WHOSE FAULT?

Evening Post, Volume CXIII, Issue 105, 6 May 1927, Page 8

WHOSE FAULT?

MILLER OR MERCHANT

ANOTHER VIEW OF TIMBER

PRICES

"FARMED" BUILDERS AND DARK

DISCOUNTS

The question of higher protection for New Zealand timber, now before the Customs Tariff Commission, is partly dependent in the attaining of a higher standard of efficiency in the timber industry. The question of a higher degree of consumption of New Zealand o.b. timber in Government house-building, and in houses on which Government money is lent, is also partly dependent on better production (including seasoning or artific' 1 drying), and on other things (grading, for instance) coming under the head of the economic efficiency of the industry. In the 'first case (higher duties) it may be found that the Government will lay dqwn the principle of tariff help only for the self-helpful. ■ The State will assist those industries who assist themselves.- In the second case (building materials for long-term mortgage houses) the attitude will probably be: ''The necessary security value of a long-term mortgage house precludes any advance unless the timber is going to last, and lasting value depends not only on the position of the timber in the : growing tree, but on how it is milled and prepared for market." This fatter consideration raises the question^ of whether the * classification ■'' of timber into heart and non-heart grades is a satisfactory marketing classification. INQUIRY IN PRIVATE. Although both of the above inves? tigatibns—into higher duties, and into higher consumption of New Zealand timber by ihe State—are proceeding . more or less in private, they are of inimportance to the public, and 'the public are entitled to such light on the issues as can be provided. Some light was thrown by a Wellington builder, an interview with whom appeared in a recent issue of "The Post."- He produced the invoiced prices of an order for timber obtained by him from a big and successful Ohakune sawmiller who does not belong to the sawmillers' association or "combine." That independent miller's • price* he compared with the current price lists of two "association" firms, one of them a big operator in the district where the independent miller cuts and sells, and the other a selling organisation in Wellington. The comparitive figures were published in "The Post." The independent miller's figures are very much lower than the "association" figures; and the builder's argument, in brief, is that no plea of economic inability to compete with imported timber is valid on the part of the associated, sawmillers, when it is plain that their price 3 are far above the prices of a fully economic and inBeplies have since come to hand from the secretary of the Dominion Federated Sawmillers' Association, Mr. Arthur Seed, whose letter was published last Saturday; and from Mr. \V. E. Turnbull, secretary of the New Zealand Timber Industry Advancement League, whose letter is published below. Neither of these gentlemen contributes counter-figures, or contests the figures of the builder; but Mr Seed suggests that the lower prices of the independent Bawmilier arc explainable, and that he would explain> them were he not pre- , vented from doing so by the fact that the issues are bofore tho. Tariff Commission, in private. Mr. Seed writes that "the Sawmillers' Federation takes no part whatever in any matter relating to timber prices, but the circumstances of the miller referred to by your buildor informant are quite well known to other sawmillers, and, I think, also to most builders in this district; and the incidence of his peculiar price lists are quite understandable when all the circumstances are explained." Mr, Turnbull does not work from the same angle as Mr. Seed, and does not agree that the question is removed from public discussion. In his appended letter, without questioning the builders' figures, ho suggests that . the difference in' prices is duo partly to the factor of distance from railway, and partly to' excessive profits by timber merchants as apart from sawmillers. •|The merchant who retails clean heart. lima at 75s is making a huge profit." DISPUTES WITHIN THE TRADE. From' tho above it will be apparent ;that the timber prices fight is inclined .to pass—as has happened before—from a duel to a triangular contest. Instead p£ a fight between oawmiller and builder, it may be a fight between sawmiller, merchant, and builder. In any case, the public, as fourth party, is interested. The public pay both duty and price. It is not easy for a newspaper to gather all the charges of each link ( ia the chain from the' forest to the user, for there is a variable factor of discounts; but Mr. 'Turnbull's letter serves as a reminder not only that is th«. public dissatisfied with the total cost of the services of sawmiller, merchant, and builder, but that two of tKese important factors in production are prepared to question the costs of each other. So long as prices are subject fo unreyealed discounts, and so long as costs investigations are held behind closed doors, the public must necessarily be kept in the dark. In fairness, Mr. Turnbull's letter is printed in full. But in equal fairness, it should be pointed out that while ; he advocates the putting upon oath- of persons who (like the builder-critic) express themselves publicly, so that they would be "more careful in the statements they make," ho does not contest a single figure given in the interview to which he is replying. CHARACTER OF CREDIT. It is significant that Mr. Turubull speaks of builders who are "farmed" by merchants. This is evidently a reference to builders being tied, by considerations of credit, to one firm. But, in that case, should not a tied builder's invoice figures be high in price instead of low! Apart from the immediate argument, the character of the credit in the trade, and its effect on costs, seems to offer an excellent field for investigation by anyone who has the power to investigate it. But, as Professor Murphy has pointed out, there are many essential facts of industry that an economist cannot get hold of. Nor can a newspaper.

