21 June, 1923.]

Major Van den Bergh's suggestion Mr. Stanley assisted the Army Canteen Committee in 1916 (then not a trading organisation but a controlling authority) with his advice on the prices of fruit and vegetables. Later, during the period June, 1918, to June, 1919, he was employed by the Board as a paid Inspector of Local Produce (Fruit and Vegetables), and on leaving the Board's employment in June, 1919, he was awarded a bonus of £100, on Major Van den Bergh's recommendation, in consideration of the services rendered by him in 1916." Is that correct?-Quite correct.

2458. Paragraph 115: "Sir Francis Towle and Major Boyd have each stated in evidence that Major Van den Bergh informed them that Mr. Stanley was backed by a syndicate possessing considerablo capital, one of the members of which was also a personal friend of Major Van den Bergh. Major Van den Bergh himself, however, denied to us both any knowledge on his part of such a syndicate, and the fact that he mentioned it to Sir Francis Towle or Major Boyd." Now there seems to be a conflict there between Sir Francis Towle and Major Boyd and yourself. Do you still maintain that you had no knowledge of such a syndicate, and that the fact was not mentioned to Sir Francis Towle?-Yes. I still maintain that.

2459. Paragraph 116: "As will be seen, the prices at which goods were sold by Mr. Stanley were, in our opinion, unduly low. One explanation of this may be, if in fact such a syndicate as that referred to existed, that Major Van den Bergh's lack of technical knowledge of the goods he was selling, united with the sense of his personal friendship to Mr. Stanley and one of the members of the syndicate, tended to cloud his judgment and lead him to grant unduly favourable terms." What do you say to that?-I deny that I know of any syndicate behind Mr. Stanley whatsoever. Mr. Stanley was only a business acquaintance of mine, not a personal friend, and the whole of the deals, both with Mr. Stanley and Mr. Pollock, were carried out entirely by my Chief Assistant and not by myself. 2460. The sales to Mr. Pollock and Mr. Stanley were carried out by your Chief Assistant and not by yourself?-Yes.

Mr. Hugh Morrison.

2461. What is his name?-The lato Mr. Fenton.

[Continued.

2462. Without your knowledge?—He submitted the bids to me, and on him assuring me that they were the best prices he could obtain I told him to settle the deals at the best prices he could get.

Chairman.

2463. Am I right in saying that the offers were submitted to you for your approval before the transaction was entered into? Yes, at prices recommended by my Chief Assistant who had nothing else to do at this time except to dispose of surplus goods.

2464. Then it is hardly correct to say the sales were carried out by your Chief Assistant if the prices were submitted to you before the sales were made?-Hẹ submitted the prices and recommended their acceptance.

2465. Did you take no trouble to ascertain whether the prices were right or not? I left it entirely to him. I had many other things to do at the time; I was travelling all the week round to visiting the camps, and I had to leave a tremendous lot of work to him to do. He had a private telephone from his office to the Buying Department, and I took it for granted that he got in touch with all the buyers on the matter. I should mention too that none ci those sales were affected at headquarters at all until the buyers had had six months to dispose of those goods and had not done so.

2466. I pointed out that there was a conflict of evidence in this paragraphthat Sir Francis Towle and Major Boyd said one thing and you said another, and I asked whether you still adhered to your statement and you said you did?---May I pass a remark on that?

2467. Certainly? On this particular thing there were many syndicates in operation at the time, and I think it iz quite possible that there might have bee i a misunderstanding between Sir Francis Towle and myself as to which particular syndicate was being referred to. There were hundreds, I might say thousands, of deals going through at that time.

2468. Do I understand there may have been a syndicate which was buying goods which you knew of ?-There were several syndicates who had had offers of goods.

2469. Did you know of them? Was one of the members of them a personal friend of yours? The organisation that was being got up for this particular deal never came to anything; it was never

formed into a syndicate. It was to do with a large consignment of goods for Russia, but owing to the condition of affairs in Russia the syndicate was never formed.

2470. Let us have this quite clear. There was a syndicate, amongst the members of which was a personal friend of yours, which was proposed to be formed in order to buy certain goods, but that syndicate never functioned?-It never came into existence.

2471. Was there any other syndicate which did function?-Not that I can remember at this moment.

2472. It goes on, in paragraph 117: "Major Van den Bergh has stated that later Mr. Stanley brought Mr. Pollock to his office at Knightsbridge and personally introduced him, and that Mr. Pollock then expressed his desire to deal with the Board direct." Is that correct?— From what I can remember of it it is correct.

2473. Did you take any steps to find out who Mr. Pollock was? I left that entirely to my assistant-all this transaction.

2474. Is there anything you did not leave to your assistant?-My work took me all over the country; I had more important affairs to deal with than even the disposal of those stocks.

