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Thursday, 14 December 1905

Mr GLYNN (Angas) - I must compliment the Ministry on having at this early stage in the debate put forth their great protagonist, the Attorney-General, to defend this Bill. They evidently consider there is some necessity for the careful and elaborate argument which the honorable and learned gentleman always brings to bear on questions ofthis sort, since he has been induced to interpose so early in the discussion of a Bill of which he is not in charge. Whilst complimenting the honorable and learned gentleman upon the ability which he always displays in the matter of exposition and research, I regret that for the sake of strengthening some weak arguments in support of our being precipitate in this matter, he should have appealed to considerations of prejudice. Such a line of action could not strengthen the case for a good Bill. The honorable and learned gentleman said that this was the first Bill presented to an Australian Legislature which called upon honorable members to range themselves as the friends or foes of Australian enterprise. Surely the honorable and learned gentleman is not going to prejudice the discussion of a far-reaching measure - and so he described this Bill - by saying that those who may happen in a deliberative assembly to differ from him as to its expediency must necessarily be the foes of Australian industry ! Such a statement is scarcely in keeping with a debate in a Federal Assembly. To my mind, it is hitting below the belt, and is hardly worthy of a member of a Commonwealth Ministry. To some extent, the honorable and' learned gentleman maligned, unintentionally, no doubt, the great race from which ' we have descended, when he said that all our competitors cared for Australia was represented by the profit that they could make out of it. If we are to be told that those in the British Possessions, who compete with us, are actuated only by such' selfish feelings towards Australia, what is ali this cant about Imperialism, and as to extending the range of sympathy throughout the British Empire, by establishing trade relations at the mutual instance of the various citizens of that Empire? I am sorry that the Attorney-General at the inception of the debate attempted to poison the wells of controversy by introducing such an exceedingly strong appeal to prejudice.

Mr Frazer - Does the honorable and learned member think that people outside are led to compete with us from patriotic reasons ?

Mr GLYNN - I make no assertion, one way or another ; but it is not reasonable to try to impute an exceptional degree of want or patriotism to those who happen on a far-reaching measure of this kind to differ from the members of the Ministry. The Attorney-General has said that the Bill is a far-reaching one. If that be so, the necessity for it must have been foreseen long since. If its necessity has arisen only within the last few weeks, surely I am entitled to say that we are asked to be exceedingly precipitate in placing a measure of this compass upon the statute-book in the dying hours of the session. The excuse for doing so is not' to be found in one of the closing allegations of the Attorney-General to the effect that the question of whether certain people are to enjoy their Christmas dinners de pends upon the passing of this Bill. If that does not savour of the introduction of cant and prejudice into this debate, I do not know what would. If the measure is a far-reaching one, the conditions which justified its introduction must have been foreseen long since. The honorable gentleman might have introduced a measure at a time when it could have been carefully considered and debated under that full light of publicity "which is so necessary when commercial and mercantile interests are affected, and when proper attention could have been given in Committee to the points arising out of the various clauses. I call it scarcely less than fatuity to try to place this measure on the statutebook between now and Christmas Eve. The mere attempt is unfair to the interests affected, and to the great mercantile public. The Attorney-General referred to the pressure responsible for this measure as due to a recent reduction in the prices of the machines imported by the International Harvester Company. I wish to weigh with an unprejudiced mind any case presented to this House,' and am, therefore, desirous that the matter shall be put before us in all its completeness, with the statement of all considerations, pro and con, and after the report of the Tariff Commission has been made, so that we may do justice to all the interests concerned. I have not hitherto heard a case presented by the local manufacturers against the International Harvester Company or other importers, which justifies me in voting for the Bill. According to statements made a few months ago in the public press, the importations of the International Harvester Company into Australia were equal to about only onetenth of trie importations of this class of agricultural machinery from other parts of the British Dominions. It was stated in a letter published in the press that the Massey-Harris Company, whose competition is most complained of by the local manufacturers, sends' about 90 per cent, of the agricultural machinery which comes here.

Sir William Lyne - The International Harvester Company sends more harvesters than are sent by the Massey-Harris Company.

