WHEAT PRICES

Evening Post, Volume CX, Issue 144, 16 December 1930, Page 10

WHEAT PRICES

SLUMP IN CANADA

BANKERS ASSIST POOL

(From "The Post's" Representative.) VANCOUVER 26th November. When wheat fell to 2a 6d a bushel last week—the lowest price in the history of the Winnipeg Grain Exchange —the three Prairie Premiers hastily packed their grips and boarded the train for Toronto and Ottawa, to plead with the banks about the guarantee they gave the Wheat Pool, and to ask the Dominion Government if it would add the credit of the nine provinces of Canada to their guarantee. The banks loaned £4,800,000 to the pool, of which everyone expects £2,000,000 to be dead loss. The bankers rose to the occasion, and said they had no intention of foreclosing on the Provincial Governments or forcing the Wheat Pool to realise on its assets, valued at £4,000,000, in the shape of elevators and other equipment. The bankers realiso that wheat will not stay long at the record low-level ■ price of all time. As a matter, of fact, the price jumped 2d a bushel when their assurance became known. The Prairie Premiers are not likely to get much in the way of credit guarantees'from Mr. Bennett when he returns. His hands will be full with unemployment, falling revenues, shrunken trade, a prospective deficit, and all the other attendant circumstances of world depression. The Premiers might as well have stayed at home, for all the help they could get at Ottawa. If the Dominion Government started out to pledge the country's credit for the stabilisation of wheat in a bottomless market, they would never end till they had dealt with demands for similar treatment for other key industries, such as lumber, pulp, fish, and mining, quite apart from the. manufacturing industries. Last year, when wheat prices were in the vicinity of 5s 6d a bushel, the pool set its initial payment on 1929 wheat at 4s 2d. This was later reduced, to 3s 6d, then to 2s lid. On the 1930 crop the price was fixed, for the initial payment, at 2s 6d. This has been twice since reduced in a crashing market till it reached 2s Id a bushel. To stabilise last year's situation, the three Prairie Governments guaranteed the bank loans out of which the pool made its initial payments on the 1929 crop, on the security of its wheat holding and the credit of the three provinces. The guarantees were not extended to the pool's borrowings on this year's crop. Grain in the hands of.tho pool therefore represents collateral for a mixture of guaranteed and unguaranteed loans, and when December wheat slumped below 2s s|d last Week the market value of this collateral had .shrunk to a point where the margin between it and the total amount of the loans was narrow enough to threaten the credit of the provincial Governments. It was at this moment that the Premiers, in panic, took the train for Ottawa. There was more panic than gesture in their precipitate flight; they could have got the bank's assurance without leaving their capitals; they could expect nothing from Mr. Bennett at homo or abroad. Complicating the issue is the need to finance the 1930 crop. A reasonable forecast is that'the banks will extend the period of. their loans and finance the new crop of 396,000,000 bushels—a problem which is. made more serious by the size of the harvest. No one has any doubt that the wheat market will recover. Meanwhile the Wheat Pool is under severe criticism from its members, and there is a suggestion that the Liberal Opposition at Ottawa will lay a big share of debacle at the door of Mr. Bennett for his attitude at the Imperial Conference.

Superintendent Slinn, who was recently seriously injured in a fire. ;it Lower Jlutt, is now able to resume his business, but states that he will not Tie ;>ble to attend night Jires for some time.