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Thursday, 14 December 1905

Mr WATSON - I think that it is. If private enterprise be such an ideal system - if it leads to the development of the highest qualities in man - we ought- to be consistent, and allow it to work its way, and to expand the ability and the resourcefulness of individuals warring one with the other.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Food is a good thing ; but should we gorge ourselves all day?

Mr WATSON - No; but if honorable members opposite have so profound a belief in the virtues of private enterprise, it seems rather inconsistent that they should discover that there are some spheres wherein it is not wise in the public interest, to allow private enterprise to work its own sweet will.

Mr Robinson - May I say that I hold the view.s in question, because I believe that competition is impossible.

Mr WATSON - Quite so. I quite agree with the honorable member as to the ownership of public utilities. The only point at issue between us is as to what constitutes a public utility. I hold that with improved organization, with the greater appreciation of the economy that follows upon organization, the conditions are changing, so rapidly that that which may not be regarded to-day as a public utility will inevitably be regarded as one to-morrow. As soon as one line of industry is under the control of one set of individuals, who, like the Standard Oil Trust, for instance, pay all their employes, from the manager down to the ordinary labourer, good wages, and so make them loyal to them, while, at be same time, they fleece the people a.t every available opportunity, we may expect others to be dealt with in the same way. Surely the Opposition must see that when such a condition of affairs is reached, one of two courses must be taken. Either legislation of this kind must be introduced, with the object of returning to the public some control, and of securing to them some chance of receiving the benefit of competition; or, on the other hand, the community must step in and, in some form or other, resume the industries, and work them for the public benefit. Apparently, therefore, it is only a question of time and degree, and circumstances, as between ourselves and the honorable and learned member for Wannon and his friends.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - In, say, a few hundred years.

Mr WATSON - I fear that events; are marching- sb' rapidly that it is not a question of many years before this will be the position in regard to many main lines, of industry. I have followed, as closely as an outsider may do, the course of antitrust legislation in the United States, and I am free to confess that that legislation has not been attended with the degree of success that one would have liked. Apparently, a loophole has always been discovered, by means of which the law may be broken and its intentions evaded. But that should not deter us from making an effort in the same direction. There is no reason why we should not profit by the mistakes, if they be mistakes, of the United States, or, at all events, by the example which that country has set us. It may be that the measure which is now before us will not prove more effective than the legislation of the United States has done; but even if that be so. we shall have at least the satisfaction of knowing that we have tried ordinary methods before resorting to more extreme measures to secure the public interest.' The United States have undoubtedly had a most trying experience, There is a great deal of truth in the suggestion put forward bv the honorable and learned member for Wannon that the private control of railways and other means of freight-carrying has had much to do with the abnormal success of some forms df trusts and combinations in that country.

Mr Glynn - Coupled with their large ownership of land.

Mr WATSON - That is so. A number of factors have combined to help combinations in that country - factors which I admit do not exist here. But making allowance for that, it must become more and more apparent to capitalists as the years go by that they can run their businesses much more efficiently by an arrangement amongst themselves. That has been evidenced by the tobacco monopoly which exists to-day in Australia. As to the question of imports, I hold that we have a right to consider Australia's interest in regard to Australia's industries. It is al! very well for some honorable members to declare that it is to the interest, say, of the farmer that he should be able to obtain his harvesters at the cheapest rate. I admit that if the farmer could be assured that, as the result of fierce competition, he would be able for a considerable time ahead to purchase harvesters at a very -low rate, or even obtain them free of cost, some degree of benefit would immediately result to him. But whether that benefit would be equivalent to the collateral advantages of having the whole country a busy hive of industry, and so providing employment for his children and his children's -children, is a question I do not propose at present to argue. If the trust system of invasion of markets is to obtain in this country, in common with others, there is no reasonable guarantee that prices will remain at a low rate for any considerable time. It is the commonest of experiences that so soon as the dominant industrial concern has crushed competition out of existence, or rendered it so helpless that it can do nothingas against the larger enterprise, prices are put up to the highest possible limit, and the users of implements, or the consumers of other products similarly affected, are at the mercy of those who at first professed friendship for them.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Can the honorable member mention a case in point that has ever occurred in Australia?

