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Thursday, 4 October 1906

Senator PEARCE (Western Australia) . - I am sorry that the time at my disposal is insufficient to enable me to go through the very able speech made by Senator Millen. But I point out that that speech was not devoted to a criticism of the report itself. Not a single sentence of his speech dealt with it. He did not attempt to argue against the conclusion at which the Commission arrived, but devoted himself entirely to criticising and analyzing what I said in initiating this debate. But I should like to deal with Senator Millen's address. I think I shall be better advised if I devote my attention to the case which has been put before the people of Australia, per the medium of the press, by a Melbourne firm of solicitors. It was published in the Argus of the 27 th September. I invite honorable senators to listen to the paragraph in which the instruction of the solicitors to counsel is set forth-

Our clients consider that the report furnished by the majority of the Royal Commission is onesided, unfair and misleading, but as this can only be conclusively exposed bv a detailed study of the voluminous "minutes of evidence," which would perhaps be too great a tax upon the time of members of Parliament, or of the public, they requested us to obtain the opinion of two leading counsel as to whether, specifically and generally, the conclusions of the majority report were justified by the evidence upon which they purported to be based.

Accordingly, we submitted the matter to two leading counsel here, Mr. E. I'". Mitchell, K.C., and Mr. T. a'B. Weigall, as per our letter of 10th August, 1906.

It will be noticed that the two counsel were simply invited to support the opinion of their clients - who were paying for this ten days' trip to the country. The case was already prejudged. Any finding bv the gentlemen who were being paid for tlie opinion that the report of the Commission was not misleading, would not have been very palatable to those who were finding the money. But I intend, in the short time that is available to me, to analyze this criticism of the Commission's report, and I think I shall be able to show that if the two gentlemen who have furnished an opinion upon it, read the evidence, they were verv careful to put it on one side in formulating their opinion.. Here is their first statement -

First " the combine " or " combination " generally referred to by witnesses and Commissioners is that which was effected by an arrangement made in February, 1904, and described by Mr. L. P. Jacobs at Q. 555. Any amalgamated body which preceded it was always opposed by some other body or bodies powerful and active in a fierce war of competition. Not _ until February, 1904, was there anything in the nature of a "combine" of the principal firms nr companies carrying on the tobacco business in Australia.

Now, Senator Gray, who certainly was nor hostile to the combine, has submitted a minority report, and if honorable senators will turn to that document, they will see that he says (page 17) -

In March, 1903, the firms of Dixson and Cameron, realizing the formidable nature of the competition of the Wills 'Company, agreed to merge their interests in a new company to be called the British Australasian Tobacco Company.

At that time, the Wil/ls Company had only commenced operations in Australia. That Company, I may say, was the pioneer of the British American Trust. Therefore, according to Senator Gray's conclusion, based upon the evidence, in March, 1903, the principal Australian firms formed a combine to meet a possible competition which was only then commencing ; because the Wills Company had only then established itself in one or two of the capital cities of Australia. On page 56 of the evidence (question 542), we have a statement of the origin of the local combination which preceded the international combination. The statement is that of Mr. L. P. Jacobs. 542. I was asking you with regard to your connexion with tobacco manufacturing in 1806, and whether you took Mr. Gross into partnership? - I will explain. About the year 1895 or 1896 Mr. Alfred Gross, and his partner, who did business in Brisbane .under the name of Messrs. A. Gross and Co., came to Melbourne and opened a tobacco factory under the name of Alfred Gross and Co. Proprietary Limited. After he had been in business for about two years . the firm of which I was a partner, Messrs. Jacobs, Hart, and Co., secured an interest in Alfred Gross and Co. Proprietary Limited, whilst Mr. Gross acquired an interest in the firm of Jacobs, Hart, and Co. That arrangement continued for about two years, when Mr. Gross retired from (he firm of Jacobs, Hart, and Co., and remained connected only , V, tl, A. Gross and Co. Proprietary Limited. We retained our interest in Alfred Gross and Co. Proprietary Limited. Some time after that Messrs. Dixson and Sons, of Sydney, and Robert Dixson and Co., of Adelaide and Fremantle, joined me in purchasing the business of Alfred Gross and Co. Proprietary Limited, and starting a tobacco company in Melbourne under the name of the Dixson Tobacco Co. Proprietary Limited, of Melbourne. 543. Can you tell us why Messrs. Jacobs, Hart, and Co. went into, liquidation ? - We did not go into liquidation. We amalgamated our business with the distributing portion of the businesses of Dixson and Sons, Brisbane, Robert Dixson and Co., Adelaide and Fremantle, and Sutton and Co., Sydney, under the title of the States Tobacco Company Proprietary Limited, of Melbourne and Sydney. 544. That was just about the time of the estab lishment of Inter-State free-trade? - Yes.

