LONDON WOOL SELLING

New Zealand Times, Volume XXXIII, Issue 7853, 15 July 1911, Page 4

LONDON WOOL SELLING

Reference to some objectionable features of the London wool sales made by this paper in January last has drawn from the firms controlling the business a reply. Bearing in mind “comparative statements of the values returned pci- bale in Now Zealand and London aale rooms” which emanated at times from London brokers this reply may bo regarded as characteristic. Instead of strengthening their case the brokers show that the London system of wool selling is even worse than it had been stated to be in these columns. In the first place the London circular of defence says: “The statement contained in the article: ‘The last buyer can take any succeeding line providing another buyer does not exceed his bid by lid’ is false, and no such custom has ever been in existence at the London wool auctions.” Allowing, tor the sake of argument, that this precise rule does not exist then the remarkable privilege of allowing “the last buyer” to take the succeeding lino is seen to be shorn ; of any redeeming feature, for it

means there is no check whatever on “the last buyer” having tho floor to himself. The brokers simply prove that front-rankers can absolutely control tho position—as Now Zealand brokers and buyers who have personally investigated the London system have time and again declared—and having onco secured a line a buyer can forthwith refrain from bidding and merely signal an indication that he claims tho next line. Indeed, ho can go on “claiming” to his heart’s content. Truly a most effective means of encouraging competition ! The brokers frankly admit, in reply to us, the existence of the “last buyer” privilege, hut naively contend that it has become an unwritten law solely to facilitate the progress of the auctions. They instance, as a necessity for this practice, the volume of competition at tho London selling room, which they say cannot ho realteed by those who are only familiar with the auctions in New Zealand. The London brokers’ argument is plausible, but it is not convincing.. An a matter of fact the actual volume of competition in London is not equal to what may bo seen at the best sales in this country. Though the number of supposed “buyers” may he much greater a large percentage of those in attendance arc “colts” gaining an insight into wool valuing and buying. There is no comparison at all between the competition in London and in Sydney. In Sydney the business of wool buying is absolutely unrestricted by any rules to suit a section of the trade. Tho regulations which trammel competition in the London sale-room would not be tolerated at Australian or New Zealand sales.

Tlio London brokers quote a rule which, they say, has been framed to prevent the misuse of the "last buyer” privilege. Our contention is that the rule is greatly abused. The enormous advantage given to the last buyer and the other astounding London rule — which the Horae brokers very lamely defend —that only id bids are taken after 8d is reached, entirely, eliminate that freedom of purchase which should prevail in an auction room and drives the buying power into the hands of a coterie who can, and do, absolutely dominate the position. There are often not more than a dozen actual operators at a London sale —not more than a quarter of the number bidding at the leading New Zealand sales. Obviously an outsider cannot afford to rise Id above tho market rates and therefore is forced to give his buying orders to men who are in a .position of special advantage. 'At the present time the iniquity of only allowing Jd bids when the price excedes 8d instead of tho Jd bids allowed np to 8d (a reversion of the usual order, when the higher the price the narrower the margin of the bidding)‘is particularly unfair to New Zealand growers. With wool selling at the current London sales at a price above 8d a fall is being registered of -id a pound, instead, of, as would be the case at a New Zealand sale, only 3d. Another extraordinary custom in London—which, by the way, suggests a reason for the existence of the peculiar “privilege” and “rule” referred to—is that some brokers are also buying agents. These are probably as much concerned in the success of the buyer as in tho interests of the New Zealand producer, and are naturally against any reform which would broaden the competition. A man cannot serve two masters, and in these cases the producer at least runs a, risk.