2475. But this was a matter amounting to £153,505?-These are all in separate deals; there was no one big deal.

2476. No, but when Mr. Stanley brought Mr. Pollock to your office and personally introduced him to you did not you then suppose that large transactions might result? I could not judge of that at all.

2477. Did you think it would be only a few pounds?-I did not think it would be anything large.

2478. Paragraph 118: Arrangements seem to have been come to at about this time for Mr. Stanley to receive commission on sales made by the Board to Mr. Pollock. The total amount of commission SO allowed was, apparently. £1,357 4s. 8d., but we have been totally unable to ascertain on what particular items the commission was paid, as record whatever exists of these items or of the terms of Mr. Stanley's agency." Is that correct? I cannot say; I should think it was entirely an accountancy

matter.

no

2479. Who made the arrangement that Mr. Stanley was to receive a commission? -That I cannot say; possibly myself, or

[Continued.

possibly my assistant. I have no recollection of the matter, but he would be entitled to commission for introducing a buyer.

2480. Did Mr. Stanley have any share in the profits made by Mr. Pollock?-I cannot say.

2481. You cannot say; but surely if you agree to pay a man a commission for doing certain things, for selling stock to another man, you take care to see that he does not get a profit in what he is purchasing besides receiving a commission? -He would not get a profit from the Board; I cannot say if he got anything from the other side; that is impossible.

2482. But if he gets a profit from the other side, is not it in his interest to purchase at as low a price as he can?-If he can, yes, certainly.

2483. Is that what you gave him a commission for?-No; he made the bids, and it was up to the Board whether they accepted his prices or not.

2484. Is not it a well-known rule that when a man acts as an agent he is not allowed also to become a principal and take a profit?—Yes.

2485. But you did not take the trouble to ascertain whether that was done or not in this case?-I did not personally,

no.

2486. And that is what you considered to be your duty to the State* ?-Well, I had so many duties to fulfil; I had to do the most important ones at the time. No doubt if I had been in my office all day I could have done this thing, but I was careering all round the country.

2487. Did it ever occur to you to inform the Government* that you had so much to do that you could not do it properly and part of your work should be given to somebody else?-I think my superior officers knew the amount of work I had to do.

2488. You did not make any suggestion to that effect?-I made no complaints.

2489. Paragraph 119 says: "It was in connection with the transactions with Mr. Stanley that the question of allowing credit in respect of the sales made from Knightsbridge first arose. In order that the manner in which, we believe, it arose, and the effect of the decision given, may be appreciated, we should explain that when the terms of sale had been agreed with a purchaser-and these terms were seldom, if ever, committed to writing that is rather an unbusinesslike pro

See statement at commencement of Proceedings on 5th July, pp. 247 and 248.

21 June, 1923.]

ceeding, is it not?-In ordinary business times it would have been done naturally.

2490. Instructions were issued by Major Van den Bergh's office at Knightsbridge to the buying department at Tower Bridge Road, or to the Expeditionary Force Canteens (according to the ownership of the goods), to issue a delivery order." Is that so?-That is so.

2491. Does that mean that the goods were delivered before the purchase price was paid?-No; the orders were that all goods were to be delivered for cash only.

2492. Paragraph 120; "This delivery order was usually, in the case of the Board's goods, to be issued to the purchaser direct by the Tower Bridge Road office." You remember you said just now the goods were to be issued only against cash? Yes.

Tower

2493. "The accountant at Bridge Road was finally responsible at that office for authorising the issue of delivery orders, and it was in the ordinary way his responsibility, moreover, to say on what conditions they should be issued, that is, whether for cash or on the customary trade credit." Is that right? No, the conditions were that all goods were to be sold for cash.

2494. Then if the accountant at Tower Bridge delivered goods on trade credit, he had no business to do so?-He would use his discretion a bit as to the firm he was sending delivery orders to.

2495. You remember you said that goods were only to be delivered against cash. Paragraph 121:" On receipt at the Tower Bridge Road office of the first instructions from Knightsbridge to issue a delivery order to Mr. Stanley, the accountant there made certain enquiries as to his financial standing, with the result that he did not feel justified in issuing the delivery order except against a cash payment." That confirms what you said. Now: "Mr. Stanley then complained direct to Major Van den Bergh that he was unable to obtain the delivery order, and Major Van den Bergh thereupon telephoned to the accountant at Tower Bridge Road, instructing him that it was to be taken that if he (Major Van den Bergh) passed directions from his office for a delivery order to be sent to a purchaser, he was satisfied that the purchaser was good for the credit, and that the delivery orders were not to be held up." What do you say to that?-That instruction was given about one particular delivery order for a particular amount of money a delivery order wanted in a hurry.

