Revolutions of Price Fixation

Manawatu Times, Volume LII, Issue 3527, 17 June 1927, Page 9

Revolutions of Price Fixation

Mr. W.A , lorns Explains Position Stresses Importance of Goodwill MR COATES AND MR PATERSON EXONERATED At Wednesday’s meeting of the Dairy Produce Board, Mr. W. loms, chairman of the London Agency of the Board, who Is now hack in New Zealand, presented a lengthy report to the Board. Mr. loms dealt cliiefly with the disastrous policy of price-fixing as well as a munher of other matters in- . tlmately associated with the welfare of the dairy,, industry. His frank statements throws a new light on a munher of problems that have agitated the minds of New Zealand dairy-farmers. Very shortly after my arrival in London I realised that any attempt on our part to cut out any legitimate channel of distribution. o r any medium between the producers and the consumers that already was serving a useful purpose would be disastrous. This has been demonstrated clearly enough by the investigations of the British Pood Department during the Great War, and by the failure of tjie prolonged and costly efforts of a great American concern to establish a meat monopoly. If any further demonstration had been required it would have been furnished by our own recent attempt at price fixing. Dictatorial Tactics. Even the poorest intelligence should have recognised that by attempting to cut out the brokers and penalising the wholesalers we were ostracising sections of the trade that had been in the business for many years to the great advantage of New" Zealand producers. The adoption of this policy drove a number of operators into the arms of the Dominion’s rivals and immediately resulted in the lessening of the premium which had existed for New Zealand produce and the widening of the premium for Danish. This dictatorial attitude on our part, opposed to' all British methods, had it been prolonged, would have inevitably driven the big buyers in England to" the formation of a “Buying Committee” which would have deprived New Zealand producers of the advantages of trade competition. Mr Irons then proceeded to quote a number of letters from agents condemning price fixing, and later, on the removal of this policy, expressing their approval of the Board’s action. These and many other letters to the same effect, continued Hr Irons, wore received between March 31 and April G, within a few days of the discontinuation of price fixing, but of course most of the expressions of approval came to me and others attached to the London Agency, verbally. Quite probably those members of the Board and others who still cling to the delusion that wo could compel the British merchants, distributers, retailers and consumers to submit to such terms as we cared to impose upon them, if we only hung on long enough, will tell you that the people who are rejoicing over the collapse of price fixing are animated only by the prospect of making more money for

[themselves out of the “unfortunate •New Zealand producers.” I am not [going tq follow them in their reiteration of this silly story, but it is only due to the friends the industry has at Home and to the personal friends we have made there ourselves to say that it amounts to nothing less than n, gross slander, I have dwelt upon this price fixing episode at considerable length, not because I have any fear of the experiment being repeated in our time, but because I want Its incidents definitely placed on record. Having done this I will refer only briefly to other matters which I hope to have an opportunity to discuss with the other members of the Board in the near future. A Frank Opinion. Befox-e leaving this subject, however, I hope you will bear with me while I rend without comment a letter addressed to the New Zealand Dairy Produce Board, Adelaide House. London Bridge, E.C., on February 9, 1927 by Henry A. Lane and Co., a firm far too well known to require an introduction from me. The managing director writes as follows: — “We believe that you will admit that our attitude to Control from the earliest days has been a friendly one and our influence has always been in a mollifying direction which was so often necessary. Therefore an*’, views which we may venture to express, will, Wc feel sure, bo received in the right spirit. Whilst always recognising the right of the New Zealand producer to have a voice in the disposal of his goods, wc have consistently, pointed out what we considered were the dangex-s attending a policy of price fixation. Our attitude la on record in the New Zealand Press of 1923 and we feel present conditions justify our opinions. It is generally admitted that there is something wrong with the butter and cheese markets to-day. There is an indifference producing a sort of inanimation and the cause Of it would bo removed with the removal of the Price Fixation policy. The Board could still control weak sel- ’ lers Or too free sellers, etc. We are speaking now of the trade as a whole, that independent and larger constituency. We see a vast body of wholesalers throughout i the United Kingdom doing all they can to find something other than New Zealand Dairy Produce to work, not fx'om resentment but from sheer discouragement and it is making all the, difference to active interest, carrying stocks, pushing the goods, etc., with the result that the Importers here are carrying the stocks and the Trade are using minimum quantities. New Zealand Dairy Produce cannot be dispensed with, a certain quantity will be required whatever the conditions are, but w r hat is necessary is to win back the previous Interest and enthusiasm for th c goods. There Is a growing desire to support Empire products; we have increasing evidence of it all the time, but the Distributor must sell the goods which help to pay his way. Our remarks leave out of the question exceptional conditions where interwoven intei-ests of one kind or another ensure the px-efer-ence for New Zealand Produce. We ar 0 speaking of the Trade as a whole, throughout England, Scotland, Wales, and. .in a minor degree Ireland.” Our Competitors. When I was in Holland recently several Dutch merchants stated to me that they regarded the embargo placed upon theix' meat as the first step towards a “Bx-itlsh Empire Preference” scheme that would shut them out . of the English market. But their fears had been relieved. The Indignation aroused ixx England by New Zealand’s attempt at price fixing, they said, had so angered the consumers that there was not likely to. be any further talk of preference. While in Denmark I heard the same opinion expressed quite openly by responsible people. I was astounded by Mr Goodfellow's statement, reported in tho newspapers a little while ago, to effect that there was no such thing as goodwill on a wholesale max-ket. Every wholesaler handling our products in London speaks of goodwill as an important factor in his business, and if Mr Goodfellow had been up against tho “ill-will” thc London Agency encountered while it was trying to establish price-fixing he would have realised what the other term meant. One firm in Liverpool that prior to price fixation, had been taking 1000 boxes of New Zealand butter a week, stated to mo when fixation was initiated they would take no more of our produce under the new conditions and since then their orders have gone to the Danes. Surely “good-will” and “ill-will” had something to do with this change. I should say, by the way, that British goods in general, and New Zealand goods in particular, make a real appeal to the British consumer, and it was only when the Agency attempted to fix prices that he began to kick. I am satisfied that if in any reconstructed scheme any company ,or any group of companies employs similar tactics the result will be detrimental, not merely to tho dairy farmers, but as well to the great body of New Zealand producers as well. No Team Work In Ixindon. There are a number of more or less personal matters which cannot

