WOOL CONTROL SCHEME.

Otago Witness, Issue 3487, 11 January 1921, Page 9

WOOL CONTROL SCHEME.

A most important conference of woolgrowers was held on December 7 in Melbourne to consider a scheme to control the sale of all the carry-over wool under the imperial contract, which is to he terminated. The scheme, which was submitted by Sir John Higgins (chairman of the Central Wool Committee), was unanimously adopted. Tha Chairman, in outlinging the scheme, said: The “special” executive recommends that an organisation be formed, called the British Australian Wool Realisation Association, Limited, a legal entity with an Australian domicile, and registered under the Victorian Companies Act. Drafts of memorandum and articles of association have been considered and are in course of preparation, in anticipation of this scheme being accepted. The scheme is to petition the Prime Minister of the Commonwealth (Mr Hughes) to apply to the Imperial Government to terminate the wool contract cn a certain date, say, December 31, 1920, making a division of cash (if any in hand), wool, and other assets, in the ratio of 50 and 50, based upon statements to bo prepared immediately in London and Australia, and subject to adjustment when actual balance sheets have been prepared and audited. As practically the whole of the wool on hand is paid for. its value can Ire mutually determined by the Imperial wool authorities and the Central Wool Committee without difficulty. The Imperial Government’s half of the unsold Australian wool is to be disposed of through the proposed now entity—-the British Australasian Wool Realisation Association, Limited, as agents for the Imperial Government, the proceeds of each bale of carry-over wool sold to be credited, after deduction of charges, equally between the Imperial Government and the British Australian Wool Realisation Association, Limited. Under this scheme the association would obtain control of all Australian carry-over wool, and as the association is composed solely of Australian wool producers they will have the management of the sale of their own commodity, and can market it in conjunction with the current clip as may be deemed to be in the best interests of all concerned. It must be distinctly understood that the “special” executive, in the submission of this oroposal, does not wish you to interpret it as having been accepted by the Imperial wool authorities. Tito “special” executive believes that if a request embodying the above recommendations were made by the Prime Minister to the Imperial Government, hearing the endorsement of the Central Wool Committee, State Wool Committees, Australian Wool Council, Pastoralists’, Farmers', Graziers’, and Settlers’ Associations, co-operative companies, fellmongers, and others, the Imperial Government would confer with its wool advisers, and make every endeavour to carry out the i wishes of the Australian wool proclue-or#-

—“Walk-in, Walk out” Agreement.—From these remaj-ks you will realise that the “special” executive committee’s recommendation amounts to a proposal, that the wool contract between the Imperial Government and the Commonwealth Government representing Australian woolgrowers be terminated at one stroke. That the proposed new entity—the British Australian Wool Realisation Association, Limitedtake over the Australian wool now controlled in London by the Director General of Raw Materials, and in Australia by the Central Jfool Committee, on a “walk-in, walk out”

basis of 50 per cent, of ail assets to the Imperial Government, and 50 per cent, to the Commonwealth Government (as agent for Australian woolgrowers), which would automatically transfer its half to the new organisation. The new association may be termed a trust and realisation association for the disposal of all Australian carry-over wool, in which each individual grower participating in profits will possess an interest liased upon the value of the wool appraised through the Central Wool Committee since

the initiation of the scheme in November, 1916. The control of the Australian carryover wool by the Imperial and Commonwealth Governments would cease, and the realisation of carry-over wool would be vested in the proposed Australian association owned by Australian growers, and the liquidation of wool stocks would be effected by _ the directors of the proposed company, assisted by a large advisory council representing all States. Attention must be directed to this important fact—that by settlement in kind, as proposed by the “special” executive committee, the ownership is changed from present conditions, wherein Australian woolgrowers have only an equity in profits without power to direct time or place of selling the carryover wool or fixing any reserve. Another advantage would be the disbandment of the Central and State Wool Committees at an early date, but the offices, wool stores, and plant could be utilised, and such staff as the new organisation required could be drawn from the offices of the Central Wool Committee and State Wool Committees, who have been specially trained for the work and have four years’ experience to their credit. —Details of Organisation.— If the new organisation is launched, it would be registered in Victoria, with' its head office, in Melbourne. Its capital would be, say, £25,000,000. in 25,000,000 shares of £1 each, representing present Australian interests, partly in cash, wool, and other asse'3. _ It is proposed to make issues to Australian growers and others interested in the scheme as follows:—Half their interests in debenture stock, half their interests in shares in the association. The debenture stock could be valued as worth 20s in the £l, but the ultimate value of the shares would depend largely on the actual realisation of the wool. The directorate would

consist of nine members, five in Australia and four in London, with an advisory council of, say, three members from each State. The directorate would have plenary powers and fixity of tenure, say, not less than three years. Vacancies on the directorate would be filled by the directorate, and vacancies on the advisory council would be filled by the advisory council. One member on the Australian directorate would represent British interests, and one member on the London directorate would represent Australian interests. The memorandum and articles of association would be as wide as

possible, giving the directorate full and complete authority to conduct and ‘"finalise” the association’s financial operations. The debenture stock would be retired at will. In order to give early relief to the small growers, it is suggested that all debenture stock and shares under, say, £lO (i.e., stock £5 and shares £5), be retired as soon as funds are available from the sale of wool. It is estimated that in this way the number of debenture and share holders would be reduced by 25 per cent, or 30 per cent, within a month or two of the formation of the new organisation. Both debenture stock and share interests would be negotiable. The committee reasons that the issue of part of the capital as debenture stock will permit growers to obtain financial assistance if necessary; in any ease, the debenture stock will he worth its full face value. It is anticipated that the association could obtain loans amounting to from £10,000,000 to £15.000.000 sterling- on its assets if deemed advisable, not for the purpose of supporting the wool market bv purchase of wool at auction, but by making advances to approved wool-selling companies and firms which, in turn, would advance to their clients on wool of current or future clips stored in approved warehouses. The association would take proper and necessary precautions to have the wool as security, plus any assets possessed by the companies or firms requiring money for advances on wool for clients.