H.—44a.

[bJe. murphy.

77. You can see that a manufacturer, particularly one who is manufacturing a good article, has a very valuable goodwill ? —Unquestionably. I am told that half a million dollars was paid for the goodwill of Eskimo pie in the United States. 78. When a trader or a number of traders sells a manufacturer's article to a retailer at a price either at cost or below cost, or at a price which does not leave them a margin of profit, you recognize, do you not, that they are doing injury to that manufacturer and his article, no matter whether it is right or wrong ? —I think it is probable that destructive price-cutting might ultimately damage the manufacturer by restricting the demand; but whether that has been done Ido not know. 79. Do you think that that is justifiable on the part of the trader who is adopting those methods ? It depends upon what you mean by justifiable. I think it is legal, but socially undesirable if it became a general policy. It could not become a general policy, because it would break up. 80. Do you not see that in some cases the traders, for advertising purposes, purchase a particular article and sell it at a sacrifice as a decoy article, and thereby make larger profits on other articles ? —Whether it is done or not I do not know, but I have heard that it is done. 81. Assuming that it is, is that economically sound or unsound ? —I do not think it is good business for it to become universal. What is the difference between a retailer destroying the goodwill of the manufacturer through the public Press by counter-attractions or ultimately injuring the manufacurer by selling the article below cost ? 82. Do you recognize even now that a manufacturer may legally—l do not say it is practicable —sell his goods on such terms to the retailer that the retailer must sell at his price ? —What the legal position is I do not know. 83. Would you say from your point of view that the lawyers are wrong ? —lt is not for me to give an opinion on the law. 84. I do not mean to say that they are legally wrong, but they are wrong from your point of view ? —I think it is an unfortunate point of view, assuming it to be the law. 85. So that the position we have is this : you, as an economist, take one view as to what is in the public interest, and the Courts have taken another view, which I suggest is the correct one, and in your opinion they have taken a wrong attitude ? —Well, their view is different from the view I have expressed. 86. Mr. Collins.'] How long have you been an economist ? —I have been a professional economist since 1918—that is to say, that has been my exclusive occupation since 1918. 87. How long have you been associated with Victoria College ? —Since July, 1918. 88. You mentioned, in the course of your examination, the Cost of Living Report of 1912 : how do you view that report ? —lt is quite sound, and I think it was a very able document. 89. I have noted that during the course of your examination you made strong objection to price-fixation : you know, of course, that the Ford car is subjected to price-fixation ? —Yes. 90. He has given the world a product at a cheap price, and he insists on that cheap price being maintained in order to maintain the popularity of the car ? —I do not know what his policy is. 91. Would you be opposed to it ?—I do not know it; Ido not know what it is. 92. You seem to be opposed to all price-fixation ? —I think that competition in distribution should be the rule. 93. Can you state any case where price-fixation would be justified from the point of view of the economists I—l cannot think of one. I think the fixation of prices in such services as transport is in the public interest, but I cannot think of any hypothetical case where price-fixation of commodities is in the public interest. The older I get the more it seems to me that competition in a retail business is the only way of weeding out superfluous men. 94. Would you believe in price-fixation being necessary in emergency conditions ? —lf prices are to be fixed, they should be fixed by the Board of Trade—that is, not the Board of Trade, but by a Board of Trade. 95. Do you know of the operations of the P.A.T.A. in Great Britain ? —No ; I do not know of anything beyond what is in McCrosty. 96. It has been operating since 1896 ? —All that I know of the P.A.T.A. in England is what I have read. Note. —For Professor Murphy's written statement see Appendix A. George Gladstone Marriott sworn and examined. (No. 26.) 1. Mr. Gresson.~\ You are a grocer, in business at Parnell, Auckland ? —Yes. 2. You began business in 1913 ? —Yes. 3. And took over a family business ? —Yes. 4. That was a credit business, was it not ?—Yes, we did a family trade of nearly 90 per cent. 5. In 1921 you were president of the Auckland Master Grocers' Association, were you not ? —Yes. 6. Did you become interested in cash stores in Auckland ? —Well, I have just returned from Australia and whilst I was there I have been inquiring into various operation existing there. 7. When did you turn your business into a cash store ?—About 1922. It was not entirely cash, but I adopted a method which has not, so far as I know, been in operation in either New Zealand or Australia. I was considering the desirability of turning my business into an entirely cash store,, but recognizing that by so doing I would have to sacrifice 50 per cent, of my credit customers, and not seeing where I would get 50 per cent, back, I proceeded to make provision for the credit customers as well. I published two prices—namely, the cash price and the credit price.

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