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Tuesday, 21 August 1906

Senator DOBSON (Tasmania) .- I am inclined to think that the importance of the Bill has been somewhat exaggerated, but no words can over-estimate the complexity of the problem with which we have to deal. As I have thought on many occasions, we do not adopt the right mode of making laws for the Commonwealth. It appears to me that our system is not the one best calculated to insure wise laws, nor to make the most of such ability and experience as members of the two Chambers possess. The Bill is eminently one which might with great advantage have been referred to a Committee. I do not mean a Select Committee, but a Committee of the Senate composed of members of varied experience, who, sitting round a table, with authorities, precedents, and histories before them, would have been able to prepare a report most helpful in dealing with this complex problem, and in framing such laws as would bring about the result we all desire. That result is that trusts shall be fairly regulated, and dumping of an injurious kind shall to some extent be prevented. I quite admit that the evils of trusts in Australia have hardly yet appeared. The reasons I have for voting for the second reading, and thus getting the Bill into Committee, are two. First, I agree with the closing remark of Senator Playford, that, having an Act to deal with trusts and their regulation and control, we could to a very great extent prevent the mischief showing its head here; and, secondly, I am influenced by the statement of Professor Ely in his admirable book on the question, namely, that because we cannot see our way to do everything we might desi:e in the regulation of trusts so as not to injure our trade and commerce, is no reason for our not attempting to do something. For those two reasons I shall vote for the second reading of the Bill, but I am not prepared to vote for every clause. It is quite certain that there are beneficent trusts, and trusts which have injurious effects. Some writers tell us that trusts were created to put a stop to the waste of competition, it being seen that, by large organizations of capital and industry, economies might be effected which could not be brought about by single individuals. I think, however, that it will be found that human nature is at the bottom of most trusts, which really are formed and continued for the purpose of preventing competition. The Meat Trust, for instance, is one which appears to be based on selfishness and on virtual tyranny ; the members have done everything that dishonorable men - :for that I call them - with brains could do. They depreciated or appreciated the price of cattle) as suited their purpose, and tried to limit the output and regulate prices - in short, they acted in every way in restraint of trade in order to do away with what we call fair competition. Then the American Sugar Trust agreement is such that it is difficult to find a clause in it of which it can be said that it is illegal or ought to be made illegal. That trust was formed for a beneficent purpose, but at bottom there was a desire to get rid of competition. I have been rather amused by the utterances of Senator de Largie, and I think that when Senator Gray interjected the former gentleman found himself in rather an awkward position. We find the Labour Party supporting a Bill, the object of which is to do away with unfair competition and bring about fair competition - to base the industries of this Commonwealth on a fair standup fight between man and man. Senator de Largie must see that, in supporting this Bill, he is absolutely inconsistent in view of the principles he advocates.

Senator de Largie - How does the honorable senator make that out?

Senator DOBSON -- The fact will appear a little more clearly when I come to deal with the utterances of Senator Pearce, who made a most excellent speech, and gave us a good deal of information. Senator Pearce, however, fell into the same inconsistency as Senator de Largie.

Senator de Largie - The honorable senator might give us some proof of his statement.

Senator DOBSON - Senator Pearce told us that these trusts are Che result of economic conditions, and that nothing could effectually stop them but the nationalization of industries. If Senator Pearce's veryneat phrase that " trusts are the result of economic conditions," has any force in it - and I think it has - it is a half truth ; the honorable senator has left out, as the Labour Party always1 does, the factor of human nature. I do not think that the United States could hold anything like the position in the. world it does to-day - that it could not possibly have attained to the position of one of the first industrial nations of the world - unless there had been large organizations of capital. Such organizations are absolutely necessary to the progress, and nothing that we can do will ever stop them. All that we can attempt to do is to try and regulate them. I am quite sure that both Senator Pearce and Senator de Largie have been studying some of the excellent books in the Library, and that they must have come across passages which set forth in better language than I can command, the fact I am now trying to establish, namely that those large organizations are simply the result of the evolution of commercial and industrial life.

Senator Findley - They are stored up labour.

Senator DOBSON - "Stored-up labour." The honorable senator is now repeating one of the fatal blunders of the Labour Party. He is speaking as if everything were done by labour - as if there were not such a thing as skill, as efficient labour as against inefficient labour, or any variability in human nature. This capital is not simply stored-up labour. On this point, I should like to read an extract from a book, Commercial Trusts, written by John R. Dos Passos, of the New York Bar, as follows: -

It is a cruel mistake, not to say blunder, to discuss these questions upon the lines of wiping out capital and exterminating it. It is as senseless as '-impossible. One more thought, and I shall close. In connexion with this crusade against aggregated capital, it is fashionable to cry out against individual wealth. There is not in the political history_ of this country any appeal so demagogic, unnatural, unfounded, and unsustainable, as that which is made against wealth. The instinct of envy, or the worst passions of prejudice, or demagogism and ignorance, lie at the base of such appeals. That you and I have not been fortunate enough to accu- mulate wealth, is no reason why we should undertake to criticise, and fmd fault with, those who have gotten it legitimately, much less to seek to deprive them of it.

