THE WOOL PROFITS

Dominion, Volume 14, Issue 266, 4 August 1921, Page 6

THE WOOL PROFITS

AN INSPIRED STATEMENT MR. MASSEY’S CONTRADICTION THE POSITION FULLY EXPLAINED London, June 20. (Official Correspondent.) There appeared in the “Daily Telegraph,” London, on June 7, an article dealing with the wool profits negotiations between Mr. Massey and the ’lmperial authorities about which nothing up to this date had been published. The article also appeared in q similar form in other papers, and was evidently inspired from some quarter. It was as follows: — government wool deal. Fifteen Millions In Dispute. (From a Correspondent.) "The Government of New Zealand claims from the Treasury millions of pounds as part in tho profits resulting from the sale of the two wool clips, 1916-18. The Home authorities oppose to this demand the losses incurred from the realisation of the wool in the years 1918-1920. “When the war began our'. Government entered into a contract with New Zealand to take off its hands the entire quantity of wool available for exportation. The shcepfarmers were to receive a guaranteed price 55 por cent, over prewar standards, and the New Zealand Government 50 per cent, of the net profits of the sale in Europe. This arrangement was renewed yearly in 1918, 1919 and 1920- The sales in 1917 and 1918 resulted in tw profit of £5,000,600, but in the following two years a loss of £lO 000,600 was incurred. This leaves us with a net loss of £5,000,000 on the whole operation. According to a special clause in the contracts, tho New Zealand Government is not responsible for any loss that may occur aa the result of the sales, but, not satisfied with this, it claims in addition £5,000,000 as its part of the profits of the first two years. Iho argument put forward is that the contracts were renewed yearly, and! are to be considered independently. This point of view is strenuously opposed by tlie Treasury. In consequence serious fnction has occurred between Mr. Massey, the New' Zealand Premier, and tlie Home authorities, with whom ho has been, discussing the question. MR. MASSEY’S CONTRADICTION. When this misleading article came under Mr. Massey’s notice the Prime Minister sent tho following reply:— Mr. Massey said at tho outeet that the paragraph contributed by a „9® r ?, e ‘ spondent which appeared in the Daily Telegraph” under tho heading Government Wool Deal-£15,600,090 in Dispute,” was very far from correct. "The purchase (Mr. Massey continued) in tho first instance was made at the same time and in the same way that the Australian wool purchase was made. The Imperial Government wanted the wool and! both the Commonwealth and Dominion Governments sold at what was considered a fair price, though a price not equal to tho value which free wool was fetching in tho open market. Consideration, however, was given to the fact that most of the wool was wanted for Arrny purposes, and that the neccssary shipping to carry it was being provided by the purchasers, lhe arrangement was that wool used for Army purposes ahould stand at the price for which it was purchased, but if wool was used tor civilian purposes, and realised a profit when sold, then half the profit wont to the country where the wool was produced, that is, to tho producers. "That the wool was sold well within ite value was proved by the fart that until recently every time New Zealand wool was placed on the open, market it realised considerably more than was paid for it by thq.- authorities in the United Kingdom. The arrangement worked very well until July of last yea , when a telegram was received by tl e New Zealand Government indicating that there was approximately a million and a half sterling of profits belonging to the New Zealand sheepfarmers \whicn the Department here was prepaied to hand) over), and stating exp further dividends would be tortlicom inn In a telegram from the Secretaiy of State for 'he Colonies it was stated that tno dividend thus distributed was to be regarded as an interim dividend, and final dividends shall be based on ascertained profits over the whole of the 'clips purchased. The woolgioweis the Dominion were asking for their money and the New Zealand Government agreed to tho suggestion from here. On January 4, 1921, a telegrair. was received from the Secretary of State for the Colonies, of which the following is an extract: — Undistributed profits on New Zealand wool estimated at a little under £8,060,000 before writing down stocks, but loss on present stocks estimated to cost approximately £22,000,000 will, it is feerod, substantially exceed undistributed profits on sales since March 31, 1919. "This jneant that tho whole of tho £8,000,000 was being held for the purpore of meeting any possible loss that might be made on the wool now in stock. The wool on ivhich, as the telegram says, there has been £8,000,000 undistributed profits, was all sold tor civilian purposes, and therefore, according to tlie last arrangement made, viz., that the share of profits actually realised should be paid to New Zealand calculated at same rate per pound of wool delivered ns was paid to the Commonwealth Government, a very largo proportion if not tho whole of the £8,000,000 may bo claimed to belong to the New Zealand "They are not, however, asking for that; they lire only asking for what is reasonable. They claim that what tho representatives of the Impelial Government propose is not carrying out the spirit of the agreement, and 1 must say I agree with them. "So far as the ‘serious friction’ referred to in the paragraph is concerned, I know nothing of it. Hight through the war jieriod the business relations between the two Governments have been of the pleasantest character, and I regret exceedingly that any attempt should now bo made to make trouble out of what has taken place in this connection. T have confidence, however, that the difficulty rvill be settled satisfactorily.”