CEMENT COMMISSION.

Star (Christchurch), Issue 16573, 4 November 1921, Page 4

CEMENT COMMISSION.

MR MASTERS CROSSEXAMINED. (Per Press Association.) WELLINGTON, November 3. Replying; to Mr MacGregor Mr Ma*Jerssaid that on oath before the Commissionhe stood by everything he said bi his speeches in Parliament m regard to. his allegations. He reiterated Ins statement that the letter of Mr Luttrell referred to in the speech of the Minister of Industries and Commerce contained misrepresentations. Counsel: You said it was a deliberate lie Do you swear that? —Yes. Continuing, witness denied having told Luttrell that if he did not make his position as agent safe he would bring the matter up in Parliament. What he referred to' was the closing down of the works, and he believed xnat that was also on the mind of the secretary of the Golden Bay Company <Mr Doulton). The conversation took place in May, a few weeks after the agreement between the companies. The Solicitor-General : What did you have in your mind?—l have already told you quite intelligently. With eighty members in Parliament it was natural that the closing down of the works would be mentioned there. And Mr Luttrell assumed that unless you continued to hold the agency ■von would do it. He called you a blackmailer didn’t he?—No. That is a deliberate lie. What is the use of quibbling—l am not quibbling. It is not m3* habit You can’s bluff me. I am here to give mv opinions. As a high-minded representative of the people?—l’m doing what I think right. Witness read the agreement, he said before the conversation with Mr Luttrell. The Solicitor-General : You said in the House that the agreement was a most criminal transaction?—Any agreement which closes down production of cement, under which two companies pay £15,000, turn people out of work, force them to sell their homes at u loss ‘and send them through the country looking for work is immoral commercially. I knew that I would lose the agency, but if I had kept my mouth shut I would have continued getting cement from Wilson’s. I had everything to lose by opening up the matter. The Solicitbr-General : Purely on moral grounds, when you found Masters Ltd- could not get what they wanted?—l was not asking anything for Masters Ltd. When did you make up your mind that £1 16s per ton increase was not justified?—When I got certain information. From whom?—l am not prepared to say. Addressing his Honor, witness asked : Might I answer “ yes” or “ no ” to this ? His Honor: Yea. Witness said he received copies of the cost of production sheets of the Golden Bay Cement Company. Although questioned at great length by the Solicitor-General he refused to disclose the' source of his information or the date. He gave a bond of secrecy in regard to the matter, and if questioned for a week he would not divulge the name. Hi s informant, witness said, did not obtain similar information in regard to the Wilson Companv or Milburn Company. Witness in answer to further questions by the Solicitor-General, said he got the documents subsequent to May last. He could not give the actual date. The Solicitor-General : Do you expect anyone to believe you ? Who are the members of the cement trust you refer toP Witness: The Wilson, Milburn and Golden Bay Companies. You say the Board of Trade assisted it by allowing the price to be raised and not taking action about the agreement?—Yes, by reason of the fact that the Milburn Company did not take advantage of the higher price, and in view of the profit of £15,000. They paid a per cent dividend and 2£ per cent bonus. If thev had accepted the rise then on the basis of allocation of stocks of 25,000 tons per annum they would have made another £14,000. That fact showed that the increased price was not justified. Do you suggest that the Board of Trade is corrupt?—l do not say that. Or that they were bribed, as you say the companies were ?—I do not suggest that. Nothing is further from my thought*. Mr M’ Donald (the president) is above suspicion?—l should certainly say so, but it is his business to justify an increase in price. I understand that as a member of the Taranaki Producers’ Committee you, accepted your share in the rise ?—Distributors did not fix the price. His Honor : Did you get the benefit of it?—We had no choice, because the price was fixed by the companyIn reply to Mr Myers, the witness said he did not pay for confidential information received from an employee of the company. He had no idea of causing a political party sensation. He denied that there wa s a shortage of New Zealand cement in January, 1921, as two thousand tons were sent to Taranaki within a few days of the granting of the increased price. He was not surprised at anything the Government might do in commercial transaction*. In reply to Mr White, witness said he regarded the Milburn Company as an honest concern, but at the time he made the statement in Parliament he did not know whether the company had taken full advantage of the price or not. He believed 10 per cent to be fair manufacturing profit for the Milburn Company, which had largely increased it a profits since 1918. Itr profit increased 50 per cent in one year. The evidence of Donald Gordon Johnston, secretary of the Omahaka Iron Company', as to purchase of cement closed the case for Mr Masters. In opening the case for the defence the Solicitor-General said that so far as the Board of Trade was concerned the position had developed from a personal grievance on the part of Mr Masters, a country storekeeper,' which he bottled up for Borne months. It was fomented by political party spirit and developed into a legal difficulty in which the companies were charged with criminal practices and the Board of Trade was charged with complicity. Finally it involved a serious allegation of impropriety on the part of a Government Department and responsible people. Counsel denied that any evidence had been adduced showing that a cement ccmbme was formed to exploit the , *i C ' cornm « ?nt «d on the delay of Mr Master* in entering the witness oox and on his obtaining information from a tainted source. It was a painful. pitiful sight to see a member of Parliament enter the witness box and evade telling the truth, sheltering behind some unknown man. Mr W. G. M’Donald, chairman of the Board of Trade, submitted a statement on oath dealing with the reasons for fixing the price at £4 18a in 1918

