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Friday, 22 June 1906


Mr HARPER (Mernda) . - I desire to place before the Government and the House my view as to the character and scope of this measure. I disclaim any intention of making what I may term a political speech. Inasmuch as the House has apparently decided to accept the principle of the measure by passing its second, reading, I feel greater freedom in expressing my personal opinions, which differ from those entertained by many honorable members on both sides. I have given .some consideration to this question, and as I have had a long business experience, which enables me to form some definite opinions as to how the measure is likely to affect trade and commerce, I feel that it is my duty to lay my views before the House. I do not represent any organized body, nor have I received any communication from the Chamber of Commerce, the Manufacturers' Association, or the Employers' Union. I shall deal with this question entirely in the light of my own knowledge. I speak as a protectionist and a supporter of the Government, and, although my views may differ from those of Ministers, I do not attribute to them any intention to injure the best interests of the country. I take it that their object is a legitimate one, and that they consider that such legislation is necessary. I think it is rather unfortunate that this measure should have been introduced at the present juncture. The Bill will be far-reaching in its character, and will afford the traducers of this country, who are misrepresenting it at every turn, further opportunities for making misleading statements as to the scope and character of our Federal legislation. It is to be regretted that, at a time when we are doing all we can to remove the stigma that is now resting upon us, as the result of a hurricane of misrepresentation, a measure of this kind should have been brought forward. At the same time, I admit that if the Government felt that they were being urged on by a great public necessity it was their clear duty to introduce the Bill. At this stage I would ask whence the necessity arises for the proposed legislation. The objects of the .Government are, first, to prevent what may be termed predatory competition directed against industries which are established1, or may be established in this country, and, in the second place, to prevent imposition upon the public by the operations of associated capital. I assume that it is not desired to interfere in any way with ordinary trade operations, or with those legitimate combinations which are more or less necessary in all branches of business. I would ask honorable members to .consider the circumstances, of this country, and the representations which have been made with regard to the operations of combinations and trusts. One of the reasons advanced for the introduction of the Bill is the alarm that is felt that we shall be raided by certain formidable foreign trusts, and that our industries will suffer. One particular industry has been adverted to by the Minister of Trade and Customs, but I do not intend to enter upon any criticism of the harvester trust or the Sunshine Harvester Company. I shall merely refer to them by way of illustration. The primary reason for the introduction of the measure is the apprehension that certain foreign trusts of great financial power and ability may enter this country, and, by predatory attacks upon local competitors, destroy or coerce them so as to establish practical monopolies. Incidentally the question has arisen of the possible creation in Australia of similar trusts or combinations of capital. During the recess - knowing that this matter was to engage our attention - I devoted myself to a somewhat extensive inquiry into the position of the so-called trusts which exist in the United States. The extent of the literature upon both sides of this question is surprising, and I confess that to me it was somewhat confusing at first. But having obtained from various sources the latest publications dealing with the matter, and having read and considered them with a perfectly open mind, the conviction was borne in upon me - and last night the honorable member for Echuca also emphasised the circumstance which had come under his own observation during his recent visit to America - that the backbone of the trust system in that country is to be found in the control which certain trusts have obtained over the means of transportation. I think I may be permitted, without trespassing too much upon the patience of the House, to allude briefly to the growth of the great Standard Oil trust, which is typical of a certain number - although by no means of all - of the trusts in America. After I have given a resume of its rise, its progress, and, in my opinion, the main cause of its success, I shall endeavour to apply the principle of the illustration to our present circumstances. The trust was originally formed by Mr. Rockefeller at a time when, owing to want of organization in the trade, and to the keen competition' which existed between various producers, the oil industry, within a few years of the discovery of the use of petroleum for lighting purposes, had been reduced to such a position that nearly every one connected with it was being ruined. The story of its origin and development is told in Mies Tarbell's History of the Standard Oil Company, a most interesting book, which I would commend to the attention of honorable members. Mr. Rockefeller is one of the most capable men of business that the world has produced. Had his abilities been devoted to the military profession he would undoubtedly have been a great general. He saw that the only possible way in which to put the oil industry upon a proper basis was by uniting a number of the competing establishments, comprising some of those which were in the lead both from the point of view of the quality of the article they produced and from the extent of their operations. Having united a number of these, under the name of the Standard Oil Company, he set to work to deal with the difficulties of the position upon lines which, were consistently pursued until recent legislation interfered with them. By this union of interests the Standard company became by far the largest "shipper " by "the railways, as they term it in America, and Mr. Rockefeller determined that he would exact from the railways .certain rebates or preferential terms. From his stand-point the position he took up was a reasonable one. At first there were two competing railways, and afterwards four, all of which naturally desired to get hold of the great trade in the carriage of petroleum oil. As a result, they immediately began to compete with each other to obtain the large and continuous shipments produced by this powerful company. The natural result was that, in the course of time, Mr. Rockefeller was able to make absolutely his own terms with the railways. He waa in a position to offer them an enormous quantity of oil - some 60,000 barrels per day - which enabled the railway companies to make up daily freight trains to run right through to New York, and to bring their trucks back within ten days, instead of thirty days. This enabled the railways to make a large saving in the cost of carriage of the Standard company's consignments, 'as compared with those of small shippers, and Mr. Rockefeller claimed the benefit in the form of a differential rate. At first, Mr. Rockefeller said to the railways : " To any shipper who ships as much oil as we do you are at liberty to accord the same rate as we pay, but no concession must be allowed to any smaller shipper." He well knew that no other single shipper could comply with this condition. Later on, Mr. Rockefeller not only succeeded in getting heavy rebates for his own company, but he exacted from the railway companies the payment to his company of the difference between what the Standard company paid and what was paid by other people on their consignments. Upon the huge quantities of oil that were shipped the profits from these rebates were enormous. Subsequently, on the establishment of pipe-lines, which to a considerable extent superseded the railways as a means of transportation, the Standard company, by most extraordinary and clever manipulation, secured exclusive control of them, and the oil business was theirs. It is through the control of the means of transportation that the Standard Oil Trust, able as are its managers - Vanderbilt, who was no mean judge, and who wast president of one of the railway companies with whom they dealt, said that its managers were the smartest men he had ever come across, and were much too smart for him - occupies the position it does to day. The same remark is applicable' to the methods of the beef trust. That trust secured possession of all the meat trucks - in fact, it owned them - and by an arrangement which it made with the railways it was enabled to get its trucks upon the various lines, and to delay or run off all others. That is the secret of the strength of these organizations, and some others. In passing, I may say that the term " trust " is one that is very much misused. It is true that at first many of the American combines, such as the Standard Oil Company, were "trusts." The individual companies composing them, while retaining their separate identity, surrendered the control of their businesses to trustees, to whom the stock of the separate concerns was transferred in exchange for trustees' certificates. Eventually, the law courts having declared this mode of conducting the business of corporations to be illegal, it was abandoned. Now, however, with that misuse of language which seems to be one of the characteristics of the day, the word "trust" is often applied to any concern which has attained large dimensions. Owing to the success of the Standard Oil Company and others), the trust idea caught on in America, and all sorts of industrial combinations have been formed. The company promoter and the stock-jobber came into the field, just as they did in the boom time here, and just as they have done many a time in mining matters. The company promoter approaches the proprietors of some of the larger concerns engaged in the production of a commodity, and points out the advantage of combining their undertakings, and so secure the advantages of large production and the lessening of competition, in order to improve their profits. The company promoter, having secured their adhesion to his plan, arranges the formation of a new company to purchase the different businesses concerned at prices satisfactory to the owners, and generally much in excess of their intrinsic value. In exchange for their businesses1 they obtain bonds and share stock of the new company, the promoter taking care to be well provided for by a large premium, which is added to the already greatly inflated stock of the company. The cessation of competition for x time enables the combine to make large profits and pay high dividends. The shares and stock are consequently enhanced in value, and the holders are enabled to pass their stock on to the investing public. By the time new competitors, generally better equipped than the combined company, are able to enter the competitive field, the original holders of the stock have cleared out, and collapse ensues, to the disappointment and disgust of the new shareholders. Thus a vast number of so-called trusts were formed, not with the intention of destroying any industry, but merely with a view to making money out of their formation. There are in America three kinds of combined organizations. There isi, first, the trust which, by the control of the means of transportation, makes large profits; then there are the combines, which are stock-jobbing concerns, and have the seeds of their dissolution in them, from over-capitalization from their inception j and, finally, there are the amalgamations of firms or companies arranged as the result of business acumen, to secure increased output and the legitimate advantages and savings of large as against small production. The last class, I take it, ought not to be interfered with. The second class will pass away. An illustration of the danger which, besets the overcapitalized combine is referred! to in Professor Ripley's book, Trusts, Pools, and Corporations, page 462 -

