R v Associated Northern Collieries [1911] HCA 73

At common Jaw and apart from any statutory provisions - June 7-9, ee

(1) Acts of one defendant, however numerous and however pointedly 16, 19-21, 2

in furtherance of a prohibited purpose, are not admissible in evidence as 30; gaas a RS) overt acts of offence against a co-defendant charged with conspiring at 24.2

with the first, unless the two defendants are shown to be associated for August 7- 12,

that purpose, so as to make the purpose common to both. He AB oa 23: (2) Community of purpose may be proved by independent facts, but December 20,

not necessarily so. If the other defendant is shown to be committing

other acts tending to the same end, then though primarily each set of | teaace J. acts is attributable to the person whose acts they are, and to him alone,

there may be such a concurrence of time, character, direction and result

as naturally to lead to the inference that such separate acts were the

outcome of pre-concert, or some mutual contemporaneous engagement,

or that they were themselves the manifestations of mutual consent to

carry out a common purpose, thus forming as well as evidencing a com-

bination to effect the one object towards which the separate acts are

(3) An unlawful conspiracy may be inferred from the conduct of the parties, and if several men are seen taking several steps, all tending

towards one obvious purpose, and they are seen through a continued por- tion of time taking steps that lead to one end, it is for the jury to say whether those persons had not combined together to bring about that end which their conduct appears so obviously adapted to effectuate.

(4) Once the combination and its purposes are proved, the acts of any party to it in furtherance of those purposes are attributable to all, as being within the scope and in execution of their common agreement. No act which is not done in furtherance of the common purpose comes within that principle of admissibility.

Sees. 14c and 14p of the Australian Industries Preservation Act 1906- 1910 which make certain minutes, records, hooks, letters, documents, ete., evidence against defendants in proceedings for an offence against Part II. of the Act are procedure provisions and are applicable to the trial of proceedings instituted before the passing of those sections by the legislature in 1910.

'The sections referred to do not create any new liability or lessen am old one. They leave the rights and liabilities of the parties exactly where they were ; but they lay down rules respecting the mode of proof at the trial.

The said sections apply to offences originally created under Part II. -

of the Principal Act of 1906 although material alterations with respect to such offences are made by the Act of 1910, and the sections apply as to the proof to be given as to such original offences as well as to the new offences created by the Act of 1910.

Sembie, that sec. 15a of the Act which provides that in any proceeding for an offence against Part IT. of the Act, any indictment, etc., shall suffice if the offence is set forth as nearly as may be in the words of the Act is valid.

Sec. 15a is a stringent provision casting the initial burden of proof upon the defendants in certain cases, but nothing more. It still leaves it to the judicial tribunal to determine on recognized principles the issue of guilt or innocence having regard to any evidence that may be adduced. It is not applicable where the affirmative evidence covers the whole ground.

'The offence under sec. 4 of the Act of making or entering into a con- tract in relation to trade or commerce with other countries or among the Scates with intent to restrain trade or commerce to the detriment of the public is complete at the moment the contract is formed. The offence, however, under the same section, of being or continuing to be a member of or engaging in any combination for a cimilar purpose continues so long as the combination exists. The combination may be the pure result

of the contract, or may exist without any contract at all, or may originate in a contract and afterwards seriously depart from its terms and take on new or modified purpose or method of action sanctioned by the conduct or acquiescence of the parties.

Queere, whether see. 14 p does anything more than formulate a rule of common law leaving the effect of the document made evidence there-

under, when admitted, exactly what it would be apart from the Statute. MONWEALTH

The intent necessary for the commission of an offence under sec. 4 must be real and not merely imputed. It must be the actual intent of the defendant, and not that which might, without regard to the true condition of his mind, be deduced simply from the construction of his words used perhaps for another purpose. It is not the intent expressed in a contract to restrain trade or commerce to the detriment of the public to which the defendant is alleged to be a party - if such contract be the act complained of - but the actual intent of the defendant, of which the contract may, however, be evidence. To ascertain the defendant's intent, the Court may go behind the contract altogether, and in cases where the defendant's alleged connection with a combination to so restrain trade or commerce is complained of the Court may, by every lawful kind of testimony, search out the true state of the defendant's mind. Such intent, in the absence of direct evidence given by the defend- ant, may be proved from his declarations or conduet.

It is the duty of the Court under see. 4 to enquire by a course as direct as circumstances will permit as to whether a contraet in restraint of trade is to the detriment of the public and not to substitute an enquiry as to whether the contract is unreasonable as between the parties as an equiva- lent test of legality. The aim of the Statute is to protect the public at large and to give the publie the power to prevent injury to the body politie by individual members of the community, and not to protect private individuals from unreasonable contracts into which they have voluntarily entered and which they may lawfully decline to fulfil or from equally unreasonable combinations from which they can at any moment retire without legislative or judicial assistance.

'The reasonableness essential at common law to the validity of a con- tract, which is in fact in restraint of trade, is reasonableness as regards both the private interests of the parties and the interests to the public outside those private interests, but affected by their individual arrange- ments. If unreasonable towards the party bound, the contract is void ; but, even if not so, yet if it results in a pernicious monopoly, which is unreasonable toward the public, it is equally void, unless the objectionable part is severable from the rest.

H.C. or A. End of 1907, 5 : ' eae Contract Renewed in 1908, 1909 and 1910. Z + 434 History, Formation and Objects of Coal Vend é = . 434 Beginning of Combination Charged =. . . : = Concealment by Defendants of Fact of Combination . 3 - 442 Replies to Scott Fell & Co.'s Requests for Coal 4 ~ 442 Combined Objects of Defendants to exclude Scott Fell & Co. from Competition : : ¢ : - ~ 4S Defendants' Reasons for Secrecy : : : . 449 Combination Continued to end of 1909 : * . - 450 Combination Continued 1910 . 5 A " . 453 Connexion of Melbourne Steamship Co. and James panes & Co. with Charges : ' : i 'i . 458 Position of J. & A. Brown » « * . . - 469 Law astoIntent =. - ; 3 2 - 460 Law as to Contracts in Restraint of Trade e

relied on as showing that in 1909 there was no combination. The H.C. or A-

statement was that " he would be no party to any understanding or 19Hs

agreement which in any way restricted trade or was in contraven- Tux Kixe

tion of the Anti-Trust Act." This laudable sentiment was mani- sy? vey. festly evoked by the pressure of the combination arrangements GENPRAL OF

THE Com- on Mr. Hunter's particularly tender trade spot. It is the first monweavre

declaration by any member of the combination of allegiance to the pes jee «|. NORTHERN

law. It comes on the last day of November 1909, after the parties Qo) ierirs.

have been doing for years what is now admitted by him to be a

breach of the law. It is limited to Mr. Hunter and apparently even

by him in practice to gas coals as will presently be seen. And how far was it in fact observed? When the general supply for 1910 was discussed objection was taken to the allotment basis on the ground of what I may shortly describe as public injury. The Vend adhered to its proposal, the matter was not decided there and then and it was arranged that representatives should meet later. In Ex. V will be found several telegrams ultimately arranging the meeting for Sydney on 17th December at two o'clock. What took place at the meet- int there is no record to show. We can only infer it from subse- quent conduct. I should think that no definite conclusion had been. arrived at as to whether the allotment basis was to be adhered to. However, that was at the end of the year 1909, and the strike was still proceeding.

As against the Adelaide Steamship Co. Ex. R8 is an admission of the renewal of the agreement for 1909. It is a telegram from Cap- tain Brown (Newcastle) to Northcote (Melbourne) dated 22nd January 1909 and contains these words : - "' Coal agreement fixed for this year. Terms my letter nineteenth." The letter was called for, but not produced.

As to 1910 direct proofs are less plentiful, but the circumstantial evidence leaves no doubt in my mind there was a continuance in fact. There is not a fragment of evidence to show the previous course of conduct was definitely broken off and the combination abandoned. The public had to be supplied and of course were supplied while the parties were struggling about strict allotment.

ATTORNE GENERAL THE Com- MONWEALTH v AssocraTEeD NortHern CorLiErtes.

In January coal was for instance raised to 46/- to the retail d in Adelaide (N5) because the strike was still on, and this n immediate settlement of allotment less urgent. The strike contin till 24th March 1910. Can it be believed the shipowners got the profits of the strike prices or was it not rather that clause of the agreement was brought into operation, the price fixed agreement, and the profits divided? Unless the contrary is s and it is not - I infer that latter course was pursued, though syllable has been produced to record it.

On 10th February 1910 (U. p. 140) Cant wrote to Appleton as for a meeting between " your members and a committee of

association " to discuss matters generally in connection with inter State supplies of coal. The letter refers to a meeting of the Ve held on the preceding Tuesday ; but no Vend minutes have b produced later than Friday, October 8th 1909 (Ex. J. p. 263), withstanding the fact that later minutes were specifically deman in writing by the Comptroller-General (Ex. Q.) 16th May 19 and a few days later by Hudson verbally. The sudden termit tion of the minutes, the last entry of which is the record of the decision to call a full meeting of the members for the 14th October at 9.30 in the morning, is remarkable, and like many other inci requiring explanation by the defendants has been left unexplaint On the side of the shipping Association the correspondence on the subject goes on up to 26th March 1910 (U. p. 148) when the whole correspondence between the two bodies so far as disclosed abi ends. But for one circumstance this fact would be not only sin but scarcely susceptible of reasonable explanation, because mutt business operations certainly did not terminate and up to date mentioned there is no indication of any approaching ch from the customary mode of transacting that business. The o suggestion of a reason for not holding the conference asked for i

statement by Appleton, in the latest letter disclosed, that he had expressed to Forsyth and Learmonth the opinion that " it would better to let matters settle down for a time." Now what mat were there which the parties thought had better settle down for time? The strike was over two days before the letter was writ That was past. But coming events frequently cast their shad

before, and, when legal proceedings are in course of preparation by H- ©: oF A-

one party, steps have frequently to be taken which bring more we

than a premonition to the other ; whether this was so or not in the Tur Kine AND THE

present case it is difficult to say with certainty, but the fact appears that, within a very few days of 26th March 1910, active and open ® steps were taken by the Government to obtain information from

some of the defendants in connection with the alleged combination. Assocrarep Norriern

Hudson proved (p. 111) that on the 15th April 1910 he saw Mr. Cant Gorirerres. at the latter's office Newcastle when the books were produced which

Mr. Hudson identified a letter dated as appears in the notes 15th April 1910, which must be an error for the 13th April 1910, because it can have no reference to any letter other than that marked Ex. G., for identification (see p. 109).

The words " for identification" were inadvertently left on that

document and Hudson's mistake as to the date was left uncorrected.

I therefore base no inference on Ex. G. although in effect it was

identified and so treated. Apart then from that document it is

clear that on the 15th April a letter having reference to the pro- duction of the books had passed. A person in Mr. Cant's position was not likely to produce, and in similar cases (see p. 113) did not produce Vend documents without prior authority. The probability then, from the fact of production on 15th April and the existence of the letter, is that there had been a prior request and the con- sideration of that request by the Vend, authority being given to

Cant to produce the books. Consequently it does not require

a very strong effort of imagination to see why formal records, in the

shape of correspondence after the end of March, have not been

Business however had to go on and did go on after 26th March continually. The interviews Moorehead had with Appleton were four, namely, 26th and 27th May, when documents contained in Ex. U. were handed over ; 1st June and 28th June 1910. Instances of business done may be found in the letter of MeIlwraith McEacharn & Co. with Metropolitan Gas Company, 16th May 1910; the same Company's tender for general stores to Melbourne and Metropolitan

: Board of Works, 17th May 1910 (BS). Huddart Parker & Co.'s

Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWFALTH v ASSOCIATED NorrHern CoLLIFRIES.

tender for general stores same date (B8). There appears in fact to be no break in the method of dealing with the public. The defend- ants' silence in regard to this period does not of course supply any want of Crown testimony, but it is a circumstance proper to be considered wherever there are any facts tending to show a con- tinuance of the former course of conduct, or from which such a

continuance in the absence of contrary proof might be presumed. - So considered, it detracts from any observation as to the meagreness q of the evidence; or as to its unsatisfactory character, or as to injustice of the inferences which the Crown invites the Court to draw. The circumstances appeal to my mind as immensely strong to show a continuance down to the commencement of the action ; and, although no liability in this action attaches to the defendants for what they have since done, their subsequent conduct may show

an intention to preserve the combination unbroken, and therefore

be inconsistent with its termination in 1910. This is, in my opinion,

the effect of the evidence. One instance may be mentioned at this : point, viz., Ex. 18, which represents tenders of the four defendant - shipping companies and J. & A. Brown, dated 1st May and 2nd May : 1910, for general supplies for the South Australian Government for two years ending 30th June 1913. Those tenders include items of

coal, some best screened and others small coal, one item being for Southern coal, in divergent quantities, from 20 tons to 3,000, deliver- able at eight different places, some in bags and some not, some new items, some old. It isa most remarkable fact, buta fact nevertheless, that there is absolutely no difference in any of the five quotations ; as to one item there are two tenders only, and as to two others there are three tenders only, but as to eleven items, the prices, varying of course as to the items themselves, do not vary one farthing as between the tenderers. Other instances are to be found in Ex. B8 Melbourne and Metropolitan Board of Works. Huddart Parker & Co. on 10th June 1910, J. & A. Brown on the ith, the Melbourne Steamship Co. on the 11th, McIlwraith McEacharn on 11th, and Howard Smith & Co., on the 11th, tender for 1,000 tons engine coal,

~ at the Pumping Station, all separately and all at the one price 22s. 6d.

For coal at the Farm in May 1910 Huddart Parker & Co., Melbourne Steamship Co. and Mcllwraith McEacharn & Co. all tendered for

50 tons at the one price 27s. 3d. Later on, in the same month, H. ©. or A. tenders were sent in for engine coal for the Farm, and as required He from Ist July for two years by the following : - Huddart Parker & tae Kine

o., McIlwraith McEacharn & Co., James Paterson & Co. and AX? THE

Melbourne Steamship Co., all tendered separately, and at the one boi or tHE Com

price, 27s. 3d. Evidently a truce was observed on the question moswraurn

of rigid allotment and subject to that and the strike, matters went shied

on by tacit understanding substantially as before. I will here Pasar ee

quote a few words from the recent American case of United States y. American Tobacco Co. (1), White, C.J., in delivering the judgment of the Court said : - " Coming, then, to apply to the case before us the Act, as interpreted in the Standard Oil (2) and previous cases, all the difficulties suggested by the mere form in which the assailed transactions are clothed become of no moment. This follows because, although it was held in the Standard Oil Case that, giving to the?Statute a reasonable construction, the words 'restraint of trade' did not embrace all those normal and usual contracts essential to individual freedom, and the right to make which was necessary in order that the course of trade might be free, yet, as a result of the reasonable construction which was affixed to the Statute, it was pointed out that the generic designation of the 1st and 2nd sections of the law, when taken together, embraced every conceivable act which could possibly come within the spirit or purpose of the pro- hibitions of the law, without regard to the garb in which such acts were clothed. That is to say, it was held that, in view of the general language of the Statute and the public policy which it manifested, there was no possibility of frustrating that policy by resorting to any disguise or subterfuge of form, since resort to "reason rendered it impossible to escape, by any indirection, the prohibitions of the Statute."

This completes the enquiry as to the fact of a combination and its continuance down to the commencement of the action, and the statutory effect of sec. 14 (c) would simplify the approach to this result which so far has been affirmed at common law. The basis of the combination was undoubtedly the set terms appearing in the

(1) 221 U.LS., 106, at p. 178; 81 (2) 221U.S., 1. S.C. Rep., 632, at pp. 648, 649.

e H.C.or A. document contained in Ex. S. and its modifications. In o a words, even if the document in S. and its modifications are

Tax Krxc_ technical process of reasoning or rule of law to be taken, AND THE be Arrorney- CODS!

Gamera °F bond of union and the basis of common action between the Vend MonweaLTH every member of it for the time being, on the one hand, and Assoorammn shipping Association and every member of it for the time bei aa the other. Leaving aside for the present the question of intent:

detriment I find the allegations of fact in pars. 43, 44 and 45 of

tituting a formal contract, they do, as I find, constitu

ConNEXION OF MELBOURNE StEamsuip Co. AND JAMES Pa' & Co. with CHarcEs.

The Melbourne Steamship Co. Limited and James Paterson 4 Co. were not, I think, originally parties to the agreement. But ve soon afterwards they cast in their lot with the four defen shipping companies, and were in some partly unexplained perfectly certain manner assisting the combination and sharin, the profits. As regards the Vend, their minute of 13th Nov 1906 (I. 37) says : - " Melbourne Steamship Co. - Mr. Hunter vised were in line." As against the shipping companies, the of D. Y. Syme, manager of the Melbourne Steamship Co. to Apple dated 17th January 1908 (U. p. 28), Appleton's answer, 20th ary, are in point with respect to the same Company. As agains all the defendants see Chapman's letter to Newman, 29th Decem! 1906 (X. p. 16); Chapman to Hunter 9th January 1907 (X. p. 21) Newman to Lewington 11th January 1907 (X. p. 26); Lewin reply 14th January (X. p. 28) ; Lewington to Chapman 16th Janu 1907 (X. p. 31); Chapman to Newman 31st January 1907 (X. 36); Newman to Lewington 26th March 1907 (X. p. 55); Hunter to Forsyth and Howell 25th July 1907 (X. p. 114); Newman Learmonth 15th November 1907 (X. p. 171); Newman to month 27th November 1907 (X. pp. 181 and 184); Earp's lette to Cant 7th September 1908 (U. p. 97) communicated to Ap on the 10th as to the Melbourne Steamship Co. and Cant's lette 28th September 1908 (U. p. 103) to Appleton, and its enclos Reid to Greaves; letters 20th March 1909, Appleton to Car

Cant's reply 30th March and the enclosed letter from H. McLachlan, H © or A. Secretary to Chief Commissioner of Police of New South Wales to heap Cant 23rd March 1909 (U. pp. 120, 121, 122); also minutes of Tue Kixe Conference 23rd April 1909 (U. p. 149). eee The fact that these two shipping companies were active and ©

Es recognised members of the combination is proved, and it makes mo:

no difference that they were not directly and as between them and the aman NorTHERN

Vend parties to the combined agreement, or that they stood in Goytirnrms.

some sort of dependent or subsidiary relation with respect to the defendant shipping companies. They had their function to per- form in the arrangement, and they performed it, and participated in the results.

The position occupied by J. & A. Brown is a little complicated. They are colliery proprietors and members of the Vend, and it is in that quality only they are sued by the Crown. But they are also shipowners and carriers of their own coal. Apparently, and not unnaturally, they were not expected to surrender and they did not surrender their carrying trade. Some special arrangement was consequently necessary to meet this exceptional situation and it appears to have been made. As to its actual terms, the defendants J. & A. Brown have maintained consistently the general attitude of the defendants, by preserving silence. There are some few refer- ences to the arrangement which permit us to obtain some idea of its general nature, though not of its stipulations. When the ship- ping companies attended the Vend meeting on 24th April 1906 they arranged for the agreement between the coal proprietors and the steamship companies, but "subject also to a proper agreement being entered into with Mr. John Brown." That gentleman was present at the meeting. The amount of inter-State trade which J. & A. Brown did for the year 1906 was 36,624 tons cargo, and 4,250 tons bunker, in all, 40,874 tons, out of a total inter-State trade in Newcastle coal of more than 1,500,000 tons. Their subse- quent inter-State exports may here be added. In 1907, they were 47,619 tons cargo and 4,600 bunker. In 1908, they were 62,150 tons cargo and 5,975 bunker. In 1909 they were 68,200 tons cargo

H.C. or A. and 4,860 bunker. In 1910, they were 65,110 tons cargo, bunk

191). unknown (Y9). At the conference of July 1907, some que:

Tux Kine arose as to payments to be made by the shipping companies to

Festeel & A. Brown. It appeared that the companies were now ready

pees .°* willing to make the adjustment, and it was left in Mr. Appleton' monweattu hands to make it immediately subject to audit. The agree

Assoctatep between the Associated Steamship Owners and J. & A. Brown can

Per sa up for discussion in January 1908 (X. p. 214), what the trouble

or how remedied does not appear. From Ex. U. pp. 132, 149, 150, it would seem there was some provision to keep Brown's coals apart from other coals shipped in the same vessel, but that othe there was no special stipulation as regards the coal; they shared in the general Vend allotment as appears from Ex. U. p. 158. At the E conference of November 1909 observations were made by Mr. Hunt to the effect that while the other shipowners were expected take each and every class of coal, Browns were at liberty to take and - did take only Pelaw Main coal, and a lot of trade had been gaine by Brown in consequence of this. He asked Mr. Forsyth if the - Vend intended to place Brown on the same footing as other carriers, | and allot them the same percentages of all classes of coals as ot] carriers. Mr. Forsyth did not answer this question. This indicates _ that although the Vend still continued in full force and the old exclusive arrangement between Vend and shipowners still went on - including the allotment stipulation, yet for some reason the Vend - permitted J. & A. Brown collaterally to break through their internal Vend agreement. Brown's special agreement is left indistinct as_ to terms but certain as to existence (see also Exhibits 08 and P8)

These considerations then establish the combination as well as the contract, but before the substance of paragraph 46 of the statement of claim can be pronounced upon it is necessary to enquire as to the intent of the defendants with regard to both the contract and the combination, and as to the alleged public detriment. There is no

offence under sec. 4 unless the act complained of is done with oo a

certain intent. Law as to Intent. The material words here are, " with intent to restrain trade or - commerce to the detriment of the public." I apprehend the inten'

must be real and not merely imputed. It must be the actual intent H. C. or A. of the defendant, and not that which might, without regard to the 1).

true condition of his mind, be deduced simply from the construction Te Krve of his words used perhaps for another purpose. The intent aimed ,4y ony.

at is not the intent expressed in the contract - if the contract be the act complained of - it is the actual intent of the defendant, of

which the contract is excellent evidence to begin with, because a eusccaes man's real intent may generally be gathered from what he says as (NORTHERN: well as from what he does. But to ascertain the defendant's intent, © - - -

the Court may have to go behind the contract altogether, and, in

the case of combination search out, by every lawful kind of testi- mony, the true state of the defendant's mind.

Proof of intention does not involve direct evidence. The person whose intention is in issue may give direct testimony on the point, but, apart from that, the only means of establishing his intent is by proving his declarations or his conduct. Wills on Evidence, 1907 ed., pp. 63 and 64, contains a passage which accurately states the position : - "In one class of cases circumstantial evidence must from the nature of the case be given. They are those where the state of mind of a particular person is in issue, as, for instance, where it is alleged that a party did a particular act with a fraudulent purpose, or where, to establish the commission of a particular crime, it is necessary to prove that the prisoner, when he committed the physical act, did so with some particular guilty intent. In these cases no one save the party charged can, strictly speaking, give direct evidence of his mental state ; and, when he denies the charge, it has to be proved by inference from his conduct."

The authorities are collected and the law summarised in Lord Halsbury's Laws of England, vol. 1x., p. 236, and vol. xurr., pp. 448 and 449.

In this case the defendants and those for whose acts the defendants are responsible were mute, and so the matter rests upon the infer- ences to be drawn from their declarations and conduct on the well- known principle, acta exteriora indicant interiora secreta.

We start with a presumption of innocence: but there is also another presumption usually made, and which is 2» i ble to the present case, that a person intends the natural anu | 1 »le conse-

GENERAL OF words and acts; and the evidentia rei would therefore be sufficient

monweautH without other proof of intention." In South Wales Miners' Federa-

quences of his acts (see Lord Halsbury's Laws of England, vol. x,

p- 389, and vol. xumr., p. 499). , In Coaks v. Boswell (1), Lord Selborne says : - '' A man is pre-_

sumed to intend the necessary or natural consequences of his own

tion v. Glamorgan Coal Company (2), Lord Halsbury L.C., said : - "Tt is further a principle of the law applicable even to criminal law that people are presumed to intend the reasonable conse quences of their acts." His Lordship doubtless in using the word "reasonable " meant " natural," and he went on to say : - "It is not perhaps necessary to have recourse to such a presumption where, as upon the facts stated, it is apparent that what they were doi must necessarily cause injury to the employers." I quote the last - passage because the Crown has urged that upon the facts in this

case it was apparent from the beginning and at all events very soon afterwards, that injury must necessarily have been caused to - the public.

Then as to the nature of the necessary intent. It must be (1) to , restrain trade and commerce; (2) to the detriment of the public. - In view of the argument I shall deal with these two parts separ- ately.

Mr. Mitchell advanced an argument which may be stated, as I i apprehend it, in the following four propositions : -

(1) The legislature has penalised only those contracts intended to be in restraint of trade and commerce which are to the detriment of the public.

(2) It could not have been intended therefore to penalise any - contract which the common law at the time of passing of the Act would regard as enforceable, because not detrimental to the public.

(3) That contracts though in restraint of- trade are, according - to the common law, not detrimental to the public, and are conse- quently enforceable, provided only they are reasonable.

(4) That reasonableness has reference only to the parties them- selves, the common law in that connection disregarding any element

(1) 11 App. Cas., 232, at p. 236, (2) (1905) A.C., 239, at p. 244.

of raising prices to the public and regarding as invalidating circum- H.C. ov A.

stances only such as vitiate any other contract, as for instance some _ - '1911-

proposed illegal means of performing the contract or some con- py King

templated breach of positive law, outside the mere restraint of ANP THE ATTORNEY-

trade. GENERAL OF . _ THE Com- The argument may be effectually answered in two ways. First, yoxweaurn : ae " : v. the legislature has not left the limitation on the words " restraint 4 ..4°).nep

of trade or commerce" to be implied. Sec. 1 of the American Act pened of 1890 used those words without qualification. For many years

dicta had fallen from the American Courts to the effect that these

words were to be taken in an unqualified sense, and that all such

contracts were stamped with illegality whether reasonable or un- reasonable, whether beneficial or detrimental to the public.

In a later case, The Standard Oil Co. of New Jersey v. U.S. (1), confirmed in the subsequent case of U.S. v. American Tobacco Com- pany (2), the Supreme Court has held, upon a consideration of the whole Act and its relation to the common law, that the legislature had not rigidly invalidated all contracts in restraint of trade, but intended that the standard of reason which had been applied at common law and in America, in dealing with subjects of the char- acter embraced by the Statute, was intended to be the measure used for the purpose of determining whether in a given case a particular act had or had not brought about the wrong against which the Statute has provided.

The Commonwealth legislature, having before it the American

Statute and the earlier judicial expressions of interpretation which had fallen from the American Courts, inserted in the Australian Act its own express limitation on the words referred to. When the legislature has turned its mind to the consideration of a subject and expressly stated its will as to the limits to be observed, it is beyond the province of the Court to further extend those limits. The qualification of the phrase "in restraint of trade" found by the United States Court to inhere in the Actas a whole was adopted as that which Congress would have expressed if it had preferred to record its intention in definite words, which it had not done. That qualification may be found to be just what has been inserted

H.C. or A. in the Australian Act. But in any case, our own Parliament h

aiid thought fit to clothe its intention in express language, and

Tue Kixe language must be taken to be the measure of its intent. Mzpres:

AND THE ATTORNEY- epee ov It is not as if the phrase "restraint of trade" or its equi THE Com- a i monweartn " to restrain trade and commerce " were in itself ambiguous. ®.

Assocraten In the Ipswich Tailors' Case in 1615 (1), the Court spoke NonrHERN Parliamentary prohibition to use more than one trade as a " rest CoxurerrEs. YP

of trade and traffic"; it also said it appeared by the Statute | Elizabeth that " without an Act of Parliament none can be in manner restrained from working in any lawful trade." It is el from this, and from the way in which the phrase " restraint of trade" is used in the classical case of Mitchell v. Reynolds (2), that restraint spoken of is simply a restriction in fact. The restra may be good or bad according to circumstances. It may be re able or unreasonable, it may be productive of injury or of benefi to the public ; but the expression " restraint of trade " means same thing in each case. So when the legislature says that the kind of restraint of trade or commerce, which it seeks to suppress i certain cases, is where there is detriment of the public," I conceive is not open to the judiciary to add a further condition, or apply a different or additional test. The duty set by the Statute is to enquire, by a course as direct as circumstances will permit, as to detriment of the public, and not substitute an enquiry as to whether the contract is unreason-_ able as between the parties as an equivalent test of legality. The common sense of the matter makes this obvious. For with - what was Parliament concerning itself when it forbade certain con- tracts and combinations under penalties of fine and imprisonment? _ Was it undertaking to protect private individuals from unreasonable. contracts into which they had voluntarily entered, and which ex hypothesi they might lawfully decline to fulfil; or to protect them from equally unreasonable combinations from which they could ¥ at any moment retire without legislative or judicial assistance? Assuredly not. Such matters called for no repressive legislation. The aim of the legislature, as is apparent from the ordinary natural

meaning of the words of the Statute, as well as the reason of the H.C. or A.

matter was to protect the public at large. The community had no ee

voice in the making of such contracts or combinations ; it was no Tur Kiso

party to them, it could by its Courts refuse to enforce them to its Apabewee

own detriment, but, if the parties found it to their mutual advantage CPNPRAL OF tHE Com-

to proceed with them, the public had only to submit to the conse- monwravrnt

This is the mischief the Statute was designed to meet, by giving pias the public the power to prevent injury to the body politic by in- dividual members of the community ; and it is precisely the mis-

chief which the argument of defendants' counsel would allow to escape, by leading the Court along a road it was never intended to travel, and which, so far as the Statute is concerned, leads nowhere. And if Parliament was looking to the safety of the contracting parties, it would certainly be a quaint method of protecting private interests to do so by compulsory Crown intervention, subjecting all the parties to the compact, to fine, or fine and imprisonment.

For what it is worth as a legislative guide to intention, it may be added that in sec. 2 of the amending Act, No. 29 of 1910, the defences of "not to the detriment of the public " and " not unreasonable " are treated as separate defences.

The second answer to the argument is that it is inherently unsound at common law because it rests upon a fallacy.

The fallacy lies in assuming that reasonableness as dealt with in the decisions has reference only to the parties themselves, and their private individual rights and interests.

On the contrary, the reasonableness that is essential to the validity of a contract, which is in fact in restraint of trade, is reason- ableness as regards both the private interests of the parties, and the interests to the public outside those private interests, but affected by their individual arrangements. If unreasonable as to either it is invalid. If it is unreasonable towards the party bound it is admittedly void, and, if though not open to this form of unreason- ableness it results in what Lord Lindley has termed a pernicious monopoly, it is unreasonable toward the public, and equally void, unless the objectionable part is severable from the rest.

The authority chiefly relied on for the defendants was Collins v.

See Tue Kixa AND THE ATTORNEY- Genera oF THE Com- MONWEALTHE °. AssociATED NortTHEern Cormrerres.

Locke (8), and the passage most pressed upon me was the last paragraph on p. 685, which is as follows : - " The objects which this agreement has in view are to parcel out the stevedoring business of the port amongst the parties to it, and so to prevent competition, at least, amongst themselves, and also, it may be, to keep up the price to be paid for the work. Their Lordships are not prepared

to say that an agreement, having these objects, is invalid if carried _ into effect by proper means, that is, by provisions reasonably ; necessary for the purpose, though the effect of them might be to create a partial restraint upon the power of the parties to exercise their trade."

It could not in my opinion be disputed that some cases of preven-

tion of competition between the contractors, and some cases of keep- ing up prices would not be objectionable. Competition though stayed as between the parties might still be open to others. Certain competition unrestricted might be of the nature forbidden by the second part of paragraph 1 of sec. 4 of the Act ; and the agreement would be a laudable one which would restore it to a normal condi- tion. The prices that are kept up by an agreement might be quite fair and reasonable, and nothing more than would exist under healthy competitive conditions. Their Lordships of the Privy Council did not I apprehend intend to lay down a rule of law, that prevention of competition and maintenance or increase of prices are under all circumstances legal and enforceable objects. There was nothing in the contract then under consideration to show any intention to prejudice the public, except in the covenant at the end of the first clause. In all but that the contract appeared to be a mere distribution amongst themselves of work on terms not shown to be unreasonable or exacting. Nothing was said in it about prices and although probably the arrangement would prevent competitive cutting it did not appear that the parties when they made their contract intended to use, or did at any later period in fact use, their power so as to treat the public unfairly as to prices or otherwise. But as to the covenant at the end of the first clause the Privy Council held that it made the contract illegal because it provided that if the merchants loading ships did not chose to

employ the party to the agreement, who between themselves was H- ©. or A.

entitled to do the stevedoring, no party to the agreement could ie a

do the work; and their Lordships said (1) : - " The combination Tus Kina

they have thus entered into is obviously detrimental to the public." ,vonsnv-

Tn that case a passage from the judgment of Tindal C.J. in Horner pec

vy. Graves (2), was expressly quoted with approval. It is important wonwravrH v. because it lays down the test of reasonableness and contains the Assoctarep

c NorTHERN common law answer to defendants' argument. I will not stay Go, g' ConriErtEs.

to quote it now because it comes in more clearly in connection with the next case cited. The leading case on the subject is Nordenfelt v. Maxim Nordenfelt Co. (3). In that case Lord Herschell L.C. said : - "JT would adopt in these cases the test which in a case of partial restraint was applied by the Court of Common Pleas in Horner v. Graves, in considering whether the agreement was reasonable. Tindal 0.J. said : - ' We do not see how a better test can be applied to the question, whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favour of whom it is given, and not so large as to interfere with the interests of the public. Whatever restraint is larger than the necessary protection of the party can be of no benefit to either ; it can only be oppressive, and, if oppressive, it is in the eye of the law, unreasonable.' The tendency in later cases has certainly been to allow a restriction in point of space which formerly would have been thought unreasonable, manifestly because of the improved means of communication. A radius of 150 or even 200 miles has not been held too much in some cases. For the same reason I think a restriction applying to the entire kingdom may in other cases be requisite and justifiable.

"T must, however, guard myself against being supposed to lay down that if this can be shown the covenant will in all cases be held to be valid. It may be, as pointed out by Lord Bowen, that in particular circumstances the covenant might nevertheless be held void on the ground that it was injurious to the public interest." Lord Mac- naghten (4), laid down the law clearly and succinctly in a notable passage which states the rule together with its reason and its mean- ing. He said : - '' The public have an interest in every person's

(1) 4 App. Cas., 674, at p. 688. (3) (1894) A.C., 535. (2) 7 Bing., 735, at p. 743. (4) (1894) A.C., 535, at p. 565.

H.C. or A. carrying on his trade freely; so has the individual. All en ference with individual liberty of action in trading, and all r Tur Kine of trade of themselves, if there is nothing more, are contra ae nay. Public policy, and therefore void. That is the general rule.

ArroRNEY- GENERAL OF there are exceptions; restraints of trade and interference

owes individual liberty of action may be justified by the special Assocraren cumstances of a particular case. It is a sufficient justification, (peas indeed it is the only justification, if the restriction is reasonal reasonable, that is, in reference to the interests of the parties cerned and reasonable in reference to the interests of the p so framed and so guarded as to afford adequate protection to party in whose favour it is imposed, while at the same time it in no way injurious to the public. That, I think, is the fair of all the authorities."

The result of Nordenfelt's Case and authorities of that thus stated by the Judicial Committee in United Shoe Machine of Canada v. Brunet (1) : - ' In each of them the person restra

from trading had granted, presumably for adequate considera

the restraint upon him, and, in order that the latter might re without injury to the public, that for which he had paid, the con tract imposing the restraint was held to be valid only where t restraint was in itself reasonable in reference to the interests bo of the contracting parties and of the public."

It is therefore plain beyond possibility of doubt that the test reasonableness is not confined to a consideration of the mat as it affects the protection of the parties to the contract. In that would be beginning at the wrong end, and mistaking incident for the rule. Bramwell B. in R. v. Druitt (2) said: "The public had an interest in the way in which a man disp of his industry and his capital." The test of whether the contract is fair and reasonable is always and from first to last whether is prejudicial or not to the public interest ; "it is" as Parke said in Mallan v. May (3) " on grounds of public policy alone that these contracts are supported or avoided." eo

(1) (1909) A.C., 330, at p. 344. (3) 10 Cox C.C., 592 (3) 11M, & W., 653, at p. 685.

