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Friday, 20 July 1906

The PRESIDENT - Does the Minister think that these remarks have anything to do with the Bill before us?

Senator PLAYFORD - I was replying to interjections, and I beg the pardon of honorable senators if I have been led astray. Mr. Tregear, in his report, deals with the definition of " trusts," and1 points out that the dictionaries differ in such a way as to make the explanation not very plain. For instance, " trust " is defined in the Standard Dictionary as follows : -

An organization for the control of several corporations under one direction by the device of a transfer by the stockholders in each corporation of at least a majority of the stock to a central committee or board of trustees, who issue in' return to such stockholders respectively certificates showing in effect that, although they have parted with their stock and the consequent voting-power, they are still entitled to dividends or to share in the profits - the object being to enable the trustees to elect directors in all the corporations, to control and suspend at pleasure the work of any, and thus to economize expenses, regulate production, and defeat competition.

Mr. Tregear,with a view to clearness, divides that definition into three parts, dealing respectively with pools, rings, and trusts. The definition of " pool," according to Mr. Tregear, is -

A "pool" is a combination or agreement between certain persons or firms, in order to influence the market by controlling output, dividing territory, extending trade, and sometimes determining prices.

A " ring," says this gentleman, is -

A "ring" is a similar combination, but devoted more especially to controlling sellingprices.

For instance, a number of manufacturers of one or several articles may agree to form a " ring," one condition of which is that those articles shall not be sold below a certain price. A " trust," according to Mr. Tregear, is defined as follows: -

A " trust " is a corporation or combination of corporations into unity for the purpose of amalgamating plants and properties, economizing expenses, buying and selling to best advantage, ousting competition, and controlling markets.

The trusts that are best known, and, I suppose, the largest in the world, are those of the Standard Oil Company, the Consolidated Tobacco Company, and the Anthracite Coal Company.

Senator Pearce - What about the Beef Trust ?

Senator PLAYFORD - There is the Beef Trust, and a great many others.

Senator Croft - Does Mr. Tregear quote authorities, or he is expressing his own opinion ?

Senator PLAYFORD - Mr. Tregear,in the first place, quotes the dictionary definition, and then proceeds to divide that definition into the three parts I have mentioned - pools, rings, and trusts, all of which act in different ways, although their object is practical lv the same, namely, to get a monopoly. Trusts are not necessarily all bad, in the sense that in their operations they produce injurious results to the public. It entirely depends on how a trust is conducted whether or not a bad effect is produced. Trusts naturally desire to get as- much profit as possible - that is human nature - but all trusts are not worked' absolutely to the injury of the public. Mr. Tregear points out -

The great enterprises which have legitimately reduced the cost of production and have won a place for American enterprises in the international industrial world should not be strangled by adverse legislation, but only controlled by national regulation. To strike down industrial or commercial combinations, with the result of closing factories and mines, and turning workers by thousands into the streets, would' be a calamity whose extent could hardly be imagined.

Mr. Tregearthen makes a quotation from some remarks by the Hon. ,E. Morrell, of the House of Representatives, Washington,, as follows: -

The trusts are not a cancer in the body politic : they are not an excrescence on the body politic; they are a part of the vital principleof the body politic. Thev need to be properly regulated and watched and controlled, just the same as any vital organ of the body needs to be ; but, in like manner, they need to be guarded' from violent injury.

In the conduct of business it often happens that, by means of combination, expenses may be very considerably reduced. By this means, the cost of production maybe cheapened, and it may be possible to supply the particular article at a lower rate than that which prevailed before the combination took place. If that be so, who is to complain ? The working man ordinarily likes to be employed by a big combination, because, as a rule, big combinations pay the highest rates of wages. If the public are not injured, but benefited, by a combination, as a result of a reduction in the cost of production, who is to complain ? Nobody ; because under such circumstances the community as a whole benefits.

Senator Millen - Would not a beneficial trust of the kind indicated by the Minister come under the operation of this Bill ?

Senator PLAYFORD - No.

Senator Pearce - It would if it were unfairly interfering with local industries.

Senator Sir Josiah Symon - Of course it would.

Senator PLAYFORD - It would only if it restrained trade or commerce to the detriment of the public, or with intent to destroy by means of unfair competition, any Australian industry, the preservation of which would be advantageous to the Commonwealth, 'having due regard to the interests of producers, workers, and consumers.

Senator Sir Josiah Symon - The more thev lowered prices, the more these trusts would come within that definition.

Senator PLAYFORD - No; not necessarily.

Senator Sir Josiah Symon - Will the Minister explain bow that would be?

Senator PLAYFORD - I cannot answer all these questions now. We must leave them to a later stage of the proceedings.

Senator Sir Josiah Symon - I thought the Minister was dealing with that subject.

Senator PLAYFORD - No; I am not dealing with, it now at all. The only point I am making now is that there are, and may be, combinations and trusts whose operations are not necessarily injurious to the public.

Senator Drake - Is the paper from which the Minister is quoting available to honorable senators generally ?

Senator PLAYFORD - I do not know. It is a parliamentary paper, printed in New' Zealand.

Senator Sir Josiah Symon - It would be useful if we could get a copy of it.

Senator PLAYFORD - It would, and if I can supply honorable senators with copies of the paper, I shall be only too pleased to do so.

Senator McGregor - The honorable senator is quoting it fully, and we shall be able to obtain the information from the report of his speech.

Senator PLAYFORD -.1 am quoting only those parts which I think of interest, and which bear out my argument.

Senator Sir Josiah Symon - What is the date of the paper?

Senator PLAYFORD - It was published in 1903. Its title is Trusts and AntiTrust Legislation. There is a memorandum by the late Premier of New Zealand, in which he says that, having decided to bring forward legislation to prevent the formation of rings and trusts, he wishes to have the latest information on ...- subject, and upon that Mr. Tregear prepared the report from which I am quoting. I come now to deal with the evil effects of trusts, and they are set down as -

(1)   Over-capitalization or "watering of stock"; (2) secrecy or lack of publicity in organization and conduct ; (3) destruction of competition by underselling, &c. ; (4) management of institutions by absentees for benefit of absentee capital ; (5) management for private benefit of officials; (6) destruction of local public spirit; (7) power to corrupt elections and bribe parliaments ; (8) power to influence Courts and set the law at defiance; (9) absence of personal liability for illegal actions; (10) holding vast properties (as in mortmain) without taxation; (nl shutting down mills, mines, &c, at will, and throwing thousands out of employment; (12) the use of boycott and black-list; (13} fraudulent opposition to patents and use of patents; (14) discrimination in tariffs and rebates.

