Yes, on turnover. That would represent approximately 18 per cent. on cost. The retail trade is being permitted, under the most recent Order of the Department, a margin of 30 per cent., which means that, over and above the expenditure on wages, commission and bonuses, there is a margin of 12 per cent., but it is 12 per cent. on an article which is far more expensive than the article which was handled at a cost of 14 per cent. in 1933. I have mentioned the cost of a suit length. The article I had in mind would have cost 7/6 per yard, ex-factory, in 1939. That article now costs 16/6 ex-factory, so that, assuming that the rate of profit as a percentage has remained unchanged, the amount of profit in cash has increased, as I say, by 137 per cent.
With regard to the profit in other trades, perhaps the best thing I can do is to read a paragraph which appeared in the Connacht Tribune on 2nd November last. The paragraph, set in a panel, reads as follows:—
"A Westmeath fruit grower consigning apples to Dublin slit one and placed in it a note containing his address and stating: ‘I sold this apple for a penny. How much did you pay for it?' He received a reply from a Dublin woman who had purchased the apple stating that she paid 9d. for it. He did the same thing with a head of cabbage which he sold for a farthing and he received a reply stating that it had been purchased for 4d."
These are margins of profits in the greengrocery business and I think the same margin is being sought generally.
There are, of course, limits. It is untrue to suggest that the prices of all commodities have gone up in the fashion I have now described. For instance, there are a number of commodities—bread, butter, milk, and a number of similar commodities—in respect of which the margin of profit is controlled on a much narrower basis than that in the drapery trade or the greengrocery business, but what the average housewife sees is that her husband has received an increase in wages in the last six or eight weeks, which increase has been swept away, particularly since Christmas, by the increase which has taken place in the price of these essential commodities which are consumed in every household. Of course, the increase is going to go on.
We are only at the beginning of this racketeering so far as retail prices are concerned and, to some extent, of course, Government policy is responsible for the increased prices. I understand, for instance, that the Department of Local Government has intimated to the Dublin Corporation that the rents of corporation houses must be increased by 15 per cent. in March. I understand that ukase has been issued to the corporation by the Minister for Local Government: a demand that rents on working-class houses in Dublin provided by the corporation are to be increased by 15 per cent. A number of privately-owned houses built in Dublin City prior to Christmas were on offer three weeks ago at £2,000 each. I suppose that pre-war their price would range from £950 to £1,000. On the 1st January. every one of these houses was increased in price to £2,250, so that 12½ per cent. had been added to the price of a house which was completed in December last.
There were a number of advertisements or "puffs" published in the Press in respect of the auctioneering business immediately after Christmas. On the 2nd of January, for instance, the Irish Times had a statement furnished, I take it, by Adhouse & Company, Auctioneers, in which it was stated that “towards the end of the year prices had increased to over three times the pre-war level”. Another advertiser published in his statement the following particulars: “Houses that originally cost £1,800 were sold for £7,000.” That is to say, they were sold in 1946 for £7,000. This advertiser said, by way of postscript, that in one instance a house which originally cost £320 was sold for £1,825 and auctioneer's fees, which means that the house, as it grew older, increased in value to the extent of 500 per cent.
So far as I can gather all those firms which have been induced, either by agreement or by a direction of the Labour Court, to increase wages have taken steps at once to pass on not merely the increase in wages but a profit on the increased wages to their customers. In one case of which I happen to have personal knowledge, a notice was sent by a firm in Dublin to its customers saying that "as from the 1st February, the cost of their services would be increased by 25 per cent." So far as I have been able to ascertain, the wages in that firm have been increased by 15 per cent., so that Senators will observe that the firm is passing not merely the 15 per cent. wage increase but a very substantial profit on the increased wages. A well-known firm of printers in Dublin—I hope Senator Campbell will take note of the fact—in which the printers have obtained an increase in wages, has written as follows to its customers: "We are reluctantly compelled to inform you that owing to the recent heavy wage increases all estimates submitted by us previous to the 1st December, 1946, whether for work accepted or in progress, are now subject to revision. The recent increases amounted to 25/- weekly for men and 11/- for women. We are now going carefully into costings and will advise you at the earliest possible moment how the work you have placed in hands will be affected." Their customers do not know yet how they will be affected. One thing they can be sure of is that they will be affected to some extent. As I have said, our experience has been that it is not merely the increased wages which are being passed on but a substantial profit on top of these increased wages.
