WELLINGTON NEWS

Hokitika Guardian, 26 February 1930, Page 7

WELLINGTON NEWS

AN UNBREAKABLE LAW.

(Special Correspondent.)

WELLINGTON, February 24

The law of supply and demand is a natural law, fixed, rigid and unbreakable. When supply is in excess of demand prices decline, and when demand exceeds supply prices advance. Artificial methods and means of staving the movement of prices may be successful temporarily, for the unbreakable law of supply and demand will operate.. The war caused a good many people to believe that a new era bad dawned for the world. Right from the outbreak, of hostilities prices of commodities began to rise and owing to war necessities the various governments were forced to commandeer certain commodities that were essential for prosecuting the war. Thus New Zealand wool, meat and other products were bought en globo by the Imperial Government at agreed prices which were well above those ruling before the war. When the war ended the perishable commodities rvere quickly consumed while others gradually went into consumption. In the early pre-war years there was an enormous carry-over of wool, which originated the Australasian Wool Realisation Association or Bawra as its was familiarly known. To Bawra was entrusted the task of realising on the surplus wool without pressing supplies on the market, and Bawra was enabled to do this because in those earlier years there was a very strong demand for woollen goods especially to provide civilian clothing for the thousands upon thousands of demobilised soldiers Prices were high for the raw material and higher still for the manufactured woollen goods, nevertheless the de-. mand continued for the period was one of inflation. When the initial demand was me 1 ' and deflation followed the consumers of wool were unable to continue to pay the high prices demanded by retailers, while at" the same time owinc to the high prices of the raw material wool production has expanded and has continued to expand at a relatively greater rate than consumption. The latter would and should have shown a greater expansion but retail prices did not fall relatively to the raw mate rial, and the high retail prices not only checked wool consumption but alsc save a stimulus to the use of substitutes.

A Bradford correspondent recently put bis finger on the sore spot when he wrote: “The position of the avool market again brings into prominence the just complaint that while the raw material has sagged hack to or somewhat below the level of values current before the war there is no sign of the advantage of cheap . ran' material being reaped by the ultimate consumer* of wool commodities.

It is now becoming recognised in Australia as in Bradford that excess ive retail charges for wool attire constitute the sole serious impediment t p that free flow of manufactures int' the hands of the public which is essential if the industry from the wool growers onwards is to operate in a sound healthy manner. There is a block in the stream between the manufacturer and the public consisting of execossive charges which raise the cost of clothing so high as to curtail the demand. Long charges rather than short dresses have been the cause of tiie sluggish demand for wool textiles’’

Tt amounts to this that the distributors of wool goods are in effect plundering the growers of their legitimate share of the profit. The distributors can no doubt declare with some justification that costs of distribution are high and therefore retail prices are high, but there has. been no attempt made to reduce the costs. Wool-growers in Australia and New Zealand have determined on holding wool back from the market and they have a perfect and unassailable right to do so if they believe that such n course of action will work out to their benefit, but when they appeal to the Government to help them in their self-imposed task by lending them th p money of the taxpayers then the latter will have cause for serious complaint.

The holding of wool by a grower is a voluntary act, just as is would be if a speculator bought wool and held it until the market improved. If the speculator asked the Government funds to help him hold his speculative wool there would he howls of indignation from the whole country, and yet in the holding of wool there is no difference between the wool-grower and the wool speculator. Both are engaged in a gamble. While the wool-grower has an absolute right to gamble with his wool, he must recognise that it is a gamble, and if he meets the not unusual fate of the gambler and loses, he must bear the loss and not expect the tapayers to carry the baby. The wool market will not show any real 'asting improvement until some drastic measures are taken to have retail prices'of wools reduced to a reasonable level.