WAR AND TRADE

Evening Post, Volume LXXXVIII, Issue 61, 9 September 1914, Page 3

WAR AND TRADE

»» — • — PRESENT POSITION REVIEWED SETTLING DOWN TO BUSINESS I THE OUTLOOK BRIGHTER NECESSARY PRODUCTIVE WORKS. 1 "Husband your resources!" said the Prime Minister to the people of New Zealand on the outbreak of war, and they began "husbanding" right away. They went about it different ways, but ib was all with the one end of providing against a possible time of stringency in every direction. Some merchants cabled at once cancelling orders given to firms in the United Kingdom, on the Continent, in the United States and Canada, and in Australia. Building and other large contracts just on the point of signaturewere not proceeded with ; orders given to local tradesmen and manufacturers (except for foodstuffs, coal, and other prime necessities) were countermanded ; salaries and wages — not fixed by awards — were reduced And hands were put off. There was no panic, never has been a panic, and yet these, things* were done and are still being done, or are contemplated. In the early days of the war New Zealand had nothing ready to send away thai the rest of the world wanted. That being so, the producers or shippers, as the case might be, had nothing upon which they could go to the banks and ask advances upon when the goods were put in store or into the ships' holds. The New Zealand exporting season had not opened. In fact, it is not open yet, for in normal times the first boat away with butter and cheese aboard for th© London market usually leaves here about the middle of September every year. Meat follows later, with wool in company. The lamb slaughtering season does not fully begin until near the end of the civil year, and shearing is not yet started. While there is no doubt that the position which, has arisen calls for strict economy in expenditure, there does not. appeal' to be* any ground for not spending money and Mot paying bills. This view appears to be taken by the large New Zealand institutions which come into financial relationship with producers. It is readily granted that all necessary productive works in the country must be proceeded with, but contracts thac involve the borrowing of mom/ are not encouraged — at any rate, not for the present. Not from th© reticent bank manager, but from client* who interview him from time to time, it may be learned that the same attitude is observed towards applicants for funds required to carry on .new undertakings. For going concerns the utmost is being done by the banks, within safe lines, to keep them still going, and for the customers or clients of such going concerns it must be said that they are promptly and loyally meeting their obligations. Hero and there a little slackness in meeting accounts as they fall dua on settling day is noticeable, but the root cause of this is, or is said to be, attributable to tardiness on the part of retail customers in discharging their obligations to storekeepers. It is to' be feared that "husband your resources" has been, interpreted by many, such to mean "Don't pay what you owe just now, but hang on to all your ready money." The con* sequences of, following such a doctrine to it* conclusion will be very serious all round, • and especially so to the retail customer, in -the end. THK PROSPECTS. Happify there are signs of an improvement in the trading position. Increased freights, increased marine insurances, and the payment of war risk insurance all make a heavy charge upon goods imported and exported ; but -.when they are apportioned they do not add very much to the cost of a single article. In the case of drugs and chemicals, the advance has certainly been heavy, and it is general, and levied upon some made-up goods too, the bases of which are . very small quantities of imported drugsov chemicals. A 3s 6d article has advanced to, say, 3s 9d. That odd 3d is a war tax which the consumer is paying already. To meet an increase in price of a particular article — not necessarily of a pharmaceutical character — made by increased freights and insurances to cost, the distributor pays 5 per cent., bat he may profit by charging 15 per cent, more for it than usual when it is handed over the counter. This is no doubt inevitable, but it is very difficult to rnakc the retail purchaser understand why it should be so. Meat, or rather beef, -we have been told, was bound to rise in, price from canoes operating before the war began or was thought to be pending. It was raised- per lb by wholesalers in Wellington, and next Id, and even more, per pound by some retailers. This was another way of putting the Prime Minister's advice into practice, and equally hard for the consumer to understand, especially when mutton went up_ too, and may still further advance. WANTED, THE SHIPS. Now, gfven the ships to carry the produce away, the prospects for this country for the future are particularly bright. Meat, butter, and cheese are certain to command high prices in the British markets. Tliey are fetching high prices there already. I?or example, on Ist August the High Commissioner reported the. prices of New Zealand mutt, butter, and cheese. He did likewise for the week ended sth September. This enables the- following comparisons to bo made : — N.Z. Ist Aug. sth Sept. Mutton, Ib ... 4dto4id 5 M6dtosfd Lamb, lb ... sidtp6d 6idto6£d Beef, lb ... 3|dtosd s|dto7d Butter, cwt... I'<iostol24s 124s to 130s Cheese, Ib ... 64s to 66b 70s to 74s The new season's shipments of New Zealand butter and cheese have not yet begun. So far, then, as to the future of the market for New Zealand produce — when it gets there. But there axe still two or three obstacles in the way, although these are not insurmountable. Th© first is 1 the maintenance of open sea xoutee, the freedom of the sea between New Zealand and Great Britain from the enemies' ships. The Austrian Navy is a pTactically negligible quantity : the German Navy, we aco given to understand, is held by; the British fleet in the North Sea. Still there are cruisers in the Pacific and Atlantic still unaccounted for "which have the capacity for doing- a great deal of mischief to merchant shipping. This explains the increase' and maintenance of the high marine insurance rates and the war risk insurance, and also in part the increased freights — • although bo far as butter* and cheese are concerned, thai, shipped through the National Dairy Association will be carried at the same rates .as last year, and no extra freight on this kind of cargo for San Francisco and Vancouver ie to be charged. Perhaps the most formidable obstacle at the moment as the -uncertainty as to tonnage or ships /to take the produce away. Ministerial assurance* have al.Mady^hega jjiven aa~to ;£hat^ jgojah Jbufc,

