WELLINGTON NEWS

Hokitika Guardian, 13 September 1927, Page 4

WELLINGTON NEWS

THE WOOL.OUTLOOK. (Special to “ Guardian ”.) i WELLINGTON, Sept. 10. ' The fifth of the series of Loudon wool sales begins on Tuesday, September 13th, when the catalogues will comprise about 124,000 bales, of which 41,000 bales will' consist of New Zealand wool. This series will therefore Ijo of some importance to us as it will give an indication of the probable trend of values of crossbred wool. There is no reason for anticipating any recession in prices, for ah' authorities agree that the market for wool has stabilised, but the undertone is not quite satisfactory. and this is indicated in the Juiy circular issued by Messrs 11. Dawson and Co. They state that the July sales in London established a rernai liable sound basis of values, and .tlie general .strengthening of the position of the raw material, hut the continued increasing domination ..I wool is both surprising and perplexing to the manuI,,,.Hirers in centres like the Home and the United States markets, who are landing business insufficient to keep machinery occupied: but also arc finding it impossible in ordinary standard lines to compete and secure adequate returns. Trade still is too limited in bulk ; the inquiry is still patchy. Everybody is Imping for, improvement and for a better season after the de-

pression of tlie past two or three years. ' Tlie steadiness of the. raw material is perhaps a helpful factor, but under the present machinery capacity the immediate prospect of such a revival as will keep it fully employed is not very encouraging. The most prosperous centres of the industry at present, judging from the demand for the raw mat dial, are on the Continent. German: appears to be very fully employed lies pito the difficult credit position of re cent years. It is, however, probabl; better equipped than any other seetioi of the textile trade, while for economi

eal and efficient production, the organisation of their works is probably unexcelled. The only thing holding Germany hack is the. Yack of liquid capital which is necessitating long credit terms in every branch of the industry. In the United States there has been some improvement in the wool market with considerable activity in domestic sorts, but as yet there is no notable revival, except at the manufacturing end. ..In all circles except that of tlie woolgrower there is considerable apprehension lest values of the raw material should open on too high a level for the new season, and so retard tlie chances of good business for the textile tiado noKt year. DOWNWARD TREND OF PRICES. Referring to price levels in the latest bulletin issued by the Department of Economics, Canterbury College, it, is stated that some authorities regard this steady downward trend as the beginning of a long period of steadily falling prices such ns followed the Napoleonic and Franeo-Prussinn wars. They consider that the world’s supply of gold money is, and is likely to he, inadequate to meet the demands of expanding production and trade. If that conclusion is right, it means that some measure of continued depression is probable in New Zealand until prices turn upward again ; for. if tlie decline in prices continues, unless production can be considerably expanded and costs lowered, we shall have to pay annually the same or larger monetary values in interest and amortisation on both public and private debts out of national and individual incomes decreasing in value as prices fall. There are other authorities who regard the recent fall partly as a readjustment to a lower level consequent upon the restoration ot the gold standards in Europe from the first half of 1925, 'partly as a temporary fall consequent upon the depletion period which followed tlie restoration ol gold. They hold there is absolute elasticity in the credit system based on gold to meet'all probable needs for money, and to maintain a fairly stable price-level. The recent lowering of the hank rates in London and New York, and the comparatively easy credit conditions prevailing there, support this view. The more recent French purchases of gold add weight to the opposite views. Rut, whichever school of opinion is correct,

it appears likely that prices will settle at higher levels than about 50 per cent above the 10.13 basis. Under these circumstances it would he futile for the Dominion to rely upon any considerable rise in prices to lift her out of her present difficulties. It is possible that hotter prices may he obtained by pur 'exports in the coming season. Already some signs of hotter conditions arc visible, and some farm prices have improved recently in North America ; but it is very improbable that prices wilt reach their 1025 levels in the near future for much deflation has occurred since then, and prices are now more stable.