In reference to the question of patents, we have only one monopoly that is recognised by law, and that is the monopoly of patentees. They may sell their rights to manufacturers, but it has been found that trusts are sometimes formed to defeat the object of a patent. They may actually pirate the patentee's invention, and, having done so, defend their action in the Courts against him, or offer him some ridiculous price for it, and otherwise injure him very considerably. I do not know that I need quote anything further on that particular point. These are the charges that are brought against trusts. I quote now from page 8 of this paper -

One of the methods employed by trusts to raise the va,lue of their properties and depreciate those of others has been the illegal use and misuse of patents. Combinations have used their political and pecuniary influence to prevent patents applied for being granted, and in order that they might use the invention as being unpatented. A Court case disclosed that associated railway companies made an agreement for the purpose of restraining individual owners of patents from freely negotiating sale of interests in their patents, and from collecting compensation from any member of the association who has appropriated a patent invention. The combination was to use all means against any person bringing a suit against one of these members, was to collectively "boycott" or refuse to negotiate with the patentee, and not to settle a suit or claim so long as a similar suit or claim was maintained againstany other member of the association ; this, of course, to cut off " the sinews of war " from the opponent. (See Pettibone, the. United States, 13 " Supreme Law Reporter," 542,1893.) Thus, any competition for a patent is suppressed, and the combination either uses the patent without payment or purchases it at its own price. As the law of the United States declares that there shall be a fair and open market for patents, such acts as those, spoken of are plainly in " restraint of trade," and are illegal.

Senator Pearce - That is not the only abuse of patents.

Senator PLAYFORD - There is a paragraph here which I may quote with regard to discrimination -

In the early part of this year it came to the knowledge of the President that great railway systems in the Middle West, upon which every section of the country is dependent for the movement of 'breadstuff, had entered into unlawful agreements to transport the shipments of a few favored grain buyers at rates much below the tariff charges imposed on smaller dealers and the general public. This injustice prevailed to such an extent and for so long a time that most of the smaller shippers had been driven from the field, and the business formerly enjoyed by them absorbed by a limited number of persons who received secret and preferential rates. In a word, there was practically one buyer on each railway system, and the illegal advantages he secured from the carrier gave him a monopoly of the grain on the line with which his secret compact was made.

Senator Mulcahy - That cannot happen in Australia.

Senator PLAYFORD - Not now; but it did happen in Australia not long ago.

Senator Millen - It does happen now to a modified extent, but this Bill will not touch it.

Senator PLAYFORD - I have been speaking with regard to trusts in the United States. Singular to say, in the experience of the United States these corporations appear in almost all cases in the form of. trusts and combines, but when we come to consider the experience of Europe, we find that there they take the form of pools. A number of independent manufacturers form a pool. They agree to a certain output and a certain price, and if one manufactures more than he is entitled to manufacture under the agreement, he has to pay something to the others in the pool for so doing.

Senator Mulcahy - That might be quite legitimate.

Senator PLAYFORD - I quote from page 22 of Mr. Tregear's report, to show what is done in this way in Austria.

Coming to the question of legislation in regard to industrial combinations, we find that so far back as1870 a drastic measure was passed in which it was declared that any agreements between business firms to raise prices are invalid. As an example of the working of the law may be cited a case in which an agreement regarding sales having been broken by one of the parties recourse was had to the Court. The decision of the Court was that not only was the agreement invalid, but that it was not necessary to prove that the price of goods had increased, for such prices might have increased without the agreement. The agreement could not become the subject of any valid contract, and, therefore, no penalty consented to by parties to the agreement among themselves could be inflicted. Even the institution of a selling bureau, a very common institution among Austrian pools, has been held to be invalid, and any violation of its contracts cannot be punished by legal methods. These decisions, making the adherence to such agreements entirely a question of personal honour, have tended somewhat to discourage the formation of trusts.

Honorable senators will see that in Austria they have a law under which a man may enter into whatever agreements he pleases, but so far as they are in restraint of trade they are invalid. It might be contended, that if a certain manufacturer manufactures more than the quantity of goods agreedupon by arrangement with others in a pool, or sells his goods at a lower price than that agreed upon, he is liable, under his contract, to a certain penalty, but, under the law, it is impossible to enforce that penalty, and in this way trusts have been to a very considerable extent discouraged in Austria. In Germany the law on the subject is very uncertain. As a matter of fact, the Prussian Government are themselves in a trust, and operate a trust. Public feeling in Germany is not specially hostile to trusts, but the publicity given in that country to the operation of corporations militates against their establishment. In the United States, this position arose in connexion with the formation of these corporations. There are in that country a number of separate States, and the Federal power can interfere only in connexion with inter-State or oversea commerce. It cannot interfere with the internal legislation of what are practically sovereign States. The result has been that when one State has passed a stringent corporation law compelling any business corporation to issue a yearly or half-yearly balance-sheet, and to give publicity to its operations in order that the public might, know exactly how its business was carried on, another State, anxious for the establishment o£ that corporation within its borders, has modified its' law by giving facilities to the corporation to avoid the publicity enjoined by the law of the first State. A corporation would, therefore, naturally establish itself in the State which afforded the greatest facility for the carrying on of its business in the dark. The State of New Jersey, opposite New York, is noted for the very lax way in which itallows corporations to be formed, and a great many of the corporations and trusts of the United States have been incorporated in that State. In England, and in Europe, as a whole, such publicity in connexion with the operations of corporations and trusts has been insisted upon, that, amongst other things, the watering of stock has been largely prevented, and that is one of the great abuses of trusts in the United States. As a consequence, trusts have been discouraged in England and in Europe to a much greater extent than in the United States. I stated just now that in Germany, the people do not trouble very much about trusts and combines, and that, in fact, the Prussian Government is a party to a combine. I may quote the following on the subject from page 24 of this report: -

In the case of the potash combination, its products were formerly wholly obtained from mines belonging to the Government, but private mines were opened, and agreements made, in which the State itself (Prussia) is a party. The State had factories of its own to work up the products of the mine, and upon forming a pool with other mine and factory owners made certain rules, which, being agreed to, bind mine owners not to supply to outside factories, or these factories to buy from independent mines, but the Government retains the power of regulating the amount of output, and even of making special concessions in price for the benefit of German agriculture.