[Continued.

2496. Yes, but you have already said on oath that you gave instructions that goods were only to be delivered for cash. Now it appears that at any rate in one case you altered those instructions?—Yes, I altered those instructions for one particular delivery order.

2497. Being satisfied that the purchaser was good for the credit; but you have also told us on oath that you knew nothing about these sales to Mr. Stanley, and that it was entirely done by your assistant?— I say the sales were done. This is a question of delivering a delivery order.

2498. Do you consider it curious that, having given instructions that no goods were to be delivered except against cash, you alter those instructions when it is a question of a man with whom you were on a more or less familiar relationship? -No. In ordinary business to-day, although my terms are entirely cash, I sometimes, for one specific parcel wanted in a hurry, let a delivery order go.

2499. You remember the statement made by Mr. Fisher and Mr. Rae Smith is that Mr. Stanley had been known to you for the past 15 or 20 years, and that on leaving the Board's employment he was, at your suggestion-and this you confirmawarded a bonus of £100?-It was not an unusual thing for the Board to award bonuses to people who had been in their employ.

2500. That is not the point. The point is that here was a man who you evidently thought well of, because you recommended that he should have a bonus, who had been an acquaintance of yours-I will not put it any higher than that-for 14 or 15 years, and it was for this man, who was in negotiation with the man who has since been committed to prison that you brake your rule that no goods should be delivered except for cash?-I broke this rule because I knew that on this particular delivery order the would be forthcoming; if I had not known the man I should not have done it.

money

2501. Then paragraph 122: "Major Van der Bergh's authority at Tower Bridge Road was such that no person employed there dared to question his actions or instructions, and it resulted from this, that, so far as we have been able to ascertain, credit was allowed without question to all purchasers to whom sales were effected from Knightsbridge." Here is a statement that credit was allowed to all purchasers; is that correct? I have dealt with that matter in my

21 June, 1923.]

précis of evidence. That was done entirely on the authority of the accountant, who was frightened to raise the question again with me; he simply took upon himself the authority of issuing delivery orders to anybody he thought fit. after that.

2502. Then I gather your answer to the question as to whether that para graph is correct or not is that it is correct? Which paragraph is that?

2503. Paragraph 122.-That credit was given, yes, it was-without my authority, absolutely.

2504. Paragraph 124: "The prices paid by Mr. Stanley require somewhat careful consideration, and we propose to examine in some detail certain of the transactions which have come prominently to our notice. To deal first with the cases raised in Mr. Macquisten's question in the House of Commons on the 20th July, 1920"-that was when the question was asked "we find that the sago sold to Mr. Stanley and to Messrs. Adams, Montgomery & Co., on the 18th and 22nd September, 1919, respectively, was out of the same parcel, and that these were the only sales made out of that particular parcel during the year, the remainder being largely disposed of through the canteens in the ordinary way. Having regard to the time that has elapsed since the sales were made, it is not possible to determine whether the sago was in good condition at the time of the sale or not. The market price appears to have been about £55 per ton, as stated in the question referred to, but we are informed that this price was rather a nominal one and that there was, in fact, at the date of the sales in question, little market for the commodity. On the other hand, it is or record that an offer of £55 per ton for the same quantity of sago as that sold to Mr. Stanley (50 tons) was received some time immediately prior to the 13th August, 1919, from a broker, and this offer-which was not accepted-would almost certainly not have been made without previous inspection of a sample, but whether or not this sago could have come out of the same parcel as that sold to Mr. Stanley we have no means of knowing." What was the price at which this sago was sold to Mr. Stanley? It does not appear to have been given; do you remember?-(To Mr. Fisher.) Can you assist the Committee with the price at which this sago was sold? (Mr. Fisher.) It is in Mr. Macquisten's ques

[Continued.

tion on the 20th of July, page 3 of the Appendix.

Colonel Hodge.] It refers to the amount lost.

Colonel Stephenson.] £23 a ton.

Chairman.] Apparently this sago was sold to Mr. Stanley at £23 a ton, and also 50 tons of tapioca at £23 per ton, the market prices being £55 per ton and £49 per ton respectively, these sales resulting in a needless loss to the Navy and Army Canteen Board of £2,900; and whether they were sold to Adams, Montgomery, on 22nd September, 1919, 10 tons of sago at £25 per ton, the market price being £55 per ton, and also 20 tons of seed pearl tapioca at £27 10s. per ton, the market price being £52 10s. per ton, a loss to the Board of £800." That was the question, and there is an official answer to it, which means nothing.