In one concern in the City of Dublin it has been the practice, in tendering for contracts, to include in the tender an item for wages. I think that is probably true of most concerns, but in one particular case, which I had the opportunity of examining, I saw the item "wages". The figures set down in the contract form for wages seemed very high. I asked the manager of the firm what rate of wages he was paying, and as well as I remember he said that the rate of wages now in the industry was 3/- per hour. I drew his attention to the fact that in compiling his estimate he had quoted 6/- per hour for wages. He said that was the usual practice—take wages whatever they are, and add 100 per cent. and you have the labour cost of the article.
I do not know whether the Minister for Industry and Commerce is in a position, or will be in a position, to examine estimates and figures of this kind, or whether he agrees that a manufacturer or a contractor, whether he is a builder or a plumber, or whether he is engaged in any other industry, is reasonably entitled to charge his customer in respect of labour a figure which represents 100 per cent. increase on the actual sum he pays for the work done. At any rate, if that is to go to on it seems to me that the increases in wages which have been conceded recently are illusory. Prices are going to rise to a far greater extent than the increase in wages would justify, and these increased prices are going to be followed by a demand for a further increase in wages.
We were told during the emergency that it was essential, in the national interest, to stabilise wages so as to prevent inflation, but is inflation not threatened now when all the firms which have granted increases in wages are writing to their customers where it is necessary to do so, and, of course, only where it is necessary to do so, stating that there is going to be an immediate increase in cost? Is not this the starting point of a new inflationary tendency, and does it not mean that if we do not grapple with that tendency now it is going to get out of hand completely, and that money will have no meaning whatever so far as it represents purchasing power? That is exactly what happened in some European countries after the last war. The fact that it has not been happening in countries like Great Britain, following the recent war, is due entirely to the methods adopted at the centre—the methods adopted by the Government to control everything in order to maintain prices stable. We succeeded, for a period of five years or more, in keeping wages stable; we did not keep prices stable, and that is the tragedy we are up against now.
Comparing the rise in prices in this country with what took place elsewhere, one can see at once what has been happening. I do not want to go back to 1914 to take the figure upon which the cost-of-living index is based in order to illustrate what I am saying. I am taking the figure for 1929. There is a great number of countries which have the base figure calculated in relation to the costs in 1929. Amongst them are this country, Great Britain, Australia, New Zealand, Canada and America.
What has been happening? Taking the figure of 100 as representing the cost of living in Great Britain in 1929, it became 96, a drop of 4 per cent., by 1939. With us the figure had become 101, an increase of 1 per cent., in 1939. By August, 1946, the British figure had become 124, an increase of 24 per cent. over the figure for 1929. In August, 1946, our figure had become 164, an increase of 64 per cent. between 1929 and August, 1946. As a matter of fact, of all the countries with which one can reasonably make a comparison, our costs have gone up out of all proportion to what has been experienced elsewhere.
In Britain the figure is 124 in 1946, related to a figure of 100 for 1929, in New Zealand the figure is 113, in Australia the figure is 110, in Canada it is 104, in the United States of America it is 115, in Switzerland it is 129, and in Sweden, which is the nearest approach to our figure of 164, it is 143. The rise in prices so far as this country is concerned is due not entirely to the viciousness of our traders or manufacturers. It is due in part, and in a substantial part, to Government policy. The Government were not adverse to the traders making substantial profits so long as they could collect additional revenue from those who made the profits. The result was that during the war period the Government collected in excess profits roughly £40,000,000. There is temptation there, of course, temptation to a Government to allow prices to soar so long as it brings more revenue to the Exchequer. As Oscar Wilde might have said, the Government can resist anything but temptation.
