WELLINGTON NEWS

Hokitika Guardian, 21 July 1925, Page 4

WELLINGTON NEWS

UNITED STATES AND WOOL. (Special to “Guardian”.) WELLINGTON, July 17. At the* opening of the New Zealand wool sales which was at Wellington on November Ist last, juices went soaring skywards because tin* American representatives operated without limits. Their instructions were to buy at discretion, and some liradlord buyers receive,| similar insuiictons and tin; resultant competition sent values flying upwards. When the ruble messages recording the prices were received in liradlord and Boston there was consternation and the previous orders were promptly cancelled. I’lie Ameri-

cans adopted the most uncompromising attitude anti throughout the subsequent series ot sales very little wool was purchased on American account.

rmi the absence of this competition undoubtly had a depressing effect and u'l'otinled in no small degree for the persistent fall in values. America lias not vet come on the market, for her inirlieases ill London were exceedingly

small. Tiie American position m respect to wool has been an enigma to everyone connected with the trade. It is well known that the Aiueriean buyer- lost heavily, but the sale." call be said oj* Biadiord and ( outiueiilul buyers. yet the latter have not refrained from buying. The woollen trade of the United Stales has been in a rotten condition for some time juist. ( lotliing manufacturers have found it difficult to quit stocks and naturally declined to commit themselves to purchases. Tins reacted on tlm manufacturers of woollen fabrics who could find no outlet for their goods, and the raw material -idlered in consequence. It was

explained some time ago that owing to the extensive develojnnent ot the hire jm.iilinse system ill respect to automobiles and radio sets tic* Americans were economising on dollies to meet ilmir instalments. More recent - lv it was claimed tlia.L the vogue of nrtiiicial silk was affecting the woollen and cotton textile industries. Hot this state of alVairs cannot last much longer. The 1 nihil Stai.cs doc- not produce sufficient wool to meet domestic requirements and must import a considerable quantity. It was estimated by one authority that as compared with (he pre-war period America was equal to cnii-uining an additional million bales of' wool, but that perhaps is mi optimistic view. However, at

a recent date the wool in bond was estimated al PA.I It lli.t II It lib and very little was coining out because id the lv.-tricicd demand. Despite tlit* vogue ol art silk and other suh-l itm es the world cannot do without wool, and the demand for the staple must always be good. Price- are comparatively low tn-dav because consumers are unable to afford more; but even at the low prices of to-day there is a margin of 11 rollL lor tin* grower. Ihe Americans must come into the market, sooner or later, and the sooner the better. BORROWING IN U.S.A.

Those in a position to express their views on the projected issue ol a Commonwealth loan in the United States, while admitting that it is an unfortunate circumstance, realise that (lie Commonwealth lias no option in the matter for the reason that London is unable, or rather unwilling to furnish the credit. It is explained, that the position is due to Britain having reverted to the gold standard. Such a statement is. of ■ nurse, unintelligible In the average reader and requires ex-

planation. I vein iv i lie war when commodity prices were normal, and bnriowing in London was moderate, the Dominions were unable to accumulate credits in London beyond what was necessary to meet current obligations. Put sime (lie close of the great war conditions have changed. Encouraged hv 11 sc* ease with which money could be borrowed both locally and in London, the i.vefsetis Dominions indulged ill ml Oi ev o! borroAiug ill Loudon and ibe ( oniiaonv, caltli. and the Auslr.iIi:• 11 Eta!os set a warm pace. I.ondon I.nil millions uinl nior ■ millions, and si a vast credit was piled up in I.ondon. Pul this was not all. Almosi every kind of |>rodmv exoorled from Australia and New Zealand sold at high prices and more millions were added to Ibe Loudon credits. Then came I lie problem of I ransl'errim; the credits from I.ondon where they were not wanted, to Australia where they were badly u >eded. As everybody knows, tin's developed into a very difficult and i osil \ exchange problem, because gold could not lie exported from London. When the dollar exchange moved up some Australian banks sold in New York exilian:'.' on I.ondon. and with Ike proceeds obtained gold which war shii.ped in Australia. There is. ol course, not the same accumulation of credits in London as was the ca.-e lasi year, but to allow free borrowing' in London would create there credits, and as there is now no embargo on ; i.e eyooi't ol gold, tin- Commonwealth hanks would be able to draw gold from the Hank of England. To prevent, this drain of the yellow metal, the Commonwealth Ims been sent to New York for its loan because America would hr

glad to he relieved of some of the gold in its possession. That is the whole explanation of the position.