CURRENCIES AND WOOL.

Poverty Bay Herald, Volume L, Issue 16423, 6 May 1924, Page 3

CURRENCIES AND WOOL.

VALUES SOUND IN SPITE OF FALL OF THE FRANC. (Sptv-ia;! Correspondent.) BRADFORD, March 4. During Hip last three years there lias been a- steady advance in wool prices which it 'has seemed impossible for any influence at all to prevent. There In? been the advent of an American tariff, imposed with the object of keeping woo. oulti of America, so that that grown by their own sheep-farmers would sell foi more money. There has been such a slump in the emrencies of important countries like Russia, Austria, Poland, and even- of Germany, as the world cannot remember in the history of any country. At one point there have been -three million bales more than a normal season’s supplies. Our home industries have had to fight against the dumping of cheap textiles in this country from foreign manufacturers, greatly helped by the fallen exchanges reducing their conversion costs. At the prcsiint- time we are faced with ai slump in the franc, which cam quite possibly have farreaching effects.

But- in .spit.ii -iif all this, it is doubtful if there is a.sta.pJo commodity of any ki.ii'd whose current prices are resting on a sounder basis than wool. The pos sibility of disturbance llii'oii'ghoe-l the woeP markets of the world owing to the rapid fall of the franc has Leon much discus&td' during the last few days. Short- of the decision of the French Government to ration the private purchases of foreign currency, to bnuamce its budget and reduce national expense in a drastic maniiitir, there seems to be no reason why the franc having fallen to 120 should not fall; to 500. The possibilities of this happening have not caused the (rouble that might have been expected. A lent bers of tire trade everywhere have been pointing out that the faster the mark fell, the -more wool the Germans seemed to buy, and a,’though it is aln ironical situation, it, seems us if in the case of a similar falling franc, The French nation will have to turn to the Germain to find out how f.ct make profit and -good business from such a situation.

FRENCH WOOL BUYERS’ METHODS It has been stated in more than one journal that ono of the chief reasons for the rapid decline in the franc has been the adroit manipulation of the money market by Germans through Ho! land. One Dutch- firm is stated to have made over a million, sterling in profit since l 'last August-. There, seem to be a- big number of Germans who understand the working of exchanges much better than the average man in this country, because for the last, few weeks Germans have been buying aill manner of goods in France and England, in many cases for payment some time abend and their gamble on a reduced value of the franc has succeeded. Gf course the fact that wool rose in price at- the same time as the mark was .ailing is a coincidence and not an example altogether of cause and effect. The falling mark certainly made it possible for German mills to run at a big profit compared with other countries, and naturally they would want all the raw material they could get hold of. But wool was rising a.iul has continued to rise bevUiuso of a< general world- demand and not just the needs of Germany. One of the largest French wool merchants stated the o their day that it did not much matter to him where the frame went, b'ccamse so Jong as he 'had an outlet at ai l for wool, in France lie would buy in English and Colonial markets. A fortnight or three weeks ago this same man bought a big quantity of sterling at flic rate of 97 francs to the £. With this money ho bought heavily in wool at the H.ii'll and Liverpool sales, and of course can now make at least 20 per cent, profit-on exchange afone. In one Liver poof sale towards the end of- Novemboi •ant year, at- which ho bought, over 4000 bales, he could have made more than 5 per cent- profit cm the exchange alone the following day. On being asked what would have ibcem the position if the exchange had moved against him instead of in bis favor, lie stated that- in that case he would hold the wool until such 'time as be could sell ait ,a profit., He has a large working capital* and is by no means compelled to .sell quickly. Like most- other French merchants and im porters, he states that for the last few years lie bald been running two businesses. wool inerchanting and a banking business. Moreover most of that time most- Of his calculations for buying a-nd selling wool bare a been -on a sterling basis.