Inter-State free-trade was established in 1 901, and, according to Mr. Jacobs' evidence, the principal "tobacco firms had then already commenced their work of combination, and many of them were combined. At a later date the Cameron firm came in, and in 1903 the very large majority of the firms were in close combination. Now we come to the statement as to the humidity of the atmosphere, and the conditions under which the operatives worked - "2nd. Par. 17 states that four representatives of operatives employed in making twist and plug tobacco 'were in agreement' that conditions generally were worse than before the combination, and that these complaints refer to - " (a) Inadequate and reduced wages. " (b) The substitution of female labour for male labour at lower rates of pay than male labour. "(d) Power of combine to dictate terms and conditions, owing to the absence of competitors. "'These four witnesses did not each of them corroborate each other of them upon each of these four heads of complaint. One of them, Mr. Blundell, expressed satisfaction with existing conditions in his State (South Australia). Only one of them. Mr. Stanley, referred to complaint c. Complaint d seems to have been pressed more by certain Commissioners than by the witnesses themselves."

It is said that nobody backed up the evidence of Mr. Stanley, but here is the evidence of Mr. Forest Irwin -

Three or four times last summer I have, under instructions from the union, reported to the Factory and Shops Act Department the necessity of reducing the decree of heat existing in the press-room, owing to the employes not being allowed sufficient fresh air, and also in regard to the quantity of tobacco dust and particles flying through the air, which were naturally inhaled.

That is the statement of a witness from Sydney, and he practically makes the same charge as that made by Mr. Stanley. This shows that these impartial judges have not read the evidence, or they could not have made the ' statement that only one of the witnesses called on behalf of the operatives complained about the atmosphere. I now come to the following paragraph in the letter: - " The contradictions given by the inspectors (public officers) were not confined to the question of humidity of atmosphere, and cannot be fairly described as 'qualified.They appear to us to be unqualified contradictions of any assertions that there were any such ill-effects as alleged from any preventable humidity."

The Commission stated in their report that the contradictions by the officials were only qualified ; and I shall read a statement to honorable senators, who will be able to judge as to the correctness of that view. Amongst the witnesses examined was Mr. William John Rubin Pearce, Inspector of Nuisances, Melbourne. His evidence was as follows : - 6994. You have no knowledge that any such state of affairs existed, as statedby Mr. Stanley ?- No. 6995. Assuming that the ventilators, at a certain time, had all been closed, and therefore the atmosphere had become unhealthy by reason of that fact, would you have any knowledge of it? -Really, I do not think I would. As regards the ventilation itself, that comes more under the supervision of the factory inspector.

As a matter of fact, this gentleman, who was brought to contradict Mr. Stanley's evidence, had nothing to do with the ventilation. Mr. Edward Charles Martin, Inspector of Factories and Shops, whose duty it was to look after these matters, was examined,' and the following is an extract from his evidence: - 7002. Do you supervise the ventilation ? - No, I have nothing whatever to do with that. 7037. BySenator Stewart. - You say you never found the ventilators shut? - Had I done so, I would have ordered them to be opened. 7038. If they were kept 'shut, would the atmosphere be detrimental to the health of the people working inside? -I would like to sayin reply,to that, that that matter is beyond my province.

The statement made by Mr. Stanley was that the factory was supplied with ventilators, but that these ventilators were kept closed - 7039. But the purpose of having ventilators is to purify the atmosphere? - Exactly. If the ventilators were closed the men would not be able to work in the factories, and theywould take care of that themselves. 7040. The allegation made is that owing to the ventilators being closed, the factory is extremely unhealthy to work in ? - I have never seen the ventilators closed. 7041. You visit the place three times a year officially, and although you did not find the ventilators shut, it is finite possible that they may have been shut during the greater portion of the year ? - Exactly.