There can be little reason to consider the Stale as being a partner in an evil combination, when on many occasions the rights reserved to itself have been productive of enormous advantage through its chemists and agriculturists to the nation, lt does not scruple to punish guerilla competition by a competitive war, and has forced private enterprises to desist from busi ness, or enter the combination, but its direct influence has been that of the beneficent aristocrat.

That goes to prove a statement I made some time ago, namely, that all trusts are not necessarily disadvantageous to the public interests. Here is a case in point, so far as Germany is concerned. In England, there is a number of trusts.

Senator McGregor - What ! In England?

Senator PLAYFORD - In England there is a great number of trusts.

Senator McGregor - I thought that England was a free-trade country?

Senator PLAYFORD - Amongst my papers, and I think amongst the papers which I laid upon the table, there are some extracts which show that, next to the United States, England is the great country of trusts. Our free-trade friends say, and say loudly, that the trusts and combinations which are supposed to work so injuriously in the United States, are the product of protection, and that trusts and combinations are not so prevalent in other countries. In Europe, France is one of the most protectionist countries, whereas, the only free-trade country is England. France, the protectionist country, has hardly any trusts, but England', the freetrade country, has more trusts thao any protectionist part of Europe. The argument of our free-trade friends, therefore, will not hold water.

Senator Sir Josiah Symon - What about America ?

Senator PLAYFORD - The United States, we are told, is cursed with trusts, because it is a protectionist country.

Senator Sir Josiah Symon - So it is.

Senator PLAYFORD - Compared with the protectionist countries in Europe, England has more trusts than they have, and immensely more trusts than France has.

Senator Pulsford - And less than America has.

Senator PLAYFORD - If protection is the cause of trusts, then France ought to have more trusts than England has, whereas it has fewer. In America there is a certain party which is constantly affirming that trusts are the result of protection, and the protectionists deny the statement. Mr. Tregear sums up the position by stating that in certain cases, protection does assist trusts, but that, taken as a whole, it is not the cause of trusts, because they are found in free-trade England to a larger extent that in protectionist France.

Senator DAWSON (QUEENSLAND) - By the expression " more trusts," does the Minister mean that there are more people in the trusts ?

Senator PLAYFORD - I mean that in point of number, capital, and so on, there are more trusts in England than in France, where, I understand, there are only one or two.

Senator DAWSON (QUEENSLAND) - In that highlyprotected country, America, the operations of a few trusts cover the whole Continent.

Senator PLAYFORD - In England, the law relating, to pools, rings, and trusts, is the old common law under which anything done in restraint of trade is illegal. The law as to corporations is extremely strict as regards the publicity which tends to deterthe formation of trusts

Senator Sir Josiah Symon - Have we any trusts here?

Senator PLAYFORD - Undoubtedly, we have combinations here, but I do not say whether they are injurious or not, as I do not wish to argue that point. I shall tell honorable senators by-and-by why I ask for the Bill, apart altogether from the question of whether there is anything in the Commonwealth in the nature of an evil to cure by its provisions. I believe that there is, but I am not going to single out special combinations.

Senator Sir Josiah Symon - The honorable senator is merely preparing, physic, although he has not got a patient.

Senator PLAYFORD - Yes ; and that is a very wise thing to do.

Senator Sir Josiah Symon - The honorable senator does not know what is the matter with his patient, but he is going to physic him.

Senator PLAYFORD - But we do know what is the matter. We know that throughout the civilized world, for the last halfcentury or more, trusts have been formed, and in many cases, to the injury of the people. We do not expect to escape an evil of that sort.

Senator Best - " Prevention is better than cure."

Senator PLAYFORD - Undoubtedly, in this case, " prevention is better than cure." I desire now to refer to the anti-trust legislation which has been enacted in various^ parts of the world. Some time ago, I laid upon the table a memorandum which was prepared by my secretary, and which gives honorable senators all the information which was obtainable on that subject. If they will turn to the paper, they will see that the first Act of the United States was the Inter-State Commerce Act of 1887 -

This Act forbids the restraint of trade and commerce by carriers and shippers engaged in Inter-State commerce.

Its principal objects are summarized thus : -

To secure just and reasonable charges for transportation ; to prohibit unjust discrimination in the rendition of like services under similar circumstances and conditions ; to prevent undue or unreasonable reference to persons, corporations, or localities; and to abolish combinations for pooling freights.

Senator Sir Josiah Symon - In England, there is a similar Act called the Railways and Canals Act.

Senator PLAYFORD - It was found that these pools and combinations, when they became sufficiently powerful, made arrangements with the railway companies for special rates. In some cases, the special rates were enormously to the advantage of the combinations, and against other people. Take the case of the Standard Oil Company. By means of the enormous rebates which they got from the railway in the carriage of goods from the Pennsylvania oil-fields, they were able to compete with all their rivals, and in a. short time, to compel every one of the owners of the oil-well s in Pennsylvania to go into their combination until they got an immense monopoly.

Senator DAWSON (QUEENSLAND) - How does that apply to Australia?

Senator PLAYFORD - I do not say it does apply. I am only pointing out that the Inter-State Commerce Act was one of the first Acts passed in America for the purpose of preventing the monopolies which were obtained! under the rebates and concessions granted by railway companies. We have no fear of anything of that sort arising here, and therefore we have not made any provision in that regard. In the Commonwealth Constitution we took the power to create an Inter-State Commission, which, would have the right of regulating this kind of traffic between the States. Before our Constitution Act was passed we had discriminating rates on the States railways. Victoria granted rebates on the carriage of wool from the border of New South Wales to Melbourne. South Australia had special rates with regard to the carriage of wool on her -railways, and New South Wales also had special rates from part of Riverina. Because we had the power to create an Inter-State Commission if we desired, the Railways Commissioners met together, and, I understand, came to an arrangement bv which no such rebates are now granted. Therefore, as far as we know, there is no necessity for the appointment of an Inter-State Commission.

