THE RISE IN WOOL. VIEWS OF MR J. S. HORSFALL.

Otago Witness, Issue 2388, 7 December 1899, Page 7

THE RISE IN WOOL. VIEWS OF MR J. S. HORSFALL.

(Australasian.)

The causes of the present almost phenomeiral~advance in the value of wool and the future prospects for our great staple are attracting great attention. On these subjects we have interviewed Mr J. S. Horsfall, of Goldsbrough, Mort, and Co., Limited, one of the best authorities in the trade. He has been associated with Goldsbrough and Co. since 1656, when he entered the service ,at the age of 17.

Mr Horssfall states that the present rise' forcibly reminds him of that which took place in England in the latter part of 1870, after : the termination 'of, the Franco -Prussian war. He was in "England that year, and the advance which TDeeame apparent in Oetobei, J570, wns almost sensational. One Bradford i ■■firm, alone, which had made heavy purchases I in June and July, was said to have made a clear profit of a quarter of a million Stirling, j This advance was not reflected in Australia until the season of 1871, when at the opening sales in Octoher an advance of 50 per cent, at - once became apparent, such clips as War- j breccan, Carroonboon, and others, which in • 1870 were svld at about £d per lb in Mcl- j bourne, reac\ily finding eager buyers at 12d > to 13d, and V'ae Warbrecean wool — to quote J one instance among many — sold for £12,500 : net in 1871, as against £8000 net in iB7O. In his own case he sold a clip of 255 bales of hot- J water washed wool, from a station in which j he was a partner, at Is l|d per Jb in 'December, 1370, and the fortunate .purchaser made £2000 by its resale in London. In 1871, the season after that clip realised 12£ din the grease, being nearly double the amount it ' realised in 1870 — one year before. In this sea-. ! sou of 1871 American buyers appeared in Mcl- ' bourne for the fii>t time, the contingent being Messrs Harding, Yon Blarcom, Denny, Whitton, Hill, Williams, Cavalli, and Tracy. They ■ quickly raised the values, until towards the end of the season the be.=t Riverine clips, • which in 1870 were only worth 3d to 9d per i lb, were 6elliiig at 13d to 15d per lb. The j Coonong hot-water washed Riverine wool sold \ that Eeason at Goldsbrough's at 2* 2d per lb ' for fleece and Is 3£d for pieces. In 1872 the • American buyerb were again present, and ! j many Riverine fleeces were realised at from ' i 13d to 16d per lb, and in at least two in- ' stances .portions of clips from Riverina"sold ' for id to id per lb more, and Western District clips up to about 17£ d. In 1873, 1374, . 1375, aud 1676, prices still continued ,high ; i but not equal to 1872,' which may be regarded ! as the year of highest values at the Australian i tales until the present season. In .1877 price 3 showed an easier tendency, and, with one or i two exceptional seasons, they continued on i a lower level until 1889, when another sudden • and unexpected riuo occurred. But this was : not sustained, and prices declined season after J reason till 1894, when they reached about their lowest point, good clips of greasy being sold at from 7d to 8d per lb— -in fact, that year wool touched the lowest values in the colonies within his recollection. He-» states that he often asked leading buyers the reasons for the low prices, and the invariable answer was, "Too much wool! Too much wool!" The only remedy, and the only chance of bringing about more remunerative rates, was a big drought, they said. Well, the big drought came, and not one big drought, but droughts year after year ; until, as he says, we are now beginning the fifth year of them in moat districts of New South Wales, the effect of which ha 3 been that the number of sheep shorn in that colony has decreased from about 64.000,000 in 1894 to probably not more than 32,000,000 this year, or one-half. There has been a great fallingoff in South Australia also. In Victoria, Queensland, New Zealand, Tasmania, and Western Australia, the numbers have been fairly sustained, especially in New Zealand; but as nine-tenths of the wool grown there is now crossbred, owing to the greater profits j resulting from meat-freesing, the increase has ! not affected the supply of merino wool. He states that the present great rise in the value of merinos is no doubt caused by the absolute scarcity of the article — in short, the cry of " two much wool," which has so long been apparent, has now been stopped, and it has dawned upon manufacturers in all parts of the world that the supply of merino | wool has at last become, through the operation of these enormous losses of sheep, and the substitution of crossbreds for merinos in Now Zealand and South America, puobably insufficient for the- requirements of the trade. Heuce

