GOVERNMENT WOOL

Otago Daily Times, Issue 18051, 27 September 1920, Page 6

GOVERNMENT WOOL

RESULT OF AUCTION SALES,

THE OUTLOOK FOB CROSSBRED,

(Fbom Odr Own Cobbesfondent.) LONDON, July 27. The recent Government wool auctions have not been as depressing as the two previous serios, prices being maintained better than the majority expected. Home and Continental traders have been the mainstay, and although withdrawals have been large it is noteworthy that the Government has refused to let tne wool go under the issue prices of last year, and if more Continental competition developed reserves would easily be reached. The decline in j all qualities is covered by 5 per cent., the I bulk of the wools selling at fully last sale's ! prices, greasy and scoured fine crossbreds I often advancing fully 5 per cent, j The wool correspondent of the. Daily TeleI graph states that unquestionably the demand j for the raw material has improved, and it is significant that the price, of tops in Bradford is beiow that at which many qualities could be made for out of wool bought during the recent auctions. It is nigh, time that merinos especially should be steadied, and no good 64's tops should be available under 8s 6d. Bradford has always been a philanthropic centre, but there is absolutely no need to-day for topmakers to acI cept so low as 7s 6d, as has been the case i during the recent auctions. Some expect I that values will ultimately settle below • the present level, and directly it is felt that a new basis ha s been established there will be a big buy in all departments. The fact of the sale "by description" which, should have taken place being cancelled is rather significant. The officials of the department j must see a way of getting rid of their surI plus stock of low crossbreds without sacriI ficing prices ■ any further, or else the sale would have taken place. END OF BOOM PERIOD. There is not much change in consuming centres, trade stil being on. the quiet side. Just a hand-to-mouth business is passing, and things are no worse, but 64's warp tops cannot be quoted at more than Bs. a price which affords a rcmarkabe contrast with those current in March, when the same quality wa s selling at 14s per lb. Better news comes from Leicester, and the mills of the West Riding of Yorkshire are all running full time, though there is much talk of one or two districts going on short time. The demand of the textile workers for a further 40 por cent, advance in wages may result in a serious crisis, for if the operatives are not prepared fo accept the offer of the masters a strike is inevitable. Many are amazed at the masters conceding anything, but there is no doubt that many firms are eager to get our orders to contract time in order to prevent any cancellations. That really is the crux of the whole question. Stocks of pieces have at last faeeun to pile up, and the entire textile trade seems to have come to the end ot the boom period. Germany is inquiring a little more both for wool and yarns and civen a settlement of political trouble a bW Continental business would soon develop.

FUTILITY OF FIXED The Bradford correspondent of the Yorkshire Post, on the subject of fixed prices for crossbred wool, writes: "For some little time certain sections of traders have been in possession of an assurance from the Director-general of Raw Materials concerning bis intentions as to the fixing of reserve prices for crossbreds. . It is difficult to understand why the precise character of the assurance given by. Sir Arthur Goldfinch to country domestic wool dealers was not published, so that traders general y should have the Benefit of it. It is hardly possible that Government-owned wools will be cleared before the new South American and New Zealand wools are on the market. Neither our wool department nor the 1 rime Minister of Australia has the power to dictate the price of wooL The attempt of the Wool Council to do so from April to jSovember of 1919 was futile, the character of the demand forcing prices far beyond the point intended, and the Government Wool Department will be equally impotent to stop the downward movement. The opinion is strongly held in some quarters that the department should pursue a policy of systematic liquidation, and so at least secure the best market price of the day. To maintain an artificial reserve pneo is not only postponing the date when a new basis of values will be found, but it is causing ; apprehensions of a disastrous slump in values when new crossbred wools are com- ■ ing into the market. Those who are op- ' posed to this policy ask what assurances 1 there axo for importers when the new Aus-' : tralian clir> is marketed; also why those who bny in New Zealand should not be considered also? The sooner the Government department is out of the wool trade- the better, and that time will be hastened by a, judicious policy of liquidation of stocks." GOVERNMENT'S POLICY.

" The stagnation which now exists in the woollen and worsted industries," says the Statist, "is caused by many factors, but by no means the least important is the fact that the rank and file of traders are really beginning to appreciate the possibilities which may result from the enormous accumulation of colonial wool existing at the moment when control of buying comes to an end. We have not forgotten that in iho autumn of 1919 the Government, by opening the London sales to foreign competition, forced a rise in prices at a moment, when a fall had begun, and it now appears that thej are endeavouring to maintain their present reserve prices by restricting the sales and reducing the quantities offered. This policy, we suggest, is fundamentally wrong. "So far as crossbred wools are concerned, the pace has been set by South America, from which sales are taking place at prices far below the Government reserves and at practically the pre-war levels. Even if some arrangements are made for supplying sufficient wool to our late enemies, it seems inevitable that a big drop in raw wool prices is inevitable in the near future, and we believe that the only sound course of action for the Government to take is to permit prices to roovo gradually to a lower level Tins plan can only be put 'into effect by reducing the reserve prices and by maintaining nn ample, or more than ample, sironlv in the saleroom." J