Mr McDonald - The Colonial Sugar Refining Company.

Mr WATSON - I could name many cases in which this has occurred. As one "who has had some commercial experience, the honorable and learned member must "know of instances where the large trader has forced the smaller one out of the market, and then raised prices.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - Can the honorable member point to any case where a big business shop has crushed a small one?

Mr WATSON - I hold that that is the natural tendency of business. We are not to assume--

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - The honorable member spoke of a case in which a small trader was crushed out by a large one, who immediately raised prices. Where has that occurred in Australia?

Mr Tudor - That has been the result of the brick-makers' combine in Melbourne.

Mr WATSON - I do not say that an industry in which such incidents have occurred has been killed ; but competitors have been forced out of the market, and the dominant party has immediately increased its prices. It is only natural that any body of men who succeed to irresponsible power, whetherit be in politics or industrialism, will abuse that power, and use it to the full est possible extent for their own personal advantage. It would be most unfortunate for the farmers of Australia if a foreign trust were able to force out of the market the local producers of implements, leaving them at the mercy of the manufacturer abroad. The International Harvester Trust, whose resources we are assured by all reports from America are almost illimitable, boasts that at present it holds 90 per cent. of the world's trade in implements. It is as clear as noonday that, in its endeavour to get possession of the Australian market, it will use every effort, first of all to scotch local competition, and secondly, to reimburse itself in respect of the losses incurred thereby, by forcing up prices as soon as it has obtained control.

Mr Hutchison - They state in their circulars that that is their intention.

Mr WATSON - They do not say that it is their intention to force up prices, but they do assert that they are after the market. It is only to be expected that, having obtained control of the market, they will at once take advantage of it.

Mr McWILLIAMS (FRANKLIN, TASMANIA) - Are not all the manufacturers after the market?

Mr WATSON - Certainly they are.When the Bill is under consideration in Committee, the honorable member will find that I am as anxious as I hope he is to curb local combines as well as those from outside. In my view, there is a reason for taking action in this connexion, so far as importations are concerned. Whether we are justified in following the lines laid down in the Bill is a matter for consideration when we come to deal with its details in Committee, and I do not propose to speak upon it at length at the present stage. I trust that the general principles of the measure will be affirmed. It is not. as some honorable members seem to think, proposed to confine the application of the Bill to importers ; it is intended to impose reasonable conditions upon local manufacturers, and to punish any attempt to create monopolistic combines in Australia.

Mr Johnson - But it will be more difficult, under the Bill, to deal with local trusts than with foreign trusts.

Mr WATSON - That is a matter to be considered in Committee, and I shall be ready to give assistance to those who wish to insure that we can bring within the purview of the Courts the operations of all persons - whether local or foreign

Mr McWilliams - The shipping companies have combined pretty effectively.

Mr WATSON - Nothing is more adversely affecting the fortunes of our producers to-day than the existence of the local shipping ring to which the honorable member refers. The local companies, by an arrangement between themselves which is equivalent to the formation of a trust, are fleecing our consumers and producers alike, who are at the mercy of a little knot of men who control the shipping trade, and impose what freights they choose for the conveyance of goods from State to State. By an ingenious system of rebates, such as operates in the shipping trade all over the world, they bind to them those who have freights to send, in a manner which makes escape impossible. Only a little while ago I saw a letter from a man who complained of the treatment which his firm was receiving at the hands of the shipping companies, but who said that the information must be regarded as confidential, because he dare not think of what would happen if he publicly stated all that he knew in this connexion.

Mr McWilliams - The system of rebate exists in connexion with the fruit trade between Tasmania and the mainland.

Mr Watkins - Have not the shipping companies controlled the coal trade of Victoria for years past?