the great, rush to secure merino wool, and fine crossbreda to use with it, during the latter portion of this year. The reault is the most successful sales and the highest prices ever known in Australia. The advance, in fact, ranges from 50 to 75 per cent. In his own case, he realised 70 per cent, more for his clips than was obtained for them last year ; and most growers have had similar experiences. At sucn prices, and providing that they are nearly maintained for even throe or four years, many> growers who have had heavy losses of stock will have good reason for congratulation on having had the droughts; but many others have lost their capital beyond oil chance o.f redemption.

And he states that, as regards this great rise, it will not appreciably affect the prices for manufactured goods, because the cost of wool, in a suit of clothes, for instance, is very small ; and" an advance of, say, 6d per Ib on greasy, or equal to Is per lb on scoured, would probably not add more than half a crown to the cost of clothing worth, say, ,£5 ss, the great; outlay being "in the cost of labour and machinery for its production, In 1872, when wool was at its highest point, the working classes were very prosperous, and no com"plaints were heard of the higher cost of wearing apparel consequent on the advance which had been established. The older manufacturers in Yorkshire, even to this date, speak of 1872 as being one of the most prosperous years that they have ever had in the trade.

And as regards the effect of this great rise in the value of wool in connection with Australia generally, and especially with reference to the consequent enhancement in the value of land, he gives some pact experiences which will be interesting. To quote his "words : —

" I remember making out a balance sheet on June 30, 1869, for our firm (R. Goldsbiough and Co.) which showed losses amounting to £232,000 sterling, caused by large advances on station properties, chiefly on the Lachlan and Darling, made before we had gained our experience of those Northern districts, and before water conservation had made them Eafe for stock. Drought had succeeded drought, and wool had fallen greatly year after year from the high levels which had ruled from 1853 to 1866, and on the basis of which the advances had been made. Stations had in consequence become almost unsaleable, and the late Richard Goldsbrough's confident belief for years before that wool was — as he often said — safer than gold had been much shaken. All the partner's capital was gone, and there was an overdraft pf £100,000 sterling at the bank over and above the value of the securities held, and we. had nothing to represent it except the goodwill of the woolbroking business. It- was a. time and a lesion never to be forgotten, and its effect on me was to cause an absolute dread of all but freehold securities, or good liens on wool, for many years -after, and, indeed, more or less up to the present time. I well remember after our business was transferred to a limited company, in 1881, the frequent scares I had on returning, after long absences in England, New Zealand, and other places, trying to regain my shattered health, at finding that tuch large advances on back country had been undertaken, advances which to this day have been a drag on the concern, and which, in fact, ultimately led to and caused its stoppage and reconstruction. . But, to resume my story, the bank could not get anything to realise towards this great deficiency, and, as our woolbroking business was worth £10,000 a year or more, tiur bankers ultimately agreed to carry us* on for a term of years, contingent on our paying the interest —and also £10,000 per annum off the prin-, cipal. There being no other alternative, except to ' put up the shutters,' this acceptance of the late Richard Goldsbrough's proposition to pay everyone 20s in the £, with interest added, gave us all new life and energy, and every man in the concern put his 'phoulder to the wheel ' in earnest, led on by the senior partner., who animated everyone by his strong will anil determination to surmount all obstacles in his efforts to retrieve the position. I never admired any man more in my life. He was a grand character — big" in physique, handsome in appearance, and noble in mind and principles — a typical John Bull. It was my pride and pleasure to be associated with him. And' he had his reward, for the balance 6heet of the year ending June 30, 1872, showed a net profit of £85,000 on the year's transactions,, and whan the balance sheet ofthe following year was made out the assets were sufficient to pay all outstanding liabilities and interest, and to leave a surplus of £120,000 sterling. *

