The Australian Wool Scheme.

Press, Volume LVI, Issue 16848, 31 May 1920, Page 6

The Australian Wool Scheme.

Tho details of Mr "W. M. Hughes's wool scheme amplify very considerably the meagre information conveyed by the cable. Whilst tho proposal to sell low grade wools to the Central Powers is an important element in th»; scheme, it is not that feature which is causing so much concern in the trade at Home. The proposal that is doing this is to tho effect that no auction sales are to he held of Australian wool in London after September 30th, 1920, until May Ist, 1921, the object being toallow the free disposal of the new clip in Australia during that period, and not bring it into competition with tho carry-over from the former clips. Naturally English wool circles are very much opposed to this, and it is extremely doubtful if the Imperial Government would give its sanction to a proposal which, it would probably urge, aims at retaining high artificial values while big weights of wool are held in Australia on Imperial account.. As a matter of fact, at the end of June there will be a carry-over in Australia and on the water of about 1,600,000 bales. All this wool will by then have been paid for by the British Government, representing a value of about £32,(100.000. In addition, tho Imperial Government is understood to hold about SOQ.OOO bales in England, representing an additional value of over £16.000,000, or a total investment of about £43,000.000. It would require very convincing argument to influence the Imperial Government to withhold from auction this huge quantity of wool —less, of course, the amount sold from now to September—for seven months, and. in addition, submit to further restricted offerings thereafter while the trade at Homo was clamouring for supplies- Howevar, in Australia the scheme has raised criticism from a totally different standpoint. Mr Hughes wants finance, and he is not tho typo

' of mail to be distressed if lie has to flout orthodoxy in securing it. His ' scheme proposes:— j The Commonwealth Government to negotiate with tho British Governj ment for the payment of £10 ; 0c0.0]-0 immediately on account of accrued profits, such amount to be used by the Commonwealth Government to reduce > its indebtedness to the British Givemj ment. 2. The Commonwealth Government to issue bonds (having a currency ! of five vears) to Australian owners for I this £10,000,000, and at the smne time j to make available temporarily. tie assistance of the banks. sny, £3,000 COO ; sterling if necessary, wherewith to lend i up to-50 cent-, on the bonds to ; wool-owners requiring accommodation to tide them over until tho proceeds jof the 1920-21 clip are available. 3. As to tho balance cf the wool profits, all amounts as trry accrue to bo credited by tho British Government to thi; Commonwealth Goverrment, and to be set off against the Commonwealth Government's indebtedness: to a simila.* amount the C'ommnnwca'th Government to simultaneously issue five-vpar negntinble bonds to the Australian woolowners for the araou'-t of such bal- ! ar.ee of such wool profits." ! It is rather a clever schema of reduc- ■ inrr the country's indebtedness, but the Australian wool-grower is more likely to ask for gold thnn bonds, particularly , with the efrccts of tho drought before | him. The total wool profits and money lying to Australian credit at Home are estimated by Mr Hughes at £40,000.000. Nobody knows where lie obtained thesa figures, but tho amount of Australia's unfunded debt with the Imperial Government is, singularly enough, £-10 : - OCO.CvO, and tho estimate may be a matter of convenience. In any case, this substantial ainotfmt would always be available for debt extinction purposes by way of compulsory loan if such a method of financc wci\: deemed advisable or necessary. The Wool Council in Australia, which had been dealing with questions of the future marketing and financing of the ensuing clip, was not consulted by Mr Hughes before launching his scheme. It was entirely his own affair, and as

it has created strong criticism in both

England nnl Australia, it is unlikely that it will be adopted—if at all—without modifications that will entirely alter its character.