It will be remembered that Mr. Forest Irwin's statements were in regard to the Sydney factory ; and the following is an extract from the evidence of Mr.William George Armstrong, Medical Officer of the Board of Health, who was called at the request of the combine to disprove Mr. Irwin's statements - 4939. Have you ever had occasion to visit the

British and Australian Tobacco Company's factory to inquire into the question of the humidity of the air? - If that is the factory formerly known as Dixson's, I made a visit there on 26th May,in company with one of the inspectors of the Department of Labour and Industry. I suggested one or two slight alterations in the way of ventilation, but nothing further. 4940. What caused you to make any suggestions? - . I thought it might be improved slightly in one or two directions. But, generally speaking, I considered it fair. 4941. Were any of your suggestions based on the quantity of dust arising in the factory ? - No. 4942. Can you give the Committee an idea of what alterations you suggested ? - I think I suggested putting in one or two ventilating openings in one of the walls; that is as far as I can recollect. It is a considerable time ago, and my memory is not very clear about it. 4971- How long have you been in the Government employ ? - Eight years. 4972. During that period you often visited that factory ? - No ; I have only visited it once, in 1905. 4973. You were instructed to make the visit by the Minister for Labour and Industry? - No; I was not instructed, but at the request of that Department,' who said they would like my advice in connexion with the ventilation at a certain factory. 4974. What time did you spend at the factory? - About one and a half hours. 4975. And by whom were you shown over it? - By one of the officials of the factory ; I could not say who. 4076. During the eight years you have been in the Department you visited that factory but once ; therefore, speaking as an expert, one visit in that period of time could not be taken as a serious opinion on a matter affecting the health of operatives engaged in that factory? - In general terms. No, I do not think so. I should prefer, before giving mv opinion, to visit the plan at various seasons of the year.

In view of that evidence, I ask any reasonable man if the Commission were not justified in saying that the contradictions given by officials to the. statements made by the witnesses for the operatives, were only qualified? As to wages, there is the following paragraph in the letter: - " (a) Is a finding 'that wages have been in some instances reduced.' Except in the isolated, and (we think) immaterial, instances referred to by Mr. Irwin affecting only five or six operatives, we think that no finding that there has been any reduction of wages by the combine is or would be justified by the evidence."

The statements made by Mr. Irwin are admitted; and, therefore,I need not follow that point further. Twist tobacco is very largely used in Adelaide, and is sold at so many sticks to thepound. After the combination was formed, the number of sticks to the pound was increased, but the operatives, who were paid 4d. to the pound, were not given an increase of wages. Where they had been making sixteen sticks for 4d..they had to make eighteen sticks, and where they had been making fourteen sticks they had to make sixteen. My contention is that that constitutes a practical reduction of wages, because more labour was required to earn the same amount of money. The following is an extract from the evidence of Mr. Reginald Blundell, of Adelaide: - 6028. By the Chairman. - In answer to Senator Gray, you stated you were getting thesame. wages now as you were before the combine came, into existence. You were making fourteen sticks for 4d., and nowyou are making sixteen sticks for the same price. How can you be getting the same wage? - I meant per lb. Some lines are worse than others, but taking it all round, our price is 4d. per lb. 6029. Take any particular line. You were making fourteen* sticks for 4d. for several years. Now you are making sixteen sticks in that particular line for 4d. Do you say youget as well paid? - In that light we are not. We get the sameper lb., but not the same per stick.

The same thing happened in the case of plug tobacco. The size of the plug was reduced, and the operatives who made the covers were paid so much per lb. ; and the result was that they had to cover a greater number for the same price as formerly. It will be seen that Mr. Irwin's statement was not an isolated one. but that, in the case of the plug covers also, there had been a practical reduction of wages. Then we come to the following paragraph in the letter: - " (b) Is a finding 'that the number of females employed has increased,' and that in some cases they receive less than men for similar work?' In so far as this finding means that women areemployed to do the work which men formerly did, and at a less wage than men received for such work, we think that it is in noway justified by the evidence."

Honorable senators will notice the twisting of the report, which stated simply that the number of female operatives had been increased. That statement is so twisted as to convey the impression that women are now employed at a lower rate of wage, to do work formerly undertaken by men. Now let us see what witnesses proved this.I direct honorable senators to page 59 of the evidence. They will find that the witness under examination was Mr. Louis Phillips Jacobs, one of the heads of the trust, and he submitted a table showing the average weekly wages paid in tobacco and cigar factories for the first week in June, in the years 1902, 1903, and 1904. The table gives particulars for all the factories, but I refer only to those of the Sydney factories under the initial "B." It will be seen, from this table that the num- ber of hands employed in 1902 was 307 males; in 1903, 320 males; and in 1904, 328 males, and 43 females. In 1903 the trust came into operation. A summary of the whole position by Mr. Hugh R. Dixson will be found at page 327 of the report, and these are the figures which he gives - For 1903, women and girls, 523 ; youths and boys, 326 ; and men, 598. For 1905, women and girls, 609 ; youths and boys, 330 ; and men, 649. These figures show an increase of seventyseven women and girls, four youths and boys, and fifty -one men, or an increase of twenty-six more women and girls than of men.

