CEMENT ALLEGATIONS

Poverty Bay Herald, Volume XLVII, Issue 15639, 5 October 1921, Page 5

CEMENT ALLEGATIONS

MINISTER JUSTIFIES AGREEMENT NEW ZEALAND PRICES LOWEST. (Front our Parliamentary Reporter.) WELLINGTON, this day. A. reply to the allegations by the member for Stratford regarding the alleged agreement- by tlie. New Zealand cement-‘companies to curtail the output and maintain the price, was given in the House by the Hon. E. P. Lee, Minister in charge of the Board of Trade. Mr. Lee contended that- the agreement was perfectly legal. He'denied that it resulted in raising prices, and in the course of his explanation he quoted a Jet ter from the managing director of tlie new Golden Bay Co., which made a personal al,legal ion against Mr. Masters, which (lie latter hotly denied. The Minister declared tliat many of Mr. Masters' statements were inaccurate, and his (‘■(inclusions and deductions ■from even accurate statements were, he thought-, worthy of challenge. He had not minced matters in referring either to the manufacturers or the Board of Trade.’ The speaker said he would first deal with' the period up to May last, when the agreement was made to close tlie Golden Buy works. Mr. Masters: You admit the agreement? The Minister: I am going to justify it. He went*'on to sav that apparently Mr. Masters had nothing critical to about the Board of Trade until after the agreement. -As for, price-fixing there was tin inquiry into the price of cement in September, ' 1918 which was fixed at £4 16s per ton, an increase of 21s on the pre-war pi ices. When the companies were selling at £2 3s per ton, _ they were making a dividend. Was this not peculiar, in view of the facts he intended to qiiote ? The Board of Trade decided to review the price of cement from time to time in accordance with the conditions. The price accordingly was reviewed by competent officers, who had no axe, to grind, and were not concerned in' cement sales and; distribution. The highest price reached was in January, 1921, when it was £9 13s 6d. which. >vas absolutely justified by the cost of production. CEMENT COMPANIES’ PROFITS. The Minister then examined the divi-dend-paying aspect of the New Zealand cement companies. Tlie Milburny Company paid 10 per cent, before the Board of Trade took charge, and continued to pay that dividend,, but it should be noted that this company dealt largely in' agricultural lime, which was a very remunerative business. The Golden Bay Company in 1918 paid 5 per cent., and again in 1919, but immediately afterwards the company was reconstructed, and for the years ended June 30, 1920 and 1921, their profits were insufficient to allow of a dividend, or of placing sufficient sums to reserve. ‘Mr. Masters: How’ much was the capital watered ? Mr. Lee: Not at all. - Referring to Wilson’s Portland Cement C-0., 110 >vent on - to say that, it- had paid no dividend since the amalgamation To March, 1920, but in the next year 5 per cent, was paid. . , Mr. Masters: How much was their capital watered? VICTORIAN CEMENT CONTROL. Mr. Lee went on to state that in Victoria the Fair Profits Board controlled the price of cement, and. in July, 1920, fixed the price at £6 3s for Victorian, and £7 19s for New/ South Wales. Further revisions brought the price oT-Victorian cement to £9, when the price in New Zealand was £7 17s 6d. The price of imported cement in New Zealand in July was £l6 11s 6d, dropping to £lO 11s 9d in December, while the price of New Zealand cement never got, beyond £9 13s 6d. A reduction of 36s per ton in the local price of cement, was alleged to have .been caused by •competition, of imported cement, etc. In December the Board of Trade got a- cable, stating that, cement was available from America at £l2. c.i.f.. also shipments in February and March to southern ports-nt £l2 10s, 6d. c.i.f.. the exchange being on four dollars’ basis. Thus the local cement was still much cheaper. Complaints came to the Board about the shortage of cement, with the result that the Board took over the system of rationing about the end of June, 1920, continuing until 1921. HO had to refuse permits to many members who urged that supplies he‘given to their districts. “Some members were particularly per-,-tinaeious, and,” said the Minister, looking at Mr. Masters. “I have my eye on one now: Taranaki did not like the restriction.” . Mr. Masters: For the restraint of trade. The Minister: They didn’t like to be restrained in the distribution. Members: Who, didn’t? Mr. Lee: The member for Stratford distributed part of it. 1 had to turn him down, and I am inclined to thinkhence these tears. * Mr. Masters: That’s childish. Mr. Lee then referred to the importation of cement