"COLOSSAL" PROFITS

Evening Star, Issue 17320, 7 April 1920, Page 5

"COLOSSAL" PROFITS

■- ■ • ———* _ OFFICIAL REPORTS ON WOOL PRICES. ENGLISH PROFITEERING ACT FAILS TO "PROTECT. .?*** hu K? .Profits were made from the ,SIU6 ot wool is apparent from two reports ; Just issued under the Profiteering Act, One or these is the report of the Standing Committee cm ,4he. Investigation of Prices; the other the report of a Sub-committee on -lops and \arns. All profits at the auctions . of Australian wool were divided between the British Government and the Australian sheep farmers. The profits made by branches of the trade in England are in a different category. The auction sales of raw material brought "in, it is estimated unofficially about 60 million pounds. Half this profit-that is, about 30 million pounds * r' S M . handed b y the British Government to the Australian Government for distribution among the Australian sheep farmers. Ihe raw materyil, it mny be explained, goes to the top-makers," .who prepare it for manufacture and sell it to the spinners, who turn it into yarn. The prepared raw material is wound in the shape of a child's top-hence th 3 name '"tops.' 7 The profits made in these various stages are not re- / . vealed. ,Under the War Office system—which ceased to onsrato in May last—of issuing raw material at fixed prices to the spmners, 'fair prices" were fixed at which the raw material was converted into varii. A comparison made by the committee between the "tair prices" on the War Office basis and the market prices recently ruling disclosed : . * ■K- Tha ,U hs esl 'inatcd profit allowed bv the ,m offioe varied from Id to 3d per "lb. I hat the market quotations show an estimated profit varying from 13d to 43d per lb. \ °L th - e 30 to 40 { s"l ,cs of J' aril s covered by the investigation -one-half show a profitof. not less than 25d per lb. Investigations made bv the War Office show an average pre-war rate of profit of i Id per lb for all yarn of this character. ) The committee state that Sir Arthur I Uolaiinch (Director of Raw Materials) in-1 formed them that he was ouita unable to I give any information as to the profits which have, m tact, been made bv 'the British ' Government on the Australasian wools. Buf it is clear from the Dublished figures of prices realised in the auction !? les ~ attd u ' Arthur docs not disguise the facWhat they have been on a colossal scale. The whole-Australian wool ciio w?s taken over by the Government- at a nxed rate of lt> 2 d per lb greasy weight, or 55 ner cent. above the market rates of 1915-14. The findings of the sub-committee on the trapsactions that flowed from this arrangement may be summarised thus: During the war Snd for five months aftrr the armistice wool wts issued to the fade by the Government at mices intended to b-> : reasonable to coyer the Governments outlay, the controlled prices at which th» Government were able, owing to tlmir control, to issue the wool were generally lo«-t"-than the world prices. Ihe release of wool from control in April has been follow-d i by a VERY GREAT IN'CREASE IN PRICES. ' Profits on raw wool of all types have !""■<■ i> ' augmented very greatly since the control was removed- I'Se ttmcrer.ee between the purchase pri:e and the auction price has ac- _ crued to the British Government- and' the Australian Governments or'growers. From the information before them the Sub-com-mittes are . unable to arrive at a .definite I i-gure inchoating the extent of the Govern- ! menu profits, but it is clear that these must nave been on a considerable scale. I to protect the British public from the I ellect of tne decontrol of wool and of its i sale at increasing prices through the auc- i tions, the Wool Council, comnosed. of represenauvos of all branches of "the trade and ot the trade -aniens, put forward a standard clothing aoheme to sup id y clothing for the -biilisli public at- reasonable prices. A majority of the Wool Council recommended a. compulsory scheme, but a minority preferred a voluntary scheme. The scheme after considerable delay, was rejected bv the Board of Trade. The sub-committee understood that it was intended to rely on the Profiteering Act to check unreasonably high prices. As a matter of fact, the Pro*litcering Act does not appear to Jipvc affected the situation, e;:cs»t that- it has- enabled the facts contained in this report to I be brought to light. The woofs distributed at the controlled prices were used, in the absence of the standard clothing scheme, for general trade purposes, and such distribution has not had the corresponding effect of keeping down tie prices of clothing to tlie public, but some part at least of the difference between the fixed issue orices and the greatly increased auction values of wool has remaiueel in the hands of one or other branch of the trade. ' \ "Among the causes that have contributed i to the present high prices of wool the following may be enumerated as the most lmpoirant:—The demand to-day is greatly in excess of supply, and transport delay accentuates the difficulties.. The cessation of woo! sales in Australia and their concentration almost wholly in England has i'ocussed the competition of the world's buyers/whilst not enough of the qualities of wool most in : demand have been offered. Machinery capacity to-day is unable to cope v/ith the' unprecedented demands made on it, and producers whose output is sold for many months ahead often quote high prices, partly to cover themselves in a market that con- i tinucs to rise and partly to deter customers from placing orders for future delivery. €o persistent is the demand, how3,ver, that the j high prices quoted have been willingly paid. I The dzmanci has concentrated itself on the i hier qualities, and it has been suggested! to the sub-committee that if the public had been able to spread their demand mere equally among the various qualities, the ' prices of the finer qualities might, have been' less. When prices were beginning to ease in London the auctions were thrown fullyopen to foreign- competition.