THE HIGH PRICE OF WOOL.

Marlborough Express, Volume XXXIX, Issue 160, 12 July 1906, Page 4

THE HIGH PRICE OF WOOL.

(Christchurch i^'-oss.)

Considering thnt G'.r gcou times j which both New Zealand :uid Australia tiro now enjoying aiI.- admittedly clno to the high p'ricos'prevailing for wool, ie bocoiuy's a subject of interest to all classes of the community to enquire what has led to tluv-o high prices, ami whether they arc likely to contmuo. The question is dealt with at some length in the June number ol: the Australasian Insurance and Hanking Record by "3Lr Edmund Jowett.^ an acknowledged authority. Describing th« extraordinary ris.e which has tak«.Ms pl-.ioe ii tl:o pric-o ef woo! d'K- ;.■.!■.•• Uk- l:i■..!■- .-i^ ;.'.v;r:;, ho points on!' fii:;t siievlnos touch:1!.! i-hcir lowest ]i:>i:ir :\t the end oi' I'.-'OO, when in 1/ct-oh:-r ami IVovombrr a >i\\y,xv invrliio top v.'a:: quoted is) i'^rnfiifi'd i'or .several Wi-=.'ks at ibid. A ihniiur top wns worth during isiay this ye-u* iiftAd. This shows a recovery o'i IOJ-d or G'-i-Wl per cent. l.'ut even this is trtjno bst-ido the recovery in C!'o?.;;.l;n,>ds. The:,e reached their lowest point about Noroinher, 1901, -.vhen a large tr:n»;action in -J-O's tr.-ps (course oiG^brecl-;) took plaeo at Vcl per lb, avu 4(>'s (medium crossbred) i'ell to L3id. 'iiio iO'.s tou in June last was most buoyant ab'lOid, and the 46's wasworth '20,U1. In other words 40"s had vis-en ]./o per cent., and 46's 138 per cent. Is it any wonder that the p^r-.toral and farming industries in these colonies are flourishing, especially when we remember in addition to the boom in wool, the- satisfactory prices Hint prevail for frozen meat, skins, and dairy produce? To what can Be is thin gratifying rise in prices chiefly to be as-signed? Air Jowett attributes it very largely to the increasing production of gold, but to our mind he attaches a great deal too much importance to this factor. It is no doubt true within certain limits that when gold is plentiful there is a tendency for more of it to be given in exchange for commodities, and the latter consequently rise in price. On the other hand, if the production of gold falls off, its purchasing power increases, and the price of commodities falls. This general tendency, is greatly modified by the state of credit "and by the relative supply of and demand for individual commodities themselves. Y\'e do not- think that the fact that the production of Fold rose from £52,500,000 in 1900 to £77,000,000 in 1905 is in itself sufficient to account for the rise in theprice of wool from ISJ-d to say 27d for mcrir.o during the same period, iftlie rise v.'ero dr.o to monetary cau.vas alono we should expect to find that the price of wheat, for example, rose in the same proportion, and, as a matter of fact, it did not do so. The chief reason for the increase in iho price of wool is the fact that while consumption increased the supply fell oil. The increased demand was clue to various causes—the Boer war, the Russo-Jap-anese war, change in public taste, general prosperity in trade, leading to increased spending power of the masses, and consequently an increased expenditure on clothing and so forth. As regards the falling off in supply, Mr Jowett shows that the number of sheep in Australia and New Zealand fell from 92.551.463 in 1901 to 72,959,829 in 1902. Since then there has been a gradual, but gratifying recovery, until in 1905 there were 94",527,444." This year we know there is a further increase in New Zealand, and there is every reason to believe that a still more gratifying recovery has taken place in Australia. Fortunately the increase in the wool produced has grown at a greater rate than the increase in tha number of sheep. Taking Australia alone, Mr Jowett shows that the recovery in the numbers of sheep in Australia from the end of 1902 to the end of 1904 has been only from 54,000,000 to 66,000,----000, the increase being 12,000,000, or 22 per cent. But the wool produced increased from 988,000 bales in 1903 to 1,420,000 bales in 1905, thus showing an increase of 44 per cent, or doublo the percentage, of increase in the number of sheep growing the. wool. The explanation of this striking phenomenon Mr Jowett finds, nnd no doubt correctly, in the remarkable improvement which has been going on from decade to decade in the woolgrowing capacities of the average Aus- ! tralian shcop. This is mainly effected by the intelligent application cf the law of evolution, vis., the elimination of the unfit in order to enable tlio most lit to mo.ro Jfrscly propagate and Jive. ! Does not what has been accomplished in t»3 case of the sheep afford an object lesson to the dairyrf.irmer as indicating what might also by done to improve the yield of butter from the herds of the colonies? It is interesting to add that Mr Jowett estimates the growing clip—that for 1006-7—at 2,050,000 bales for Australia and New Zealand, which would be the greatest clip Australasia has ever grown.

As regards the future, Mr Jowett is of opinion that it is hardly to bo expected that wool values are likely to last loug at -their present extreme prices, even H 'the. jaumial production of gold remains or t'vcu (still further expands. He points ont *-@ry truly that the tendency ol' ail fltictsta-tio-ns in prices is to exaggerate themselves until what was originally a genuine trade demand, based upon tho legitimate purchasing power of the people, becomes a veritable "boom." It is true tkfit every bale now bought is .said to be ftuing direct into consumption, and this -i« a healthy sign. It is evident, however, that the high prices are feiminlrtthtg production, while on the o-t'lie.1-' hand, they will naturally tend to dsss'tja-scj f.hy demand for wool, and foster the use y£ j.o\yer-prieod substitutes. Moreover, it is evident that anything like a general declijso in trade would accelerate the fall in wool. Fortunately there is no immediate sign of depression, and the probabilities arc that the decline in the price of wool when it comes will be a gradual decline, and not a sudden slump, which >.ypiiH] Kpell disaster.