WELLINGTON NEWS

Hokitika Guardian, 22 April 1930, Page 2

WELLINGTON NEWS

POOLS AND IIOLDS-LT

(Special Correspondent.)

WELLINGTON, April 18

The Commonwealth Government is bent on saddling the country with a compulsory wheat pool in the vain belief that by curtailing market supplies, orderly marketing and so forth, economic Jaws can be evaded and an artificial prices profitable to the producers established. There is no re-

corded instance of a pool—compulsory or voluntary—having succeeded. Canada has had a voluntary pool and still'has such an organisation, but it lias achieved beyond distributing the normal course of trade and causing financial stringency. The crisis in the Winnipeg grain' market which developed early in February had its origin in the price war which has been waged during the past six or eight months beween the holders of Canadian wheat on the one side and European importers on the other. On the Canadian side the chief protagonists are the Western co-operative wheat pools, who, with 140,000 members, control oo per cent of the wheat crop of Western Canada. When it became plain that the prairie wheat crop of 1929 was of very modest dimensions (the Dominion Bureau of Statistics places it at 279,000,000 bushels as compared with 522,000,000 bushels in 1928, and a five year average of roughly 400,000,000 bushels) the pools determined on a policy of holding up their wheat stocks for a price higher than European buyers felt justified in paying. In this policy they were able to secure the co-operation of a number of important private grain and ele- ' vator companies who were normally their bitter antagonists, but one of them knowing that there was a substantial volume of wheat still available from the last Argentine crop had no serious expectation that their policy would yield any great fruits before the end of 1929, hut they were serenely confident that the month of January would see other supplies well on the way to exhaustion and a strong buying demand materialising from Liverpool and other grain centres of Europe. Meanwhile their policy had ' inflicted a very severe dislocation on the economic life of Canada. The earnings of all the railway companies suffered a severe curtailment as did the reserves of jbotli lake and ocean shipping companies; business firms catering for the Western trade were afraid to make , committments and place orders wi th manufacturers; and as a oonsequence of a tremendous fall in exports a favourable trade balance was transformed into an unfavourable one. Acute disappointment as the - days passed I)s' in January, aud the European buyers, having continued to pick up supplies of wheat from Argentine, France Germany and other countries showed a stubborn obduracy and kept out of the Canadian market wheat prices sagged steadily downward and at the end of February the banks, which had advanced very large sums to the pools aud the private grain firms, became nervous about the situation and began to call for further .security. Up to this point (thttjpuibiic ' had been more or less kept 'hi the dark: about the situation, ' blit the Press' their - began to carry front-page istbfies abput the grain the West..-- -.'h ~ *v)v “Whatever wheat has been purchased for Europe it can only be a small proportion of the wheat held in Canada and U.S., and it is stated that impartial observers do not see any prospect of marketing more than half the stocks before July 1, when the new crops of 1930 begin to-be available. Selling pressure on the pools is bound, to' increase, for apparently the po-ols have-., not yet made to their members the final payment for the crop in 1928, and the latter also -expected a second payment, on the 1929 crop last month to provide funds for the spring seeding 'operations, Thus the pool directors must find money to meet their obligations or they cannot fail to lose prestige with their members. And even as things are they Wifi have to explain why they embarked ..upon a policy which, unless there, is a swift upturn in prices, must entail ’very substantial losses in a year when they could ill be afforded. Running a pool in connection with any' world commodity is a difficult and hazardous venture and the safest course appears 1o be to accept the market price of the day.