Early in 1893 the lead trust owned all the establishments in the country except two. In 1894 there were in existence independent plants producing as large a product as the whole trust. The trust had a capitalization of $30,000,000, and the independent companies employed a capital of only $2,000,000. Yet the $2,000,000 concern was in a position to turn out as much lead as the $30,000,000 concern.

This class of so-called trusts are purely stock- jobbing concerns, which come to grief because they are over-.capitalized. People have been swindled, and the proper course would have been to deal with the promoters of those concerns. That I am correct in what I have said concerning them is proved by the fact that last year no less than forty-four of these amalgamations went into the hands of the receiver. After they get into the hands of the receiver, the promoters of these over-capitalized concerns may buy them back for very much less than the capital they represent. So far as predatory combinations of .capital, like the Standard' Oil Company, which are really the combinations to be feared, are concerned, they could not exist here, because we have State-owned railways, and they would be unable to control the means of transportation. Because certain things have happened in America in totally different circumstances, it does seem to me to be a pity that we should be asked to legislate in a panic-stricken fashion, as if we were in danger of having the same things here. The Minister gave some instances in support of his fears, but although I am in touch with commerce, I confess that* I have not heard of any of the dreadful things to which the honorable gentleman alluded. If in this country we maintain our present attitude with regard to the means of transportation, and our railways are conducted by the States on business lines, so that every one complying with business conditions shall be given the same opportunity, the successful existence of a huge combine for any length of time is a matter of impossibility. That I am right in my view that' control of the means of transportation is the main cause of the success of these great combinations is shown in Miss Tarbell's History of the Standard Oil Company. As early as 1874 the Windom Committee dealt with this evil, and at page 168 of Vol. I. of Miss Tarbell's work I find that so serious did the Windom Committee consider the situation that they made the following radical recommendations: -

The only means of securing and maintaining reliable and effective competition between railways is through National or State ownership, or control, of one or more lines which, being unable to enter into combination, will serve as a regulation of other lines.

One or more double-track freight railways honestly and thoroughly constructed, owned or controlled by the Government, and operated at a low rate of speed, would doubtless be able to carry at a much less cost than can be done under the present system of operating fast and slow trains on the same road ; and being incapable of entering into combinations would no doubt serve as a very valuable regulator of existing railroads within the range of their in. fluence.

I could give many other illustrations showing the correctness of that position. After many attempts to meet the difficulty, the Sherman Act was passed in 1890. That is the Act upon which the Government have, to some extent, based the present measure. It is, I think, the Act upon which the only provisions! of this Bill which are based upon experience are founded. "Most of the clauses are new and experimental, and ha.ve been devised to meet our local conditions. Although the Sherman Act does not specifically mention railways, it was intended to deal mainly with railways. The leading idea in the minds of the framers of that measure was the desire to stop the system of giving rebates to huge concerns, which, by combination and the unscrupulous application of capital, were destroying the industries of the country.


Mr Isaacs - The honorable member is not right about the intention of the Sherman Act. There were over 100 different proposals before .Congress to deal with trusts in various ways.


