[Continued

127. You did not make that Report; the Treasury made that Report?-The Treasury made that Report.

128. Who were you referring to, Mr. Fass? Were you referring to this gentleman?-(Mr. Fass.) The witness will be able to tell you who was at the meeting, and which officers of the Departments took the different views.

129. You must have known it at the time? Yes, we certainly had the names.

Mr. Leif Jones.

130. There was a very surprising statement made just now; you said there was no evidence forthcoming to disprove the allegation that there was a guarantee. Surely it should be that evidence should

be forthcoming that there was a guarantee. In the absence of any proof of the allegation that there was a guarantee one would imagine that there was no guarantee?-(Mr. Fass.) The Society alleged this promise. On asking whether any such promise was given, one of the officers said that a promise was given, and the other officer said a promise was not given. We were not able to prove it. We had not evidence on which we were able to go into Court about the matter. There was also another point; it was very doubtful whether we should have got anything from them even if we had succeeded. (Mr. Coller.) They were the trading agents of the Agricultural Organisation Society and had only nominal assets.

Chairman.

131. The next Account is the National Kitchens on pages 157 and 158. This Account is closed now. There is no note by you, Sir Malcolm?-(Sir Malcolm Ramsay.) No; I have no observations on this Account.

Mr. Arnold Williams.

132. What is this item, "Interest on Capital" in the Balance Sheet. It is rather peculiarly set out there, is not it?

(Mr. Mead Taylor.) I think I can explain that it was simply because, in the ordinary way, it would be repaid by the business, but here, if you look on the other side, you will find there is a loss of £8,500, so there is nothing to pay interest with. In fact, most of the capital was lost as well. (Mr. Coller.) It is something to do with the Central Finance Section, I think.

Sir Fredric Wise.

133. How many Kitchens were there?— Of those for which the Ministry was responsible, I think not more than 10.

Mr. Black.

134. You sold the place for £560?The Treasury ordered us to close these

kitchens in 1919, and the plant and equipment were really sold as scrap. With regard to the Veterans' Commerce, Limited, we have compromised that matter. It was an Ex-Service men's Organisation, which was guaranteed by people for purely charitable motives; the rent of the place was doubled from £1,750 to £3,500; with the result that no profit was made, and the guarantors had to pay £1,750, a half year's rent. As the Government have had a trifle more from the Veterans' Commerce, Limited, than they would have got if the Veterans' Commerce, Limited, had never come on the scene at all, as there were no alternative purchasers, it has now been agreed that debt of 1,500 guineas should be compromised for 500 guineas, that is to say, the guarantors will be let off the other 1,000 guineas.

135. So really, there is, in fact, a loss shown for the two years of £10,000.Roughly, the total loss on the Kitchens will be £10,000. Only one Kitchen paid, and that paid very handsomely.

Mr. Gwynne.

136. That is, £10,000 altogether, not for one year?-That is altogether; they ran for about two years.

28 February, 1924.]

[Continued.

Sir Henry Craik.

137. Have you any remarks to make upon this? (Sir Malcolm Ramsay.) No, Sir.

Mr. Leif Jones.

138. Is this Account all wound up now? -(Mr. Mead Taylor.) Yes, that is the position. There are only a few debts to be collected, but they are rather difficult debts to settle. That is virtually all there is. I can tell you the position up to date. This is, of course, to the end of March, 1922, and shows a total loss of £6,473,000; and, as we have the Accounts to date, that loss has been slightly decreased, to £6,320,000, but, just to give you an idea, the total number of accounts outstanding is only 70.

139. Have you got any timber in your own hands now?-None whatever.

140. You have disposed of it all?-We have disposed of the whole lot.

141. Then the purchases you made in this year, down to March 31st, 1922, were all in pursuance of previous contracts?Entirely. 142. No contracts.

new contracts?