Colonel Hodge.] On the following page you will find Mr. Fisher and Mr. Rae Smith state: "The evidence we have been able to obtain is not convincing either way."

Chairman.] "With regard to the bags of this parcel of flake tapioca bearing different marks, we have inquired whether this is any indication of varying grade or condition. The evidence we have been able to obtain is not convincing either way," that is as regards the tapioca.

Colonel Hodge.] And then, in paragraph 125, they say, "Having regard to the time that has elapsed," putting the two together, it is practically their summary of the criticism arising out of that question.

Chairman.] We had better not discuss it. I want to know the explanation of the witness why this 50 tons of sago was sold at £23 a ton when the market price was supposed to be £55.

Witness.] I have already stated that those sales were entirely carried out by my assistant and you cannot possibly take any notice of what the nominal market price was for those goods at this particular time. When he submitted the offers to me he assured me they were the best offers made. He had also been in the grocery trade all his life, and I took his advice.

2505. We have ascertained that Mr. Stanley received a commission. The quantity that Mr. Stanley purchased of this tapioca flake he purchased at 23s. a hundredweight, and re-sold it to a wellknown City firm at 27s. 6d. per hundredweight. Now Mr. Stanley was receiving

21 June, 1923.]

a commission? It does not say he received a commission on this particular lot.

2506. No, but he received a commission -he received £1,300 odd as a commission. I asked you whether that was correct and you said, Yes, he did receive a commission, but you did not know what terms were arrived at when it was arranged to pay him a commission, and you did not know whether he had made a profit besides obtaining the commission. In this case he certainly made a profit of 4s. 6d. a hundredweight on the sale of this tapioca. Did you take any trouble to ascertain whether or not a commission was paid to him as well?Not personally, no; the books of the Board should show that.

2507. That could be found out? Yes. 2508. How was it you did not try this well-known City firm who bought the tapioca at 27s. 6d. per cwt. which you had sold at 23s. to Mr. Stanley, who was not in the trade and apparently had no reason to be employed except that he was known to you and had been in the service of the Board? Those goods should have been offered to this firm by the Buying Department. They had had these goods on their books for six months and had not submitted to me any bids for them whatsoever.

2509. What would a fruit and vegetable grower trading in Spitalfields Market know about tapioca? There were a good many people trading at this time who know nothing about the articles they were trading in.

2510. They seem to have done pretty well with it? I cannot say what the ultimate result was of what they bought all round.

2511. On page 42, at paragraph 129, it says: "In the case of several lines of cereals and spices, we have been able to trace the prices realised by Mr. Stanley on re-sale by him to a well-known firm of merchants in the City. This firm is one with whom the Board had been in the habit of dealing by way of purchase, and it is difficult to understand, therefore, why the Board could not sell to this firm direct instead of allowing Mr. Stanley to purchase and re-sell to them." Does not that seem to be a fair statement? My answer is that the buyers who had those goods to sell before they were taken over by Mr. Fenton should have offered those goods.

2512. They should have offered them? -Yes, certainly.

[Continued.

2513. But they did not do so?-No. 2514. Why did not you see that they were doing it?-Because they assured me they were offering the goods wherever they could.

2515. Surely the first person to offer goods to is the person from whom you bought them, especially if it is a wellknown firm of City merchants?-Yes, the buyer should have done so.

2516. My question is, why did not you see he did do it?-Because I was assured by the buyers that they were disposing of the stocks as rapidly as they could.

Mr. Hugh Morrison.] Who were the buyers under? Were they directly under Major Van den Bergh?

2519. Paragraph 130: "The prices at which Mr. Stanley so re-sold gave him an all-round profit of 12 per cent. on the prices paid by him to the Board, without his having had to handle the goods. We cannot but think that if Mr. Stanley, who was not in the trade, could have obtained these prices, the Board, with all the advantages of being in constant touch with the markets and being large prospective purchasers, could have done considerably better had any properly directed effort been made to do so." Do you agree with that?-Yes, the buyers there who bought the goods should have been able to sell them to those firms.

2520. Then paragraph 131: "We find that Major Van den Bergh sold to Mr. Stanley 1,220 dozen cigarette caseselectro-plate on brass and each capable of holding 40 cigarettes-at 3d. each, equalling £183, the cost to the Board being 3s. 4d. each, or £2,440 in all." Therefore apparently you sold to Mr. Stanley goods which were new goods which cost you 3s. 4d. for 3d. "These cigarette cases were apparently re-sold by Mr. Stanley to Mr. Pollock." Is it correct that you did that?-I cannot say whether it is correct or not. I emphatically deny that I ever saw those cigarette cases myself. There were dozens of cigarette cases on the Board's price list.