Mr HARPER - I am right so far as my statement goes. There were many attempts made to deal with trusts, but I am speaking of the scope and intention of the Sherman Act, and all the authorities I have seen are agreed that what bulked in the minds of those who dealt

Avith that Act was the question of transportation.


Mr Isaacs - It was one great question, but it was not the sole question.


Mr HARPER - It was the great and almost the sole matter dealt with by the Act. That Act has been brought into force, and it has had some effect. In his work Trusts. Pools and Corporations. Professor Ripley, at page 282 says -

The situation is much improved in respect to transportation discriminations within the last two years. This is the result first of a determined effort on the part of the Government to apply existing laws in an effective way against discrimination : and second, to the fact that some of the higher-minded railroad managers of the country had exerted their large influence in the direction of equitable dealing with the shippers of the territory which thev serve. Whether it is a consequence of these influences or a mere coincidence, it is nevertheless stated on high authority to be a fact that the embarkation of new capital in enterprises in competition with the supposedly controlled industries- within the period named probably equals the capital of the trusts. The effect of certainty of protection against predatory competition can be safely prophesied to increase this figure.

That is an illustration in support of my statement that if we take away the control of the means of transportation we must break the back of the strongest combine that can be formed. If, without some such advantage, any attempt is made to unduly raise prices, and it is continued for any length of time, new capital comes into the industry concerned'. The combine mav continue to be conducted with antiquated machinery and old methods of administration, whilst a new concern comes into the field with a new equipment, and the trust goes into the hands of the receiver. Unless these combinations have behind them some natural monopoly, something beyond mere capital, they must and will be checked by the natural evolution of business. Men who have in all probability been brought up in these concerns, and who know their weak and strong points, get capital behind them, and with their experience start a new concern, and the combination is burst up. I think I am fairly entitled to say that the Government have not made out a case to prove that in the present circumstances of Australia this legislation is necessary. That is my conviction. I propose now to deal in some detail with the provisions of the Bill. It is due to the Attorney-General to say that 1 think the House is indebted to the honorable and learned gentleman for his masterly explanation of the scope and intention of the Bill, in terms which the meanest capacity mav understand. But he and the Minister of Trade and Customs passed over the first part of the measure very lightly, although to my mind it contains a great deal that merits attention. It defines, amongst other things, what is termed a " commercial trust." As defined in this clause, a commercial trust includes a combination of separate and independent persons, corporate or unincorporate, whose voting powers or determinations are controlled or controllable by the creation of a trust, as understood in equity, or by a corporation the trustees of which, hold' the interests and shares of the component parts of the trust, or by a simple agreement. Let me deal with the words " a combination of separate and independent persons, controlled or controllable by an agreement. ' '


Mr Isaacs - - Whose voting power or determinations are controlled so that they are not free agents to determine as they like, having agreed beforehand.


Mr HARPER - I think that the word " determinations " is too wide.


Mr Isaacs - The wording refers to individuals who cannot determine at the moment as they would like to do, their determinations being governed for them bv an agreement made beforehand.


Mr HARPER - Governed, not for them, but by them, which is a very different thing.


Mr Isaacs - They have formed their determinations beforehand.


Mr HARPER - I wish to have this point cleared up, because it is a very important one. A commercial trust includes a combination of separate or independent persons, whose determinations are controlled or controllable by an agreement which they themselves have entered into.


Mr Isaacs - The force of the provision lies in the words "controlled or controllable."


Mr HARPER - I am not a lawyer, but, although I have listened with respect and interest to the honorable and learned member, I confess that I am unable to understand the position. Men effect many agreements which are necessary in the conduct of business, and with which, I am sure, the Attorney-General and the Minister of Trade and Customs do not wish to interfere; but it seems to me that the provision to which I am referring will cover a multitude of such arrangements or agreements - they may be termed combinations in a sense - necessarily prevailing in every business in the interests of both producers and consumers. I am not referring to arrangements for the pooling of interests, nor to combinations preventing manufacturers or merchants competing with each other ; but to what I may term business, or trade boards, or committees for settling the prices, terms of sale, and so on, of commodities. As an instance, I would mention the Flour Millers' Association. That association, as I understand it, is formed of competitive members ; but, as the wheat market rises or falls from day to day, it fixes and publishes prices, the arrangement being perfectly defensible from every business aspect.


Mr McWilliams - Unless prices are unduly raised.


Mr HARPER - That cannot take place, because, as there is no cohesion between the members of the association, and nothing to keep them in line except, perhaps, some 1 rifling penalty, if an attempt were made to take advantage of the public some of the members of the trade would break away and get all the business.


Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - It is the same thing with the coal vend.


Mr HARPER - Yes. In Adelaide, there is an association of retail grocers, whose articles of association I hold in my hand, the object of which is to promote the interests of the trade, and it fixes selling prices. These associations do not mean that the members of a trade are banded together to swindle the public. As a matter of fact that is not their object, and, if it were, they would be unsuccessful. It must be remembered that predatory competition is not confined to trusts, and is often most destructive in connexion with small concerns, started by persons who do not properly understand their business, and do not know the cost of the article with which they are dealing. In their desire to cut into the trade of those who are trading on fair lines, they lower prices, until they have brought about a state of confusion and almost business anarchy, for which there is no reform until an association is formed, and their mistake pointed out to them, when, perhaps as the result of moral suasion, all the competitors are brought into line, and the business is put on a sound basis again. The public, instead of suffering, benefits by these arrangements, because without themthe smaller men would be destroyed, and the bigger men would remain, competition would be lessened, and the whole of the business would be in the hands of a few. I do not think the Minister of Trade and Customs, or the AttorneyGeneral, wish to prevent these arrangements ; but it seems to me that they might be prevented under the provisions of this Bill. I have known of tyranny, as bad as anything Rockefeller ever did,committed by small storekeepers against their neighbours, one cutting against another, to run an opponent out.


Mr Isaacs - In Australia?