No new

143. On page 189, under "Reserves," I see that £275,000 is reserved for bad debts and anticipated claims. Did you use up all that money?-Did the bad debts amount to as much as that? It seems a very large sum?-No; they did not amount to as much as that, but a good deal of that was in respect of adjustments of Accounts as to which we had had negotiations opened. Let me explain to the Committee that, in clearing up the Home Grown Timber Accounts, efforts were made in 1919 and 1920 to dispose of blocks of assets, that is to say, stocks of timber all over the country; ash Later on it was dis

was one case.

covered that what the Department thought it had to sell, it had not got to sell; that is to say, there were smaller quantities, or the description was not accurate; and those Accounts, owing to the attempt to get rid of the assets in bulk, have had to be revised, and this is a provision, not so much for bad debts in the economic sense, as for debts which had to be reduced because we had sold for a price which we could not sustain.

144. Then I see that sales to Government Departments were at least 10 per

The

cent. lower than in other cases. representing a loss to you estimated at £450,000. Why did you sell at less to Government Departments than to other people? Why did you take on your own shoulders this loss, instead of charging it to the Departments?-I am afraid that the whole policy of fixing prices for sale was really quite unsatisfactory. Home Grown Timber Department went through three or four controls during the war. It started with the Board of Agriculture, who set up a Committee. Then it passed to the War Office. It passed, in 1917, to the Board of Trade, and there were two or three Timber Controllers. There is no doubt that their policy was to get timber and deliver it, and so far as going into accurate questions of costing, and fixing the prices properly, I am afraid that was neglected. In fact, had they attempted to fix the prices based on cost they would, I have no doubt, have frightened everybody at the time.

145. You misunderstood my question a little. I was referring to paragraph 15 (b), where it says the sales to Government Departments were at least at rates 10 per cent. lower than in other cases. You must have fixed the price in order to make that statement. I suppose that you fixed the price at which you would sell to other people, and then sold 10 per cent. cheaper to Government Departments?-Yes; I cannot tell you why that was done, because I was not connected with this Service until May, 1918, and all the damage, as regards prices, had been done by then.

Mr. Black.

146. Do we take it, then, that on sales amounting to £16,300,000 the total loss is £6,473,000?-Yes; a little less to-day. 147. A little less?-Yes.

148. Could you tell me how much was sold to the Government, as opposed to how much was sold to private traders? It seems to me that you were selling to private traders at about 33 per cent. less than the stuff cost? It was mainly sold to the Government-mainly Government Departments.

149. On the Government you only lost £450,000? That was one of the reasons. For instance, this loss of £6,473,000 is as to £1,605,000, due to road damage, and nothing to do with the trading really.

28 February, 1924.]

[Continued.

150. That leaves £5,000,000, does not it? That leaves £5,000,000.

151. It is a nice little figure on £16,000,000?-There is no doubt that to-day we know very well that it was not an economically-run service by any means.

152. Would you mind my asking, with regard to the loss through fires of £201,000, whose fault it was that there was no fire insurance?-The Government practice is not to insure. We should not be allowed to do it.

Mr. Arnold Williams.

153. Do I understand that this loss is really considerably increased by reason of the freight which has not been charged, another £445,000?-To which item do you refer?

154. Page 187, paragraph 3. There is nearly half a million there which would have had to be paid in the ordinary course?-Those were items that it was not possible to trace out against the Government Departments who took delivery of the goods, and the loss remains in this Account instead of being borne by the other Departments.

155. It represents freight not borne on the Account. I assume on these Accounts they were carried free under the Government arrangement with the railways, and really this loss is increased by another £445,000? That paragraph says: The carriage freight charges for the year amount to £23,000."

on

156. Then the last clause of that, "in addition, goods have been carried on the railways, on Government accounts, free Transit Notes, representing a freight charge not borne on the Accounts, of approximately £445,000 "?-Yes, that is quite true; I was dealing with the first figure. That figure is quite so.