Where they are upheld, it is as that learned judge said " not H.C. or A.

pecause they are advantageous to the individual with whom ties, ae contract is made, and a sacrifice pro tanto of the rights of the com- Te Kine AND THE

munity, but because it is for the benefit of the public at large that sqrornny-

they should be enforced." Mallan v. May (1) was approved in pepe an Collins v. Locke (2). MONWEALTH: These considerations justify Sir Frederick Pollock's view in his iaiaoorasceD

Principles of Contract (8th ed., 1911, at p. 374), and are confirmed Goprrrres. in Nordenfelt's Case (3) by the observations of Lord Watson at p. 552 and of Lord Macnaghten at p. 566; and in Russell v. Amal- gamated Society (4). Parker C.J. in Mitchel v. Reynolds (5) summed up the common law attitude of the Court in these terms : "In all restraints of trade where nothing more appears the law presumed them bad ; but if the circumstances are set forth that presumption js excluded, and the Court is to judge of those circumstances and determine accordingly and if upon them it appears to be a just and honest contract it ought to be maintained." That reasoning was followed by Parke B. in Mallan v. May (6) and holds at the present day as is seen from the citation made from the judgment of Lord Macnaghten whose words were followed in £. Underwood v. Barker (7) by Lindley M.R. (8) and Vaughan Williams L.J. (9). See also per Collins M.R. (10) and Mathew L.J. (11) in Dowden v. Pook (12); Russell v. Amalgamated Society of Carpenters (13). Even at common law therefore the Court is bound to consider whether the contract is reasonable from the standpoint of the public. Since writing the foregoing observations there has come to hand Vol. 220 of the United States Reports. It contains the case of Dr. Miles Medical Co. v. Park & Sons Co. (14) decided in April of the present year. At p. 406, the judgment of the Court contains this passage : - '' With respect to contracts in restraint of trade, the earlier doctrine of the common law has been substantially modi- fied in adaptation to modern conditions. But the public interest

(1) 1M. & W., 653. (8) (1899) 1 Ch., 300, at p. 304. (2) 4 App. Cas., 674. (9) (1899) 1 Ch., 300, at p. 312. (3) (1894) A.C., 535. (10) (1904) 1 K.B., 45, at p. 3

(4) (1910) 1 K.B., 506, at p. 516. (11) (1904) 1 K.B., 45, at p. 53. (5) LB. Wms., 181, at p. 197. (12) (1904) 1 K.B., 45.

(6) 1M. & W., 653. (13) (1910) 1 K.B., 506, at p. 520.

H.C. or A. jg still the first consideration. To sustain the restraint it m

1911. be found to be reasonable both with respect to the public and t 'Tue Krxe_ the parties and that it is limited to what is fairly necessary in Amonwey. circumstances of the particular case, for the protection of

Gane race covenantee." Among other citations in the judgment is the pa:

monweartx I have quoted from Lord Macnaghten's speech in the Nordenfelt Assoctaren Case (1). NorruekN therefore reject the defendants' contention both because the

CoLLieriEs. reasoning by which it is supported is unsound at common |:

and because even if sound it would have to give way to the express tule laid down by the Statute.

This brings me to the question of "detriment to the publi As the circumstances appear, including the terms of the contra the course of dealing, the partial character of the restraint, and on, I am not to make any presumption of illegality against defendants - that is excluded - but I am to judge of the cir "um stances set forth in evidence, and determine accordingly as public detriment. And further, the law as I understand it requit me to arrive at that determination, approaching the considera' of those circumstances with the initial presumption of defend innocence, and requiring the Crown to bear the burden of sai ing my mind not by conjecture but with moral certainty Y on proved facts and proper inferences, that the defendants hay offended against the Statute.

" Detriment " carries its own meaning upon its face. Whate is its loss or disadvantage, or prejudice, whatever puts it in a_ worse position is to the detriment of the public. A higher price, a worse quality, a restriction in choice, a more precarious mold delay in delivery, are instances. é

As Fry L.J. points out in Mogul Steamship Coy. v. McGregor (2), the ancient common law of England - as well as some ancient Statutes - referring to forestalling, regrating and engrossing re garded certain operations in goods which interfered with the more ordinary course of trade as "injurious to the public" ; and those -

1. (1894) A.C., 535, at p. 565. (2) 23 Q.B.D., 598, at p. 628.

Statutes made them criminal. Blackstone in his Commentaries H.C. oF A. (18th edtn.) (1830) Vol. 4, pp. 189, 190, observes that forestalling 19!

among other things enhances the price ; so does regrating. Engros- Tum Kine

' tee f a E AND THE sing was the getting into one's possession, or buying up large sironnny-

quantities of corn or other dead victuals, with intent to sell them Nee! again, that is at monopolising prices. Says Blackstone : - ' This monwraurn must of course be injurious to the public, by putting it in the power AssoctareD

é ' i ee A NorrHern of one or two rich men to raise the price of provisions at their own Goyrserins. discretion." And he adds "so that the total engrossing of any

other commodity with intent to sell it at an unreasonable price,

is an offence indictable and finable at the common law." Russell on Crimes (7th edtn.) (1909) at p. 1919.

As Fry L.J. observes the Act of 12 Geo. III. c. 71 repealed the other Acts and left the common law to operate. It recited the tendency of the former Statutes to "enhance the price." In 1844 the common law itself was altered by 7 & 8 Vict. c. 24, which abol- ished the offences of badgering, engrossing, forestalling and regrating, but provided as the learned L.J. says that "nothing in the Act con- tained should apply to the offence of knowingly and fraudulently Spreading or conspiring to spread any false rumour or with intent to enhance or decry the price of any goods or merchandise " &c.

In Scott v. Brown (1) Lopes L.J. refers to R. v. Berenger (2) in which Lord Ellenborough says of a conspiracy to raise by false rumours the price of public funds : - " The purpose itself is mis- chievous, it strikes at the price of a vendible commodity in the mar- ket, and if it gives it @ fictitious price, by means of false rumours, it is a fraud levelled against all the public."

In the Termes de la Ley under title " Forestaller " the definition is "he that buyeth corne, or other merchandize whatsoever is saleable, by the way as it cometh to markets, Faires, or such like places to be sold, to the intent that he may sell the same again at a more high and deer price in prejudice and hurt of the common- wealth and people."

There are some definitions which I shall give in their proper place under the head of monopoly very much to the same effect. Forestalling, and regrating and engrossing are only slight variations

(1) (1892) 2. Q B., 724, at p. 730. (2) 3M. & S., 67.

H.C. or A. of each other; and condemnation of one frequently implied con- -

ae demnation of the others. There is nothing technical about the

Tue Krxe injury to the public, and never was. When Bishop Latimer

Atrorney- 1550 besought King Edward VI. to appoint promoters - i.e. infor- i GENERAL OF

THE Com- " 3 : monweattH extortioners, bribers and usurers, he instanced the case of regrating -

mers - against various oppressors of the poor as rent-raisers,

Assoviaren and he said among other things : - "' Yea and (as I hear say) alder- _

ae. men now-a-days are become colliers; they be both woodmongers -

and makers of coals . . . There cannot a poor body buy a sack of coals, but it must come through their hands." :

After allowing for differences of modern commercial life that - and the citation from the Termes de la Ley bear a considerable analogy to the position as put by the Crown in this case. The passages I have quoted abundantly testify to the recognition by English lawyers of the fact, which no ordinary individual would deny, that raising prices to a height, variously characterised as - unreasonable, fictitious, monopolistic, exorbitant, oppressive, or by some similar adjective, must be a prejudice to the public.

The Supreme Court of the United States in the Standard Oil Case (6), reaffirmed last May in the American Tobacco Company's Case (7), based their decision on the principle that the American Act was intended to repress the evils produced by the common law offences which unreasonably restricted competitive conditions, of which a monopolistic increase of price was recognised as one.

In the celebrated case of monopolies, Darcy v. Allen (8), Popham C.J. said the sole trade of any mechanical artifice or any other monopoly is a damage and prejudice to those who exercise the same trade, and he referred to three incidents of a monopoly against the Commonwealth which the Court there considered inseparable, viz., 1. "that the price of the commodity will be raised, for he who has the sole selling of any commodity may and will make the price as he pleases; 2. that the commodity will not be so good and merchantable as it was before; and 3. it tends to the impoverish-

ment of divers artificers and others who before by their labour had maintained themselves and their families."

(2) 221 U.S, 1. (2) 221 U.S., 106 ; 31 Sup. C.R., 632. (3) 11 Rep., 845.

He also referred to a case of Davenant v. Hindis (1) in which an ordinance made by the Merchant Taylors Company, under their charter, was held void. The ordinance was that every brother of the Society putting cloth to be dressed by any clothworker, not being a brother of the Society, should put one-half of his cloths

to some clothmaker who was a brother of the Society under penalty monwrautH

of 10s. The ground of the decision was that the ordinance was

against the common law, as it was against the liberty of the sub- Gorriertes.

ject, to get his cloth dressed by whom he pleased, and cannot be restrained to certain persons, "'for"' said the Court "that would be in effect a monopoly." It is interesting to see that even at that early date the Courts applied to what was "in effect a monopoly," the same rule as to a monopoly strictly so called, that is, one granted by the Crown. See also Pollock Principles of Contract, 8th Edition, p. 374.

I by no means regard as inseparable the incidents referred to by Popham C.J. but I refer to them because, when they do occur, they are regarded by the law as prejudice or detriment to the public; and further though not inseparable they are not unlikely to occur. 'The Crown asserts that they have all occurred in the present instance.

I am distinctly of opinion that this question of detriment must not be determined upon any narrow grounds. The mere fact that prices are raised is by no means conclusive. And for this, there is strong judicial warrant. For instance in Hearn v. Griffin (2), there was an agreement between two coach proprietors that each should charge the same price to passengers. Lord Ellenborough O.J. said that it was merely a convenient mode of arranging two concerns which might otherwise ruin each other. Collins v. Locke (3) in the passage quoted is clear on the point.

The Act under which these proceedings are taken, as I have already pointed out, indicates that prices may be reduced so low as to work injury to Australian industries by unfair competition, and a combination to restore to a fair level prices that had been reduced to a dangerous limit could not for that reason be regarded as contravening the law.

(1) (1599) (2) (1818) 2 Chitty, 407. (3) 4 App. Cas., 674.

In Hare v. London and North Western Railway Co. (1) Wood V. said : - " It isa mistaken notion that the public is benefited by pi two Railway Companies against each other till one is ruined ; th result being at last to raise the fares to the highest possible standard 7

It is the real substantial effect upon the public that must b sought after. That which appears at first sight and standing alon to be a preiudice may when considered in conjunction with other circumstances prove to be the means, and the only means, of ultimate and lasting benefit. t

An apparent advantage may, when properly examined, be seen to be merely temporary and the prelude to severe public loss. | Competition unrestrained may drive fair-minded and useful ser-

The Court then is bound to look beyond the surface, and im gate causes and effects ; it must regard not merely one or mo isolated incidents, but the combined circumstances of the situati so far as they are ascertainable before it can pronounce whe' upon the whole detriment has arisen, or is likely to arise, and whether the intention to which the law attaches culpability was present _ in the minds of those charged with contravention.

The particular application of these general principles to the several incidents of detriment complained of by the Crown will be madi E as these are in turn considered.

I could well have wished to state my views in a very much briefer _ form than that in which they will be presented. The enormous mass of evidence, the separateness of the transactions which compose i their varied nature, and individual peculiarities, the numerous attendant circumstances proper to be looked at before some of them - are, so to speak, reduced to a common denominator in order to be correctly estimated and justly compared, preclude anything like a generalisation unless preceded by a detailed examination. The novelty of the enquiry, the importance of the issue to both the defendants and the public demand the best and most anxious _ scrutiny I can give to the matter, and I have thought that after

all it would be a mistake to sacrifice precision to conciseness, or to H. C. or A.

deprive anyone concerned of the opportunity, if he so wishes, of pane

following my steps upon the long and often thorny path that has Tux Kixe

led me to my conclusions. Pettit At this poi ity ssi GENERAL OF t this point I take the opportunity of expressing my sense of ae OE

obligation to learned counsel, who, from their respective standpoints, wonwearra

conducted the case with so much ability and skill. Of those having paneer ] Normern

the responsibility of leadership I need say no more, but a special Gort teries.

word of appreciation is undoubtedly due to the junior counsel all

round. I say this because, in addition to their other specially laborious duties, they so readily and so admirably responded to the requests I made to summarise and systematise the enormous and intricate mass of transactions that otherwise would have been most difficult to follow, and would have prolonged the case beyond all reasonable compass.

Although I have found it necessary to examine the original records of those transactions for myself, the summaries prepared on both sides not merely expedited the progress of the trial itself, but have been welcome guides to the contents of the documents, and tests of my own examinations and comparisons.

Varrous Crasses OF DETRIMENT RELIED ON BY THE Crown.

The first and the main detriment relied on is the excessive chara- acter of the prices charged, the excess being neither natural nor uniform, governed not by legitimate business considerations, but dictated by the necessities of consumers, their artificially increased difficulties in obtaining other supplies, and by favouritism or other erratic causes.

Other grounds of detriment, all serious, are urged - as restriction upon the public choice of transportation and of the pits, and in the total quantity from permitted pits, restriction upon the quantity of small coal, short deliveries of coal contracted for, and substitution of other coals, some inferior.

The Crown says that the contract and the combination alike gave power, and each was intended to give power, to the defendants to create all these prejudicial circumstances, and particularly to artificially raise the price of coal the public would have to pay ;

H.C. or A. that they at once commenced to do so, and have ever since con- 1911. 'tinued to maintain and, where opportunity offered, to advance their artificial and unnatural prices still higher.

Looking to the terms of the contract itself, no price, either to

gia acai) shipping companies or to the public, is fixed. Clause 6 binds the

come shipping companies to pay whatever price the collieries may fix

COLLIERIES. from time to time as their f.0.b. price Newcastle, and clause 8 pro- vides in the first instance for the maximum prices to be charged by the shipping companies to the public ; additional stipulations being added by later clauses.

The contract specifies in the schedules 7s. as the lowest and 12s. as the highest f.o.b. price apparently within the contemplation of the parties for best coal apart from circumstances such as war, strikes and lockouts, and 5s. and 6s. as the corresponding limits for small coal. The collieries are left by the contract entirely at

large to fix whatever prices they choose, certainly within those limits. If the agreement consisted of nothing more, I think the proper rule to be applied in the absence of actual abuse or of some exceptional circumstance, as where the limits are palpably excessive or some outside event makes it probable that abuse will arise, is to assume, as I think the Privy Council assumed in Collins v. Locke (1) that no unfair advantage will be taken of the power. But there is strong common sense in the view that when the whole of an agree- ment is looked at one part presumably innocent when considered separately may give rise to a strong probability of danger. The idea was well expressed by Mr. Justice Holmes in Swift v. United States (2). That was a case where a charge of combination was made against a dominant proportion of the dealers in fresh meat through- out the United States not to bid against or only in conjunction with each other, to fix prices at which they would sell, restrict shipments of meat when necessary, and charges of intent to monopolise, &e. The learned Judge said : - "' The scheme as a whole seems to us to be within reach of the law. The constituent elements, as we have stated them, are enough to give to the scheme a body and, for all

(1) 4 App. Cas., 674. (2) 196 U.S., 375, at p. 396.

that we can say, to accomplish it. Moreover, whatever we may think H. ©. or A. of them separately, when we take them up as distinct charges they a

are alleged sufficiently as elements of the scheme. It is suggested Tan Kiva

that the several acts charged are lawful and that intent can make no 4vronwny- difference. But they are bound together as the parts of a single GPNPRAL oF plan. The plan may make the parts unlawful. Aikens v. Wis- :

consin (1). The Statute gives this proceeding against combinations Assoctarep in restraint of commerce among the States, and against attempts Cone to monopolize the same. Intent is almost essential to such a

combination, and is essential to such an attempt. Where acts are

not sufficient in themselves to produce a result which the law seeks to prevent - for instance, the monopoly - but require further acts in addition to the mere forces of nature to bring that result to pass, an intent to bring it to pass is necessary in order to produce a dangerous probability that it will happen. Commonwealth vy. Peaslee (2). But when that intent and the consequent dangerous probability exist, this Statute, like many others and like the common law in some cases, directs itself against that dangerous probability as well as against the completed result. What we have said disposes incidentally of the objection to the bill as multi- farious. The unity of the plan embraces all the parts."

In conjunction therefore with the stipulation as to price, there are found the stipulations which I have, in the earlier part of this judg- ment already quoted - clause 5 binds the collieries not to sell for inter-State trade except to the shipping companies ; clause 6 binds the shipping companies not to purchase any coal for inter-State trade except from these collieries, and binds them further not to carry or have anything to do with the carriage of any other coal. I have referred to the exceptions made in favour of the shipping companies and which are negligible in this connection.

There is thus erected a ring fence in connection with the public supply of Newcastle coal as it may be shortly termed. The domin- ant proportion of colliery proprietors in number and in quantity of coal produced thereby agreed with the dominant proportion of shipowners that not an ounce of Newcastle coal shall be supplied inter-State except through the shipowners and that whatever

as Tue Kine AND THE ArTORNEY- GENERAL OF THE Com- MONWEALTH vw AssocIaTED NorTHERN COLLIERIFS.

ptice may be demanded for Newcastle coal, none other shall be - obtainable by inter-State consumers by means of the shipping companies. Further the agreement provides as already pointed out that as a rule the collieries need not deliver to the shipping companies coal from any colliery that has reached the limit of out- put assigned to it by the collieries under any agreement among themselves. If the consumers object not only to prices but also to the nature of the coal supplied through the shipping companies, their opportunities for obtaining supplies elsewhere are immediately, that is, directly, curtailed.

Two opposing suggestions were made as to the intention of the combination in stipulating for a maximum c.i.f. price. The Crown suggested that the collieries imposed a maximum limit so as to guard against the probability of the shipping companies demanding such high prices as would drive the trade to other collieries. The idea contained in the suggestion is that the parties arrived by cal- culation or estimate at the highest price which the public would consent to pay rather than go elsewhere. This seems to me highly improbable. It would involve among other things some estimate of the lowest prices at which other collieries could afford to sell. It would further connote that the shipping companies would not be alive to their own interests, but would pursue the fatal policy of driving trade not only away from the Northern collieries, but also from themselves, because they had undertaken with minor excep- tions not to carry other coal.

Somewhat to alter a homely adage that would be not to kill the goose that laid the golden egg, but to drive it away that it might lay the golden egg on other persons' premises. Such reckless altruism is not to be imputed to the shipping companies. I do not accept the Crown's suggestion. Equally unable am I to adopt the view suggested by the defendants. That view is that the maximum c.i.f. price was fixed in order that the public might be protected against the rapacity of the shipowners. It was argued that if no maximum had been imposed the agreement might have been open to the objection that the exclusive purchasers of the Vend coal were left at large to charge what price they wish ; and that the fixation of the maximum exhibited a laudable solicitude for the welfare

of the public on the part of the Vend, and a corresponding recogni- H. ©. oF A.

tion of the propriety of such fetter upon temptation on the part of auN the shipping companies. There are several difficulties in the way Tue Kino of accepting this suggestion. First of all - there is no corresponding 3.) ny. fetter placed by the shipping companies on the possible rapacity oa ofthe Vend. At any time without rhyme or reason, the f.o.b. price wonweantH

could be raised from 9s. or 10s. to 12s. at least which would mean 'Agsterees

an automatic advance of the maximum c.if. price from 14s. or QOvTEnrs, 15s. 3d. at Melbourne to 17s. 9d. and from 15s. 6d. or 17s. at Adelaide to 19s. Again there is no indication in the agreement of any special consideration for the public. The tendency of the whole

agreement is self-interest, and if there had been any desire to guard

the public in the way suggested I should have expected to find some distinctive provision in regard to it. For instance, there would in all likelihood have been some condition providing that if there were any attempt to extort higher prices from the public, the agreement might be terminated, or the collieries should be at liberty to sell to the public direct or to other shipping firms ; nothing of the kind appears ; on the contrary there is a distinct provision made of a wholly different nature as to what is to happen where excess prices are charged.

Clause 11 already quoted makes that provision, which is that the whole excess if without the consent of the collieries is to go into the pockets of the Vend, and what is extremely important is, that the reason for this stipulation is expressly given. That reason says nothing whatever about protection of the public; the reason given being that it was the intention of the agreement to place the shipowners, who are called the purchasing agents, in the position of agents only, with a liability to pay for all coal ordered at the rates agreed on ; and it is stated as will be seen on reference to the clause that the maximum c.i-f. prices set out in clause 8 are to represent the shipowners' compensation for freight and remuneration for their work of realisation. The further provision in the clause that the shipowners are bound to give full access to their books and documents to the Vend's accountant to enable him to ascertain whether a breach of the clause has been committed emphasises the previous words regarding agency. The collieries it appears are

H.C. or A. ag between themselves and the shipowners to be deemed to 1911.

• )

Tue Krxe clause 11 indicates the intention of the agreement to unite the Avronsy. groups by constituting the shipowners pro hac vice the ex ree agents of the Vend, forbidding them to act for the benefit of monweatrH collieries other than those of their principals and stipulating as_ Meiatites, the application of the purchase money received from the pul Pe cea The further proviso in clause 11 applying where excess prices

obtained '"' with the prior consent of the Vendors in writing" -

an expression pointing to the protection of the collieries, not of

public - divides the excess in such case equally between the col lieries and the shipowners. The difficulty of explaining away the very clear language of this clause led Mr. Mitchell to rely on soi expression used by the representatives of the parties at the ference held 23rd July 1907. They are found at p. 107 of Ex X. Mr. Forsyth on the side of the collieries said : - '* We have right to increase our price to you at any time for such coal as may not require to satisfy your contracts." That was statemen number one. Then he made statement number two, which agree with Mr. Mitchell is a distinct statement, though it appe: in the same paragraph - " If you sell coal over the agreed prices are entitled to participate." Mr. Hunter on the side of the owners replied, "Mr. Forsyth is right in stating that if unde special circumstances we get higher prices, the collieries are entitl to share in the excess." Mr. Mitchell urged that an interpretati was thus placed by the parties on clause 11 which gave an enti different effect to it. He said in effect that they recognised that excess prices should be shared only in special circumstances, and argued that "special circumstances" meant only the sp matters mentioned in the agreement, wars, strikes, lockouts, that clause 11 was limited in its application to clause 10. But that suggestion cannot be accepted. The parties at the conference not directly discussing the effect of clause 11 and it does not appear that any formal interpretation contrary to its plain meaning was ever adopted. Still less did the parties ever act upon any such as is suggested. The statement by Mr. Hunter, that if an excess price is obtained the collieries are entitled to share in the excess,

obviously does not apply to cases where the excess is obtained with- H.C. or A.

out the consent of the Vend, because in that case the excess is not 1811.

shared - it all goes to the collieries. 'Tae Kine The special circumstances referred to, I take to mean whatever sbet crs!

circumstances may at any time be recognised by both parties by peri oe

mutual consent as sufficiently special to warrant an increase in the monwearrn v.

maximum prices fixed by the agreement. War, strikes, lockouts, Assoctatep

are recognised by clause 10, but a war, from its situation and the 'oes

nation involved, may be such as in the opinion of the parties not to affect the demand for Newcastle coal. In that case it would not bea special circumstance, so also a strike or a lockout wherever it takes place might or might not in the opinion of the parties appreciably affect the supply of available coal. That opinion would determine whether they consider it a special circumstance and so induce the Vend to give or withhold their consent. Again a change in the de- mand, home or foreign, a natural alteration in the supply, or acci- dents to mines or ships might induce a reconsideration of prices.

Clause 17 adopts clause 11 in a very remarkable manner. In addition to war, strikes and lockouts " inevitable accidents" are referred to as possibly interfering with the carrying out of the engagements of the parties "'or any of them." Such parties are "to the extent of such interference" to be free from compliance with the engagements embodied in the agreement.

The largeness of that expression would so far free the shipowners from the provisions of clauses 10 and 11 so that they might without

the Vend's consent sell at an excess price and keep the excess. But then comes the concluding part of clause 17 providing that the shipowners shall not without the consent of the collieries re-sell at a higher price than already provided and " in the event of their selling at any higher price," which applies whether there is consent or not, the provisions of clause 1] are to apply to any excess.

T accordingly put aside all idea of the maximum being instituted for benevolent motives, or to establish bona fides in the event of the agreement - which the parties refrained from signing - being brought to light. Also do I discard the notion that it sprang from

a distrust of the business capacity or sanity of the shipowners. vou. XIV. 31

Cue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw ASSOCIATED NorrHern CoLLIERIES

Tyrention anp Errecr or Provision ror Murua Exciusion 0 OvursipE CoMPETITION. ; Iseein it prima facie an intention that the shipowners shall not; more than a certain proportion of whatever price may be obtain for the Vend coal. Circumstances like the strike of 1909 might permit of much higher prices being obtained from the public than the fixed maximum, and the collieries were not disposed to b absolutely content with their previously fixed f.0.b. price and allow the shipowners to get all possible surplus advantage of the market. - The higher prices might be reasonable or unreasonable ; that was - immaterial for this purpose, but whatever they were the arrange- ment amounted to this, if only they were obtained by joint consent the excess should be shared equally. By constituting, as between themselves, the shipowners jointly the agents of the Vend jointly, - the Associated Collieries retained a hold upon the transactions of - sale which secured the due fulfilment of this part of the bargain. As a deterrent against its secret violation, they established a right to the whole of the excess unless their prior consent were given - ' and this right with the right of examination of the shipowners' ; books made any attempt at evasion futile. The defendants by the means built up a ring fence as I have already described it, which was high enough and close enough to shut out almost all effective - competition. It is demonstrated by tenders (see Q3), contrac and verbal evidence that, for the larger contracts, consumers quently desire several pits to draw from. Regularity and con tinuity of supply are of high importance to railways, gas and electric lighting companies and public bodies generally. To guard agains' interruption or total stoppage it is desirable to have a number pits from which supplies can be drawn. This in itself puts a power- _ ful lever into the hands of the combination and seriously detracts from the availability of the non-Association mines - Wallsend, Bur- _ wood Extended and Ebbw Main - to meet the general demand supposing all other things equal. An example of the power this confers on the combination is afforded by Learmonth's telegram to John Brown of 30th October 1909 (Ex. P8). Again, whatever chances of outlet the non-Vend mines may have, means of transport are indispensable and there is a closed door between them and the

shipping companies with their allies, the Melbourne Steamship Co. H- ©. or A.

That was the object of this ring fence so far as may be deduced tae Kine

from the agreement itself. Mr. Campbell said that at most it merely Aeneas

formulated a pre-existing practice. Whether that was so in fact Sas poy

or not will appear presently, but it matters not, because a contract wonwrarra which imposes an obligation to continue a practice seen to be Assoctarep

mers E ear NortHERN prejudicial creates a very different situation from that where any eeeeeattae,

party may freely at any moment alter his practice as soon as prejudice threatens or appears, and, as already pointed out, the correspondence presents numerous occasions where both parties in turn point to the agreement existing between them as a reason why, to some step taken or desired to be taken in the circumstances, this obligation constitutes a bar, and we find when this is pointed out that the step complained of, however desirable, is either re- gretted, retraced or abandoned. There are some additional concrete instances which further indicate to my mind that but for this combination the exclusiveness which is its central vice would not have existed. In January 1906 when the South Australian Govern- ment was about to call for tenders, Mr. Colebatch, the Chief Store- keeper and Executive officer of the Supply and Tender Board for that State to make enquiries as to direct tenders, towards the end of the month saw Mr. Chilcott, of the Scottish Australian Co., with reference to altering the form of contract that had hitherto prevailed, and calling for tenders in two parts, one for freight from Newcastle to South Australia, the other for coal direct to the Government instead of as formerly to the shipping Association so as to be cheaper. Mr. Colebatch put the question to him whether he would tender to the South Australian Government direct if he had the opportunity and he said he would do so. About the same time Mr. Colebatch saw M.. Wilkins of the Hetton Coal Co. and Mr. Learmonth of the A.A. Co. and Hebburn, and Mr. Brown of J. & A. Brown. Mr. Wilkins said he was agreeable to tendering to the South Australian Govern- ment instead of to the shipping Association ; Mr. Learmonth said he considered it a good move on the part of the Government to separate the tenders in the way previously described, and he gave reasons. The account of these three interviews I have admitted

H.C. or A. only as evidence against the following defendants resp

ci Chilcott, the Hetton Co., Learmonth and the A.A. Co. Tue Krxc defendants are certainly affected by what they said. It 'Avronury. that the Government called for tenders in March and Seott F

GeNERAL oF & Co, desired to tender. The Vend minutes of the 23rd April

tHE Com- monweattn (F. 59 and following), already mentioned in another conne 'Associaren Tefer to the South Australian contract of 96,000 tons. Shi -AoRTHERS and collieries were both represented at this meeting, Mr. Hun

• addressed the meeting and explained the position of the St Owners' Association in regard to the contract and asked for s quotation from the colliery proprietors as would enable them (tl Steamship Owners' Association) to secure the business. Ri to Ex. (2 shows that the only coal called for by the Governm was Newcastle coal. . The minute proceeds to say that Mr. Simpson for the Pacific Mr. Laidley for Rhondda informed the conference that they h already quoted for Scott Fell & Co. for a supply of a portion : this contract, but were willing to make a quotation to the Si ship Owners' Association, with the result previously adverted

Several companies undertook not to supply coal for this cont except to the Steamship Owners' Association. The immedi ' outcome was the guarantee of 24th April; that is evidence all the defendants and there is nothing to countervail it. is also affirmative evidence from the resolutions of 30th March that no member of the Vend would sell to Howard Smith & Co. or to th Adelaide Steamship Co. pending the report of the Committee abo to proceed to Melbourne without consulting the Board, and on 23rd April, at the meeting of the Vend before the joint confi on that day (and this I take as against the Vend only), Mr. Chileot mentioned this resolution and asked if he were still precluded from supplying the Adelaide Steamship Co. The meeting resolved th he be allowed to execute the order given by that company. think it is idle for the defendants to ask me to assume that thes

agreement had never been made. Then said Mr. Campbell fu the combination was beneficial, because it promoted concentrat supplies, in other words having the whole of the production a'

able for the service of the trade. That means as I understand if H- C- oF A-

ships load whatever coal is brought to them the loading takes place

quicker and with less possibility of delays than if coal from particular Tue Kixe

pits were selected for the cargo. The bare fact may be so, but that sprorney-

is no guarantee of advantage from the combination, for it is little

satisfaction to a consumer to know that he can be the more speedily MonweaurH

supplied with coal that he would rather not have, in return for not . getting at all the coal he prefers. Mr. Campbell adds to the sup- 4 posed advantages of the arrangement, those of regularity and con- tinuity. They are only consequences of what is already said. How the inter-State consumers of coal in Australia suffered for want of some such beneficial arrangement all the years down to 1907 the defendants have not vouchsafed to explain. How the foreign trade and the purely New South Wales trade suffers at the present time is not shown. It was also claimed as a benefit from this arrangement to the smaller collieries and I suppose through them to the public that their products are more sure of earlier and regular despatch. Perhaps to the collieries this may be so, though I am not altogether convinced of that on the whole, but to consumers Ishould say certainly not. If a consumer wants the coal of a par- ticular small colliery, so far from being sure of getting it quicker, he is not, unless in some exceptional cases, sure of getting it at all. The object of the ring fence then so far as a deduction may be made from the agreement unqualified by what was done under it was to control, so far as it could be controlled, the supply to the public of what is known as Newcastle coal. Mr. Knoz said it was absurd to talk of creating a monopoly of Newcastle coal just as it would be to talk of creating a monopoly of Tasmanian apples. If the charge were that the defendants had created a monopoly in the production of Newcastle coal, there would be more force in the argument. New- castle coal, of course, can only be produced in the Newcastle district, and that fact must remain so, combination or no combination, so Jong as all the mines are worked. But the supply of Newcastle coal to the public involves other considerations. The producers of that coal, whether singly or in any form of mutual association as a Vend, might, lawfully or unlawfully, raise the price, restrict their aggregate output, and allot individual proportions of that output,

H.C. or A. and yet stand clear from the particular objection of monopoly. J

ae notwithstanding all other objections they sold to any Tur Krxe Whomsoever that applied for coal, if they sold indiscriminat Avroneey. any shipping firm whatsoever that applied, and did not p Caer other persons from raising coal in that district and disposing o moxweattit they would be free from monopolizing the trade in Newcastle

shall address myself later ; I am concerned at the present mi only with distinguishing between mere monopoly of production, monopoly of trade.

The charge here is, that by the combined agreement a monop has been created in the trade and commerce in the coal which b with the first movement of the produced commodity on its tr to other States by limiting its course of transit to the one channel, namely, the shipping companies. The collieries undertake to their coal reach the public in no other way ; there can, consistently with the agreement, be no inter-State trade in Newcastle coal ex that which is concentrated by means of this agreement in the har of the shipping companies, which are regarded for the purposes. the agreement and in relation to the collieries as one entity. I ha previously said that that result would not have arisen if the agreement had not been made; whether that amounts in law t monopoly depends upon considerations properly dealt with later on.

I have now described what in my opinion is the plan or schen contained in the agreement each part throwing light on every oth 1 part, the general intention animating the whole.

If consequently, I were driven to find from the contract itst

explanatory reason for the contract and the form it has taken, here was a strong probability of such misuse. I gather from the

document and the way it came into existence an intention to be guided only by self-interest, an intention to make the most of any situation which the necessities of the Australian public might present and, in utilising all such opportunities, not to be restricted by limits of price which would be measured by ordinary and reason-

able competitive standards. Competition is killed so far as the MonwrarrtH

parties by agreement could kill it. But, in favor of the defendants, J do not arrive at my conclusion against them on this point without considering their conduct during and since the latter part of 1906. I take into account their course of business and estimate their actual intention and the probability of danger to the public arising from the new combined power created by the contract from the consideration of its terms as they have been actively applied, and as they have been interpreted practically by themselves so far as words and acts have placed any definite and reliable construction upon them, and, where they have not, then from an interpretation of the document itself by the light of surrounding circumstances. These external matters, as I may style their words and conduct alluded to, fall conveniently under their appropriate classification of intent and suggested detriment.

Increasep Prices To THE Pustic AcTUALLY CHARGED BY SHIPPING ComPANIES AFTER DEFENDANTS' CoMBINED AGREEMENT.

The issue of excessive prices opens up evidence bearing very strongly on the question of intent, as well as detriment, but in the first instance it is, I think, desirable to show in a succinct form in figures the actual increases in price which either were coincident with the coming into operation of the combined agreement, or else were introduced as soon afterwards as current engagements permitted.

The Vend on 27th September 1906 fixed the prices of coal for 1907 ata higher level than that existing at the beginning of 1906, namely, at a minimum 10s. net for large and 5s. 9d. net for small. The combined arrangements would naturally be expected therefore to operate as from Isi January 1907 ; this they did for the most part ; an expressly admitted example exists in the case of the Townsville Gas Co., see letter of 4th January 1907 (Ex. A9). In a few excep-

H.C. or A. tional instances prices began to rise a little earlier, but only af UBL ihe prospect of completed combination seemed assured. Coming - Tue Krxe now to the actual advances of price I will take the States separately, -

Avronwny. enumerating the respective consumers and showing the increase of

Caren price in each case. 4 monwearrH Vycrorta. (1) Victorian Railways. - The price of Pelaw Main, - ea Stanford Merthyr, Abermain and Hebburn coal for 1906 (contract - CeenaERS made towards end of 1904) was 10s. 5d. and 10s. 6d.; for 1907 (contract made towards end of 1906) 14s. 1d., a rise of 3s. 7d. and _ 3s. 8d. or 34 per cent. That was under a contract for 3 years. -

For 1910 the price was 15s. 5d. and 16s. 2d., that is to say an eventual

rise over the 1906 price of 5s. and 5s. 8d., say 48 per cent. The quantity was about 260,000 tons per annum for the period 1907-9, _ and about 129,000 tons for 1910. (2) Footscray Gas Co. - The price of coal screened at pit from A.A., Stockton and Hetton collieries for 1906 (fixed in March 1905) was 14s. 9d. at Footscray wharf ; for 1907 (fixed in March of that year) was 18s. 6d., a rise of 3s. 9d., about 25 per cent. ; from Abermain, ; Hebburn and Aberdare pits for 1906 13s. 9d. ; for 1907 18s. 6d.,a rise of 4s. 9d. Small coal for 1906 11s. 9d.; for 1907 14s. 6d., a rise of 2s. 9d. In 1908 the price advanced to 19s. 9d. or 5s. over the 1906 price, and small coal to 15s. 3d., which was 3s. 6d. advance ; in 1909 the price was 19s. 6d. and in 1910 19s. 3d. The last quota- tion leaves the price at 4s. 6d., increase about 30 per cent. The quantity averages about 5,000 tons per annum. (3) Melbourne Glass Bottle Co. - Newcastle engine coal for 1906 was 12s. 3d. ; for 1907 was 15s. 6d., an advance of 3s. 3d. or 26 per cent. ; in 1908 the price was 17s. making the advance 4s. 9d., which receded in 1909 and 1910 to 16s. 10d. and 16s. 6d. respectively, the eventual increase being 4s. 3d. per ton or 34 per cent. The quantity used is about 12,000 tons per annum. (4) Melbourne Co-operative Brewery. - The latest date given prior to 1907 is 1904 when the price was 16s. 3d.; the earliest date after the combination is February 1908 when the price was *22s. 3d., nearly 37 per cent. In 1909 it was 22s. 3d.; in 1910 2Is. 3d.; the quantity is about 2,000 tons per annum, an eventual rise of 5s. or 80 per cent. over 1904 price.

