THE H.B. TRIBUNE MONDAY, FEBRUARY 6, 1928 COTTON TRADE CRISIS

Hawke's Bay Tribune, Volume XVIII, Issue 46, 6 February 1928, Page 4

THE H.B. TRIBUNE MONDAY, FEBRUARY 6, 1928 COTTON TRADE CRISIS

ONE 0 NE of last Saturday’s cable messages told us of the collapse of a round-the-table conference between employers and employees in the British cotton manufacturing industry. The employees, it was said, refused to discuss terms of settlement based upon a reduction of 12-i per cent, in wages. A reduction of half-a-crown in the pound is certainly a very substantial "cut,” and it can be readily understood that the wage-drawers would resist it strenuously. At the same time, it has to be recognised, on the other hand, that the employing companies have been suffering very severe losses during the long period of depression to which the trade has been subjected. There are two main causes for this. The first goes back to the brief boom time that followed immediately upon the close of the war, when in the cotton areas an immense amount of company “reconstruction” took place upon the footing of hopelessly inflated values, both for machinery and goodwill. It was quite out of the question that even under normal trade conditions an adequate return could be earned upon these wholly fictitious appraisements, and the investors of that period are the ones who a're now suffering most, dividends becoming a disappearing quantity. The situation, already bad enough, has during the last two or three years been greatly aggravated by the falling demand for the finished article. This to a very large extent has been due to the anti-British boycotting movements that have been in operation in the eastern markets which formerly provided the biggest outlets for certain classes of goods. The result has been that both in China and in India the turn-over of British cotton goods •has been reduced to -a mere fraction of its former volume. In China, too, the long-drawn civil war has so impoverished the main body of the population that even those who would be willing to buy British goods have not the wherewithal to pay for them. To these two causes has, of course, to bo added the general trade depression that, with its consequent un-

employment and reduction of purchasing power, has affected the home markets in a very markedly adverse manner. So that, altogether, the company shareholders in the cotton industry as well as their employees, have been faring very badly, and many of these shareholders are operatives and ex-operatives who had been induced by the boom-time glitter into investing their lives’ savings in the industry. Writing a few weeks back from Oldham, the centre of the American cotton-spinning branch of the industry, the industrial correspondent of the "Times,” was, however, able to say that nothing could be further from the truth than the suggestion, which had more than once been made, that Oldham was on the verge of bankruptcy as the result of the longcontinued severe depression in the cotton trade. "On the contrary,” he declared, "Oldham is facing with undaunted spirit a period of undoubted adversity, the effects of which are felt by all classes, and are being endured by all classes in a silence that shames some other industrial localities not so hardly hit, but of bankruptcy there is no sign.” For the operatives shorttime working has been chronic since the bursting of the brief “boom” that followed the War. Yet such is the sturdy selfreliance of the working people that among a population of 150,000 only 1 per cent, have recourse to Poor Law relief. A still more significant index is the number of families who find it necessary to send their children of school age for the free meals which it is now an obligation of the Education Committees to supply in case of declared necessity. There are riot more than 60 such families. It remains true that a large number of people in the cottonmanufacturing area are suffering severe losses. These are the holders of mill company shares on which the uncalled liability is now being paid off under pressure. Such shares, created at the time of the reckless reflotations of 1919, are the only security for the banks, for the loanholders, and for the trade creditors of scores of concerns now in difficulties. It is inevitable, whether adversity has made liquidation or arrangements under the sanction of the Chancery Court necessary or not, that this uncalled capital should now be got in. The process, as may be imagined, is a painful one for the shareholders. These people, however, are in the main people in the trade, and it is not they who are making claims for public sympathy. They know very well they have made a bad speculation, and that under the limited liability company laws they are only suffering the necessary consequences, and are really fortunate to escape the penalties of personal bankruptcy. It is among the small investors, many of them, as has been said, belonging to the class of manual workers, that the worst financial effects of the slump in fhe ootton trade are being felt.