157. In addition to that there is the statement above, that services to the extent of £1,436,000 have not been charged; that makes it nearly £2,000,000? -(Sir Malcolm Ramsay.) I think this is one of the first Accounts. The Timber Department began in a very haphazard way, before the Trading Accounts were systematized, and they never debited other Government Departments with the true cost of the timber; large charges were also omitted from the Accounts, as explained in paragraph 31 of the Report for 1919-20.

Sir Henry Craik.

158. It was a matter of book-keeping; it would not either have increased or

lessened the charge on the public purse? -That is so.

159. It was merely a matter of bookkeeping? That is so; it is mainly a question of inter-departmental charges.

Sir Fredric Wise.

160. With regard to page 187, paragraph 4, Depreciation of Plant, could you explain whether that has been wiped out? (Mr. Mead Taylor.) This is the depreciation that has been charged in the Accounts, but it was not the result of refined percentages on the different classes of machinery. It was merely depreciation charged when we, later on in the process of the realisation, found out what the goods were worth.

161. You have no plant now?-No plant at all; everything has been sold.

162. On the next page I notice in No. 8: "Bad debts," and also on page 189: "Bad debts." One is for £12,000 odd, and the other is £275,000 odd. Why are these?-The bad debts in item No. 8, £12,666 are losses ascertained and charged.

163. And those on the succeeding page? -In paragraph 12, reserves, those are made for anticipated losses on bad debts of £275,000.

164. You anticipate your losses will be greater than that? Or is that the maximum?-I think we are safe on that figure.

Sir Henry Craik.

165. That is to extend over some years? -Yes, that is to cover all the debts that we still have to get in.

Mr. Gillett.

166. On page 188, Workmen's Compensation is put down amongst "Sundry Losses": £40,000 odd. Then there is a foot-note which shows that nearly all the money was got back again. I do not understand where this £39,000 appears on the other side. Where does it appear?I do not think it would appear on the other side, because the position is that the Timber Account is properly chargeable with Workmen's Compensation payments, therefore it is debited here show the total loss, but as a matter of Governmental procedure we get this amount back from the PaymasterGeneral.

to

28 February, 1924.]

[Continued.

167. Does not it give rather a false impression to anybody who happens to be looking through the Accounts?—I should not have thought so, because this is a proper charge, but for the fact that one Government Department can get the amount back from another. This Account in fact has not lost it, the person who has lost it is the Paymaster-General. The Paymaster-General has found the money, but what we are endeavouring to do here is to show the whole of the loss of the Timber Control.

168. I was going to put to you that it is very much the same as if a private firm had insured its Workmen's Compensation. If you have some arrangement by which another fund pays it out; is not that it?-I am afraid that would be giving a misleading view of this Account. This Account must be charged with its compensation payments.

169. You mean the money really is lost as far as the Government is concerned?As far as the Government is concerned, it is lost, and lost here. This is where it is lost.

170. What is the use of bringing this foot-note in unless it is to say that another Account bears it? That is to show that as a matter of fact the cash has been provided by another Department under the Superannuation Vote. must do that to link it across.

Sir Henry Craik.

We

171. In any case those Officials, when they came to retire, would have been entitled to claim, under the Superannuation Act, certain compensation. They get this trading calculation I suppose on a commercial basis, but very fairly they say, "Well, we have paid this ordinary commercial trading Bill, but we have saved you 60 much under the Superannuation Act, and therefore, we claim to be refunded it." Is not that the case? -That is how I understand it.

172. Is not that it, Sir Malcolm ?-(Sir Malcolm Ramsay.) Of the whole of the £306,000 debited to this Account, the little foot-note explains that as a matter of fact £39,000 was provided from another Vote.

Mr. Gillett.

173. I thought it was the casual labour, the workmen employed on the job?-You

have the whole of the Workmen's Compensation debited against the Profit and Loss Account. It is immaterial really where the cash comes from.

Mr. Gwynne.