to meet a shortage. New Zealand could have produced from its- own works ample cement for local requirements and export, and .there was a severe shortage due to the shortage of coai. It .required about’ 100,000 tons of coal to make’ 160,000 tons of cement, i but only f sufficient coal could be sup-1 plied’ for half that output, and even : what was available was irregular in supply. Then there was an enormous j increase in coal prices, and the public then had to put up with a shortage as' well as high prices, though cement was still higher in England, Canada, and Australia. This caused a curtailment of building, not because the Board of Trade gave assistance to an iniquitous combine; but because coal was scarce. The Government had had to pay up to £6 30s per- ton for coal to keep the Chelsea sugar works going. It had been said by Mr. Masters that the Golden Bay Cement Company was well established on a sound footing. Tho selling of the works to another company was nothing to do with the Board of Trade, which could not interfere with a- legitimate transaction. He had asked tho managing director of tho purchasing company to give his version of the matter. Accordingly, Mr. Luttrell had written to him fully, and he read this' communication to the House. Mr. Luttrell stated that immediately after closing down the Golden Bay cement works, Mr. Masters, who had been the selling agent of the company in Taranaki, informed mo in Wellington that if I did not make the position of his selling agency safe he intended to attack the company in the House. Mr. Masters: A deliberate lie. Mr. Wilford: You have no right to read such a document to tho House. i Mr. Leo went on to quote Mr. Lut- j troll's letter, which, replying to Mr. | Masters’ allegation that a number of i speculators got hold of the works, only ! putting in £II,OOO, declared this to he | incorrect. The members of the new company were responsible for an overdraft on December 22, 1920, to the extent- of £30,000, hut a further £SOOO was found to he needed, and was furnished again. On February 1, £3OOO was found, raising the overdraft, with accumulated interest to nearly £40,000. Thus at this stage the/ financial outlook of tlie Golden Bay Co. was anythin" but bright.,- and it- felt that under tne circumstances it was unable to compete successfully against other companies. One on other of two courses was open, either to increase the capital by £150,000, or remodel the whole works. Tho directors succeeded in obtaining £05,000 in promised capital, hut the financial

depi’ession came, and they were unable to secure the remainder. They were compelled to abandon this scheme. About, this period Mr. Elliott, chairman of Wilson’s Cement Co., informed Mr. Luttrell that they intended to reduce the. price of cement The position of Ihe Golden Bay Co. was explained to him, showing it. would involve closing down the works. Mr. Elliott was svn>iiathelic, and said that any assistance he could give to keep the works going would be forthcoming. “It then occurred to me,” continued Mr. Luttrell, “that, it might he arranged during the time of financial stress that other manufacturing companies could increase their output and handle our trade without detriment to flie public intya'est, and prevent the collapse of the company. I made that, suggestion to him, that we ■lose our works for twelve months, and receive from other companies, for temporarily handing over our trade, fis per ton by way of royalty. Several meet, ings and discussions were held. It was decided 1.0 pay 4s per ton, it being est imated this would pay debenture in-j terest, taxation, and the general upkeep 1 of the works during the period of idle-j ness.” _ j AIT. Lull veil's letter went on to state thitPhhe agreement was that at the, same time the selling price was being reduced by 36s per ton. Bui. for the agreement the works would have had to close down automatically.. Mr. Masters, as one of the company’s agents, was fully aware of the difficulties in, the way of disposing of its supplies, very tempting offers having been made to; agents, and Mr. Masters accepted some of them, sating cement at a reduced price on extended credit. The ATinister, having concluded reading the letter, went on to say thm it, was a proper business transaction lor Mr. Luttrell and his associates, who iequired cement in large quantities, to, .purchase a works. Would Air. Masters say that the agreement was illegal? Air. Masters:'l say it- is. immoral. The Alinister: I say it is neither illegal, immoral, n®r criminal. He went on to sav that if an agreement was in restraint, of trade it could not be upheld in Court, but a very high legal authority held that an