Mr. Turnbull writes from Ohakune as follows:—

"Dear Sir,—"Will you kindly allow me space to reply to statements made by the Wellington builder? In the past I have refrained from answering any letters written ovor a nom-de-plume or any interviews given to so-called wellknown builders where the name is not given, for this reason: I have always felt that these gentlemen were largely builders who were 'farmed' by the merchants, and, as a consequence, their opinions were of little value. However, since Mr; Seed has replied to this builder, I want to enlarge upon that reply. "The builder makes much capital out of comparing New Zealand prices with New Zealand prices. In no question of costs does the reasonably-minded indivi dual take the extremes. The averag' is what is determined. One miller in;'; be operating his mill adjacent to the railway, and as a consequence has no road transport to pay for. Another mill«ir may be tea miles from tho railway

(and these millers are in the majority), and it will therefore cost much more to place their timber ou trucks.

"Would your builder suggest that timber ten miles away from the railway should not be milled? There is a great potential wealth in the forests miles away from the railway, and in the interests of the nation this must be utilised. Again the figures quoted by the builder prove only that it is not the miller who is making an excessive profit but the merchant.

"For your builder's information I mention that the freight from Ohakune to Wellington is 5s 9d per hundred superficial feet railway measurement. It is significant that he did not know this, in view of the fact that he claims to have purchased timber, f.o.r. Ohakune. Then take the highest price. Is the builder aware that the millers allow the merchants a discount ranging from 15 per cent, to 33 per cent. It will then be clear to your readers that tho merchant who retails clean heart rimu at 75s is making a huge profit. NON-HEART QUALITIES. "Tho deputation which waited upon the Prime Minister asked that the Government consider the advisability of the more extensive use of New Zealand o.b. timbers and rightly so. Tho average bush in New Zealand cuts only 15 per cent, "heart." It is therefore obvious that if the remaining 85 per" cent, could be classed and sold, tho price of New Zealand timbers would be reduced. "As far as the borer is concerned, there are houses in this district, built of tho poorest quality o.b. timber and in some cases not painted, that have stood the ravages of rain and sun for the past thirty years, and are still sound and free from borer. If the State Advances will advance on o.b. timbers, then it means, that tho city workers can obtain cheaper houses. In any co.se, it is manifestly unfair to insist on a man building a 'heart' timber house when he cannot afford the cost, and savours of asking a man to buy champaign when, he can only afford beer. ■ . . ,' "On tho evidence of timber experts, the New Zealand o.b. timbers resist the borer equally as well as the imported cedar, Oregon, and hemlock. I have samples of these foreign timbers which have only been iA New Zealand six months well riddled with borer. "My league stands, sir, for the development of the New Zealand timber industry, always protecting the public against exploitation by sawmillers and timber merchants. Further, the league was formed by tradespeople and workers affected by the depression in the sawmilling industry. UNFAIR DRAWBACK. "The sawmilling industry has suffered by the importation of foreign timbers. A most unfair competition exists with regard to the importation of butter boxes and cheese crates from Sweden. When the boxes arrive a small duty is imposed, and when the New Zealand product is packed in them and shipped overseas a draw back of duty is allowed. Thereby allowing" the foreign product to compete with the New Zealand product duty free. "Referring to Mr. Seed's reply, I quite agree with him that the millers have given the Tariff Commission every assistance in the matter of placing facts bofore that body. I cannot, however, agree that it is wrong to give publicity to the matter of the New Zealand timber industry. Notwithstanding the fact that the inattor is sub judico in as much as it affects the Commission, wo are not discussing the Commission or its probable findings, but a matter of public interest. The public pay and the public have a right to know the true position of the industry. I am fully persuaded, sir, that if the public understood the reactions as reflected in the timber industry consequent on the importation of .foreign Timbers, and tho limit market for New Zealand o.b. timbers, they would bo quite willing to see the foreign timbers shut out. . ■

"I cortainly agree witli Mr. Seed, that it would be an excellent idea if all persons expressing themselves publicly on the subject could be examined on oath. They would then be more careful in tho statements they make. Finally, if foreign timbers arc shut out and restrictions on New Zealand o.b. timbers removed, then your builder would not have time to grant. interviews to 'The Post' or nny other paper. He would be very busy building houses in Wellington City, where they are so much required."