WOOL PRICES

Dominion, Volume 14, Issue 45, 17 November 1920, Page 8

WOOL PRICES

THE QUESTION OF ADVANCES EXTENT OF GOVERNMENT GUARANTEE POSITION STILL INDEFINITE The decline in the price of wool at the Christcliurch sales on Mondaj - , following the unfavourable reports from London, has given many producers an added interest in the problem of wool finance. The fanners arc being advised to hold their wool, lost by putting it into an already overstocked market they should nccentiiate the existing troubles, and most of them realise' that the advice is good. But very many of the farmers cunnot wait a year or two years for their wool money. They must secure advances on the bales they have put into the stores, and they are waiting with some auxioty to leant what the basis of those advances will be. A Dominion reporter who niado inquiries on -the subject in commercial and banking circles gathered that the situation is still very uncertain. Bankers and stock and station agents, as well as farmers, are watching developments, and they are not prepared yet to speak at all confidently about arrangements that must depend upon circumstances. It is true that the Government has taken rower to guarantee advances made by the banks to producers, but the terms of this guarantee have not been defined. The clause of the Finance Act dealing with the subject reads as follows:— ■ Whero any bank carrying on busi-ness-in New Zealand has, With the ■ approval of and subject to conditions imposed by the Minister of Finance, advanced any moneys to persons engaged in New Zealand in the production of wool, meat, dairy produce, or other primary products, on the security of such products, the Ministor of Finance may .'from time to time onter into agreements with such hank to guarantee-to the hank the repayment of such odvancos and of tha interest and other charges in respect thereof. The Minister of Finance (Mr. Massey) hns stated definitely that while the Government is prepared to support the -producers, it' is not going to risk the loss of any of tho public money. The banks, with- or without tho guarantee, will not make Advances beyond a maximum believed by. them to be well within tho actual market value of tho wool. The question, to. be determined, then, Is I what is the actual market valuo, having regard to all the factors. It is obvious, of course, that tho company or bank making the advance, will' be guided also by tho general financial status of the borrower. One farmer may be in a position to secure better terms than Ins neighbour can obtain. The man with the l big mortgage and the small eoiuty will be in a disadvantageous position, and lit the same tiiAfi he will be tlic man least able to hold his own wool for any length of time without assistance. If the Government guarantee is required, it will be chiefly for this class of producer. The conditions of the Government guarantee will not be denned until the needs of the situation become more certain than they are at tho present time. Neither the November London sales nor this week's. Clinstchureh sale can be regarded as htning fixed wool values. . .. ~ . ~, The real key to the situation is held by the British Government, which owns tiie accumulated stocks of Australasian wool, amounting at the end of September to some 2,635,000 bales. The Government has asked the Director-Genoral of Haw Materials to continue the policy of holding wool firmly and releasing such quantities as c» n -ha absorbed by the market without causing a,™nous fall in prices. If the accumulated mm! is'withheld in this fashion, and if facilities are provided for getting some part of the new clip oil 1 to the market, the men who have the handling of the wool at this end are disposed to believe that any really serious trouble can be averted. It was suggested to the ronbrter that the Imperial authorities S the New Zealand producers some consideration since the has'arisen-is duo largely to the.policy followed in London selling limited quantities of wool at very high prices, and allowing stocks The adopted in regard to meat, wtth conse quences • well known to the Now /eaK farmers. If the accumulated wool should now be placed "P on JH ; xsv-sf a::. ernnient will try jof' d j£janr,T^*tKo ances on this point before declaring the Stent to which the grantee w-ill be carried The policy of the banks in the meantime must be guided by circumstances.