WELLINGTON NEWS

Hokitika Guardian, 23 November 1927, Page 1

WELLINGTON NEWS

WOOL VALUES’. (Special to “ Guardian WELLINGTON, Nov. 21. The question of whether the recent rise in the value of wool will be maintained, is exercising the minds of many people interested m the marketing end of the proposition. Messrs Dalgety and Coy. in their report of the Wellington sale, say: “ We do not wish to be pessimistic, but on the present Bradford quotations—and such ((notations must always have a certain influence on the market-rates recorded lor certain qualities of wool appear dangerously high, and this is inclined to make the future of wool values as perplexing as it is vital. It would be unwise to predict anything in the nature of a coming boom in 'wool prices, but on the Wellington sale rates Bradford top quotations for -10-14 up to 48-50 would have to appreciate 2RI to 3d per lb before greasy wool could lie purchased here as the range of prices.” This view of the position by such a well-known firm is entitled to the highest respect, and it can be freely admitted that the advance in its entirety will not he maintained very long, at the same time it seems obvious that whatever the recession ' in price it will not wipe out the whole of the advance, that is to say that the current season’s average price will he well above the average for the past season. The advance that took place in Wellington was not due to any assistance given by Bradford, Lilt was brought about by the very keen competition of Continental buyers.

Tho operating costs of Bradford are hopelessly high, but the market cannot be modelled to suit the special requirements of Bradford. ft seems more reasonable to suggest that Bradford should revise its production costs, and bring them into line with competitor)!. Bradford has long held the supreme position in the world’s woollen trade, and it still holds it, but Bradford must in future, light to maintain that position. Wool values cannot recede very unit'll this season. The rise at the opening sale has been attributed to users being short of supplies at the moment. That indicates that the record clip of last season has vanished, and that again suggests that the demand for wool has been good. Almost before a new wool season begins, the trade finds itself short ol the raw material, and as general trade shows every indication of reviving, there is not likely to be a slackening in demand. The trade has to face the (act also that the supply will be considerably less than last season, for owing

to adverse conditions the clips of both Australia and South Africa will be substantially less than in the past season. Wool appears to be a particularly good asset, and New Zealand is singularly fortunate in being able to show an increase in the flocks, which should lead to an appreciable increase in the weight of the clip. I-’ARAIERS’ BANKS. A special effort is being made to interest farmers in establishing a farmers’ bank with the right to circulate intermediate credit notes on the security of land, live stock, produce, or other mercantile assets. These notes are to lie legal tender, convertible into cash when the security upon which credit is given is marketable. Nothing is said as to what is likely to happen if the security is not marketable, or if on realisation it tails to reach the

amount of the credit. The suggestion is simply a pica for paper currency, and (lie world lias witnessed quite enough of tho harm that has resulted from this system of finance. A wonderful lot of advantages are claimed for a farmers’ bank, but they are small nearly nebulous, for they are at best based on sentiment, and sentiment in business is a negligible quantity. Ihe Farmers’ Bank is to deal directly with Home purchasers, and it is suggested that it would not be difficult to arrange with the purchasers .that, should open market rates rule higher at any time, than his contract price, such increase in value be added. Apparently if the open market price falls below ihe contract price, the Home buyer is to pocket the loss. Sound business cannot lie built up on such lines. It is well known that farmers who have reasonable security fo pledge, havc.no difficulty whatever of obtaining credit at current rates of interest. It is not sa much cheap money that 1 armors need, as the cheapening of the cost of production, and it would be bettor to concentrate efforts in achieving this rather than dissipate those efforts in furthering wild-cut. schemes. ....