WORKING THE LONDON WOOL MARKET.

Hawke's Bay Times, Volume 14, Issue 703, 26 July 1869, Page 3

WORKING THE LONDON WOOL MARKET.

(From the Melbourne Age.) The mismanagement of the business of the colonies in London is not confined to the negotiation of railway loans. There is something more than a suspicion that the mode adopted for the disposal of colonial produce is more favorable to the London brokers and jobbers than to the colonial growers and shippers. In regard to the wool sales, as well as to the floating of a loan, the notions of " success" are very different ) when arrived at from different points of view. The language of the brokers' circulars may be framed so as to be soothing to local constituents, while the transactions alluded to are altogether one-sided in favor oi London customers. We are accustomed to look with reverence upon the mercantile policy and usages of English merchants, and to disparage and distrust our own instincts and judgment on such matters. But we object to take anything for granted in business, and feel, disposed to subject to criticism the most time-honored superstitions of trade in the same way that we would investigate the merits of a new project. If we find old ways involve a violation of the recognised laws of trading, and at the same time run counter to the promptings of common sense, we should not hesitate to abandon them, and adopt a more rational system. To arrive at a correct estimate of how far the London usages of the wool trade are conducive to colonial interests, we should begin by ascertaining what these usages are.

There are four great sales of wool in the year. No matter what the state of the market may be in the intervals between the sales, all cargoes arriving are stored at great expense until an artificial glut has been created. The accumulations of three months are then put up and knocked down to the highest bidder, a few parcels only being practically subject to a reserve, and these when unsold are retained for three months more to swell the next glut. The London agents, brokers, and traders thus make a profit from the storage of the wool, from keeping the trade for long periods in the hands of jobbers, and from the artificial depression in price caused by periodically recurring gluts. The loss to the colonial producer and shipper must be greater than the gain by the London trader; for the gross charges, which are of course greater than the profits ou them, are included in the bills of sale sent to the colony. The system is an indefensible one, even if all be honestly managed, but it requires no great stretch of imagination to suppose that combinations may be formed among the buyers, and that a comfortable and profitable "knock-out" may be arranged, especially at the beginning and close of the series of sales. The colonial seller is victimised on all hands,

and the profits of the jobber are greater and more certain than those of the producer. The manufacturer, too, is injured by the operation of the London system of sales, although to a less degree than the grower. The manufacturer gets his wool cheaper while the auction 9ales are going on thaj he would otherwise do, but this gain is delusive, for he either must run the danger of buying too much stock, or becoming dependent on the jobbers. He, too, must store his wool, and lose the interest on capital needlessly locked up. It would be better for him to pay a higher price for supplies to meet his wants, provided the usages of the trade did not stand in the way, than to speculate on what those wants may bo several months ahead. The intermittant system of supply may even have the effect of rendering a suspension of manufacturing operations for a time advisable. The foreign buyer is placed at a disadvantage by the existing system, his legitimate business being thereby surrounded with needless risks. The London wool brokers, by their adherence to trade usages, which have been created for their own beneiit, exercise a tyranny over the traders which provokes counter-com-binations, and between them the poor colonial grower is crushed. A virtual monopoly is established, and the seller has no option as to how he shall dispose 6*f his goods. The remedy for all these evils must be a radical one. The laws which, govern the trade must le abrogated. Wool must be sold as other articles are sold, all through the year, the cargoes disposed of on arrival when the market is favorable. At present tha energy of the colonists is wasted. Tha efforts to save interest and expense by sending wool in clipper ships to market are really nugatory. A period equal to the whole length of the voyage is wasted. The absurdity of the system would become clear enough if the manufacturers were invited to dispose of their piece goods in the same way. The whole system is a gigantic device for the aggrandisement of London brokers and middle men. There are sjirewd reasons for suspecting that the evils are on the increase, aud it is impossible to account for the fluctuations in the price of wool for the last two years on any other supposition, than that new abuses are created, and old ones aggravated. When the first great fall iu wool occurred, we at once rejected the idea that it had been caused by over-production, and pointed to the probability that it was owing to some speculative combination to "bear" the market. Time has proved the correctness of our statement that there was no increase in the supply, aud time will show that no satisfactory reaction can be looked for until the trade is made " free " in the proper meaning of the word. How is this to be done ? We have performed our task in pointing out where the evil lies. The colonial growers of the staple must take the remedy into their own hands. Years ago the pernicious tyranny of the London trade was felt, and an effort, which for a time promised to be successful, was made to establish a rival market in Liverpool. The effort failed from the indifference of the colonists themselves. The squatters did not think that what became of the wool was any concern of theirs. So long as they made large profits without looking beyond the boundaries of their runs, all went merrily. But now that they feel the pressure of the Bank screw on one side and the grinding operations of the London brokers on the other, they must take some action to save themselves, or they must perish iugloriously. By adopting a better system of sale in London, their receipts would be bettered in two ways; they would get a better price, and they would be saved from the needless charges in which they are now mulcted. Not only should the London trade abuses be put a stop to, but new markets should be opened up. The French at one time sent buyers to Melbourne. Is it not reasonable to snppose that they would prefer dealiug with us at Havre ? So long as the wool-shippers are content to be tied to the apronstrings of the London brokers, so long will they be liable to unforeseen losses. It appears to us that an excellent lesson in free trade could in this matter be administered by Victoria to England.