The effect of these increases to which I have referred is to depreciate the purchasing power of the money which is in circulation among wage-earners, pensioners and people with fixed incomes. Broadly speaking, the pound which is paid to-day in wages, in the form of pensions or in any other form, has approximately the purchasing power that 11/- would have had in 1939. It is rather disquieting to remember that the effect of that depreciation in the purchasing power of money is this, that it is the equivalent of a cut of 3/- a week in the old age pension. It is a cut, of course, of a greater amount in the incomes of those who have no means of improving their incomes by increased wages or otherwise. Take an ex-teacher, an employee of a local authority, a civil servant, a Guard— anyone out on pension. His pre-1939 income is reduced to the extent of 9/- in the £. The old age pensioner's decrease has not been so great because of certain compensations provided by food vouchers or by the cash addition which was made in the case of those living in rural areas. My submission is that the old age pensioner has suffered a decrease of 3/- a week. Those who have fixed incomes settled in 1939 have suffered a reduction of 9/- in the £ in their incomes.
Another way in which the Government policy affects the purchasing power of the community is in relation to the manner in which, taking tariffs as an instance, the import duty is passed on to the community. Tariffs in most cases were fixed long before 1939 and the import duty was related to the then cost price of the imported commodity. That price has gone up considerably, but the rate of duty has remained steady as a percentage. Let us assume that the price of an article subject to 20 per cent. in 1939 was 5/-. The duty would be 1/-. If that article is now costing 10/- the duty is 2/-. We know that duties are very rarely as low as 20 per cent. Up to very recently the duty on clothing and materials was 25 per cent. That has been cancelled temporarily. The cancellation is effective up to March only. It has been cancelled merely because the Government saw that the income from customs duties was out of all proportion to the value of the commodities imported. But the duties range up to 75 per cent. There are still some 75 per cent. duties left. Razor blades bear 75 per cent., while cutlery and bedsteads carry a duty of 50 per cent.
I was speaking recently to a person who was in the habit of importing artificial silk fabric on which there was, up till recently, an import duty of 40 per cent. I asked him to calculate what effect that duty had on the selling price. He told me that the effect was as follows:—A yard of material cost him 6/- at the Port of Dublin, to which was added an import duty of 2/5. The wholesaler added 20 per cent. profit, which brought the price payable by the retailer up to 10/-. The retailer added 30 per cent., or 3/2, which brought the retail price to 13/3. Therefore, the article which cost 6/- delivered to the Port of Dublin was selling to the ultimate consumer at 13/3. Now, if there had been no duty on the commodity and if the margins of profit remained unchanged, the selling price would have been 9/4. The duty, therefore, was not merely 2/5; it was 2/5 plus two profits on 2/5, bringing the figure to 3/11; so that actually the duty payable by the consumer was not 40 per cent. but 65 per cent. on the actual value of the article imported.
I suggest to the Minister that, having regard to the manner in which prices have risen, not merely the price of the home-produced article, but the price of the imported article, there is an urgent case for revising the whole of the tariff schedule. If the Minister considers that 40 per cent. was an adequate protection for an Irish industry in 1939 when prices were fixed at a certain level, then he is bound in duty to re-examine the situation now when prices of the imported articles are doubled and when in fact he observes that the tariff as paid by the consumer is not 40 per cent. but, as I have shown in this case, 65 per cent.
