WELLINGTON NEWS

Hokitika Guardian, 16 March 1926, Page 4

WELLINGTON NEWS

LONDON WOOL SALES. (Special to “ Guardian.”) WELLINGTON, March 12. The second of the series of London wool sales commenced on the Oth inst., and except for creasy merino which advanced a. penny, all other descriptions of wool were either unchanged or a shade lower. Fortunately crossbred wools show no change, yet it was ex-

pected by some interested in the trade that values would he slightly in favour of sellers. This view was apparently based on the tone displayed in New Zealand where prices recently looked like being above the current London parity. The political situation in Europe and the disorganised state of French finance has been no bar to Continental competition, which was keen. After all there is no doubt that Bradford is exercising a favourable inliueiicc on the market. liradford is buying wool, and although not. prepared to give any fancy prices, the fact that liradford is in the market for wool is encouraging and stimulates buying on the part of other countries. French buyers are again showing considerable activity in the London sales as they have done at the sales in New Zealand and Australia, and this notwithstanding the tremendous depreciation of the franc. The report of the’ Comic Central de le bailie, Paris, on the French textile industry in 1925 indicates that French wool men were the first to grasp the fact in May last that values had reached rock-bottom. The report states that in that month a renewal of confidence was evident, mid quotations tor woollen manulactures became firmer. In support of this there was the fact of the special active purchasing of wool by France m London and Australia in .July and August. The wool trade is thus greatly indebted to the French for the recovery that has since taken place. At the London sales New Zealand crossbred wool sold at 101 l to Hid and according to a correspondent of one of the daily papers, if is eon tended that wool must return to the average producer IK.BO pence per pound to give him a living wage. The correspondent bases his calculation on a thousand

acre property wintering Lj slice]) and valuing the land at i'll per aero. The wool buyer may reasonably retort. that the value of the land was too high, and taking the average price of crossbred wool over a period of, say, two years, the land should not be valued more than i” per acre. Ihe cost of production is undoubtedly high, and the correspondent thinks that the Arbitration Court and the Hanks could modify the costs, the lormer by reducing wages and the latter hy reducing interest. Such reductions arc not likely to he made just now. hut were they possible then a reduction in laud values. should simultaneously take place. Hut the price of wool and other commodities is fixed hy the consumers. for it, is according to their demand and purchasing power that business is possible. It the cost ol production is above that price, then the cost of production must he reduced. " MONEY IS TIGHT.” 'l’llis about describes the state ol the money market in Wellington, and it is probably no different in any other part of the Dominion. Some three weeks ago the Wellington ( itv Council offered a limited number of debentures, hearing interest at the rate of 51 per cent per annum, one lot having the short currency ol lour years and nnolher lot for a longer term which were returning slightly more than 5) per cent interest were offered at the same time. There lias been no eager rush on behalf of till) investing public for these debentures, in fact the total amount subscribed so far is about U7UO. Other local bodies are experiencing the same difficulty with their issue-, and idle explanation appears to he ilmt money commands a higher re 1 urn than o) per cent. On very fine mortgages with a wide margin of security 0 per rent is easily obtained, and in some eases as much as 7 per cent is being paid. It is jnsl being realised that the predictions of some of our financiers and bankers tlint money would he scarce and dear is being verified. One has merely to examine the export and import returns for the current produce year to appreciate the present position. And there will he a progressive increase ill the shortage of loanable credit be-

cause 11 10 income of the country is very much smaller than it was a year ago. It is problematical whether tlie savings this year will be sufficient to replace worn out capital, let alone to provide for new developments.