WOOL CONTROL.

Otago Daily Times, Issue 19198, 14 June 1924, Page 15

WOOL CONTROL.

HE VIEW BY SIR A. GOLDFINCH. NEW ZEALAND’S BONUS. EIGHT YEARS’ WORK. (From Our Own Correspondent.) LONDON, May 1. “Wool Control,’ ’is the subject of an article, written on the eve of the sale of the last bale of B.A.W.R.A. wool, by Sir A. Goldfiinch’ (Director-General of Raw Materials, 1917-1921, and GoverningDirector of the Hritish-Aiist-ralia-n Wool Realisation Association, Limited, 19211924), appearing in The Times. The clearing up sale at Liverpool this week will see, brought to an end, a gigantic series of transactions extending over eight years. Though the re-sale of the wool has continued to the present time, Sir Arthur savs no raw wool would ever have been bought for the British Government account except under the pressure of war conditions. The need of immense quantities of wool for military clothing and equipment was the original cause of these transactions, but it will be seen that the British Government without any deliberate design to enter into commercial ventures, became involved in the purchase of vast quantities of wool of types unsuitable for military purposes, with the result that a larger profit was realised than had ever before been received by any national Exchequer from Government trading. The Governing Director of the B.A.W.R.A. explains that in December, 1916 ,the unsold portion of tbe wool clips of Australia and New Zealand for the 1916-17 season were purchased by negotiation with the dominion Governments at prices averaging 15jd, reckoned to be equal to 55 per cent, above 1914 pricesITiis basis was at the time generous to the dominions, but when tbe contracts were renewed at the same price in Jinn 1917, for the 1917-18 clips, the transaction was more evidently advantageous to the British Exchequer, for the entry of America into the war had caused wool prices outside the Empire to go up snarply. In June, 1918, a further renewal was negotiated to cover the clips during the remainder of the war and one year after, which in the result meant all the wool shorn up to June, 1920. No one could possibly tell at the time whether for such an extended purchase the price basis would turn out cheap or dear. To all these contracts there was attached a condition which was not much regarded by sheep farmers at the time, but which ultimately gave the Australian pastoralists about £34,000,000 extra. It was agreed that on any wool not required for military purposes the British Government should'bear any loss on re-sale, but should return to Australia (or New Zealand) onehalf of any profits which might result from the re-sales of wool of the respective dominions. “Australian public opinion at the time and since, throughout the varying market conditions of the past eight years, has with scarcely a discordant voice consistently regarded those transactions from a broadly favourable standpoint. The conditions of sale were fixed after public discussion with the desire on both sides to he fair and just. It has always been recognised that these groat purchase contracts assured to the pastoral industry for four years a high degree of prosperity. In 1917-18 particularly, to secure cash payment for wool as it reached port was a consideration of vast importance not only to the wool growers) but to all the financial interests of Australia and New, Zealand. The enormous accumulation of unshipped wool which lay in the dominions warehouses for Government account right up to the end of 1920 are sufficient evidence of the difficulty which would have been experienced in soiling or financing the wool if the British Government had not bought it. Added to the good price received at the time, Australia Has since received bonuses by way of half profits amounting to about £34,000,000. Unfortunately, the Now Zealand bonus was only £1,600.000, and oven that was a premature distribution not justified by the ultimate results. This difference between the two dominions was due to the fact that the 1919-20 boom in prices of merino wool, of which New Zealand produced almost nothing, did not extend to cross,hrcd wool except in a very minor degree, and ci-ossbreds afterwards fell to less than half, or, in some cases, to one-third, of the Imperial purchase price. It is not strange that New Zealand sheep farmers were disappointed at the relative smallness of the bonus, but from a market point of view it is clear that they' did bettor than Australia by selling four clips at virtually the same price to the Imperial Government. BROAD AND KINDLY JUDGMENT. “That the interests of the War Department of the British textile trade during the war were well served by the Wool Control is not now disputed by anyone. At the time, and especially at first, the drastic interference with' private dealings was resented by many, and no doubt mistakes were made in the application of this control which aggravated the resentment, but no voice is now raised to maintain that the Wool Control went any further than was necessary at that time of national peril, or that there was any serious error in its administration. I may perhaps be permitted to say that those who were responsible for exercising almost despotic power over the wool trade are deeply grateful to the leaders of that trade for the broad and kindly spirit in which the Wool Control has been judged. Sir Arthur tells how the B.A.W.R.A. came to be formed in 1920, and ho says that from the first the directors firmly believed that the surplus wool would bo a rapidly diminishing quantity, the postwar annual production being substantially less than the world’s requirements. They believed, therefore, that the depression of market prices which occurred when private selling re-commenced in July, 1920, was a passing trouble and that the tendency of crossbred prices to fall far below the cost of production ought to be resisted as contrary in the long run to the interests of the -whole community. Holding these ideas, they were by no means averse to regulating the sale of the old wool so as to prevent as far as possible the total offerings exceeding the normal demand, knowing full well that by far the greater proportion of the restriction had to be exercised by B.A.W.R.A. private sellers for the most part being unable, even if they were willing, to fioia hack their wool. It was necessary, or course, to have regard to the general policy of the British Treasury in uio realisation of war surpluses, bait within the limits imposed by that policy, B.A.W.R.A. endeavoured to prevent a ruinous slump in the price of wool, which the directors knew must cut down sheep flocks and bo followed by a sharp rise in prices in 1923, if not sooner. The attempt thus to avert violent falls and rises of price was by no means completely successful, but wool-users as well as woolgrowers now' recognise that B.A.W.R.A.’s diagnosis of the situation was correct, and that its action was prudent and beneficent. Most people are now inclined to think it was a pity that outside influences made it impossible for B.A.W.R.A. to carry out more thoroughly the declared policy of the directors. There would ho • some millions more crossbred sheep in the world to-day had B.A.W.R.A. been able to act more whole-heartedly in 1921. The wool position since 1923 had become so clear that only the wilfully blind can any longer ignore its strength. Wool-growers no longer stand iu much need of defenders. CAREFULNESS OF DETAILS. Larger than the Imperial wool purchase scheme were the purchases of wheat and sugar, but the wool scheme was much more complex and interesting, and its influence was much ace per and longer lasting than in tho case of tho other two main war monopolies. Under the wool scheme 9,895,000 hales of colonial wool were handled, selling for about £380,000,000, and yielding about £70,000,000 profit, divided between the British Treasury and tho dominions, Tho aggregate sales of British wool were about 40,000,000 Kilos, the net profit being £5,000,000. From first to last the accounts

