The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. TUESDAY, DECEMBER 2, 1930. A BRIGHTER SKY.

Southland Times, Issue 21257, 2 December 1930, Page 6

The Southland Times. PUBLISHED EVERY MORNING. Luceo Non Uro. TUESDAY, DECEMBER 2, 1930. A BRIGHTER SKY.

A ray of light has penetrated the dark clouds with the receipt of the news from the Old Country that the market for wool is showing a hardening tendency. It is true that the most definite improvement has oceured in Merinos, and the other line wools which do not affect New Zealand growers to a large extent, but low prices iu crossbreds have led to a stimulation of demand, and in these classes, which constitute the bulk of the New Zealand output, the position is more favourable to the grower than it has been for some time. This improvement should not be exaggerated; but the fact that it has made itself felt is encouraging. It must be remembered that with the development of artificial substitutes for silk and for wool, the effect of high prices for the natural article must be more marked than was the case say, ten years ago. It is wellknown that when butter and meat rise above a certain figure, the consumption of .substitutes increases, so that there is a certain point beyond which production cannot go without bringing about a set of conditions which diminish the demand so that the returns to the growers cease to advance in sympathy with the rise in the price level. The correcting influences in the Old Country are dual. There is, as has already been mentioned, the stimulation of the demand in wool by the capacity to manufacture it at lower prices, and there is also the promise of increased demands resulting from the improved economic condition in Europe. As prices generally were descending, markets were so unstable that in every country uncertainty bred a. disinclination to purchase, and this increased the downward movement of prices; but the reports from the Old Country suggest that the bottom has been reached, and that the now stable foundations will be at a lower level than that which obtained in the boom period, but higher than the present quotations. Some advance, of course, was necessary. The market, having gone below production costs, could not remain there, but that fact should not diminish the encouragement resulting from the declaration by Bradford that there will be an improvement in the wool market all round. The break in the wheat prices, intensified by the action of Russia desperately seeking to obtain money abroad by the disposal of its wheat at almost no price, is a direct feature to be set against the encouraging factors elsewhere; but even here the position is not without a glow of hope, because the cheaper wheat must be reflected in the cost of living in the manufacturing countries, and if Russia is able to obtain funds from abroad, the demand for woollen goods may be stimulated more rapidly than would otherwise be the ease. Of course, wheat-exporting countries like Australia and Canada will feel this blow more severely than New Zealand. The recovery of the wool market, especially for crossbreds, will not be rapid, and it would not be wise to expect any sensational advance during the current season, but we have the hope, amounting almost to a certainty, that the position at the end of this season will be better than it was at the beginning, and that, with another twelve months to further solidify the economic position in the world, the price level will continue to move upwards. People do not realize the influence world conditions have upon our domestic affairs. It would be easy to trace the connection between the “cause” of the civil warfare in China and the “effect” on the returns from the exports enjoyed by New Zealand. In recent years, Britain has lost a large amount of trade through various disturbances in markets that "were particularly profitable to her in the East.' Foreign competition undoubtedly caused some of this but so far as China is concerned the biggest factor in bringing about the diminution of British trade has been the long period of warfare into which at one stage Britain was projected by the necessity of protecting her own interests. A great deal of the onus she incurred when the Nationalists made their first rush at the Yangtse-kiang has disappeared and she has recovered much of her lost prestige, but as the Chinese are spending large suras in the pleasant business of fighting each other, the country has no time or money for the purchase of foreigir goods in the quantities it obtained a decade ago. The markets, however, are improving, and this improvement is, to a great extent, the cause of the more hopeful tone in

the trade reviews from the Old Country, and it is in those reviews that we find the most important information from the viewpoint of the New* Zealand producer. It is safe to say that at no period in the last twelve months has the position been so encouraging. We must not expect very much immediately, but we can congratulate, ourselves on the fact that to all appearances we are turning the comer.