded the deputation that tho meat .salesmen of the Dominion had been able to get supplies of meat from the Imperial slocks at the export prices. Hundreds 'of traders had used' this meat. The Government, in order to keep down the prices of butter 'and bread, was 'paying subsidies amounting to over £400,000 a year. Ho could not say how much longer theso arrangements would be required or how much longer the Government could continue them. The Government was anxious to keep down the cost of living lo the consumer, ft was anxious at the same time, to avoid being harsh or unjust to the trader. He could not recollect that at any stage the Government had discriminated between the retailer and the wholesaler. Tho solution of the cost of living problem was to be found largely in the increase of production. He agreed that the farmer had been doing very well, but other sections of the community should not forget that practically everything that the farmer required in his business had more than doubled in price in recent years. Ho did not think that any injustice had arisen from the administration of clause 24, requiring tho supplying of information about businesses. Tho principal difficulty that had arisen was in regard to the definition of an unreasonable profit under clause !ti. Tho deputation was asking that provision should be made for replacement. This very point had been discussed when tho Bill was before a committee of Parliament, and the statement had been made by experts that if profits were allowed to bo based on replacement value, the Government might as .well leavo the legislation alone, since it would be impossible to secure a conviction in any case. The Government would take into consideration all the arguments that had been advanced by tho deputation. Tho Ministers were not unreasonable people, and they were not going to do an injustice to anybody if they could help it. He believed that 'if the Board of Trade Act wero nmended during the present session it would be made a better Act from tho jioint of view of both traders and consumers.

Mr. Massey added that certain people were trying very hard to make political capital out of what they called the "inaction" of the Government in regard to profiteering. They had orestod misunderstanding in the minds of tho people.

Mr. Lee remarked that in Australia the investigaricins of the tribunals wero roado in public and Hie details published in the newspapers. Mr. Luke: I think, wo must all Tcalise that if there was no Act, then God help New Zealand.

Mr. Wiles added that the traders wished to assist tho Government, and would be glad to give any as«istnnco required of them •» tho"- framing of amending legislation.