Mr HARPER - Yes. These cases show that human nature is the same whether a man is rich or poor. We must deal with the facts of the position. It is absolutely necessary, in nearly every business, to have some such board as I have been speaking of, or to make some other arrangement to secure fair and reasonable competition, and to prevent what my friends of the Labour Party would call black-legging. If it is necessary to have trade unions to compel the workers to standby each other, it is equally necessary that the smaller, and even the larger, traders, for that matter, should protect themselves from predatory competition similar to that which has been so justly denounced in this Chamber.


Mr Bamford - The honorable member would defend an arrangement for keeping up the price of groceries, but inferentially he condemns an arrangement for keeping up wages.


Mr HARPER - No. I have not said anything at all on the subject. In my opinion, the small shopkeepers and producers are often the greatest sweaters, and it has struck me, in reading of the great

American trusts, that it is never suggested that they do not pay their employes well, nor do I remember to have heard of protests from their employes. Those who are always cutting into the business of other people, and reducing prices so low that the payment of decent wages becomes impossible, are the chief .sweaters. I think that it has been stated, in connexion with the operations of the tobacco trust, that distributers dealing with the trust are compelled by agreement to sell tobacco at not less than certain prices. I do not know whether that arrangement exists or not, because I know nothing of the operations of the trust ; but it has been condemned as an attempt to injure the public. I know, however, that many1 large manufacturers, doing business all over Australia, insist upon scales of prices below which they will not allow retailers to sell. This is done, not at their initiative, but at the initiative of the retailers', who complain that certain men sell at prices leaving no profit, and that they could not compete with them without loss. Of course, it is to the advantage of the manufacturer to prevent underselling, because if the retailers are forced by unfair competition to sell any article at a price which gives them no profit, they try to find a substitute which they can sell to better advantage to themselves, and thus the sale of a particular manufacture is injured. It may be said that these arrangements are arrangements in restraint of trade, and to the injury of the public; but I submit that they are not.


Mr Deakin - Then they would not be affected.


Mr HARPER - I shall show how they would be affected. I am seeking to aid the Government. I believe that men who are engaged in commerce can best appreciate the probable effects of legislation of this kind. I know that it is not the intention of the Government to interfere in cases such as I have indicated, but I am explaining the position, as I understand it, so that they may know how far-reaching the measure will be.


Mr Deakin - The question as to the fixed price would surely be determined by whether it was fair. If it were fixed so that it demanded too much from the public it would be unfair, and it might also be open to question if it demanded too little from the public.


Mr HARPER - There are a number of other trade arrangements that would be affected by this provision. For instance, we know that the brewing trade of Melbourne is in a bad way, nearly all the companies engaged in it being almost in a state of insolvency. Out of the wreck of one of the companies a co-operative concern was started, and this has led to a combination of all the large brewing concerns.


Mr Deakin - Was not the embarrassment of the brewing companies due to overcapitalization ?


Mr HARPER - No. It was due to incautious speculation at the time of the boom. The breweries made large investments in hotels at inflated prices with borrowed money, upon which", of course, they had to pay heavy interest. When the hoorn collapsed, and property had decreased in value, the interest charges which the breweries had to meet swept away their profits. An attempt is now being made to bring them together, and under the Bill such a combination, may, in my opinion, be held to be in restraint of trade.


Mr Deakin - The question is, would the combination be to the detriment of the public ?


Mr HARPER - It might be so held; but I shall deal with that point later. I read with interest, and thorough approval, some remarks made by the Honorable" P. C. Knox, the Attorney-General of the United States - the man who has? been fighting the trusts in America - in a report to the Honorable George F. Hoar, Chairman of the Committee on the Judiciary of the United States Senate, in January, 1903, which I quote from Ripley, page 280. I should like honorable members to mark what Mr. Knox says as to the way in which trusts should be dealt with in America, where they have a full-grown predatory animal to deal with, and not merely a small tiger whelp such as some honorable members have referred to as existing here. Mr. Knox said -

The end desired by the overwhelming majority of all sections of the country is that combinations of capital should be regulated, not destroyed, and that measures should be taken to correct the tendency toward monopolization of the industrial business of the country.

I assume a thing to be avoided even by suggestion is legislation regulating the business interests of the country beyond such as will accomplish this end?

He also says, at page 286 : -

Of course, the general scheme of legislation to correct trust abuses, should be developed with great care, for it is not nearly so important to act quickly as to act wisely.


Mr Isaacs - I think that we have acted according to his advice.


Mr HARPER - I certainly think that the Government have acted quickly, but I am doubtful whether they have acted wisely. I think most people will agree with me that there was no urgent necessity for the Government to act so quickly as they have done.


Sir William Lyne - I think that it was necessary to deal with the shipping combine.


Mr HARPER - I shall deal with that at the proper time. I now wish to refer to Part II. of the Bill, which provides, in clause 4 -

1.   Any person who wilfully, either as principal or as agent, makes or enters into any contract, or is a member of or engages in any combination to do any act or thing, in relation to trade or commerce with other countries or among the States -

(a)   in restraint of trade or commerce to the detriment of the public ; or

(4)   with the design of destroying or injuring by means of unfair competition any Australian industry the preservation of which, in the opinion of the jury, is advantageous to the Commonwealth, having due regard to the interests of producers, workers, and consumers, is guilty of an indictable offence.

Clause 5 deals with foreign and local corporations, in the same way that the previous clause deals with individuals. The Prime Minister stated that combinations such as I referred to, if they were not detrimental to the public, would not be interfered with by the Bill. But if the Bill becomes law it would be impossible to say beforehand that any combination was beyond its scope. In clause 6 provision is made that, in the event of unfair competition being charged, the onus of disproof shall be thrown upon the person charged.


Mr Isaacs - Unfair competition does not enter as an element into paragraph a of clause 4, which deals with restraint of trade to the detriment of the public.


Mr HARPER - Yes ; I had overlooked that point. Do I understand that that is a matter for the jury?


Mr Isaacs - Yes; no onus is thrown upon the accused, except as to unfair competition. It rests with the prosecution to prove that an industry is being destroyed, and that the industry is one that should be preserved.