Mr GLYNN - I have looked carefully into this matter, and read what has been published on the subject, (arid I shall, therefore, endeavour to recall one or two points which have struck nic in the corre- spondence, as a corrective of the statements of the Attorney-General. He mentioned that the International Harvester Company had reduced its prices from £&i to ^70 for one machine, to £60 for two, and to £50 for three, and a similar statement was made in a letter which appeared in the Melbourne Age of the 13th October. That letter was followed immediately by one from the International Harvester Company, in which it was pointed out that they had for some time previously been selling their machines at from £70 to ^75 each. They explained that their reason for doing so was that the combine's price was too high, and that the small manufacturers, whose machinery was imperfect, compared with theirs, had also been selling at the lower prices; and I have seen that statement repeated in many quarters. The writers very properly asked why large manufacturers, who might be supposed to have the best kind of machinery in their works, could not make a reduction in price similar to that of the small local manufacturers, whose machinery might not be quite so good.

Sir William Lyne - A small manufacturer at Corowa, in my electorate, was selling his machines for j£8o each.

Mr GLYNN - Some extraordinary things happen in the honorable gentleman's electorate at times. I am dealing with the newspaper dialectics only for what they are worth, and, in my opinion, the counter statement to which I have referred is of as much importance as the original statement quoted by the Attorney-General. He referred, towards the close of his speech, to the Bill itself, and it is a pity that honorable members have not a month or two in which to consider the real bearing of its clauses. We are all, as were those who walk the torrid pavements of a certain region, which I hope none of us will reach hereafter, actuated by good intentions; but the public expect something more. They require a certain, amount of scrutiny to be given to the machinery proposed to carry out any policy, even though that policy may be acknowledged to have been sent by Providence itself. Under clause 14, local manufacturers are to be permitted, not only to prevent foreign, manufacturers from competing with them, but to recover treble damages. I interjected, when the AttorneyGeneral was speaking, that the Courts award damages only where the bad results of certain actions complained of can be directly traced, and it will require great ingenuity to prove that any local manufacturer, has suffered such special harm by the importation of foreign machinery as to justify the awarding to him of treble damages. That surmise, I 'think, is justifiable, in view of the fact that, so far as I know - though I have not made exhaustive researches - in only one or two instances, since the Sherman Act was passed in 1:890, have proceedings been instituted under it to recover treble damages, and they included the case referred to by the honorable and learned member for Wannon. I hope, therefore, that our friends, the manufacturers of this country, will not be duped, either by this plausible clause, or by the more plausible explanation of it which has been given. It is a little too bad that the Bill should have been framed to strike a blow at an import trade about 70 or 80 per cent, of which comes from -British Possessions, and mostly from the mother country. They have acted differently in New Zealand. That country is frequently referred to here as an example to us, .and Ministers, not having much power of initiation, are very fond of copying New Zealand legislation, relying upon the democratic reputation of Mr. Seddon to get it passed. They do not, however, copy that gentleman's virtues. The Minister has adopted only the debatable portions of his policy, and left the rest to the winds. The New Zealand Act, I think, does not apply to British goods. If that is so, our Act has about three times its compass, and directly affects a much larger importation.

Mr Page - What does it matter whether the combine is a Yankee or a British one.?

Mr GLYNN - If the merits of "the Bill are so clear that it does not need consideration, there is no more to be said. But it seems to me a ' strange course to provide against evils which are merely surmised. We have not been given proof of the need for this legislation, and have not even waited for the report of the Tariff Commission. It has been introduced on the mere conjecture that a certain state of things may arise, and continue in existence for a few weeks or months. To meet such an occurrence, we are asked to practically suspend the operation of the Tariff, and to substitute prohibition for the range of duties which was elaborated after eleven months of debate in the first session of this Parliament. I have such a regard for the true Imperialism at which we should aim, and such a feeling of kinship with the people of the British Islands, that I hesitate to agree to a measure to which only a few hours' consideration can be given, prohibiting, their importations. The Bill is not only unfair to the British people with whom we are allied in blood, but it is also unfair to our local merchants. There are many merchants who are purely distributors. They do not necessarily purchase all their machinery from local manufacturers, and it has been saidthat one of the causes why the competition of which we have heard so much has sprung up within the last four or five years, has been that some importers have found it more economical to manufacture abroad and send their goods here than to purchase machines locally made. We should consider these large mercantile distributors, whose businesses extend throughout Australia. But it is proposed that, on the mere certificate of the Comptroller-General of Customs a Board may be appointed by the Minister, which may suspend importations, without any limit as to time, because it cannot be compelled by mandamus, or in any other way, to present a report, and may therefore delay reporting as long as it likes. The Minister thus has power to prohibit importation, or to allow it only subject to such conditions as he may think fit. I object to the delegation of this tremendous power to the Minister, who will require to be almost purity itself, and to have a marvellous capacity for recognising the honesty of others, as well as an immense grip of the conditions of manufacture and importation, to properly exercise it. The effect of its exercise may be to practically ruin some of our local distributors. I use the word " distributors," because some honorable members who are supporting the Government get their back up when " importers " are mentioned. They seem to regard the benign dispensation of Providence which makes the abundance of one nation minister to thescarcity of another, by the interchange of products, as baneful in its operation, and, as such, a thing to be put an end to. We should pay some attention to the interests of those whom, in recognition of this prejudice, I prefer to term distributors, rather than importers, and to the interests of the general consumers, who have not been consulted in regard to this measure, although they comprise the great body of the electors.

