RESONABLE PROFITS.

Rangitikei Advocate and Manawatu Argus, Volume XLV, Issue 12042, 1 May 1920, Page 8

RESONABLE PROFITS.

THE'TRIBUN.AL'S RULING. A PERCENTAGE ON INVOICE PRICE. The Board of Trade haa ruled that 6 *a reasonable profit," within the meaning of the anti-profiteering law, mufit be calculated on the actual cost of the goods to the retailer, and not upon the replacement costAnswering a question put by a newspaper reporter on Thursday, 1 the chairman of the Wellington tribunal Mr C M Luke, said his tribunal upheld this interpretation of the law. "The margin of profit should be calculated on the invoice cost," said Mr Luke. "Many retailers had -large .stocks when ths war broke out Prices went up, anl the public was -required to nay there increased prices on goods that had been bought at low prices. We are holding now to the principle that a reasonable profit on the actual invoice cost is the right thing, "If traders expect the sam|! margin of profit en the replacement value that they had on stocks held prior to the rise, then that is exDioitation of the community. In my opinion it is unreasonable for the trader to claim the same margin of profit on greatly increased invoice values. Some of the balance sheets examined by the tribunal disclose to us the fact that the net actual profit is considerably higher than in 1914, although the quantity of goods handled has not increased. The increased profit is due to the taking of the old margin of profit on the increased value of the goods. I say that is not fair to the community, and that if business men, in the face of the present exceedingly high cost of living, are not prepared to make sacrifices our social fabric will break down."

Mr Luke mentioned the argument advance:! by some retailers that if they sold goods on the basis of the old invoice price after a rise has taken place, their competitors will buy fehein and then sell at the new price. He did not think the suggestion need be considered very seriously. Circumstances might make it profitable for a retailer or wholesaler to buy at any old retail price frptn a shop which carried a stock of low priced goods But a retailer holding such a stock could protect his own customers if he wished to do so. He would not be entitled to extract from them an extra profit by charging the new prices on the old goods.