Mr HARPER - I understand that in regard to paragraph a of clause 4 the question as to whether any contract is in re straint of trade to the detriment of the public can only be settled by an application to the jury.


Mr Isaacs - By application to the jury in a criminal case, and by application to a Judge in the event of an injunction.


Mr HARPER - It will not make very much difference whether the application has to be made to a Judge or to the jury. It appears to me that, unless such business arrangements as I have indicated are expressly excluded from the operation of the Bill, some business competitor might urge that a certain combination was being entered into to fix prices to the detriment of the public, and that the parties to that combination might be haled before the Judge or the jury to show that they were justified in doing what every citizen of the British Empire has a right to do. It might be difficult to conceive that the operations of the combination could be detrimental to the public, and yet those concerned might be subjected to the most serious annoyance, inconvenience, and loss. One can scarcely over-state the far-reaching effects of a measure of this kind, and I trust that the point to which I have directed attention will receive the consideration of Ministers. With regard to paragraph b, it is proposed to make it an indictable offence to enter into any contract with the design of destroying or injuring by means of unfair competition any Australian industry which it is considered should be preserved. If the defendants be a " commercial trust," as defined only in this Bill, consisting, it may be, of only two individuals, they will have imposed upon them the almost impossible task of proving a negative. They will have to prove that what they are doing will not affect Australian industry.


Mr Isaacs - The honorable member is wrong. All that the defendants have to prove is that the competition is not unfair. The onus of proof in regard to all- the other elements lies on the prosecution.


Mr HARPER - As I read clause 6, it appears to me that if two persons make an arrangement to do certain things, which, rightly or wrongly, are held to involve unfair competition and a design to destroy Australian industry, they will be haled before a Judge, and will have to prove that what they are doing is not detrimental to the public.


Mr Isaacs - That is not so. If if were proved that the competition were unfair, that would not be sufficient to convict the defendant. The prosecution would have to go further, as I have indicated.


Mr HARPER - My point is that if the onus of proof that the competition is not unfair will lie upon the defendant, it will have imposed upon it what, in many cases, may prove to be an impossible task.

Sitting suspended from 1 to 2 p.m.


Mr McCay - I think we should have a quorum. [Quorum formed.]


Mr HARPER - When the sitting was suspended, I was dealing with Part II. of the Bill. I was pointing out that under it individuals who were joined together for the purpose of carrying on legitimate operations which were not to the detriment of the public, might be placed in the unenviable position of having to justify their action by proving a negative, which, in many cases, would be impossible. For example, it would be competent for anybody, rightly or wrongly, to raise the question of whether they were not doing something which was inimical to the public interests, and having been constituted by Part I. of the Bill a commercial trust, the onus would be thrust upon them of proving that the allegations made against them had no foundation in fact. I am sure that the Government do not intend that. I apprehend that such a position needs only to be understood in order to be condemned. The principle which it involves is foreign to our whole system of law.


Mr Poynton - It is embodied in the Customs Act.


Mr HARPER - It may be, and perhaps it is rightly contained in that Act. But I would point out that in the Customs Act the offence is clearly defined, and the person against whom any charge is made is in a position to refute it. I do not intend to labour this point any further. Under clause 7, the question arises of what constitutes a monopoly. It seems to me that the term " monopoly " is very frequently misused. Originally it implied a State monopoly - that is, some right which was given by the Government to certain persons to do certain things to the exclusion of all others. I quite admit that in modern times that strictly legal definition has been, to some extent, modified, and that a monopoly may now be created by means other than a State grant. I have already shown that in the United States a monopoly may be obtained as the result of control of the railways, which are in private hands, for the exclusive advantage of certain persons. In that way monopolies have been acquired just as effectively as if the United States Government had enacted legislation conferring upon certain individuals the right to trade in petroleum oil to the exclusion of everybody else. But this Bill goes immensely beyond anything of the kind, and, therefore, I should have liked a clear definition of the term " monopoly." I have heard it stated that the Colonial Sugar Refining Company is a monopoly. De facto it is not a monopoly in the sense that it has behind it any advantage which is not enjoyed by everybody else.


Sir William Lyne - It puts up the price of colonial sugar almost to that of the imported article, and nobody can prevent it from doing so at the present time.


Mr HARPER - At an earlier stage I intimated that I did not intend todiscuss the details of the harvester business, nor do I feel disposed to deal with the position of the Colonial Sugar Refining Company. I hold two shares in that company, so honorable members will recognise that in what I am about to say I am not seriously interested. I repeat that the Colonial Sugar Refining Company is not a monopoly.


Mr McWilliams - It regulates the price of sugar, absolutely.


Mr HARPER - It fixes the prices for its goods, as every firm has a right to do, but other firms can, and do, undersell it if they choose to do so. For instance, there is a refinery in Port Melbourne, which is doing a large portion, of the business in Victoria, and which frequently undersells the Colonial Sugar Refining Company. There are Queensland refineries which do the same. The company has taken no action to prevent it, being apparently content to act upon the sound principle of "live and let live." When the Minister tells me that the Colonial Sugar Refining Company puts up the price of the local article almost to that of imported sugar, their reply is that they are compelled to do so, because the protective portion of the existing Customs duty finds its way into the pockets of the cane-growers. As a matter of fact, I know that the relations existing between that company and the majority of the cane-growers are of the best. The company has grown from very small beginnings. About fifteen or twenty years ago it had a most unfortunate experience in pioneering the industry, the result of which was that the shareholders in both Sydney and Melbourne were so hard hit that their shares fell far below par, and a reconstruction of the company had to be undertaken. That is a matter of history. The company is not in any sense of the word a monopoly . It seems to me that we are gradually losing our appreciation of the true significance of that term. We are too prone to regard as a monopoly any business which attains large dimensions. In this connexion, I desire to point out that large profits made by a company or firm do not necessarily imply that those concerns are robbing the public. Let us suppose that A and B each possess a capital of £20,000, and that the former has an annual turnover equal to the amount of its capital. After paying all expenses, its members naturally desire to secure a fair return upon their outlay - say, 6 per cent. Upon the other hand, B. concern may have a turnover of its capital, not once, but twelve times in the year. There are businesses, I am informed - which small men frequently complain threaten to wipe them out of existence - whose turnoveris twelve times in the year the amount of their capital stock. " A' ' company overturn their capital value once a year, and make a profit of 6 per cent., equal to £1,200. "B" company, with the same capital, turn over the value of their capital stock twelve times in the year, selling at the same prices as "A" company, and make a profit of twelve times as much, £14,400. Would any one say that, because the magnitude of their business enables the proprietary of " B " company to earn a profit equal to twelve times that earned by " A " company, though they sell their goods at the same prices, they can be said to be robbing the public? I do not think they can. Suppose the proprietary of "B" company say, "We do not desire to make more than £6,000 a year, or 33 per cent, on the amount of our capital, and we shall sell our goods at prices' which will return that amount, and no more." "A" company may feel aggrieved, and complain that "B " company is trying to exterminate them. "B " company, owing to the magnitude of their business, and not by exacting extra profit from the public, contrive to earn a very much larger profit than " A " company, and by reducing prices give to the public a part of the profits they can legitimately earn. Should such a concern be brought into Court to show all the details of its business to show that, in reducing its prices and selling at a lower rate than its opponents, "A" company, it was not doing so to injure the business of the opposing company, or to the detriment of the trade of the country ?


