The Dominion. THURSDAY, APRIL 27, 1938. WOOL PRICES AND OVERSEAS FUNDS

Dominion, Volume 31, Issue 179, 27 April 1938, Page 10

The Dominion. THURSDAY, APRIL 27, 1938. WOOL PRICES AND OVERSEAS FUNDS

The 1937-38 wool-selling season, which ended with last Friday’s Wellington sale, was uncertain and disappointing in several ways. Though there were no big price fluctuations the world situation affected the market, as it has overshadowed practically every other commercial activity, with the result that there was. not. always the keen competition among buyers which reflects itself in prices. Generally they have been willing to fulfil their requirements at rulingprices, but there has been no “wool hunger” as there was in the preceding year. The season opened on a definitely lower plane, and growers, realising the position, have in most cases been prepared .to meet the market, so that there is unlikely to be a big carry-over of the season’s clip. ’ Official returns from Dominion auctions are not yet available, but estimates show this season’s realisation to be something over £9,000,000, as against '£ 14,903,257 the previous. year. Thus the Dominion wool cheque has shrunk by roughly one-third, and the sheepfarmers and the country generally are so much worse off —something like 5| million pounds worse off this year as compared with last year. The main factor contributing to this reduction in the country’s, wool cheque is price decline, but there has also been a decline both in the weight and quality of the clip, especially in the Wellington district. Under all the circumstances growers might have been satisfied with the season if other things had remained the same, but, of course, this has not been so. Faced on the one hand with shrunken returns from his clip the grower is faced on the other with the increased costs of its production and heavy taxation. These he is forced to meet out of decreased income, and so the gap between costs and prices becomes wider once again. A farmer who was able to meet these obligations on the prices of last season may well find difficulty in doing so this, so that what might be considered a normal year as far as returns from the Dominion clip are concerned cannot be considered normal when looked at in terms of profit to the grower. In fact many sheep-farmers will find themselves on the wrong side of the ledger. / . It was only a few days ago that the Prime Minister was talking somewhat boastfully of the advance in the value of production under the rule of his Socialist Government. In fact one was almost led to assume that it was the Government and not the farmers of the Dominion who were responsible for the production of our wool and butter and meat. If any credit was due to Ministers for the increase in value of production, then the Government presumably will now take the responsibility for the loss of five and a half millions on the wool clip. So also in connection with the value of our exports generally. According to the latest figures available, that is up to the end of February last, there has already this year been a drop of a million and a half in our exports compared with the first two months of 1937. This is a very unpleasant fact for the Government and the country to face. Again there is a disquieting development in respect of the balance of our overseas trade. In the first two months of 1937 exports exceeded imports by £6,392,965, whereas for the corresponding period of 1938 the excess was only £3,229,048, a drop of over £3,000,000. These facts are of interest at the moment because they follow closely on Mr. Savage’s extravagant claims. But they are important also as indicating the unwisdom of the general attitude and policy of the Government in assuming that good times and good prices are bound to continue and .that we can go on spending accordingly. There is a very significant set of figures to be found in the Abstract of Statistics in relation to our overseas credits. In February, 1935, the net overseas funds in London held by our banks totalled £41,215,567; in February, 1937, the total had dropped to £31,333,393. This year the February figures show a further drop to £25,517,818. This heavy depletion of our overseas funds is one of the signs of the times which should not pass unheeded. We are using up our accumulated capital overseas at a rate which may involVe us in difficulties.