SUPPLY OF WOOLLENS

Dominion, Volume 13, Issue 162, 5 April 1920, Page 5

SUPPLY OF WOOLLENS

DANGER OF SOARING PRICES ■ HEAVY LOSS ON AMERICAN EXCHANGE. i '■■ ■ Oho of our wool expertß .is complaining that the British public is so greedily, clamouring for woollons and worsteds that not enough is left for export, lie .'says that "it is well worthy of con- ' ' Bideration whether a. still greater incrca?« in- the price of finer goods (of wool) would not be a Messing in disguise in - eo far as it would lesult in diverting home demand on to medium and lower qualities and releasing expensive goods for tho export.trade." Ao a matter of fact, tho export trade is not doing lindly,\and the record for Decemoar* shows a tremondous advance, not only in value, ■ but in quantity, upon the corresponding period of last .year, writes Sir Ohtaa Money in the.London "Observer."' the ''■' facts are that'in December, .'9lB, wo exported 7,761,000 yards of woollen and worsted tissues for .£2,851,000, whereas in Decoraber' we exported 16,339,000 yards , f0r.£7,'61G,000. It is rather a case of exports making it hard, for tho home con- / sumer than of the home consumer robbing the export trade. Last year we exported enough cloth -to -;lothe over : 27,000,000 people, allowing six yards per person./ 'At"tho December rate we did even better; tho exports of that month "i alone wore sufficient to clo_the over 2,700,000' people. •' . ' ■ The war and post-war conditions have '. ■■• afforded the' most striking iistance? -if the working of the law of rupply am demand in all commercial history.- In the war many millions of men wore raised in status as'consumers, or expressions of demand, by passing _ from civilian to military life, ev»n wiiTic tho. ' very fact that they ceased to be pro- ' \ < tlucers decreased tho supply of (ommodi-. ties upon which they called. Th? candle was thus burned at both ends. The fighting unit' as a consumer of food. " clothes, metals, leather, chemicals, and a, host of other-things made a call upon, commodities many .times as great as-)-? exercised as wage-earner. In such circumstances', if control had not been taken oT supplies, and the commercial eSectSTff supply and demand bad not . been therefore greatly restricted, prices would have risen to giddy heights. As ' a matter of fact, the State control of . ' supplies and prices actually induced figures in some cases. The Government paid not more but less for its shells and its-machine gums as time'went on, because it took charge of their manufacture, ascertained the actual cost of production, and made its bargains according- ' ; : ly with knowledge. . When the. war camo '' to an end the law of. supply and demand was allowed to lesume its sway,and as quickly as possible we got rid of every sort and, kind of control, whether of freights, or. of foods, or of .materials, ' or. of! manufactured,' articles. Everywhere it was said, and rarely contradict-, ed. that free competition would bring : down prices. It was-fin'extraordinary misreading of the 'situation. Europo ' ' was largely ont of action as a producer. ■ The world at largo was bare of 1 stocks. The demand for commodities was bound to exceed supply for a considerable . period." The e'vcunistances were all in ■ favour' of the seller. The result was tho great rise in prices .which characterised 1919, and which is stillcontinuing. When the Government bought clothing for the soldiers it protected itself. The soldiers, returned to ordinary employment, and needing civilian clothes, 1 find, themselves ,' 'charged heavily by producers who havo been released from control. v The growth of our export trade from &7,300,000 in January to ,£90,900,000 in 1 December, and the simultaneous growth 'of our re-export trade in imported commodities fronv £4,600,000 to ',£20,100,000 was, while abundantly necessary for the national welfare," obviously out of pro- : portion to tho increase in production or importation. The result was to denude the homo market as timo went on. Retailers found increasing difficulty in obtaining supplies, and each successive order was accepted as a favour at an-ad- - vance in price.' ..This occurred;'' too.-in' a market enriched by the many large and small fortunes made.in the war. One could not imagine conditions .better qualified to raise prices. Oversea demand is eager and increasing, and it is difficult : to know how production here can be reasonably expected to keep' pace, with . that demand, combined with the icall in the home : market. . Production will increase, but it will not' for some time keep pace with the call for goods. In these circumstances the price of manufactured articles will continue to rise unless >there is concerted action to interfere with tho law of supply and demand. Those who object to action are, of course, . entitled to their: point' of view, but it is idle .to suggest that inaction will .not be accompanied by further increases in ; price, 6omo of them of a-startling character, to "be followed eventually by slump and disaster, '■'..