with a large quantity of wheat on hand, and we took it over from them. Mr. Lehmann, an old partner of mine, asked me to take over the wheat; and my firm agreed to do so. I simply took over his certificates. That stack showed a shortage of 2,800 odd bushels, half of which I have debited Mr. Lehmann with, but have not yet recovered the amount. The other wheat was milled very quickly; and it was on account of grinding that wheat that I came into collision with the Scheme. We were all in the purchasing agency agreement. The agreement is to be found at the back of the Wheat Marketing Act, 1916. Under that agreement we are obliged to pay for the wheat as we use it. In fact, we were supposed to pay for it before we used it. The scheme laid down very hard and fast lines for dealing with millers, and a lot of the trouble has arisen owing to the Scheme's adhering to those hard and fast lines and failing to recognise that we are not working under normal conditions. We could not make provision for markets ourselves; we simply had to pay for wheat at the price the Australian Wheat Board laid down, and sell our products at whatever figure the Federal Price Commission fixed. We were restricted on each side, both in our buying arrangements and in our selling arrangements. But, notwithstanding that, the Scheme expected us to deal just the same as if we were buying in the ordinary market. That arrangement was found to be unworkable; the Scheme sent down large quantities of wheat, and we could not always see ahead how we were going to use those quantities. Gradually a workable basis was arrived at, of paying for the wheat as it was milled. Now I come to the time when I ground up this large quantity of wheat. The mistake I made was in not asking the permission of the Scheme to grind it. We had no orders on hand; most of the millers had begun to close down. There was a shortage of offal. Many thousands of tons of offal were being imported until the Federal Prices Commissioner made strong representations to the Minister and asked him why the millers could not be allowed to grind some wheat in order to relieve the shortage of bran and pollard. We ground our wheat without asking permission, and we were called upon to pay for it. We pointed out that by grinding the wheat we were saving its life, so to speak. We brought down the wheat and turned it into flour, and it was kept in better condition as flour. We asked the Scheme if we could be paid for it as we sold it, but their answer was, "No; you ground it and you must pay for it." They billed us with £20,000 or £30,000 and on that issue the position of our account lay, and it was on that that the references have been made by various people to the celebrated advance of £12,500. We never got a penny advance. After a long discussion it was finally agreed to give us credit for the amount of wheat we had made into flour and they credited us with the value of the flour. That was the advance we were supposed to have got. You can see how unfair the previous treatment was and how bitter it made me in my relations with the Scheme. They could see at a glance that what had been done was for the benefit of the wheat. The agreement stated 'that the wheat had to be paid for as it was ground. I ground it and incidentally kept my mill going. The advantage to the Scheme, on the other hand, was enormous. I showed no loss on any of my stacks except the alleged surplus which they never got and which I think is questionable.

7490. You were no worse than the others?—No. The mills had no surplus. The other millers only acquired what they wanted for their mills. I acquired more and ground all the balance. If there has been any surplus I have not been able to discover it. At the end of the season, and I have shipped wheat for many years, I have never had a surplus, and the out-turn on any of my cargoes has never exceeded the invoiced quantity, except once in 1913. I was in England then, and saw a small sailer discharging. That vessel showed a surplus, perhaps because the boss was there looking on. That was the only ship I ever had a surplus from. In connection with some of the ships that have gone to the Mediterranean I have had considerable losses; but there must be a loss there where there are several handlings. Now, with regard to contract wheat.

7491. We have not touched that because the matter is in dispute and is in the hands of the Crown Law Department? — And it is likely to remain there. Incidentally, that contract wheat was responsible for a great deal of trouble. If the question had never cropped up our relations with the Scheme would have been better. You have noticed that Mr. Deane Hammond and others have alleged that we, having put this wheat into the Pool, abstracted what we considered due to us. That has been looked upon almost as a criminal offence. When Mr. Johnson called us together and said that a Wheat Pool was going to be formed, we told him that we did not care about joining in. It may be that we were not sufficiently patriotic, but we could not see that going in would be of advantage to ourselves or to the farmers. The farmers also shared that view. They would have preferred to sell to us at a straight-out price. The Farmers' Association, and even Mr. McGibbon, preached no Pool for many months. We fought against it and tried to keep out of it, and told Mr. Johnson flatly that we would have nothing to do with it. We did not want to fight the State or the Federal Government, but if we could have remained outside the Pool we would have done so. I said that I intended to go on buying wheat. I can see now that I was wrong in doing so, but I did not think so at the time. I bought every bag of wheat that I could lay my hands on, right up to the time it was necessary to stop. Finally, I agreed to buy no more, and I telegraphed to all my agents to cease buying. You can see, therefore, that it was impossible for me to say what quantity of wheat I had bought at that time. I informed the Scheme that I had absolutely ceased buying, and I did so when I promised on the 30th November, 1916, that I would buy no more. When my contracts came in I sent them to the Scheme. A lot has been made of the fact that we met Mr. Johnson and told him what we had bought. Mr. Sibbald who was present, and who constituted himself the spokesman at that meeting, said we had bought 150,000 bags of wheat. I knew that was wrong because I estimated privately that that would be pretty well the quantity that I myself had bought. Mr. Sibbald made all kinds of statements, but he had not bought any wheat himself. Over that quantity, the 150,000 bags, a great deal of trouble arose, but it only arose months after the Scheme was concluded. Although we were negotiating in October and November, it was well on to April of the following year before the agreement was signed. Mr. Johnson did not know how to deal with this wheat which we had bought outside the Pool. We wanted to keep it, while he wanted to be able to tell the Prime Minister of the Commonwealth that it was all pooled. The great mistake was made by the Minister taking the wheat and by ourselves in putting it in. If we had kept it all this trouble would not have arisen. We contract millers were supposed to have made £40,000 out of this. As a matter of fact we did not make 40,000 pence. In the Eastern States wheat was delivered a little earlier than ours. There were delivered there in South Australia 250,000 bags and the millers were allowed to retain it, and they were also permitted to export the flour. At the time, of course, there was a fair amount of shipping. We had to complete against American and other flours and these flours were made from wheat costing nothing like the value that the Australian Wheat Board were asking for Australian wheat. Had we been obliged to buy from the Scheme, we could not have done any export business in competition with America, and our flour would never have been shipped. After the Scheme came into operation, in July, an Australian wheat cargo was sold at 50s. in London. We were afraid then that we would not see the money we had paid for our wheat, and we regretted having put it into the Scheme. Later on, when the American crop proved to be a failure, and markets soared, then the Scheme officials began to think what a lot of money had been lost through the millers not being obliged to buy the wheat through the Scheme. Of course it is easy, after conditions change, to imagine how much more might have been made. They said nothing about cargoes which were sold earlier, and nothing about the thousands of bags which had come into the Perth market and which had been sold by auction. The produce merchants who bought that wheat were treated as ordinary business men but we millers were criminals. We had only done what others merchants had done, but because we had bought wheat from the farmers we had robbed the Scheme. Had we been allowed to keep that wheat our relations with the Scheme would have been very much better. Our agree-