WOOL ADVANCES.

New Zealand Herald, Volume LIVIII, Issue 17684, 20 January 1921, Page 6

WOOL ADVANCES.

There are many signs that authoritative opinion has little confidence in the policy of indefinitely withholding wool from sale with the hope that some change of circumstances might solve the problem of tMe accumulated stocks and stabilise the market at a level of prices higher than are now offered. The recent sales in Christchurch showed that therf is continued competition for the finer wools, and that buyers are prepared to pay prices which the Board of Agriculture and the Producers' Committee have recommended growers to accept. But the coarser crossbred wools that comprise nearly the whole yield of New Zealand flocks have not made the slightest recovery, either in London or Christchurch, for the simple reason that every woolbuyer and every wool manufacturer knows that the supply greatly exceeds the requirements of markets able to bid for it, and that the surplus will increase the longer the holders maintain the present policy of inactivity. Not only is the production of the coarser wools continuing in both hemispheres, but there are-indications that Australia's yield of the finer wools will be increased by the highly-favourable season, which will enable the country to make a rapid recovery from the effects of the drought. Though the statistical position is unfavourable for the withholding of New Zealand wool, the state of the wool market does not invite indiscriminate selling. It is therefore encouraging to learn 3 that the Board of Agriculture and the Producers' Committee have recognised that their original recommendation of a Government guarantee will not solve the problem, and are turning their attention to practical methods of reducing the accumulations. Unless the capacity of the markets now available can be increased without undue sacrifices on the part of the woolgrowers, efforts must be made to open new markets, and any development along those lines will apparently involve some sort of wool " pool," by which the problems now confronting individual growers would be undertaken by a group of experts, able to study changes in the situation and to seize every opportunity for the disposal of stocks to the common advantage of all shareholders in the pool. An organisation of this character would relieve the Government of the hazardous responsibility it incurred by undertaking to guarantee advances by the banks against wool. In ordinary circumstances, advances of this character are made by the banks as part of their ordinary business, but in the prevailing circumstances they evidently regarded the financing of woolgrowers as a doubtful investment and demanded a Government guarantee upon all such loans. Even with this guarantee the banks were doubtful whether the available funds would meet the normal requirements of producers and traders in addition to the special needs of the wool industry, and this difficulty was overcome by authorising them to issue notes up to the amount of their advances on wooL The present scheme has probably served a useful purpose in protecting the small farmers, especially returned soldiers who have lately taken up land, but its value is obviously temporary. No one would seriously suggest that the Consolidated Fund should be loaded with an indefinite liability upon the problematical security of held-over wool or that the currency should be continually depreciated by fresh advances to woolgrowers. Sooner or later a halt must be called, and at a time when the need for cautious and conservative control of finance is imperative the sooner a halt is called, and a practical scheme brought into operation, the better it will be for the woolgrowers and the country generally.