■■ . . , It is earnestly to be hoped that those engaged in the woollen and worsted in- ,"' dhstriea. will recftgn-'se that the exceptionally good fortune which they have .'' '''enjoyed through thp war an;l its consequences Will not much lon'ger bo tolerated by the public. To be quite fair, it ought to be pointed out that trades such as woollens oi" shipping have dealt no more haTdly with the public than .other ' . branches of industry 'have -done. War distributes its profits unequally under commercial conditions; it ruins some and it gives unearned fortunes to others. We shall do well to remember,, however, that the industries which'have not specially benefited would not have refused war profit if their occupations, had v nppened to be profitable in war. Nevertheless,- the time has clearly come when those v. r ho fain unduly by exceptional conditions should think very seriously how to make their trades equitably seivc the nation. I think it a very great pity that the profiteering inquiries were neldin secret. There is no good reason why we should .not have open inquiries in such cases as the wool trade and the,petrol trade. Many of thosi eugnged in the' trades themselves, conspicuously i;he retailers, do not understand their position. Tho supply of clothing _in such a climate as ours is in the nature of a' supreme function, and an . intelligent poople ought to know something more about it than is told in the current story given us at the shops that we had better buy now for fear of worse things to come.; I imagine that public ' inquiry wonlr] show it to be quite possible to arrange a limitation of profitu . ■ ' ■' scheme,. .' i ■' Whether we shall eventually Teturn to the level of prices we knew before the war depends upon many immeasurable factors, not the least of- which is the progress of science. Certainly it will not be in Hie near future. Let ns take nolo of the fact, however, that if nothing is ' . done, to cheek the present rise nf prices, it will bo followed in due eouree by a ' break whioh, although not reducing prices to the pre-war level, will have (lis astrous conseduenccs. It is not of much valuo to consider precedents in this con nection, because the circumstance are in many respects unprecedented. Nevertheless, we shall do well to remember tho heavy flump which, followed th» boom after the Eraneo-Gcrmari war.- Tho inflated prices of 1R73 fell in a few years to below the pre-war level. Pig iron fell 60 per cent, between. 187.1 and IR7O. .The'greater the hoiglit to which nric.es are allowed.to soar in the near future the heavier the eventual reckoning will have to be. A heavy break in the prices . of, manufactured articles would witness the ruin of tens of thousands of large and small traders with stocks on their .hands bought at high prices. Tho retailer to-dav tells you with almo't unconcealed glee that prices will be higher In a few months, because he sees very clearly Hint at each successive rise in price 'hi' is able,to pet more for a eer ; tain stele which h» has' bouclit at a lower price. Ft should occur to him that Hint is n process which 'cannot continue indefiuiinlv. and that as thing; are going,, the dar will suHy come when a Hump will find him the possessor of a stock for which he paid dearly, but which must be sold nt beavv loss. . Mr. T. W. Lament, of Mews. J. P.. Morgan and Co.. who responsible ros't'on at Paris of Financial Adviser to the American Commission, has a very thing to say in "The Times" on Hie decontrol of the for. oien exchanges. Hp says: "I venture to /say that neither the American ppople nor the people at large on your nldo.of the water appreciated the fnll sipnifi- ' canco of the stopping, of Government'

MSinSsip iOAauDAmt \ ./qipaio pjuoq •uiLioim put; apu.l} uftaioi ;bopu ;i[Suu UOI.IDU ?Uip SU .111.} 03 OAIIBIIUII .eiUAI.KI 'o} oaionuuoo jo pun 16.151103 my own opinion on the matter, and I aril quite sure that if the Government had dreamed that the American exchange , would fall to 3.60 dollars they would never have pulled the "pogs" out of the foreign exchanges. TJio. public at large is quite innocent of, the appalling fact that the difference on tho American "exchange is now costing us over J-200,-000,000 per annum, and that that is tho price, reflected in hardship for millions, which wo are now paying for having made enormous economic sacrifices by which America gained. The sacrifice still goes on. Unfortunately, while Mr. Lament sees the evils of the situation very clearly, and is good enough to recopnise tliat it is the result of British snerificp, he does not seem to see voir elenrlv that America has been the residuary legatee of tho war, and that the key of the situation is in American hnnds. The present condition of the American exchange is robbing the British people of tho fruits of their labour in an enormous sum every day. We are importing from America, at the rate of about .£1,7.50.000 a day. and tho ,-Bl buys only lis.worth in America.