(5) Australian Paper Mills. - The price for 1906 and up to the end H- ©. oF A. of February 1907 under a contract dated March 1905 was for New- ear castle engine coal at Melbourne 13s. 6d., and small coal 12s. 3d.; 'Tue Kine

for 1907 (by contract of March that year) the price for engine coal Vv) try

was 18s. 6d., being a rise of 5s. or 37 per cent. over the previous nODeeae

price ; and for small 14s. 6d., being a rise of 2s. 3d. and a provision onwesvrn of Is. extra if more than 25 per cent. small. In 1908 the price for Aesoctinnts engine coal rose to 21s., a total advance of 7s. 6d., that is more than (ORTEEES. 50 per cent. on the price paid in 1906. Small was 16s. 3d., a rise of 4s, and 1s. extra if more than 25 per cent. small. In 1910, the price of engine coal, 20s. 9d., an eventual rise of 7s. 3d., that is, 53 per cent. The price of small is 4s. 6d. less, namely, 16s. 3d. The quantity supplied was about 5,750 tons large coal per annum.

(6) G. Mowling & Son. - For 1906 the price of Maitland engine coal was 14s. 3d. and small 13s. 3d.(contract note December 1905) ; for 1907 (by contract note dated 18th December 1906) the price was

20s. 1d. and 17s. Id. respectively, being a rise of 5s. 10d. or 40 per

cent., and 3s. 10d. or close up to 29 per cent. respectively. For 1908 a further rise takes place. The contract note bears date 30th Decem- ber 1907, and engine coal is 22s. 9d., which is 8s. 6d. rise or about 60 per cent. ; small coal is now 19s., a rise of 5s. 9d., about 40 per cent. For 1909 the last mentioned prices are maintained. The quantity supplied was about 2,000 tons per annum.

(7) The Melbourne Harbour Trust. - In 1906 the price for Hebburn and Maitland coal was 11s. 6d. In 1907 Lambton, Burwood, New- castle, Hebburn, and Abermain 15s. 3d. ex steamer, a rise of 3s. 9d., within a fraction of 33 per cent. In 1908 it is 17s. 9d., which is 6s. 3d. advance, over 55 per cent. In 1909 and 1910 the highest price is retained. The quantity supplied is about 4,000 tons per year.

(8) Melbourne City Council - At the Electric Light Station in 1906 Aberdare, Abermain and Hebburn were 13s. 6d. For 1907 for the same three pits and fourteen more the pits being named as "and/or" the price was 18s. 3d., an advance of 4s. 9d., that is 35 per cent. In 1908 the price for "* Newcastle coal" is 20s. 10d., an advance of 7s. 4d. In 1909 and 1910 it recedes to 20s. 4d., the final increase being 6s. 10d., a shade over 50 per cent. Small coal is : -

od Tue Kina AND THE ATTORNEY- BENERAL or THE Com- MONWEALTH v ASSOCIATED NorrHern CoLriertEs.

1906 12s.; 1907 15s. 3d.; 1908 and 1909 16s. 7d.; 1910 1 total rise of 5s. on small coal. The quantities used are about 7, tons large, and 8,600 tons small. s

(9) Melbourne and Metropolitan Board of Works. - First at Pumping Station for 1906 the price of A.A., Stockton, H and/or Newcastle was 13s., the tenders being dated 9th Janus of that year. In January of the following year the price rose | 18s. 9d. and 19s., about 46 per cent. ; and in 1908 to 22s. 6d., whe it has remained, that is an increase of 9s. 6d., over 73 per cent. The quantity per annum averaged about 6,800 tons. For Werribee Farm down to 30th June, Newcastle engine coal in bags was 19s. By contract dated 13th June 1906 based on a tender 0 28th May and covering the period from Ist July 1906 to 30th June 1908 the price was raised, but only to 21s. 5d., an advance of 2s. In 1909, the price was 27s. 9d. and in 1910 27s. 3d.; an ultimate advance of 8s. 3d. over 43 per cent. The quantity about 300 ton per annum.

(10) Commonwealth Services - Forts, Port Phillip Heads. - rst as to the Point Nepean house coal the price fixed in October 19 for the year 1906 was 17s. For 1907 by tender dated 5th November 1906 the price is raised to 28s., a rise of 11s., close on 65 per cent., tolerably substantial rise. I should here state that William Rea, who is Regimental Quarter-Master Sergeant, has stated for the past 10 years the conditions of delivery have been exactly the with regard to Point Nepean and Queenscliff. In the follo year however a still further rise took place. By tender of 4th November 1907 wrongly bearing date 1908 the price reaches 32s. 3 and, in the following year, by tender of 16th November of that y wrongly dated as 1910 the price is 32s. 9d., being over 92 per cen ; increase. The amount is only about 30 tons per annum, but : circumstance would of course have been considered when the was fixed in 1906 and so the contract between the two limits is unaffected by the quantity. :

Then as to Queenscliff, the price of house coal for 1906 was 18s. ; for 1907 23s. 6d., that is, 30 per cent. ; for 1908 and 1909 27s. and for 1910 27s. 9d., just over 54 per cent., the quantity about 1: tons per annum.

(11) Victorian Government Special Services. - (a) Sunbury : Hous Coal - The price for 1906, see McIlwraith's tender 17th October

1905 (V2), was 19s. for Maitland coal ; for 1907 the price is 25s. 3d., Tue Kine

arise of 32 per cent. ; for 1908 the price is 27s. 3d. where it remains ; a qporney-

that amounts to a total rise of 8s. 3d., over 43 per cent. The quan- ©

tity is about 500 tons per annum. (b) Melbourne District House moxweavrn

Coal. - Price in 1906 was 14s.; in 1907 it sprang to 20s. 3d., over enonstial

44 per cent. ; in 1908 it was 22s. 3d., a total rise of 8s. 3d., over pels aan

58 percent. The quantity is 1,400 tons per annum. (c) Melbourne G.P.O. Steam Coal. - The price in 1906 was 13s. 3d. for Maitland, 13s. 9d. for Newcastle. In 1907 it was 19s. for both, that is 42 per cent. over the previous average price. By direction of the Victorian Cabinet, Jumbunna coal was taken at 19s. 5d. In 1908 the price rises to 20s. 6d., the tender of James Paterson & Co. being accepted. The rise here is 7s. 3d., over 54 per cent. beyond the previous lowest price, or 50 per cent. over the average. The quan- tity is about 600 tons per annum. (d) Lady Loch Steam Coal. - For 1906 the price of Maitland coal was 12s. 3d., Newcastle 12s. 9d., or an average of 12s. 6d. For 1907 the price was 18s. 4d., a rise of Gs. 1d. over Maitland and 5s. 10d. or 46 per cent. over the mean. By Cabinet direction Jumbunna coal was taken at 19s. 6d. In 1908 the price was 20s. which gives a total increase of 7s. 9d., which is over 63 per cent. over Maitland and 7s. 6d. or 60 per cent. over the mean. The quantity is about 950 tons per annum. (e) Yarra Bend. - Price 15s. Id. and 15s. 7d. for Maitland and Newcastle respectively for 1906, an average of 15s. dd. In 1907 21s. 6d. or 38 per cent. over the mean. In 1908 23s., a total rise of 7s. 8d., that is 50 per cent. The quantity is about 2,125 tons per annum.

(12) Retail Dealers. - Mr. Ramsay is a coal and firewood dealer carrying on business at Windsor, Melbourne ; he is Secretary of the Melbourne and Suburban Firewood Dealers' Association. His trade since 1897 has been nothing less than 200 tons of Newcastle coal a year. There are about 600 members in the Association. It does not appear how much in the aggregate was sold by the 600 members, but it must be a very considerable quantity, some tens of thousands of tons, and we are not concerned here with the exact tonnage of coal sold. The defendants in 1908 estimate it at 53,607

Tue Kine AND THE ATTORNEY- GENERAL OF tue Com- MONWEALTH v. ASSOCIATED NortHERN COLLIERIES.

tons, but it is more. The shipping companies also sold direct to the public. The Adelaide Steamship Co. to a very small extent indeed, the quantity so sold being negligible, the other three do sell retail in a substantial sense ; they issue lists such as those in Ex. K8 in which prices are given for dealers on the wharf, for casual dealers and for private orders. So far as Victoria is concerned the lists show that to dealers on the wharf up to Ist June 1906 the price was 14s. 9d. for screened coal ; 13s. 9d. for engine coal ; 11s. 6d. for smiths coal. Private orders on the wharf, which may be taken as the datum, were 2s. more. From Ist June 1906 dealers on the wharf were charged 16s. 9d. for screened ; 15s. 9d. for engine ; 13s. 6d. for small. From 28rd July 1906 the price to dealers on the wharf was 19s. 3d. screened, 18s. 3d. engine, 16s. small. There was a discount of 2} per cent. given to dealers taking 25 tons per month and paying by 14th of following month. If that discount were frequently operative, it would be in cases at the rate of 300 tons per annum and applying this to 600 dealers would make the total tonnage something very great, about 180,000 tons, but the total quantity sold in this way was not one half that tonnage. There is the statement that about 7 per cent. of the total trade is what is called the general trade (Ex. X. 107). This is substantially assented to by defendants (see p. 1806). But that does not give anything exact for Victoria. The total inter-State trade is certainly over 1,200,000 tons and about 7 per cent. of that is 84,000 tons of which it would not be over estimating it to say 60,000 tons were sold in Victoria. Continuing the range of prices, the October list 1906 repeated the July list, so that up to end of 1906 the price had risen for screened coal from 14s. 9d. to 19s. 3d. to dealers with 2s. extra to the public direct. I do not refer to this so far as any advance of price resulting from the combination, because of the admission that before 24th Septem- ber the Shipping companies were not acting in combination ; al- though the colliery proprietors had to a certain extent coalesced, and had determined, in conjunction with the shipping companies, to assist those companies or some or one of them, since I must take it they were acting independently, to obtain the South Australian contract. And these rises in price during 1906 are probably due to the influence of the coming change which was confidently anticipated.

However that may be, I have the undeniable fact, that the price of H- ©. or A. coal had so far mounted. From the Ist January 1907 a further rey rise - a combination rise - took place, the prices now being 21s. for Tur Kiva screened, 20s. for engine and 17s. 9d. for small, that is to say Is. 9d. yay Orniey. per ton was clapped indiscriminately on all three classes of coal, cmon

2s, additional being still retained for the public. Casual dealers wonweaurn v,

special prices now disappeared. From Ist January 1908 a further Assoctarep rise took place, they were 22s., 21s. and 18s. 9d. respectively - CREE EEN corresponding prices to the public being 24s., 23s. and 20s. 9d. From Ist January 1909 a reduction of 6d. per ton on large coal was made to dealers, so that the prices stood thus : - To dealers, screened 21s. 6d., engine 21s., small 18s. 9d.; to the public prices were respectively 24s., 23s., 20s. 9d. ; that is the public did not get the benefit of the 6d. reduction and this was continued into 1910. There was now no discount - the reduction apparently taking its place. The result to the public is that the price has gone up from Lés. 9d. for ordinary household coal prior to June 1906 to 21s. 3d. to end of December 1906, but not so as to attribute this to the combined

contract or combination charged in the statement of claim. Had

these agreements not been in an advanced state of negotiation, it may be that the rise in prices, so far, would not have taken place. I draw no legal conclusion adverse to the defendants from the rise of price up to this point, but I take the rise as a fact, and I do not think any conclusion favourable to them can be drawn from the circumstance that by the end of 1906 or properly speaking by 24th September of that year the prices had reached the limits mentioned. But from the beginning of 1907 when the defendants were in com- bination the public have to pay for ordinary household coal at the wharf the difference between 21s. 3d. and 24s. at the time the action was commenced and for 18 months before. Now 2s. 9d. a ton extra, close upon 13 per cent., is a considerable addition to a house- holder's bill of coal especially after the recent advances, which altogether brought them to 7s. 3d. a ton or 43 per cent.

(18) Metropolitan Gas Co. - The price in 1906 of large coal was 14s. 7d. ; small coal 10s. 3d., that was under a tender dated 18th September 1903 for a period of 3 years from Ist April 1904. The next contract was in May 1907 for 3 years for best screened round

H.C. or A. coal at 15s. 2d. per ton, the quantity about 150,000 tons per annum. - ae The Crown has drawn attention to the double fact that the rise 4

Tue Kixc in 1907 was only 7d., and secondly the price reached in that year

Arronvny. 15s. 2d., whereas in the case of the Footscray Gas Co. the rise was

Genenat oF 3s, 9d. and the total price for the same year 18s. 6d. In 1910 by _

THE Com- MoNweattH contract of the 16th May the price for the next 3 years has been

nsactniein increased by Is. further, making the total cost price 16s. 2d. as paleo against 19s. 3d. in the case of the Footscray Gas Co.

The case of the Metropolitan Gas Co. is pointed to by the Crown not as an instance of excess price, but as evidence that the other instances disclose exorbitancy. I may add at this point that the defendants have attempted no explanation of the conspicuous dis- crepancy between this and the other cases referred to. The dis- crepancy in the case of small coal is extremely great. In the 1910 contract small coal delivered to the Gas Company is Is. 5d. per ton. The Footscray Gas Co. paid 15s. 3d. in 1908 delivered on the wharf. The Melbourne City Council in 1910 were charged 17s. for small coal delivered at the Electric Light Station. G. Mowling & Son paid 19s. in 1908-1909 for small coal ; and private consumers as already mentioned were charged in 1909 and 1910 20s. 9d. Unless therefore some reason can be given for thinking that the price of lls. 5d. delivered on the premises in the case of the Metropolitan

Gas Co. is due to some exceptional circumstance, which made it fair to lower the usual standard, and not some desire to unduly favor the particular company - any idea of which I reject - or some pressure or inducement to sell at a great loss - which is not pre- tended - the prices charged to other consumers certainly in com- parison do stand out in relief as amazingly great.

(1) Retail Dealers. - I think this class of transaction properly occupies the first place, because it is apparently clear and simple and because of the only explanation, if it may be called one, which has been given regarding it. Mr. Thomas is a fuel merchant in Adelaide of many years standing - he is President of the Fuel Merchants' Association there, and he speaks as to the trade. He produced invoices of Howard Smith & Co. for the years 1904 to 1910 inclusive. He also produced some invoices of J. & A. Brown

in 1905 and 1908 and, at the request of defendants, invoices from Bell & Co. were put in. The invoices showed that the price of screened coal to dealers in 1904 was substantially 20s. for the first half of the year, coming down to 18s. 6d. at end. In 1905 it was

17s. In 1906 and for all household coal delivered to end of Decem- GENERAL OF

ber 1906, it was 17s. I omit reference to some few intervening MonweaurH

exceptional cases and disregard them, taking what is clearly the

governing standard price. For coal delivered in January 1907 there Gorirenis.

is a sudden and startling leap in price to 24s. 6d. which I take to be the regular price for 1907. Throughout 1908 and 1909 the price advances to 26s. except at the end of that year when strike condi- tions brought it up to 46s. and kept it there till the end of January, a circumstance which of course I disregard for this purpose. For the rest of the year 1910 the price is 26s. 3d. Bell's price in January 1904 for 15 ewt. was 23s. 6d. per ton, but this may have been a moment of emergency or temporary shortness of supply which for the moment enhanced the price. However that single instance on Ist January 1904 cannot outweigh the general force of the prices charged down to end of 1906, and in addition the other invoices of Bell & Co. which are in 1907 make their prices accord with Howard Smith's. Brown's invoices in November and December 1908 are 26s., the same as Howard Smith's. The rise from 17s. to 24s. 6d., an advance of 7s. 6d. to dealers and of course passed on to their consumers, is a very substantial addition to household expenditure. A sudden rise of 44 per cent. in an article of prime necessity is severe, whether it can be justified is another question. No attempt has been made to justify that particular advance or the subsequent advances which have brought the additional cost to 9s. 3d., that is 54 per cent. over and above the 17s. pre-existing, that is before the combination arrangements came into operation. Mr. Knox said of this, while it could not be denied there was a large jump in price there ought to be borne in mind the utter insignificance of the whole of the South Australian retail trade, as compared with the rest of the trade. He said it works out something under 2,000 tons out of 2,000,000 tons and he urged it could hardly be imputed as intention to the defendants that they intended for the sake of getting a few shillings a ton more from some dealers whose total purchases

H. C. or A. amounted to about 2,000 tons a year to get at the rest of the put aS J am not prepared to say that 2,000 tons is the full amount of Tue Kix defendants' general retail trade in South Australia. The

Arvonnny. inter-State trade being over 1,200,000 tons, and the general trad eee ® portion being from 76,000 to 84,000 tons in all, according as we

monweartH the percentage, at 6.38 or 7 per cent., I should think South Aus: Associaren tralia consumes a good deal more than 2,000 tons in retail purcha ee But however that may be, I cannot accept the invitation of Knor on behalf of the colliery proprietors to close my eyes to

significance and seriousness of the alteration of prices to

dealers. Insignificant it may be to the defendants, it is not in significant to householders to whom coal is a necessity. If so insignificant why was the advance made in 1907? Why was increased in 1908, and the increase maintained in 1909, and wh was this insignificant portion of business of 1910 weighted with another 3d. per ton? One further observation is to be made. price to dealers in Melbourne, as already appears, was 21s. in Janu ary 1907 as compared with 24s. 6d. in Adelaide, a difference 3s. 6d. ; 21s. 6d. in Melbourne from Ist January 1909 as cone with 26s. in Adelaide, a difference of 4s. 6d.; and from February 1910 it has been 21s. 6d. in Melbourne as against 26s. 3d. in Ad e a difference of 4s. 9d. The defendants have not explained whi the absence of South Australian coal mines affected their minds fixing prices there.

(2) The South Australian Government ; General Supplies. Adelaide and Suburbs: In April 1905 the price cf best screen Newcastle house coal was 18s. 5d. by contract for two years. In April 1907 the price tendered was 25s. 7d. for 2 years. The rise in price was 7s. 2d., over 38 per cent., and the Government appar- ently was cautious enough to accept for 6 months only. In December | 1907 it called for tenders for the year 1908 for these and other coal 2 services, the approximate annual quantity for Adelaide and suburbs being 1,750 tons ; but the Government was unfortunate, because : the lowest price on this occasion was 27s. 2d., a rise of 8s. 9d. a ton, - and this was accepted and was the price for year 1908. For 1909 the bs price was again 27s. 2d.; in 1910 and 1911 it was 27s. 3d. under contract May 1909. The advance in price thus amounts to 8s. 10d.

upon an original price of 18s. 5d., which may be taken to be 48 2 oe A.

per cent. (b) Port Adelaide and Suburbs. - In 1906 (by contract Ses

of 1905) the price of Newcastle house coal was 15s. 5d. In 1907, Tue Kiva

Mellwraith & Co. tendered for 2 years at 20s. 9d., a rise of 34 per g\ronnpy- cent. Again the Government's caution led it to limit the time to Gua 6 months, and again ill-fortune attended it for in December fresh wonweatru tenders gave the lowest price at 23s. 3d., which the Government paid Cetcteen for 1908. In 1909 and 1910, the price is 22s. 9d., a total advance of pissed 7s. 4d., which is 47 per cent. Small coal was 14s. 3d. in 1906 ; in 1907 the price was 19s. 9d. ; in 1908, 1909, 1910, 20s. 6d., a rise of 6s. 3d., which is 43 per cent. (c) Port Pirie- - The price in 1906 for best Newcastle steam coal was I4s. ld. In 1907 20s. 9d., or an advance of 41 per cent. for 6 months, caution again bringing mis- fortune, the December tenders bringing the price to 22s. 6d. for 1908; for 1910 and 1911, 22s. 9d., being an advance of 7s. 10d., which is 52 per cent.

(3) Adelaide City Council. - In 1906 down to July, screened coal was 18s. 5d.; in July it went to 23s. 5d.; in September it reverted to 18s. 5d., and so continued up to November. On 19th November by contract note the price was fixed for 1907 at 26s. 3d., a sudden advance of 7s. 10d., over 42 per cent. In November 1907, a con- tract was made fixing the price for 1908 at 27s. 9d., and in 1908 the price for the next year is again 27s. 9d., and 1909 the price was fixed for the following year at 28s., the total increase is 9s. 7d., that is, 52 per cent. The quantity is about 2,000 tons a year. Small coal was 14s. 11d. in 1906 ; 20s. 9d. in 1907 ; 21s. 9d. in 1908 and 1909 ; and 23s. in 1910, a rise of 8s. 1d., that is 54 per cent.

(4) South Australian Railways. - In 1906 the price was 11s. 9d. by tenders dated April and May for 96,000 tons per annum for two years. This price was tendered by Huddart Parker and the Adelaide Steamship Co. as an all-round price for every port. This price is either a fair price or an extremely low price and unremunerative price. If it were the latter, the history of the transaction will show that the lowness of the quotation was not due to any competition among the defendants, but in order to underbid a possible freight competitor, and this phase comes in later. If, however, the view is to be taken that it was a quotation of what the defendants thought

H.C. or A. was a fairly remunerative competitive price, then we may take aaa as a present starting point. In April 1908 the lowest price tend d

Tae Kine by any of the defendants was an all-round price of 17s. 6d. for o

fF sordanaszse year and 17s. 3d. for two years. The quantity was 133,000

Samer per annum. The tender was ultimately accepted for two years ;

wonwearra 17s. per ton. In 1910 the all-round price for first grade coal mio ea 17s. 145,000 tons. Even 17s. is low if compared only with some of oes the prices I have mentioned, and one of the questions which it

be material to consider is, why this considerably advanced, but s

comparatively low price, was taken for the South Australian raih

contract. The advance in two years and afterwards mainta was 5s. 3d., which is over 44 per cent. increase.

(5) South Australian Gas Co. - The price on trucks Port Ade was by tender made March 1905 for 3 years 15s. 3d. In M 1908 the price was 19s. an advance of 3s. 9d., which is 24 per a At the Retort House, Port Adelaide, the price was 17s. in 1906, 21s. 6d. in 1908-1910, a rise of 4s. 6d., over 26 per cent. For Company's Retort House at Port Pirie, the price in 1906 was 17s. that is 6d. more than at Adelaide; in 1908-1910 the price was 23s. 4d., that is 1s. 10d. more than at Adelaide, and a rise of 5s. 10d. above the 1906 price, which is 33 per cent. The quantity of screened coal delivered to the company was about 18,000 to 19,000 tons year. .

Small coal was 12s. in 1906, and 14s. 3d. in 1908, 1909 and 191 a rise of 2s. 3d., which is only 18 per cent.

(6) Wallaroo and Moonta Co. - The price in 1906 was 14s. 3 tender accepted in 1905 for three years. In 1908 the price for was 18s., a rise of 3s. 9d., which is 26 per cent., and for small i 1906, the price was 11s. 9d. In 1908 it was 15s. 6d. for deliv over 6,000 tons a month, a rise of 3s. 9d., being 31 per cent.

(7) Kitchen Sons & Marsh Limited. - In 1906 the price of coal was 14s. In 1907 18s. 9d., almost 34 per cent. rise. In 1908- 1910, 20s. 3d. The quantity was 375 tons per annum, a rise 0 6s. 3d., being over 44 per cent. -

(8) Adelaide Electric Lighting Co. - Small coal. In 1906 the price was 11s. 10d. In 1908-1909, 17s., a rise of 43 per cent. Jn 1910,

17s. 3d., a total rise of 5s. 5d., being 46 per cent. Average 7.400 H. ©. oF A.

(9) May Brothers Limited. - Small coal. Average 350 tons per Tus Kixe ES

annum. In 1906 the price was 12s. 3d. In 1907, 16s. 9d., a rise of about 36 per cent. In 1908, 17s. 6d. In 1909, 17s. 3d. ex heap. G

(10) Sulphide Corporation - The price of best brands, A.A., New- castle, Wickham and Hetton, free on railway trucks Port Pirie in 1906 was (by contract made in December 1903) 14s. 8d. Pelaw Main was 13s. 8d. Call that a mean price of 14s. 2d. During 1906 and 1907 the company was supplied by Scott Fell & Co. By con- tract dated 30th April 1908 two of the shipping defendants con- tracted to supply until end of February 1910 up to 1,600 tons per fortnight, coal from 18 specified pits at the company's option, but with the proviso that the contractors could obtain the coal required at the time their steamers are loading at Newcastle and deliveries were not to be made from pits disapproved provided contractors could obtain suitable coal as a substitute while loading. These provisoes, in view of what we now know to have been the relations between the contractors and the collieries are very material on the question of price. The price for this contract was 18s. per ton, a rise of 3s. 4d. on Newcastle and 4s. 4d. on Greta coals, being 22 per cent. to 31 per cent., or an average rise of about 27 per cent.

(11) Lhe Broken Hill Proprietary Co. - By contract January 1906 Caledonian or Seaham coal 12s. 1d. ;* East Greta, Hebburn and Abermain 12s. 3d.; Newcastle Co., Dudley and A.A., 12s. 10d., a mean price say of 12s. 5d. The conditions were very favorable to the consumer, the contract was for two years to end of February 1908. By contract of May 1908 the price was 16s. 6d., coal from Neweastle and/or Maitland districts with a rise and fall clause. That was an advance of 3s. 8d. to 4s. 5d. or 28 per cent. to 36 per per cent., or an average of say 32 per cent. The contract was extended for a year.

(12) Broken Hill Water Supply. - The price by contract note in

In 1910, 17s. 6d. ex steamer Port Adelaide. The final rise is 5s. 3d., woNweattm v,

without taking into consideration the place of delivery. If loaded Assoctarep

ex heap it is 1s. per ton extra; to calculate the percentage I add Pitecarcal

H.C. or A. February 1906 to March 1908 was 13s. 9d. for best Ne bed and/or Maitland pits including A.A., Newcastle, Hetton, Caledonian

, NortHern These various claims arose upon a discussion of the Chairman's ¢oyrreries.

suggestion that a document fixing the selling price, such as put before the last meeting should be signed that day by all present. The reference to the minutes of the previous meeting shows that the prices referred to were best 9s. ; unscreened, 8s.; small, 5s. 6d- per ton f.o.b. Newcastle. The Caledonian Seaham Companies did not then consent, and so it came on for the later discussion. Now it does seem very extraordinary to me that men should require a mutual pledge to sell at 9s., if they were already doing so; and still more extraordinary is it that two large companies, one New- castle, and the other Maitland, should hesitate to pledge themselves to do what they were already doing, or, on the other hand, should hesitate to do what is now said to have been their only means of salvation from bankruptcy. Not only so, but at the second meeting, if the defendants are right, several companies of considerable output, and of the highest grade of coal (see Ex. X, page 200), claimed the "Tight" and made the "demand" to commit what, I am now invited to believe, would have been industrial suicide. It must not be overlooked also that Lane (p. 492a) says the price he based his tender 1906-8 upon was 7s. 6d. f.o.b. Newcastle. I have said that occasions presented themselves when the colliery proprietors might have been expected to advert to their impending ruin if a f.o.b. price of 9s. were adhered to as a reason for the formation ofthe Vend. The first was on 5th January 1906, when we find the first record (F.1.) of the meeting of coal proprietors, Mr. Learmonth, who was chairman, pointed out the absolute necessity of forming an Association of all the collieries, if the present very unsatisfactory state of the coal trade was to be improved, and he asked those present to express their opinions.

Mr. Alexander Brown proposed that it was desirable to form an

~ Tre Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw ASSOCIATED NortHERN COLLIERIES.

Association to raise and maintain the price of coal : that was unanimously. The price subsequently being fixed at 9s. is a clear indication that that was not really the price at which it was being sold in January 1906. The reference to the very unsatisfactory state of the coal trade by no means necessarily indicates that some - profits were not being made. Mr. Wheeler said that, at the invita~ tion of Mr. Learmonth, he met that gentleman, Mr. John Brown, E Mr. Keightley of the Newcastle Coal Company, and others. He is' not clear about the date, but the first minute shows he was present, and that was the first meeting he referred to Mr. Wheeler. Nowhere was it said that the prices obtained were ruinous, or that the defen- dants ever said they were. Indeed, he said that his sale of 20,000 tons of coal for the South Australian Railways at 7s., with an extra 1s. under the guarantee agreement, making 8s. over all, left him no loss, but, as I gather, returned him some profit. But for the ls., that is at a net price of 7s., he would have lost, but he could not say how much. The unsatisfactory state of the coal trade might well be accounted for by the underbidding in an article, which the - coal owners knew was limited to their own locality.

Subsequent to the meetings I have referred to, namely, on lth - April, 1906, Mr. Learmonth wrote to Mr. C.M. Newman, apparently ; as the Caledonian Company (F. 45.), in which reference is made to - an arrangement '' That you would associate yourselves with us - in the object we have in view, namely that of raising the price of © coal, and working amicably for that end." No reference whatever is made to ruinous prices although the occasion was one that invited - it, if the fact were so. And without further particularizing, there were many points in the history of the Vend, where such an allusion would have been effective. Nothing has been brought before me to indicate that Mr. Learmonth, Mr. Brown, Mr. Keightley, Mr. Chilcott or the other gentlemen, representing large collieries, who met Mr. Wheeler to form the Vend took this action to avoid disaster. Perhaps the most decisive refutation of the contention that 9s. and not 7s. 6d. was the price obtained prior to the forma- tion of the Vend is found in the letter of Newman to Chapman of © 23rd November 1906 (X. page 3). Speaking of Indian coal exported - to Hong Kong during the year 1905-6 Mr. Newman states that

no less than 126,000 tons was shipped to that market. He then put this question "If India secured this volume of trade in com- petition with Newcastle coals at 7s. 6d. how much more will they take with the price of Newcastle coal ruling at 10s." The reply tacitly admits the fact and discusses the prospect.

Mr. Campbell relied on Cant's evidence of the cost of production at monwravra

the Abermain colliery as showing the ruinous character of the 1905 Tee,

price. Cant said that in 1908, which was his only personal acquaint- ance with the mine, the cost of raising and delivering Abermain coal f.o.b. was 7s. taking it all through. But the cost in 1908 was not necessarily the cost in 1905. In the first place hewing rate in 1908 was based on a 10s. selling price : and even 3d. a ton on 200,000 tons the output for 1905 amounts to £2,500. But, besides that, the mine was really just beginning in 1905, and in 1908, though by no means an old one, they had got in about a mile. I am not able to say that the cost of engine driving, stores, pit timber, horsefeed, underground work, and wheeling, would all be the same in the two years. Probably not I should think.

I cannot therefore conclude that in the Abermain mine the bare cost f.o.b. was 7s. merely because it was so in 1908 under conditions constantly altering. Still less can I assume from that fact that 7s. was then or at any time the minimum in all other mines.

As against the Crown I refused to receive Cant's evidence respect- ing the one year's working at Abermain as against other mines. It was received as against Abermain only. Mr. Campbell now how- ever relies on it as in favor of all ; because Abermain he says is a favourably situated mine. It may be in some respects, but may not be in others. That is all left in doubt, and the party who wants to use the evidence affimatively for his own purposes must make it applicable.

Besides the Crown's case is not confined to the one point of time or to the one price. Suppose 7s. were the cost in 1905 and made some rise of price reasonable, 8s. in 1907 would have given a hand- some fund for profits after paying the extra labour cost under the agreement in L.8. The output of Abermain that year was 236,000 tons and at Is. the extra fund is £11,800.

In 1908 when 7s. cost is actually proved the declared selling

Tue Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH

price was lls. fo.b. The all round selling price of Aber in that year from January to June - the rest is not shown Ex. L.8) - was 10s. 8.77d., which includes foreign coal. Probably many instances of 29 per cent. discount for foreign coal ocew and probably too some further allowances or charges, and so average price I take at a high price namely 10s. 6d. Now that i 3s. 6d. a ton over cost relied on by Mr. Campbell and, although | is difficult to say from the agreement of 10th May 1906 exactly how much would be added to labour cost, it is easy to see that that is comparatively small. The output for 1908 was 373,00 tons returning at 3s. 6d. an extra fund of £65,275 to cover labour cost and profit. What then becomes of the argume to ruinous price both in 1907 and still more in 1908. The def

Then Mr. Campbell relied on the case of the Burwood Extende Mine. Mr. Webb who has a good deal to do with the manag of the mine said that his principals started in 1905 re-working th mine, which had been unworked for years, even during high pri They worked in 1905 the Victoria Tunnel seam, and produced a C grade coal. It is therefore a third class coal, which was suggested by the defendants in cross-examination to be suitable only for bunker purposes. Mr. Webb maintained it was suitable for station-_ ary engines, and has not been used on railways, except during th strike, and then only 1,000 tons. He says it is suitable for house- hold purposes, but cannot say how much was sold for that purpose. - The total quantities were 30,000 tons in 1906, 35,000 in 1907, 46,000 in 1908, 41,000 in 1909, and 35,000 in 1910. The declared - selling prices of this grade were 1906, 6s. 6d. ; 1907, 7s. 6d. ; 1908, 8s. 6d. ; 1909, 8s. 6d. ; 1910, 8s. 6d., all f.0.b. Newcastle. Hesays - the cost of production is 7s. 1d. f.0.b. for 300 tons a day working 9 days a fortnight. A fair average would be 6 days a fortnight. He says they never made a profit except in one year he thinl He says in answer to cross-examination that " that was on account of being unable to get trade and nothing else - I should say, being unable to get sufficient trade." io They had to hire waggons. It is quite impossible that this mine with its low grade coal, the evident comparative unsuitability of

its product for general purposes - I do not wish to say more about H- C. ov A.

it - can be accepted by me as a guide to the position of the great uae

Newcastle and Maitland mines. If the Burwood Extended mine Tu Krxe AND THE

was not thought worth to work in war time, its character is far nme: NERAL OF

from being typical. Mr. Webb says he made a profit in 1908, GENENA® ©

when the price was 8s. 9d., and that by no means assists the defen- monweavra v,

i 3 aga ; Norruern So far everything upon which I can rely as indicating affirmatively (octets.

an answer to the question whether the pre-Vend price was so low as to be ruinous, leads me to a negative conclusion. I should not omit to notice Ex. 38c, which consists of extracts from annual reports by Mr. Atkinson and issued by the Mines Department of New South Wales. With regard to the trade for 1905, the defen- dants put in the following passage : - " During the year coal gener- ally speaking was dull and the prices realised unusually low. The latter was particularly the case in the Newcastle District, where competition from the Maitland collieries is now very severe." That is all I have in the exhibit as to the year 1905. The first observation to make upon this is that if the dulness is referable to the quantity of coal exported foreign or inter-State the state- ment is not borne out by the figures. In another of the defendants' exhibits (33c) in 1905 the total quantity exported from Newcastle to foreign, inter-State and New Zealand ports, was 3,461,438 tons, the highest it had ever reached ; the quantity going foreign 1,5! tons was the highest on record except 1903 when it was only 11 tons more. The inter-State exports were 1,577,707, and the highest record was in 1901 when there were 38,723 tons more. The New

Zealand tonnage was the highest up to that time. Comparing that year with 1904, there was an excess in 1905 of 372,346 tons foreign ; 94,524 tons inter-State; and 43,267 tons to New Zealand. For home consumption, I cannot separate Newcastle from other New South Wales coal, but the total home consumption for 1905 accord- ing to Exhibit 34c was 2,914,085 tons, the highest up to that time. So far then as output is concerned, the evidence does not disclose any convincing symptoms of dulness. Next, it has to be observed that Mr. Wheeler in his evidence thinks the Maitland competition was felt somewhere about 1906 to 1907. It is true Pelaw Main

Tue Kino AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssociaTED NortHern CoLLIeRIEs.

produced in 1905 311,000 tons but this did not all go inter-State the amount must have been small. In 1906, Pelaw Main produced 294,065 tons besides J. & A. Brown's Newcastle output, but y their total inter-State trade for that year including bunkers w as we have seen, under 41,000 tons. Further, the previous out- put of Pelaw Main was in 1902 - 95,430 tons ;.in 1903, 229, tons; and in 1904 it had reached 337,768 tons (Ex. V.8). It had therefore declined in output in 1905. Abermain, and Hebburn were pointed to by Mr. Knox as each producing 200,000 tons 1905. That is true, but it is also true as he said that in 1904 Aber- main produced 87,000 and Hebburn 155,000 tons ; and how much - of the produce of these two mines went inter-State I am not aware. There is another feature that strikes me as worth considering from - the standpoint of common sense. Besides Pelaw Main which is : Maitland, J. & A. Brown had the Minmi, Duckenfield and Back - Fe Creek collieries. These were Newcastle proper. In 1904 th put out 270,333 tons; in 1905 the output amounted to 324,000 | tons. Now, if Maitland, so largely represented by Brown, was - attempting to supplant Newcastle, what am I to believe Browns were doing with regard to Duckenfield and Back Creek? Were - they designedly losing money in Pelaw Main in order to lose more in Duckenfield? It seems to me on a rational view of the matter _ that though the competition might be severe, at all events, as under- stood by Mr. Atkinson, that is not at all the same thing as dis- astrous or suicidal. The annual report for 1906 says that the state ° of the coal trade as evidenced by the recorded figures of production - was good and prices realised have generally increased. That is true, but the price as we know was 9s. net. Mr. Campbell analysed Mr. Brown's price of 14s. in 1905 with a view of demonstrating its ruinous character. In my opinion Mr. Shand's answer was correct. FS

Mr. Ford manager of the Union Bank of Australia, at Newcastle, _ said in cross examination that he was bank manager there for 14 _ years ; that at the time of the Boer War in 1900 the trade was - particularly good ; but, it was an artificial demand caused by the - war, and he thinks it lasted for 2 years. He states that he had an impression, and he thinks everyone had an impression, that

the bad trade was brought about by excessive competition. He adds that different collieries were, it seemed to him, selling for what they could get. He goes on to say that the one result of that exces- sive competition was the want of trade. By "result"? I think he must mean " cause," for excessive competition would increase trade; but even if he does mean " cause" the figures I already quoted show that his idea was wrong. His error in this respect is further demonstrated by reference to Ex. 33c. In 1900, a war year, the total export of Newcastle coal was 3,021,912 tons. In 1901 it was 3,104,685 tons. In 1902 it was 2,966,764. In 1903 it was 3,420,197 tons, a larger output than Newcastle had ever seen, much larger than the previous year, which he regarded as a year of prosperity. In 1904 it was 2,951,301 tons almost as large as in 1902, and far above the average of 1897-8-9. In fact it was over 486,000 tons above that average then as I have shown. The next year 1905, the export tonnage rises another 510,000 tons, making the total export output of Maitland and Newcastle coal nearly a million tons more than the average for the three years immediately preceding the war year. And Wheeler, though pressed in cross- examination, persisted that serious Maitland competition was not felt till 1906. That is very probable since the total output from all the Maitland mines for 1905 was about 1,162,800 tons. Mr. Ford was J. & A. Brown's banker and he has been the banker for the Vend, but that does not qualify him to testify to the cost of production in the mines. His "impression" as to whether competition was excessive does not carry much weight with me as showing that 9s. or even 7s. 6d. was a disastrous price, particu- larly in view of more solid evidence that I have before me and still less can I build on his statement as to other people's impressions. But he may possibly be correct in thinking that some of the col- lieries were selling for what they could get, they may have been going below 7s. 6d. In fact V.8, Chamber of Commerce Reports 1910-11, p. 61, shows that in 1905 some Newcastle coal was sold as low as 7s. 3d. although the selling price was 9s. Undisclosed rebates may in some instances have still further reduced net receipts. Maitland certainly was selling as low as 7s. 1$d. in 1905; about 7s. 1d. in 1906 (Gale's reports L.8) as an average for all trade.

Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH

H.C. or A. Mr. Ford goes on to say that the hewing rate was very low and ey was not so good for the miners, and those with whom they Tur Kina did not do so well. Of course that is natural. He also said tl Avrouney- in 1904-5-6 there was an exodus of miners from Newcastle. Genera OF have already referred to the excellent volume of trade in 1905 monweartu and I will add that in 1906, during the whole of which year the Associaren exodus continued according to Mr. Ford, the exports rose anotl Cenmrn® 514,000 tons. It is now, that is 1906, over 1,000,000 tons than 1902, one of Mr. Ford's years of prosperity and during th year the supposed cut-throat business had stopped. But the mi in the beginning of 1907 got 3s. 10d. hewing rate instead of 3s. 6

that is to say a nearer approach to a decent wage. As to wl the miners went during the exodus Mr. Ford is unable to tell. states that whether they left the district permanently or went Maitland he cannot say. He adds "I think a great many of the

went to Maitland coal field." I cannot regard this evidence

at all satisfactorily establishing the crucial justification of the d dant collieries' first steps in connection with the formation of Vend. It is all hazy, indistinct, inexact, and is in importa points of contact with the issue of a hearsay and fallacious char acter. Direct and clear evidence on the point was easily within - defendants' control. Mr. Ford it must be remembered though called by the Crown and perfectly honest, was by no means a witness _ antagonistic to the defendants. f

Provision tN VEND AGREEMENT FOR PENALTIES AND COMPENSATION. _

There are one or two other features that have been the subject of much discussion. One is the provision in the Vend agreement ie for penalties and compensation. As originally fixed, the penalty for selling beyond the allotment was 4s. a ton when the selling price was 10s., and 3d. less for every diminution of 6d. in the selling price. And every colliery whose trade fell below the allotment was to receive at the like rate out of the fund in compensation. It was said the penalty was a deterrent, and it was probably something considerable over the price and the question is how much ? The - compensation was no doubt likewise intended as a reward for honest adherence to the compact as well as recoupment for actual

loss to those whose trade fell off, causing a smaller output, and the H. C. or A. same question presents itself on the converse side. On 5th June 19h

1907 (Ex J. p. 1) the rates both for penalty and compensation Tus Kiya

were reduced to 2s. a ton from Ist January of that year, and modi- xP One

fications were made as to adjustments. On 21st November 1907, ee set

the rates for 1908 were fixed at 2s. for penalty, and Is. for compensa- monweatrH

tion, the surplus to be paid into the general fund (J. p. 59). On Auaiceeeas 13th February 1908 (J. p. 111) it was resolved that penalties Peete should be reduced to the compensation rate, and this left both at 1s. Finally on 22nd January 1909, the rate of both penalty and

compensation was fixed at 1s. 6d. per ton. It is very hard if not

impossible to arrive at any satisfactory conclusion from the penalty and compensation proceedings as to the proportionate relation the rates bore to profits.

My impression so far as I have been able to form one on a review of the whole circumstances is as follows. Events had proved too strong for the Vend. In face of the insistent public requirements, the 4s. penalty - intended like the same penalty on the shipping companies in clause 6 of the combined agreement to be a complete deterrent - had to be abandoned. Some of the collieries were forced to go beyond their allotment. Being so compelled, it would natur- ally have been considered unfair and unreasonable to deprive them of all their profit, but enough must be taken as a penalty to put a substantial check upon them so as to confine the breach to cases of pressure ; otherwise the allotment system would fall altogether. Thus, as a rough working amount, 2s. was taken as a sufficient sacrifice of profit, most probably the greater part of the profit on the price ruling in June 1907, and this it was apparently thought would meet the situation. It is plain to see how the pressure arose. The telegram of Howard Smith to Cant of 21st May 1907 (X. 74) and subsequent communications exposed a serious state of affairs. On 5th June (J. p. 1), at the Vend meeting, the Chairman stated that difficulties had arisen which required to be dealt with. No doubt he referred to the public difficulties the penalties and the Vend stipulations had occasioned. He went on to say : - '' Some of the regulations, for instance, had the effect of crippling the trade of the port generally. Another thing was that the scale of penalties and

GENERAL OF gl], They have given no explanation whatever of why they cam

monweartn down from 4s. to 2s. and dated back the reduction 6 months ;

compensations had been fixed at too high a rate." The di took place at a critical moment. The community stood kno at the door of the Vend for coal, and the Vend evidently felt selves forced to abate some of their restrictions on supply, but not

I am driven to reason it out as best I can from the probabilities the situation as read by the light of ordinary human and busin motives. Consequently I think that they would naturally to some extent to remove the prohibition against meeting public requirements without entirely abandoning their scheme, and ¥ therefore compromise opposing influences by leaving some, comparatively small, advantage to those going beyond allo ment In November 1907 they determined (J. p. 59) to meet the difficulty they were in by the danger of public outery on one hand, and risk of collieries overselling on the other, by what they called ": scientific basis of allotment for an extended period after 1908." : Jam confirmed in my impression, because, on 21st November 1907 when the Vend committee reduced compensation to 1s. and adhe to 2s. for penalties important events had taken place. On 20 August (X. 143) an impressive telegram had been sent by shipping companies to the Vend pointing out the seriousness of th shortage in three States, and the likelihood of general indignation leading to hostile legislation. There had been an effort to meet the urgency of the situation. In September (X. 158) another pressing letter was sent, and another assurance given of endeavour to meet the shortage. Then in November came the strike of 1907 which lasted about a fortnight. While the prices continued and State. services were endangered, the Premier of New South Wales was approached by the Vend to obtain relief from penalties from various State Governments for the short delivery or non-delivery of coal | under contract and it was pending receipt, and in fact one day | before receipt of the Premier's reply, that the Vend passed the resolt- tion I have just referred to, maintaining a penalty of 2s. for over-_ stepping allotment. I assume the collieries were not prepared to - go so far as to impose a direct fine for daring to supply the urgent needs of the various States especially when asking for relief for -

penalties, and at the same time human nature tells us that ordin- arily no colliery would be prepared to supply coal for no reward at all. I have a distinct prima facie impression from all the cir- sumstances connected with the penalty that 2s. was recognized as something appreciably less than the amount of profit when the declared selling price was 10s., but what I cannot tell from this branch is how much. That has to be determined by resort to other and independent evidence. The declared price was not raised to Us. until 2nd December 1907 (see Cant's letter of 9th December Ex. X. p. 198). I do not feel concerned with the reduction of com- pensation in November to half the amount of penalty. It may have been some scheme of partition of profits in an indirect way, and the fixation in February 1908 a direct partition of those profits. I am not prepared to search out possible answers to a prima facie inference when the defendants might so readily have satisfied all doubts. Even at the bar no reasonable explanation was suggested as to the penalties which, taken not so much in isolation as in con- junction with other features, impress my mind against the Vend. But even considered alone, it is not to be overlooked that, notwith- standing the liability to penalties, several of the collieries did in fact largely over-deliver. At what date these over-deliveries began Ido not know. However there is a letter of 10th December 1907 from Laidley to Learmonth (Ex. 0. 1), and in that letter reference is made to the heavy payments they may be called upon to make for excess of coal invoiced during that year. There is another letter of 6th December from Mr. E. P. Simpson of Minter, Simpson & Co., writing on behalf of the Pacific Co. to the Secretary of the Vend. He refers to the very heavy responsibilities the company will have incurred in the then present year for penalties. He suggests that some automatic process should be arranged whereby those collieries which might in any one year secure trade in excess of their Vend should receive some reasonable addition to the Vend in the following year based on a proportion of such excess. One can hardly imagine

• and without some evidence cannot presume - these collieries supplied the extra coal without some little profit. I think that in actual practice that such an automatic arrangement was applied. I mean that in alloting the output for any given year, the total

H.C. or A. quantity sold by each colliery, whether under penalty or not, 191. taken into account. But it is quite plain that the prices obta Tue Krxe for the coal must in any case, and putting it at the very lowest, Amonxuv. been considered sufficient to provide against loss after allowing GBNER AT .°" penalties as well as ordinary expenditure. Hither that is se monwrautH by the price already fixed for the current year or else the i Associaren for next year must be made to cover it. Probably it is the form Peal seeing that the price remained the same from 1908. Some of # penalties paid were considerable in amount. Looking at the minu

of 13th February 1908, and particularly at the Chairman's stat

ment that the sub-committee had devoted two days to matters

relating to compensation for loss of trade during 1907, I gai

that the reduction of compensation to 1s. was retrospective, a

this helps to incline my mind to believe that the reduction then m was a short and direct way of dividing the profits. It may be ths penalties paid after resolution and down to the final change were all on the basis of 1s. even retrospectively, at all events future penaltie were. On 21st February 1908, eight days after the reduction that month, the Pacific Co. paid £888 1s. 3d. ; then on 29th Feb ary 1908, Hetton Co. paid £975 18s. 4d., and Laidley & ( £532 19s. 8d., and another sum of £548 2s. 5d. These sums were clearly penalties, and were apparently awaiting final adjustment. The ordinary monthly contributions of these two companies und clause 14 of the Vend agreement amounted to £58 13s. 7d. £22 Is. respectively. On 5th March 1908, Sneddon paid £1,225 1s. 6d., also obviously for penalties. On 16th May 1908,

on 29th June 1908, but, although this payment was made for penal- ties, I am willing to believe the company, when they sold the coal, did not so construe the Vend agreement as to think they were liable to pay them. Apparently the Vend thought 1s. penalty not sufficient deterrent and so in January 1909 they raised it to Is. 6d. But on 13th March 1909, the same company paid in £1,297 13s. 4d. ;_ this time beyond all question with full understanding right through. On the same date, the Hetton Co. paid in £535 15s. 5d.; J. & A. Brown on 15th April 1910 paid £7,122 0s. 2d., that may have all

been for penalties. It is just possible however that portion of it H.C. or A- included monthly levies. I am not satisfied that is the case, but, if 19M

so, the levies would amount approximately to £3,000 at most, Tax Kiva

leaving over £4,000 for penalties. The penalty then and since ,*. evry.

January 1909 being 1s. 6d., Brown on this, the lowest assumption, on roma

sold 53,333 tons and probably more, knowing that the declared monweaurn

price recouped him the 1s. 6d. penalty as well as his regular expendi- Aeiusenateeds NorvHERN

The Seaham Co., on 22nd April 1910, paid in £4,147 19s. 8d. This

• money may have been all penalties, but, assuming with fullest

liberality that for two years they never paid levies, it leaves £1,700 net penalty.

Caledonian Co., on 23rd June 1910, paid £1,324 15s. 8d., which I take to be penalties.

The funds of the Vend frequently mounted very high. In August 1907, there was £13,181 5s. to its credit (J. p. 27). In November same year there was £21,952 5s. 9d. (J. p. 63), and heavy sums were paid out for compensation (see J. pages 101, 109 and 147). I may quote some figures from the last-mentioned page : - East Greta received in July 1908 £3,284 14s. ; Heddon Greta £1,505 ; Newcastle Co. £4,165 4s. ; Shortland Colliery £290 ; that left a credit balance on 15th July of £15,522 1s. 6d. On 10th June 1910, when this action commenced, the credit balance was over £20,000. The common- sense question arises how could those members of the Vend who provided these huge sums afford to do it ?

Derenpants' SuccEsTion as To Forrrcn Trape Prices ror Venp Coat As JUSTIFICATION.

Inow come to the second additional matter debated, as throwing light on the question of whether the declared f.0.b. prices were excessive ; I allude to the foreign prices obtained for New South Wales coal. Mr. Knox placed great reliance on this contention. He urged, in what I may call his relative argument, that in 1907-1908 the foreign trade of the Northern Collieries gave them higher prices than they got inter-State, and that it could not

be said to be exorbitant to charge the Australian people prices VOU, XIV. 34

Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH w AssocIaTED NortTHERN CoLLIERIEs.

that could have been bettered if the coal were sent abroad. strikes the mind as singular that the collieries would ha voluntarily taken a lower price here, if they could have got substantially higher price elsewhere. Some allowance must course be made for merchants preferring a market at hand, that preference is on the ground of material not sentim advantages, and no mercantile or other circumstances have b pointed out to me which would outweigh the discrepancy of s gested prices. If the foreign market offered higher prices for coal sold in Australia, why was not more coal sent there? output certainly more than filled the Australian demand, and course when foreign commitments are made they must be But when the foreign demand for Australian coal is filled, foreign market is gone at the price. To gain further entry- things being equal - the price must be lowered and then we have ask by how much? Then say the defendants: We lowered t price for Australia, and lowered it appreciably and therefore it must be assumed we could certainly have got those prices abro for our coal or much of it, and so it cannot be said the prices excessive. 7

Mr. Knoz put his arguments into an effective visual form by me of a graph, showing by corresponding lines the relative prices, in State and abroad, obtained for New South Wales coal for 30 y a from 1880 to 1910. From this graph it appears that during t whole period foreign prices were unmistakeably higher. differences shown are sometimes enormous ; as in 1903, when for prices appear to reach 2s. beyond the home prices, the extt being about 10s. 3d. abroad when the inter-State price was as | as about 8s. 3d.

In 1905 foreign prices are shown at their lowest at about 8s. while in Australia they never went higher than 7s. 9d. The gri

average over the year would be approximately 9d. The qua of Newcastle coal exported inter-State in that year was 1,57 tons as against 1,595,654 foreign. Is it not reasonable to belie

that if 9d. a ton more or anything near it could have been obtained jn 1905, when learned counsel for the defendants tell me the col-

• Jieries were on the verge of ruin, they would have eagerly taken it ?

From the middle of 1905, the discrepancy gradually grew wide until the middle of 1908 when it was 1s. 10d. in favor of foreign price. In 1909, the difference was about 1s. 9d., and at this time the Newcastle supply was divided inter-State and foreign as fol- Jows : - 1,645,071 tons inter-State and 1,532,039 tons foreign. From the defendants' standpoint it is incomprehensible why advan- tage was not taken during the several years in which, judging by the diagram submitted, enormous profits could have been made by transferring the inter-State coal. Still, say the defendants, the graph correctly represents the prices in Exhibit 34 C, and so it is necessary to examine that Exhibit. It is an official table, which shows the quantities and average value per ton of coal exported to Australasian and other ports respectively. It also distinguishes between coal exported to Australasian ports, and coal exported to other ports. It states the value in each case at the port of ship- ment. The average prices per ton are evidently arrived at by dividing the value at the port of shipment by the number of tons. The coal dealt with by the table includes all coal, whether New- castle, Southern or Western, and whether large or small. It also includes bunker coal. The value of the coal exported is furnished to the Mines Department by the Customs, who get it from the invoices of the coal exporters. The invoice price I take to be f.0.b., because at the port of shipment." Apparently a con-

the return says siderable proportion of Southern and Western coal went foreign. 'The quantities may be arrived at in this way - Exhibit 34 © shows that in 1906, 2,701,450 tons of New South Wales coal were exported abroad ; Exhibit 33 C shows that in the same year the quantity of Neweastle coal that was exported abroad was only 1,918,086 tons, therefore the difference, namely, 783,354 tons must have been South- ern and Western coal. So in 1907, the total tonnage going foreign was 3,364,483, but of this only 2,313,614 were Newcastle - there thus being 1,050,869 tons of Southern and Western coal. In 1908 the total foreign tonnage was 3,383,366. In that year Newcastle tonnage foreign was 2,446,293, leaving a balance of 937,073 tons

Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw AssocraTED NortHERN COLLIERIES.

H.C. or A. Southern and Western. In 1909 the total foreign export) ne 2,192,834, Newcastle providing only 1,532,039, the balance bei

Tue Krxc 660,795 for Southern and Western. In 1910, the total tonn

ANP nt. foreign was 2,211,936, Newcastle providing 1,722,997. South

ATTORNEY- GrneRat oF and Western coal was therefore included to the extent of 488,

THE Com- monwearra tons. On reference to Exhibit T8, it is seen that some of the railw. Deca ae freights from the South coast and Western mines to Dazrli Pilea Harbour are very heavy,-even on coal for shipment. For ins'

from South Clifton 2s. 5d.; Lithgow Coal Association 4s. Besides this the inter-State exports included a considerable q tity of small coal. Foreign exports were large coal or practically so. Mr. Knox admitted that far more small coal went inter-Stai than foreign (page 1,322a), and he candidly agreed that that is of the factors which accounts for the difference between the pi foreign and inter-State on which he relied. It also appears in the minutes of the conference of shipowners and coal-owners of 2 April 1909 (X. 219) that the steamship owners stated as one of reasons for deficiency in small coal that the foreign markets wei being supplied with small coal, which to their knowledge had not been the case previously. It seems to me therefore quite impossibl: e to regard the two lines on Mr. Knoz's diagram as showing

respective prices obtained by Newcastle coal only, and of the san class and under similar conditions, except that in one case the destination was inter-State, and, in the other case, it was forei That line of argument therefore lacks affirmative support.

there is also a strong body of evidence of a negative character. 30th March 1906 (Ex. F. pp. 33 and 41), the Vend passed a resolu- tion which was signed by all present, who represented J. & A. Brown and nine other collieries, that, until otherwise altered by t Association, the minimum price of coal for foreign trade shall be 9 for large, and 5s. for small, less a maximum of 2} per cent. allowed

9s. for large, and 5s. for small net. As against the Hetton Co. only - I may refer to Exhibit G6, by _ which it appears that on 3rd March 1906, Arch. Currie & Co. stated - to the Hetton Co that they already had a contract for 3,000 tons ~ for the East at 8s. per ton f.0.b. Newcastle - subject to the] percent.

. ' a, 1911. the quantity to 8,000 tons at the same price. Hetton Co. replied,

wastage - but otherwise net. Arch. Currie & Co. offered to increase

agreeing to accept the offer, but strictly on the understanding that Tue Kiva : - A fi aes AND THE no portion of this quantity was to be disposed of within the Aus- arrorney-

tralian Commonwealth, and an option of a further 7,000 tons was Soo likewise given. So far as the Hetton Co. is concerned, this corres- MONWEALTH

pondence militates strongly against the argument put forward on Associarep its behalf. It appears from the minutes (I. p. 59) that the Vend Jee

allowed 1 per cent. wastage off foreign shipments for 1907, but none off inter-State or New Zealand deliveries. On 24th April 1906 a meeting of the Vend at which the shipping companies were repre- sented authorised the Seaham and Caledonian proprietors to tender for the Manilla contracts of 110,000 tons in all for United States at 7s. 6d. per ton f.o.b. Newcastle, with compensation in the event of the hewing rate increasing. After the shipping representatives retired, Mr. Simpson made a statement which, in accordance with _ the rule I have already explained, I use against the Vend only. He asked whether it would not be fair to allow compensation under the Vend agreement to collieries doing foreign trade at a lower price, while another colliery is doing inter-State trade at the full price. In December 1906, when 10s. per ton was demanded for large coal from the Metropolitan Gas Co., it is noted in the minutes (I. page 43) that that price was unobtainable for contracts to the West coast of North America and the East; see also on the same subject X. pp. 2 and 3, I. pp. 45 and 47. I refer also to I. 55, and note minute as to "Frisco trade. I refer to the Vend minutes of 10th October 1907 (J. p. 26) also the minutes of 11th March 1908 (J. p. 123) to be read with the minute of 23rd April 1908 (J. p. 135). Just at that time Laidley & Co. were in correspondence with A. Currie & Co., and, as regards those defendants only, I refer to the letters, the Exhibit is U6, and consists of two documents, 22nd and 23rd April 1908. It is sufficient to say that the clear inference to be drawn from those letters is that foreign prices were not procurable

at higher rates than Australian prices, and therefore the defence of the Vend price rested by Mr. Know on the relative superiority of foreign prices is not sustained.

H.C. or A. J Jeave another of his arguments over for a little later consider: 1911. os

Tur KING DerENDANTs' SUGGESTION AS TO ADVANCE IN Miners' Wa

ATToRNEY- AS JUSTIFICATION. GENERAL oF Pisses Com Another justification to support this successive rise was yEALTH 5 v advance in miners' wages. It is admitted on both sides that AssocrateD

Nortners miners were underpaid in 1906. The mine owners though not losing ComMIERIFS. were not adequately remunerated as I find, in the earlier part of year, but were most assuredly well paid in the latter part. And ye

because the miners, as everybody now concedes, were justly entitle

to an advance in wages, the owners provided for it, or for part at all events, but only on conditions which made the public pay the advance in full and also gave 53d. a ton to the mine own I asked for some explanation of this; I was told that it had b the custom for years at Newcastle to regulate the miners' by the selling price, that the two things went together, that is for every ls. of the selling price the miners received 4d. hewing re with a consequent rise to ancillary workers of say 24d. I can qu understand the justice of an arrangement between miners anc mine owners that after a certain minimum wage is provided,

additional 1s. of profit beyond the price giving that minimum legitimately obtained from the public shall be shared in a

proportions between those who jointly co-operate in producing commodity. But that assumes the Is. as being legitimately tained from the public who had had no voice in the arrangement. The agreed partition is the result of obtaining the price, and it i altogether misusing it to convert it into an instrument for measuring the price the consumer has to pay. To make the price itself fa we must not overlook the fact that the public have rights too, and long as the 1s. belongs to them it is not a sufficient reason for

pelling them to pay it to say that the two other parties to industrial operation have agreed to divide it in certain proportions A price that is not excessive regards what is fair to all parties. public may justly be called upon to pay whatever price is nece: to provide an adequate remuneration to both employer and em ployed, and therefore if the 1906 price were not sufficient without

trenching on the owners' fair remuneration to provide the extra 64d. for the miners, the public could with propriety have been called upon to bear that addition. But on the other hand, if the owners were already receiving for themselves, not only a fair, but a good

profit I have to enquire whether there was still any fair business C&*'

justification for demanding from the public an extra Is. and so obtaining from them both the increase of wages and also a further remuneration to the proprietors of 53d. per ton. The custom of partition of sale price is no answer. In its just application the point where the public are concerned is already passed, for reasonable competition has already fixed the price and the two sets of partners, as I may term them, are merely sharing the legitimate returns that have come in.

To give effect to the defendants' argument as to this point would be to sanction a misuse of the custom by admitting the right of the collieries to decline to recognise the admittedly just claims of their employees except at the cost of working a gross injustice to the community. From that injustice the public have some sort of pro- tection while competition prevails, but by combination that pro- tection is annihilated and the colliery proprietors are then in a position in which they are able to make any increase of wages to the miners dependent on their also obtaining, however unnecessary it may be, an almost corresponding bonus for themselves. It was suggested that the custom must be well founded because it had been so long adhered to; but that might be said and has been said of many admitted abuses. It was also said that it had received the sanction of the New South Wales Industrial Court in the Hast Greta Case (1). But that case is entirely beside the present ques- tion. The Court was there considering only the relative rights of the two sets of co-operators, and the basis of the whole position was that a price - presumably fair, but at all events unquestioned - was in fact obtained, the only question being its subsequent partition. The public were not there represented, the law then (1903) made no provision for their representation, and in the particular dispute they had no interest. The Statute under which these proceedings were instituted affords the first opportunity the public have had

Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH

but for the Statute the whole scheme was perfectly legal. custom of fairly dividing a justly earned price consequently g no more sanctity to an increase of price composed of a fair advane to employees, plus an unnecessary bonus to employers, than it would to a bargain between the collieries themselves to divide

I was told that to reduce the prices, charged by the Vend, wou necessarily involve the lowering of the wages to their employee I do not believe that such a result would follow unless the pre f.o.b. price were fair and legitimate. If it is excessive the reduction of the price to what is reasonable would be much more likely enable other employers to pay better wages to their work peop And the law either is, or may be made, strong enough to se justice at the same time to the miners without imposing an und burden on the rest of the community, and I do not believe injustice will accrue to the miners. It is admitted that 4s. 2d. not too much for them, and therefore no f.0.b. price can be fair a

to enquire, and have no materials to decide. But nothing I say prevents the colliery proprietors from demanding whatever pri is required to pay 4s. 2d. and as much more as may by agreement any competent tribunal be found to be a fair addition to the presen

wage. I simply refuse to countenance as a valid reason for incre' ; ing the price of coal the plan of tacking to a justifiable advance miners' wages, which the public may reasonably be asked to prov whether there be competition or none, a further and unjustifiable bonus to the mine owners not called for on fair business grount and which therefore apart from combination would not be insi upon, but would be corrected by free and reasonable competi In other words I decline, as I stated during the argument, to permi the defendants to use the miners as a buffer between themsely and the public. The claims of all parties concerned must stand on | their own merits, or fall by reason of their own defects.

Derenpants' SuGcEstion as To RecoupMENT For Past Lossus H.C. oF A.

Mr. Campbell sought to justify the addition of the mine owners' Tux Kine

bonus by attributing it to recoupment for past losses. The sugges- \nporney-

tion is that the colliery owners having for some time voluntarily

sold below payable prices, some of them designedly - ex hypothesi - monwravta

to run competitors out of the market and ultimately recoup them- Associarep

selves by higher prices, they are justified in demanding an otherwise ( unjustifiable accretion to the price of their coal. The persons who have to pay it may not be the same as those who previously got coal cheap; the increase may seriously affect other industrial operations ; it is not limited in time, or amount; there is no in- dication of staying the increase when collieries, that according to the argument were forced to lower their prices so as to live, shall have their losses repaired, but they, and the aggressors in this trade war, are to continue the process of recoupment indefinitely. But most singular of all, the miners, who during all this time and without any choice on their part have been receiving admittedly inadequate wages, have no fund provided for their recoupment. Miners at Newcastle sometimes remain for years even continue for generations in the same employment. Mr. Wheeler tells us that his company has been in existence over 50 years and father, son, and grandson, have been employed in the mine. Yet they received no recoupment. On the contrary they were still allowed what is now conceded to have been an insufficient wage. I reject the suggestion of the owners' idea of recoupment - for many reasons - because there was no loss to need recoupment, because, if there was, the increase should at least cease when recoupment was effected, because extra charges on the public indiscriminately is an unjust mode of recouping losses voluntarily occasioned by concessions to particular individuals, because I believe the idea of recoupment as such never entered the minds of the colliery owners, but has been the despairing suggestion of learned counsel since it has no evidence to support it, is incon- sistent with the argument that by custom the hewing rate followed increased price, and was unaccompanied by any corresponding recoupment in favor of the miners, who simply got a somewhat better future wage for future work.

H.C.or A. Mr. Knox put in Mr. Wheeler's balance-sheets for 1907 and |

hae T do not want here to say more about them than this, that, e

Tue Krxc allowing for a further outlay for royalty, they show a very han

Atronwey. profit, and certainly do not assist the defendants' case. Whe

ble oo .o* too was fighting against difficulties of combined opposition. MONWEALTH

v Conpuct oF DEFENDANTS INDICATING F.O.B. Price FOR 190% ASSOCIATED NortHern UnnecessariLy Hicu. ContieriEs.

Before parting with this phase of the matter reference should be made to the minutes of the Vend of 11th December 1906 (Ex. L. 55). It is this: - ' Abermain allowed to supply to 30/6/07 at 9s. and 5s. 6d. in connection with Cockatoo Dock contract, it bein agreed that Abermain do not come on the funds for compensation difference in price." This entry has obvious reference to the r proviso of clause 22 of the Vend agreement in Exhibit 8. wl says : - " That where in order to procure any particular trade any member in pursuance of authority received from the Board sell coal at a lower rate than that in force he shall be indemnified to th extent of the difference." At this time the declared prices, as p the resolution of 31st October, gave 10s. for Abermain coal for 1907. The importance of this minute is this - That the Abermain Compa were willing to supply at the lower price and agreed with the rest of the Vend that no compensation should be paid. Now, there n have been special circumstances which induced all parties to from the provision of clause 22, but no such circumstances h been suggested. I am bound to draw what conclusions I can from the circumstances apparent. If therefore, the Abermain Co. y anxious to get the trade even at 6d. less than the declared price sought permission hoping to get compensation ; and if the V thought no compensation was necessary and the Abermain Co., still desirous of doing business on those terms, I will not a in the absence of affirmative evidence that they were anxi to make a loss or to work without a fair profit. And if that were the 1907 price of 10s. was not needed to return a reasonable profit ; and the 1908 price still less necessary. In my opinion 9s. 1d. for 1907 was unquestionably extremely profitable ; and for 1908, 1909

1910, the price of 9s. 8d. was equally so. I reckon the 64d. in each H. ©. or A

Furruer Increase oF ¥.0.B. Price in' 1908. Tue King AND THE

price beyond 1907, with of course a rise of 6}d. for the miners, bring- Recess ing their wage to the point now conceded to be not unduly high,

namely 4s. 2d. at which it still remains. The prices were fixed at the Vend meeting of 2nd December 1907 of which no record has been

In and for 1908, there was a further increase of 1s. in the f.o.b.

disclosed, there being only a reference to it in Cant's letter of 9th December (X. 198). Trade had greatly improved. In 1904 the total foreign export was 1,223,308 tons, and inter-State 1,483,183 tons and to New Zealand 244,810 tons, a total tonnage of 2,951,301 tons. That had mounted in 1906 to 1,918,096 foreign, 1,723,643

• inter-State, and 333,916 New Zealand, a total of 3,975,655, over a
• million tons more. In 1907 there was a still further increase ; foreign 2,313,614, inter-State 1,893,913 and New Zealand 338,721, total 4,546,248, over 570,000 tons above the preceding year. So with trade more vigorous, greater output and consequently a lower- ing of the average cost of production per ton, with no untoward circumstance existing or threatening, it is decided at an unrecorded meeting for reasons wholly undisclosed, except the obvious advance of 64d. per ton being the labor cost of large first-class coal, that the _ public shall pay Is. more per ton on the best coal up to point of _ putting it on board at Newcastle. But that is not all that was done : - at that unrecorded meeting. It will be seen that its proceedings are of great importance in relation to this matter. It will be necessary to compare the Vend minutes of 31st October 1906 (Ex. I. p. 33) with Cant's letter of 9th December 1907 and enclosures (Ex. X. pp. 198, 200).

From the earlier Exhibit we find that the prices of best New- castle or Maitland were fixed for 1907 at - Large, 10s.; Small 5s. 9d. By the latter Exhibit, coal of the "A" grade, which in- cluded mines that in 1908 produced 4,774,798 tons all reckoned as "A" grade, except such part of Seaham, West Wallsend and Killing- worth coal as was required for Australian railways and Sydney trade, _ was raised to 11s. large, 10s. unscreened, 6s. 3d. small. The names

H.C. or A. of the collieries are set out in the latter exhibit and are to be fo

1911. in almost exactly the same order in Ex. S. schedule to Vend Tux Kine ment. In 1907 the price of West Wallsend and Seaham was - Lé Atroaxmy. 98. 3d., small 5s. 9d., without distinction, and apparently constitu

Genz "pr é lier pole ed the ""B" grade for the railways and Sydney trade (see the earlier

monweatrx Exhibit and the schedule in Ex. 8.). Assocratey For 1908 these mines are raised 1s. for large and 6d. for small, and eaemEN: unscreened is charged 9s. 3d. In 1907 grade "' C " (unscreened) apparently including New Lambton, Ebbw Vale, Shortland ai Waratah (upper seam) was 7s. 6d., altered for that year to 7s. b resolution of 3rd December 1906 (I. p. 43). This was raised for 1908 to 8s. Gd. The "D" grade, Pacific, Rhondda, Northern Extended and Northumberland in 1907 was best 6s. 6d., unscreened 6s., si 4s. 9d. Before stating the 1908 prices it will be well to refer to the prices for these inferior coals as fixed by the Vend on 9th May 1906 (F. p. 91). On that date, it was resolved that the prices fixed for _ the coals in classes "' C" and " D " should be as follows : - On

basis of 9s. for coals in " A." class; class " C" unscreened, 6s. 6d per ton net; class ""D" best, 6s. per ton; unscreened, 5s. 6d. ;_ small, 4s. 9d., all net. So that in 1907 there was added to those prices 6d. per ton on class "C" and 6d. per ton on best and un screened in class "D." Now in 1908, an astonishing furtl advance is made, " C" grade advancing still another 1s. 6d., which makes it 2s. beyond the first fixed Vend price and "D" grad large is advanced 2s. more which makes it 2s. 6d. above the fir fixed Vend price; '"' D" unscreened is also advanced 2s., making it 2s. 6d. more than first Vend price, and "D" grade small is brought to 5s. 6d., which is 9d. above its previous price.

How can these advances in price be explained? Ruination in 1905 and 1906, if it ever had any substantial existence, was ended ' when the Vend raised its price by Is. 6d., and brought it to 9s. net. A The additional 1s., or net 5$d. in 1907, poured another stream of - income into the pockets of the Vend. The Teralba coals in 1907 may not have helped so much, but the others did. And then we reach the further increases in 1908 merely announced, without a word of recorded explanation why they have been made, and made at a meeting, the importance of which cannot be denied, and yet

but for a formal allusion in a letter they would have found no H.C. or A. 1911.

Then I was invited by Mr. Knox to regard the agreement of as 19th November 1909 (Ex. 17C) between Kethel & Co. of the one tH Com- part and Hughes and others of the other part as a guide and almost ab a convincing guide to the proper price of coal. Mr. Knox put it '\S00la™mP that it was an admission by Cant that 9s. was the sum necessary COMttERIES. to cover colliery cost f.o.b. Newcastle, and that lls. was not an unfair f.o.b. price. It was also argued that the contract had an additional significance in this case from the fact that one of the parties to the contract was now Attorney-General. This last sug- gestion I at once put aside as impossible. Under no circumstances could private transactions of any individual affect the rights of the public whom he officially represents. So far as Cant is concerned, it could only be taken at most as affecting his evidence, and it does not lead me to alter my view of his testimony in Court. On the merits, the circumstances in which the agreement is made were quite abnormal. The strike introduced elements that affected prices, employment of workmen, and the supply of coal generally ; and as will hereafter be seen the defendants in certain transactions receive the benefit of these considerations. In view of the practice prevailing to control the hewing rate by the declared selling price of coal, I can quite understand also a readiness on the part of the miners to recognise 11/- at least as the fo.b. selling price. I cannot suppose that the miners had worked out all the items going to the mine owners' cost of production, such as management, &c. ; and having regard to the unusual features of the time I do not accept the figures adopted by the parties to the agreement as sufficient to determine the limits of fair and reasonable

Looking at the numerous circumstances I have considered, some because the Crown affirmatively advanced them, others because the defendants relied on them as negativing the Crown case, I see no reason for hesitating to believe that the prices, prevailing before

Tue Kine AND THE ATTORNEY- GENERAL OF tHE Com- MONWEALTH P) AssoctaTED NortHErRn COLMIERIES.

were, to some extent, profitable prices, and that, then and since, were not lower than the foreign prices obtainable for the same They were in my opinion higher, though of course not so n higher as to attract in ordinary circumstances an influx of for coal into Australia. There was I believe in some few instan smaller collieries only - difficulty in disposing of the output ari from its comparative inferiority, and in those instances sta charges brought up the average cost per ton so as to require a la sale to pay. But this did not apply to the substantial trade in Ney castle coal and in no appreciable degree affected either the welfar of the district, or of the miners, or of the general body of min owners, or the public at large.

