WELLINGTON NEWS

Hokitika Guardian, 25 November 1930, Page 2

WELLINGTON NEWS

BUMPING AT THE BOTTOM. (Special Correspondent). WELLINGTON, Nov. 22. It seems that for the present at* least most of the industrial metals and some of' the raw materials with world markets have reached their lowest level, for from mid-October to mid-November the general trend of price movement lias been upwards. Standard copper on spot (London quotation) has risen from £42 18s L)d to £l9 Cs 3d. This substantial advance is somewhat superficial and is due to an agreement having been reached producers of 90 per cent of the world output to restrict output by 2000 tons a month, this being estimated to be the present excess of supply over consumption. Spelter and tin also show improvements but lead is unchanged. Thus of the four base metals three have advanced and the other holds its price. That seems- to indicate that the downward trend has cease for the time * being. , There is no doubt that the fall in commodity prices has been overdone. There have been similar occurrences in the past, none so wide in extent or so serious in result, It was inevm'ffe that the great gap between the selling prices of commodities and the cost of production should have been bridged, or efforts made in that direction—in greater degree by lowered costs and, to a lesser degree, by some recovery of ' prices from their depressed levels; Producers generally must' accustom themselves to a lower levpl of values,, but by economy and sacrifice fairly distributed by all concerned. The present low prices can be made to yield a profit, to producers, and until this profit is realised there will he no real prosperity in the world. Prices have been and are still very low, so that production has had to he curtailed and that has resulted in' increasing the volume of unemployed. Prices cannot rise very much because as soon as a -profitable level is reached production will expand for closed-down works' will resume operations. Among raw materials it is particularly interesting to find cotton and rubber showing some slight improvement. The price gain in cotton over the month is exceedingly small hut nevertheless significant, for it is some indication that the economic conditions in India and Asia generally are improving. It* is these people that absord most of the cotton textile manufactures, and if their conditions improve the conditions in Lancashire must also improve, and improvement in Britain would be quickly reflected in New Zealand and Australia. . No effort has been made to restrict the output of cotton, World supplies of which are ample for all requirements. Raw cotton, is selling at •r less than 6d per lb. while at btte period of the post-war years it sold at 13(1. Rubber went as low as 3d and seveneighths per lb. and is now up to G(L Before Eastern plantations were deyelopen Brazil wild rubber sold in London *- at about 2d per lb. Production costs in the East have been greatly reduced in recent years but probably no estate could make profits with the price at 3d and seveneighths. An authority on the industry emphasises the imnrrtance of the extent to which Asiatic ownership of rubber estates has 'increased both in Malaya and the Dutch East Indies i' since 1922-23, and this is mainly attributed to the restricted policy adopted by British planters in 1922.,' It .is calculated, that . 5 per cent, of the rubber industry is now in Asiatic hands, and owing to the virtual absence of overhead charges which the British companies have to meet, the native grower can produce profitably with rubber at a very low price, f While base metals and raw materials show an upward trend food products • 'continue their downward course. The quotation for wheat in Chicago has fallen from 77£ cents to cents. The '’wheat position is'affected by the dumping tactics adopted by Russia. Reliable London marketing reports state that up to about the beginning of October this season’s shipment from Russia to all countries amounted to about : 16 million bushels, with a possibility that an additional 32 million bushels, may be shipped before the next crop becomes available. Students of the situation however, regard it from the possibility of Russia in the future being able to resume the position she held in pre-war days. This is quite probable and discounts the possibility of dollar wheat in the hear future. Butter, mutton and lamb are lower than a month ago. Butter at 112 s is lower than it was in July 1914. Wool, butter, cheese and frozen meat arc practically all below the pre-war level while costs of production rre on the post-war basis, and to justify this some people suggest doles to farmers, establishing cottage farms and placing more people on farm lands. The costs must come down before people will be tempted to go farming at present prices.