WHAT IS FAIR PROFIT.

Taranaki Daily News, 29 September 1920, Page 4

WHAT IS FAIR PROFIT.

—~ ■ A ! THE REPLACEMENT JTHEOBX ' INTERESTING LEGAkMOOMEHT. By Tslegriph.—PreM AisOtilUMl. Wellington, Last JRght. At the Appeal Court in the "Big Bin" case Sir John Findlay said that, ll>ng experience had shown traders what prices they must charge 10 that in a series of years their bonnes* might «how a profit and that was the maricet or re> placement price. The Crown's case ig«, nored (1) any reference to tht market price, (2) any reference to true value ij£ the exchange of goods Sold, (4) tkedifference between the skill and ability of' different merchants in organising and Arranging their btisinest. The Crown's argument would deprive an able manager of the extra profit lie would make over what a poor manager could make. Free competition was the best and only reli« able regulator of price#. - <■ Mr. C. P. Skerrett, KG., said it was not the object of these p™™<"»u f ion» to attack the scheme of. the fixation of prices. No attack was mad* on the reasonableness of profits made by manufacturers, nor on the rate of profit of a wholesaler and retailer where goods are bought and sold on a basis of one price schedule. No attack was made qa the ground that the price to the public in April, 1920, viz., 25b., was an iunrea< ' sonably high price on the basis of the, March, 1920, price schedule. The subject of attack was merely that 40 clocks were purchased before tbe eoming into force of the March schedule. Three ; things might be said as to the' construe* tion of Section 32 of the Board of Trade Act: (1) It applied only to goods sold in the course of trade or business; (2) ' there was nothing in the section which prevented all the circumstances of a case being considered. Taking all the cir- * cumstances into consideration it WM reasonable to sell the old stocks under the new and higher schedule price. A reasonable course of business required a ; higher'rate of profit on a few articles when the price is being raised, owi2lg : to the increased cost of production. As to the cost of replacement tfcMfy, he submitted three propositions: (I),' That a magistrate was entitled to told that it was sound business practise; (8) that capital is lost if goods which have gone up in price are sold at the utoal margin of profit on the cost price; (3) conversely, when goods in stock have fallen' in price, they must be sold at a loss, or at a reduced rate of profit. The Solicitor-General, in reply, tub* mitted that the statute Wae passed for the benefit of the consumer, and not,of the seller. The arguments of the other aide with regard'to the replacement theory were fallacious. The only way to estimate profit was to compare the Iniying and galling prices, and the sale at 25s of an article which only coet 12s wm clearly an unreasonable sale profit. The case is still'unfinished.