Mr WATSON - Yes. Honorable members and the outside public seem slow to recognise, or to be wholly unaware of, the effect which the operations of this combination have upon the fortunes of our producers, and even upon the consumers.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - During the years in which I was connected with the shipping trade, the local shipping companies

Mr WATSON - The shipping combine is not effective in connexion with the coal trade, because of the competition of Messrs. J. and A. Brown.

Mr SYDNEY SMITH (MACQUARIE, NEW SOUTH WALES) - Newcastle coal can be bought in the suburbs of Melbourne to-day for 5s. a ton less than it costs in the suburbs of Sydney.

Mr WATSON - The fact that one firm has been able to neutralize the effects of the ring, so far as the. coal trade is concerned, proves how thoroughly the combine controls all other trade.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - It ought to illustrate what happens when a trust abuses its opportunities.

Mr WATSON - In this case the competing firm is very wealthy. It owns coalmines and vessels, and was compelled to compete by reason of the oppressive charges of the combine. But very few producers, and practically no consumers, are so happily circumstanced.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - The coal trade is a business which requires hundreds of thousands of pounds to embark in.

Mr WATSON - That makes it so much the more difficult for an ordinary producer to break down a monopoly in it, and is an additional reason why the Government should interfere when there is an abuse of power by a combination. In ordinary businesses, in which any person who possesses a few pounds can set up, a monopoly is impossible. But the tendency of modern industry is such that an increasingly large amount of capital is required to start in any business, and consequently opposition is becoming increasingly difficult to establish.

Mr Conroy - Because of the taxation on raw material.

Mr WATSON - The honorable and learned member is obsessed in regard to that matter. Combines, however, are not confined to countries of any particular fiscal policy. They exist everywhere. Their influence is almost as great in free-trade as in protectionist countries. I am reminded by the honorable and learned member for West Sydney that the Chamberlain-Nettleton screw combine in England is one of the most efficient in the world.

Mr Hughes - It has crowded out all other makers.

Mr WATSON - Then there is . the Coates combine in linen thread. Those examples prove that there are combines in countries where there are not heavy protective duties. The shipping combine to which I have referred merits the serious attention of Parliament, with a view to affording relief to those who are suffering by reason of its operations.

Mr McWilliams - They hold our rebates over from season to season to keep the trade.

Mr WATSON - They tie the producers up in such a way that there is no escape. They are like the fly in the spider's web, and cannot break away without outside assistance. It rests with this Parliament to say whether they shall receive assistance, or remain victims to the rapacity of the combine. Then there is the tobacco combine. Up to the present the evidence of its malevolence towards the public is comparatively little, but it is only gathering strength, of which it will take advantage later on, when an opportunity presents itself So far, it has succeeded in lessening the cost of the production and distribution of tobacco very materially, but a distributing monopoly may work injury to the public, by increasing the price of tobacco.

Mr Conroy - I prophesied its formation in 1901, when the question of Excise was being considered.

Mr WATSON - I think that I helped to raise the Excise on tobacco. The importation and distribution of tobacco is in the hands of the combine, so that something more is needed than to increase the Excise.

Mr Hutchison - We get smaller plugs now than we did for sixpence.

Mr Watkins - And the quality of the tobacco is worse.

Mr Mauger - The workers are not allowed to average more than £2 a week.

Mr WATSON - Personally, I have no complaint to make about the quality of the tobacco which I buy, but we have evidence that the combine is likely to operate detrimentally to the public interest.

Mr Hughes - It is in a position to do so if it chooses.

Mr Conroy - This example shows that local combines are sometimes more dangerous than foreign combines.

Mr WATSON - Both are bad. Besides, it! is as easy to arrange a combination of importers in connexion with certain lines as to arrange a combination of manufacturers.

Mr Conroy - No, because, with freetrade, importers cannot keep a market to themselves.

Mr WATSON - When there was no duty on reapers and binders a combination of importers kept the price of these machines up to about £55, though they were imported at about £20.