Ibe discussed in any detail in a statement of this kind, and I can only indicate them here as a subject | for our early attention. I never |havo been able to understand why the Board has not paid more attention to the representations made to it by thc Agency. The manager’s px-actice of consistently communicating with the chairman of the Board and Mr. Goodfellow without even informing the representatives of thc Board of his intention to do so caused an under-current of uneasiness. There could bo no “team work” in tho office under such conditions. There is a widespread feeling at Home that the administration of the Agency in London is not altogether impartial and that it is swayed to some extent by old trade associations. Tho appointment by the Board ol a big London firm a s its selling agents in the United States and Canada is quoted as a case in point. This was the occasion of a good deal of irritation to other sellers of our produce. I say definitely that equality of treatment to our customers does not exist.

The Board’s Official Organ. There can be no duobt, I think, that much harm has been done to the interests of the producers by the publication of the “Exporter” newspaper under thc auspices of the Board. There is a free Press in this country, which the whole world is commending, and surely this ought to be good enough for all of us. One of the large dairy companies in New Zealand had asked each of its agents to contribute £250 towards the institution of thc “Exporter,” and the paper is now being used to further the ideas and interests of individual members of the Boax-d. These are some of the personal matters wo should discuss, and it ig obvious wo should approach them without recriminations and with the single purpose of promoting the best interests of tho producers, whom we are here tf> represent and to serve. Mr. Coates Exonerated. I cannot conclude without expressing my own very high appreciation of the services rendered to the Board by the Prime Minister, the Rt. Hon. J. G. Coates, and thc Government’s representative at the London Agency Mr. Stronach Paterson. I have read reports of criticism levelled against Mr. Coates’s attitude towards the Board while in Ixindon by members of tho Board and others, which I should like to believe to be misrepresentation of the speakers’ words; but as they have. remained uncontradictcd that satisfaction is denied me. The truth of the matter, which can be verified by any member of witnesses, is that while in London Mr. Coates strove to the utmost to bring about a satisfactory settlement of the difficulties besetting the Agency and the Trade. He spared himself in nothing. He gave no thought to politics or popularity. The interests, of the producers were his one concern. The suggestion that he sought to undermine the statutory authority of the Board was simply an outrage upon truth and decency. .No one in tho circumstances could have borne himself with greater candour and propriety than the Prime Minister did. Mr. Paterson’s Atlf tudo.. ■ As for Mr. Paterson, tho Government's representative at the Agency, I speak with a very intimate knowledge of this gentleman’s, services when I saw they were invaluable, not only to tho Agency and the Board, but even more so to tho producers. He alway s was courteous and pre-' cisc and yet always insistent upon the rights of his position. I nave gathered since my return to New Zealand that some members of tho Board think It was the duty of Mr. Paterson to gay "Aye” when the “Agency” said “Aye,” and “No” when thc Agency said “No.’ Had that been the beginning and the end of his functions they might just as well have been performed by a junior clerk from the High Commissioner’s Office. Mr. Paterson took a voiy different view of his obligations and on occasions, as I remember, insisted upon certain courses being followed in order that he might supply' the Government with Information that w'as expected from him. Ho also thought it within his sphere to criticise fairly , severely certain expenditure which was not in the interests of the producers. Objection has been raised here, I understand, to the Government’s representative introducing a deputation from the importers and wholesalers to the Prime Minister while that gentleman was in London. Mr. Paterson was asked by tho members of the deputation to introduce them to Mr. Coates, and when he asked me for my opinion on the subject I told him I thought he was the px-oper person to perform the ceremony. I understand beyond introducing the deputation ho took no part in the proceedings. I was very sorry indeed to hear of his resignation. His business experience and understanding, his knowledge of the whole business of the Board and his proved integrity made him tho ideal man for the position he occupied, and whoever his successer may bo his services will bo much missed.