A CEMENT COMBINE

Otago Witness, Issue 3525, 4 October 1921, Page 6

A CEMENT COMBINE

ALLEGATION IN PARLIAMENT. INQUIRY ASKED FOR. (Fboxi Ocb Own Correspondent.) WELLINGTON. September 29. Serious allegations regarding trie methods adopted by t ho cement companies to restrict competition were made by Mr R. Masters (.Stratford) during his speech this afternoon. I am going to 1 -»y on the (Government the whole responsibility in regard to the want of competition and hig.i prices ruling at the present time, said Mr Masters. At the outset the Government is primarily to blame foi the whole thing. The Minister in charge of the Hoard of r i ra<!e, he proceeded, had sa i that there was ample provision, and this still exile 1 for stopping profiteering. He thought he could prove that ther*' was ample need f» r action. Ho intended t f > refer to the Milburn Cement Y\’orks. J lieso works were ous to develop the industries of the country. After years of hard >• ecgling against great difficulties they got on to a veiy sound footing. and the venture proved a financial stuv?e?* The works we e recently purchased r r i - a: ate of speculators. He did not Visme t):/» shareholders for sell.og at a ‘' i’:J zji-x -- works would be developed, frr-sb /;'j* put in, and new machinery instahed, snel that r heaper cement would be c The company had a capital rf i'AA .COA and a debenture i-sue of £25.000. r i he syndicate paid a bonus ot £30,000 for the c* f-upany’s int *rest? The promoters look £IO,OOO and put in a paltrv £II,OOO. making a capital of £136,000.’ Things v.Riit along vcry nh.vly for a short wliile. Then came tin* opportunity, with the heavy demand for cement, of fleecing the public, and ihe companies approached the Hoard of Trade of all p.- . .!••. The board drew attention to changes in the prices - f cement in the past few year-. In 1918 it was £3 3- at the works: in 1919 it was £3 17s; in the middle of 1920 the price had risen t ! £6 0- 6d. In spite of these heavy rises i : :<* companies approached the Hoard of diode fer a further increase. Mr Wi!fc;d: Whai -•unpanies were tliese? «h.-Men Hay In .-j,ce of the heavy rises ♦ .» r]'c mi-’die - f 1920. continued Mr . to a t . £7 10 6d. A p* v ttiiar position wae fhV rompamo* were dividend. Tile < of lab ’ r i;,d material had not. risen to an extent th .« would warrant, an inC ape in pj j.'-e from £2 3s to £7 10- 6d. Onn of tlie «-ompanie i was opposed to the T did not wa? it. becaua it ’ ■ if • ■ yet • • te of that the Hoard of T.ade allowed the neoph : ine to i (ho price by 30s. Mr Musters quoted from th re] ’ and ? .3 mce sheet of the Wilsor bomp-uiy »"n 1920. wh-m the price was £7 If 6d •• h stated that the sum availnMo f r diMrihuiinn was £47.000. _ After the pa vrneiit of £3 3900 in land and income t - •' ; reserve. end allowing £26.000 f r depreciation they

paid this huge amount of profit, and paid i dividend of 5 per cent, on watered stock, in spite of this the board allowed the price to be increased by 30s. What happened then ? The immediate effect: was to bring cement from all parts of the world, the market being flooded. The local works thus ran short of orders. The Government imported a large amount of cement, and lost money, but these people had to have their rises. Then this position canto about: The companies then voluntarily dropped the price by 39s 6d a ton. That proved to his mind that the Board of Ira.de had not given the matter that consideration which it should have done before allowing the increase. Thi- decrease was very sc: ions from the point of view of the compan.es. They held a meeting and came to an agreement. The Board of Trade knew all about this agreement and so did the Government. I will read the agreement. It starts off: An agiecment between the Golden Bay Comem Company, Ltd., Wilson’s (N.Z.) Portland Cement Company, J,td., and the Wilburn Lime and Cement Company, Ltd. Whereas the contracting panties are of opinion that the demand for cement in New Zealand is likely for some months to be considerably less than the supplies that are at present being manufactured by the contracting parties, and where a,s the contracting parties desire to enter into an arrangement whereby the said parties may derive the most satisfactory results possible and hate ..greed to finer into this agreement:. (1) The Golden Bay Cement Company shall close down the manufacture of its cement on the 14th day of May, 1921. or, as near thereto as possible, in order to clear out its present stock of clinker. (2) 'j he Golden Bay Cement < 'ouiputiy shall have one month from the above dale to sell the stock of cement which may be at its works or in the hands of its agents. (3) From and after (he 14th day of June. 1921. the Golden Bay < enn-nt rummany shall not liiaiiufaei ure cement, for a period of 12 months, unless the other computin' ■ give iiuiiee of ili'o' i u i .*,.: i on to teriaaiiiute this cgiemenl under the powers hereinafter contained. “! want to ask the Minister for Trade if this is lies! r.iitit ot Hade or not," onitinued Mr Masters. It was a clear o 1 ot restraint of trade. To his mind it was a criminal tiling when the Covi-rmmnl knee, (ami it k ne ■ this ;tgi ■ meilt was in ■ lion). it had taken no action m thescandalous commerced Mi of the an rooment : (4) The Miiburn Lime m,l Cement Company and the A i! on - ' Fortian.i Cement Company agree ilia! during the said peril of 1 t will up to a combined aiinuai on; pul o' 60,000 ions: and if the outpui of the said companies is over 60,000 tons, the said companies will pay to the Golden Bay Cement Company t!ie sum of 2. per Inn on the amount by which the output exceeds 60,000 tons pet