Senator Guthrie - Do those figures include all the factories?

Senator PEARCE - They include all the trust's factories. Mr. Coghlan's figures for 1902 give the total number of employes at 2,979, and the number given by Mr. D. Ferguson, Inspector of Excise for Victoria for 1904, was 2,816, so that over the whole of Australia there had been a decrease of 163 in the number of employes engaged in tobacco factories. Here is another statement made -

That the atmosphere in two of the principal tobacco factories is kept at a high state of humidity, and a return handed in in reply to

Q.   5034 shows an unusually high percentage of sickness in one of the factories.

This is the answer to that -

In our opinion the evidence as to this matter does not support any finding that there have been in any factory any humidity which was excessive, or which could or should have been avoided. There is no evidence on which we can express an opinion as to whether the percentage of sickness in one of the factories, as shown in the return handed in, was unusual.

I turn again to the evidence of one of the witnesses supplied by the trust - Mr. Wicks, one of their foremen - and I direct the attention especially of honorable senators who have any acquaintance with the business of friendly societies to the evidence which he gave. It will be found at page 231 of the report -


Nearly one-third of those subscribing to the sick and accident fund had become at one time or another a charge upon the funds. In all my experience of friendly society work. I have never come across a record approaching anything like that. I think that evidence abundantly justified the statement we made on that point. Here is another paragraph -

The lessening of the number of competing employers has placed the employes more completely under the control of the dominant employer.

Their answer to that is -

However true this may be as an abstract general proposition, we think that there is no evidence to show that there has hitherto been any use by the combine as a dominant employer of any supposed power of more complete control.

We did not say that there had been, but we did say that they had the power. I pass over the rest of their report, for the very, good reason that I have not time to deal with it all, and I desire to deal particularly with a question arising out of the statement of the accountant. We are told that the tables submitted in our report were submitted by them to a firm of accountants. I may inform honorable senators that our tables were submitted to a firm of accountants by the Commission before they were embodied in the evidence. They were submitted to Mr. S. J. Warnock, incorporated accountant and managing trustee, of 375 Collins-street - a gentlemanwho, I am told, stands very high in his profession in Melbourne. He checked our figures before they were published in the report. Now, as to the sources to whichthey say they attribute errors, whichthey deal with in paragraph 5. I take the first line -

Under-estimate of retail of profit on imported cigars, £184,242.

If honorable senators will turn to page 12 of the majority report, they will find a table headed -

Cigars - Jacobs' estimated retail prices and numbers, p. 465.

The meaning of that is that we took the estimates supplied by Mr. L. P. Jacobs, the head of the cigar branch of the tobacco trust. We give in the table the weight and number of cigars of local manufacture and of imported manufacture, according to his estimate, and then we go on to say--

Mr. L.Benjamin (pp. 71) estimates 50 per cent. of imported cigars are sold at 6d. each retail; 20,000 at1s.; 100,000 at9d. Imported, 120,000 at1s., £6,000; 100,000 at9d., £3,700; equals £9,750. Imported,9,551,115 at 6d., £238,778; 9,551,116 at average 3d., £119,389; equals £358,167. Total retail value, 19,322,231 imported cigars, £367,917.

If this is an error, then it is based on the sworn evidence of Mr. Jacobs and Mr. Benjamin, members of the trust, and the heads respectively of thecigar manufacturing and cigar importing branch of the business. Wherever we have been able to do so. we have given the page and question at which the evidence supporting the statements we have made are to be found, and why did not this firm of chartered accountants seize this splendid chance to expose the error? This is their next line -

Over-estimate of retail value, £100,681 ; less over estimate oftheir cost value, £51,604; £49,00;.

The estimated retail value is based again on the evidence of Messrs. Jacobs and Benjamin. What tetter authorities could we get? We might have taken the evidence of Mr. Carter, a cigar-manufacturer outside the trust, and if we had done so, instead of showing a profit of , £400,000, we might have shown a profit of £800,000. But anticipating this criticism, we carefully based all our estimates, whenever we were able to get the information, on the evidence of representatives of the trust. That is the reason why there was no detailed criticism of the accounts. These accountants knew that if they analyzed and attempted to destroy our figures "they would have to destroy the credibility of the trust's own witnesses, and they were not likely to do that. I have material before me with which I could answer the whole of the criticism suppliedby these, persons, and on the sworn evidence submitted to the Commission. I regret that I have not time to do so, because I desire to have a division on the Bill taken, and I must perforce conclude.

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