I admit that the manufacturers must be fairly considered, but the consumers, who far outnumber them, and particularly the consumers of machinery in connexion with the primary industries, are entitled to be remembered. The conditions of the primary industries are not beyond challenge. Any one who looks at the records of production in the Argentine Republic will see that right through the whole range of our products that country is becoming our dangerous competitor. Even in merino wool of high quality, the Argentine is becoming a fairly successful competitor.

Mr Watson - The Argentine wool is nothing like the Australian wool in quality.

Mr GLYNN - It has been stated, on good authority, that it is, but I da not wish to be led into a discussion upon that point. All I wish to point out is that the Argentine may largely challenge us in the markets of the world, and particularly in the markets of the British Empire, to which this Bill is mainly directed.

Mr Watson - In what way?

Mr GLYNN - In its operation. The bulk of the imports which will be affected by this Bill come from British Possessions.

Mr Watson - The bulk of the trusts are not in Great Britain.

Mr GLYNN - No; but Canada is a British Possession, and there are trusts and combinations there.I have heard some complaints made against the MasseyHarris Company, which is a Canadian concern.

Sir William Lyne - It is the International Harvester Combine, and not the Massey-Harris Company.

Mr GLYNN - It has been stated" that the Massey-Harris Company is connected with that trust.

Sir William Lyne - No; it was stated to have joined a local trust.

Mr GLYNN - At all events, the competition of the Massey-Harris Company has been largely complained of, and the Bill aims at stopping, not only American imports, but also at putting an end to the competition of men who are British subjects like ourselves. I say that the natural corollary of all this legislation will be a series of provisions for the protection of the local consumers. The conditions of local trade, as well as the conditions of the import trade, must weigh with us. It is not enough for us to show that the imports challenge local products. We must also demonstrate that the returns upon the capital employed by local producers are not sufficient, and, further, that the remuneration given to the workers is fairly proportionate to the profits derived from the enterprise. We must satisfy ourselves that the profits derived from local industry are not too large before we destroy that competition which tends to keep prices at a fair level. The logical result of passing such legislation will be a measure for the investigation of the profits of those who have to compete with the imports which it is proposed to prohibit. We ought to be able to ascertain the amount of wages paid and the total value of the products, the return obtained upon the capital invested, and also whether the conditions are such as to lead to that gradual perfecting of machinery that is going on throughout the world. Whilst we limit competition from outside, we should see that the perfection of the Australian product is not seriously affected by our policy. I do not wish to say anything in disparagement of local products, because many of them are no doubt excellent; but it seems to me that a wholesome check is imposed even upon business men of the highest character by fair competition from outside. No honorable member will deny that it is essential that our primary producers should be able to purchase the machinery they require at fair prices. Prima facie, if you diminish competition, you increase the power, and by consequence the likelihood of unfair prices being charged. The effort made by American Legislatures is to increase competition, to restrain attempts to limit competition, and to prevent the levying of high charges upon the community. We may talk as much as we like about importers destroying competition, but that evil has not assumed such magnitude amongst us as to justify the precipitate determination of this question. If we limit competition from outside, prima facie we shall increase local prices. That argument may not be very convincing, but it indicates one of the points from which those who are opposed to excessive haste in this' matter view the question. I object to the tremendous powers which it is proposed to confer upon the Executive. This is a most vicious development of Australian legislation, for which this Parliament is largely responsible. We are delegating to others many of the powers which the electors expect us to exercise. If honorable members will look at clause 3, they will see that it is provided that the industries to be affected by this measure are to be left to the decision of the Comptroller-General. Instead of following, the example afforded by the New Zealand Act, which has a very restrictive schedule, limiting its scope, the Minister proposes to place it in the power of the Comptroller-General of Customs to say what industries shall be brought under the protection of the measure. Unfair competition is defined as having, reference to- those Australian industries the preservation of which in the opinion of the Comptroller-General or the Tribunal (which has to determine any matter under this Act) as the case may be, is advantageous to the Commonwealth.