And when the mine owners in 1906 after years of experience of fixed on 9s. net, having no one to consult but themselves and from internal competition, I must assume, having no evidence to contrary, it was at least a reasonably payable price. And if. no circumstances have appeared which make it less so, except addition of the miners' wages.

Errect or ComprNation on Prices iv AusTRALIA By Exciupr CoMPETITION. T appreciate the force of the observation made by learned

price. So many elements enter into a determination of that qu tion, that it can never be invested with absolute certainty. as the factors that go to its determination are not constant, bu may change from day to day, no arbitrary figure can ever be p manently adopted as the limit of reasonableness. I have be referred to the observations of Lord Bramwell in the Mojul S ship Co.'s Case (1) where the learned Lord quotes the following wor of Fry L.J., in the Court below : - To draw a line, between fé

able, passes the power of the Courts." I was invited to regard dictum as a judicial admission of incapacity to ascertain whet (1) (1892) A.C., 25, at p. 49.

a price transcends the bounds of reasonableness ; it was certainly H.C. or A. not so intended. The sentence immediately preceding the passage ie adopting those words is this : - " I cannot think that the defendants Tx» Kine

did more than they had a legal right to do," and when the judgment yi\ouvry-

of Fry L.J. is referred to in which the quoted words appear it will be papel

found that he is referring to the legal power, not the actual ability, wonweanrn to determine upon appropriate evidence whether a given price is presen

P Ni reasonable or not. Reasonableness as to prices, wages, charges of Gone

all descriptions and conduct of every kind may at any moment in ordinary litigation have to be considered and determined by some tribunal in a Court of law. I think the case of Rickett v. Midland Railway Co. (1) much nearer the point, though, of course, no rigid standard can ever be fashioned, as a test of reasonableness, it all depends on circumstances compared with which the kaleidoscope might sometimes be regarded as stability itself. Rickett's Case (1), came before the Railway and Canal Commission of which Lord Collins (then Collins J.) was the judicial member. Under the Act, the tribunal had to determine whether a rate or charge was reason- able or unreasonable. Collins J., held in eflect that the standard

of reasonableness of any increase of rates depended on the circum- stances existing or apprehended before the increase was made. The learned Judge said (2) : - '' By what standard are we to try the question of reasonableness? The legislature have left us at large on the matter, except so far as we may be helped by presumptions or their absence. I think it clear, however, that in our capacity as Judges we are bound to direct ourselves adequately as to what circumstances we are to take into consideration on the question of reasonableness. We are not a Court of conciliation, or a tribunal of honour. We are not made Judges of prudence or of generosity.

Vast interests have been committed to our keeping, and a jurisdic- tion of extreme delicacy has been conferred upon us, in virtue of which we are called upon to adjust a dispute as to the reasonableness of charges made by one set of traders to another in connection with the carriage of coals, in enormous quantities, to the centres of con- sumption. Our decision upon matters of fact is final. There is no appeal. And yet I cannot suppose that Parliament intended

(1) (1896) 1 Q.B., 260. (2) (1896) 1 Q.B., 260, at p. 264,

H.C, or A. to take the management of these trading concerns out of the hands of aa ihe practical men who work them, and to place it in the hands of th

Tux Kixe Railway Commissioners. It is of the utmost importance, therefore,

PaEEAL, °F this novel jurisdiction." To some extent those observations ha' THE Com-

monwnaura present application, The legislature has left the Court without a es Sec specific standard of detriment, and therefore without a specific eae standard of excessiveness of price; like the railway Commission, this Court is not a Court of conciliation nor a tribunal of honor, nor am I to determine the issues on the grounds of generosity or mere prudence. Prudence of course may be an element legitimately influencing the defendants in fixing their prices. With equal truth - also may this Court remember that vast interests have been com- mitted to its keeping. Mr. Knox told me that the coal industry is probably the vastest industry in the whole Commonwealth, and vaster still is the collective welfare of the Commonwealth itself, _ dependent in so great a degree upon the industry I am immediately _ considering. And equally with the Railway Commission do I con- - ceive it incumbent on this Court not to take the management of -

that we should not travel beyond our proper province in exercis

great trading concerns out of the hands of the practical men who work them. The functions of this Court are only to guard the -

rest of the community from what I may shortly describe as the artificial maleficence of combination or monopoly. Lord Collins had to consider how to determine what were reasonable rates at which the carrier was bound to convey ; he said (1) : - " A main element in such determination must be the expense to the carrier." - He then cited the words of Baron Parke, who said : - " The charge

is no doubt to be varied according to the trouble, expense and - responsibility attending the receipt, carriage and delivery of the different articles." Lord Collins went on to say for himself : - "The affluence or indigence of the person rendering or receiving the service is beside the question." By that last paragraph he meant, I apprehend, affluence or indigence of the person rendering the service outside the conduct or maintenance of the business - by which the service was rendered. Lord Selborne in Canada Southern Railway Co. v. International Bridge Co. (2) said : -

(1) (1896) 1 Q.B., 260, at p. 265. (2) 8 App. Cas., 723.

includes the determination whether "detriment of the public arose or was intended to arise as a result of the combination. soxw Undoubtedly prices rose, and were intended to rise and to be main- Asaccumen

tion, not what profit it may be reasonable for a company to make but what is reasonable to charge to the person who is charged." Nowin this case the task which is set me by the Statute

_ but for the combination those prices which were different at different

__ stages of the combination would not have existed ; prices would have

been lower. The defendants by urging ruination prices as existing before invite me into the consideration of the question, whether that increase which on its face looks like a very substantial detriment

_ was really a detriment at all, having regard among other things to

the cost of production. In this way some of the principles referred to in Rickett's Case (1) come into play, those principles being applied

_ to the varying circumstances of the present case. In this way I

am led to consider what would probably have happened had no combination been formed. I put aside the suggestion of ruination 'on inter-State prices for reasons already given and for further reasons to be stated in their appropriate place later on.

What price then would have represented the reasonably com- petitive price, which the collieries would have charged f.0.b. at New- castle, and which would have allowed them a fair profit after allow- 'ing for full cost of production and transit to Newcastle. Profit, as Lord Selborne says is not the test of reasonableness, for instance a 46s. price in strike time may not be unreasonable, while a 26s. price without a strike might be highly unreasonable, and yet the profit

_ would be 20s. more in the reasonable than in the unreasonable case.

But incidentally it is difficult, if not impossible, in ordinary circum- _ Stances to eliminate the question of profit. Competition and profit act and react. Competition in trade, where possible, is induced by profit, and when present regulates it. Profit is therefore one prac- tical consideration that in one form or other enters into the caleu- lation of a reasonable price, but it is by no means the sole or even the governing test. It is not sufficient to ask what profit a given

"he principle must be when reasonableness comes into ques- H- C. oF A.

tained at the higher scale by those entering into the combination ; @oriierine.

H.C. or A. price affords, when we are seeking to discover whether it is a rea able competitive rate. The nature and extent of the compet

Tue Krye actual and possible, are for instance, material factors in

one And here comes in Mr. Knox's second argument which I call his'

monweattH absolute argument. The relative prices, foreign and inter-State, Assocrarep have found not to be as he suggests. But he has pointed out to n ACuEEE as a hard fact, the actual foreign f.0.b. price for New South Wa coal stated in 34C, which needs no question of comparison to mal us feel its force. That price is not entirely independent of th combination, because tenders for Newcastle coal were still controle by the Vend, but it must be largely so. Other New South Wale: mines compete and coals from other parts of the world compete, and the prices thus obtained must be taken as natural and real, and _

not artificial or fictitious. Now, Ex. 34C says that the price at port

of shipment for New South Wales coal going foreign was in 19 8s. 3.33d.; in 1906 8s. 10.76d.; in 1907 9s. 11.57d.; in 1908 10s. 8.8d. ; in 1909 11s. .80d.; in 1910 10s. 10.38d. These are th prices stated, and are, as I understand, gross, that is before commis sion or wastage or other allowances are considered. That is ay factor - not a supreme factor, as no one factor is supreme, but it is a highly important one. If - apart altogether from combination the collieries could make more money by sending their coal abroad, there is nothing in the Act to stop them. They are not phila thropists and the law does not demand it of them. If I thought - therefore they could have got as much, and would have sold for as _ much - because that is important too - abroad, as here, their price could not be said to be excessive by reason of the combination. It would have been extremely profitable - immensely so in my opinion

• but that would have been due to natural business causes - not to the combination. But, I do not believe they could or would. I believe that there are several causes which would have prevented ' that. First, material considerations making the home trade more 4 advantageous in many ways would have operated ; it is on the spot more under control and more regular, foreign commission is 24 per cent., and the danger of letting others get a footing in the Aus- tralian trade, all would have operated to keep the coal here. Be-

sides, to throw into the foreign market say 1,500,000 tons more would have undoubtedly appreciably lowered the price even if the means of transport could have been secured. The prices in 34.C are not confined to Newcastle coal as I have said and looking at Ex. L.8, Mr. Gale's prices for Hebburn, for instance 10s. 5.6d. up to 3lst December 1909, and to some extent for Abermain for in- stance 10s. 2.74d. up to June 1910, and remembering it is all or practically all large coal for abroad, and the way the 34.C prices were furnished, I am clear that 10s. in 1907 and 11s. in later years could not, and what is essential would not, have been obtained abroad. In 1909 exports foreign had fallen below 1905, and were more than 780,000 tons less than in 1907, and were 914,000 tons Jess than in 1908 (see 33C).

And therefore if the competition had been more open in Aus- tralia, that is to say if the combination agreement had not been formed, and acted on, prices here would in 1907 have been sub-

stantially less, at the very least 6d., and most probably 1s. less per ton for best coal and proportionately for other coal. I do not think

~ Lam at all illiberal to the Vend in taking that limit. It would unquestionably have been most highly profitable and taking this fact and all others into consideration, including the probable action of collieries controlled by shipping companies and the result of that generally, if I have to state the limits definitely I would say in 1907 the price was 6d., and in 1908 and afterwards 1s. in excess of what it would have been in Australia but for the combination. To that extent I find exorbitancy in the f.o.b. price. Small coal was practically unaffected or very slightly affected by foreign prices.

I have already explained why in my opinion the formation of the Vend was a preparatory but contemplated and essential step in the formation of the combined agreement. No doubt the ship- ping companies had no desire that the f.0.b. price should be raised to them, but they knew from the very beginning that it was part of the scheme, and that when that scheme was put into operation higher f.0.b. prices would be charged and they knew it all along.

That would have meant splitting the shilling as it is called. It was suggested that a split ls. would have been unusual. If it

Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH vw AssociaTED NortHerN COLLIERIES-

H.C. or A. were that would be no valid answer. But it was not unknown

bee Mr. Wheeler could not recollect a split 1s. in the price of best ¢ Tur Kise for many, I think 25 years. But it happened all the same. In ee nny. Exhibit V.8 the Chamber of Commerce Report 1910-11 it app

GENERAL OF at p, 61 that in 1903 coal, the declared price of which was THE Com-

monweattH and on which 4s. 2d. was paid as hewing rate, sold also at 8

Assocratep 98. and 9s. 6d. in 1904, when the declared price was 10s. and tl

ae miners received 3s. 10d. ; coal also in 1904 sold at 9s. 3d., 9s. 6d., and 9s. 9d. ; in 1905 when the declared price was 9s. and the hewing rate 3s. 6d., it was also sold at from 7s. 3d. to 8s. 6d. This I may observe was the year of Wheeler's first balance sheet, when defey dants allege coal sold at 9s. net. Then in 1906, the declared pri being 9s. coal also, says the exhibit, "sold from 7s. 6d. to 10s." That evidently refers to the beginning and the end of the yea It is plain therefore that up to the end of 1906, split shillings common for four years, evidently the result of competition.

ResponsrBiuity oF Supping Companies FoR Exorpirancy Venp Prices.

ultimately charged to the public by them. They carried on excess imposed by the Vend and are just as much responsib as the colliery proprietors. It was put on their behalf by of excuse that the Vend had made up its mind to raise the pri to 9s. net in 1906 even if no general combination had been formed. Perhaps it had ; and I am inclined to agree that it had. But ho would it have succeeded? Could that price have been maintain without the assistance of the Shipping Companies? And besidi the Vend clearly had not then resolved to push on to 10s. and to 11s. It must never be forgotten that, as I have observed before sea-carriage of the coal is an essential part of the inter-State trad The Shipping Companies watched the progress of the Vend's growth. they awaited its completion, they agreed to make the observan of part of its regulations a condition of their own compact, th undertook to aid the Vend by refusing to carry for public consump- - tion any other coal with negligible exceptions which were for their

own benefit - in short they consented to allow the Vend to raise H.C. oF A its price to any desired height, stipulating only that no Vend coal me

should reach the public except through them, so that exorbitancy Tue Kina

f f.0.b. price up to the limit of necessity became a matter of perfect Pewee

indifference to them - it must all be refunded by the consumers. psa Se

'They in their turn undertook to decline the carriage of all competing "onwzaLTH

coal, so that in short they formed a sort of marine guard for the pavers

~ Vend's coast battery. Experience showed that before the combined Sessa

i agreement the Shipping Companies played off one colliery against

another, and if the Vend had been forced to act independently of the Shipping Companies, the latter - or some of them - might not improbably have carried other and competitive coal for a consider- able part of the inter-State trade. This, or the fear of it, would have been a wholesome corrective to the cupidity of the Vend,

• it would not have been unrestrained and so it is manifest to my mind the Shipping defendants must be held responsible, even if the detriment to the public travelled no further than the declara- _tion of the excessive f.o.b. prices, pronounced by the Vend, and executed by the Shipping Companies.

Surerinc Companies' AppirionaL Excessive CHARGES AND ADVANTAGES.

I have now however to inquire whether the detriment did not : proceed further and whether the Shipping Companies used the _ powers of the combination for additional advantages to themselves. A brief glance at the contracts already referred to will show incon- testably they did. _ When the Vend on 30th March 1906 (Ex. X. at pp. 33 & 41) fixed Fs '9s. as the net price for large it also fixed 5s. net for small. It has been assumed generally that small was always sold net before and I believe it was usually so, but I have found references to a _ small percentage allowance, I think about 5 per cent. ; and in favour _ of the shipping defendants I will assume that it was so. K : The progressive rise in prices f.0.b. charged to the Shipping Com- _ panies may thus be summarized. In 1906 - large, Is. 6d. rise ; small, 3d. ; in 1907 - large, 1s. further rise ; small, 9d. further rise ; in 1908 - large, 1s. further rise ; small, 6d. further rise. With these

H.C. or A. may now be compared the progressive rises which the Shippi

Tue Kise First as to Vicrorta: (1) Victorian Railways. - In 1907 a rise AND THE

Arrorxey- 28- 7d. and 3s. 8d. as against 2s. 6d. f.0.b. rise ; in 1910, 5s. and 5s.

GENERAL OF 5 F ippii ies' rue Com. 2S against 3s. 6d. in other words the Shipping Companies' o

MONWEALTH eventual increase is 1s. 6d. and 2s. 2d. (2) Footscray Gas Compa

Associaren - In 1907 a rise of 3s. 9d. as against 2s. 6d. for Stockton and He

AloneEsns: and a rise of 4s. 9d. as against 2s. 6d. for Maitland that is all la1

coal; small coal a rise of 2s. 9d. as against 1s. In 1908, coal a rise of 1s. 3d. over the previous price as against Is. f.o.b rise ; in 1909 large receded 3d. and in 1910, 6d., the latter quotati reducing the Shipping Companies' total increase to 4s. 6d. as against _ 3s. 6d. total f.o.b. rise. (3) Melbourne Glass Bottle Works. - In - 1907 a rise of 3s. 3d. as against 2s. 6d. ; in 1908 a further rise of © 1s. 6d. as against Is. ; in 1909-10 the rise is reduced to 1s. 4d. and 1s. leaving the eventual increase 4s. 3d. as against 3s. 6d. 4) : Melbourne Co-operative Brewery. - The starting point is 1904 when

the declared price was 10s. If as I think was the case the net '

hand 10s. was the net price f.0.b. in 1904; then the Shipping Co panies' price in 1908 showed an advance of 6s. net. In 1909 ti rise was still 6s. in 1910 it was 5s. over the 1904 price, that is a shi ping rise of either 4s. 6d. or 5s. net. (5) Australian Paper Mill

against 1s. f.0.b. rise. In 1908 large rose another 2s. 6d. as against Is, f.0.b. ; small rose Is. 9d. as against 6d. f.o.b. In 1910

• large dropped 3d. leaving the eventual rise of large at 7s. 3d.

as against 1s. 6d. (6) G. Mowling & Son. - In 1907 there was a rise of 5s. 10d. for largeZcoal the f.o.b. rise being 2s. 6d. and small - coal rose 3s. 10d. on a f.0.b. rise of 1s. In 1908 there was a further rise on large of 2s. 8d. as against 1s. f.0.b. and on small a rise of 1s. 11d. as against 1s. 3d. f.0.b. In 1909 the prices were maintained.

(7) Melbourne Harbour Trust. - In 1907 a rise of 3s. 9d. as against 2s. 6d. f.0.b. ; in 1908 a further rise of 2s. 6d. as against 1s. f.o.b. In 1909-10 the price is maintained. (8) Melbourne City Council.

• At the Electric Light Station - In 1907 there is a rise of 4s. 9d.

as against 2s. 6d. f.0.b. In 1908 there is a further rise of 2s. 7d. 5S

as against 1s. f.0.b. In 1909-10 it recedes 6d. leaving the eventual shipping increase at 6s. 10d. as against 3s. 6d. f.o.b. Small coal in 1907 showed a rise of 3s. 3d. as against Is. ; in 1908-9 a further tise of 1s. 4d. as against 6d., and in 1910 a further rise of 5d. which was in fact an increase of Is. 9d. as against 6d. (9) Melbourne and Metropolitan Board of Works. - In 1907 at the Pumping Station there is a rise in large of 6s. as against 2s. 6d. f.o.b. ; and in 1908 a further rise of 3s. 6d. as against ls. f.o.b. At Werribee Farm, the price from Ist July 1906 to 30th June 1908 was fixed by con- tract, it was an advance of 2s. 5d. on previous prices as against Js. 6d. f.0.b. increase. I merely mention this as not affecting the result because it was before the combined agreement, but in order to make the next figure understood. In 1909 there was a further advance of 6s. 4d. as against 2s. f.0.b. ; and in 1910 that was reduced. by 6d. ; the eventual Shipping increase stands therefore at 5s. 10s. as against 2s. f.o.b. (10) Commonwealth Services. - For Point Nepean in 1907 the rise is lls. as against 2s. 6d. f.0.b.; in 1908 there is a further rise of 4s. 3d. as against Is. f.o.b. ; and in 1909 there is further rise of 6d. being an increase over 1907 of 4s. 9d. as against 1s. f.o.b. For Queenscliff there was a rise in 1907 of 5s. 6d. as against 2s. 6d. f.o.b. ; for 1908-9 a further rise of 3s. 9d. as against 1s. f.o.b. ; and for 1910 a further rise of 6d. being an in- crease of 4s. 3d. as against 1s. (11) Victorian Government - Special Services. - (a) Sunbury - there was a rise for house coal in 1907 of 6s. 3d. as against 2s. 6d. f.o.b. ; in 1908 a further rise of 2s. as against 1s. f.o.b. (b) For the Melbourne District, in 1907 a rise of 6s. 3d. as against 2s. 6d; in 1908 a rise of 2s. as against Is. (c) At Melbourne General Post Office in 1907 a rise of 5s. 3d. and 5s. 9d. as against 2s. 6d. ; in 1908 a further rise of 1s. 6d. as against ds. (d) Lady Loch Steam coal : In 1907 an average rise of 5s. 11d. as against 2s. 6d. ; Jumbunna Coal was however taken at a higher price. In 1908 there was a further rise of 1s. 8d. as against 1s.

Tae Kine AND THE ATTORNEY- AL OF THE Com- MONWEALTH

monweattu rest of the figures. From Ist January 1907 a further rise v. é Assocrarep Place of 1s. 9d. for screened coal as against Is. ; 1s. 9d. for EB

Arrorney- 2S already explained this is not considered as an advance of p

• (e) Yarra Bend. In 1907 a rise of 6s. 2d. as against 2s. 6d. ; in 1908 a further rise of 1s. 6d. as against 1s. (12) Retail Deal
• In October 1906 there was a rise of 4s. 6d. as against Is. 6d.

• resulting from the combination but is necessary to understand

_ coal as against Is. ; and 1s. 9d. for Small coal as against 9d. Ist January 1908 a further rise of 1s. for engine and screened against ls. and 1s. for small as against 6d. From the 1st January 1909 a reduction of 6d. on large coal was made to dealers but not - to the public. (13) Metropolitan Gas Company. - Up to 1907 the price of large coal was 14s. 7d. and small coal 10s. 3d. under a tender given when the declared price was 10s. In May 1907 th price of large coal was raised 7d. ; the declared price again bein; 10s. ; in 1910 there was a further increase of 1s. corresponding 1 a rise of Is. f.0.b. ; this it will be remembered is the case pointed to by the Crown as strangely discrepant from the other cases. No reason appears to suggest why the Shipping Companies shou lose money for the sake of the Gas Company, and if not how a the other increases to be justified ?

Then as to Sourm Austratia. - (1) Retail Dealers. The rise January 1907 was 7s. 6d. as against 2s. 6d. f.0.b. ; in 1908-9 there was a further advance of 1s. 6d. as against Is. ; in 1910 a further - advance of 3d. although there is no increase in f.o.b. price. (2) - South Australian Government General Supplies. - (a) Adelaide and Suburbs. In 1907 there was a rise over 1905 of 7s. 2d. as against 2s. 6d. f.0.b. and later in the year the rise mounted to 8s. 9d. as_ against 2s. 6d., so also 8s. 9d. in 1909 as against 3s. 6d. ; in 1910-11 there is a further 1d. rise without further f.0.b. rise. (b) Port Adelaide and Suburbs. In 1907 there was a rise in house coal of 5s. 4d. as against 2s. 6d. ; and a second tender raised the price by 7s. 10s. _ as against 3s. 6d.; in 1909-10 there is a further 6d. rise without any rise in the f.o.b. price. Small coal in 1907 was raised 5s. 6d. as against ls. f.o.b. ; in 1908-9-10 a further rise of 9d. as against 6d. (c) Port Pirie. In 1907 an advance in steam coal of 5s. 10d. as against 2s. 6d. and a later tender showing an increase of 7s. 7d.

against, 3s. 6d., that is 1s. 9d. extra for Is. f.0.b. added in the H- ©. oF A. anwhile. Tn 1910-11 a further 3d. is added by the Shipowners ae hout any advance f,o.b. Tun Kixe (8) Adelaide City Council. - In 1907 there was a rise of 7s. 10d. y}roaxey-

s against 2s. 6d. f.o.b. ; in 1908-9 a further advance takes place re

hout any advance f.o.b. That was screened coal. As to small Asmuecnaale al there was in 1907 a rise of 5s. 10d. as against Is. ; another foleiete ol of Is. in 1908-9 as against 6d. ; a further rise of 1s. 3d. in 1910

(4) South Australian Railways. - In 1908 there was an increase

Adelaide an advance of 3s. 9d. as against 3s. 6d. f.o.b. At the 'etort House an advance of 4s. 6d. for 1908-10 as against 3s. 6d. Port Pirie in 1908 a rise of 5s. 10d. as against 3s. 6d. At Port ie in 1908 a rise of 5s. 10d. as against 3s. 6d ; small coal showed tise of 2s. 3d. in 1908-9-10 as against Is. 6d.

(6) Wallaroo and Moonta Company. - In 1908, the price was vanced for large 3s. 9d. as against 3s. 6d. f.o.b. ; and for small 3s. 9d. as against 1s. 6d.

(7) Kitchen Sons & Marsh Limited - Engine coal was advanced in 1907, 4s. 9d. as against 2s. 6d. f.0.b. ; in 1908-10, it again rose "Is. 6d. as against Is.

_ (8) Adelaide Electric Lighting Company. - Small coal rose in 1907-9 by 5s. 2d. as against 2s. 6d. and 3s. 6d., and in 1910 another 3d.,

ere being no further f.0.b. rise. (9) May Brothers Limited. - Small coal rose in 1907 by 4s. 6d. S against 2s. 6d. ; in 1908, it rose another 9d. as against Is. f.0.b. In 1909 it receded 3d. In 1910, it is nominally altered again to the 1908 price, but the place of delivery is changed so as practically _ to add a shilling to the price, though no rise takes place in the f.0.b.

(10) Sulphide Corporation. - The price before 1908 was 4s. 8d.

and 13s. 8d. or a mean of 14s. 2d. in 1903 when the declared f.0.b. price was 10s. In 1908 the defendants' price to the corporation was above that of the 1903 price by 3s. 4d. on Newcastle and 4s. 4d. on Greta coal, the rise f.o.b. being 3s. 6d. above 19

(11) Broken Hill Proprietary Company. - In 1908 there was tise of 4s. 1d. as against 3s. 6d. This was repeated in 1909.

(12) Broken Hill Water Supply. - In 1908 a rise of 3s. 9d. against 3s. 6d., extended to 1911, then rise increased to 4s.

(13) North Broken Hill. - A rise for engine coal in 1908 of 5s. 3d. as against 3s. 6d. :

(14) N.S.W. Trams, Broken Hill. - A rise in 1907 of 4s. 3d. as 3 against 2s. 6d. ; in 1908 a further rise of 1s. as against 1s. f.o.b., and in 1910 it was tendered at a further rise of 1s., though the f.o.b. price remained stationary. The tender was not accepted and the price was allowed to remain on a condition favourable to the defen-_ dants.

(15) Walter Sully & Co. - In June 1906 a rise of 3s. 6d. took place for engine coal, the f.o.b. price being raised 1s. 6d., this being prior to the combination ; in 1908, a further rise of 2s. 6d. as against 1s. f£.0.b. Small coal rose in 1908, 3s. 3d. as against Is. 6d.

(16) Nield & Hyde. - In 1907 engine coal rose 3s. 6d. as against - 2s. Gd., and small 6d. as against 3d. In 1908 engine coal rises _ another 2s. 6d. as against 1s. ; and small 2s. 9d. further as against 6d. Later in the year there is a 5 per cent. discount.

(17) Broken Hill Junction North Company. - In 1908 a rise oem : 5s. 3d. as against 3s. 6d., and in 1909 a further rise of 1s. without any advance f.0.b.

(18) Zinc Corporation. - In 1908 there was a rise of 7s. as against 4 3s. 6d. f.0.b. ; in 1910 it is only 6s. as against 3s. 6d.

Then we come to WesTERN AusTRALIA. - (1) Western Australian Railways. In 1907 there is a rise of 3s. 7d. as against 2s. 6d. In

is added for Fremantle another 1d. for one year and another 7d. for the second as against ls. f.0.b. For Geraldton there is a rise in 1907 of 8s. 8d. with no advance in f.o.b. price.

(2) Perth Gas Company. - There was a rise in 1908 of 3s. 6d. H.C. or A. against 3s. 6d. f.o.b. 1911.

(3) West Australian Ironworks. - In 1907 there was a rise in large Tus Krxe coal of 4s, 9d. as against 2s. 6d., and in small of 2s. 9d. as against 4>hy. 1s. In 1908 a further rise of 1s. in large as against 1s., and first bape ors Js. and then 2s, 3d. in small as against 6d. MONWEALTH

(4) Perth City Council - (a) Parkerville In 1907 a rise in large AssocianeD coal of 6s. 2d. as against 2s. 6d. f.0.b. ; in 1908 it recedes 2d., though Pilates 1s. f.0.b. is added ; in 1909 there is an advance of Is. though no further f.0.b. price is charged ; in 1910 a further 6d. is added without any rise f.0.b. small coal in 1908. Small loose coal in 1907 rose 4s, 3d. over 1906 price, as against Is. f.0.b. Small coal bagged in 1908 rose 2s. 9d. over 1907 price 7.e. as against 6d. f.o.b. In 1909

small coal both loose and bagged rises another Is. with no advance

in £0.b. price. In 1910 it rises yet another 6d. with no advance f.o.b.

(b) City Yards. Large coal rose in 1907 2s. 6d. as against 2s. 6d. ; in 1908 it rises another 3s. 4d. as against 1s. ; in 1909 it rises another 1s. and in 1910 still another 6d. without in either case another tise f.0.b. Small coal; the rise in 1907 was 2s. as against at most 1s. f.0.b. In 1908, the price of loose small coal has risen 4s. 1d. as against 1s. 6d. ; in 1909 it rises another 1s. without any advance f.o.b. ; in 1910 it rises still another 6d. without any rise f.0.b. The total rise in small coal therefore is 5s. 7d. as against 1s. 6d.

(c) Sanitary Site. Large coal rose in 1907, ls. 6d. as against

• Is.; in 1908 it rose 5s. more as against ls. In 1909 it rose 10d. more and in 1910 a further 6d. in each case without any further tise f.0.b. Small coal in 1908 rises 3s. 6d. as against 6d. ; in 1909 it rises 1s. 1d. and in 1910 another 6d., in each case without a rise fo.b.

Then as to QuEENsLAND. - (1) Chillagoe Company. - In 1909 there was a rise in large coal over 1906 price of 2s. as against 3s. 6d. rise f.o.b. This supply to the Company is impossible at all events on the materials before me to reconcile with the other Queensland transactions. (2) Townsville Harbour Board. \n 1907 the price rose 2s. 6d. above 1906 on a stated 2s. rise. In 1908 there was a further rise of 2s. as against Is. f.0.b. In 1909-10 prices remained

4.C.or A. the same. (3) Townsville Gas Company. In 1907 there 1911. yise of Is. over October 1906 as against Is. f.o.b. In 1908 t

Tue Krxe_ was a further rise of 2s. as against 1s. f.0.b. the price still re srornev. the same for 1909-10.' (4) Commonwealth Naval Depot, To

GENERAL OF yil/e, Tn 1907 there was a rise of 1s. corresponding with 1s. f.0.b, THE Com-

monweatre rise. In 1908 a rise of another 1s. corresponding with the fm

Associate rise of Is. f.0.b. In 1909 there was a fall of Is. 9d. In 1910 ari

Pre-ComBInaTION FREIGHTS. Before estimating the force of what I may term for conv ence of expression the shipping accretions, by which I mean

with the various contracts referred to. At first blush the ti

by the Shipping Companies in 1905 and the beginning of 1906 m well be taken as a fair standard of reasonable freight. were, excluding J. & A. Brown, six recognised inter-State shippin companies in effect selling nearly the whole of the inter-State coal produced by the Northern Collieries, the four defendant Shi Companies were the chief carriers. It is said however that the

the defendants and the other two shipping companies were as betws themselves playing any game of cut-throat. They were accord ing to the admission acting freely and in competition, but nowh does it appear that they were acting recklessly or inharmoniously. © Their competition indeed was of a most friendly nature; this is rendered indisputable by the proceedings of 23rd and 24th Aj 1906, when the Shipping Companies arranged with the Collieries

for exclusive supply for the South Australian contract. Their - friendliness was carried so far that the tender for that contract, dated Ist May 1906, was a joint one by Huddart Parker & Coy. and the Adelaide S.S. Company and was accepted. Further- more, it was carried out with even marked cordiality because, Mr. Russell, the South Australian Locomotive Inspector, stated, all four defendant Shipping Companies helped to carry the coal, and although they were as per the admission free competitors up to September 1906, there is no doubt that for some purpose, or

oses, compatible .with that free competition, they were, for ome time before in friendly association and were called the Steam- 'ship Owners' Association. Traders who are in actual competition with each other are not infrequently and quite consistently members the same Association for general mutual advantage. But that pposes no such antagonism as leads to ruinous or unhealthy mpetition. Looking back for a number of years, the inter-rela-

tions of the shipping firms were by no means hostile ; but on the 3 contrary highly amicable. Thus for instance, on 22nd November "1397, there is a tender to the Victorian Railways signed by James aterson & Co. for self and other firms associated with them, those ms are Howard Smith & Sons Ltd., MelIlwraith McEacharn, Huddart Parker & Co., Adelaide Steamship Co. and the Melbourne mship Co. That is repeated in 1898 and 1899. On 30th ember 1902, there is another tender to the Victorian Railways jointly made by Jas. Paterson & Co. and Huddart Parker & Co. For the Victorian Railways there is another joint tender for 1905-6 R5) on this occasion Howard Smith & Co. and Huddart Parker & Co. are the tenderers. There are, in addition to the joint tender, a separate tender by the Adelaide Steamship Co. and another joint tender by James Paterson & Co. and McIlwraith McEacharn & Co., and another separate tender by J. & A. Brown. Consequently it seen that from 1897 down to 1905 there is no unfriendliness at amongst the six shipping companies, but their natural feelings of self-interest are generously mingled with threads of sympathy

eeding but little effort to be woven into the firm bond of union "manifested in the combined agreement. There is no reason there- ore for imagining any cutting of freights as between the shipping _ defendants. There was some outside competition, the history and _ effect of which belongs rather to another chapter.

At this point I would only say that to some extent I believe the uitside competition did influence the action of the shipping com- panies as well as of the collieries in reducing in some instances both 0.b. prices and shipping freights. For instance I would not think fair to the defendants to take the South Australian tender of Ist May 1906 as a normal tender. Roughly estimating the freight por-

tion of the 11s. 9d., I should think it was about 4s. 10d. or 4s. 11d.

Tue Kine AND THE ATTORNEY- GENERAL OF 'tHE Com- MONWEALTH v ASSOCIATED NortHEeRN CoLLIERIES.

Iam not prepared to say that there was any loss on this, I believe was above actual cost, but I do not think it afforded a fair busine profit for that trade. Special circumstances affecting both the f.o.b. prices and the shipping freights have been disclosed in regard to th ; contract. On the other hand, I accept the view urged by the def ants that prior to the combined agreement there was in prat a monopoly in the carriage and therefore in the public supply Newcastle coal. This is to be taken with the qualification of Sco Fell & Co.'s competition. Apart from that the sympathetic frie liness and harmonious action of the six shipping companies modifies the value to the defendants of previously existing fi In the absence of definite testimony, I can only have recourse to he business conduct of the shipping companies in transactions which, so far as appears, are not affected by special circumstances adv to the defendants, but on the contrary occur after they have entered - into combination. ;

I take the Victorian Railways contract tendered for in October 1906. This seems a plain case to begin with. The quantity called for by the Railways Commissioners as appears from the Departmental letter 24th October 1906 (S5) was 200,000 tons per annum minimum, with a maximum of 300,000 tons. The matter came before the Vend on 4th October 1906 (Ex. I. p. 9) and it was agreed by the coal proprietors that proportions and prices should be as follows : - For Maitland collieries 45 per cent. of the - total quantity; from Borehole collieries 1st grade 30 per cent., - 2nd grade 15 per cent. ; Teralba (optional) 10 per cent. ; prices: 10s. Maitland and Ist grade Borehole; 9s. 3d. 2nd grade Borehole; _ 6s. 6d. Teralba. Tenders to be conditional on the whole quantity - being taken from the above collieries. The quantity to be supplied by each colliery to be a matter for arrangement later on. Period _ of contract 3 years. y

On the 8th October 1906 Huddart Parker & Co. and Howard Smith & Co. jointly tender subject to certain conditions including taking the whole quantity required, the proportions being stated exactly as by the Vend and the alternative option being worked out as

é Maitland 50 per cent. ; No. 1 Borehole 33 per cent. and No. 2 Bore- H. C. or A. hole 17 per cent. The prices are : - Maitland and No. 1 Borehole pets

'ds. 1s. ; No. 2 Borehole 13s. 4d. and Teralba 10s. 7d. In each case Tue Krxe

• 4s, 1d. has been added to the Vend's f.0.b. price, that is a clean cif. SX? AEN contract, and I see no reason for not accepting it as yielding a fair freight. I cannot refrain from quoting a passage in the letter of wonwraurn ~ tender which having regard to what we now know, respecting the te

then undisclosed relations between the Vend and the shipping pote

companies, and the manner in which the quantities and prices and conditions of this contract were arranged between them, must be admitted to be remarkable. The two shipping companies tender- ing say : - '' We have only offered for a 3 years supply, as we have not been able to get under offer for a shorter period any of the coals, which so far as our experience has been able to guide us, we think ~ most suitable for the requirements of the Department."