Senator Sir Josiah Symon - But there is nothing to prevent them from giving these rebates and discriminations within the area of the State itself?

Senator PLAYFORD - No. The next Act against trusts was passed in America in 1800. and it is called the Sherman Anti-Trust Law. It makes every contact or combination in form of a trust in restraint of commerce, illegal, no matter whether it is injurious or not. According to the memorandum on Anti-Trust Legislation -

It declares every contract, combination, in form of a trust or otherwise, or conspiracy in restraint of trade or commerce, to be illegal ; every party thereto guilty of a misdemeanour, and punishable by fine not exceeding $5,000 or by imprisonment not exceeding one year, or by both said punishments.

The Sherman Act was followed in 1894 by the Wilson Act, the object of which was to deal with trust agreements by importers. The Commerce and Labour Act of -1903 provides an official agency to obtain information with a view to better regulation and legislation. The Expedition Act and the Elkin Act, passed in the same year, are machinery Acts to simplify the taking of proceedings under previous Acts. In .the States and Territories of the United States there are certain anti-trust laws. On this subject my secretary says, in his memorandum -

The nature of the anti-trust legislation may be indicated bv a brief reference to some of the State enactments -

In the State of Arkansas, all combinations which tend to lessen free competition in importation, production, or sale of goods, or to regulate or fix the prices, are deemed to be conspiracy, punishable b\' imprisonment or fine; in Illinois, any trust, pool, combine, agreement, or understanding for regulating prices of goods, or limiting quantities made or sold, is a misdemeanour, punishable by fine or imprisonment, or both ; in Kansas, it is a misdemeanour to create or maintain a confederation to regulate the price or quantities of goods, fees of attorneys and doctors, or rate of interest, punishable by fine or imprisonment, or both ; in New York, it is a misdemeanour to combine to create a monopoly in the production or sale of any commodity of common use, or to restrain competition in the supply or price, punishable by fine or imprisonment, or both; in Tennessee, it is a felony, punishable by fine or imprisonment, or both, to' create or maintain any combination that tends to prevent free competition in the production or importation or sale of goods, or to regulate the price; in Michigan, making a contract is one crime, and acting under it another, both punishable by fine or imprisonment, or both.

Senator Sir Josiah Symon - Does the Statute say that " making a contract is one crime " ?

Senator PLAYFORD - To make a contract is one crime, and to act under the contract is another crime.

Senator Sir Josiah Symon - Surely the Statute does not say that !

Senator PLAYFORD - Even if a man does nothing, under the contract, he is punishable because he made it, and if he acts thereunder he is liable to additional punishment. I understand that those words are in the Act.

There are, as indicated already, laws in many other States to similar effect. In making a comparison of the State laws, it is noticeable that in some of the States statutory exceptions from the heavy penalties have been made in favour of producers and raisers of agricultural products and live stock, and also in favour of organization of labourers.

I only quote these statements to show what a mass of legislation has been passed on the subject with' which we are dealing in this Bill, and to point out that there must be some reason for its enactment.

Senator Dobson - Since the Sherman Act was passed, hive trusts increased or decreased in Ameri:a ?

Senator Trenwith - Thev have been clever enough to dodge every Act that has been passed.

Senator PLAYFORD - The trusts have been fined, and subjected to all sorts of penalties in order to deter them.

Senator Findley - They have decreased in San Francisco - there has been an earthquake.

Senator Sir Josiah Symon - An earthquake is the only thing that will stop them.

Senator PLAYFORD - In Canada, in

V1904, a law was passed which was intended to operate against the practice of dumping. This law provides for the collection of special duty on undervalued goods. Market value is to be the value when sold for home consumption in the country of export, not the exporter's price which is often considerably under the price charged where manufactured. The definition of " market value " is -

The fair market value thereof in the usual and ordinary commercial acceptation of the term at the usual 'and ordinary credit (and not the cash value, unless know to be a " cash " article by universal usage, and so bond fide paid for) when sold for home consumption in the principal markets of the country whence, and' at the time when the same were exported directly to Canada.

Senator Sir Josiah Symon - Is that the definition in this Bill ?

Senator PLAYFORD - That is the definition in the Canadian Act, and we have adopted it to a considerable extent. Canada had to protect her own manufactures against American trusts, many of which are very large concerns. In the United States there is frequently a surplus stock which manufacturers wish to export. They have supplied the whole of their home market, and for the disposal of their surplus the practice to which they used to resort was to sell abroad at a very low rate, sometimes more than 50 per cent, below the price at which they supplied their goods to people in the United States. When these goods were imported into Canada, the importers used to claim that they had a right .to pay duty ad valorem at that reduced price. What Canada has done is this: She says, "We will take no notice whatever of your price, whether you say it is a cash price or not. We will go to the place where the goods are manufactured, and ascertain the price charged by the manufacturers in their own country. We will make you pay dutv on that." That system was found necessary in order to contend against dumping.

Senator Trenwith - '-Does the honorable senator say that he has an authentic list of articles which have been dumped?

Senator PLAYFORD - I have a list, and shall probably come to it in going through my notes. Honorable senators will also be aware that New Zealand has passed what is practically an AntiDumping Act. which provides that when goods are sold by importers in New Zealand at a price at which the manufacturers of such goods in that country cannot sell in competition if they are to receive anything like a fair profit, then the State will give them a bonus to help them.

Senator Findley - What is the date of that Act?