Mr Mauger - There is a similar combination to keep up the price of cream separators.

Mi. WATSON.- There have been a number of such combinations. The Colonial Sugar Refining Company is another large monopoly. I was in error a year or two ago, when I said that the Millaquin mill, in Queensland, was their only competitor. I have since discovered that there is a refinery in Melbourne which is nominally a competitor.

Mr Conroy - There is another in Queensland.

Mr WATSON - I do not think that the best quality of sugar is refined at Fairymead.

Mr McDonald - Yes.

Mr WATSON - The point I wish to make is that the existence of two or three small concerns does not prove that there is not a monopoly. In America the concluding indictment against the great beef trust of Chicago was that it designedly allowed a few small concerns to exist, though it controlled 75 per cent. of the meat trade in the United States. That was intended to afford the public some sort of guarantee that the trust v as not a monopoly ; whilst, at the same time, the combine fixed the prices at which beasts were to be bought, and also the prices at which meat was to be sold. The small proprietors were all right, so long as they remained civil ; but woe betide any one of them if he dared to cross the path of the big combine. He would find himself frozen out in a very short time. So long as the small men did not seek to run up the prices of the steers, or to unduly reduce the price of meat, they were allowed - as the lion allows the jackal to pick the bones after he has concluded his feast - to carry on their small operations. Therefore, the fact that there are two or three small concerns which carry on the refining of sugar in Australia, affords no proof whatever that the Colonial Sugar Refining Company is not a monopoly which operates detrimentally to the public. I have been informed by those who have made this matter a study, that we pay for the refining of our sugar - that is, the "difference -^between the .cost of .raw. sugar and of the refined article - just double as much as people in other parts of the world are called upon to pay.

Mr Conroy - -Knock a couple of pounds off the duty, and we will soon settle that.

Mr WATSON - I know that that is the honorable and learned member's sovereign remedy for everything. A gentleman in Sydney, for whom I have a high regard, has one cure for every evil, and that is, to clap another few pence in the £1 upon the land tax. He tells us that that is the remedy for every evil which is mentioned to him.

Mr Lonsdale - Remove the duties, and you will knock the monopolists out of time.

Mr WATSON - I have referred to the fact that 'a number of monopolies < in free-trade England are flourishing to the detriment of the people. However, I do not wish to again discuss that matter. It seems to me that we are paying for the refining of our sugar nearly double the amount that we should be called upon to contribute if anything like fair methods were followed. If that be so, it is clear that the Colonial Sugar Refining Company is operating against the public interest. The Attorney-General said that he did not think that the company would come within the purview of this Bill.

Mr Isaacs - I said that I did not think it would come within the definition of commercial trusts.

Mr Conroy - The Colonial Sugar Refining Company would operate within a single State, and, therefore, the Bill would not affect it.

Mr WATSON - The honorable and learned member is mistaken. The company's products are transferred from one State to another, and its operations would clearly come within the scope of the Bill.

Mr Conroy - But it could sell its t roduct to a man in the State in which it was operating, and he could distribute it to other people elsewhere.

Mr WATSON - I do not think that that would place the company beyond the scope of the Bill, if we thought fit to include it in the definition of "trust." One honorable and learned member assured me that the definition of " commercial trust," as set forth in the Bill, would allow of a single . company being brought within its purview, if it was acting detrimentally to the public interests. That is to say, the definition of "commercial trust" is wide enough to include a single company which can be proved to have done something in restraint of trade, and to the detriment of the public. If the Bill does not sp provide, it should, in my View, be made to do so. We should be able to summon the company before the bar of public opinion, and subject its operations to some sort of examination, in order to assure' ourselves that the community is not being unfairly treated. In my opinion, the company is not treating the community well, but if it can demonstrate the contrary, I shall have no further cause of quarrel with it. If the Bill does not clearly indicate that the company will be affected, we should! amend it. Some reference has been made to the local harvester trust.' In my view, a combination which keeps the price of harvesters up to ;£8o per machine - or, as it was until recently, £90 per machine - is not treating the users fairly. The price of the machines should be reduced to considerably less 'than ,£80. Of course, it is said - and there may be some truth in the statement - that the methods of pushing business adopted by their competitors from America, who have been able to spend more money than the business was worth for the time being, have forced our manufacturers to incur a similarly huge expenditure, which, of course, has been added to the cost of the machines. If that be the case, it only argues that our manufacturers must, in the interests of the consumers, organize their business on such lines that they will be able to sell the machines to the public at a price representing a fair advance on the cost of production. Therefore, we require legislation which will enable us to deal with local trusts and combines, and with monopolistic companies, whose operations are of the same nature.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Is the case-so urgent as to require "rush" legislation?

