TRADE CLEARING HOUSE.

New Zealand Herald, Volume LVIII, Issue 17885, 13 September 1921, Page 6

TRADE CLEARING HOUSE.

METHOD OF MUTUAL HELP,

SUGGESTION TO MERCHANTS

BELIEF IN DEPRESSION. REDUCTION OF OVER-STOCKS. The establishment of a clearing house to raffke possible the exchange of surp'us stocks, with the. object of limiting unnecessary importing, was suggested by Mr. Robert A. Laidlaw as a means of obtaining relief from the present financial stringency, when addressing the members of the Rotary Club at the weekly luncheon in the Town Hall supper room yesterday. There was fc record attendance of 70 members, over which the president, the Hon George Fowlds, presided. Mr. Laidlaw spoke on the present trade depression, and in his opening remarks said thjit a study of trade conditions for the past 20 years, a period over which reliab e statistics were available, showed clearly that every trade hoom had been followed by a trad© depression, and every depression by corresponding activity, the one counterbalancing the other in either intensity or duration. This suggested the observation that the best that could be said of a trade slump was that it paved the way for another trads boom. After reviewing the abnormal conditions created by the war ami the consequent rise in prices. Mr. Laidlaw said that artificial conditions such as these were unnatural, and therefore unhealthy. Up healthy conditions gave disease the opportunity it wj; uniting tor, sasd the speaker, arid it had certainly thrived during the past five years. We might call it what we liked, inefficiency in U>» business man, go-slow in the workman, arid extravagance in the Government, ft amounted to the same thing. The mam fact-urer did not care how high his costs were; be could get ajiy price and any profit. The workman did not care what his ontnut was. There was sncfa a demand for labour that even the services of a go-slow man were better than none, and the Government did not care how much >t squandered, because the uncomplaining taxpayer s«emcd able to meet any demands made upon him. Heed for Greater Efficiency. # It w&p therefore imperative that attention should bo turned to an improvement in business efficiency, that the elimination of all waste in tima, effort, and material should bo sought. To this end no stag gestod improvement was. too email to merit careful consideration. Dealing with the principal aims of sound business, Mr. Laidlaw said the first essential was a satisfactory grass profit . which presupposed right buying. It was but waste of time to build a superstructure on any other foundation. The second essential was low working expenses, or at least worVing expenses which text & satisfactory margin of net profit, bat H VM quite possible that these might be right, asnd yet the business be a veiy unsatisfactory one. This naturally led to Use third important aim of sound business— many stock turnovers per annum. The fourth, a small amount, of outstanding accounts in proportion to sales, and the fifth —small fixed capital as against productive capital, with the final result of a high-net profit on the capital invested. " For the past foor or five years," continued the speaker, " stock turnovers ■have been forgotten. We bought what we could and when we cou d, for the two reasons that if we had not we might not have been able to get the goods when we wanted them, and becattse in any case surplus istocka were appreciating daily in value. To-day we are back on a buyer's market, where the buyer can dictate his own quantities and deliveries, and when we have liquidated our present stocks, we should watch .our stock turnovers as never before." Accumulation of Imports. ; While <;hey did not' want to be caught short of goods later on, said the speaker, the trouble in the meantime lay, and very eerious'y, too, in the opposite direc- „ taon. Bearing 1919 e-ir imports amounted to £130.000,0(30. but in 1920, when the ,-slnmp hit England and America. manufacturers them filled our back orders and Shipped bb £62.000 000 worth of goods, whi'e oui% exports fell by over so'; that our trade balance went to the bad to the extent of £40.000.000 in one year._ Now, when a merchant bought heavily in excess of his sa'es he became hard prensed for money, and the best way to relieve the situation was to stop buying and keep on se'ling. Owing to back orders, two and three years old, that were thought to have been cancelled, having come forward with duplicated orders for the same goods, hundreds of business houses were holding heavy overstocks of certain lines, while they were actually short m othpre. It was probab'y true that there were ovdr £?0 000 000 worth of such goods in New Zealand that the merchants holding them could readi'y do without. System of Mutual Actios. " This is no time to take what may appear to be & personal advantage, either by holding stocks against a possible shortage, or attempting to get in ahead by landing lower priced merchandise," said Mr. Laidlaw. "It world be better if merchants and retailers would get to•ether, estab ieh a clearing house with competent men in charge, covering soft goods, hardware, ctc. To this charing house business men would send full par ticulars of all surplus stocks on hand, and would at the same time furnish lists orf all lines i-equired, so that sa'es and transfers could be effected. Before placing an overseas indent for any large line, application would first be made to the officers in charee. who would try to make an arrangement on tV<e basis of* replacement values with some other firm which was • sti' 1 holdine stocks." In cr.nelusion. Mr. Laidlaw said there had b-en a-more or less unscientific endeavour to re-t fy the position by drastic price cutting, but it was doubtful whether the resulting demoralisation of the market had not more than offset any advantage of stock reduction There was nothing altruistic or Utopian about the " get-to-ether " method suggested. It was in the be*t interests not only of the merchant* and retail"'*, but of every citizen of the Domin on to have New Zealand's trade balance transferred to the ri?ht side of the 'edger so soon as possib'e bv importing as little and exnortrng as much as we could for this was the onlv way we cou'd eel re'ief from the present financial stringency.