Senator PLAYFORD - It was passed last year. I have a word or two more to say about trusts. There was held in the

United States, in 1899, what was known as the Chicago Trust Conference. It was attended by representatives from all parts of the United States. They made a great many inquiries, and a report was brought up, from which I shall quote a portion. It will give honorable senators an idea of the extent to which trade and commerce 'in the United States are in the hands of monopolists -

Questions were sent to wholesale dealers, commercial travellers, rail-roads, combinations, labour organizations, contractors and manufacturers, economists, financiers, public men, &c-

According to these replies the following articles cannot be bought outside the trusts : anthracite coal, bagging, grass goods, cigarettes, copper (rolled), coffee, glass, iron, and steel (certain iron and steel products, such as chains, nails, and shovels, pipe, &c), glucose, kerosene oil, liquors (domestic distilled, except some Kentucky whisky), matches (certain makes), raisins, roofing (felt and slate), powder and ammunition, stoves, sardines, starch, snuff, solder, scythe snaths, tinplate, tinware, tobacco (certain brands as Battle-axe, Horseshoe, Duke's Mixture, and Durham), white lead, white pine lumber, wooden-ware, and yeast cakes.

That is a fine list of monopolies ! These trusts are able to charge the public, not, perhaps, exactly what they like, but considerably in excess of what is a fair price. This they do for the purpose of putting an extraordinary profit into their own pockets. Another important question dealt with by this conference was as to the effect which combinations had had upon distribution - that is, the effect upon the small storekeeper who distributes goods to the consumer. On this subject the following statement is made in the report: -

One hundred and ten say it is injurious, because it decreases their business and profits, and lends to eliminate them, and forty-nine wholesale dealers think thev have been benefited by the formation of combinations.

In answer to the question what effect combinations have on the consumer, one hundred and five think consumers are injured, while only twentyfour think they are benefited, and forty-one think there is no difference.

The items of information about prices aggregate five hundred and six. Four hundred and fifty-two were to the effect that prices rose after combinations were made, twenty-four that (hey fell, fifteen that there was no change, and fifteen that they were fluctuating, two hundred and ten do not specifically assign trusts as the cause of the change (increase in most of these cases), and forty assign other causes, usually increased demand, rise of raw materials, or the Tariff.

I quote this to show, in the first place, the effect of these monopolies, and the number of articles which they monopolize. I also quote it to show that, in the great majority of cases, those who are able to speak with any degree of knowledge on the subject consider that in the long run trusts are injurious. There are, it is admitted, good trusts and bad trusts - those that have done injury, and those whose operations have been attended with a certain amount of good. The replies to the circulars sent out showed that in certain cases the trusts had done some good. Now I wish to quote a passage from the final report of the United States Industrial Commission of 1902. The report is very valuable. The Commission was appointed toy the United States Senate. There were to be upon it five members of the Senate, to be appointed by the presiding officer, five members of the House of Representatives, appointed by the Speaker, and nine other persons, who should fairly represent the different industries and employments, to foe appointedby the President by and with the advice of the Senate. The Commission was appointed in 1898. It sat for a number of years, and, after collecting an immense amount of evidence from all parts of the United States, brought up a report embodying its conclusions. The gist of that report is to be found in the following recommendations : -

We now further recommend -

1.   That district attorneys of the United States be authorized and directed to institute proceedings for violations of the Federal anti-trust laws.

2.   That combinations and conspiracies, in the form of trusts or otherwise in restraint of trade or production, which by the consensus of judicial opinion are unlawful, should be so declared by legislation uniform in all jurisdictions, and as to all persons, and such Statutes should be thoroughly enforced.

3.   That stringent laws be enacted by the Congress and the several State Legislatures, making both penal and criminal the vicious practice of discriminating between customers, and cutting rates or prices in one locality below those which prevail generally, for the purpose of. destroying local competition; and that such laws should give to any person damaged the right to sue for and recover prescribed penalties, and make it the duty of prosecuting officers to proceed against the offenders.

Senator Millen - That applies to internal trade.

Senator PLAYFORD - I am not quite sure whether it applies to foreign trade also. Honorable senator's will notice the very drastic proposals there made. It will be observed,also, that we have followed the United States laws pretty closely in drawing up this Bill. Now I wish to refer to the measure itself. I will call attention to the principal clauses in it, although I shall not attempt to go through it exhaustively. The first matter in the Bill to which I wish to call attention is the definition of the term " commercial trust." It is defined to include -

A combination whether wholly or partly within or beyond Australia.

This provision has been very carefully considered by the Attorney-General, who hashad regard to the different decisions that have been given, particularly in the United' States Courts, in the various actions that have been brought against trusts and combines. Some of them have been able to escape punishment in consequence of the law not having been as carefully worded as it might have been. The Attorney-General has endeavoured, and I believe he has succeeded, in framing a definition under which it will be very difficult for trusts and combines to defeat the law. The term "commercial trust " will include all combinations that have been attempted up to the present time. Clause 4 relates to individuals. It provides against -

Any person who either as principal or as agent makes or enters into a contract . . . {a} with intent to restrain trade or commerce to the detriment of the public.

In the United States laws on this subject, those words, " to the detriment of the public," are not included. Consequently, some trusts, although their operations have not been proved to be to the detriment of the public, have been punished simply becausethey came within the law. For instance, there is the case of the United States v. Coal Dealers' Association of California, an outlineof which is as follows : -

Practically all the coal used in San Francisco was mined in Washington, Oregon, and BritishColumbia. A very large number of the coal dealers in San Francisco formed themselves into an association, agreeing not to sell coal below certain prices. The association entered into acontract with the producers of coal in Washington, Oregon, and British Columbia, whereby the producers agreed to co-operate with the association to carry out its purposes, and the producers agreed not to sell coal to any non-member except for a much higher price than they charged members. United States took action to enjoin proceedings under this arrangement.

The Court held that the combination affected the rate of coal as soon as it arrived in San Francisco from other States, and before it had become a part of the mass of property in the State it remained in Inter-State commerce, and, therefore, came under the Anti-Trust Act. It was unnecessary to discuss whether the restraint was reasonable, for the Sherman Anti-Truft law forbids all restraints whether reasonable or not.

It will be seen that in that case an injunction was granted. Clause 4, paragraph b of sub-clause 1, sets forth that it is an offence to enter into any contract or combination - with intent to destroy or injure by means of unfair competition any Australian industry, the preservation of which- is advantageous to the Commonwealth, having due regard to the interests of producers, workers, and consumers.