I should 'say that itf we do anything which unfairly or unwisely restrains trade or competition, the result must be very disastrous. Our object should be to arrive at the point where competition is fair and .where it is unfair. I think that another reason for trying to deal with this complicated matter is that if any party in the Commonwealth say that it is quite impossible to control trusts the Labour- Party will have a stronger ground for asking - " Why not nationalize all monopolies ?" I have not yet heard a clear statement of what might be expected to happen when monopolies were nationalized. I attended the debate on free-trade or protection between Mr. Scott Bennett and Mr. Max Hirsch,, and I was never more surprised in my . life than when I heard the former declare that he had ' not considered how the nationalization of industries would operate, how the men working under a social regime would have to be paid, or in what proportions they would be paid. It appears to me that the Labour Party have not considered those points, because, under their policy,, it is almost impossible to arrive at any scheme which would do justice between man and. man, or which would not end in perfect chaos before the nationalization of industries had been in force" two or three months.

Senator McGregor - Do not the .employes on the railways and in the postoffices get fair remuneration ?

Senator DOBSON - From the foundation of colonization in Australia the postoffices - and, since their introduction, the railways - have been worked by Government.

Senator Mulcahy - They are justifiable State monopolies.

Senator DOBSON - Yes.

Senator Findley - Many years ago there were private railways in Victoria, but they were bought by the State.

Senator DOBSON - My honorable friends cannot get out of the dilemma by arguing in that way. The only argument they have to fall back upon is, " Look at the post-offices .and railways." I am speaking of industries which have never, been managed by the Government, but which ought to be, and must be, carried on by private enterprise. I am not going to allow my honorable friends to force down my throat the argument about the railways and post-office's. Those institutions are carried on for the benefit of every class in the community; therefore, they ought to be under the control of the Government. My honorable friends might nationalize one industry, and not be able to observe the defects of the system, except in the creation of a few more public servants. If we nationalize all industries which are monopolies, or if we nationalized all the means of production, distribution, and exchange, it would create disaster, and that is the policy of the Labour Party. There are a great many precedents, however, to justify us in trying to regulate trusts. I find that in Austria, so long ago as 1870, it was illegal to raise prices above the market value; that in America there are sixteen States where it is a criminal offence to regulate prices, six States where it is a crime for two or more persons to enter into an agreement whereby full and free competition is prohibited, and one State - Nebraska - where it is an offence for two or more persons to agree to suspend the sale of a product. We know that since the passing of the Sherman Act fifteen Acts have been passed in the United States to regulate trusts and monopolies. Therefore, we are quite justified in doing what we cao to pass a Bill to suit Australian conditions. In the first place, the Bill bristles with legal points; and I believe that two clauses are ultra aires. It will be observed that the following words in sub-clause 1 df clause 4 - in relation to trade or commerce with other countries or among the States - are left out of the first sub-clause of clause 5. That is done because the latter deals with foreign corporations. It is contended" that, because the phrase " foreign corporations " is used in paragraph xx. of section 51 of the Constitution, Parliament' has power to deal with foreign corporations in any way it likes, and that,' although we can, only regulate trade and commerce between the States, we can regulate trade and commerce under foreign corporations in one State only. That is, I think, illegal. I do not conceive that that was the purpose for which that power was taken in section 51. I am inclined -to agree with Senator Drake that in legislating with regard to foreign corporations, we have to deal with such questions as their formation, their capital, and so forth, The same argument arises in connexion with clause 6. It says -

For the purposes of the last two preceding sections, unfair competition means competition which is unfair in the circumstances; and in the following cases the competition shall be deemed to be unfair unless the contrary is proved : -

(a)   If the defendant is a Commercial Trust.

It is to be taken for granted that there is unfair competition if the defendant is a commercial trust.

Senator Playford - If he cannot prove the contrary.

Senator DOBSON - Some honorable senators have denied that if it be a commercial trust, and if prima facie that is to be evidence of unfair competition, the Minister would have to prove all the things stated in clauses 4 and 5, namely, the contract or combination, the intent-

Senator Mulcahy - Does the honorable senator say that it would be necessary to prove that the defendant was a commercial trust ?

Senator DOBSON - Certainly. The only thing which the phrase " commercial trust," would save the Minister from proving, is that it was unfair competition. It would still be necessary to prove the contract the intent, and that it was an Australian industry worth preserving.

Senator Mulcahy - Is not unfair competition the whole gravamen of the thing.

Senator DOBSON - Whether that is so or not, certain things are laid down in clauses 4 and 5, all of which, with the exception of the unfair competition, would have to be proved. For instance, it would be necessary to prove that the man had imported the goods with the intent to bring, about unfair competition or to destroy an Australian industry, or that the preservation of the industry was to the advantage of the Commonwealth.

Senator Playford - If he was acting unfairly, it would be necessary to prove that he was intentionally doing so.

Senator DOBSON -If the defendant were a commercial trust, it would be necessary to prove all the things mentioned in clauses 4 and 5, with the exception of the unfair competition.

Senator Playford - The intent would be proved by the way in which the thing operated.

