THE SILK TRADE

Dominion, Volume 14, Issue 57, 1 December 1920, Page 8

THE SILK TRADE

OPINIONS OF AN IMPORTER. Respecting the present world position, of the silk Arade ,Mr. Ernest Makower, of the firm of Makower. M'Bratli and Co., Ltd., writes:— "At different, times I have been asked to give my views as to the future trend of fashion or prices an regards the silk trade. While it is always safer to prophesy after the event than- beforo, I have been rash enougjj and confident enough in my own judgment at-, a given moment to say how the trend of affairs appeals to me. Once again I have been approached, and on this occasion I feel more than my usual diffidence, as in the present unsettled state of tho world It is indeed dangerous to have any very settled convictions; but a fow outstanding and salient points seem safe on which to base certain conclusions.

"The first is that where exchanges are so fluctuating and unstable, inevitably similar fluctuations must take pluce in the price of silk goods; and, furthermore, that as long as practically the whole of Europe—by which 1 mean Russia. Germany, Austria, the Balkan States, and Turkey—is almost bankrupt, and France and Italy in on impecunious state, it is hard to see how n genera! state of prosperity can exist. The new countries—and' among them New Zealand—have this much to their vory great advantage, that they have in their meat, their wool, and various other raw materials an asset which the old countries must have, and must buy, because they, are essentials; and therefore the future in the Now World looks much brighter than in tUie Old AYorld.

"Broadly speaking, the price of silk, as of everything else, depends upon tho supply aiid demand. Now, the last few years, to a great extent, brought about an apparent wealth to a great number of people, butl the discerning 'realise that this is only a fictitious wealth, and not real, and one. that may Inrgely disappear over-night. To illustrate my meaning I will quote a story that was told mo in Vienna of a man who wished to make a speculation, and who had the equivalent- of .£IO,OOO at tho outbreak of war. He was advised to, buy leather and did 60, and found that ho required a warehouse in which to store it; and a short timo Inter ho realised his leather, and found himself worth .£20,000. Two yenrs later hie friend, who had given him the tip, came to him again and told him that .it was a splendid opportunity to have another speculation in leather, so he bought .£20,000 worth .of leather, but when he inspected the goods found that he could just get them comfortably into his din-ing-room, nnd so there was no need to take a large warehouse in which to store them. This was agnin a successful operation, and he realised JMA.OOO when ho sold the goods. About a year ago ho was advised once more to go in for leather, and he bought .£40,000 worth, and found, when he inspected his purchase, that it would oasily go into a small cupboard in which ho was accustomed in the ordinary way to put his clothes. The moral of this story, although obvious, has not come home to many people. Many firo very much richer, but they have very much loss to show for their wealth in tho way of goods.

"Till last March silk goods were very scarce. If thero were anything like an active trade in America they would soon he scarce again, because Amoricn normally consumes between 60 and 70 per cent, of the raw silk consumption of the world, and la6t year tho Whole of the Jnpaneso silk crop, which is nowadays by far tho most important item in raw silk production. ■ For the moment there is a certain weakness, largely brought about by the abstention of American purchases in Japan; and this has influenced buyers to a certain extent, who fear the same thing happening in European goods. But when wo look closely into the matter we find that the quotations for European goods arc only very slightly less than what they were six' months ago, and the reason is that the cost of production, in tho shape of labour, dyeing materials, and so on, has increased*so much that oven a depreciation of raw silk affects European goods far less than those made in the East.

"Of course, if Ukto were n prolonged spell of bad trade in Europe, aud stocks were to accumulate, there is no knowing what reductions might be made; but thus would only be temporary, becauso there is a cost price under which you cannot produce, and tho moment- goods are sold below that in any quantity the manufacturer stops producing, and things automatically find their level. The great point at issue is: What is going to be tho level, what is going to bo the normal price of raw silk, what is going to be the normal price for twisting that raw silk for dyeing, for weaving it, for finishing it, and for handling it? That, in my opinion, it will take some years still to arrive at, and so as far as we can see, tho best course for all those to take who are not forced to spcculato, is to buy from hand to mouth, as and when their requirements are felt. By this means they will not get overstocked, and will be able to supply tho public as nnd when and in quantity according to the way tho public can afford to buy. "They will sometimes find they pay a little dearer for their goals than if they had bought ahead. Thoy will more often find they are buying cheaper than if they lind bought ahead, because I nm quite convinced of one fact, and that i 6 that athough thero will be fluctuations up and fluctuations down, tho general trond of prices in the silk trade will bo a downward one for 6ome littlo time> to come."