The. penalty for the offence is a fine of £500, and it is provided that every contract made or entered into in contravention of the clause shall be absolutely illegal and void. Clause 4, it will be seen, refers to persons, corporations being provided for in clause 5, which reads as follows: -

Any foreign corporation, or trading or financial corporation formed in the Commonwealth, which, either as principal or agent, makes or enters into any contract, or engages or continues in any combination ....

Then follow words precisely similar to those of paragraphs a and b of sub-clause 1 of clause 4, and, as under that clause, the penalty is . £500, while every contract so made is to be, void. The questionmay be asked whether there is power to deal with foreign corporations. If honorable senators turn to section 51 of the Constitution they will see that the Commonwealth Parliament has power to make laws with respect to -

Trade and commerce with other countries, and among the States.

That is sub-section 1 of section 51; and sub-section 20 gives the Parliament power to deal with -

Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.

It will be seen, therefore, that we have very extensive powers in this connexion. We cannot deal with individuals doing purely Inter-State business, but we may say to foreign corporations that they must not do certain things, or that, if they do, they shall be punished.

Senator Mulcahy - How is it proposed to reach foreign corporations?

Senator PLAYFORD - Foreign corporations, which come within the Bill, will have agents in Australia.

Senator Mulcahy - But supposing a foreign corporation has no agent?

Senator PLAYFORD - I cannot answer questions of that kind on the second reading; and I suggest that the honorable senator should raise these points in

Committee, where I shall have the assistance of my legal colleague. Clause 6 deals with unfair competition, and clause 7 provides against any monopoly of Inter-State or external trade. Clause 8 refers to the monopoly of trade by corporations, and includes any foreign corporation or trading or financial corporation formed within the Commonwealth. I desire to call special attention to clause 10, which provides for injunctions. It is laid down by this clause that no injunction shall be granted until there shall have been a hearing and determination on the merits of the case ; in other words, it will not be possible to obtain what the lawyers call an interlocutory order, which is made on a sort of ex parte statement to the Judge, often relied' on in ordinary processes of law. The clause renders it imperative that the facts shall be laid before the Court, which must make inquiry before an injunction can be granted. Clause 11, which deals with actions for damages, is taken from the Sherman Act, and I propose to quote a case in order to show how that Act works in operation. The case is as follows : -

Montague v. Lowry. - This case is one in which an action was brought by a private person against a combination engaged in the manufacture of tiles, grates, and mantels, to recover treble damages under section 7 of the Sherman Anti-Trust Act. Plaintiffs in that case claimed that they had been boycotted by the Trust, and were unable to purchase goods except from members of the combine at " list prices," which was 50 per cent. higher than was charged to members of the combine. Plaintiffs obtained treble . damages.

Honorable senators will notice that in this clause any person who is injured may sue for treble damages, as in the case which I have just quoted. In regard to suing under the Bill, it is provided that where imprisonment is involved, the case shall be heard before a Judge and jury, but that where it is purely a matter of a fine, the decision shall be left to a single Judge of the High Court.

Senator Pearce - Can the Minister say whether there is power under the Bill to deal with a trust which is confined to one State?

Senator O'Keefe - The Constitution itself would; I think, prevent our exercising any such power.

Senator PLAYFORD - I must say that I am not very clear on the point. There is no doubt that, under sub-section 20 of section51 of the Constitution, we have power to deal with foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.

Senator O'Keefe - But not within the limits of a State.

Senator PLAYFORD - If a corporation is formed within the limits of a State, it is formed within the limits of the Com monwealth.

Senator Guthrie - For instance, could we deal with the Sydney Gas Company ?

Senator PLAYFORD - I do not know ; I should not like to express an opinion on that point. There are provisions regarding second offences, followed by clause 15, which deals with the public notification of the term of contracts or combinations, but to which, though a long provision, I need not refer to further. Part III. of the Bill has for its object the prevention of dumping. When this part of the measure was originally drawn, it was provided that a Board should make the necessary inquiry into any case of alleged dumping, but, in another place, a Justice of 'the High Court was substituted, to the improvement, I think, of the Bill. We are more likely to get careful, legal, and consistent decisions from a' single Judge, than from the members of any Board.

Senator Millen - Who may be interested in the trade.

Senator Pulsford - May I ask if the Bill will prevent export dumping?

Senator Millen - -Will our surplus wool be allowed to be dumped into England ?

Senator PLAYFORD - That is not dumping. As to this part of the Bill, I should like to read to honorable senators opinions expressed in debate in the UnitedStates Congress.

Senator Pulsford - I do not like the slang term "dumping."

Senator PLAYFORD - It is a term which, I suppose, the people understand. In the Congressional Record, of the 5th February, 1903, is the following: -

That the great industrial trusts are selling vast quantitites of American products abroad at prices far "less than those at home, which they exact from their own countrymen, is common knowledge ; but it is difficult to obtain the exact figures of foreign sales in such cases, because the manufacturers are unwilling to acknowledge any advantage in prices to foreigners, less it injure their sales at home, and by the system of discount on regular prices so universally practised, it iseasy to conceal the facts. It was only by advertising in the New York World a reward of $100 that the Democratic Congressional Committee succeeded in obtaining some of the export price and discount lists, from which and from other reliable evidence the following statement is made up. It is believed to be entirely trustworthy : -



That long list, which honorable senators may examine for themselves, shows the percentage of difference between the export prices and the home prices in the case of fifty or more different articles. The preference in favour of the country to which the goods are exported, ranges from 13 per cent, to as high as 261 per cent.

Senator Millen - Does that represent the extent to which these exporters fleece their own people?

Senator PLAYFORD - The figures represent the difference between the home prices and the prices at which the goods are sold to people abroad, and the average difference, I should say, is considerably over 50 per cent. The list will give honorable senators some idea of the dumping that was going on. We know from the action taken in Canada that it is being practised, and we know that dumping is taking place here. Any one who paid attention to what was done by the Harvester Trust will know that when they first brought their goods herethey valued each harvester at £26. When Mr. McLean, as Minister of Trade and Customs in the ReidMcLean Ministry, raised the valuation to £38 or£39, they paid duty on that valuation without a word. Since then the value of these machines for duty has been still further raised, and I believe the importers are. kicking against that decision, and are bringing an action against the Minister of Trade and Customs on the subject. But that they have been, dumping their goods here at an unfair price and in unfair competition with our own manufacturers, and evading duty by a low valuation of their machines, there can be no mistake at all.