it cannot be overlooked that twelve oversea steamers have been taken for New Zealand transports out of the fleet available for carrying Home produce, and that Austrcoln. will require twenty such vessels. Now, the banks' advances to_ producers reach their maximum at this period of the year in normal circumstances, und they look for it reduction of them during the nest nix months from the sale of the produce. But if the farmer cannot get his produce away for want of sufficient ships a serious position is likely to arise. He will not be able to draw on the banks against it, and if he does not do that he -will not have the money to spend in tliis country. Further, if this be so, then merchants here will not be able to import as freely as*?jhey have been doing, or at all, to meet New Zealand's, requirements of British materials and manufacturers. This difficulty about getting the New Zealand produce away will affect the Mother Country in two wars : (1) It will seriously retard the "replenishment of her food supplies from this quarter of the Empire ; and (2) It will restrict the purchasing power of one of her best customers, New Zealand. The Government of this country can help very materially, and no doubt it will, in the restoration of confidence. It can do so by ensuring sufficient tonnage to carry away the produce of the country ; it can itself consider and possibly adopt a system similar to that adopted by the Imperial Government for covering cargoes agiinst war risk at a reasonable rate — it is now £2 per cent. — and influence the reduction of ordinary marine risk rates. ( . THE CASE OF WOOL. Then there is the special case of wool, and with it skins and hides and tallow. The wool market is most uncertain. For all wools suitable for fine clothing the prospects were exceedingly dull in August, when such wool was saleable only at ruinously low prices, and holders were enjoined not to sell if they could possibly avoid it. This meant, of course, that their indebtedness (where such exists) to houses financing them was not likely to be appreciably reduced by their clip until the market recovered. It has improved. The Bradford tops market, as on sth September, compared with this time last year, shows that whereas 40's tops today are worth 15fd per pound, they averaged that price for the corresponding month of last year, and 60's tops are to-day Id per pound better, being 29jd per pound, as against 28£ d per poand, the lowest rate for such tops from July to September, 1913, inclusive. The market may be such by the time the New Zealand new clip is ready for export as to greatly relieve growers and those financing them of the anxiety they are now experiencing The Declaration of Peace will probably precede a boom in the wool trade of the world, but this desired event still seems remote. In the meantime, the English market prospects for wool, as cabled by the High Commissioner, are not so depressing as they appeared at the middle of August. In any case, New Zealand has not begun to shear yet, and much may happen between now and then. Taken altogether, the produce and trading position in New Zealand is not anything like so difficult as some people imagine. It is admittedly capable of improvement, and that improvement may be effected by the removal of the barriers to trade that the war has raised, but which may be levelled or lowered as time goes on, even though the end of hostilfties be not in sight. Much rests with the people themselves, and with the Government also. The despatch of the Expeditionary Force to Europe should bp> followed by a. settling down to business as before the war. and reaping the advantages of a remarkably favourable season for the production of both butter and cheese, and the fattening of stock, all of which should command highly remunerative prices once they reach the overseas markets.