Mr WATSON - That is another question. There seems to be necessity for legislation affecting both the importers and the local manufacturers. In each instance, I think that we require, for the protection of the public, something partaking of the nature of this measure. I do not intend to say a great deal in criticism of the Bill itself. In the first place, I think it would be altogether wrong for us to intrust the selection of the Board that is suggested to any Minister, no matter who he may be. I believe that we have every right to be proud of the records of our Ministers of State generally, and I- have- no desire to cast the smallest reflection upon any one who has occupied, or who may occupy, the highly honorable position of Minister of Trade and Customs.

Mr Johnson - Not even when he artificially raises duties ?

Mr WATSON - I think that the action to which the honorable member refers was justifiable. I contend that if the Minister appoints the Board, he will be placed in a false position, and would be open to all kinds of imputations of unfairness in regard to matters of great importance^ If a freetrade Minister were in power, and he happened to select a majority of free-traders, there would be an immediate outcry from the protectionists that they were not receiving fair play. Similarly, if a protectionist Minister were to appoint a majority of protectionists, a like outcry would be made bv the other side. Therefore, in the interests of the Minister himself, and especially in the interests of the public, who have a right to know upon unimpeachable authority what are the facts, it is highly desirable that no one of less standing than a Judge of the Supreme Court, or a Justice of the High Court, should conduct an inquiry of the description contemplated. In Canada, as has been pointed out, the Tariff provisions with respect to trusts enable an inquiry to be held, but it must be conducted by a Judge of the Supreme Court. In answer to the statement put forward by the Minister, that His Honour the President of the Arbitration Court felt that he would not care to undertake work of a semi-political character, I may say that the Judges of every Supreme Court in Australia, at one time or another, undertake, as Royal Commissioners, work of a character similar to that held in view. At present, Judge Rogers and Judge Owen are engaged in conducting inquiries of that description in New South Wales.

Mr Robinson - That is all right, so long as they have only to find as to the facts.

Mr WATSON - Yes. The Judge would have to find only as to the facts, so far as thev were ascertainable. And it would not be derogatory to a Justice of the High Court to ascertain facts such as would be brought under his notice in cases of the kind dealt with in the Bill. I think that the community value our Judiciary very highly., and that they would be much more inclined to agree with _ the finding arrived at if a Judge were to conduct it. Mr. "Hutchison. - We could-appoint a Judge for the purpose, if necessary.

Mr WATSON - Quite so. Although I voted for limiting the number of the High Court Justices to three, I am under the impression that very shortly we shall have to consider the question of strengthening the Bench.

Mr Deakin - There are ten or twelve cases that will have to go over as remanets from this month until next year, because the Court is already overtaxed.

Mr WATSON - That is very unfortunate for the litigants, and it is evident that, within a very short time, we shall have to increase the number of Justices. Some time ago I expressed the view that the work of the Court would increase to such an extent that an additional Justice would be necessary. I was prepared, in the meantime, to vote for the appointment of three Justices only, with a view to ascertaining what the work would really amount to. It is being demonstrated more clearly every day that the work is growing to such an extent that we shall have to reconsider the matter. Therefore, the suggestion that a Justice of the High Court would not be able to find time for this work may be put aside. I think that Ministers should consider whether; there should not be some preliminary inquiry in regard to local combines before the AttorneyGeneral takes action - just as is provided for before the Minister takes action in regard to imports. My own position is absolutely tentative, but it occurred to me that an inquiry might be held before we force on the Attorney-General the duty of taking action in the manner proposed.