"This was the effect of the great rise in Vool and the break-up of the drought on one coneera alone. "What must it have been on

all Australia? To give one instance out of many within-my knowledge, I roay statc'Jthat one property which ii vnflß6v nflB69 "stood"'in-our books at a cost of £94,000 sterling was not saleable then at even £20,000 sterling. If the latter price could have been obtained the bank would have sold it. I saw that property sold in January, 1878, after taking a clip of 2000 bales of wool off it, worth £30,000 sterling, for £154,000 sterling, and the greater portion of it was sold twice afterwards at over £100,000 profit. *So we let it go too soon, but it was a relief to get clear of it at the price named, more especially as the buyers paid half cash down, and were well able to,and did, pay the balance.

" I am of opinion thatj given a maintenance of remunerative prices for wool, and fair seasons, we are on the threshold of similar experi- ■ ences. It is quite possible, under such circumstances, that these great wool and finance companies, which, through unprecedented losses" by, bbatd t seasons, low' prices, rabbits, and advances made in prosperous timeHj have.,' got into great financial .difficulties, will' r&-' cover their lost 'ground and be r able to return good interest, and possibly capital invested, also', to their shareholders. Look at the experience of our old frrn>-^R. Goldsbrough and Co. J^qthiug could be blacker or more dep.ressing than 6ur-prQsnects in 1869,' with a great drought on. In 1870 the-drought broke,, and we had six magnificent seasons in succession, conjoined with high prices for wool and stock. " The rise in wool has come, and I have a strong belief that high prices will rule for fully seven years — not on' the present level, but at very remunerative rate,s, rates which will ensure" good returns on freehold and station properties. We can scarcely expect to breed up the 30 to'4o millions of merino sheep that have been lost in less than that period,,, even with fair average seasons, and all the timethe population and the consuming powers of | the world are increasing. In short, it does : not seem probable "that we can reach the pro- , duction of 1894 before 1906,ileaving 12 yearsof an interval for producing new outlets of consumption. And let us not forget that no country in the world can rival us in the production of merino wool. ' We have in Australia the dry climate and healthy pastures which exactly suit the merino. We in 'the wool trade used to look with almost dread on the rapid growth of wool production in'Soutli America. At one time I thought, when I saw in the Yorkshire mills and heard from the manufacturers that thoy were buying- River Plate wools cheaper than ours, and that the growers there were beginning to come nearly up to us in the quality and condition of their merinos, that we could only keep our position by careful breeding and turning out the highest classes of combing, but the diecovery of meat-freezing has. dissipated any fears on. that score. The South Americans are only: half out distance from the European markets, and they can make, ajid arc making, more money by breeding crossbred sheep for the masses than they could by growing merino wool. Besides this, it was soon found -that a large proportion of the nch Pampas was not suitable for .the merino, and great losses resulted from foot-Tot, worms, and other diseases. And, as 'about that time the frozen meat industry became susceptible of great developmentj the merino iheep was gradually displaced to make robm for Lincolns, Leicesters, and other quick fattening breeds, which v w.ere less liable to disease,- and which it' was found thrived admirably oh their vast .areas Of flat' fertile soil, with the aid of lucerne and other, fattening herbage. The. result, of, all this is that now about two-thirds of t their sheep are coarse-woolled breeds, and the fear , of rivalry to our Australian niei'inos from that quarter has been dispelled. We have, therefore.' now 'the ball at- our foot,' so to speak, so far as merino wool js concerned, and it only rests ' with our flockmasters to continue to "grow tha article, as iliey are trying to do, to the greatest perfection. .The manutacturers Avust have our grand merino fleeces for their choicest fabrics; and, as the world is constantly increasing in wealth and luxury, a great future for them 1 seems apparently assured for many years to I come. • I

"And, as. regards the seasons, I have a strong presentiment that the experience of 1870 will be repeated in 1900, and that we shall this next year see a great breitk-up of these droughts, and a return to copious rains and prosperous years. And as regards both Victoria and Riverina, and these colonies generally, the advent of federation, and free access to our own markets, unfettered by Customs dues and stock taxes, will, I believe, bring greatly increased prosperity to the whole of Australia."