174. You said in answer to Mr. Leif Jones that the timber was sold "For a price which we could not sustain." What do you mean by that. If you sola it for a price could not you get it?(Mr. Mead Taylor.) I was explaining to Mr. Leif Jones that we made one sale, I gave that as an example of ash all over the country. That ash was apparently available, according to our returns from our different divisional Offices of the Timber Control, and the ash apparently mounted up to many hundreds of thousands of cubic feet. Later on, getting the true facts by stock-taking, when the purchaser wanted to take over, it was found that these figures of stocks were not borne out by the actual stocktaking, and as soon as we ascertained that that sort of thing would have to be adjusted, we made a reserve for that, and we made a reserve for bad debts; but, as I explained, it was not an economic bad debt, but a bad debt because we could not produce the goods.

175. Then it was not the price you altered, it was the amount?-And we also did this where we could not sustain the price.

176. On account of quantities?—On account of quality.

177. If you make a contract with a man, you naturally carry it out so long as you can provide the amount and the quality?—Yes.

178. It was for those two reasons you could not do it. I see on page 187 you have, first of all, in Paragraph 2 66 Working expenses." Then later on you have "Administrative expenses," and you have an additional sum of money in respect of salaries of headquarters and provincial staff. In the "Working expenses" are those other two items included? (Sir Malcolm Ramsay.) No; the Working expenses" mean the woodmen, and the "Administrative expenses are the Directors, as it were, the overhead charges; central office administration, and so on.

179. You have in addition the salaries of headquarters; are we to take it that the salaries of headquarters and provincial staff was practically the same as the

28 February, 1924.]

[Continued.

over the generally.

administrative expenses all country?-They would be Throughout these accounts you get charged against your trading account the wages of workmen engaged in felling; in the profit and loss account you bring in your overheads, your general administration expenses, which may be at headquarters, or they might even be provincial.

180. In this particular account, under Paragraph 6, on page 187, I observe that the headquarters staff amounted to £35,000 roughly, and the whole of the administration expenses throughout the country was only £36,000. I was only commenting upon what seemed to me rather a considerable amount for the headquarters and the Board of Trade salaries. You do not want to spend £35,000 to supervise £36,000.

complications which obscure the figures in the earlier years.

Mr. Arnold Williams

184. I notice that the assets will only about meet the reserves, and will probably not even do that according to page 191?— (Mr. Mead Taylor.) True.

185. Does that mean that this fund of £5,700,000 has not yet been written off by the Exchequer?-Oh yes, that has been written off.

186. It is not a bad debt?-Yes, it has all been provided out of the Exchequer advances, which you will see on the lefthand side of the balance sheet.

187. That looks there quite good; that is what I want to understand; it is written off as irrecoverable?-Yes, it has gone through the Vote of credit.

188. And the amount set aside for the Road Board will be from the Exchequer? -We have money in hand, as the result of this account, to meet our Road Board liabilities.

Sir Henry Craik.

are to Local

189. These liabilities Authorities, I presume?—Yes.

190. Did you dispute them? They are dealt with by the Ministry of Transport, and they submit the claims to us for any observations before they actually acknowledge them.

191. Did you admit the full amount of £1,600,000? That has been reduced, and brought down. That sum is far in excess, I think, by a couple of hundred thousands, of what it really is.

192. Of what you had to pay? If you think it important, and you wish me to do so, I can refer to the figures.

193. It is an extraordinarily difficult thing to say how much this transit of timber affected the roads. ?-It is impossible for us to gauge the claim.

Mr. Leif Jones.] I can testify that they fought very hard in certain districts.

194. I see on page 193 it is stated that the stock in hand on the 31st March, 1922, was £1,030,000. Last year you said "In the notes to the Imported Timber Account it is stated that on 30th September, 1920, the remaining stocks in the United Kingdom and lying abroad were sold to a company. the contract of

sale amounting to about £5,000,000." If the whole of the timber was sold on the 30th September, 1920, for £5,000,000 how could you have £1,030,000 in stock on the 31st March, 1922?-(Mr. Mead Taylor). The whole of the timber here and to arrive from Canada was sold for £5,000,000, but this amount of £1,000,000, against which there is a reserve for £771,000, represents Russian