agreement to divide, thy business and prevent competition was not illegal. Air. Wilford: I would like the Solici-tor-Geneva l’s opinion on that agreement. Air. Lee : That’s side-stepping. You know it. is the law to-day. He would, he said, take an opportunity of having a decision of the legal authority on this agreement, which was not illegal. Air. Masters: Did I say it was illegal? Air. Lee: You said it was criminal, and that would be illegal. (Laughter.) He went on to say that the illegality was not the establishment of a commercial trust, but of utilising it to charge monopoly prices. New Zealand’s Commercial Trusts Act did not cover cement. He regretted exceedingly the closing of the works. After this agreement was signed the price was still kept down. There was no combination to pus prices. There had been no increase in nrice, and there was plenty of cement. The price of imported cement was higher than local cement. A cable that day showed the Alelbourne price, local, and Norwegian cement £ll 8s per ton, and English £l2 12s. He intended to ask the Government to set up an impartial inquiry to thresh the matter out thor- _ oughly, and have,the Board of Trade’s' association with 6ement v prices and control thoroughly overhauled. This contract, which was said by Air. Alastevs to he illegal and in restraint of trade, would also he considered, to see whether il was improper- or criminal, and a variety of other things." Air. Masters, rising to make* a personal explanation at the close of the Minister’s speech, declared, in regard to Mr. Luttrell’s allegation, that lie lin'd l liven toned exposure unless his was secured, said : “T want to give that an 'absolute denial. I never discussed that matter with Air. Luttrell, and nothing about, the agreement, because Mr. Luttrell did not know I had it; and, further, lie would be the last man I would have told I had it. I never discussed anything with him on those lines. I give that., statement a cfefibe'rale denial. Further, I want to say I am not affected in any way at all, that I am selling cement belonging to Wilson’s, and it has not affected me financially.” “A CONFUSION OF ISSUES.” Air. Atmore (Nelson) characterised Mr. LeeV’Teply as a confusion of issnes. He had attacked the member for Stratford, who had revealed what he knew, and was inspired by a sense of public duty. It was so much worse for the law of the country that he should have to quote an authority ns old as 1885. * It was a hoary antiquity, and the peoplo who made it..,did not know" what was restraint of trade. It was a reflection that the law had not been brought up to date. In the speaker’s opinion a case against, the two companies still stood. ■Air. Atmore then dealt with the statement of Mr. Alasters that the Wilson Company could pay a dividend when the price of cement was £2 3s at the works, which statement had been refuted' by Air. Lee. The Minister had defended the company by stating that the price was £4 6s. - - -•“ ' L|i ' j : Mr. Lee: I said the selling price. I Air. Atmore: Well, you contradicted f Air. Alasters, and if you now say that you said the selling price, I cannot con-: gratulate you on the honesty of lyour 1 defence, tie went on to state that he had invoices in his hand that showed that the price at the .works, less discounts, was £2 Is, and after allowing, for 9s fid freights, the company * was making 100 per cent, profit. It was nothing short of profiteering, and it certainly justified an inquiry. Mr. Alassey: .You will get an impartial inquiry. Air. Atmore* said that the matter had created an uneasy feeling throughout the Dominion, and he was glad that, a Supreme Court Judge would be appoint. e I to preside over the tribunal. Ah’. Lee : That has not been stated.' Air. Atmore: The Premier intimated it across the House while the Minister was speaking. He asked whether an opinion had been obtained on the matter from any eminent barrister, but Mr. Lee did not answer him, Air. Wilford interjecting that perhaps be had got an opinion from some member, in the House. ! ... ... -i ... " • Dr Thacker: He thinks he is top hole himself. When the Alinister declined to be drawn. Air. Atmore added that it would have been easy to bolster the opinion of a lawyer, and that was what appeared to have been done. From the fact that the amount paid to the Golden Bay Company had enabled them to pay ■ll per cent, dividend, he contended that that was evidence that the price of cement was too high. It had certainly restrained the building of houses. Mr. Luttrell had been hitting below the belt in suggesting in his letter to the Alinister that the member for Stratford had brought up the matter because it affected him personally..