THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, DECEMBER 27, 1920. THE WOOL OUTLOOK.

New Zealand Herald, Volume LVII, Issue 17663, 27 December 1920, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, DECEMBER 27, 1920. THE WOOL OUTLOOK.

4> The approval of the British Wool Federation makes it practically certain that the proposal to establish an Australian wool " pool" will receive the sanction of the British Government with certain reservations designed to protect the interests of the woollen manufacturers. Whether these interests are threatened to anything like the extent the trade has assumed is open to question. The proposals, as Sir Arthur Goldfinch, Director-General of Eaw Materials, has indicated, are cautious and moderate, and the markets of the world are so definitely against the woolgrowers that any other policy would be suicidal. An attempt to hold wool for an unnaturally high price would simply immobilise the " pool." The new Australian wool will not be subject to control and wool will be reaching the market frx>m the usual sources outside Australia. Under such circumstances the competitive price of the new season's wool will govern the price of the " hold-over" wool. All the Wool Realisation Association can hope to do is to feed it to the market in quantities the market can absorb without collapsing, to eliminate speculators who might operate the market to the detriment of both growers and buyers, and to stimulate the demand in British and foreign countries by extending long credits and by employing other means outside the trade custom. The sudden release of the hold-over wool in large quantities might mean cheap wool for a short period, but it would play into the hands of speculators, and by discouraging production, tend ultimately to raise prices above their natural level. The gradual release of the surplus, as proposed by Australia, will prevent so great a slump, but to the trade it has the recommendation of assuring cheap wool over a longer period. The right of Australian woolgrowers to combine for their own protection cannot be questioned. Having made the same bargain with the British Government as New Zealand pastoralists they are entitled to half the profits on the sale of their wool. The British Government has already balanced its expenditure, consequently half the surplus wool is the property of the growers. They are clearly entitled to control the disposal" of their own property, and they are entitled to at least a considerable voice in determining the selling policy as regards the other half of the wool. As a matter of expediency the Imperial authorities will probably welcome an opportunity to hand over responsibility for all the wool to representative organisations of producers which are willing to give reasonable guarantees that they will not attempt to manipulate the markets. It is no secret that the British Government finds the trading departments established during the war an embarrassment, and is anxious to close them down. The problem of the congested meat stores was solved by a large sale to a private firm whose intention was to explore the Continental market. It is still more reasonable .that the wool should be. placed in the hands of the original vendors for disposal. Government departments are illfitted to undertake trading innovations, and it may be anticipated that

in seeding markets tor the surplus the Wnol Realisation Association will show iar more initiative and enterprise than could be expected of a State department. It will, in addition, be free from policy considerations which might tie the hands of the British Government. The approval of the Australian scheme raises a question which New Zealand growers must face without further delay. They sold their wool under the same arrangements as Australia; they are entitled to the same right of resumption if they desire to exercise it- Probably the' Imperial Government would be best pleased if they formed an organisation to market the New Zealand surplus. To some extent the Australian " pool," by saving the market from flooding, simplifies the problem of the disposal of New Zealand wool. In other respects it j renders action by New Zealand more j necessary than ever. The British Government has made a first attempt to enter the Continental market by selling a large quantity of Australian and New Zealand wool to Poland on terms. It may be anticipated that the Australian " pool" will follow up this lead very energetically, and that the nursing of markets which are potentially important will be a leading feature of its policy. It is | highly desirable that in any such j future sales New Zealand should be j associated with Australia, otherwise i there may be a gradual clearing of ! Merino wool without a corresponding I improvement in the crossbred porI tion. The terms and the machinery of that association have become a natter for urgent consideration.