The impression naturally conveyed by this statement is that a really independent negotiation had taken place with the Vend to get ~ certain coals only and for a shorter time than 3 years, and that in spite of the tenderers' efforts on the Department's behalf, they had failed, but that, with the stipulation as to time, the quality was secured. But no one would have suspected the truth, that the

tenderers had already bound themselves to submit to the allotment system and knew they could not rely on getting simply the coals which their experience told them were the most suitable for the Departmental requirements, nor indeed that the collieries had ex- -pressly informed the shipping companies that the quantity to be supplied by each colliery was to be a matter for arrangement later on. I refer also to tender (R5) for 1905-6, which is lower still, but I pass that by without further comment. I come to the Metro- i politan Gas Co.'s contract and tenders (Exh. T7). It has been properly urged on the part of the Crown that this contract was the most onerous which the shipping companies entered into. The conditions from January 1898 down to, but not inclusive of the contract made in 1904 contained a provision that all coal supplied by

• the contractors should be conveyed direct from Newcastle to Mel- bourne (without calling at Sydney) in steamships owned by them or

Tue King In the contracts of 1904, 1907 and 1910, it is provided the coal 'Atronxev. to be conveyed to Melbourne in suitable steamships and in all

Cree ge contracts there is a provision that the coal is to be carried in sepa:

monweartH holds. Assocraren For breach of any stipulation as to their own or suitable ste Fs Gt ships as the case might be or as to carrying in separate holds or as not sub-letting without consent, there is a provision for liquidat damages £10,000; there are other provisions of comparat stringency to which I need not refer. Then there is also a pro for what is known as emergency clauses. I refer at present | freights only. The eighth clause of the 1897 contract stipulat that in the event of a strike at Newcastle the contractors will ca coal for the Gas Co. from Newcastle at 4s. 5d. per ton; that

Howard Smith & Co. The Adelaide Steamship Co. tendered at the

as to the emergency freight. In 1904 McIlwraith McEacharn 5s., including wharfage, which is equivalent to 4s. without. J. & A. - Brown named 4s. as emergency freight. In 1907 the emergency freight is 5s. 7d. including wharfage. Of course these prices being emergency prices must be considered as being distinctly higher than - they would be under ordinary circumstances. Some guide as to what the ordinary price would be may be gathered from clause 13 of the contract of 16th May 1910 made by MclIlwraith McEacharn & Co. The clause contains a proviso that if at any time during the currency of the contract " the Association Colliery Proprietors shall - have been dissolved, the prices for the best screened round coal shall - after such dissolution but not before 31st March 1911 be the declared selling price at Newcastle upon which the hewing rate is based in - addition to freight and wharfage calculated on the basis of 5s. 2d. per ton delivered at West Melbourne into tubs." That freight ae equivalent to 4s. 2d. independent of the 1s. for wharfage. The price of 4s. 2d. is an extraordinary piece of testimony to the effect of the

ination. If the Vend disappeared of course the combined H- ©. or A.

agreement would cease, and though nothing is said about a combined _ -

ent in the contract - which is natural - the effect is there. Tue Krxa

THE in that view we may make a comparison with the emergency ,vronwev-

v GENERAL OF freight stipulated in the very same contract, but with no dissolu- GUNEG™ ©

tion of the Vend, it is 4s. 7d. Why should the combined agreement monwraurn it must be that as the mere alteration of internal relations Assocrarep

'of colliery proprietors ought to make no difference to the shipowners Giorrmarne,

• create a difference of 5d. a ton on freight? This anomaly has not

en explained, and the fair inference to my mind is that, in the it of a dissolution, the exclusive sale to the shipping defendants vould cease, other carriers could come in, and the Gas Co. could, or ht, secure the transport of their coal at a lower price. From contracts it will appear on the whole, that 4s. 1d. without harfage as charged to the Victorian Railways or at the most 4s. 2d., vas a fair freight to Melbourne. The next is the Melbourne Glass 4 ottle Works contract, dated 3rd November 1904 (Ex. X. 7). The price of best Newcastle coal from A.A., Stockton and Hetton was 'Ws. 6d. Assuming that 7s. 6d. was paid, that would leave 5s. for t, and as delivery was ex steamer into railway trucks it neluded wharfage, making the net freight 4s. This again supports conclusion already arrived at.

It is to be noted also that whatever the pressure might have een before the combined agreement was formed to reduce freights, e contracts made afterwards must be taken very strongly to ent rates which the shipping companies felt they could safely demand, because henceforth the coal needed for lways and gas companies must come through them, unless freight was extraordinarily excessive. In the absence there- of any explanation which the shipping companies might have en, which they alone could give, but which has not been ven, they cannot complain of the inference which common exper- ce, of ordinary human nature and affairs of life, prompts one to e, namely that the freights I have quoted would not have been named by the shipping companies as their prices unless they left a Yor. xtv. 36

H.C. or A. reasonable margin of profit. With less strict and onerous - 1911. tions and less risk in the event of a breach of contract, the same Tur Krxa prices are still better for the defendants.

Amonvev. The onus of proof is doubtless on the Crown in this as in ot!

Caer or respects, but I repeat when conduct is proved which in normal

MonweALTH cumstances means one thing, if the defendants rely on any unus

ae gave disturbing factors, influencing the particular contract and a

Couttenies, 1g the normal inference, it is they who should establish them.

they assert the competition in any special instance was unhealthy, - they must indicate the nature and extent of the deviation from the - normal state, they must show why and how the ordinary instinetive and necessary desire to make a profit was suspended. The sum- maries of Victorian c.i.f. contracts 1907 to 1910 submitted on behalf of the shipping defendants and embracing the railways, Gas Co., Glass and Bottle Works and Harbour Trust were offered to show that to the end of 1909 the average freight earned per ton on 426,000. tons per annum did not reach 4s. 2d. and in 1910 it did not reach

The inference from the defendants' own business transactions - is affirmatively supported by Lane's evidence. He says (p. 492a) _ that during 1906 a 4s. 3d. freight Newcastle to Melbourne would be a profitable freight, would give not less than 3d. and probably 6d. per ton profit, and would enable the shipowner to sell advan- - tageously at a cif. price based on that freight added to the - f.o.b. value of the coal at Newcastle. Even at 3d. per ton on the y 1907 Victorian railway supplies which were 260,000 tons, the profit would amount to £3,250. On the Metropolitan Gas Co.'s supplies, - 150,000 tons, the profit would be £1,875. On the Glass Bottle Works, 12,000 tons, the profit would be £150, and on the Harbour Trust, 4,000 tons, £50.

Lane also said freights remained stationary from 1906 to 1910. There is another witness, James Cant, of Kethel & Co. Ltd. Hewas Managing Director and his company (now in liquidation) carried on

the business of colliery proprietors and coal merchants, wholesale and retail, They owned the Ebbw Main colliery in the Maitland district and leased the Young Wallsend colliery in the Newcastle district. The latter was on the upper Borehole seam. The com- pany was formed on lst May 1909, operations then commenced, and prior to that Cant was about 13 or 14 months Secretary of the Ebbw Main Co., the then owners of the mine. Before the formation of Kethel & Co. Ltd., Cant was also lessee of the Young Wallsend mine. Mr. Cant gave evidence as to the rates of freight from New- eastle to Melbourne, based on his actual experience, the coal being carried by the company not in their own vessels, but in vessels they had to charter. Cant's evidence is that a fair freight would be 4s. 1d. including discharging and trimming. He also stated the actual cost to himself. The defendants have taken the figures of

his actual cost, and treated them as representative charges, applic-

able to trade in general, including their own. But I cannot accept that as a correct application, the circumstances of Kethel & Co.'s business operations were quite exceptional, and necessitated ex- penditure that would not have happened under ordinary circum- stances, and that I am sure did not happen in the regular commercial transactions of the coal business carried on by the defendants either before or after the combined agreement.

For instance the yard expenses which are put down at 2s. 6d. in connection with such contracts as the Melbourne City Council, J. Kitchen & Sons, The Australian Paper Mills, form a very con- siderable addition to the suggested expenditure of the shipping defendants and the claim for allowance of that expenditure does not rest on anything more than the mere fact that Cant in his own particular business had yard expenses, which the defend- ants say amounted to 2s. 6d. Some astonishing results are brought out by this process, for instance, it is made to appear by the defendants that in supplying the Victorian Government with 1,500 tons of coal in 1906, for the Melbourne district, after paying the collieries, their f.o.b. price put down at 7s. 6d., wharfage Is., 2s. 6d. yard expenses, 1s. for screening and loss by

Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH. v ASSOCIATED NorTHERN COrLIERIES

H.C. or A. screening, and 1s. 6d. for cartage, making a total money ou 1M: the shipping contractors of 13s. 6d. ; they charged the Govern Tae Kixe only 14s. That is to say they charged only 6d. to cover the wl ane ney. cost of sea carriage, standing charges of management and to

ATTORNEY- GENERAL OF profit ; that is quite unlikely. Similarly in the same year it y

THE Com- monweautH appear that they charged the Government only 4d. per ton fi Assocraen for 120 tons delivered at Parliament House and the same for oma tons delivered at Coburg, while for 1,900 tons delivered at Yi Bend and Kew they were so generous as to do it at 1d. per ton to themselves. I have taken the contract prices as stated in summaries (198) prepared by the defendants. Substantially I no doubt they represent the fact, or the defendants would not accepted them, but it is my duty to point out that in the last mentioned instances, Coburg and Yarra Bend, the materials for those contract prices were struck through at defendants' instan and are not strictly part of the Exhibit (V2) because they transactions of the Melbourne Shipping Co. before the date wh

that company is proved to have joined the combination. Ta the lowest tenders of the defendants in connection with matters, the Coburg case would stand at 5d. more, which would Mcllwraith McEacharn's tender, so that their balance to pro for general expenses of company, wages, wear and tear of ship, co of bunker coal, and their own profit would be 9d. per ton, which, business proposition, is absurd. In the case of the Yarra Bend, same firm's tender was the lowest among the defendants and wou convert the debit balance of Id. a ton into a credit balance of same amount, a scarcely less conspicuous example of self-sat in the public interest.

And so looking down the same summary, there appears to been provided only Id. for the same expenditure and profit in supplying the Melbourne City Council with 600 tons at the Corpor tion Quarries, and 11d. for 4,000 tons at the Refrigerating Wo ; This is a price incredible, and, more particularly, when we find 5s. 2d. provided for 70 tons to the Melbourne and Metropolitan Board Works, and 2s. 9d. for the Harbour Trust for 4,000, and 2s. 9d. a 3s. for the Australian Paper Mills for 5,750 tons. ;

n view of the ordinary impulses of human nature and remem- the shipping accretions already pointed out, I have no reason

think that the shipping defendants would conduct their affairs yn the lines of philanthropy rather than of business. One is morally n that the surprising results exhibited by the defendants' maries must be resting on some fallacious support.

RAST BETWEEN SHIPPING CoMPANIES' BUSINESS AND THAT OF Kernen & Co.

the fallacy is in treating their long established and system- cally arranged methods of supply on a larger scale as exactly ar to the struggling and inexperienced efforts of Kethel & Co. to ete on a less extensive basis in the inter-State trade. It is not uted by the defendants (see page 2,316) that they would naturally oid yard expenses so far as possible by delivering from the wharf. y then should the coal supply to the Government, for the City neil, for the Paper Mills, for the Melbourne and Metropolitan d of Works, be stored in the defendants' yards before delivering n extra cost of 2s. 6d. a ton. Their huge contract business was quite easy to arrange with regard to arrival, so as to obviate the neces- of incurring this heavy expense in connection with the wharf e, and defendants have given no evidence, and have not pointed o any, that contract or any coal was delivered from the yard. If e defendants foresaw the probability of such an expenditure they turally would have increased their price by so much ; and if they did not add this to the price, it is because their years of experience al them the coal could be delivered without passing through the . Mr. Cant was under a special arrangement with his agents, sby & Co., through whom they were forced by stress of business ities to work these operations, to keep a certain amount of , about 8,000 tons always in stock. Now, as the Harbour Trust not allow anyone to stack more than 2,000 tons at the wharf, ows he always had the expense at the yard of 6,000 tons at , and at times possibly 8,000, seeing that a cargo was more than 0 tons. The defendants on the other hand were under no such ation. The trade had its facilities before the combination,

tHE Com- MONWEALTIL e - AssoctaTED NortTHERN CourertEs.

H.C.or A. Arprrmative EvrpeNce From DEFENDANTS' TRANSACTIONS A 1911. Tux Kixc Besides there is affirmative evidence coming from the defen

Atonsry- possession which supports the natural presumption. The dealers'

Genera OF lists, issued by the shipping companies (Ex. K8) state explicitly th

monweazrH the price to dealers was so much per ton "on the wharf." If ca

"associaren to dealers the ' 'price on wharf is plus cartage as per cal

plains schedule." So in J. & A. Brown's advertisements (V5) the p

By K8 the prices already detailed by me were " on the wharf." Thus from Ist June 1906 dealers " were charged 16s. 9d. for sere coal on wharf" and from 23rd July 1906 19s. 3d. I leave out tl discount for this purpose. From 21st January 1907 it is 21s., and from Ist January 1908 it is 22s., with a reduction of 6d. in 1909."

Ge although there is the distinct statement in K8 that the p are "on the wharf," and an express intimation that, if cartage is required, cartage will be charged for as per scale, and although no- contract existed requiring delivery on specific terms or at all, yet the defendants wish me to believe they voluntarily incurred 2s. 6d. per ton extra expense, and made the dealer a present of it. They have put down that 2s. 6d. as an actual outlay, and yet adhered to the 14s. 9d. wharf price to the dealer. Not only so, but a discount under certain circumstances is allowed. Further, the price to the public is only 2s. more than to dealers and the same contentic applies that though the public are specifically told a price on wharf and another price for delivery at their homes being cartage added, yet 2s. 6d. yardage is said to have been paid by the shippin companies, and ignored in their price to the general public. If t 2s. 6d. is provided for in the regular price, then an overcharge p 0 tanto must be made from the wharf. There being not a particle of evidence that the repeated price lists were so strangely departed from, I prefer to accept the defendants' own statements - business statements - which are in conformity with their policy of "a tions," and with ordinary commercial motives, rather than the ingenious but erroneous suggestions made by learned counsel on the strength of adopting Cant's exceptional experience as a universal - standard. ;

Ramsay's summaries, part of K8, in fact state " at wharf" except H.C. oF A.

5 ji « deli > i911. where a higher price was charged for " delivery." 'Tue Kine Drrricutties or DELIVERY. cade

Although the shipping defendants have not thought fit to give Gpxnran or

the Court any information through the medium of the witness-box ene

why they insist on this item of 2s. 6d. yardage as one of the reasons COLLIERIES.

of the Electric Light Station alone £1,290 6s. 3d. In 1908 for the same quantity of coal the prices are 20s. 10d. for large and 16s. 7d. for small. The f.0.b. price for large is 11s. and, adding the additions of 3s. 8d. leaving 6s. 2d. for freight, an excess of 2s. above the reasonable rate and 8d. above the agreed maximum. The over- charge for freight on large coal is £782 10s. and the excess f.0.b. - price is 1s. which comes to £391 5s. ; in all for large coal £1,173 15s. _ The small coal is 6s. 3d. f.0.b. and with 3s. 8d. additions comes to" 9s. 11d., leaving 6s. 8d. for freight being 2s. 6d. above the reasonable rate and Is. 2d. in advance of the agreed maximum. This makes the excess freight on small coal £1,075. The f.0.b. price of small is more than 6d., properly speaking about Is. in excess, but taking itat - 6d. that is £215, the total excess cost of small is £1,290 which added - to the excess on large shows on the lowest basis a combined over-_ charge for the year 1908 for the Electric Station of £2,463 15s. In - 1909-10 large coal receded 6d. ; small coal advances to 17s. in 1910.

(8) Melbourne and Metropolitan Board of Works. - In 1907 the price of engine coal at Spotswood was 18s. 9d. and 19s. for 8,000 - tons ; the f.0.b. price was 10s., 1s. wharfage, and cartage claimed at E 1s. 6d., and I see no reason to cut it down, making 12s. 6d., it has to be trimmed into bunkers behind the boilers at the Pumping Station, : I think 3d. per ton is well paid for that, and should be allowed. though not pressed by defendants, making 12s. 9d. The defendants - claim 1s. 6d. discharging from lighter and 2s. for lighterage being ; an additional 3s. 6d. The Crown objects to the last two items ' : altogether ; these, if allowed, would bring the outpockets to 16s. 3d. The defendants claim 16s. for this leaving 3s. only for freight. I ' am not at all clear about the lighterage and the discharge from lighter. In the previous year the Adelaide Steamship Co. tendered for 8,000 tons, same place, same conditions, 14s. 3d. for Seaham and - Caledonian, and Howard Smith tendered 13s. A.A. and Stockton, Hetton and/or Newcastle. They did not get the contract and it may be inferred that some cheaper arrangement was adopted. But whether that was so or not the 13s. tender affords some criterion for Judging of the accuracy of the expenses claimed by defendants in _ 1907. In 1906, the f.0.b. price was 7s. 6d., the additions claimed amounted to 6s., the total outlay therefore being 13s. 6d. When

Howard Smith & Co. tendered at 13s. did they intend to lose 6d. per ton hard cash amounting to £200 and in addition carry the coals oversea fornothing ? If 4s. 2d. bea fair amount to charge for freight it would mean that Howard Smith were foregoing no less a sum than £1,666 13s. 4d., part of which was actual cost and part profit, a total

reduced this benefaction by 1s. 3d. per ton equalling £500. I cannot _ believe the shipping companies were prepared to do business on these terms, and therefore am of opinion that there must be some fallacy either with respect to the wharfage or the amount charged in connection with the lighter and the cost of carriage. But what- ever the difficulty may be in arriving at freight with precision, I do not believe that the advance of 5s. 9d. and 6s., 7.e., a net advance of 3s. 3d. and 3s. 6d. from the standpoint of the shipping companies left them in the position of being underpaid. I will assume in their _ fayor that for this year 1907 they charged no excess freight, but the f.o.b. price was 6d. in excess, being £200. In the next year 1908, the contract price for 5,500 tons was 22s. 6d., the f.o.b. price was 11s. 'The defendants' claim additions which leave the balance for freight at 5s, 6d., the agreed maximum, even on these figures that is 1s. 4d. too much, being £366 13s. 4d., so that I need not enquire further ; _ the f.0.b. price is also 1s. too much, which is £275 making a total of

• £641 13s, 4d., even granting the full charges connected with the _ lighter and the full carriage paid. It may not be out of place to observe at this point that the freight for the Metropolitan Gas Co. this year was 4s. 2d. for both large and small. (9) Victorian Government Special Services ; (a) Coburg - In 1908, 240 tons of house coal were charged 23s. 3d., the f.0.b. price was I1s., : A to that is to be added wharfage 1s. ; wharf expenses Is. ; screening Is.; cartage 3s. 9d. and standing expenses 4d., making 18s. 1d., leaving a balance of 5s. 2:1. for freight or 1s. in excess which amounts to £12. The excess f.0.b. is 1s. also equalling £12. (b) Yarra Bend and Kew. - 1900 tons at 23s. in 1908 ; 3d. less is charged for cartage,
• there is therefore again 1s. excess in freight amounting to £95, and Is. f.o.b. also comes to £95, a total of £190. In the previous year the balance for freight appears to be only 3s. 3d. ; cartage to Kew _ appears in Ex. K8 as 3s. 3d. for 1907, and 3s. 6d. in subsequent years.

Denefaction of £1,866 13s. 4d. The Adelaide Steamship Co.'s tender monweavra

H.C. or A. That is the charge made, and the amount is allowed by me as bac ear though that is probably much less. It is always difficult 1 Tue Kixc_ believe that in 1907 the shipping companies carried at a loss, Anroxny. Where so much is clear, it is unnecessary to run after less obvio Graanaincs instances. (c) Lady Loch, Hobson's Bay. - 1,000 tons steam co monwearrH at 20s. ; f.0.b. price 11s. ; 2s. lighterage ; 1s. 9d. discharging Assoctarep 148. 9d., leaving 5s. 3d. for freight, excess of 1s. 1d., amounting t GORTHERN £54 3s. 4d., and Is. excess f.0.b. amounting to £50, total £104 3s. 4

• _ (d) Melbourne District. - 1,500 tons house coal price 22s. 3d. f.o.b. lls.; wharfage 1s.; wharf expenses Is.; screening 1s. cartage Is. 6d.; standing expenses 4d.; being 15s. 10d. leavin 6s. 5d. for freight or 2s. 3d. excess, amounting to £168 15s. ; add to" this 1s. excess f.0.b. price, namely, £75, total excess being £243 15 2 (e) Parliament House. - 120 tons house coal at 21s. 6d., the sar deductions, namely, 15s. 10d., leaving 5s. 8d., freight being Is. 6d. excess amounting to £9 and Is. excess f.o.b. equals £6, a total f

(10) Retail Dealers. - The price in 1907 was 21s. It is claimed by the defendants there was a discount of 6d. per ton on large coal dealers. That was confined to dealers taking 25 tons per month - and paying by the 14th of the following month, but I will assume for _ 2 convenience' sake it applied to all dealers, making the net price 20s. 6d. The f.0.b. price was 10s., to that must be added wharfage 1s.; wharf expenses 1s.; screening 1s. ; standing expenses 4d. ; total 13s. 4d., leaving 7s. 2d. for freight or an excess of 3s. per ton. The quantity for 1907 sold in Victoria to dealers and in private trade : according to the defendants' figures (in 19S) was 53,607 tons; this taken at 3s. amounts to £8,041 1s. overcharge by the shipping com- panies to the general public; it was even more because private buyers were charged 2s. more and were not given the 6d. discount. - The f.0.b. price was 6d. in excess, and on the same quantity was - £1,340 3s. 6d. overcharge by the collieries. So that between the - two, the general public, practically householders, overpaid to the combination £9,381 4s. 6d. in 1907. In stating that amount it is an - under-estimate, because according to 33C the total Victorian trade -

for 1907 was 1,325,739 tons or over 84,500 tons for general trade. -

However, for the present purpose of calculation, it is enough to take he figures of the defendants' summary.

In 1908 the price was 22s. to dealers. I will assume the discount all cases ; the price to the public was 24s. The f.o.b. price was

Ex. 198 is 63,022 tons, which makes the excess freight £9,453 6s. he excess f.0.b. price is 1s. and on the quantity mentioned comes to 8,151 2s. ; a total of £12,604 8s. overcharge for the year, taking lealers' prices only, but for any sales direct to the public 2s. 6d. per ton must be added. This again is an under-estimate, because Ex. 198 takes the Victorian total trade at 987,821 tons whereas 33C shows it to be 1,477,770 tons taking 70 per cent. of the total inter-State trade. In 1909-10 prices stood the same, the quantities were differ- it, namely, 47,115 in 1909, and 55,044 in 1910 according to the entage estimates in Ex. 19S - they however being as before under-estimates.

_ The prices charged for Commonwealth Services are so exorbitant _ that no comment can add to the effect of the bare figures.

I then take Sourm Austratia The first thing to consider is what isa fair freight to Adelaide? Mcllwraith McKacharn by their tender of Ist May 1906 name 5s. 3d. Newcastle to Port Adelaide for 1 _ or 2 years (Ex. C2). On the same date Huddart Parker & Co. and the Adelaide Steamship Co. tendered at 11s. 9d. for Port Adelaide and the other ports in South Australia for 192,000 tons of coal. This coal they were in fact getting at about 6s. 10d. as I reckon in their wor, and after paying 4d. for haulage, would leave about 4s. 7d. for freight, or as has been reckoned on both sides 4s. 5d. I doubt if there would be any actual loss on this. Lane says that 4s. 11}d. gives a fair profit. But though I do not wholly lose sight of that statement, I am not altogether persuaded that what he says applies ally to the defendants' business. In their favor I conclude t would not yield them a fair profit, for reasons to be hereafter

7s. 2d.; the excess freight is therefore 3s. and the quantity as Gotrienies.

ATTORNEY- and to this must be added wharfage Is. ; wharf expenses Is. ; GENERAL OF

ing 1s. ; standing expenses 4d., making 14s. 4d. The differ- wonweavra e between that and 2ls. 6d. looking at the dealers' price only Amines

H.C.or A. J think McIlwraith's tender for freight more nearly represent ai the true amount. In February 1906 (Ex. 19) Howard Smith & Tue Krxc_ sold screened coal to the Broken Hill Water Supply Co. at 13s. 9d. inp ut. free into trucks at Port Pirie. The contractors paid 9d. wharfage,

cae which made the net price 13s., the cost f.0.b. was then 7s. 6d., that monwraure left 5s, 6d. freight to Port Pirie. The combined agreement recognizes Assoviarep @ difference of 3d. to 6d. more at Port Pirie than at Adelaide. This peste contract consequently represents 5s. 3d. freight to Adelaide. It -

continued to March 1908. There were some deliveries at higher -

prices, which were apparently anomalous and I pass them by. From : '

April 1908 to March 1910 Howard Smith & Co. and the Adelaide Steamship Co. sold to the Broken Hill Water Supply Co. under - ; contract best coal at 17s. 6d. into trucks Port Pirie. The con- - tractors paid 1s. wharfage, which reduced the price to 16s. 6d. The - f.0.b. price at this time was 11s., which again left 5s. 6d. for freight to Port Pirie, equivalent to 5s. 3d. Adelaide. In the letter of 19th February 1907, Northcote to Scott Fell (part of Ex. O1) and a portion of the correspondence forwarded by Northcote to the Vend, and already commented upon, the freight to Adelaide as quoted to" Scott Fell & Co. is 1s. 3d. more than to Melbourne. There are transparent exaggerations of price in that letter. For instance Co-operative coal which was 10s. f.0.b. is quoted to Scott Fell & Co. at 15s. 6d. Melbourne c.i.f., that is 3d. more than the agreed maxi- mum in the combined agreement, and 16s. 9d. to Adelaide which is within 3d. of the maximum ; for Port Pirie it is quoted at 17s. 9d. which is 6d. more than the agreed maximum. This last super- Dreadnought quotation, when Scott Fell's needs were for coal at Port Pirie and not at Adelaide, must surely have been conceived in the most delicate spirit of irony. The combined agreement in the various schedules is erratic with regard to the differences between Melbourne and Adelaide ; in one place it is 1s. 2d. for large coal, in the next Is. 7d., in the next Is. 6d., then Is. 9d., then Is. 8d., and lastly 1s. 3d. at the highest price large coal. For small coal it is 1s. 3d., 1s. 7d., 1s. 6d., 1s. 9d., and 1s. 6d., there are differences in maximum. No steady guidance is there obtainable as to the proper differences between Melbourne and Adelaide.

Making up my mind on the materials I have, I conclude without

® itation that 5s. 4d. is ample to return the shipping companies a H. ©. or A. profit, and anything beyond it would most certainly be exces- 1

ive. Resolving all doubt in their favour I allow it at that. I Tux Kine AND THE

would mention in passing that the Broken Hill Water Supply con- a rorwey- tracts are specially valuable because there was no back-loading, and coe "this isa practical answer to the conjecture raised by the defendants cic "that the possibility of getting - not the contractual right to get - re ~ pack-loading was a factor in fixing such a freight for Port Pirie. aoe T have now to consider from the standpoint of freight, some of "the South Australian transactions.

(1) Retail Dealers' Trade. - The price in 1907 was 24s. 6d. to dealers,

the f.0.b. price was 10s., to this the following additions should be

made - wharfage 1s. ; haulage 4d. ; railage 2s. Gd.; yard expenses T would allow at 1s. 3d: ; with 4d. standing expenses and Is. further for screening, making 16s. 5d.; this from 24s. 6d. leaves 8s. Id. for freight. The defendants bring out the balance for this year for freight and management at 6s. 5d.; if that is right, the previous year's business must have been on a purely philanthropic basis. The f.0.b. price was 7s. 6d., the additions claimed amount to 8s. 1d., that added to 7s. 6d. totals 15s. 7d. The price charged to dealers _ was 17s., so that according to defendants' contention they were con- tent with ls. 5d. to provide for freight and management. It is _ putting too severe a strain on my credulity to ask me to adopt that suggestion. Taking 8s. 1d. as the actual balance for freight in 1907, the excess is 2s. 9d. per ton; the amount of trade done is left un- fixed. The defendants suggest that it was 1,500 tons and, with Port Adelaide trade, about 2,000 tons in all, that was Mr. Knoz's suggestion and is inserted in 19S. It may be right ; but if it is, the proportion of 6.38 per cent. to total trade is not maintained in South _ Australia. In that case the Victorian quantities ought probably to be largely increased. If, following defendants' assumption in 19S as to Victorian dealers' trade, that trade were calculated on the

• total Adelaide trade, it would be many thousand tons more for 1907.
• Ido not know in what State proportions the dealers' trade was distributed ; there is doubt on this point, and so I do not work it out in total results, but leave it with the observation that a large

_ excess in freights was obtained on the total quantity from the general

monweartu defendants' own summary showed a balance of 7s. 5d. for fre

public by the shipping companies somewhere. The f.0.b. price y 6d. in excess and although it is impossible to say with definiten otherwise than by taking 6.38 per cent. of the tonnage for

the collieries got it. The dealers' trade at Port Adelaide on

and management. That is an admitted excess of 5d. over the scheduled maximum. When I use the word " admitted" as to excesses I mean only an admission that that is the effect of t evidence, not an admission that the evidence is true, nor an adn sion that no other charges could be made, though no others suggested. The real excess in this instance however is greater still. To the f.o.b. price there are to be added wharfage 1s. ; wharf penses Is. ; screening ls.; general expenses 4d.; making 13s. :

excess of 3s. 1d. over the reasonable rate and Is. 5d. over the a maximum. In 1908, the Port Adelaide price is increased to 23s. 3d. the f.o.b. price is 1ls.; to this add 3s. 4d. making Ids. 4d.

1s. 1ld. above the maximum. In the Adelaide trade in 1908 price to dealers was 26s.; to the f.o.b. price 11s., additions of 6s. 5d. should be made in all 17s. 5d., which leaves a balance 8s. 7d. freight, that is 3s. 3d. excess above reasonable rate 1s. 7d. above the maximum. In 1909 the position was the same In 1910, the Adelaide price advances another 3d. making excess freight 3s. 6d. and the excess f.0.b. price 1s., altogether an over- : charge of 4s. 6d. per ton. :

(2) South Australian Railways. - In 1908-9 there were 133,000 -

£1,263 6s. 8d. Port Pirie, Port Augusta and Wallaroo, there is an" excess of 5d. a ton on 52,700 tons equal to £1,097 18s. 4d. The f.o.b.

i ingston and Port Lincoln there was an actual loss of Is. 6d. a ton, H.C. or A. ying coastal freight. To this I add 5s. 4d. the fair freight to 11!

aide, a total set-off of 6s. 10d.a ton. This rate on 2,500 tons Tue Kixe mounts to £854 3s. 4d. Then as to Port Wakefield, the admitted Prntstccint

~ sum left for freight is 1s. 6d. which is 3s. 10d. below the reasonable ae rate and this diminution on 2,000 tons amounts to £383 6s. 8d., a monweaura ~ total debit of £1,237 10s. Deduct this from £9,011 5s. and the net 'gee

• overcharge as the effect of the combination is £7,773 15s. For 8 Sere 1910-11 the only difference is in the quantity, it is 145,000 tons. (3) South Australian Government General Supplies. - In 1907 the contract price for Adelaide and suburbs was 25s. 7d. for 6 months, the annual quantity being 1,750 tons. The f.o.b. price was 10s. add 8s. 5d. for proper additions making 18s. 5d., leaving a balance of 7s. 2d. for freight, being 1s. 10d. above the reasonable rate and 2d. above the agreed maximum. For 1908-9 the price is 27s. 2d. ; the fo.b. price being 11s., adding to this 8s. 5d. and deducting the result 19s. 5d., it leaves a balance of 7s. 9d. for freight, being 2s. 5d. above the reasonable rate and 9d. in advance of the maximum. At the end of 1909, the price advanced another Id., the final excess

in freight is 2s. 6d. per ton, and this added to Is. excess f.0.b. price

(4) Adelaide City Council - tIn 1907 screened coal was 26s. 3d. ; against this is the f.o.b. price 10s.; wharfage Js.; haulage 4d. ; = tailage 2s. 6d.; wharf expenses 1s. 3d.; standing expenses 4d. ;

for freight, 2s. 8d. in excess of the reasonable rate and Is. over the maximum. Engine coal was also 26s. 3d., but the cost is 1s. less as screening is omitted. The defendants admit that the balance here is 8s. 4d. or 1s. 4d. over the maximum. In reality, the balance is 9s., that is 2s, 8d. over the reasonable rate and 2s. ahead of the maximum. In 1908, the price is 27s. 9d. for screened and engine coal, the f.o.b. price being 11s. and adding 8s. 3d. as before making

_ 19s. 3d., the balance for freight for screened coal is 8s. 6d., being 3s. 2d. above the reasonable rate and 1s. 6d. above the maximum. Engine coal cost them 1s. less, that is 18s. 3d., leaving 9s. 6d. for freight or 4s. 2d. excess above the reasonable rate, and 2s. 6d. above their own maximum. If we add 1s. excess f.o.b. to the excess

Tae Kine AND THE ATTORNEY- GENERAL OF vHE Com- MONWEALTH v AssociaTEeD NortHERN CorrrertEs.

freights there is in the case of screened coal a total over-charge f 4s. 2d. and in the case of engine coal 5s. 2d. a ton. The same prices prevail in the following year. In 1910 screened coal advanced 3d. and engine coal receded 1s. 6d. ; still leaving however in the case of engine coal an excess over the maximum on defendants' own admis- - sion. The price of small coal is noticeable in 1910. It is charged at 23s. per ton, the f.o.b. price is 7s.; adding 7s. 3d. for charges as in the case of engine coal the sum is 14s. 3d., the freight balance therefore is 8s. 9d., that is 3s. 5d. above the reasonable rate and 1s. 9d. above the maximum. The defendants' figures really confess to 11d. above the maximum.

(5) May Brothers. - In 1907 the price of large was 19s. 9d. The f.o.b. price was 10s. to this should be added 1s. wharfage ; 1s. wharf _ expenses; 4d. haulage (with doubt), and 4d. general charges, making 12s. 8d., leaving for freight 7s. 1d., which is fourpence less than is admitted by the defendants and is Is. 9d. over the reasonable rate and 1d. above the agreed maximum. Small coal was charged at 16s. 9d.; against this there is 5s. 9d. f.0.b. and also additions - 2s. 8d., making 8s. 5d., leaving a balance of 8s. 4d. for freight which is 3s. above the reasonable rate and 1s. above the maximum. The defendants admit to the extent of 8d. above the maximum. The quantity is 400 tons. In 1908, the price of large coal is 21s. 3d. ; to the f.0.b. price 1ls., we must add wharfage 1s. ; wharf expenses 1s.; 4d. haulage and 4d. general charges, making 13s. 8d., leaving a balance of 7s. 7d., 4d. less than is admitted by the defendants. This is 2s. 3d. above the reasonable rate and 7d. over the maximum. Small coal is 17s. 6d. ; against this is 6s. 3d. f.0.b. price and 2s. 8d. additions, making 8s. 11d., a balance being left of 8s. 7d., of which 7s. 11d. is admitted. The excess above the reasonable rate is 3s. 3d. and above the maximum ls. 7d. In 1909, large coal was 20s. ex steamer, which was Is. less than ex heap. From this the deductions are 11s. f.o.b.; wharfage 1s., and 4d. haulage, in all 12s. 4d., leaving a balance of 7s. 8d., namely 2s. 4d. above the reasonable rate and 8d. above the maximum, which the defendants admit. Small coal was 16s. 3d. ex steamer f.o.b., price 6s. 3d. allowances Is. 4d., total 7s. 7d., leaving 8s. 8d. or 3s. 4d. beyond

reasonable rate and Is. 8d. above maximum. Defendants admit H. ©. or A. 8d. above maximum. 1911. Tn 1910 large coal is the same ; small coal is 1s. 3d. more, namely, Tae Kine

• Vs. 6d. The f.0-b. price has advanced to 7s., a rise of 9d. to the 4\vomvey-

shipping companies to which they add 6d. more to the consumer. beet ee _ The final excess on large coal is 2s. 4d. freight and Is. f.0.b. cost or MonwEaurH $s. 8d. a ton; and for small coal 3s. 10d. freight, and an excess in Asenencoull

• fo.b. cost proportionate to the large. I may have allowed ls. too ae much in favor of the defendants in 1910 on this contract. I believe it was pure c.if.