Mr McWilliams - Would the same argument apply to importing companies ?


Mr HARPER - Of course it would. This example shows where the advantage of what is called large production comes in. Are we going to legislate in this country against large production? If we do we shall be deliberately restraining trade to the detriment of the public, the very thing which this Bill is professedly introduced to prevent.


Mr Hutchison - No combination can be interfered with unless it is shown that its operations are to the detriment of the public.


Mr HARPER - The honorable member does not understand my argument. I am glad of this opportunity to say a word about commercial morality. Whenever they hear of any individual or firm making a large income, some honorable members in this House at once jump to the conclusion that it can only be done by robbing the public.


Mr bamford -They are very often right, too.


Mr HARPER - My honorable friend, no doubt, thinks so ; but I am giving sound reasons why any thoughtful man who is not so prejudiced as to refuse to consider facts when they are presented to him must come to the conclusion that there are other explanations. As one who has spent his life in commerce, I assure honorable members that, notwithstanding the improper proceedings of individuals which are occasionally brought to light, nine-tenths of the commercial community are as strongly opposed to such proceedings as is any member of this House, and as little disposed to practice such methods. They are, in fact, only too pleased when those who resort to despicable and predatory actions are found out and punished. There are various ways of accounting for a reasonable profit' on capital invested, but in modern business the secret is that the business shall be done well shall satisfy the public requirements, and to do this the object is to secure as large an overturn as possible. The man who has a big overturn is able to undersell a competitor having only a small overturn, and in doing so he shares the profits which he might secure as a trader with the public. Such a man may be accused by those 'who, because they are not so competent to conduct a business, or for someother reason, cannot compete with him, of predatory acts which should not be so described, and which, on the contrary, may be shown to be clearly for the benefit of the public, and to assist in the development of the trade of the country. Because a business is large it is not necessarily a monopoly. If people try to establish a monopoly bv buying up other concerns, and by excluding others- from trade, their preeminence in the line of business which they follow can continue for but a short time unless, as I have previously said, they have some State concession or natural advantage, which others do not possess. In business life I have time and again- known of attempts being made to monopolize some trade, business, or industry, and in nearly every case those' who have depended upon the adoption of such tactics as I have described have come to grief. A business can only be conducted in a large way by following sound principles, selling -at a reasonable rate, and supplying, a good article, which meets with public approval. Having dealt with the first two parts of the Bill. I do not intend to say very much with regard to Part III.', dealing with the prevention of dumping. To my mind, the clauses of this part of the Bill as they stand are little short of fantastic. Avoiding the surplusage of the Bill, under clause 15, when- the Comptroller-General has reason to believe that any person, either singly, or in combination with any other person, has imported goods with the intention that they may be sold, offered for sale, or otherwise disposed of, in unfair competition with any Australian goods, he may certify the Minister. Then the Minister is to appoint a Board of three persons to settle whether the goods are being imported with the intention aforesaid. I must admit that I was profoundly amazed when I first read that clause. The whole proceedings must be based, first of all, upon a suspicion on the part of the Comptroller-General as to what some one is going to do. If he has a suspicion that A. B. is going to do a certain thing, he certifies the Minister, who refers the matter to a Board or a Judge. I can well understand the objection which any sane Judge would have to being asked to decide the question. Under this Bill the question to be decided is the intention which may be in some one's breast to do a certain thing before he has done it. It appears that there is to be a Board, or a Judge, or a jury, to decide whether some person intends to do a certain thing. In such a case a corporation is required to prove that it is not its intention to do what is alleged. It seems to me that to state such a clause in plain terms is sufficient to condemn it. In this part of the measure the Government are trying to do an. impossible thing, and the attempt to do it ma> work grave injustice to individuals, and cause serious disturbance to business without attaining any adequate result. I have tried to put myself in the position of the ComptrollerGeneral under this part of the Bill. I have said, " If I were Dr. Wollaston, and had to work under this part of the measure, how should I proceed? I suppose the first thing I should do would be to listen to every story brought to me bv interested parties."


Mr Fowler - The Comptroller-General would be doing nothing else all his time.


