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Thursday, 11 August 1921

Senator GUTHRIE (VICTORIA) . - The Fair Profits Commission also looked into this subject very carefully, and this is what that body had to say -

After a long and careful inquiry into the Victorian woollen industry, the Fair Profits Commission has arrived at the decided opinion that undue profits have been, and are still being, made by the manufacturers.

Regarding one Victorian company the Commission's finding was as follows : -

After making all allowances for writing off capital in former years, it could be said - and the Commission adopted the company's own figures - that shareholders had put more than £60,000 original capital into the business. In addition, within the last few years £30,000 of reserves had been capitalised and issued in shares to the shareholders. According to published statements, at an interim meeting of the company held a few weeks ago, the following distribution of profits for the half-year was made, partly out of accumulated but previously undistributed profits, namely: - Dividend distributed (half-year), £27,000; issue of shares, as a re'sult of writing up plant, &c. - face value £30,000, market value about £90,000. Apart from the shares, the dividend was at the rate of 45 per cent, per annum on the total nominal capital of £120,000, 90 per cent, per annum on capital subscribed by shareholders, and about 90 per cent, per annum on the capital used in the business as shown by the last annual balance-sheet.

That is the opinion of the Fair Profits Commission with regard to this poor " struggling " industry, which under the old Tariff was able to distribute 90 per cent, in dividends to its shareholders.

Senator REID - That was before the Government look over the mills.

Senator GUTHRIE (VICTORIA) - Yes. The Com- mission stated further -

The Commission considered that such figures as the foregoing compelled action. The proposals made, if the immediate future was tested by the immediate past, would enable the industry, on the average, to make 18 per cent, to 20 per cent, total net profit on capital, would permit the more successful mills to make more, and would enable the less successful mills to take a fair, though not a high, profit.-

I want honorable senators to remember that I am not attacking any particular mill or the wool industry. I hold shares in two mills. I am also a trustee in the' Soldiers' Woollen Mill, and a director of a co-operative woollen mill company in New South Wales.

Senator Reid - Have those mills turned over the same dividend?

Senator GUTHRIE (VICTORIA) - We have not had a dividend at all yet; we are only buying the machinery. But I am game to go into this business without any increase of duty, and, indeed, without any protection at all, because wo have such an enormous advantage in the possession of the raw material." Look at the enormous price the public have been paying for cloth. The price of wool has little or nothing to do with it. During tho war the people of this country were absolutely robbed. There is no other way of putting it.

Senator PRATTEN (NEW SOUTH WALES) - By whom?

Senator GUTHRIE (VICTORIA) - They all had a finger in it. The manufacturer, the people in the "Lane," and the large shopkeepers made exorbitant profits. My tailor wanted to charge me £18 for a suit of clothes, and when I protested, he said, "Oh, but look at the price of wool." The pre-war price of wool was 9 1/2 d. average, and during the war we sold it to the Imperial Government at 15 1/2 d. but the Australian manufacturers got their raw material at the original appraised price. Even supposing they had to pay 15 £d. - but 'they did not - the increased cost of wool in a suit of clothes would have been only 3s. 6d., yet suits of clothes, which formerly were £5, were raised to £10, and £10 suits were increased to £20, all on the score of the increased cost of wool ! As the result of exposure and propaganda- - I have been hammering at this matter for a long time - prices have come down again within the last few months, and suits are now £5 to £10 again.

Senator Reid - . The £18 suit is not down to £5.

Senator GUTHRIE (VICTORIA) - It is down to £10, and you can now get a suit of good English tweed, if you prefer it, at £5 5s. in the leading shops of this city. In order to show that the increased price of clothing during the war period was a scandal, I propose to quote some figures relating to the Commonwealth Woollen Mill. There were three or four parties exploiting the public. The manufacturers were concerned in it to a certain extent, "Flinders-lane" was in it all the time, and the large retailers were also concerned in it. There was no necessity to compel the people to pay £10 and £20 for a suit of clothes. The Commonwealth Woollen Mill, although at the beginning of the year it naturally had dear stocks of wool on hand, has been making the most beautiful material, out of the very best fleece wool, for 5s. 6d. a yard.

Senator Payne - What is the width of that material ?

