WOOL DEPRESSION.

Evening Star, Issue 20364, 21 December 1929, Page 14

WOOL DEPRESSION.

A comparison of the prices received tor wool at yesterday’s auctions in Dunedin with those at the first offerings in this selling centre last season must convey at a glance some rough idea of bow the national income is being diminished. Perhaps a fall of 7d per lb js representative of what has perforce to be accepted good a grace as can be mustered. Some growers are even speaking of production at a loss with the market on these levels; but ft has to be borne in mind that for some seasons past the purchasers of •their clips have been saying the same thing in respect of their side of the industry. In this connection it is interesting to study the statistics of British industrial profits. The ratio of' profits to capital during the current year

has fallen , below, last year’s ratio in ten out of thirteen leading industries, and the woollen textile industry is among those ten; nevertheless, the six typical firms, selected as the basis of this industry’s state managed to average a 7.7 per cent, profit on capital. Restricted finance is given as another reason for curtailment of wool buyers’ limits, and probably this is one of the main reasons for the present depression of the market. In Australia, if not so much in New Zealand, the policy of severely restricting the flow of this season’s clip to the market is being adopted, and it is possible that this coincides with woollen manufacturers’ alleged determination to allow growers to carry the surplus wool during the quiet season. It appears as though British banks favour the colonial banks bearing a larger share of the burden of financing the marketing of the clip. Other factors than the world’s consumptive demand for wool affect market values. A good deal has been said of the displacement of wool by substitutes. The latest information on that aspect, however, indicates that the world production of rayon, or artificial silk, only equals 3 per cent, of the textiles used. And it may be added that there is a pronounced depression at present in artificial silk shares; but here, again, this is attributed rather to depression on the Continental Stock Exchange than to any inherent weakness in the industry itself. The state of the Lancashire cotton industry is, and for some time past has been, the reverse of encouraging. Altogether textile industries can lie regarded as passing through rough waters, and until calmer seas are experienced the wool growers can hardly expect a return of the profitable years, of recent memory.