Mr HARPER - I quite agree with the honorable member, who is possessed of commercial knowledge and experience. The Comptroller-General will have to listen to this kind of story - " I heard that So-and-so, of Flinders-lane or Collinsstreet, intends to import 500 cases of goods, and is bringing these goods here in order to slaughter my industry." In the first place, is it not a most objectionable thing that the Government should encourage espionage of that sort, and rely upon statements of that kind to hale people before the Court to prove that it is not their intention to do what has been alleged against them. The members of the Commonwealth Parliament of Australia, if they respect themselves, will not,. I am sure, make themselves so ridiculous in the eves of the world as to pass such a. provision into law. The Comptroller-General is to act upon information received. He calls up the party against whom some wrongful intention is alleged. Suppose I am the party. The Comptroller-General will say, " Mr. Harper, I am informed you are going to do so-and-so." I might reply, "Who told you that?" The Comptroller-General may or may not reply. If the statement is true, I say, " I am going to get certain things out." and then the Comptroller-General will probably say, "You are going to dump these goods to interfere with an industry." My reply would be, " I am going to import these goods, and get the best profit on them that I can." Honorable members must understand that traders, as a rule, do not wish to smash anybody, but they do desire to make as good a profit as they can. My answer to Dr. Wollaston would probably be, " I have made a good bargain. I bought these goods very cheaply. I can see profit in them. I am not going to smash any one, but I will sell them at the best price I can get. If I can get the price current for them, I will get it, and if not, I shall sell as near to that price as possible." What will he do then? He may hale me before the jury or the Judge, and there will be cast upon me the duty of unfolding my business relations with people on the other side of the world to possible competitors in my business. The proposal is most unjust, and I do not need to say more on the subject. Here is a point to which I wish to direct the very special attention of the Government, and of honorable members. In Part II. of the Bill, clauses 4 and 5 are ingeniously framed so as to attempt to deal with individuals as well as corporations. Clause 4 says that any person who, either as principal or as agent, wilfully makes or enters into a contract in restraint of trade, or with the design of destroying or injuring an Australian industry, shall be guilty of an offence. In this part the act must be in relation to trade or commerce with other countries, or among the States. The position is different when it deals with companies formed within or without the Commonwealth. The Attorney-General, in response to an interjection by the honorable and learned member for Corinella as to the application of this clause, made the intention quite clear. By section 52 of the Constitution, sub-section 1., the Parliament of the Commonwealth controls trade and commerce with other countries, and among the States, and under sub-section xx. it has power with respect to foreign corporations and trading or financial corporations formed within, the limits of the Commonwealth. But while the Commonwealth Parliament has, under the Constitution, the right to deal with incorporated companies, either external or internal, it has not the right to deal with private partnerships, or with individual traders. These are controllable only by the States. The clause endeavours to bring both incorporated companies and private partnerships and individuals in, but the attempt cannot, I think, be successful. A private partnership, or [nl- 2 individual, even if it carries on a predatory business in any one of the States, cannot be interfered with by the Commonwealth, but the AttorneyGeneral seems to think that, if it sends its goods from one State to another, it can be interfered with. I am not a lawyer, and, as I am not competent to express an opinion on the legal interpretation of the Constitution, I shall assume - although I do not agree with him - that, under such circumstances, the Commonwealth could deal with private companies. It is admitted that, so long as it confines its operations to a State, it could not be dealt with by the Commonwealth law. Assuming, for the sake of argument, that the honorable and learned gentleman is correct, I shall show what could be done by a combination like the International Harvester Trust, should it intend to enter upon a predatory competition to establish a monopoly. I know nothing about the operations of that trust. I am not aware that it is a predatory company, and intends to destroy its competitors here.


Sir William Lyne - That is what it is trying to do.


Mr HARPER - I intend to show what it could do under the 'Bill, if- that is its intention. If I were the managing director of that trust, with some millions of capital at my back, this is what I could do in defiance of the provisions of the Bill.


Mr Mauger - Is it wise to make these suggestions to the trust?


Mr HARPER - The honorable member need not suppose that we can suggest anything to them which they do not know. I am dealing with the matter merely as a student of the Bill. If I and my colleagues came to the conclusion that it was to our interest, putting aside all considerations of ethics1, to acquire the whole of the harvester business of Australia, we could evade the provisions of the Bill in this way : We could select one or two of our best men, send them to Victoria - or to one of the other States - and there establish a factory for the manufacture of harvesting machinery of all kinds, in their own name, as a private firm.. Their instructions would be to employ the best men obtainable, and pav the highest wages, and, until they received other instructions from headquarters, sell the harvesting machines they produced at, say, ,^25 each.. Of course, the trust would secure its interests in the capital invested by a mortgage over the whole concern, or in some other way. If these instructions were carried out, it would be found that the farmers would buy the cheap machines which were being offered, and there would be no necessity to pay the big commissions which the Bill seeks to get arid of. Immediately there would be an outcry from all the other manufacturers in the State, and an appeal would be made to the Government for relief. The AttorneyGeneral, if he were consulted, would have to say, " I am sorry, but the law cannot interfere with the operations of this firm in this State because it is a private concern, and not a corporation; but we shall under the Bill prevent it sending its machinery to the other States. I do not agree with the honorable and learned gentleman that that could be done, because, under the Constitution, trade among the States must be absolutely free, whether by internal carriage or by sea. But, even if the AttorneyGeneral were right, the officers of the trust could get over the difficulty by arranging with agents in the other States to buy their machines deliverable at the factory door, and these machines would be taken by them, and sold in competition with the machines of the local makers.


Mr Hutchison - There are persons who could evade any law. That is why there are so many Socialists.


