CORPORATE CONTROL

Dominion, Volume 21, Issue 12, 8 October 1927, Page 12

CORPORATE CONTROL

Sir,—The secretary of the Licensing Reform Association finds it easier to vent his irritation than to deal with the awkward points I am pressing on his attention. We have now had from him two evasive epistles that have failed to clear up the following points:—(l) Why does the liquor trade want the ballot-paper to read “State purchase” if it is selling itself its own business? (2) Does the L.R.A. claim that corporate control can be introduced and made effective without any legislative appropriation of public moneys in connection therewith? (3) Why did the. L.R.A. secretary fail to make it clear to vour readers that the profits of the retailers are not to be limited, and that “it is not proposed that the retailers shall become partners in the corporation?” I now continue with comments on the L.R.A. secretary’s other replies. In No. 5 he says that if corporate control were carried, and prohibition was subsequently carried, the State would be entitled to one-fifth of the material assets of the corporation. Very, good . Will he kindiv enumerate those assets? In part, replying to question 6, the L.R.A. secretary says there is no guarantee whatever of 10 per cent, profit’ to the trade. Yet in advocating the proposals, the L.R.A. says: “Ihe profits over and above 10 per cent, sh&ll be handed to the Government.’ The 10 per cent, is considered to. be so certain that the excess over that is flaunted aS a: bait Onlv this year on a bad year—New Zealand breweries showed practically 20 per cent, net profit, and actually paid 10 per cent, after making substantial additions to the reserve, and providing for a handsome amount to carry forward. Are they going to do worse under corporate control ? Not likelv.- ■ Answer 7 tells us that the shares of the Corporate Control Corporation will be marketable, and. as the share values will include the inflations mentioned later, this means that the trade will be able to sell its shares at a premium, on the strength of ten vears securitv of tenure, and. thus, if ’.t wishes, pocket the additions to valuations, and also . the. capitalised value of added profits. And a very fine thing they would make out of it. too. Answer’B savs there is no suggestion of liability for compensation if prohibition is carried subsequent to corporate control. We take it that the L.R.A. will recommend that a specific clause to this effect be inserted in the legislation. It is asserted in answer 6 that “there will be no inflation of capital.” Well, first of all. there will be the amount, probablv 10 per cent , involving some hundreds of thousand*' of pounds, added to the valuation Then, the proposed . legislation guarantees that there will be added an amount equal to three years’ net profits, as mentioned in answer 9. On thjs .year’s New Zealand breweries’ showing, the amount to be added for that concern alone would be well on for £300,000, and that is only one o* the businesses to be bought under corporate control. Each of them is to have the three years’ profits added. Thus the addition to valuation, and this total sum, equal to three . years profits of all concerns, are to be added to the capital, and the liquor trade is to be assured of 10 per cent, on this inflated capital. Yet the L.R.A. savs “there will be no inflation of capital.” If the above, process is not inflating capital, what is? I again remind your readers that the president of the National Council of the Licensed Trade . has declared that corporate control “involves State purchase,” that the National Council is declared by the L.R.A. itself to be “in complete accord” with the L.R.A., that the retailers will not be affected in their profits bv the corporate control proposals; that those who nowconduct the trade will continue to conduct it under corporate control; ana that the L.R.A. wants corporate control put on the ballot-paper, under conditions that will ensure the continuance of the present system, even if the vote rises to over 24 to 1 against it.—l am, etc., J. MALTON MLRRAA, Executive Secretary, New Zealand Alliance. October 3.