WOOL POSITION IN AMERICA

Otago Daily Times, Issue 18385, 25 October 1921, Page 6

WOOL POSITION IN AMERICA

CROSSBRED COMING BACK INTO FAVOUR. EFFECT OF TARIFF ON RAW IMPORTS. (Written for the Otago Daily Times.) . BOSTON. MASS., September 18. Optimism 19 strongly marked in American 'wool Circles. A round of visits to leading wool men, some known from Geelong to i/urban, failed to discover a pessimist. The "verdict is that crossbred wool is steadily coming hack to a sound position, but merino wool will command a good price. Iho disturbing factor in fill calculations is the tariff. When the growers, fearing Australian competition with domestic wools, rode -temporarily into command in Congress nn the shoulders of an agricultural block, they wore successful in obtaining a severe emergency tariff with a life of 10 months, that, legislation will expire on November unless it ig extended for sonic few month;;. An extension i s probable. The fierce battle raging over the new Fordnev permanent tariff proposals does not offer muoh hope of satibility this year. le . emergency tariff lias proved prohibitive in its effects on raw wool, it has been so largely because enough wool was bought and imported in the six months beloro the enactment to keep American mills busy for a year. The effect may be understood from the latest figures issued by the United States Bureau of Foreign and Domestic Commerce, which show that in June this year the imports of Class 1 (fine) unmanufactured wool totalled 863,2151 b as compared with 16,073,2301 bin the same month of 1930. BUYING FOR BOND.

Mr F. N. Graves, the father of the wool business, who has 50 years’ experience behind him, pointe out that under the emergency tariff any wool that has been prepared in any way from its raw state has to pay a duty of 30 cents a. Jb, for greasy; as Australian and South American wools nr© skirted they come under that clause. ' Ph® wool which Americans are buying in Australia and -New Zealand to-day will go into bond, in preparation for the permanent tariff, under which a 55 per cent, duty may be imposed; this would be much less restrictive, .amounting in some cases to a duty of 11 cents as against 30, While fine and crossbred wools are penalised under the emergency tariff, rough East Indian wool is allowed in free, on the ground that it is a carpet wool and therefore non-competitive. This may have been true in the past, but to-day this wool is being' used in America in overcoats and rough goods, and is therefore being imported freely into the United States, with the result that prices have gone up considerably for that type. During the September sales in Liverpool the East India wools increased in strength almost daily, and at the close of the series the best sort, such as is imported, showed a rise of 25 per ’cent. In 1920 the wool imported into America from the British East Indies 1919 as n ß a > nst 4,919,9161 b in

What will be the effect of the Fordney regular tariff? Mr Albert W. Elliott, of J ere «h«h Williams and Co., who was called to Washington as quartermaster when America, entered the war, says that the aim will be to shut out unmanufactured woollen stuff and to raise the price of raw wool in the United States.

* % keeping up the price of raw wool, through a tax on the imported, 700,000 woolgrowers in this country will benefit. We do not want them to be driven out of the wool business into grain raising, which would mean that we should have to export and sell their grain against world competition, while being forced to import all our raw wool and mutton, probably paying big prices for the latter. America needs diversified industries. Provided that the permanent , tariff shuts out the Continental mills’ product, and ensures the manufacture in the United States of our own cloth, this country will be a bigger purchaser in the next 10 years of Australasian, and, of course, of South American and South African raw wools, than ever before. We are growing_ at the rate of two million people a year, which means that in the next decade there will bo 15 or 20 million more customers for wool. Australian wool is very popular iii the United States, and the New Zealand is superior in certain respects to that of any other crossbred wool, being free of black hair, which South American is not.”

Mr Elliott does not fear the result of the tariff on the importation of raw wool. A nation of 105,000,000 people the richest on earth which produces only a little over one-third of its own wool, must import the remainder. To an extent a high tariff might lead to a greater demand tor the cheaper variety wool. Like Mr Paul T. Cherringtou, secretary of the National Association of Wool Manufacturers, Mr Elliott does not anticipate heavy exports of manufactured wool from the United States. The wages here for mill labour are about double those of Bradford, and three s times those on the Continent. In American eyes, the same drawback is fatal to the ambitious scheme of Mr Stirling Taylor in the Commonwealth. It is thought that Germany will probably supply more manufactured goods to the world than any other country, as her conditions will enable her to manufacture more cheaply. A protective tariff of a prohibitive kind would certainly affect the Bradford and Continental mills by closing the American door. “America uses 500,000,000 dollars’ worth of cloth a year. With a prohibitive duty wo will ■ manufacture 95 per cent, of what we use,” says Mr Elliott. “Without proper protection the American mills may go out of business.” ' When Mr Elliott’s attention was directed to the representations made at Washington by agents of British and Continental Powers that if- the tariff barrier be made so high that it shuts out wool manufacturers and other products, it will be extremely difficult for the countries affected to pay their huge war debts to the United States, he replied; “The answer is that they never will be able to pay them. We must release them from those debts, but the time has not come when the American public is able to understand this. If Europe and Britain paid their delate in goods in 10 years, they would ruin America, kill our manufactures, and put our workers out of employment.” A REVIEW OF IMPORTS. In attempting to forecast the course of wool prices, assistance is gained from the excellent Wool Review issued by the National Association of Wool Manufacturers! This shows that the total wool imported into the United States in 1920 w'as 427,578.0381 b, and 422,414,985 in the previous year, the proportion of fine wool for the respective years being 337,212,1091 b and 315,635.8451 b. The imports for the last three vears from the four principal countries