(6) Electric Lighting Co. - In 1908 there were 6,900 tons small coal. Contract price 17s. ; the outpockets were 6s. 3d. f.0.b. price ;

Js. wharfage ; 1s. wharf expenses; 4d. standing charges, leaving a balance of 8s. 5d. for freight, that is 3s. 1d. over the reasonable

amount and Is. 5d. over the maximum. Taking the excess f.o.b.

price at 6d., the overcharge would amount to £1,236 5s. The defendants admit up to 5d. beyond the maximum. In 1909 the

quantity was 5,888 tons, the price still 17s., the excess as before. In 1910 the quantity was 13,432 tons, the price 17s. 3d. This year the _ fo.b. price is 7s., and with 2s. 4d. additions, equals 9s. 4d. for out- _ pockets, and leaves 7s. 11d. for freight, that is 2s. 7d. excess above the reasonable rate and 11d. above the maximum. The defendants admit to within 1d. of the maximum. Adding to the excess freight say Is. excess f.o.b., it totals 3s. 7d. over-charge per ton, which brings out the total over-payment to £2,406 11s. 4d.

(1) Kitchen & Sons Limited. - In 1907 they used 400 tons large coal at 18s. 9d. The f.o.b. price was 10s.; wharfage 1s.; wharf expenses ls. ; 4d. general charges, making 12s. 4d., leaving 6s. 5d. for freight, being Is. 1d. excess. In 1908 the price is 20s. 3d. ; fo.b. price 11s. ; additions 2s. 4d.; freight 6s. 11d., being Is. 6d. in excess. In 1909-10 the same prices exist. The final over-charge 2s, 11d. makes £58 6s. 8d.

(8) Nield & Hyde, Broken Hill. - In 1907, engine coal was charged at 17s. 6d.; f.o.b. price 10s., the only additions, 1s. wharfage ; 4d. standing charges ; the balance is 6s. 2d. freight, fair freight to Port Pirie 5s. 7d. ; the excess is 7d. in addition to ls. on the f.o.b. price ; small coal was 13s. 6d., the f.0.b. price 5s. 9d., adding wharf-

Tue Kine AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH ev. AssociATED NortHerN COLLIERIES.

age ls. and 4d. standing charges gives 7s. 1d. balance for fi Gs. 5d., the excess is 10d. freight and 6d. excess f.o.b. The quantity is 5,000 tons, but I do not know how it is apporti between large and small. The over-charge is certainly conside able. In 1908 the net price of large is 19s., the f.o.b. is 11s. 1s. wharfage and 4d. standing charges, leaving 6s. 8d. for fi

The freight is 1s. 1d. in excess of the reasonable rate. Small is 16s. 3d., the outpockets being 6s. 3d. f.0.b., 1s. wharfage, and 4

above the agreed maximum. The excess above the reasonab rate is 3s. 1d. a ton, and taking the excess f.0.b. to be 6d. on smal

it is the same thing for large coal. For small coal there is a discou of 5 per cent. which brings it to 15s. 6d. and reduces the total charge upon it to 2s. 10d. a ton. I am not quite sure if thé discount was given the year before. In 1910 it stands in thes position. #

(9) Walter Sully & Co. - This is practically the same as Nield & Hyde. The quantity however is 1,500 tons. :

(10) New South Wales Railways (Broken Hill). - In 1907 there we 2,300 tons of large coal charged at 18s. at Port Pirie; the outpocke were 10s. f.o.b.; 1s. wharfage, making 11s., and leaving a balance: 7s. freight or 1s. 5d. above the reasonable rate. The excess fol cost is 6d. so that the over-charge is 1s. 11d. per ton, amounting £220 8s. 4d. for the year 1907. In 1908 the price was 19s.; 0 pockets were 11s. f.o.b. and 1s. as before, making 12s., and lea' 7s. freight with same excess of ls. 5d. ; add to this, 1s. excess f. the total over-charge per ton is 2s. 5d. on 1,500 tons making £181 In the two succeeding years it is the same.

(11) Sulphide Corporation. - In 1908 very large quantities taken, the contract being up to 1,600 tons a fortnight to the e of February 1910. I am told the actual quantity was 20,000 a year. Iam not able to distinguish between respective quantit of large and small, but the general result may be seen. The p of large was 18s. ; small 14s. ; the outpockets were 11s. f.0.b.,

rate. Small f.o.b. price 6s. 3d. and 1s. addition making 7s.

eaving 6s. 9d. or 1s. 2d. beyond the reasonable rate. The excess H.C. oF A.

ite 1911. .b. was 1s. ; Ee 2) Zine Corporation Limited. - In 1908 there were 12,000 tons Tue Kie AND THE

coal charged at 19s. 6d. Here the defendants admit excess of a prorney- _a ton freight above the agreed maximum, which is 1s. 11d. above fa

asonable rate, and this being added to Is. excess f.o.b. amounts to MoNweavtit v,

. 1d. per ton over-charged, the total over-payment being £1,750, Associarep is the same for 1909. ss (13) Broken Hill Proprietary Co. - In 1908 the price of large coal 16s. Gd., the only outpocket was f.0.b. cost 11s., making the ht 5s. 6d. This is the same as the Water Supply Company. though I have no moral doubt that 5s. 6d. was an extremely good ht, yet as I have established the extreme margin of reasonable- at 1d. more, I reckon the whole net excess at 11d. per ton, the antity being 110,000 tons per annum, and this continuing for three years the total over-payment amounted to £15,125.

(14) Broken Hill Junction North. - In 1908, there were 4,500 tons e and small, price 18s. and 14s. 6d. respectively. Outpockets s. and 6s. 3d. respective f.o.b. prices; 1s. wharfage, leaving 6s. freight on large and 7s. 3d. on small, being 5d. excess on large and s. 8d. excess on small, besides 1s. excess on large and 1s. excess on f.o.b. In 1909 the same quantity; price 19s. large; 15s. ll; the outpockets are the same, making Is. 5d. excess on large d 2s, 2d. excess on small with the same excess f.o.b. In 1910 the e quantities, prices 19s. large as before and 15s. 6d. small, an advance of 6d., the f.0.b. price having risen 9d. The excess freights now stand Is. 5d. on large, and 1s. 11d. on small.

(15) North Broken Hill. - In 1908, 7,500 tons of large at 18s., leav- ing 6s. as admitted for freight, that is 5d. excess freight and 1s. cess f.0.b.

(16) Broken Hill and Suburban Gas Co. - Quantity 2,500 tons per num, price 19s. with admitted 7s. freight and excess of Is. 5d. per ton freight and Is. f.o.b. That is the same for the two following _ With regard to Western Austratan freights. Mcllwraith 'McEacharn's contract with the Railways for 1904-5 was for 15s. 4d.

H.C. or A. for all ports. I assume coal was 7s. 6d., that would leave 7s. 10d. ay freight for all ports 30,000 tons Fremantle, 5,500 tons Geraldton, - Tue Krxe 3,500 tons Albany, 2,500 tons Bunbury, the tender was for one year _ anonner. only. The Adelaide Steamship Co. tendered at 14s. 8d. but restricted

ATTORNEY- GENERAL OF the collieries. Howard Smith & Co. tendered at 15s. 10d. ; Mell-

'THE Com- monwearra wraith's tender being accepted; the question is whether it w:

Associarep Temunerative. That seems to be answered by the renewal on March - QOETHEEN 18th 1905 (Ex. Cl) by which the term of contract was extended for 2 years further, bringing the operation of the contract down to 22nd April 1907. In 1907 however, the combined agreement was in force, - the f.0.b. price had advanced by 2s. 6d. 3 In 1907 the tender of McIlwraith McEacharn & Co., dated 29th - January 1907, was as already stated 18s. 11d. without wharfage and for all ports. This being an average, Fremantle alone would be less. _ The f.o.b. price was 10s. except Seaham which was 9s. 3d. (see letter of 24th January 1907, Chapman to Hunter X. p. 29). The defend- ants in their summary 19S have taken the f.0.b. price at 10s., which I think is substantially right. The balance is 8s. 11d. for freight which means a little less for Fremantle. The tender of the Adelaide _ Steamship Co. is 19s. 5d. all round, which would mean less than 9s. 5d. for Fremantle. The Melbourne Steamship Co. tendered at : 19s. 10d or 9s. 10d. for Fremantle. Assuming the tenders of the Adelaide Steamship Co. and the Melbourne Steamship Co. to be genuine and honest tenders, the very highest possible freight to Fremantle would be 9s. 10d. and would average very much less. In October 1908 tenders were called, for 1, 2 and 3 years for Newcastle coal. On 24th April by letter Cant to Appleton the price f.o.b. had _ been fixed at 11s. for 1 or 2 years with 12s. for the 3rd year for the Western Australian Railways in substitution for a previous fixation - of 11s. for the first year and 12s. for the second and third years. On 29th October McIlwraith McKacharn tendered 21s. for Fremantle alone for one year and separately at the same price for two years. Verbal negotiations ensued resulting in McIlwraith & Co. tendering at 19s. for the first and 19s. 6d. for the two succeeding years. The other tenders for this contract have already been mentioned. That left McIlwraith's freight at 8s. for one year, and 8s. 6d. for the two next years. The quantity contracted for was 23,000 tons for the

first year and 40,000 per annum for the 2nd and 3rd years. In the H. C. or A.

'game amended tender Geraldton was contracted for at 24s. The pot Geraldton price had been separately tendered originally, while the Tur Kine Fremantle tender was 21s. es

Another instance which indicates the normal and payable freight fee to Fremantle is that with the Perth Gas Co. in 1907. From July monwesaurx 1905 to March 1908, McIlwraith supplied to the Gas Co., Wickham adsbenee Hetton and Stockton large coal at 17s. 6d. The f.o.b. price is taken cee by the defendants to be 10s. I am not sure whether it was 10s. or 9s. If the former it left 7s. 6d., if the latter 8s. '6d. for freight. 'The quantity was 300 or 400 tons a month. The Perth City Council was supplied with coal in 1907 for delivery in the city which after deducting 10s. f.0.b. and proper additions claimed by defendants and conceded by the Crown left the freight at 8s. 6d. Making up my mind therefore as well as I can on the materials before me, and bear- _ ingin mind the possible competition of Collie coal, remembering also that some of the freights to which I have referred were fixed after the formation of the combined agreement, and assuming that traders

_ do not ordinarily carry on such extensive operations over so length- ened a period as is covered by those freights without a sufficient recompense, I should be of opinion, if it were necessary to come toa definite conclusion on the matter, that the limit of reasonable freight from Newcastle to Fremantle is passed after 9s. In saying this I am giving a long margin to the defendants. The reasonable freight from Newcastle to Melbourne, I have stated to be 4s. 2d. at most. This provides for the two terminals as well as clear sea mileage. For additional clear sea mileage I add what I have already and otherwise found to be proper, viz., the additional 1s. 2d. to Adelaide, which is a distance of 508 miles. Now, if the further distance of 1,378 clear sea miles Adelaide to Fremantle be added at the same _ rate, it means approximately 3s. 2d. more, and adding 4s. 2d. 1s. 2d. and 3s. 2d. we get 8s. 6d. which is practically the defendants' price. _ I merely put this as a corroborative test of the accuracy of the con- clusion otherwise arrived at. It is not necessary however for me to fix the freight to Fremantle definitely as I am not really concerned with definite amounts of excess except for the purpose of determin- ing the question of substantial detriment. The Western Australian

contracts are more easily dealt with in this respect than th Victoria and South Australia. Before referring to their exce ayain have regard to Mr. Northcote's letter to Scott Fell t February 1907 (in Ex. Ol). He quotes for Co-operative coal

Melbourne 15s. 6d., Adelaide 16s. 9d., Port Pirie 17s. 9d. and mantle 2ls.; the Melbourne quotation allows 5s. 6d. for Adelaide 6s. 9d. I pass by Port Pirie as wholly exaggerated. | mantle is lls. The Melbourne freight 5s. 6d. is 1s. 4d. beyond reasonable rate, namely 4s. 2d.; Adelaide is 1s. 5d. beyond reasonable rate, and deducting, say 1s. 4d. the Melbourne ex from 11s. charged for Fremantle there is left 9s. 8d. Even figure is beyond all reason, after allowing 4d. for standing expen

Perth Gas Co. 10s. for freights, according to the way the evid stands, and that they charged the Perth City Council 10s. and Westralia Ironworks Limited 11s. They say and the Crown 1 that 8s. 11d. was the amount of freight for the large coal in' Government contract. But in the same year the Government paying 18s. for small coal. the f.o.b. price of which was 6s. 3d. :

freight for small. Besides these the supplies to the City Couneil : the various sites mentioned in an earlier part of the judgment he been analysed by the Crown in Ex. E10 in which the claimed by the defendants have been adopted. I am not whether anything extra should be allowed in respect of Parker and the sanitary site. I think not, but, as I am not certain, I nothing on them in this respect, beyond believing they are at as high as the city deliveries. As to the city deliveries I need nothing more about large coal ; but as to the small coal bagged, balance for freight on 6s. 3d. f.0.b. price is taken by the Crown on basis of defendants' allowances as 16s. 8d. ex ship and 14s. yard. I allow 16s. 2d. ex ship, although it is hardly likely to been bagged and 13s. 11d. ex yard. That is not only gi exorbitant, but is far beyond the agreed maximum namely Small coal loose is very much less, being as I find 10s. 9d. ex and 9s. 9d. ex yard.

In 1909 the defendants admit that upon the evidence for large coal H- ©. oF A- y charged the Perth Gas Co. 10s. ; the Perth Council [1s. and the nits tralia Ironworks 10s. 6d. for freight. Besides this they charged Tur Krvc

the railways 11s, 9d. for small to Fremantle, and 13s. for large to x'yvouwev-

Geraldton, the agreed maximum of which is only 2s. more than ee 'Fremantle. For the City Council it also appears that in respect to ee small coal bagged ex yard the amount for freight was 14s. 11d. or Associamep s. lid. over the maximum. For small coal loose ex ship 1s. 9d., poke and ex yard 10s. 9d. In 1910 the defendants admit for large coal = - - ~ 10s. for the Gas Co.; 11s. for the City Council and Is. for the Tronworks. Besides this the Government was charged Ls. 9d. for ~ small coal Fremantle, and 13s. for large coal Geraldton. The City Council for small coal bagged delivered in city was charged in 1910 Us. 2d. ex yard for freight, which is 1s. 2d. above the maximum and was charged 11s. ex ship and 10s. ex yard as freight. The cost _ Price for small this year was 7s. So far I have referred only to the Western Australian freights. But the excess f.0.b. prices in themselves constitute a heavy detri- 'ment for which the whole combination is responsible ; and even _ if the freight were moderate the excess prices charged to consumers 'would render the shipping companies and the Vend alike liable or the consequences. Taking not all the tonnage of large coal, but uply the tonnage stated in defendants' summaries, viz., 35,800 for 1907 to 1910 inclusive, the f.0.b. overcharge is £895 for 1907, '£1,790 for 1908, 1909 and 1910 respectively, in all £6,265 for the period. I do not stop to reckon up the excess freights - but it is easily seen they are considerable. _ We now come to QUEENSLAND. _ So far as freights are concerned, the evidence of excess is meagre, _ the primary proofs submitted consist of two contracts with Chillagoe

• Railway Co., Cairns. One contract was made 16th February 1906 : by the Adelaide Steamship Co. (G5) and the other on Ist February 1909 between the same parties. There is no doubt that the first
• contract, though made before the combined agreement, and even ' " Defore the Vend was fully formed, was entered into after steps had been taken to form the Vend and being for three years with possible further continuance. There is no doubt also the Adelaide Steamship

H.C. or A. Co, would be prudent enough to make sure of the future. I think : 1911. therefore that as against the Adelaide Steamship Co. this contract Tue Krxe_ is some evidence as to freight. The defendants in 19S say and the Avrouay. Crown in E10 admits that 9s. was the balance for freight. But as Career this was before the combination, and the only precombination monweattH evidence, I ought not to act upon it as regards the other defendants. Associaten The other contract was made during the combination and all the Pitt oad defendants are affected by it ; both sides agree that the balance for freight is 8s., the contract price being 19s. and the f.o.b. cost 11s.

The nature of the contract has to be carefully considered, the Chil-

lagoe Co. was bound to purchase all its coal from the Adelaide Steam-

ship Co, and ship all its products in "' Steamers controlled or nomi- nated by the contractors," by a fortnightly service ; the freights for the Chillagoe products were fixed and the Chillagoe Co. was to bear all harbour dues if imposed. This contract was therefore a very special contract, there was not merely a prospect, but a certainty of backloading that could be definitely counted on, and I am not prepared to say that anything over 8s. would have been an excessive freight for coal to Cairns, a distance of 1,348 miles from Newcastle. I should think it would be comparatively low, but in the absence of evidence to the contrary I cannot assume it was an actual loss. If it were a loss, not only would the ordinary presumption be reversed, but it would be strange from the standpoint of the Chillagoe Co. That company must be considered as having had a fair idea of reasonable freights for their own products to Brisbane and Sydney, namely, copper, copper matte and lead; and these products have to compete in the open market with similar commodities elsewhere produced. If a loss on coal is to be piled on to the freight of these commodities'as a recompense to the carriers, it would, at first sight, at all events, handicap the Chillagoe Co.'s products in the market. Of course all this is possibly capable of special explanation, but in the absence of that I have to judge of the meaning of defendants' acts by the light of ordinary considerations. These lead me to infer that the sum charged for freight for coal, copper and lead are neither under cost, nor excessive. Starting with this as a base, I come to some Townsville contracts. I need only say that I take the figures as admitted by the defendants. If I had to state a definite

conclusion as to which set of figures I thought was more correct, I should be disposed to adopt the Crown's figures in E10 rather than the defendants' figures in 198. The defendants admit upon the evidence that in 1908 the balances for freight were as follows : - Queensland Meat Export Co. 3,500 tons, 10s. 9d.; Townsville Harbour Board, 3,600 tons, 11s. ; Townsville Gas Co., 3,000 tons, ls.; Mount Morgan Co., 6,000 tons, 10s.; the Chillagoe Co. was 3,000 tons. In 1909, there is admitted freight to Townsville Gov- ernment Railway, 750 tons, 10s. ; The Queensland Meat Co., 6,500 tons, 10s.; Harbour Board, 3,600, 11s. ; Gas Co., 3,000 tons, 11s. Tn 1910 the Harbour Board, 3,600 tons, lls. ; Gas Co., 3,000 tons, lls.; Townsville is 160 miles nearer Newcastle than Cairns and therefore the face money difference in freight is not as great as the real difference. I cannot avoid coming to the conclusion that the Townsville freights were excessive. In 1907, the balance for freight on 880 tons for the railways was 9s. In 1909, it was 10s. for 750 tons. The freight to the Meat Export Co. for 5,000 tons in 1907 was admittedly 8s. 6d. Why it rose in 1908 to 10s. 9d. and stood in 1909 at 10s. is difficult to understand in the absence of explana- tion except on the basis that the latter prices were unreasonably high. I have no doubt at all that 11s. was exorbitant, so was 10s. 9d., only to a less degree, and I feel no real doubt that 10s. was excessive for Townsville. I observe in the Schedule in the com- bined agreement that 12s. 6d. is the maximum for Cairns and 17s. for Townsville, a difference of 2s. 6d. That has relation only to large coal at 7s., but no other maximum price for large coal is fixed, and none for small except for small coal at 5s., where there is a difference of 2s. If these stipulated differences afford a fair or even an approxi- mate guide as between the two places, the conclusion I have stated is immensely strengthened. The f.0.b. excess on large and small coal amounts for the period mentioned to a considerable over- charge. For this, as in the case of Western Australia, all the defend- ants are responsible.

It is extremely difficult, if not impossible to say just how much the public have been over-charged by the combination. There are how-

Tue Kine AND THE ArroRNEY- GENERAL OF THE Com- MONWEALTH v. AssocraTED NoRTHERN COLLIERIES.

THE Com- MONWEALTH v ASSOCIATED NorrHern Corrinries.

ever some figures which satisfy the mind that the total improperly gathered in by the united efforts of the collieries and shipping companies must have reached a very high figure. not feel very much concerned as to my ultimate conclusion precise figure the excess works out to, but an attempt may be mac to get a rough idea. The year 1908 is the perhaps least distur year, and at all events appeals to me as giving the most treated material for obtaining a broad impression. Exhibit shows that in that year the total Newcastle trade inter-S amounted to 2,111,100 tons. That exceeded the estimated requ ments for 1908 which the shipping companies sent to the Ve on 15th November 1907 (Ex. X. p. 172). The total there estima' was 1,578,750 tons, composed of 1,175,000 tons of large coal, all class, and 403,750 tons small coal. The foreign exports practically no small coal, and therefore I could not say with am precision how much of the actual export was large and how was small. But the trade exceeded the estimate, and the estim separates the two classes, and so I take in the first instance quantities there stated.

Now in 1908 the excess f.o.b. price on large coal was Is. a This reckoned on 1,175,000 tons amounts to £58,750. The ex the small which was then 6s. 3d. a ton, and had little or no foreigt sale was not Jess than 1s., rather more, a ton and so taking it at the amount in money on 403,750 tons comes to £20,187 10s. £78,937 10s. The balance of coal actually exported inter according to Ex. 33C was 532,350 tons. Of course a large p portion - doubtless the greater portion of it - was large coal. But - whether large or small coal it is to be reckoned at 1s. excess, and that a amounts to £26,617 13s. The sum of these over-chargeagis: £105,555 5s. ims

So much for the collieries. The freight total cannot be figured ' out, but looking carefully over the broad results already stated, i can be safely asserted that the shipping companies have not fa to better their instruction.

A view was presented by the defendants as qualifying and pi

ally outweighing all the circumstances to which I have referred. I the suggestion that the prices obtained prior to 1905 indicate at the lower prices of that year must in all probability be due to ome abnormal circumstance. No doubt previous prices are a sion of the facts to be considered and weighed ; but they must taken in conjunction with all other circumstances, and the similarly or dissimilarity of surrounding conditions are important in ermining whether the defendants' suggestion should be adopted. e is evidence of prices going back many years, but of course _ the further back they go the less convincing they are, because trade conditions are certainly not constant for many years together. The world trade, and even the domestic trade, are subject to normal velopments, as well as unexpected changes. Production and 'means of transport alter, and in the later portion of the period we are to consider, new mines were brought appreciably into the sphere of competition. Ultimately, as I understood, the defend- ants placed very little or no reliance on prices before 1901 or per- haps 1900. The f.0.b. prices before 1900 would not help them very ~ much. The Chamber of Commerce Report for 1910-11 gives at p. 61 the Newcastle selling price for the various years and they vary greatly. For instance, in 1891 the first old Vend year, it was 11s. ; ~ in 1892 it was 10s. ; in 1893 it was 9s. ; in 1894 it was 8s. ; in 1895 it was 7s. ; in 1896-7-8 it was 7s. 3d. and 7s. 6d., and in 1899 it was 8s. Maitland was not yet a disturbing factor. Then came two events, the Boer war and the formation of the new coal Association. ~ In 1900 prices were 8s., 10s. and 12s. In 1901 and 1902, the declared price was Ils. and in 1903 it was 10s. I stay there a moment _ because Mr. Ford has told us that the war not only made the trade _ particularly good in 1900, but also created an artificial demand that lasted as he thinks for 2 years. The coal Association "also as T have _ pointed out still affected 1903.

It appears from the Chamber of Commerce report that notwith-

• standing the declared price of 10s., coal was sold in 1903 at 8s., 9s. and 9s, 6d. ; and in 1904 at 9s. 3d., 9s. 6d. and 9s. 9d. These are reductions that were announced ; there were others that were not,

_ + because the evidence shows that in 1904, there were rebates of Is. 6d.

Tur Kine AND THE AvTORNEY- GENERAL OF THE Com- MONWEALTH v. ASSOCIATED NORTHERN Corzrertes.

Mr. Blacket handed in a very useful document, being extracts from -

the summary of summaries, and it exhibits in a succinct form the prices of 1902, 1903, 1904, so as to compare the prices up to 1905 with those afterwards. The comparison, when considered with all the surrounding conditions, does not lead me to the conclusion the defendants desire.

Take first the Metropolitan Gas Co., the first in Mr. Blacket's list. In 1902 the declared f.0.b. price was 11s., and the consumers' price 14s. 9d.; but it would be absurd to imagine that 3s. 9d. was the freight charged to compensate for everything. The next year 1903, the declared price was 10s. and still the consumers' price was 14s. 9d., in 1904, the declared price was still 10s. and the consumers' price was 14s. 7d. In 1907 when the declared price was 10s. net, the delivery price was 15s. 2d., and in 1910 the declared price being Is. the price to the consumer is 16s. 2d.

The question becomes insistent : - ' Did the shipping company who supplied the Gas Co. during 1902 and later years, lose money all the time?" Assuredly not. But if not, the fact that other consumers were charged more is hardly a ground for assuming the reasonableness of the higher rates. On the other hand take the - next item on the list, the Footscray Gas Co. In 1902 it was charged 21s. 3d. as against the Metropolitan Gas Co. 14s. 9d. a difference of 6s. 6d., and 19s. 9d. in 1903 as against 14s. 9d. or a difference of 5s., and 18s. 9d. in 1904 as against 14s. 7d., a difference of 4s. 2d., and so on. So that it is difficult to accept 18s. 9d. as a just criterion even for 1904. The price to the Footscray Gas Co. comes down to 14s. 9d. in 1905 which approximates it to the Metropolitan price, the two together seem to show that price is nearer the right amount, having regard to the net f.o.b. price then paid ; the balance for freight as will be seen was 6s. 3d. which is still more than is reasonable.

The Metropolitan Gas Co.'s price in the absence of some explana- tion by the shipping companies is a real obstacle not in itself con- clusive, of course, but very substantial, in the way of any presump- tion in their favour, and helps to lead me as before to an inference against them.

_ Then take the case of the Victorian Retail Dealers typified by 1: ©. oF 4. msay. In 1902 the price is 23s. 6d., in 1903 it is 20s., in 1904 it 1922: ops to 16s. If 16s. were a normal price in 1904 why was it raised Tue Krxe in June 1906 to 16s. 9d., and in July 1906 to 19s. 3d. even allowing Pesan

; for the discount in certain cases; and why further advanced in bere January 1907 to 21s., higher than in 1903, and still further to 22s. MonweaurH 1909? Reckoning 7s. 6d. as the net f.0.b. price, and adding Leen 2s, 4d. for additional outpockets, as explained, the total sum to be Som rovided for in 1904 is 9s. 10d., and the balance 6s. 2d. is for freight and management on a selling price of 16s., which is an excess of 2s. _ above a reasonable amount.

Looking down the prices of 1904, they are decidedly lower on the _ whole than those of 1902 and 1903. On the other hand they are not _ so low as in 1905, but lower than in subsequent years. But in 1904,

• Maitland was distinctly beginning to assert its influence - not a

_ ruinous influence at any time, but at this time perhaps appreciable - _ through the oversea trade. Scott Fell however were a potential _ danger. It was proved in direct examination against Howard Smith _ & Co. only - and therefore I do not carry the direct examination as to this beyond this company - that in 1903 Scott Fell & Co. got a Broken Hill contract for the assignment of which Howard Smith & Co. paid a very substantial sum. Mr. Campbell was how- _ ever, told generally by Lane, in cross-examination (p. 548) that before 1906 Scott Fell had held an inter-State contract which they transferred. In 1904 Scott Fell & Co. were open to do inter-State business if they could get it (p. 444). In fact on 16th September 1903 they tendered (Ex. 5S), to the Metropolitan Gas Co., on that company's conditions, to supply delivered best large at 16s. 4d. and best small at 12s. 7d. Their fleet was large. Their balance-sheet (16C) shows the list of vessels. Their turnover was £250,000, but _ none inter-State in 1905, though they had the means of doing it EE if they got an opening. In January 1906 they succeeded in getting _ another Broken Hill contract. Their course of inter-State trade did not run smooth, and ultimately their business and effects fell into the hands of the inter-State companies (see pp. 557, 561 and 584 among __ others).

This is one of the instances where the defendants and they alone

H.C. or A. could have given clear information and assistance, beyond what] 1911. ES:

pee Conc.usions as To Pusiic DerriMent witH RESPECT To

Pret ee On the whole, taking into full and careful considera'

tHe CoM- the contracts and prices before 1905 and weighing them in

MONWEALTH . balance along with others, I arrive on the question of fact as

A Peat: Nontuzey reasonableness of the prices charged to the public, at the conclusi aa CoutERIES. T have announced. Indeed the more I have examined the

and the longer I have pondered over them, the more satisfied I

that in 1904 the defendants were only getting down towards reaso

warranted, yet the ultimate prices charged to the consumer, i. when the shipping companies had added their freight charges, we on the whole nearer a reasonable standard - nearer a reason effective competitive standard - than in 1904. Certainly as freights, the shipping companies, though conceded by the admis to be free competitors, were not engaged in laying violent hands « each others' business. Therefore, unless they were in 1905 d liberately losing money in order to smother Scott Fell & Co- of course they do not admit - and people do not usually throw money unnecessarily - it is difficult, - too difficult for me at all events - to accept their suggestion on the materials they have left me.

I wish to say at this point that, though I have endeavoured work out as precisely as I could the various steps contested a leading to the result, yet I have made large mental alana possible errors of excess, pul 1s TGS rege uo een in arrivi

circumstances concurring in the same result, that J would ente no doubt whatever the public have borne, are bearing, and will z the combination is restrained, continue to bear, a heavy detriment" in regard to the cost of coal, attributable entirely to the evistence of

defendants' combination. The indirect pecuniary loss though H. C. or A.

itably great, I leave out of consideration, and here speak only -

f the direct payments, which have passed from the public - in- Tux Kiva

vidually and corporately in various forms of aggregation - into the Amoeeae

pockets of the shipowners, and by them partly retained and partly eT aaa

distributed to those associated with them in the combined scheme. woxwrarrn The price though generally the most important detriment is how- Assooranmn:

er not the only one arising from the combination. There are others ieee

quite distinct and extremely important, though secondary to price.

puic DETRIMENT FROM ResTRICTION UPON CHoIce oF CoAL.

The stipulation that the Vend should not be called upon to deliver from any colliery that has reached the limit of output assigned to it by the Vend under any 'agreement existing between the col- lieries gave rise to a very real restriction upon the choice of coal ich the public otherwise had. Instances have presented them- selves in the evidence quoted for other reasons. The shipping anies, having once entered into the stipulation with the col- ies, were naturally compelled for self-protection to refuse to 'tract for coal specially desired in any quantity. This new practice ut in force early in the history of the combine.

_ The Western Australian Government on 4th January 1907 called the tenders already referred to. The specifications named cer-

_ Storekeeper should have the right to determine from which of the

But the Adelaide Steamship Co. in tendering said : - '* We cannot

ertake to supply coal from any one pit but guarantee that the

delivered shall be from one or more of the pits specified in the

_ Mellwraith McEacharn & Co. with their tender also stipulated

• for the right to load coal from such of the schedule pits as it might

The Melbourne Steamship Co. did not make that stipulation

_ though they knew quite well they could not ensure delivery as specified. Their prices made that event sufficiently safe.

On 4th May 1907 (Ex. X. p. 64), Newman for the shipping com-

H.C. or A. panies wrote to the Secretary of the Vend saying : - "I have to - 1911. inform you that the contract of Messrs. McIlwraith McKacharn &

Tue Krxa Co., on behalf of my Association, has been accepted by the Western

Pease Australian Railways for 12 months from the 14th March 1907 on the -

Guero basis of 10s. per ton cost of coal f.o.b. Newcastle." He stated the 5'

MONWEALTH quantities, and quoted verbatim the clause as to pits and quantities Associarep Which had been substituted for the original clauses. This was

Cae replied to on 9th May 1907 (X. p. 67) and the Vend approves of the '

• substituted clauses. The letter of 4th May is relied on by the Crown as strongly evidencing the nature of the shipping Association. Whatever else the shipping companies and the Vend were doing, they were not deceiving themselves. I have referred in the proper place to this contract in relation to prices and there I indicated there was some doubt as to the tenders of the Adelaide Steamship _ Co. and the Melbourne Steamship Co. being genuine and honest. T have now to state my definite opinion on this subject. And I need say nothing about the Melbourne Steamship Co. which is not a defendant. The tender of the Adelaide Steamship Co. at all events was undoubtedly misleading and intended to be misleading. On the face of it, it appeared to have come from a real competitor. It followed all the form of a genuine effort to obtain the contract at the lowest prices the tenderer was willing to take, it enclosed bank cheques for £2,800 as required, and undoubtedly the Western Australian Government, reading the tenders and not knowing the truth as we know it now, would inevitably be deceived in thinking that of two rival tenderers, McIlwraith McEacharn & Co. was the lowest, and in face of that competition, and the apparent unwilling- ness of the other shipping companies to engage in the business at all, the Government would be less inclined to question the advanced price. That advance was, as we have seen, no less than 3s. 7d. @ ton on 56,000 tans. And in addition to that there was the double refusal to specify pits. Yet, here we find in the correspondence I have mentioned, an admission written by Newman of Howard Smith & Co. who normally would have nothing to do with the transaction, that MelIlwraith McEacharn & Co. made the contract on behalf of the shipping Association. The apparently fraudulent nature of those

enders induced me to specially invite some explanation. None has H. ©. or A. een offered, and I can only take the matter at its low face value. pees "The tenders to the City of Melbourne show the restriction of Tae Kr:

hoice very distinctly. In April 1906, the Adelaide Steamship Co. giro

: "Abermain, Hebburn and/or Aberdare at contractor's option," Monwravru

in another tender " A.A., Stockton, Hetton, Abermain and/or perae

bburn pits at contractor's option." This was a limited range, pole

@ some security to the purchaser - and some elasticity to the dor. In February 1907 Howard Smith & Co. tendered " New- tle pits at our option." This was done notwithstanding the in the specification that pits were to be specified. At the same time, the Adelaide Steamship Co. named 17 Newcastle and itland pits, with "' and/or " between each two, and obtained the tract. In May 1907 the Adelaide Steamship Co. repeated that stipulation for the remainder of the year. On 31st October 1907 ward Smith & Co. tendered to the Council for a year's supply. The Council's tender form required the pits to be named with respect Newcastle coal, but the letter accompanying the tender said 'we regret we are unable to specify pits from which the coal would be drawn. _ The Adelaide S.S. Company on the same day wrote " Pits to be ecified. Owing to the altered state of the coal trade at New- tle, and the impossibility of obtaining coal from particular (which we have previously been able to do) we are unable to cify pits, but would supply the best coal obtainable with steamers' ary despatch in loading. The coal would be drawn from inines from which the port of shipment is Newcastle." The tender is from pits : - " the port of shipment of which is Newcastle." Sub- ently we find tenders are for coal drawn from " Mines, for ich the port of shipment is Newcastle." Huddart Parker on November 4th 1907, in tendering to the Victorian Government for Commonwealth and State Services, declined to do more than supply best coal they could obtain with steamers' ordinary despatch loading." No one would for a single moment imagine they had arranged with the collieries that despatch should be controlled

the Vend allotment. The ostensible reason given in the letter VOL, XIV 39

~ Tue Kina AND THE ATTORNEY- GENERAL OF THE Com- MONWEALTH v. AssocIATED NorrHEeRN COLLIERIES.

accompanying the tender (X.2) was couched in these terms "We regret however that owing to the unsettled state of

of our being able to contract for our supplies of any particu class of coal." I do not for a moment accept that as an hon given reason. It said nothing whatever of the allotment diff and threw the whole of the responsibility for the restricted cl on the miners. On the same date, Howard Smith & Co. y that they had to eliminate clauses 2, 16, 17, 18, and 19, also 21 24 of the Conditions of Contract, just as Huddart Parker & had done.

The reason given was " owing to the disturbed conditions no existing in the coal trade at Newcastle," and they add :- - * we find it almost impossible to obtain coal from any particular pits, we can only offer to supply your requirements with the be: coal available during the loading of our steamers at Newcastle."

Again, no one would understand from this, that there had a bargain as to allotment, which was the real cause of the diffi The insincerity of the ostensible reason simultaneously advanced by these two Shipping Companies is shown by the recurrence of the stipulation in 1908 for 1909. The true cause was industriously concealed. And with what intent? I have already made repeated reference to the struggles on the part of the Shipping Companies to induce the Vend to break through the restriction and the gen persistence of the Vend in adhering to it. On occasions such the Western Australian Contract, the Vend gave an assurance to supply. But as appears from the Conference of July 1907, restriction was as a general thing adhered to, and the contra were made on that footing down to 1910 inclusive. There is an

which as evidence affects the Vend only, stating that the Hetto Company had to refuse trade owing to the Vend allotment. Pusiic Derriment ARISING FROM SHORTAGE OF SUPPLY.

