WOOL CONTROL.

Press, Volume LX, Issue 18100, 16 June 1924, Page 10

WOOL CONTROL.

REVIEW BY SIR A. GOLDFINCH. NEW ZEALAND'S BONUS. (FROlt OUE OWN COBBESPONDEKT.) LONDON, May 1. "Wool Control" is the subject of an article, written on the eve of the sale ' of the last bale of 8.A.W.1t.A. wool, by Sir A. Goldfinch (Director-General of Raw Materials, 1917-1921, and gov-erning-director of the British-Austral-ian Wool Realisation Association, Limited, ,1921-1924), appearing in". "The ; Times." The clearing-up sale at ' Liverpool this week will see brought -■ to an end a gigantic series of transactions- extending over eight years. ; Though the rc-sale of the wool has continued to the present time, Sir ATthur says no' raw wool would ever have been bought for the British Gov- . eminent account except under the pres- ! sure of war condition's. The need of ; immense quantities of wool for nrili- ' tary clothing and equipment was the original cause of these transactions, but it. will be seen that the British Government, ivithout any deliberate dcI sign to enter into commcrciil ventures, ; became involved in the purchaso of vast quantities of wool of types unsuitable -for military purposes, with the result that a -t ter profit was realised than had eve, \ been received by any national .l. *> iicqucr from Government trading. The governing director of B.A.W.R.A. explains that in December, 1916, tho unsold portions of the wool 'clips of Australia and New Zealand for the 1916-17 season were purchased iby negotiation with the Dominion • Governments at prices averaging 15£ d, reckoned to be equal to 55 per cent. abov<1914 prices. This basis was at the time generous. to the Dominions, but when the contracts were renewed ' at the same price in June, 1917, for the 1917-18 clips,'the transaction was more evidently advantageous to. the British Exchequer, for the entry of America into the war had caused, wool prices outside the Empire to. go-up sharply. .In June, 1918, a further renewal was negotiated to cover the clips during tho remainder of the war, and one year after,- which in the result meant nil. the wool shorn up to-June 30th, 1920. No ono:-.could possibly; tell _,. at the time whether for such, an extended purchase the price basis would turn out cheap or dear. To all these contracts there was attached a condition which was not by sheepf armers at the time, .but.which ultimately gave to the 'Australian pastoralists about extra. It was , agreed that on any wool not required for military purposes, the British Government should bear any loss on re-salc, but should return to Australia (or New Zealand) one-half of any profits which might result from the re-sales of wool of the respective Dominions. ■,." Australian public opinion at the time and since, throughout the varying market conditions of the past eight years, has with scarcely a discordant voice.consistently regarded these transactions - ..fa-ivbroadly- .favourable standpoint. The conditions o£"-.galo were fixed after public? discussion, with "the desire/tinvb.oth sides to be fair r ahd just. 'lt has always beeft recognised that these great purchase contracts assured to the pastoral industry for-four years a 'high degree of prosperity? In 1917-18 particularly,' to secure.ijcash > payjaent^pyi^qpl;, i aß..,it reached|port was"a not only to the wool growers, but to all the financial interests of Australia ;and.,New;-';Z.ealand;;, The ac'cumulntib'iis "of **uhshipped'''wo6l:s i which lay in .the Dominion's .warehouses for .Government account right up,to .the end of • 1920. are sufficient evidence •of :the.v,;difficulty which would haven been 'experienced in selling of financing the wooi>ijf.the British Government haS not bougnli I .'it: Added to the gobdjiprice received at the time, has sihise, received bonuses by way of half profits amounting to about £34,00.0,000, tfnfortunateiy, the New Zealand vbonus /was only £1,600,000, and even that -Was a ..premature distribution not-justi-.fied,by; the ultimate results. Tmft difference' between the two . Dominions ; was; (due"'..to the fact that,the 1919.-20 boom in prices for merino wool, of which New Zealand produced almost nothing, :.<did not .extend 7to crossbred wool,;..except iin.j'ajVefy: minor degree, and cros'sbreds afterwards fell to . less than half, or, in some cases, fo£ onethirdj of the Imperial purchase'price. It is irDt strange, that'the.- New Zealand sheep farmers were the relative smallness of the; bonus,'V but from a market point of view it- is; clear that,-they did better than Australia by selling four clips at virtually the same price to the Imperial, Government.;, s