I want to say one word more on the effect of the present tariff policy on the cost of commodities. I do not want to be misunderstood: I am not objecting to tariffs. I think there is a number of cases in which it is essential in the public interest that we should have tariffs so far as these tariffs are a protection for the home producer. I challenge the wisdom, however, of a policy which goes beyond that point and which has the effect of increasing prices unreasonably and causing the whole fabric of the price structure to go to pieces. In the first nine months of 1938, the value of our imports was £30.3 million. The import duty on that volume of imports was £9.6 million. For the first nine months of 1946-7, that is the nine months commencing 1st April, 1946, the customs duty on our imported goods was £13,220,000 and, so far as I am able to calculate, the volume of goods imported in the nine months I have mentioned was equal to 42 per cent. of the volume imported during the corresponding period in 1938. There fore, on a volume of imports, which represents 42 per cent. of the volume imported in 1938, we are paying £13.2 million in duty as against £9.6 million in 1938. In other words, if the figures for the last three months of the financial year continue on the same lines as those of the first nine months, the receipts from customs duty will be approximately £18,000,000. The Government estimated they would get £15.4 million this year. It looks as if they will get £18,000,000, as against £9.6 million in 1938, on a volume of imports which is only 42 per cent. of what we had in 1938.
Surely this is not protection. This is a method of levying an indirect tax on the community as a whole and it is a most successful method of transferring the burden of taxation from the shoulders of the rich to the bent backs of the poor. I suggest therefore that the question of Government policy is involved in this whole question of price fixing and price control. There is, of course, even more involved than merely the tax policy and the tariff policy of the Government. There is also involved the question of the monetary policy of this country. The Minister and the Government, of course, are on the horns of a dilemma. They have to sit back while thousands and thousands of our people emigrate to Britain in search of work that cannot be provided here and send home from Britain telegraph orders to the local shopkeepers to provide their wives and families with food and clothing and all the things they need. So long as our people are forced to go to Britain and, once they have arrived there, are enabled to order, by means of a telegraph form, a shopkeeper to provide milk, eggs, boots and clothing for the people at home, then the Government have no control whatever over a large area of the price structure. This, of course, would take us over a wide field and I do not propose to pursue it now.
I have raised this matter before with the Minister. I have raised it with the Minister for Finance. Other members of this House have referred to it. Of course, the reply we got was not very helpful. The general feeling I personally have is that the subject is one in which the Government is not interested. The Central Bank was established to maintain the superiority of the British economic system in this country. It was established primarily for the purpose of securing that an Irish £ must be exchangeable with an English £. So long as that remains the policy of the Government, the Minister for Industry and Commerce may be as eloquent, as forceful and as convincing as he likes in this House but his hands are tied and he has no power whatever to control prices.
There are certain commodities in respect of which prices can be controlled. The Minister has controlled, for instance, the price of bread and the price of butter, but the vast majority of the commodities with which the people are concerned are not controlled, and even where there is control, in my opinion, it is utterly ineffective. It is ineffective, let us say, in the drapery trade. I was speaking last week to a lady who had returned from England. She told me of an experience she had in Dublin. She purchased a jumper in a draper's shop in Grafton Street for 45/-. She had a suspicion that it was very like one that she had bought in England a few weeks before. She compared the two jumpers and found they were the same in every particular except colour. She found inside the sleeve of the jumper she purchased in Grafton Street a stamp, "British Utility". She had paid 15/- for the similar article she had purchased in Britain. An article sold in Britain across the counter at 15/- was sold in Dublin for 45/-. How it got to Dublin I do not know, because I understand the British Government is not permitting the export of utility clothing, but I have ample evidence that it is being done. A gentleman in this House two days ago showed me a pair of socks he bought in a leading Dublin warehouse for 4/11 and discovered afterwards that they were British Utility socks selling in Britain over the counter at 2/-. That is not an isolated instance. That sort of thing is widespread, the only difference being that in Ireland you are paying 2½ to 3 times more for the utility article than is being paid in Britain.
I am satisfied that even price fixing where it has been tried and advertised and where Orders have been made has been utterly ineffective. I do not think I need go into the matter further. I am pointing out to the House that we are up against a serious position. We are up against the position that if we cannot hold prices it is dishonest to try to hold down wages. If the Minister says he cannot control prices, then he had better make up his mind to say that he cannot control wages and let the whole matter go, but if we are going to try to control wages, earnings, incomes, then we must control prices, irrespective of what that policy involves.