Mr BRUCE SMITH (PARKES, NEW SOUTH WALES) - We shall not have to force him.

Mr WATSON - The present AttorneyGeneral may be succeeded by one who will have a much narower conception of his duties as a public officer. I must admit that there seems to be a great deal of force in the objection raised to the hurried consideration of this measure. I am strongly in favour of the principle embodied in the Bill, and I believe that there is grave necessity for taking action. But it must be admitted, even by the most enthusiastic members on this side of the House, that the Bill is a most important one, and will be farreaching in 'its effects.

Mr Deakin - These proposals are simple.

Mr WATSON - WhenI tell the Prime Minister that the opinion of one honorable and learned member differs very materially from that of the Attorney-General as expressed to-day in regard to one or two points, he will see that it is not as simple to the minds of those who have not had it under consideration--

Mr Deakin - The ends which it seeks to attain are simple.

Mr WATSON - In regard to those ends, I am quite at one with the Prime Minister. But the experience of anti-trust legislation in America is that there is considerable doubt as to how far it can be made effective. Because of that doubt, there is the greater need for us to pick our steps carefully, so that when the Bill is passed it will achieve its purpose. The Sherman Act, from which is taken that portion of the Bill which deals with local trusts and combines, has been in operation since 1890, and yet the trusts have continued to flourish. Amending legislation has since been enacted, and some of it is proving effective. How long it will take the trusts to break through the amending legislation it is difficult to say.

Mr Isaacs - The Court has repressed many of the trusts.

Mr WATSON - Two years ago an injunction was obtained from the Supreme Court of the United States against the great beef trust, but, nevertheless, that trust continued to flourish until a month or two ago.

Mr Deakin - It was dissolved and reformed.

Mr WATSON - That fact emphasizes the necessity for having every phase of the Bill carefully looked into, and I do not think that within the past couple of days honorable members have had that opportunity. As the measure is likely to affect a very large proportion of the trading operations of the States, it is only fair that the community should have a chance to express an opinion in respect to it's provisions.

Mr King O'Malley - What is the good of attempting to save the city after it has been plundered?

Mr WATSON - I admit that the case is urgent. That, however, affords only a greater reason for so marshalling our forces that when we make the attack we shall be sure of demolishing the enemy. Upon that ground, I think 'that we should go no further at the present moment than to affirm the principle involved in the Bill. The delay of the few months that will elapse between the prorogation and the next meeting of Parliament - we cannot postpone its consideration for long, in view of the fact that we must go to the country in less than twelve months--

Honorable Members. - Do not say that:

Mr WATSON - I do not wishto remind members of the Opposition of the unpleasant prospect which is ahead of them. There is, however, no doubt that Parliament must meet within a reasonable time from now. With regard to the importation of harvesters, which is a matter of pressing importance, nothing is likely to be done within the next six months.

Mr Robinson - Does not the honorable member think that the harvester trust people should be heard before action is taken ?

Mr WATSON - I think that their case should be investigated, and I would have it inquired into before Parliament reassembles next year. There is no necessity to await the passing of the Bill before Ministers can arm themselves with such information as will justify them in taking action. They can submit a Bill dealing with the matter as the first measure of next session.

Mr Johnson - Let the local manufacturers submit their books for examination.

Mr WATSON - That is a detail that might be attended to. I cordially approve of this attempt to limit in some way the operation of trusts and combines. If a majority of honorable members feel that the Bill ought to be postponed, I trust that after having had an opportunity to study the measure in detail they will come prepared to pass it next year. In that way greater benefit will accrue than ifwe passed the measure in a hurry at the fag end of this session, when honorable members have had no chance to familiarize themselves with its full import.

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