Senator Pulsford - I deny it absolutely.

Senator PLAYFORD - That is shown by the fact that, whilst they at first valued their harvesters at £26, they paid duty without a word of complaint when the valuation was increased to , £38 or£39.

Senator Millen - What else could they do when their machines would not otherwise be let in?

Senator PLAYFORD - I do not think there is any necessity for me to prove that dumping exists. I ask whether, if any honorable senator were a manufacturer here and goods were imported to compete unfairly with those he produced, he would not think that some steps should be taken to put a stop to it? There is no doubt whatever that he would.

Senator Dobson - Will not the Tariff Commission give us useful evidence in connexion with this matter?

Senator PLAYFORD - No. I was a member of the Tariff Commission for a considerable length of time, and whilst they have collected a little information on the subject, I can tell honorable senators that it is all in the direction I have indicated, and not on the other side.

Senator Pulsford - Will the Minister take care that we have the evidence collectedby the Tariff Commission before we are asked to consider this matter?

Senator PLAYFORD - No, decidedly not. This Bill is independent altogether of the work of the Tariff Commission. I do not know what the Tariff Commission may report, but I can tell honorable senators that the evidence givenbefore the Commission in connexion with dumping went to show that it exists. There has been no evidence to show that it does not exist.

Senator Millen - It depends on what the Minister calls dumping. All imports may be said to be dumped.

Senator PLAYFORD - By clause 17 it is provided that -

Unfair competition has in all cases reference to competition with those Australian industries, the preservation of which, in the opinion of the Comptroller-General or a Justice, as the case may be, is advantageous to the Commonwealth, having due regard to the interests of producers, workers, and consumers.

I think that no honorable senator can object to that. Clause 18 provides when competition shall be deemed to be unfair. It will be unfair if - (a)Under ordinary circumstances of trade it would probably lead to the Australian goods being no longer produced or being withdrawn from the market, or being sold at a loss, unless produced at an inadequate remuneration for labour ; or

(b)   the means adopted by the person importing or selling the imported goods are, in the opinion of the ComptrollerGeneral or a Justice, as the case may be, unfair in the circumstances.

In the second part of this clause it is provided that, in certain cases which are set out, and which I need not read, because we shall consider them in detail in Committee, the competition shallbe deemed unfair unless the contrary is proved. Then I come to the proceedings which are to be taken under these clauses. There will be a Comptroller-General, who in all probability will be Dr. Wollaston, the present chief of the Customs Department. It is provided that whenever he has received a complaint in writing, and has reason to believe that any person, singly or in combination with any other person within or beyond the Commonwealth, is importing into Australia goods with intent to destroy or injure any Australian industry by unfair competition with Australian goods, he maycertify to the Minister accordingly. The certificate of the Comptroller-General shall specify the imported goods, the Australian goods and industries likely to be injured, the name of the importer, the grounds for assuming unfairness in the competition, the name, address, and occupation of the person upon whose information action is taken, and any further statement which the Comptroller-General may see fit to make. He will then give the importer an opportunity to come before him and show cause - to answer the complaint which has been received in writing from the person who claims to be aggrieved. The certificate of the Comptroller-General will then be submitted to the Minister, and on receipt of it the Minister may, by order in writing, refer to a Justice the investigation and determination of the question. He will notify in the Gazette that the question has been so referred, and forward to the Justice a copy of the Comptroller-General's certificate. Provision is then made as to what the Justice shall do. He is to be given power, as set out in a clause containing nine sub-clauses, to fully investigate every matter, and when he has prepared his decision he is to forward it to the Minister. Clause 22 provides the action to be taken upon the determination of the Justice, and then there is provision in relation to a bond. These are the provisions of the Bill, and I contend that they are manifestly fair. The other branch of this Parliament took immense pains in dealing with the subject, and a great many alterations were made upon the Bill as at first introduced. We have received the measure after the wisdom of the House of Representatives has been applied to its consideration and amendment.

Senator Dobson - Do the prosecutions which have taken place in America show that the Sherman Act is fairly effective?

Senator PLAYFORD - I think there must be some kind of telepathy between the honorable and learned senator and myself, because that is just what I am coming to. I have a note " to refer to other reported statements that trust laws are a dead letter in the United States." I know that that is an old cry. It is true that there have been many cases in which the laws have failed to be effective, but there are many others in whichthey have been successful. I propose to refer to some of the cases in which the law has been successful in dealing with trusts. The Attorney-General has very carefully looked into those cases in which the law has failed. He has noted the reasons for the failure, and in this Bill we have protected ourselves as far as possible against a similar unfortunate result.

Senator McGregor - We have different Courts in this country.

Senator PLAYFORD - Dealing with cases in which the law has been successful I have the following note: -

United Statesv. Jellico Mountain Coal and Coke Co., 43 Federal Reporter 898, 1891. - Owners of the Kentucky Coal Mine and the dealers in Nashville, Tennessee, formed a combination whereby all the Nashville dealers could sell coal at the same price, the price to be fixed by the combination ; and the mines agreed to sell no coal in Nashville to any person not a member of the combination. The United States brings action under the Sherman Anti-Trust Statute to enjoin proceedings under this agreement.

Finding of the Court. - In making the agreement the transportation of the coal from Kentucky to Nashville, Tennessee, was a necessary incident to and element in the arrangement, and its execution would have been impossible without it.

That made it commerce between the States, and brought it within the purview of the Federal law -

It was, to all intents and purposes, commerce between the Stales, and as it is clear that it was a combination in restraint of trade, it falls within the Act.

Defendants are enjoined.

In January, 1903, Mr. Gaines, a member of the Federal House of Representatives, for Tennessee, said -

This Coal Trust was destroyed. Yet the honest coal business survives, and is thriving in Kentucky and Tennessee, and coal is selling there to-day at $3.50 to $3.75 - and why? The laws are enforced. Our Anti-Trust Statutes are enforced. The people are on top.