were handled on strict commercial lines, interest and every other appropriate charge being debited. In the books of the wool purchase scheme there are recorded separately for every bale of the wool its mark, number, weight, estimated yield of clean wool, cost price per lb, and a description of the grade and quality of the wool ; its transit from warehouse to ship and then through one or more warehouses to the sales room is also recorded. If the particulars of sale are allowed for, it is safe to say that not less than 100,000,000 separate particulars have gone through the books, every one of which was indispensable for the correct working of the business. Under these circumstances perhaps it may be i regarded is creditable that the administrative charges have not exceeded per cent, of the sale price, or, say, under 2d in tno £. Accuracy in every detail has been unsparingly pursued, and it is thought that no business house can show a better record in this respect than the British Wool Department. The Australian section tallied out correctly every hale bandied in seven years. Tbe London afimunsuuium has sorrowfully to admit that some confusion has arisen about loss t han'lCO bales, this being principally traceable to the position which arose early in 1920, when large transhipments were made in distant waters, and hundreds of thousands of bales of wool arrived in London without correct bills of lading. The result will probably be that out of nearly 10,000,000 bales handled there may be an ultimate discrepancy of 30 or 40 bales. Sir Arthur mentions the name of three men who were concerned in the Wool Control and its subsequent liquidation — Lord Iverforth, who “inspired boundless loyalty in all who served under him,” ana who intervened personally in all capital decisions and originated many of them himself”; Lieut.-Col. F. V. Willey, who “organised all the purchase and distribution arrangements and rendered immense service from 1916 to 1919”; and Sir John Higgins, in Australia, who “inspired ana has directed every important step in the wool transactions from 1916 until to-day. ' In conclusion, Sir Arthur ventures the opinion that the wool purchase scheme may not unreasonably be cited as a great example of successful State trading. “While it was necessary, and so far as it was necessary, we ruthlessly interfered with or suspended trade methods, but we never interfered unnecessarily with the machinery of private trading, and this was smoothly and without difficulty restored to full working order when the appointed time came.”