THE OLD CYCLE RUNS

Evening Post, Issue 28, 1 August 1936, Page 8

THE OLD CYCLE RUNS

To cut a coat according to the cloth is not easy; to cut priqes accord, ing to costs is still more difficult. The Government is now charged with differentiating between costs that reflect wage^ihereases in certain works and costs^that reflect similar increases in different ; works. For instance, increased wages of men who work on new buildings are clearly reflected in contractors' costs, and the Government's proposals will enable a contractor to vary the contract and increase his price accordingly. But when the contract is for the sale of goods variation, is not allowed for in the clause as now drafted. Why? The complaint is made, '

if a, retail firm buys cloth and sends it out to a manufacturing establishment to be made up into garments apparently the firm which undertakes the making-up can. claim relief on the grounds that it is a contract only for the execution of work. On the other hand, a manufacturer who buys his own cloth • and contracts to sell garments to a retail establishment, for delivery next season, will be unable to secure an amendment of his contract for the reason that it is a contract for the sale of goods instead of merely the execution of work.

The material cost in a manufactured article is as much a manufacturing cost as is the labour cost in it. If a cloth-making factory sells1 "under contract to a garment-making factory, any rise in co3t (not merely any rise in labour cost) jn either factory is reflected in the ultimate manufactured article. But the cloth may have been made recently and subject to all recent costs, or the cloth may have been made before those costs arose and may have' been held in stock. WiH the Government's defence of its differentiation between sale of goods and sale' of work be based on this question of old stocks? If so, then probably, as in ypars gone by, the counter-cry of. "replacement cost" will be heard. In costs arguments, history repeats itself. The old cycle runs. . ' ■■-.■■'