WOOL APPRAISEMENT

Gisborne Herald, Volume LXVI, Issue 20079, 27 October 1939, Page 12

WOOL APPRAISEMENT

AUSTRALIAN PROGRESS EARLY START MADE CONDITIONS OF PURCHASE SYDNEY, Oct. 19. Steady progress is being made with the appraisement of the Australian wool clip under the terms of the comnandeer. It is revealed that the price was made known confidentially to the aopraisers a week before it was publicly announced by the Federal Government, and during that week 32,000 bales were appraised in Sydney alone.

The price of 13.4375 d a lb. at which tile British Government bought the Australian wool clip does not necessarily represent a fixed price. The contract was made on a basis of 10-jo ib. sterling, and the 1'.'i.4373d represents this figure translated into Australian currency, acording to current rate of exchange. The Australian figure will fluctuate according to an> variations in the London-Australia exchange rate. The Prime Minister, Mr. R. G. Menzies, made this important point clcai :n, a statement which he issued to-day. He said: ‘‘The price has been arranged in terms of sterling. Should the rate jf exchange between Great Britain and Australia alter during the operation of the arrangement, that woulo naturally affect the Australian equivalent of the sterling price. Other conditions may also alter, and arrangements have been made ior annual consultation between both Governments to consider whether the price that has been fixed should be reviewed.” No official elaboration of this slatenent could be obtained. Unofficially, however, it is interpreted as an indication that both Governments have taken into consideration the possibility .hat because of war time conditions, the exchange rate may vary. No Immediate Change

At this stage, it is understood, there is no likelihood of any change in the existing exchange rate, but financial experts foresee the possibility that, gradually, Australian currency will improve in terms of sterling. In that event, there would obviously be exchange adjustment with a drop in the return in terms of Australian money to the grower. This is one of the principal reasons, it is believed, why provision has been made in the contract for a review of the price every year if necessary.

A financial authority said to-day that the chances of the exchange between Britain and Australia improving in Australia’s favour could not be ignored. He pointed out that the war might easily compel Britain to adopt far more extensive expansion of credit than Australia. There might be a substantial falling-off in Australian imports from Britain, while Australia’s exports would increase materially. It was imperative that Britain should obtain enormous quantities of Xustralia’s raw material, but Australia did not have the same urgent need of British products. Also Britain would probably have to cease to export a number of types of goods which were now bought by Australia. The effect of this tendency in trade between the two countries would obviously have a beneficial effect on Australia's finances, and, therefore, on her currency—a development which could easily lead to a fall in the exchange rate