"I Broad and, Kindly Judgment. ."■',.-■'' ''That the ''interests of -the War Departments arid of the British -'"'textile trade during the,.war were well'served by the Wool Control is riot now.disputed by anyone. At the time, and'especially at first, the drastic interference with private dealings was resented by many, and no, doubt mistakes",/were made in .the .application of this which aggravated the, resentment; but no voice is now raised to maintain that the Wool Control went any further ■than was at that time of perilj "or that, there was any serious ' error in :, its; adminiristratipn.,,. I ..may perhaps be* per' [ mitted, to sayrthat those who were responsible for v . exercising, almost, .despotic p'owbi"' oyer tithe -%obh trade' are'-ideeply: grateful to the leaders of that trade for the broad and kindly spirit in which the Wool Control has been judged." / Sir Arthur tells how the B.A.W.K;A-> came to;be formed in 1920; and he says that-from! the-.first the-directors firmly believe'd: that the surplus; of would be a rapidly diminishing the post-war annual" production, "being substantially less than,the world's: reTney believed; therefore, that the depression of market prices which occurred iwhen private 1 selling recommenced in July, 1920, wtfs a passing trouble audithat the tendency of crossbred prices' to fall far .below the cost of -production, ought resisted as ests.of the Holding these ideas, they were'by no meant averse to regulating the sale of the old wool so as to prevent as far as possible the total offerings exceeding the normal demand, knowing full well that by far the greater proportion of the restriction had to be exercised- bv B.A.W.Jt.A., private sellers for the most part being unable, even if thev were willing,-to hold back their wool. It was necessary, of course, to have regard to the general policy of the British Treasury in the realisation of war surpluses, but within the limits-imposed by that policy, B.A.W.E.A. endeavoured to prevent a ruinous slump in-the price of wool, which the directors knew rivust cut down sheep flocks and be followed by a sharp rise in prices in 1923, if not sooner. The attempt thus to avert violent falls and rises of price was' by' no: means completely successful, but wooi-users as well as wool-growers now -recogn : se that 8.A.W.8.A.'5-diagnosis of the situation was correct, and ■ that its action was prudent" and beneficent' Most people "Bi£ now inclined to think it was a pity that outside influences made it impossible for 8.A.W.8.A. to carry

out more ..;■: thoroughly the declared policy, of :the, directors.. There vyould be some' millions more crossbred sheep in' the' world to-day.:<ha,d- 8.A.W.8.A. ■been able to--act more whole-heartedly in 1921. The 'since 1923 has become,so clear -that only the wilfully'blind can any longer ignore its' strength. Wooltgrowers „no longer stand in much need of defenders. Carefulness of Dotails. * Larger than" the imperial wool purchase scheme.; .'were: ihe purchases of whe£t'. and sugar, but the wool scheme was much iritire comple.x| and interesting, and its. influence Vas muchdeeper and. longer-lasting than, in the. case of the. other two, main, .war" monopolies, tinder the wool : scheme 9,895,000 bales of" .colonial wool, were .handled;selling for about £3807000,000, and.yielding about £70,00.0,000; -profit, divided between the British Treasury and the Dominions..," The 'aggregate sales of British wool .were about 40,000,000 bales, the net profit 'being £5,000,000. From first', to ; last the accounts were handled on strict commercial lines, interest and- every other . appropriate charge being debited. In the books of, the wool purchase scheme there are recorded separately .for every, bale of wool, its mark/ number, weight, estimated yie v ld of clean wool} cost price .'per'lb, arid a description of the grade and' quality of the wool; "its transit ''from warehouse . to. ship and then through .one or more warehouses to the sales room is also .recorded. .If the particulars of sale are allowed v for, it is. safe to say that no fewer'than* 100,000,000 separate /.particulars have gone through the books,' every :6no. of which was indispensable for. the correct working of the business. Under these circumstances perhaps, it may be regarded as creditable that'the ad-' ministrative charges, have, not exceeded 1 3 per cent, of-the sale price,-or, say, under 2d in.the £. Accuracy in every detail has been unsparingly pursued,; and it is thought that ■no business house can show a better record in this respect that the British Wool-Depart- ! ment. The Australian soction tallied , out' correctly every bale handled in seven.years'. The" London administration has sorrowfully to admit that some confusion has arisen about less than 100 bales, this being principally traceable to the position which arose early in 1920, when large transhipments were made in distant waters and hundreds ! of thousands of bales of wool arrived I in London without correct bills of lad- ' ing. The'result will probably be that ! out of nearly 10,000,000 bales handled ! there may be an ultimate discrepancy i of 30 or 40 bales. ~-'" I Sir Arthur mentions the names of I three men who were concerned in the. ! "Wool Control and its subsequent liauida--1 tion—Lord Inverforth, who ' '. inspired boundless loyalty in all .who served under him,'' and who. '' intervened. per- . sonally in all capital decisions and originated many of them himself";. Lieu-tenant-Colonel F. V. Willey, who "organised all. the purchase and :distribution arrangements and rendered immense service from 1916 to 1919"; and Sir John Higgins, in Australia, "who inspired and has directed every. important step in the wool transactions from 1916 until to-day." | In conclusion, Sir Arthur ventures the opinion that the wool purchase scheme may not unreasonably be cited as a great example of successful State trading.. "While it was necessary, and so far as it was necessary, we ruthlessly ' interfered with or suspended trade methods, but we never interfered unnecessarily with the machinery of private trading, and this was smoothly, and without difficulty restored to full working order when the appointed time came.'*