OUR YORKSHIRE LETTER.

Otago Witness, Issue 3495, 8 March 1921, Page 11

OUR YORKSHIRE LETTER.

A YEAR OF BOOM AND SLUMP V (From Our Special Correspond ent.l BRADFORD, December 30. 19201 The year 1920 will go down, to history a* one in which a boom and a slump occurred in the wool trade. A veritable landslide in values has been witnessed, one whidk easily breaks all records and which ab\ ays be looked .upon as on© of th© disastrous experiences ever known. The opened with the sun of prosperity shimn K upon th© trade, but is finishing in "almost total eclipse. This is not too a description, and it is a thousand prC£o» that after four years of boom due to iha great European war, depression, the like of which has never been known in the history of the wool industry, should follow. Since May the entire trade has been enveloped in a veritable maelstrom, and it is only by extraordinary financial measures being taken that hundreds of firms have been saved from being called upon to file their petition. It is true that great fortunes were made np to the end ot the month named, and until the middle of the year the whole trad© was exceedingly busy, but the cloud of depression has so spread over the entire commercial world during the latter half of 1920 that the gains of the earlier part of the year have been completely taken away. It is regrettable that the year closes with trado demoralised, and nearly all mills running short time. COURSE OF EVENTS. The course of wool values has been remarkable. The year opened with prices for all classes of raw material on an exceptionally high level. This was undoubtedly due to the great scramble during the latter half of 1919 when whatever wool merchants, topmakers, spinners, or manufacturers bought was worth sensibly mar© the week after. Prices travelled upwards at a rapid rate, and London selling brokers oould not put wool on the market fast enough to satisfy the requirements of th© trade. Not only did wool values mount “fast and furious” during the first three months of the year, but everything oould be sold with great ease, so much so that many failed to see any limit to the market. There was just a little slackening in demand and prices in December, 1919, which temporarily checked the mad upward rush of values, but when the London isales opened in January another upward movement took place, further large new orders being placed by spinners, manufacturers, and wholesale fabric buyers. There was no curtailment in the demand or the placing of orders right up to the end of March, the three series of London sales that took place during the first quarter of the year all registering a sensible advance in values. Orders for yarns and pieces poured into the West Riding, and whatever price was named for the partly and fully manufactured article could be obtained without th© least effort. American buyers of merino yarns oame over to Bradford in February and March in large numbers and placed big orders, offering often fid per lb premium if delivery oould be obtained in May and June. Every spindle and loom in Bradford and district was engaged to its utmost capacity, most woollen mills in the West Riding running either till 8 p.m. or through the whole night. Everything went as merry as marriage bells until the middle of April, when a sudden change came over the whole scene. CANCELLATIONS. By the month of May cancellations began to pour into Bradford, United States buyers cancelling practically all their yarn orders, while a great financial crisis in Japan also led to orders for piece goods being cancalled. All this very soon knocked the bottom out of the market. The statements made by Bradford spinners and the agitation in the pres© for lower prices have been credited with putting the wind up among the general public. Whatever the red cause, it is a fact that by th© middle of the year the public were refusing to purchase what -was not absolutely necesaary in the way of new clothing. At the London wool held in May a distinct change of front was in evidence, values then suffering a serious relapse. With trade getting worse and worse as months passed all wool sale© soon became demoralised, values slumping month after month, as our tables below clearly indicate. But fer the British Government maintaining their reserves prices would have fallen still more seriously, but it m only for the superior lines of greasy merino combing wools that anything Like decent prices are to-day forthcoming, and even these have fallen tremendously since last March. Every adverse factor possible seem© to have combined to inflict upon the wool textile industry a crushing blow, and month after month wool prices have fallen, while the purchases have often not been more than 25 per cent, of th© offerings. Crossbreds have fallen to almost pre-war levels; in fact, some wools are to-day even lower than in July, 1914. Even cheap wool has not galvanised the trade into renewed activity. The lower wool prices go th© more afraid users seem to be to operate. The real cause of the disastrous trade of the last three months of th© year ha© been the tremendous stocks of piece goods in the hands of manufacturers and wholesale houses which were either cancelled in the process of manufacture or are being held to the order of customers, chiefly the former. The presence of these stocks continues to have a very depressing effect upon the whole trade, holders being faced with tremendous losses. COURSE OF VALUES. The following table will illustrate letter than anything else the movement of wool values. It includes the clean scoured cost of merino and crossbred wool in London* in July, 1914; the Government issue pric® from April 1, 1919, to November 30; also* tho auction price in London last Maxd^

/tthen the highest point was reached, cornspared with December of this year. The are as follows: Govt. Auction Auction Issue? Price, PricP. Price. Ist April London. London. July, to 30th March, I>eoember, 1014. Nov., 1919. 1920. 1920.

BIG GOVERNMENT STOCKS. It will be remembered that during the autumn Sir Arthur Goldfinch, DirectorGeneral of Supplies, published a very important statement showing stocks of Government wool last June 30 when the Government control soheme finished in Australia and New Zealand. It was then shown that the British Government still had no less than 2,900,000 bales of unsold wool, or just about a year’s production in Australia, New Zealand, and South Africa. The London auctions have been &o disastrous since July that no big quantity of wool has been it being safe to say that the year is finishing with at least 2,500,000 bales of unsold wool. That is & great handicap to the trade, and will oontinue to he such for a long time to come. Last October a new colonial dip began to arrive in Aua-

tralien markets, and something like 6,000,0CX) bales of wool confront the trade to-day, including the old and new clip in South America. What troubles the trade even more than the huge stocks of wool is th 3 poor call for pieces, this being the worst factor of all. This is really the cause of all the mischief, stocks of pieces everywhere being so great as to convince everyone that there can be no material improvement in wool markets until they are absorbed. Manufacturers and wholesale houses have written down values, practically half, and even then the demand is exceedingly limited. THE PIECE TRADE. The record of tho pieco section of the industry is equally as bad a$ in wool, tops, and yarns. It is here where the chief source of the trouble lies, and trade would

never have slumped as it has but for the heavy stocks of piece goods which exist at the end of the year. It is a cane of the entire trade having overbought, everybody being led to plunge during the first three months of the year, thinking that the market was right As things have turned out the heavy contracts made during the first quarter proved most disastrous both to manufacturers and buyers. Japan led the way towards the slump by cancelling her heavy purchases; in fact, there are several firms in Bradford who have lost big fortunes through this cause alone. It is a fact from first to last of the entire industry being “sold,” and the year finishes with very big stocks of dear fabrics, and in the process of liquidation large amounts of money will be sacrificed. The same tale has to be told of both dress fabrics and men’s wear goods. Everything went as merry as marriage bells up to the end of Maroh, but since that month it has been one continuous decline until 18oz to 19oz blue serge which were sold at 32s per yard cannot be disposed of to-day at 15s. A very remarkable feature is that amid all the slump there have been practically no failures; but the absence of financial disaster does not mean to say that many firms are not in a tight comer A very large number are hoping to see their losses somewhat atoned for by getting back a fair proportion of the Excess Profits Duty which they have paid during recent years. Were it not for this many firms would undoubtedly be called to meet their creditors. The. outlook is by no means bright. The majority cannot see the least sign of improvement ; in fact, there can he no betterment until the entire world settles down to a more peacable state of affairs, exchange becomes more favourable between one country and another, and the teeming millions in Eastern Europe be brought into touch with Western civilisation and methods of business.

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