The question of shortages is closely connected with restricti When to the limitation of the Vend allotment there is added the provision for exclusive purchase from the Vend, the danger

of shortage is immensely increased, the public are thus left entirely in the hands of the Vend, and this Association is free from the motive for relaxing its limitation which would spring from the

• possibility of outside supplies. It has been urged on behalf of the "Shipping Companies that the allotment regulation is purely a Vend arrangement and not a creation of the combined agreement ; that the Shipping Companies found that instituted and had to acceptit, and make the best of it, and at times tried, as I have pointed out, to get rid of it, and so, say the Shipping defendants : " We "are not responsible for it." The colliery defendants say likewise among other things : - "' Whatever injury has been or is occasioned by it, is the result of our own independent Vend agreement and as that per se is not being attacked we are not assailable in this action." But that argument cannot prevail. A consumer prefers for the
• purposes of his business coal from pits A. B. & C., and finds that coal from pits X. Y. & Z. are altogether unsuitable. He is told _ that he cannot rely on having all or any from the pits he desires, but may have to take some or all from the pits he disapproves of, and take them at the same price because the Vend classes them together. In such a case, if ordinary competitive shipping conditions existed, he might choose between what is for his purpose second or third rate coal, at the top price, and Southern or even Western coal at a less price. That possibility is a powerful antidote against autocratic refusals to depart from the allotment rule, such as we have seen evidenced. But where each group for its own objects makes and adheres to a compact of mutual exclusiveness, they form, so to speak, the corresponding blades of huge "commercial shears that cut off all approach to relief from despotic prices of the Vend, as well as those of the Shipping Companies. And not only are prices heightened but shortages are likely to occur. We have just partly seen how the Shipping Companies feared and felt them, and tried to some extent to provide against them.

That shortages occurred in fact is undeniable. At the con- ~ ference of July 1907 (X. p. 105), Mr. Forsyth correctly points out how the difficulty arises. Mr. Northcote stated that the previous 4 week his Company had been advised that they could not get coal and were subsequently informed that as several oversea steamers

THE Com- MONWEALTH v. ASSOCIATED NorTHERN COLLIERIES.

H.C. or A. had not turned up they would be able to load a large amount.

1911. 'then said what seems to me to be plain common sense, " It s

Tue Kixe very hard that our clients' works should be liable to absolute s ioe page, if these oversea steamers had come in." And then he add

GrNERAL or _"T venture to say there would have been a great outery if THE Com-

monweatrn a thing had happened." Mr. Forsyth put his finger upon the v.

Assoctaren note when he said in reply : - '' It always goes back to the initi NOSTEREE stage, you estimated." That means that at the beginning of

Counterres. year or before, the Steamship Companies give to the Vend an estimate

where, arrange as far as possible for all the rest to go foreign. - Sometimes a particular colliery complied unwillingly (see Earp's ; letter to Murrell 6th March 1907 (O1) and Ex. L, p. 91). Th if the inter-State actual demand happens to exceed the estim: it cannot be met if the foreign demand requires the coal. It wou not be an accurate answer to say that if the demand increasec fresh pits or shafts or adits might be opened. There is a cla in the Vend agreement to which I should refer, though not for the - purpose of affecting the Shipping Companies as part of the Com- - bined agreement. It was not part of that agreement but it material in showing the impossibility of making good any deficiency - by the means mentioned and also as affecting the members of the - Vend with regard to their knowledge of the circumstances. Clau 21 is in these terms : - '* No member shall open up any new wind shaft pit or adit on any of the Colliery properties hereinbef named nor shall any member lease or let on tribute any part of any - Colliery property on any agreement other than those disclose by such member to the Association in writing prior to the executior of these presents the intention of the parties hereto being as the pits already opened are more than sufficient to supply the existing trade no fresh pits shall be opened on any of the properti

hereinbefore named. Provided however that this clause s

'unable to maintain the same owing to exhaustion of coal accident H- C. or A- or other similar cause." 1911. This contracts the possible production, and as may be gathered Tue Kiva from the conferences and correspondence no suggestion was ever aaa! GENERAL OF

"mooted to open fresh pits or shafts or adits. nae Cae

'And whatever the pressure for more coal, the Shipping Association Monweatre v.

'must not go outside to get it. This is an imperative bar. AssocIATED NortHern

Supprnc Compantes' Apissions or Pusiic Iysury From Suorr (Cerna

The telegram sent by Howard Smith to Cant on 20th August 1907 (Ex. X. p. 143) which is a month after the vigorous arguments of the July Conference, puts the position against the defendants as strongly on this point as any presentation the Crown has ever made. These are its terms : - " Steamers, Mintaro, Time, Cycle, Perth, Barrier, now Newcastle, and Colac, Norkoowa, Komura, Period due this week. No coal available for any. Positions very serious. Contracts Victoria, South and West Australia seriously short ; all stocks are exhausted. There is sure to be trouble unless coal is provided Newcastle immediately. There is reason to fear as soon as the general public knows present state of affairs indigna- tion meetings likely to be held, and will probably result in deputa- tions to Government seeking hostile legislation. We consider position warrants your Association deferring further supplies foreign until our immediate requirements satisfied. Publie will demand this before allowing Railway, Mines, and various indus- tries being rendered idle on account of - It is very important your advice by telegraph extent present and future relief we can depend upon in order to defend ourselves."

The Shipping Companies knowing the evil, persuade, remon- strate, supplicate, warn and prophesy - they in fact take every course but the proper and effectual one, which obviously was, to break away from the bonds which fettered their own freedom of action. Like the Athenians they knew what was right; but unlike the Lacedemonians they did not practise it. The railways ~ and mines and various industries they knew would not stop if they _ carried other coal. There might in some cases be comparative

H.C. or A. inefficiency, but the dire results, apprehended by Mr. Howard Sm

peu writing for his Association, could only oceur by the persistence

• -

Tur Kixe of the combination in maintaining the artificial restrictions in which ; Anronsev. they had confined the working life of Australia. Why this pre- Saar ee judicial course was clung to, they have not condescended to expl

moxweartn One would have thought they would have considered it a mor v,

Associaren duty to the community, whose industrial life they held in their fer hands, to explain how it came to that imminent condition of peril. - They must have thought otherwise, and I lay that consideration - aside. They must be left to be the final judges of that - the moral _

• aspect of the matter. But when they ask me to draw an infer-_ ence from the proved facts more favourable to them than the ordin- ary process of reasoning warrants I must regard the opportunities they have conspicuously neglected of offering whatever materi

they possess to place some better interpretation on the circumstances,

The Vend on 21st August recognized the seriousness of the position and offered 2,700 tons of West Wallsend which the Vend rate as second class for Railways and Sydney trade, and so the Victorian Railways thought (see $5 Oct. 31/07). They also pressed upon - the Shipping Company 5,000 or 6,000 tons of Teralba coals, that - is the fourth grade, saying that if the position was as acute as repre- i sented consumers should not hesitate to accept Teralba. This is the coal that could not be disposed of in Melbourne. In Septem- - ber, the Vend are informed by the Shipping Companies that the - shortage in Victorian Railways Supplies has reached such a climax : that the Commissioners notified the contractors they would pur- - chase against them. The Vend replied, it was due to the abnormal State of the trade for the last six months. And Mr. Cant forwarded - to the Shipping Companies a calculation of Victorian Railway | shortages showing it to be as at 31st July 1907, 32,133 tons. He - also shows that other coals were substituted to the extent of 19,498 _ tons, and even after this substitution has taken place, that is, coals - outside the Schedule altogether, there still remained a net shortage - of 12,635 tons. I imagine Mr. Cant meant that such a shortage was nothing much to complain of. The Vend promised on 12th -

"September to do everything possible to assist the Shippers. Not- H.C. or A. _ withstanding this assurance the allotment system is not abandoned, a

and the exclusiveness continues ; the result is that the short supply Tur Kine

'continues up to the middle of January 1908, and the Railways s\younny-

threaten to buy another 16,000 tons against the contractors. In G2NERAL OF tHe Com-

'the previous month as appears from Ex. 8.5 the Secretary for Vic- monwrartn torian Railways called at the office of Huddart Parker & Co. on 12th Aiba and saw Mr. Appleton, told him 28,000 tons were absolutely neces- Pass

sary that month and that all that was actually in sight for December

up to the 31st was 12,000 tons. He asked for an assurance to receive 28,000 tons but this Mr. Appleton could not give, nor could Mr. Appleton and Mr. Newman together obtain such an assurance from the Colliery proprietors or give any hope of more than 4,500 tons in addition to 16,500 tons in sight. Mr. Appleton assured the Commissioner that no stone was left unturned in the contractor's efforts to provide coal for the department. However as I have said notice to purchase against the contractors came in. Ex. s.5., shows that short deliveries went on to 1909 and in November of that year the Contractors were ordered to make up shortages. See the Chief Storekeeper's memo of June 9th 1908 as to the serious expense occasioned by irregularities. In January 1910 Mr. Sutton the Chief Storekeeper spoke of the personal efforts he made to obtain full deliveries. He said that the substituted coal was sometimes inferior, that he told Huddart Parker so, and that he accepted it only because of the low condition of the Railway Stocks. His evidence is that the coal he regarded as inferior would be from 45,000 to 50,000 tons out of 800,000 tons that is 5 per cent. to 6 per cent. It was suggested by defendants' counsel that the shortage was the result on the whole or in part of shortage of trucks, the evidence does not support that. Sutton's memo to Captain Bull of Huddart Parker & Co., dated 9th June 1908 (O1) is opposed to it. The witness could not give any concrete instance where substitution had made trains late, but I do not think that is necessary. He said that some of the coal such as A.A. was too soft for their pur- _ poses and as an observation applying to several cases of substitu- tion I think the consumers having the experience of their own work-

ing necessities must be taken to be the best judges of what best

H.C. or A. suits their own business. When the Victorian Railways authorities - 1911. or the S.A. Railways authorities (Evidence p. 694), or any of the :

Tur Krxe other consumers te!l me that they find a particular class of coal AND THR

Avronney- the best for their purposes I believe them. I prefer to take their es

GawnnaL sor actual experience to accepting the suggestion of learned counsel -

woxweatta that other coal which they did not order and did not want, but -

Assoviaren had to take, was something quite as good for them.

pile The normal reserve of the Victorian Railways was about 30,000 - tons. In December 1907 it got as low as 10,000 tons, only about -

a week's supply. It must be noted however that in the next month -

the stock of coal was 33,400 tons, there were 17,256 tons over sup- plied for the month, and from that time onwards the reserves were well over 30,000 tons. Some months there was a surplus for the month, but more often a deficiency, the net shortage at the end of November 1909 being as already stated. Two observations may here be made, whatever the normal reserve might be the Railways" were entitled to have what they ordered and what the contractors undertook to give the Railways.

The subsequent maintenance of stock was well beyond the normal -

essential reserve - three weeks supply was of course a great improve-

ment. But the constant shortage was complained of, and ought 5 not to have occurred, and would not have occurred in my opinion : if the Vend had not had the exclusive undertaking of the Shipping - Companies. It was this which made them feel secure as to their allotment provision - a security which nothing could disturb except

dread of consequences. Up to the beginning of January 1908 there was actual detriment of a perilous kind ; after that there was real detriment, but not attended with present danger. The evil was there, its presence was felt, though not in a great degree, and if a sudden demand had arisen for foreign coal, I have no doubt,

there would have been a real risk of embarrassing shortage. Since November 1909, the risk of detriment is greatly lessened by the opening up of the Powlett River field. This is undoubtedly a source of safety to the Victorian Railways, and therefore except

as part of a great scheme of concert I would, in view of the proved _ policy of the Victorian Government to use local coal, be disposed

to disregard the future danger to the Victorian Railways from the H- ©. or A. tent risk of shortage of Newcastle coal. oe

There were shortages also in connection with the South Aus- 'Tue Krxe AND THE

tralian Railways. Coals that were contracted for were not delivered apes

and in some cases inferior coals were substituted. There was a contract of 10th May 1906 for 2 years supply. This contract I _ have more than once referred to. It was the outcome of the guar- ante of 24th April 1906. The approved pits were specifically

'named, 70 per cent. of the deliveries was to come from the Bur- wood, Co-operative, Newcastle Wallsend and Newcastle Company, _ 15 per cent. from the Seaham, and 15 per cent. from Wallarah. Certain collieries were struck out.

; Shortages commenced in appreciable quantities about June 907. On Ist June 14,065 tons, on 6th July 13,999 tons, on 3rd gust 15,113 tons; 7th September 12,198 tons; 5th October (15,936 tons ; 26th October, 19,573 tons; 2nd November, 22,027 'tons; 16th November, 18,428 tons ; 30th November, 26,716 tons: _ 1th December, 26,136 tons ; 21st December, 24,485 tons. Then in 1908 on 4th January, 27,603 tons ; 18th January, 21,936 tons ; Ast February, 23,475 tons; 15th February, 18,542 tons; 22nd ebruary, 11,808 tons; 29th February, 5,386 tons; 14th March, 231 tons ; 21st March, 3,384 tons; 4th April, 4,280 tons; 11th pril, 1,929 tons; 2nd May, 1,654; 30th May, 201 tons; 13th une, 3,684 tons. As to substitutions, a considerable quantity f distinctly inferior coals was practically forced upon the South _ Australian Government. These commenced about July 1907, and went down to June 1908. They consisted of 10,097 tons 16 owt. of West Wallsend, and 2,992 tons 4 ewt. of Teralba coals. hese inferior coals were the subject of remonstrance by the Depart- ent. Mr. Russell, Locomotive Insyector said that he drew the

• attention of Huddart Parker & Coy. to the fact that West Wallsend had been struck off the schedule in October 1904, and it was not a thing that they should have to take it to make up the requisi- tions. In October 1907, other pits were added to the schedule. Those pits were first class, the quantity from these added pits

_ was 19,041 tons and no complaint can be made as to the quality this coal.

Tue Kine AND THE ATTORNEY- GENERAL or tHE Com- MONWEALTH wv AssocIATED NorrHern CoOLLIERIES.

As to the detriment arising from inferior coal, Mr. Russell states - his opinion that delays were increased owing to this reason to t extent of 5 per cent. There is no doubt looking at the posi broadly, the South Australian Railways were very much hampered, é and their safeguards against interruption of traffic were reduced, and an appreciable impediment was placed in the way of the satis-_ factory conduct of that traffic. All this was the plain result of th

entirely dependent upon outside sources for its coal supplies. e next tenders were called on 18th March 1908 for 1 or 2 years' supply from Ist July 1908. The tender of Huddart Parker & Co. and the Adelaide S.S. Coy. was dated 28th April, and so was Howat Smith & Co.'s separate tender. The contract was dated 18tl May for two years. There is a letter from Appieton for the Ship-

1908 (Ex. U. p. 83) which is illuminative of the position when read with the original tender. The joint tenders embraced 16 pits, including the West Wallsend and Pelaw Main. The price was lis. 6d. for one year and 17s. 3d. for 2 years. The previous con-_ tract was for 11s. 9d. a difference of 5s. 3d., on 133,000 tons a year, which meant an annual increase of £34,912 10s. and on the two years' contract an increased expenditure of £69,750. Besid this as is seen, the objectionable West Wallsend, as well as Pelaw Main, and Duckenfield were included. From the letter, it appears that the tender had been placed before the South Australian Cabine

• not to be wondered at - who gave express instructions to the Supply and Tender Board to adhere to certain conditions. Whilst this was pending, the South Australian Government entered into' : negotiations for the purchase of coal property. This fact, coupled - with the further fact, which the Shipping Companies had evidently

learned, that a number of members of the South Australian Govern- ment were disposed to carry this project into effect, led the tenderers to answer the request for an immediate reply by closing the con-. tract without Pelaw Main or West Wallsend, and at 17s. all round. The saving by this was about £8,300. The shortages are not com- plained of after this time, as to the South Australian Railways,

West Wallsend. With regard to the Broken Hill Contracts with 'Scott Fell & Co. I need not repeat the observations referriny to ott Fell & Coy.'s ineffectual eflorts to obtain coal. It may be summed up in this way that roasting coal was requisitioned for Port Pirie to the extent of 50,000 tons approximately, that was

• for the Broken Hill Proprietary Mine, the only one that uses roast-

_and South Greta, as it gives a good flame for roasting purposes. The _ quantity of roasting coal supplied was 5,977 tons, principally from 'Heddon Greta, but also from South Greta, Oakey Park and Bur- wood Extended. They had to use some of the other coal to make up the shortage of 44,000 tons of roasting coal. Mr. Dickenson "said that the roasters were not stopped, nor were the smelting works for want of roasting coal. Mr. Delprat had to put down 1 or 2 other boilers in April or May 1906, but that is outside the period covered by the charges, and I cannot take that as anything more than evidence of the nature of the expedient necessary, when other coal is substituted for roasting coal, the deficiencies of course _ occurred partly after the combined agreement because the Broken Hill Coy. required 25,000 tons a year. The Company also had to get Lithgow coal to mix with the Newcastle Wallsend coal for steam as better suited to their purposes. They were always short of coal, and at one time got coal from Natal. It was said by the defendants that the Broken Hill Coy. could not complain _ as it paid very large dividends notwithstanding its inability to obtain the commodity it needed through Scott Fell & Coy. As a legal proposition I simply have to say I fail to understand it. Then it was suggested that the Broken Hill Coy. might have obtained what it wanted by direct application without the intervention of Scott Fell & Co. Of course that means confining them to the single channel of supply established by the combined agreement. 'his happened with the next contract, dated 15th May 1908 (W.4) _ the price being 16s. 6d. as against Scott Fell's 12s. 11d. and 12s. 9d. ut allowing for the rise f.o.b. from 7s. 6d. to 11s. In 1911 it was 16s. 9d. The Broken Hill mines represent an important depart- "Tent of Australian Industry, employing about 7,000 men at Broken

'ing coal. The Company prefers for roasting purposes, East Greta, (5.

H.C. or A. Jill, and 1,500 at Port Pirie, and although they may be ab

wes bear the substitution of less efficient roasting coal for more effi Tue Kine without greatly suffering, the detriment is real and may be further. One or two general references may still be made whi

shows that shortages did not stop early in 1908. There is a

rae Com- MONWEALTH vigorous struggle by Paterson & Co. through Appleton with Associaten Vend in September 1908. Paterson & Co. had taken their s NortHern COULIERIFS.

of inferior coals - or what is inferior for their trade - as in dui bound, and they object to any more (Ex. U. p. 103). Then the is a letter from Appleton to Cant dated February 20th 1909 (E U. p. 118). It states "all the Companies here are very sh smalls, being unable to supply customers, and the position is s

There is little or none for bunkering the small steamers, and unde the circumstances I will be very much obliged if you will do you can to facilitate the loading of some of the vessels with class of cargo." The reply is dated 22nd February and the given is that there is a great scarcity of small coal on accoun the falling off of the trade generally, but, said Mr. Cant, you may rest assured nevertheless that I will do all possible to meet requirements. Of course the serious position and the ina to supply customers might easily have been met if the Shipping panies had been free to take Southern or other coal.

There is a section of the evidence which does not raise any tinct issue, but the effect of which, on the issues I have just b discussing, is best seen by separate consideration. The stip that the Shipping Companies will carry no other coal, exclu all other coals that might otherwise be carried inter-State. Sev have been referred to some of which may be briefly disposed The following coals could not in ordinary circumstances be ee inter-State so as to compete with Newcastle coal at the price which the latter had up to the present been sold. I am no speaking of strike prices. Those coals are Collie and Powlett Riv

another way. But Southern coal might be a very close competi with Newcastle coal, and at a further distance even Western

ld not be left entirely out of consideration. As to the last H. C. or A. ntioned coal as early as 21st December 1906 the Vend Secretary bites

ed a wire from Newman (see X. p. 12) that Wilkins of Hetton Tux Kine npany was upsetting the market by offering Lithgow to Vic- Pesta Gas Companies and others. The fact that Wilkins denied GENERAL OF

the offer is nothing to the point, which is the recognized competitive woxw=aurit v.

lue of Lithgow coal for inter-State purposes and the effect it had Assoctarep mn the Vend. The letter referred to is remarkable as showing that pastas (of Hetton) said he was not surprised that Lithgow was ¢ offered, and so, if the Vend and the Shipping Companies h thought Lithgow coal a possible competitor, that is a very d reason for my thinking the same. The quantities exported Scott Fell & Co. in 1906-08 (see Y.9) also evidence its adaptability. , the Vend in April 1908 thought it necessary to obtain from Shipping Companies a statement of the quantity of Southern, ern and other coals taken for the previous quarter. The wer was given on 29th April (Ex. U. p. 73) the quantity was 74,000 tons Southern, no mention made of Western. The average lorific value of Western coal is 11.67 as against the average thern 12.73. The highest Southern is Metropolitan 12.8; Borehole has an average of 12.9; Maitland 13.8. Southern coal is in all respects a good coal. It is very slightly inferior to the orehole in analysis, and for some purposes, it is even better. Pitman, the Under Secretary for Mines and Government Geolo- for New South Wales, said that for steam purposes and smel-

s admittedly better (p. 1387). For household and gas making yurposes, Newcastle coal is undoubtedly better. For Railway urposes Mr. Pittman thought the two about equal. The effect

so on. The Southern coal agency in their circular prescribe

conditions for best results. Colebatch the South Australian Chief Storekeeper tells us t the commanders of vessels in South Australia prefer Southern

• coal for bunkering purposes; Mr. Lane said that Southern are peculiarly suitable for bunkering marine engines. Mr. La considers Newcastle coal best for steaming purposes. The shi vy. owners themselves have a high opinion of Southern coal as is " by Appleton's letter of 20th January 1908 (Ex. U. p. 30). To thi monwraLtH as we have already seen, the Vend objected in their letter of 31st pe aa January (Ex. U. p. 39). On 27th January 1907, Newman wrote: ' Somat Cant with reference to an inquiry from the Mount Morgan Compan

for a freight quotation for 500 to 1,500 tons of Southern coal fi Mount Kembla to Rockhampton. Southern coal was also tend for and sold by the Shipping Companies apparently within quantity permitted by the agreement (see p. 420 of proceedings). - According to the letter of the Adelaide S.S. Co. of 12th February 1907, addressed to Chapman (Ex. S.) the Melbourne City Council had used Southern small coal, but, I read that statement only as against the Adelaide 8.8. Coy. Howard Smith & Co. by letter of - 9th November 1906 decline to quote a freight on Southern cos enquired after by the Australian Paper Mills; at pp. 1903a, 1903b, 1903c, 1904 will be found what are in effect refusals. In 1908 | Howard Smith & Co., Huddart Parker & Co., and Mellwraith McEacharn & Co. declined to supply Southern, at all events exce to a limited extent, and in a very guarded way. It is plain there- fore that Southern coal could become a check upon the advancing prices of the Vend. Exh. 26C contains the Southern Coal-owners - Agency offers to the Victorian Railways in October 1909. There was first an offer of 150,000 tons of best screened Southern coal for one or two years at 15s. c.if., Melbourne,one condition insisted on, other conditions to be mutually arranged. That was informal and was followed by a more formal offer which stated the coal owners' inability to tender under the prescribed conditions of tender, _ and they made a new and independent offer. That offer was for coal the product of Mount Kembla and/or Mount Pleasant and/or Osborne-Wallsend at Mount Kembla from the shoots at the jetties

• minimum quantity 125,000 tons - maximum 175,000 a year at 14s. 3d. c.i-f., Melbourne or Geelong. If that coal was not thought suitable then the offer was 60,000 tons minimum and 80,000 - maximum taken at Pyrmont cranes at Darling Harbour, the price _

14s. 8d. c.if. Melbourne and Geelong. Certain conditions were H. C- or A- ipulated for. The circular enclosed mentions that the Southern oe eries had steam colliers with a carrying capacity of 2, Peer how many is not stated. The Mount Kembla colliery is 52 miles AXP 0% m Sydney, the Osborne 49 miles, and the Mount Pleasant 48 GENERAL OF

ATTORNEY- THE Com- 'miles, and the freight would be along the South Coast Railway. The woxwsaura rate is not mentioned, but the Metropolitan rate is 1s. 11d. for 1 about 29 miles. Mr. Knox thought this Exhibit proved that the "ds. tender supported the reasonableness of the charge of 15s. 5d. o the railways and that of the defendants' tender in Exh. U.5, and that the railways could have been sufficiently supplied with Southern coal. With respect to the first point - the defendants consistently

_ obtained the rejection of evidence as to the cost of production in other mines, because the conditions were different, or might be,

and the rejection of other persons' tenders, as matters unknown

to defendants, and possibly dependent on special or different con- siderations. This tender was not known to defendants so far as ppears, and is not like a known price in the open market. It _ may have been very unreasonable itself. Therefore the reason- bleness of the defendants' charge in, their own tender could not e measured by a particular and secret offer of another person. _ Where Southern coal and Newcastle coal stand on comparable _ footings, or where market prices have been proved, they may be compared, as Mr. Knox did at pp. 1379 and following, and there is

mass of evidence as to this. But a party is not at liberty to appro- bate and reprobate, to procure by useful argument the rejection of _ hurtful evidence, and then swing round and press the admission _ of what may be friendly evidence on the contrary argument. But even if the tender be looked at for the purpose of testing the reason- _ ableness of the Newcastle price f.0.b. or c.i-f., it does not help the defendants in the least. As shown, the amount of 15s. was not _ attached to any particular set of conditions ; and so the point urged _ 1s not made, viz., that the railways could not be prejudiced by the price ; and the corrected tender was much lower ; and for the better _ sample, namely at Pyrmont the maximum quantity was clearly _ insufficient. Further, it would not have, and was not suggested

H.C. or A. to have any bearing wltra the railways, that is plainly b 191. : . Tue Krxe_ is no likelihood as things stood of a regular carrying trade to suppl

pests smaller consumers who desired it, either absolutely or at a comp

GENeRAL OF tive price. The conditions annexed in the letter of 22nd October 1 THE CoM- :

monweattH that there must be 12,000 tons a month taken shows that clearly 'asaecnend But on the other hand if the defendants had not debarred thems

even if the railways could have got it at the price mentioned t

from carrying it inter-State there is no reason why this coal p chasable at Darling Harbour or Port Kembla jetties would not have formed an appreciable restraint on the growing prices of the Vend and if the Shipping Companies continued in real competiti with each other, the price 14s. 8d. c.i.f. Melbourne would if admitt at all as to price be instructive as to freights. The prices to b presently mentioned which are relied on by Mr. Knox show that to if you take the cost at the pit, and add the railway freight to Darli

Harbour, you have a sum which allowed only 4s. freight, when the

c.f. price is as stated. The tender consequently if looked at regard to the issues of detriment to the railways alleged to ha' arisen or to have been intended through the raising of prices in. Newcastle coal is adverse to the defendants. Though I have stated my views on the Exhibit had it been admitted as to reasonableness of defendants' prices, I do not use it against them except for th : purposes for which it was in fact admitted. I am not able to say on the materials before me that any of the other coal would in ordinary circumstances be extensively carried inter-State and be affec by the provision of exclusive purchase.

calorific power than the average Borehole was purchased by New South Wales Railways at prices some of which I shall quo In 1905-6, 7s. 6d. ; the same in 1906-7 ; the same in 1907-8; th 9s. in 1908-9 ; 8s. 9d. in 1909-10 and the same in 1901-11 ; the qu tities were very large 176,844 tons in 1905-6; then 179,133 tons; 175,981 ; 187,033 tons; 129,473 ; 137,682; These prices were at the Metropolitan siding. The freight to Darling Harbour for shi ment was ls. 11d., that would make the price in 1905-6-7 and 1908

9s, Bd. No reason is given for the sudden rise to 9s. in 1908-9 H. C. or A. and the partial maintenance of that rise 8s. 9d. for the next two baa

years. It may be that the progressive and permanent Newcastle Tue Kine AND THE

"rise furnished the opportunity. Or it may be - judging from the amorxey-

headings on the letters and circulars in 26C - that the Southern Ca

coal owners are also as between themselves non-competitive. It monweavrn

would still at its advanced rates be much cheaper to the Govern- 'Aaageien ment at Darling Harbour than any Newcastle coal. Pelee

New Sourn Wares Rattways Prevenrep From GETTING Metro- POLITAN COAL.

The New South Wales Railways Commissioners as Mr. Parry tells us would have sent Metropolitan coal to Broken Hill in 1908 if they could have got the freight. At the price quoted to the Government plus fair freight for shipment it would be cheaper to send inter-State, and might, if freight existed, prove a formidable competitor to the extent of its production.

Summing up the question of detriment I have no hesitation in finding that the Australian public in four States have suffered great detriment in respect of excessive prices charged for Newcastle coal ; that the excess is accentuated by the restriction on choice introduced _ by the Vend and made more thoroughly effective by the Shipping Companies. There has been, and should pressure of circumstances at any time arise, there would probably again be shortage in delivery of desired coal. The enforced general enumeration of pits takes away the quality of a legal breach of contract in not delivering coal particu- larised in a requisition, but it remains a real objection. And the _ presence of a penalty on mines for delivery beyond their allotted output is a standing deterrent against meeting an emergent demand. Substitution to some extent and to a substantial extent must follow, and the substitution must be other and possibly inferior Vend coal ; and it cannot be Western or Southern except within the limited range.

H.C. or A. Pusiic DETRIMENT FROM ARBITRARY DISCRIMINATION OF se Prices.

Tun Krxa There is however another distinct detriment, that of arbiti AND THE os si oe lee 2

Aptorney. and capricious discrimination of prices. I do not for a mom

pee assume favouritism. I think the Vend and the Shipping Companies

monweartx looked to no persons' advantage but their own. And their o Sees they followed up wherever they could, and to the farthest dis

Perey possible. But sometimes consumers' opportunities, or want o

opportunity, made them discriminate. In one sense discrimination by reason of purchasers' special opportunities is perfectly legitimate, - but when the heavy end of discrimination owes its weight to com- bination, there is a distinct lawful cause of complaint for th who have to carry it, while their neighbours escape.

The process is illustrated in various ways. A signal examp occurs in relation to the Melbourne Gas Company. I have pointed out how much lower the price of coal was to this Company tha to the Footscray Gas Company, and other consumers. The is not difficult to trace. On 4th October 1906 (Ex. I. p. 5), just

that interviews had taken place with Mr. Hinde the Gas Company's Secretary, who strongly resented the extra 6d. and hinted at be forced to buy elsewhere. The Committee thought it would b ""prudent " to sell at 10s. and 5s. 9d. on a certain named ba and asked for authority. On 27th December 1906 Chapman for : the Vend wrote to Newman for the Shipping Companies asking to negotiate inter alia on the Melbourne Gas Company's contra ob (X. p. 16). Newman replies two days later that Hunter will not allow anyone but himself to deal with that matter. Mellwraitl & Co. were the contractors, but the communication so far wit teference to it each way went through Newman. The contr i was completed by 9th January 1907 as appears from a letter Chap- man to Hunter. It was at 10s. (I. p. 59). : Now a word as to the cause or the partial cause of the " prudence. As far back as May 1906 (F. p. 103) both collieries and shipowners

"heard tumours that the Gas Company was negotiating for the pur- hase of Cessnock land for a coal mine, and this led to action by the Vend, and communication between the Shipowners. The exact position does not appear, but evidently there was enough

or some other possible source of supply was at the back of these 'resentful objections, the Vend and the Shipping Companies sup- plied the Melbourne Gas Company with first class coal at a most favourably discriminative price. And even at this price the con- _ tract must have been valuable, for, besides the ordinary presump- tion from a business transaction, Hunter was specially jealous _ of any one else conducting negotiations. Indeed the mere fact of the Gas Company's representatives conferring with the Vend direct at all is singular.

~ The aberrations in prices generally have not been accounted for ; and apparently are the result of arbitrary power, restrained only by possible limits of endurance. In Western Australia, Collie : coal is very largely used on some of the railways on the South West- ern, Great Western, and Eastern Goldfields lines. Collie coal is very friable, and as far as I can see unsuitable for export. The further too it is carried inland, the more it breaks up. But the Department, naturally having general considerations of local con- éern to observe, does in fact use a considerable quantity in certain "Tocalities, about 75 per cent., and might there use more.

~ But Geraldton means 230 miles sea carriage, with two terminal handlings for Collie coal, and this appears to me to account for the tremendous disparity between the later freights of Newcastle coal

• to that port and to Fremantle. It must also be remembered that Bunbury is 40 miles from Collie Mines, and is the nearest port. Geraldton took 15,000 tons of New South Wales coal in 1905; 21,000 in 1906; 12,000 in 1907; 9,700 in 1908; 9,700 in 1909, and 8,500 in 1910 up to 13th September, and I think 18,000 more to 13th December 1910 (V5).

That Collie coal competition was a possibility actively contem- _ plated by the Shipping Companies is undeniable in face of their own statements.

prudence'? when some months later Mr. Hinde's GENERAL oF

"hints " were given to the Vend Committee. Whether a coal mine Tetv ae

H.C.orA. In Appleton's letter of 7th February 1908 to Cant (U. p. 47)

a this passage occurs which illustrates the position as to several Tue Kina classes of coal, and therefore may be quoted once for all. It Awronwey. indicates the straits to which consumers were driven for want of Gueion Newcastle coal, and also that after a certain limit is passed other monwearrn coals are locally of commercial advantage. The defendants' en power must not be pushed indefinitely far. Tentative advances CQOETHERN are to say the least prudent, before rushing on to the 12s. contem- plated by the combined agreement. That was attempted once in April 1908 (Exh. U. p. 68), when the Vend fixed 12s. for the second and third year's supply in connection with the Western Australian Railways, but dropped it. The passage I refer to is as follows : - "' Last year you undertook to supply us in addition to the special contracts we had with all coals we required for the general trade, but so far from this undertaking being fulfilled, Victorian coal, Collie coal, Natal coal, Westport coal, and Tas- manian coal all came into the market, which should never have - E

happened at any rate to the considerable extent it did, depriving

us of the carrying of whatever the quantity may have been." On

the other hand in January 1908 the Vend were on the alert also

against the same coal. At a Vend meeting Mr. Forsyth was asked

to draw the attention of the Steamship Companies to the fact that

the Collieries were advised they had been delivering Collie coal

to mail steamers (J. pp. 90-93). Natal and Westport coal came of course from abroad. Tasmanian coal also came inter-State

by sea carriage, but, as we know, it cannot compete at regular

rates; and the Victorian and Collie coal must have been intra-~

State. This passage really does not affect the exclusive clause

in the combined agreement, but it shows there are limitations

of excess which must not be passed, because it proves the suitability

and consequently the competitive restraint of the local coal in

Victoria, Western Australia and Tasmania, beyond a certain margin

Appleton wrote again to Cant on 29th April 1908 (Ex. U. 72)

in which this passage occurs " West Australian Railways : - We

passed on the information to Fremantle in regard to your modi-

fication of prices for the second year, but I am afraid owing to the

'position of the Government there with the Collie coal people, they H- © oF A-

ay not accept any contract meantime . . . we are watch- ee ing matters very closely." 'Tue Kina

Victorian coal in ordinary circumstances was largely absorbed ek

Es 3] . ws Rae GEN es by the railways on the ground of public policy. The limited quan- ae

tity of Victorian coal left for general consumption and the compara~ Monwratrn e

tive superiority of Newcastle coal presented no obstacle therefore AssoctaTED to maintaining prices beyond those of healthy competition, while Pica l) jn South Australia there was no local competition at all. The variety of circumstances prevailing throughout Australia were ; regarded by the defendants - so I judge from the facts before me - merely as more or less effective obstructions to the full use of the combined power they had artificially created.

The case of Ballarat in Victoria is a very instructive one. Ex- clusive of the Gas Companies there, the volume of trade in coal held by the Shipping Companies, for Ballarat and the District, was 39,000 tons which according to Newman's letter of 10th December 1906 (X. p. 6) was sold on the basis of 7s. 6d. f.0.b. Newcastle, ds, 9d. freight to Geelong on trucks,, wharfage Is. ; in all 13s. 3d. "Maitland coal was used but owing to increased prices the competition jn wood threatened the trade. Newman said : - " We have no

• desire to reduce prices unnecessarily, but we think that in the present

instance the circumstances justify us in suggesting that the Vend allow the Shipping Companies to secure the Ballarat business at the best rates possible, and any reduction that it may be neces- sary to make at the end of the year be adjusted proportionately between the shipowners and the Newcastle Vend." 'There is no talk of ruination or loss - it is merely " reduction." The Vend met this on the 17th (I. p. 59) by asking the Caledonian Co. to fill orders with 75 per cent. '' D " grade and 25 per cent. Maitland or No. 1 Borehole - that is to foist inferior coals on to Ballarat. Next day they wrote (X. p. 9) to the shipowners suggesting this blend, three-fourths inferiority. Evidently they felt they had the power and intended to use it. This apparently led to some corres- pondence which is not before me, and on 9th January 1907 Chapman suggested that one group should reduce freight and the other reduce the price of coal a little, to meet the case.

H.C.or A. Chapman's letter to Lewington (X. p. 31) establishes - as agai

kde the Vend - that Hunter said the Vend price plus freight and other - Tux Kiva charges provided by the shipping agreement, made the coal cos Atsorney. 198. 9d. at Ballarat, that is cost to the consumer - whereas they

GENERAL OF could only get 15s. 9d. Hunter suggested 9s. f.0.b. price and the