The word ' ' tribunal " is used there to some extent to make the clause more palatable, but the power of initiative does not lie with the tribunal. That rests entirely with the Comptroller-General. The Minister is empowered to appoint a Board, and the action upon the report of that Board will depend upon the Executive. -It is proposed by clause 3 to surrender an enormous amount of power over which we should 1 etain control, even though we do not desire to exercise it at once. The clause pretends to give the power of initiative to ;he tribunal which is to be appointed, but it does nothing of the kind. Clause 5 provides that, whenever the ComptrollerGeneral has reason to believe - and no one can challenge his belief - that any person is importing goods that may be sold in unfair competition with Australian goods he may certify accordingly. The word "unfair " opens up a very wide question. All those considerations to which I have referred, such as the fair returns obtained upon the investment of local capital, the conditions of labour, the proportion of the total profits paid to labour, and other matters, should be inquired into. The conditions of production and exchange, so far as external commerce is concerned, should also be examined before the ComptrollerGeneral decides that certain competition is unfair. But he has arbitrary power conferred upon him, which he can exercise without any guidance or reason. If we do not mean to convey that, it will be necessary for us to insure that inquiries such as I have suggested are made. The Comptroller-General will then have to enter upon avenues of inquiry, along which he will have to travel far before he can find a firm footing. Upon receiving a report from him, the Minister will appoint a Board, and immediately the importation of the goods in question, except on such conditions as he may prescribe, will cease. Such action may involve, not only the importers, but also the distributers, in very heavy loss. So far as I am aware, there is no precedent for legislation such as that now proposed. Under clause 4, the unfairness of the competition is assumed, practically for all purposes, unless the contrary can be shown. It is assumed, under sub-clause 2, io exist not only for the purposes of the Comptroller-General in giving a certificate, but also for the purposes of the report of the Board. There is no limitation of the effect of sub-clause 2 merely to the discretion of the Comptroller. Therefore, unless the importers could show that their competition was not unfair, the Board could report at once, without hearing evidence, that it was unfair. I do not think that that is a proper power to vest in the Board., It is certainly repugnant to all the principles which should govern judicial bodies in arriving at : their conclusions. Unless the Board can be satisfied by evidence - which may not be easily procurable - because, say, an American exporter could not bring witnesses here except at very great expense - that the competition is not unfair, they can at once report to the Minister that it is unfair. A Canadian or American exporter would find it very difficult to prove, on the comparison of the conditions of production and the rates of wages paid litre with those prevailing in America, that his prices were not unfair. Then, again, the Bill makes no exception in favour of reasonably lowering the prices of commodities, or for that disorganization of industry which may "reasonably be expected to occur under the conditions of international trade. It assumes that the effects of the ordinary conditions of exchange must be baneful to an industry. That is the prima facie assumption, whereas we know as a matter of fact that there is no local trade which will not be affected, more or less, by large exports from other countries. This Bill assumes that competitive imports tend to make the conditions of labour unfair, to decrease employment, and to unduly diminish the profits of capital, and makes the rebuttal of the assumption in cases difficult. It is therefore repugnant to British justice. Reference has been made to American legislation, but on looking at the Sherman Act, I can find no provision which is aimed against attempts to lower prices.

The Sherman Act of 1890 is intended to protect trade and commerce against unlawful restraints and monopolies.

Mr Conroy - That is to say, it is aimed against interference with trade.

Mr GLYNN - Yes. The Bill, however, will result in the diminution of competition and in an enhancement of prices. The effect of the first portion of this Bill is directly the opposite of the American Act. Act No. 570, section 73, of the United States Statutes deals with combinations and contracts of- the class mentioned in this Bill.- It refers to -

Combinations or contracts between persons or corporations, either of whom is engaged in importing any article from any foreign country into the United States, and when such combination, conspiracy, trust, agreement, or contract is intended to operate in restraint of lawful trade or free competition in lawful trade, or commerce, or to increase the market price in any part of the United States of any manufacture into which such imported article enters or is intended to enter.

