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War Economy

Pricing for New Zealand Production

Pricing for New Zealand Production

Since demand for most commodities exceeded manufacturing capacity, the tender system of placing Government contracts was not suitable and production was arranged by allocating to various manufacturers orders for quantities fixed in the light of their respective capacities and equipment.1

In the early stages, prices for production were fixed at a value assessed by the staff of the Commodities Sections, or on the basis of costs submitted by various manufacturers. During 1942 and 1943 Ministry of Supply investigating accountants verified costs from the manufacturers' own records and then negotiated prices. It was difficult to keep up-to-date with this work. As there was not enough staff to investigate all contracts, first attention was given to larger contracts. The problem of costing production for the Ministry was made complex by the high competing demand for production of civilian goods which could not be imported.2

The Government had taken a stand against profiteering from war contracts but administering departments had to face the fact that in other production lines there was a seller's market and high profits could be made. In many cases, manufacturers not only tended to find civilian production more profitable but were anxious to secure retail outlets to assist their post-war activities.

1 The Factory Controller had adequate powers, when he found it necessary to use them. Regulation 3 (1) of the Factory Emergency Regulations 1939 (New Zealand Gazette, p. 2385) read: ‘The Controller may from time to time, by notice to the occupier of any factory, whether or not the factory was in operation at the date of these regulations and whether or not it is the subject of any licence granted under these regulations, direct that the occupier cease, restrict, or increase the production of the factory or of any branch thereof either generally or in respect of any specified goods or class of goods, or that the occupier produce at the factory or at any branch thereof goods of such kinds, descriptions, types, sizes, quantities, and qualities and in such order of urgency as may be specified in the notice.’

2 The problem is more fully discussed in Chapter 13.