Honorable senators will see that they glory in the fact.

Senator Pearce - Will the honorable senator tell us why the same law failed to deal with the Sugar Trust, the Tile Trust, and the Beef Trust?

Senator PLAYFORD - It did not fail to deal with, the Beef Trust.

Senator Pearce - The first prosecution of the Beef Trust failed.

Senator PLAYFORD - I have a word or two tosay about the Beef Trust, which will show that the law did not fail to deal with it, and I propose to give some idea of the methods adopted by the Beef Trust, in whichthey notonly injured the consumer, which is the usual practice of monopolies, but the producer also.

Senator Pearce - Although one case against the Beef Trust may have succeeded, it still exists.

Senator PLAYFORD - No.

Senator Millen - The honorable senator mentioned it himself as one of the big trusts of America.

Senator PLAYFORD - It was one of the big trusts of America, but it certainly does not exist as a trust now. There may be some understanding amongst those engaged in the business, but I dare say the President of the United States is looking after them pretty sharply at the present time, and if there is any understanding between them it is likely that they will fare badly. I call the attention of honorable senators now to the note I have in connexion! with the case United Slates v. Swift, 122 Federal Reporter, 529 April, 1903. Swift was a member of theBeef Trust, and the case was tried in the United States Circuit Court, in the northern district of Illinois.

This case involved what is known as the Beef Trust, one of the most formidable of the industrial combinations of the United States. It was urged that of the total volume of trade and commerce among the Stales and Territories in fresh meats the Trust controlled about 60 per cent. The Trust is alleged to be guilty of the following acts : -

(a)   Directing their purchasing agents to refrain from bidding against each other at auction sales of live stock;

That is against the producer -

(b)   In bidding up the price of such stock for a few days at a time to induce large shipments, and then ceasing to bid to obtain the stock thus shipped at less than ruling market prices.

The object was in the first place to establish big prices. When those prices became known throughout the country stock was sent in from all parts of the United States. Then the prices at once came down, and the owners of the stock could not take them back, perhaps thousands of miles, and were compelled to sell them for whatever they would fetch. In this way, the Beef Trust fleeced the producer in a most disgraceful manner. The note continues -

(c)   In agreeing upon prices to be adopted by all, and restricting the output or quantity of meal shipped ;

By that means they kept up prices in the foreign, market. There are all sorts of devices in trade, and while one ' plan adopted is to dump goods into a foreign market, another is to prevent shipments to foreign markets when they would have the effect of lowering prices in those markets.

Senator Millen - Whether they send goods or not, they are to be punished.

Senator PLAYFORD - Yes ; they are a bad lot; there is no doubt about that. The note ofthis case continues -

(d)   In directing uniform prices for cartage and delivery throughout the United States as a device to increase the price to dealers and consumers ; and

(e)   in negotiating with carriers for secret rebates on their enormous shipments, thus bringing about unjust discrimination against other shippers and competitors for the purpose of stifling and destroying competition.

The Court held that these facts constituted an unlawful combination and conspiracy within the meaning of the Sherman Act, because it was restraint of trade and commerce, and, applying the rules laid down in the Addystone Pipe case, granted an injunction perpetual, forbidding the continuance of the acts of defendants complained against. (The injunction was granted in April, 1903. Further litigation followed, but the decision was upheld by the Supreme Court of the United States, in January, 1905.)

Then the injunction is set out, but I need not read it. It appears, however, that the trust comprised seven corporations, one co-partnership, and twenty-three other persons.

Senator Pearce - Nowthey have what is called a gentleman's agreement, which is expressed in no writing and no bond, except a bond of honour.

Senator PLAYFORD - I know that that has been stated, but I do not know that it has been proved. Whether there are men of honour among these people I am unable to say. I have four typical cases which show that in the United States the anti-trust law has been enforced. It may be said, in fact it has been said, that in the Commonwealth there is no necessity for this Bill. Some time ago I stated that I did not intend to allude to individuals or to corporations. But I expressed the belief that there were trusts and combines in existence in Australia. I will not say for a moment whether those trusts and combines are injurious - whether, like chips in porridge, they do neither good nor harm - or whether they are beneficial, as in some cases they may possibly be. I do not lay stress upon that aspect of the matter as one of the reasons for bringing in the Bill, but I submit that, in the absence of a restraining law, it is inevitable that sooner or later we should have trusts and combines working here which would be injurious to the public. It is a great deal wiser, therefore, to pass such legislation as this before any injury has been done than to wait until some of our citizens complain. We cannot pass retrospective legislation. We can only deal with cases which may arise after the passing of the law. It is wise, therefore, to legislate in advance. In this connexion I wish to quote some words which Senator Hoar addressed to the Senate of the United States on the 6th January, 1903, when it was considering certain proposed anti-trust legislation, and when he was arguing in favour of such legislation being proceeded with immediately. His statement is a wise one - and is worthy of being quoted. Speaking on the subject of the regulation of trusts or corporations, he said -

So it is for the future more than for the present that the wisdom of our legislators is called upon to take thought. And, Mr. President, the condition of that country is unhappy whose legislator does not take thought for the future even more, than for the present. Happy is the people whose statesmen foresee and prevent grievances, instead of waiting to experience them to cure them. In dealing with this trust problem, and the danger of vast accumulations of wealth in single private hands, we are seeking to lay down beforehand the law of & healthy life, and not to grope after a cure for a deadly sickness.

That is the position I take up in regard to this Bill. Honorable senators may say that there is nothing in the nature of trusts and combines in the 'Commonwealth which demands the enactment of such legislation ; I do not care whether there is, or is not. Looking at what has been done in other countries in this respect, and remembering the injurious effects which trusts and combines have produced, more or less, in different parts of the world, I submit that it is a great deal better for us to place this measure upon the statutebook now than to wait until the evil actually exists. I contend that if it be enacted, we shall be able to deal with any case which may arise before much mischief can be done. I believe that it will have a deterrent effect, in that it will prevent trusts and combines being formed whichwould be injurious to the public interest.

Debate (on motion by Senator Millen) adjourned.

Motion (by Senator Playford) proposed -

That the adjourned debate be an Order of the Day for Wednesday next.

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