PRICE OF SHOES.

Wanganui Herald, Volume LIII, Issue 160732, 19 August 1920, Page 5

PRICE OF SHOES.

AUCKLAND PROFITEERING CASE. MAGISTRATE’S JUDGMENT. (Per United 'Press Association.) AUCKLAND, August 18. In giving judgment against Dudley’s Ltd., on a charge of profiteering, Mr Wilson, S.M., said the facts which are proved or admitted are that on the date mentioned, April 1, the defendant sold one pair of black suede court shoes (lady’s) for the sum of £3 7/6, which it is claimed by the informant was an unreasonably high price. The defendant landed the shoes into the shop at Auckland at a cost of £1 18/3. He was called upon by the Prices Investigation Tribunal to justify the price charged, and on 10th May, 1920, the secretary and working manager of the defendant, Mr Goldsmith, wrote to the secretary of the tribunal, setting out that the price was made up as follows:—Landed cost, £1 18/3, overhead charges 19/2, added on the ground that the shoe was a fashionable one and might have to be sold at a loss, 4/6 added on the ground that the shoes had been purchased at a cost lower than that ruling at the time of pricing 5/7, total £3 7/6. Mr Goldsmith’s evidence was that the line of shoes from which the particular shoe was sold had only been a few days in stock,’ and that on the day on which this shoe was sold he had sold three pairs of the same shoes to one customer. In his opinion, if he imported direct from the maker, instead of buying from a local warehouse, his firm was entitled to add from 5 per cent, to 10 per cent, extra in pricing the goods. It seems clear that the shoe in respect of the sale of which the charge is laid was of a very fashionable type, and that there was more risk in dealing with such types than ia dealing in what one may call everyday lines: This being so, I think it reasonable that the dealer should have such higher price as will reasonably compensate him for his risk. I have to consider whether the price charged by the defendant in this instance goes beyond that reasonable figure. Taking all the evidence, I have come to the conclusion that it does. The defendant admittedly caters for high-class trade, that is, its customers are people who buy fashionable goods. Admittedly there is risk in such business, and the question arises as to the degree of risk and its compensation. It was urged upon mo by the defendant’s counsel that. I must have regard only to the particular transaction involved in the charge, that I should not consider the whole of the year’s dealings, in coming to a conclusion as to whether in this particular instance the price charged was unreasonably high. I do not see, however, how I am to gauge the risk unless I do regard the whole of the year’s transactions. On the face of it, I have no hesitation in saying that the charge of £3 7/6 for an article which is landed in the defendant’s place of business at a cost of £1 18/3 is in my opinion unreasonably high. The defendant contends that the shoe is a risky article to deal in, and that in common with shoes of like fashionable and extreme nature it should bear the additions which he has placed upon it. In concluding, I feel that I am entitled to look to the last balance of the defendant’s business and seek there evidence as to iwhcthcr or not dealing in'goods of this nature entails such a risk as would justify' the pries charged. It seems that this gives the best evidence which can bo had. The balance sheet for the year ending March 31st, 1920, shows that the defendant company, which was incorporated in May, 1913, and which is a private company (in which the managing director holds the great majority of the shares) has a capital of £SOOO. During the year covered by the balance sheet produced a nett profit was made of £3931, and this after allowing for a. salary to the managing director of £SOO, in addition to the costs of running the business. The result of seven years’ trading is that the defendant- company, after paying a dividend of 2 per cent, on its capital and a yearly salary of £SOO to the managing director, has still its capital of £SOOO intact, and-in addition to that a sum of £10,012 of accumulated profit. I consider it is impossible for me to come to any other conclusion but that the defendant could have sold the shoe in question at a considerably lower price and yet have received a reasonable commercial profit on the transaction. In considering the evidence, I have looked for some indication that the high prices charged in respect of some lines would be applied in alleviation of the cost of goods in more general use. Had the defendant been able to show that to be the fact, I should have considered it a relevant factor in determining whether the sale in question was made at an unreasonably high price. That, however, does not appear on the evidence given by Mr Goldsmith.” In conclusion the Magistrate stated that in his opinion an offence had been committed. The fact that the defendant’s business was of a special nature had to be taken into account. Had it concerned goods required by the ordinary run of buyers he should have felt obliged to impose a very heavy penalty. In the circumstances the defendant company would be fined £75 and £7 7/- costs. At the request of Mr McVeagh, for the defendant, to fix security for an appeal on general grounds, his Worship fixed the amount at £IOO.