The Feilding Star. Published Daily. THURSDAY, NOV. 2, 1893 THE WOOL BROKERS AND BUYERS.

Feilding Star, Volume XV, Issue 107, 2 November 1893, Page 2

The Feilding Star. Published Daily. THURSDAY, NOV. 2, 1893 THE WOOL BROKERS AND BUYERS.

-♦- In a previous article on the subject of the dispute between tbe wool brokers aud tbe wool buyers, we pointed out that the disputants wero showing tho producers that it was possible for the hitter to do without either of them. Sinco then we were informed by cablegram that by a " scheme " of mutual concessions the difficulty had been overcome and an arrangement satisfactory to both parties bad boen made. £o said the cable-gramtner. But yesterday we were informed by another wire from Sydney that the settlement of the local wool disputes was as far off finality as ever. The press agent, after tbe manner of his kind, said " Neither side sees its way clear to conduct the business on the lines laid down by the other " The unutterable silliness of this gratuitous piece of information is proved by the sentence which immediately succeeds it, " The sellers insist that they shall have control of the wool until it is paid for." This is what the buyers object to. They waut credit for what is a cash transaction. Now, although to outsiders (save the mark) this seems only right, yet, in the old days, it was not a rule which was enforced to a " vexatious " limit, because such enforcement would havo trammelled trade. vVe will explain. An Englieh buyer, let U6 say for the sake of example, went over to Cork, in Ireland, to buy butter. All of his available capital consisted of one hundred pounds — and his good name. He bought up to his capital and consigned his purchases to Liverpool, under letters of hypothecation to the Irish banker who, almost as a matter of course, discounted the bills drawn against the ehipmeut of butter. The cash thus obtained was then invested in the purchase of a second lot of butter, which in its turn was hypothecated by bills drawn against it on the consignees, the purchaser's agents as in the first instance, and so on until the end of the season when the original capital of the purchaser would have been turned over not less than four or five times during the course of a very few months, and probably oftener. The bills drawn in the first instance were paid by the sale of the butter, and so on in succession, and the bank making the original and succeeding advances against the consignments were protected, first by the initial value of the articles hypothecated, secondly by the personal security of the drawer of the bills of exchange, and thirdly by tlie drawees, who for their mutual honor would protect — that is pay these draughts — under any circumstances whatever. In those days a man's commercial honor was his life. In the case now before us tbe bitter consideration does not appear to enter. Commercial honor disappeared with the introduction of the Bankruptcy Act as a protection for debtors. The buyers want to get possession of the wool to hypothecate and "draw against" to pay for it, while the brokers, who are only the agents of the producers, decline to "ive up the control of the wool (their sole security) until it is paid for — and they are then able to hand over the proceeds to their principals. It is clear unless the brokers use their own capital, they cannot do this until they actually receive the money from the buyers. Our object in thus writing is to show that the brokers so far as we can judge at this distance, are entirely in the right. They are not authorised nor are they paid to take the smallest risk on behalf of their clients, the woolgrowers. The latter have everything to lose if their irresponsible agents — i.e., the brokers, were to part with the security of the wool to buyers who do not )>cr me represent either capital — available through the banlcs — or commercial honor. We hold to this opinion because if one or more buyers had not broken faith with the brokers and the banks the necessity for their precautionary action could not have existed.