The annual consumption of cement, said Mr Masters, appro.’.lied 90,000 tons. Those two companies were paying £15.000 per annum to the Golden Bay Company to close down its works, and keep them closed for 12 months. The people were paying the £15,000, and he considered it the grossest piece of profiteering ever perpetrated in this country. It was 11 per cent, on the capita! of the dSfrnpany, including its watered stock, to keep the works closed. For what object, but to keep the price lip and io stifle competition. It ■ laud. At the present time the iron and at .’el work.- -it Onalnika. which were just , being established, were in need of cement. 1 They were within 10 miles of the Golden Bay work.-., but they had to .-end to Auckland for the cement. They would be loaded : with the capital cost of the extra charges for alt time, owing to methods like this. | it was interfering with the building of ! houses all over New Zealand. it was ! keeping men out of work, being one of the ’ causes of unemployment. It wa.- a trust and. combine in operation, it war not the ■ only one. but lie happened to know some- : thing of this one. The Government was | building up prices against itself. Public j works could not go on for want of cement. | Proceeding with his ('(notation of tho agreei merit. Mr Musi era rend: - j (5* The Milburn Company and Wilson’s (N.Z.) Company shall be entitled, after I this agreem.-ni has been in operation ! for three months. To terminate the said ! agreement by giving the Golden Buy i Company three months’ no; ice in w riting I of their intention to do so. While this i agreement: shall be in operation the Gol- | den Ray Company shall lake no steps | toward- re-organising its capital, or imj Board of : i ide again if this is restraint i If h is not restt lint of trade v .■ want anj Of!,, r \. ; : ' I It S , " lb r eeding to the eight h clause, Mr M i -■ - (non ; • ]', A- ii" . -ci tiic Mi bum ( • a: pa • \ | and the ’ • b. :■ N Z Company . the oling i poreotiMge to v> hteh the -aid < ■ n nios i renc ! foV \ ' 1 w i I - üb.3 Comieiny 3 id' other pi \ i :on s of > It a a. ’ "in, i. ■ ■ iii,:', in minion w ■ id hive no: io • ; h.i o.oiv , ini’'' - That had cr m i o' bon throiii-d ” 1: wa- known 1„. of the : lent cot nil • ill A:ra hisiu Ilia’ had been -m -le 1 i:: N ,",h Am k! nd h ”1 failed. b was < . .. b - • exist !k M ■ ■ when . ili,-. only one left. If e Mii! urn Ci mwoitid be a! bed ‘ Not . m come to t ion w ith the wiiii: i he -ignat' u'ie- io this docii in. ni.said Mr piasters. “The signali>rii s v. me C. G. Whin , of tho NTildireetoi of the G- Men Bay Company, and

George Elliot, on behalf of the Wilson Company.” Referring to Mr George Elliot. Mr Masters said that he was appointed a trade commissioner to go to Samoa at the time of the Parliamentary visit, and asked if he was going to develop the industries of Samoa in the way in which he had developed the cement industry iu New Zealand. He was also Government nominee on the directorate of the Bank of New Zealand. in tlkii capacity he should be looked to to develop the industries of New 7j( aland and not to do his best, to stifle them. A man who could bo a party to such a transaction had no right to be a Government nominee on the board of directors of the Bank of Now Zealand. -Mr Masters said he bad stated a case stong enough to demand a committee of the House to inquire into the whole position. I he Minister of Agriculture, who followed Mr Musters, said that the questions raised were a matter for his colleague, the Minister for Industries and Commerce, who would deal with it when his turn came. Personally, he would pass no judgment, for he was absolutely destitute of the facts, lie assumed that Mr Masters was not insisting that any rncmbois; of that side of the 1 louse was implicated. Mr Masters interjected: Not personally implicated. Mr No-worthy said that lie was glad of tiiar. because cement had cost the one side of the House as much as the other.