sending Class 1 or fine wools into the United States are ns follow, those for 1918 being only for Boston, New York, and Philadelphia, through which cities 96 per cent, of the wool imports came in 1920: 1020. 1019. 1918. lb. lb. - lb. Australasia ... 75,818,624 92,991,382 32,366,733 Argentina ... 129,770,054 121,519,497 161,089,148 Uruguay 45,310,997 34,386,870 17,488,372 British South Africa ... 41,463,603 47,967,223 53,745,777 The total product of shorn wool in the United States in 1920 was 259,307,0001 b, and of pulled woof 42.9C0.0C0, an aggregate of about 302,000.00G1b. It may be significant I of the effect of low prices, though largely the result of the very severe winter of 34919-20, and of the unusually low lambing, that the number of sheep in the United States on January 1 of this year was 45.0C0.000, a shrinkage of more than Z.0f0.000 on the same month in 1920. and of 3,800,000 on January 1. 1919 There are three ways of explaining ,t.he slumn in crossbreds and the heavy demand for fine wool which ha? marked (he wool situation, ami of understanding why this is steadilv changing. Mr Graves declares that conditions will come back to normal “ when the tparusfe'' stops thinking that *he must drive in a broadcloth suit, —and ho is learning.” AN ANALOGY IN STOCKINGS. Mr Elliott, says; “ Ton million women changed over to sill; stockings during the war. In the next few years nine million of them will bo back in cotton. The process will bo gradual. So it will be in the case of fine and coarse wools.” The Wool Review attributes the position tir false prosperity. High wages and the passage of bonus, appropriations for returned American soldiers led to a demand for the “finest goods at any price." Manufacturers bid against, each other for labour; wages and prices soared. Then came credit restriction, profiteering outcries, and recognition of the inability of Europe to buy or consume. Prices dropped perpendicularly. In April last year Australian tops (64’s) averaged 2.85 dollars. In September they dropped to 1.85 dollars, and in December to 1.20 dollars. But ths did not moan that the world swung round again to crossbred wools or that nine out of ten million women went back to cotton stockings. Fashion yields loss easily to economic i pressure than do wool tops. Nor can one always force the public to buy what it docs not want. For instance, during the height of the merino period an attempt was made to push cheap suits made from South American fabric. It failed.

The next spring goods—seasonal goods arc manufactured six months ahead—do not yet reflect the movement to coqrser materials, and the bulk of the demand is still for the better grades of fine wool. Yet there is an increasing public inquiry for moderate priced fabrics, which means that medium and crossbred wools will be more in request by the mills. It is anticipated that in January, when the mills will be preparing for the following winter’s heavy-weight trade, rough wools or low class stuff will figure largely. In fact, Mr Graves finds rough cloth now in demand. Lifting a piece of strongly-made stuff from his table, he remarks that the cost of the wool in it was about 20 to PA cents a pound scoured, against 80 to 85 cents for fine wool. This is an encouragement to the manufacturer because he can buy three pounds of the coarser material for one of the finer. Mr Graves believes that there is room for a considerable increase in the price of crossbred, and he points out that even a rise of 25 per cent, would nicely represent 8 cents in 32 cents, or about 25 cents more in a whole suit—in which about 3£lbs of wool are used. That additional cost could easily b" 1 covered by the use of a little waste and shoddy. He notes that crossbred wool has gone ud 10 to 25 per cent, in the last four weeks—for example. Monte Video 56’s have risen in six weeks from 25 and 30 cents to 40. “WHAT WILL HAPPEN?”

“What will happen when the manufacturers turn their attention to crossbreds and coarser wools?” He puts the question and supplies the answer; "Not what I saw happen 20 years ago. when fine wool sold at the same price ns Cheviot. There is not a surplus of fine wool. You must remember that the whole world has been turning to the production of sheep for mutton purposes, wool being a by-product. In 1870 you might go over America with a fine toothcomb to catch a crossbred: in 1920 you might, almost do the same for merino. New Zealand and South America are almost wholly crossbred, and Australia partly so. Looking round at wool - conditions, it is evident that there is now a strong demand for sports cloth of a rough texture for men’s and women’s wear. This calls for low grade wools. In July, American mills used up about 46,000,0001 b of wool, of which it is estimated that about 45 per cent, -was from half-bloods and finer grades. This is in marked contrast with the figures last summer, when the proportion of finer grades was 65 to 70 per cent,, and Mr Elliott, estimates that before the >war tire United States used about 600,000.0001 b 01 wool on the basis of fifty-fifty. Half merino and halt crossbred. At the peak of good times the proxiorticn was about 400,000,000 merino to 200,000,000 crossbred. Now it is about 350,000.000 to 250,000,000, and will probably settle down to slightly more than half and half. Following the old economic rule that, when the price of a product falls below the cost of production the quantity produced will diminish, the low rates ruling (or crossbred wool have forced out many owners, and in South America sheen have often been left unshorn, especially when burry.

Wool experts agree that merino wool will not bo hard hit by the increasing demand for crossbred. There is not now a surplus of fine merino in the world, they say, and the Continental mills, particularly German and Belgium, will always take the finer stuff. Although Bawra has much in hand, it is not regarded as of best quality. Incidentally, it. may be mentioned that some representative Americans admit frankly that Bawra prevented Australian fine wool from sinking to absolutely unprofitable prices. Australia must, however, recognise that South African wool is liked in the United States, and it has made strides forward in the last, decade. While its quality is good, it is not classed as well as the Australian. American wool men are watching with interest tho efforts made by South Africa to improve her studs by buying highclass merino rams from Australia. South African woo! exports, in the grease, for three years to the chief purchasing countries, reveal the nrogress made:—l9l9, 231.591.1511 b; 1918, 143.942.7041 b: 1917, 139.844.884. As far as the American imports from South Africa are concerned, thev were 49.635.7771 bin 1920 and 57,565.601 in 1919.