Senator DOBSON - My honorable friend is taking a very shortcut in order to get out of a difficulty. I quite agree with him that when certain things were done and there was a natural, clear result flowing from the act, the Court would deem that to be evidence of the intent, tout it would be necessary to prove that result. I do not mean to suggest that it would be necessary to stand up like the International Harvester Trust, and say that, having got 90 per cent, of the world's trade, it was going to get the other 10 per cent. But if the importation of the goods and the competition which was brought about was unfair, and certain other consequences followed, the intent would be assumed. But that would have to be proved according to the law of evidence. Clause 6 goes on to say -

(b)   If the competition would probablyor does in fact result in an inadequate remuneration for labour in the Australian industry :

(c)   If the competition would probably or does in fact result in creating substantial disorganization in Australian industry, or throwing workers out of employment.

Senator Pearcedealt with that part of the clause. I am sure that he feels, as I do, that here we are touching upon very delicate ground. It has been understoodall along that the Commonwealth has nothing; to do with the industrial life of the people of the States, that all legislation as to factories is left to each State, and that even if we desired, we could not possibly have a uniform industrial law.

Senator Playford - What about the Conciliation and Arbitration Act?

Senator DOBSON - That only refers to industrial disputes extending beyond the limits of one State.

Senator Playford - The honorable senator said that we have no right to deal with certain industrial questions. He made no concession at all.

Senator DOBSON - We have no right by a side wind to attempt to deal with the rates of wages or the hours of labour in the different States. Under our authority to regulate trade and commerce between the States we cannot deal with such questions. Those clauses, 5 and 6, appear to me to be ultra vires.

Senator Guthrie - In some businesses we can.

Senator DOBSON - I do not think that it can be done there. In dealing with the question of dumping, we are venturing upon more delicate and dangerous ground than ever. According to my reading, the United States have a magnificent home market of 80,000,000 persons, and it is protected with the highest Tariff wall in the world. The manufacturers keep their factories and men working at full speed from' the 1st January to the 31st December. They make such an enormous profit in their protected and .magnificent home market that they can afford to dump their surplus down in other countries, and1 take almost any price for it. That is the kind of dumping- which I think we ought to try to prevent. When Australians go to England or maintain there smart agents who understand what our markets are, and buy the surplus of the season's goods in London and ship them out at a very low price, I do not call that dumping, but competition - the very competition which the Bill is meant to create and put on, a firm basis. I admit that it is almost impossible to draw the line between unfair and fair dumping, and there comes in the complexity of the problem with which we have to deal. I am very much interested in the amendment of which Senator Symon has given notice, because, as I understand, he proposes to except the importation of goods from Great Britain^, I do not know what course the Government intend to take.

Senator Playford - We are going to oppose the amendment, of course.

Senator DOBSON - The Government declare that they are in favour of preferential trade, and here is an, opportunity to deal with preferential trade..

Senator Keating - Preferential dumping.

Senator DOBSON - To some extent it would give a preference to Great Britain. No one can contend that the dangers arising from., and the illegalities of, the trusts in Great Britain aTe a thousandth-part of those of the trusts in America. Is not that a reason for making an exception in favour of Great Britain? I defy honorable senators to draw a comparison between the importation of a quantity of last season's London goods at cheap rates and dumping, because countries like America make goods to sell at an absolute loss. We know that in almost every case thev take less for the goods thev export than, notwithstanding the cost of transport, they can get in the home market. The latter is the kind of dumping which we ought to try to regulate or exclude if possible. On this subject Senator Drake pointed out a matter which I think very much ' detracts from the usefulness of the Bill, and that is that ive cannot discriminate between State and State. If it be found that goods are being dumped into the Commonwealth, their importation must be prohibited. The Justice or the Government might consider only the circumstances of the State in which the dumping occurred, consequently the Minister might prohibit the importation into the Commonwealth of goods which two or three States most urgently required. He might prohibit the manufacturers in those States from getting, perhaps, some of their raw material in the shape of partly madeup goods, and thereby do infinite harm to the trade of the Commonwealth. I am at " a loss to understand how we are to frame clauses which would do exactly what we desire. The progress of the Commonwealth must depend upon the free play of competition, with very few exceptions. It must depend upon every man being allowed to do the best he can for himself, and to use has brains and capital in the best possible way, and the exceptions must be when unfairness has crept into the competition. The difficulty, however, is to say how the unfairness is to be determined, and to discriminate between it and what is really fair competition and fair trade.

Senator de Largie - That would land the Commonwealth in a state of anarchy.

Senator DOBSON - Nothing of the kind. It must be borne in mind that there are scores of things which create hardship. If, however, we attempted to regulate those things, we should stop the progress of mankind. We all know what great suffering was brought about by the introduction of machinery. On the whole, sewing and other machines have done good to the world, but at the same time they have caused infinite suffering to hundreds, nay, thousands of men and women. In the same way, on the whole the aggregation of capital in large trusts has its good, as well as its bad side. Too much time is, I think, being devoted to the debate on the second reading of this Bill, but if it gets into Committee I shall be prepared to do my share of the work in dealing with its various clauses.

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