THE PRICE OF WOOL.

Press, Volume LXVI, Issue 20098, 29 November 1930, Page 19

THE PRICE OF WOOL.

10 THE EDITOR 01 THE PEEKS. Sir,—l regard the present slump in wool as a most serious thing for our Empire, which produces about half of the world's wool. As I have not scon, my view of the cause in print, I will try to explain it as briefly as possible. Before the war wo were working on the gold standard. After the war, and for three years later, we were working on a standard of more paper than gold, and many countries were doing the same. About nine or ten years ago Lord D'Abernon, Mr Churchill, who was Chancellor of tho Exchequer, and the federated banks, decided to go back to the gold standard, and started what they called the deflation policy, giving as their reason, that they believed that the extra paper currency was tho cause of prices rising. Had this been done immediately tho war stopped, not so much harm would have been done, but three years after these paper prices had become extended throughout the whole fabric, land included. In a short letter to The Puess at the time, I predicted chaos, seeing that the unprotected primary producer would have to foot the bill. All the protected and sheltered industries and services 'would hold both their prices and their property values, as the first holds the second. Therefore, the primary producers would have to lose more than their share.

The lirst article to give way was wool. It was cast abroad at up to fivepenci. for half bred wool at the third sale, merino about sixpence. Interest ai ; money, of course, became much dearer, as another causo of the detlation policy. The enormous loss made by the countless farmers, who have since gone to the wall the Empire over, have not been ■sufficient to save the rest of the community from the deflation policy. This is not a New Zealand problem alone; the heart of it is in England. Her costs are too high for the gold standard leaving no money to buy the wool with, and also making the finished article too dear to compete with other countries. Countries which have to buy our Empire 'a wool have been able to undersell her. The two serious points are to my mind: (1) That wool is the first thing to give way, seeing that we produce a lot for other countries; (2) the strength of unionism.

A point missed by some students of the problem is that if all trade wages and salaries are too high for the gold standard, property is too high in value, and thus too much capital is invested in City property mini transport property, leaving too little for primary property, as well as putting too heavy a load of overhead expenses upon it.. T maintnin tbnt. if lond is not allowed to rise in value with everything else, as money becomes moro plentiful- as it lias done ever since its invention ns the best means of exchange, then it is a bad investment, and the pioneering cf the past going to be a wasted asset for the Mritish Empire. As instance the Empire's wool being ngain east abroad at greatly under cost. T.'nder the principle observed until now of keeping wages up to the "cost of living" and protecting many products to a payable price, land can be forced down nn4 down and still further down. And if tho farmers combine with the strength of unionism in the way of pools and also demand a payable price, we will burst the gold stnndard or any other standard. It is a pity our economists can't tell us yet what standard of living we can afford at any time, or from time to time. Thev will no doubt arrive at it vet. Let us hope they won't be long, because perhaps it is very doubtful how much wages and salaries will have to come down. I think there are certain signs of depression or prosperity that are not an yet recognised. When they are recognised money and prices of primary products will be much more stable and buying lnnd will not be such a gamble ns it has been in the past.—Yours, etc., W. A. STRACHAN. JRakaia, November 27th. 1930.