Senator GUTHRIE (VICTORIA) - Fifty-six inches; and 3J yards are used in the making of a

Bult of clothes." The- Commonwealth Woollen Mill is selling this beautiful tweed at 5s. 6d. a yard, blue serges at 7s. a yard, and one special class, 56 inches wide, made of what is practically the very best merino wool, at 6s. per yard. Honorable senators will say that the mill cannot be making any profit when it sells its products at such prices. I have here its balance-sheet for the year, and it shows that it is. It- is admitted that it opened the year with stocks of dear wool, which it had obtained from the Pool at very high prices, and that since then the market has been falling. Wool that you purchased last week at what you considered to be a low price is dear this week, because the market has been slumping. Yet, after writing off £18,449 on account of depreciation, the Commonwealth Woollen Mill, which, has been selling magnificent material at these extraordinarily low prices, made a profit of £26,000 for the year. Had it been able to concentrate on two or three particular lines, it would have made enormous profits. The position, however, is that it is called upon to make small quantities of a variety of goods, and that, we all know, adds greatly to the cost of production. It has had to make a special twill for the Air Forces, highquality thick material for suits and overcoats for naval officers, and special lines for the Defence Department, the Navy, the Railway Department, and trainees, &c. I was astounded when I took His Excellency the Governor of Victoria over the mill the other day to see that it was producing some forty or fifty different lines. If it were able to concentrate on one or two lines it would make far greater profits; but, despite the fact that it has been called upon to produce an infinite variety of material, ranging from rugs and blankets to the finest of tweeds, it shows for the last twelve months a profit of £26,000, plus £18,449 written off in respect of depreciation. And this notwithstanding the low prices charged for its products.

I think I have shown from the report of the Inter-State Commission, as well as from statements by Mr. Ambrose Pratt, Mr. Stirling Taylor, and the balancesheet of the Commonwealth Woollen Mill, that the industry does not need this increased protection. I do not say that we should remove the whole of the protection which it enjoys. We want to make sure of our position, because the high wages now ruling in England and France, as well as the high freights, may fall at any time. When the woollen industry of Australia was started, it was very much in need of protection. When I was working some years ago. in the woollen mills at Home the hours of the operatives were very much longer than they are here, while the wages were only a fourth of what we pay. The freight on our wool to England was only from 1/4d to id. per lb., and the freights back were the same. Here to-day we have a wonderful supply of the raw material. The wool used in the manufacture of flannel, for instance, is obtainable at 6d. per lb. in Australia. That same wool costs, landed in Bradford, 9d. per lb., so that in respect of that one item alone we enjoy an advantage of 50 per cent. Our competitors there have also to lose interest on their money in respect of the time spent in getting their wool Home and sending back the manufactured article. The woollen mills here have at hand the pick of the best wool in the world - they can obtain it to-day and have it on their looms to-morrow - whereas our competitors at Home have to pay delivery charges, freight, insurance, and railage to the mills and back again, plus a highly Protective Tariff on the manufactured article. Since the framing of the Tariff of 1914, under which the woollen manufacturers were making fortunes, wages in the woollen manufacturing industry of England and France have increased 400 per cent., while freights have also increased about 400 per cent. In these circumstances, I ask honorable senators to have regard to the enormous advantages that we have over our overseas competitors, apart from any increased duty.

Senator Lynch - All of which advantages mean more protection for the local manufacturer.

Senator GUTHRIE (VICTORIA) - Yes. We have an advantage of 25 to 50 per cent, to start with on the cost of the raw material. I propose now to show that even such a staunch Protectionist newspaper as the Age- which so unkindly Avro te of me the other day, because of my desire to keep out German lager from Australia, that I evidently took more interest in the Australian beer trade than in the wool industry, in which I have made my living all my life - apparently considers that our woollen manufacturers need no further protection. In its issue of the 10th February, 1920, there appeared this statement -

Wool-growing in itself is profitable enough, but the profits of the pastoralists pale before those of the spinners and manufacturers.

Senator PRATTEN (NEW SOUTH WALES) - In Australia?


Senator PRATTEN (NEW SOUTH WALES) - I will show that that is absolutely inaccurate.

Senator GUTHRIE (VICTORIA) - That, at all events, is the statement of the Age, which loves the primary producer! When this statement was published, wool-growing was payable, but to-day it is the reverse. The wool-grower, however, is not whining for protection for hia wool. 'He is prepared to take the rough with the smooth.

The CHAIRMAN" (Senator Bakhap - Order! The honorable senator's time has expired.

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