DECLINE IN WOOL

Manawatu Standard, Volume XLV, Issue 138, 15 May 1925, Page 10

DECLINE IN WOOL

CAUSE OF THE TROUBLE.

MARKET FAINT HEARTED.

LONDON, May 13

“Where is the big man with tho money and sufficient faith in the wool industry to commence buying immediately?” asks Sir Arthur Goldfinch, who was chairman of the London board of Bawra.

“Though I am now only an observer,” he said, “I am convinced that the situation has eased, because tho smaller men follow a lead like sheep. The root cause of Australia’s wool difficulties is panic. Tho whole market is faint-hearted and unreasonably frightened.

“It is doubtful whether the present trouble is going to be settled by such simple methods as suspending the sales, or getting Bawra to acquire portion of the surplus at a valuation. Pei’sonally 1 am of opinion that there is no indication that Australia wishes the association to enter the market. Bawra would be wound up if it were not for litigation. “The statement by the Australian Commissioner to U.S.A., Mr J. M. Elder, that Mr Churchill’s silk taxes will help to increase the demand for wool, is, to a certain extent. tiue of England, as of America, though only slightly, because the worid’s production of artificial silk at present does not exceed 6 per cent'. The wool slump will certainly deter experimenters in synthetic wool, whom Wool-growers have real reason to fear.” CONTROLLED SALES AGAIN? A high independent authority said that the woolgrowers were up against the Bradford manufacturers, who had temporarily lost their heads. Bradford now realised, he said, that conditions were never so satisfactory and prosperous for the growers, buyers, and public, as when Bawra controlled tho sales. Bradford already was putting out feelers for renewed control, not necessarily Bawra’s, for tho purpose of stabilising prices, and preventing the disturbing zig-zagging which has been a feature of the sales since de-control. REACTION MAY FOLLOW, A partner in H. Dawgon and Co., one of the largest wool broking firms in the world, stated that the position of the market was fundamentally unchanged, but wool was fetching far below its true value. Therefore, he concurred with Sir Arthur Goldfinch that it would require a comparatively small buyer in Bradford to start a reaction which would be certain to he violent and probably sufficient to affect manufacturing. He did not know whether tho reaction would start to-morrow or the next day, but there was plenty of latent Bradford and American buying expected. He doubted whether prices could be satisfactory stabilised by an association such as Bawra, although Bradford manufacturers were discussing that possibility. Any immediate improvement in conditions must start in the wool market end of the trade.

Comparing to-day’s position witli that of 1920, he said there was no artificial hold-up of stocks nor general restriction of credit, nor a bottleneck in production, resulting in heavy forward contracts at artificial values. World stocks certainly were not greater now than during the slump in 1920. Stocks of raw and manufactured wool in America were now at their lowest for ten years, while the combing mills in Yorkshire and on the Continent were not congested with merino tops. A more confident tone in London would place the trade in a better position than for years past.