Mr HARPER - It is a depressing thing that there are in this Chamber honorable members who seem absolutely incapable of following an argument. I am not now dealing with Socialism ; I am merely showing how the Bill, if passed, would be ineffectual to prevent a predatory company from doing what we wish to prevent it from doing. This Bill, which may hamper every industry to an unknown extent, and will have effects which those who ares supporting it: do not intend, will, I contend, while doing much mischief, have no effect in preventing huge concerns like the International Harvester Trust, if they so determine, from doing that which is the raison d'etre of the Bill to prevent. It is foreign combinations only we have to fear, and the Bill will not prevent foreign trusts carrying out their predatory intentions if they mean to carry them out. The AttorneyGeneral admitted the other night that private companies and individuals doing business within a State cannot be interfered with by the Commonwealth, and so long as this is the constitutional position, unless a law is passed preventing business from being done except at prices fixed by the Government, the sort of thing which we wish to stop cannot be hindered. Any law that we pass will not affect one section of trade without affecting all others. I fear I have trespassed too much on the time of the House. In speaking as I have done, I am actuated by the best feelings towards the Government. Having studied this question, and having personal knowledge which enables me to form definite opinions with regard to the proposals embodied in the Bill, I have considered it my duty to- express my views, in the hope that the Government, if they do not put the Bill aside, will at least place it low in the list of business,' so that honorable members, and the public outside, will be afforded an opportunity to realize and to consider the possible consequences of such legislation. It is necessary that we should fully recognise what too many people forget, namely, that there are many objects which cannot be achieved by Act of Parliament. After all, the great trading operations which this Bill will interfere with, and which the Socialists think can only be properly controlled by the system they advocate, are all based upon natural economic laws, which no legislation can supersede. Socialistic legislation might hit certain individuals, injure* certain interests, and upset society, but human nature would assert itself, and natural economic laws would inevitably prevail. Australians pride themselves on their freedom, and I ask whether we, who possess a Constitution intended to be the freest on earth, are prepared, whilst endeavouring to cure some particular evil, to impose upon ourselves', shackles which mav prove most disastrous to the best interests of the country whose prosperity we all desire to promote. It is inconceivable that the people of Australia would, "if they could thoroughly understand the position, agree to anything of the kind. In conclusion, I should like to refer to what I regard ais an unfortunate feature of our present political system. It is not often that I occupy the attention of the House, but I think I may, without impropriety, remark that it is unfortunate that a measure of this importance should evoke so little attention that speaker after speaker has to address a bare quorum of members. As one who has spent nearly thirty years in public life, I cannot help contrasting the present condition of affairs with that which obtained during the early struggles and fights in which I and others engaged in this Chamber as members of the State Legislature. At that time, members were in their places and listened with interest to the arguments addressed to them. They showed, at any rase, that they had some desire to obtain from others the knowledge which they might not themselves possess. Another point is that, owing possibly to business exigencies, debates of this character, which so vitally affect the whole of the people, are not reported in the press so fully as formerly. In times gone by, parliamentary debates were well worth taking part in, and members were fully rewarded for the trouble they took to make themselves acquainted with a subject, iso as to speak with some reasonable degree of authority. They not only had an appreciative audience in the Chamber, but were able, through the press reports, to communicate their views to an interested public. I hope that we shall soon have a change. Otherwise there will be a danger of the utter atrophy of Parliament. Another branch of the same subject might also be referred! to in connexion with this Bill, and without special reference to the present Ministry. Every Government that has been in office since the Federation was established has apparently acted on its own initiative, without consulting the members of the party supporting it or availing itself of the knowledge that was at command among the rank and file of its supporters.


Mr Fowler - That does not apply to the Labour Party ; the caucus prevents that.


Mr HARPER - I am not referring to the Labour Party, but to the Government. I do not belong to the caucus, and do not intend to. I am mentioning a fact which is noteworthy, because of its important .influence upon what we do in this Parliament. I do not say that Ministers ought to button-hole every member of their party and ask them what should! be done in regard to matters of policy or Bills that it is intended to submit to the House; but I think it is their duty to keep in touch with their supporters, so that they may be able to gather information and knowledge from those who may know more than they do upon certain subjects. No matter what the Ministry may be, its members cannot possess all the talents or all the knowledge. There have been five Ministries in this Parliament, and I have supported four of them. During all these years these Ministries have never once convened their supporters, or consulted them on matters of policy.


Mr Fowler - The caucus is the cure for that kind of thing.


Mr HARPER - The caucus is a machine devised for the purpose, not of reflecting the opinions of members who are the elect of the people, but for organizing and carrying into effect the behests of numerous irresponsible outside bodies.


Mr Fowler - Nonsense !


Mr HARPER - This is a serious question. The Barton Government never convened a meeting of their supporters, but there may have been special reasons for that. The Deakin Government did not once consult the members of their party. The Watson Government, no doubt, convened meetings of the caucus, but I do not think they ever invited honorable members such ais the honorable member for Melbourne Ports to join them. Then the Reid Government followed. That was a coalition Government, formed for the avowed purpose of sinking differences and starting upon new lines. They never called their supporters together, even during the crisis which led to the present Prime Minister being accused of treachery and traitorous conduct. I have privately remarked more than once, to honorable members that, in my opinion, if the right honorable member for East Sydney had called a meeting of the party on the Monday after the Ballarat speech was delivered, the present Prime Minister would have been present, and would have made the statement that he afterwards made to this House, and there would have been no break-up and no accusation of treachery. Since the present Government has been in office the position has been the same. What is the moral of all this? The present Bill, with the policy which it involves, has never been submitted to the country. I gave my adhesion to the present Government as a protectionist Administration, whose general policy I approved. I am still in that position. I do not agree with everything they do, but I support them generally, and I have the greatest admiration for the ideals of the Prime Minister. I contend, however, that the Government have done themselves injustice, and their supporters as well, by failing to consult their party before introducing such a measure as that now before us. If I had had a draft of this Bill before me prior to its introduction, I could have communicated to Ministers privately what I have just been saying publicly. Not having had that opportunity, I have done my duty now in giving my opinion. I do not intend to divide the House against the Bill, but I think it is a mistake. I believe that the Bill will fail to achieve its purpose, and that it will embarrass the business of the country, and retard its progress. Therefore, I would appeal to the Government to either withdraw the measure-


Sir William Lyne - We shall not do that.


Mr HARPER - I know that there is a difficulty, because when once Ministers put their names to a Bill it is vain to appeal to them to withdraw it. If, however, they recognise that there is any force in my arguments, especially in my representations that the measure will not accomplish its purpose, I hope that the Government will at least allow honorable members time to master its provisions. I trust, moreover, that before we are asked to agree to the drastic provisions of the Bill we shall have the report of the Tariff Commission before us, and be able to understand some of the reasons which, so far as they have been revealed to us, have led to the introduction of the measure.







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