The Evening Star TUESDAY, MAY 22, 1923. BREWERS AS REFORMERS.

Evening Star, Issue 18281, 22 May 1923, Page 4

The Evening Star TUESDAY, MAY 22, 1923. BREWERS AS REFORMERS.

This is an ago of combines and pools. Organisation of this kind was in existence before the war. Then, with Governmental lead, it boomed. Readers of Wells’s * Food of the Gods ’ will recall how the unsuspected liberation of an experimental compound made wasps grow as big as crows and rats as big as wolves. Suddenly a peaceful world became as full of fierce adventure and sudden unexplained disappearances as wo arc told it was when the dinosaurs roamed the earth. Trade appears to have been inoculated with something producing similar effects—at least in the eyes of a nervous public, which sees one necessary of life after another withdrawn from the healthy breezes of competition and placed under shelter. Years ago the spokesman for big American trusts, such ns those of the Chicago packers, the steel and the oil kings, told the public that combination, not-competition, was the soul of trade; that by cutting overhead expenses the trusts were able to produce a cheaper article, and the public were able to buy it cheaper. There was more emphatic and widespread assent by consumers to the former of these two conclusions than to the latter.

There can bo no .doubt that the p*- 1

system can bo made to ensure cheaper and more economical production. Whether the consumer permanently gets the 'benefit of that lowered cost depends on the controllers of the trust. Human nature is not yet purged of avarice. The temptation, together with the means of exercising it, has often proved too strong. In the United Stales things went so far that the Government, impelled by bitterly clamant public opinion, endeavored to break up the trusts by bold legislation. One might ns well try to disperse a flock of starlings and keep them dispersed indefinitely, Big business beat the law badly, and its component parts soon ran together like quicksilver. Then, spurred by the war, Governments tried their hands at trusts, either temporarily absorbing or working in with those alreadyexisting for creating new ones. Where Governments have since got out of them they have left the organisation to continue in operation free of control, not without public protest. Where the Governments have remained in partnership there is also public protest. New Zealand provides instances of both kinds. Queensland provides very much more educative ones. There the State has entered many branches of trade. The net result is that losses were made in every direction; the Government’s credit lias been stopped in important quarters; capital, never more urgently needed, is leaving the country' wherever it can free itself, and so is much of the best element of the population.

State control Has had so many and so | glaring bad advertisements in Australasia I of late that there is no call for wonder that the New Zealanders are very chary of it as a solution of the liquor problem. The middle issue on the triennial referendum papers is practically ignored by the | voters. Mr Massey has definitely stated i that, if Prohibition was not carried last December, ho would propose drastic alterations in our licensing legislation. As Prohibition was not carried, ho stands committed to it, and if it docs not include a clause pointing the exit tor the State Control issue, some member is sure to try to insert one. Assuming this issue to vanish, the “ trade ” lias to ho at least prepared to face the possibility of having to secure an absolute majority for Continuance. This is not an impossibility —perhaps not even an improbability, as the pendulum of world opinion seems now to ho swinging—hut it involves a great risk. The brewers’ amalgamation, together with the rumored move of wine and spirit merchants to follow suit, looks like an attempt to secure the upper ground in the manoeuvring that always precedes the coming to grips in Parliament when tuo subject is licensing reform. It is more than a mere consolidation of the “ standing army ” for the coming fight. It is a perfectly legitimate attempt to attract recruits. As wo stated on a previous occasion, its successes must largely depend on how attractive the terms are to the volunteers whom it is sought to enlist (instead of their remaining mere camp followers of rather dubious loyalty). For the present those terms are being | kept as close a secret as were the long negotiations which preceded last week's announcement of amalgamation—and quite rightly so. The furthest that has been disclosed is the statement in the Christchurch ‘ Press ’ that “ shares and debentures in the new capitalisation will bo issued to tho public." That capitalisation is stated to bo likely to exceed £1,000,000. One great question is how much of that sum will be open for public subscription. Some of our breweries are big proprietary concerns, and so far as tho public is affected t the present position would not be greatly altered if these elected to bo paid in shares in the united concern rather than in cash. But it is to bo presumed that tho reason for the move is to alter the present position more than merely nominally, and to offer the public a real financial interest, and possibly some small share of direction, in the industry. “ The main idea of the whole scheme,”- said Mr Charles Speight on Saturday, “ was to improve the conditions of the trade.” This latter term is capable of various interpretations according to the particular viewpoint, but we believe Mr Speight was using tho words in no narrow sense, but implied an improvement that the public would appreciate as well as the sensible publican and the 'brewer. Stability and permanence aro what the two latter classes desire, and, unless tho public is satisfied, those attributes are wanting. Mr Speight expressed the hope that amalgamation would be tho first stop towards improved conditions. The Christchurch ‘ Press ’ states that “in view of the proposed amalgamation brewery shares have shown a substantial rise during the past week or two.” There thus appears to he corroboration of his view by the investing public. One has, however, to hear in mind that there must necessarily be a difference between the pre-amalgamation and the post-amalgamation investor. The present buyer may bo merely a prospective vendor later. Everything depends on tho still undisclosed terras.

It has been stated that the amalgamation is based on the four Auckland Anglican Synodsmen’s scheme. The basic principle may be the same, but that is'all. Both schemes involve the sale of existing businesses to a big corporation. The brewers themselves propose to be paid in part by shares in this corporation, the balance to come from the cosh subscribed by the public for the undisclosed reminder of the shares, The Synodsmen

propose that the brewers (and holders of wholesale licenses) should be paid partly in Government debentures and partly 'in shares. In what proportion is nob stated —only that the Government is to “ acquire a substantial interest in the corporation.” a corollary, the Government would have strong representation on the .corporation's directorate, besides appointing a magistrate as chairman. This is but modified State Control. The Government might have a controlling financial interest and a majority on the directorate. But, even if this were not so, the result would be the same, as the “ trade’s ” returns fi;om the industry would have strict limits set, whether in the shape of interest on debentures or dividends on shares. If excess profits wero realised they would go to help the national finances. Experience of State control or even State partnership in other directions makes it doubtful whether there would bo any excess profits for long without some measure of exploitation. If the Stale’s intervention could bo done without, so much the better. It remains for the brewers to show that it can—i.e., through generous treatment of the public by what undoubtedly promises to bo a powerful combine. This case is singular in that the public’s power to end tlie whole industry by a stroke of the pen is sonic guarantee that causes of resentment will bo reduced to a minimum.