when the Australian price was £4 19s and increased costs were incurred from time to time subsequent to July. 1919. He reviewed at length the position of all companies at oversea prices He contended that the reasonableness of the board’s prices .was illustrated by the fact that prices per ton, f.o.b , London and Liverpool, paid for cement of British manufacture imported into New Zealand was between £lO Is 2d per ton and £l6 12s 6d per ton between the months of July and December 1920. Mr M’Donald also referred in detail to shortage of coal and the adoption and extension of the allocation system. Had the companies been allowed a free market prices much in excess of those sanctioned by the board would have been available to'them. Ho accepted personally sole responsibility for the board’s granting an increase of 36s per ton to the Golden Bay and Wilson’s companies. Mr Wilson; his colleague, was a debenture holder in one of the companies. For that reason witness considered it desirable that he should take an active part.hy deal ing with the applicatons. One of the reasons for granting the increase was that the Golden Bay Company needed considerable expenditure for repairs to the works. Wilson’s company, ifi support of their application showed increased costs since the date of the last increase of 11s 7d per ton. Mr M’Donald submitted a return showing that cement imported from 1920 to May 1921 totalled 90,000 tons, the landed cost ranging up tof £ls per ton. The companies advised at a conference on December 10 that; an increase of 36s per ton had been approved, to take effect from January 1, 1921, making the Wellington retail price £9 13s 6d, equivalent to £7 10s per ton at Tarakohe. After the close of Wilson’s company’s financial year an investigaion of their accounts by the board’s accountant showed that the result of the year’s trading at prices approved by the board, including three months at £9 13s 6d Wellington, had not produced unreasonable profits. The balance sheet of the Golden Bay Company for the year ended .June 30, 1921 showed that the financial results justified the increased price allowed. The agreement between the companies was the result of a drop in the demand for cement in New Zealand, and as the outlook was anything but bright for the cement industry it was absolutely necessary that the output in New Zealand should be restricted, as it was in excess of what the public could absorb. He was compelled to admit that it was necessary that cement producers should curtail operations, the only other course being that all the companies should produce at the normal rate, with the result that in a short space of time the wholei of their stores would be loaded. The companies then must have ceased operations until they were able to reduce stocks. They could only run intermittently at considerably increased cost. The best method in the public interest appeared to him to be that actually adopted by the companies that the works with the highest cost of production should cease operations, thereby allowing the other companies to continue to produce at the normal capacity. As a return foi avoidance of increase in cost of production this made possible the two companies contributed to the Golden Bay Company on the basis of sales a sum sufficient to enable that company to meet the financial negotiations and maintain its works and plant. Almost simultaneously with the execution of this agreement the price of cement was reduced from £9 13s 6d to £7 17s 6d per ton, Wellington. Under these circumstances it was not considered that any action under the Board of Trade Act was necessary or desirable. The inquiry adjourned till to-morrow.