That section shows the distinction in objects between American legislation and the Bill ; the one being against enhancement of prices through artificial trade limitations, and the other against the lowering of prices through competition assumed to be unfair. That is the language of the American Act, which, as I say, is altogether different in character from the Bill before us. There is only one Act with which I am familiar which contains a provision in regard to the lowering of prices. It is a State Act which was passed in Arkansas, and it forbids any act being done which would tend to advance, reduce, or control prices, or the cost to the producer or to the consumer of any product or article. In Tiedeman's work on State and Federal Control of Personal Property. Vol. 1, which was published this year or last year, the general principles underlying the American Acts are stated to be -

First, that the act of entering into such combination or contract is itself an actionable conspiracy, which is punishable criminally ot actionable civilly according to the provisions of the particular statute, and, secondly, that all contracts, agreements, or combinations which have the purpose or effect of restraining trade and suppressing competition are illegal whether the restraint was reasonable or unreasonable - the restraint of trade be:ng in the direction of the diminution of competition so as to enhance prices. I would further point out that our powers of legislation in regard to internal matters are exceedingly limited. In America there are State as well as Federal laws dealing with' such matters. There, the Acts, which are directed against trusts, are chiefly State Acts. Since allusion has been made to the Colonial Sugar Refining Company, I should like to refer the Attorney-General to a decision given in connexion with the American Sugar Trust. In the case of the United States v. E. C. Knight, 156 U.S. page 1, a question arose as to the "Federal power to control the operations of the Sugar Trust in America. As bearing upon that question, I have made the following extract from the opinion of the Court : -

In order to give Federal jurisdiction to a Court it must be held that the article does not become a part of Inter-State commerce until it has started from one State to another

That is a very far-reaching decision. The operation of these Acts is nearly always local. In Australia it would be ivery easy for an internal trust to establish independent' trusts in the different States, and so evade the Federal law. We know, from the broken package case in America, that when an article once gets into the stream of interchange between the States, it becomes subject to Federal control. But when its transit ceases, and the package is broken, it is no longer subject to Federal control. Consequently, I cannot see, even if we amend this Bill, how we can do more than touch the Colonial Sugar Refining Company in relation to its exchanges between the States.

Mr Isaacs - In the case to which the honorable and learned member refers, there was a dissent by Mr. Justice Harlan, and his opinion, has since been upheld in the Addystone Pipe case.

Mr GLYNN - It is clearly laid down by all writers that the Federal jurisdiction over commerce does not begin until an article has reached the stream of interchange between the States. But after it has reached its destination it ceases to be under Federal jurisdiction from the moment the package is broken. Consequently, the main principle which I deduce from the quotation I have given is not affected by any decision such as that to which the AttorneyGeneral has referred. Section 1 of an Act which was passed in New York in 1893 says : -

Every contract or combination in the form of trusts or otherwise made after the passing of this Act, whereby the competition in the State of New York in the supply or the price of any article of common use in the said State for the support of life and health may be restrained or prevented for the purpose of advancing prices, is hereby declared illegal.

Clause 10 of this Bill, which deals with restraints on trade between the States or with foreign countries, is an exceptional one. I think that it is susceptible of amendment. In adding the final words to that clause, which render it penal for a trust to do anything which may have the effect of injuring Australian industries^ we are opening up possibilities which were certainly not contemplated by the framers of the American legislation. In" the earlier part of the Bill there is no provision made to protect small producers against internal competition or State monopolies. These are the men who, prior to the establishment of the International Harvester Company, reduced the prices to the consumer. They are not protected by this Bill against the State combination, which may completely destroy them.

Mr Watson - That is a State matter. We cannot do everything.

Mr GLYNN - So far as the public have had an opportunity of judging this Bill, they imagine that its scope really extends to the protection of all manufactures, whereas in its operation it will chiefly protect the larger men against competition, whether fair or unfair. I have no desire to trespass any further upon the attention of honorable members, but I think I have adduced some arguments which tell against the too hasty passing of this Bill, and against precipitate action on our part. My own feeling is that the evil has not arisen. At any rate, I would prefer to deal with the matter six months hence in the fuller light which may be shed upon it by the well-considered reports of the Tariff Commission.

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