WELLINGTON NEWS

Hokitika Guardian, 8 December 1930, Page 2

WELLINGTON NEWS

COMMODITY VALUES,

(Special Correspondent).

WELLINGTON, Dec. 5

There appears to be some slight indication that commodity values, or some of them, are intending to -improve. .A nd this improvement- is shown by the base metals and a number of commodities that rank as raw - materials. A comparison of prices at the end of November and the end -of Decembef shows that copper, lead and spelter have improved, but tin. has gone back. Three of the four industrial metals are higher on the month, and that is really encouraging, for it shows that prices have been bumping at the bottom,'and are now slowly rebounding.

The metal, .markets were, greatly • disturbed by the war, which .called for increasing quantities of the base metals. After the war the demand was* very pronounced and prices natUlrally ascended. The result was that producers increased their output, and mines abandoned because of- costs, were reopened, because the high prices yielded a profit, even at the wprst of the mines. After a while the, consumption decreased because consumers cbtild hUt afford the prices. In 1920 till was sell-' ing at £419 10s per'ton! ' *• •■ . The slump of, 1920-21,.which was the herald of deflation, knocked prices about and they have been down l ever .since. It was soon made. apparent that production had outstripped . consumption and strenuous efforts have been made recently to., restrict production. It is futile to expect prices to go back to what they were during the period of inflation but they will probably reach a level which yield reasonable profits and permit of ordinary marketing. - •,

Tn addition to the base metals, some, raw materials have improved oVer the month. Thus Manila hemp has advanced 25s per ton to £22 15s, and sisal has’ improved 30s to £22 10s. In October, there was practically no sale for. N'.Z.,' hemp and no sales were reported, but’ towards the end last month fair grade;, hemp was quoted at £23 15s per ton. and it is very pleasing.''to note’ that.fof. the three cordage fibres N.Z'.’ 1 . lierilp hrings the most money. Last month; our hemp sold at 20s per ton ,m’orej than Manila and 25s above sisal,A ; The profit on N.Z. hemp would not be so large as that on Manila and sisal because those two fibres are produced by coloured labour. The lower price of sisal is a factor that wants to be,kept in view. Rubber shows a big.improvement at 6!d per lb. Not so,very long ago it was selling at below 4d per lb. and many of the rubber, companies have reduced costs, some' to 3d and others to 4d, so that the current price, low as its appears, leaves a good itiar* gift of profit. , V. There are many native growers of rubber and present prices will mean wealth to them. The improved outlook for rubber should soon be reflected on the cotton trade of Lancashire. Jute, another product of coloured labour, shows steadiness which is also “bull” point for the Lancashire cotton spinners. :

It is worth noting that most'of the base metals and a number of the raw materials have improved., Thiß is not an accident, but the result of economic laws. The prices have improved because the demand has-improyedt-., and there could he no improvement ihytlie demand unless the Ultiffi'afe.YCO.nSum’ers of the finished products v-fiad /elij* larged their demands. To . accourit Tor this latter we must I examine ';sss.uhotlr ditions in the world’s mohey ’Market. \ A year ago New -York the world with slumps on l t”• jfil-yff change and high call mohey: ; Vat'esj Money rates were high in -NewYork and London and in all the European capitals. Then matters subsided, but confidence had vanished, and prices- of securities and commodities tumbled down. The fall in the general leyel pf prices, and the curtailment of production called for lesß ■ currency, and credit. •T

• >;|rbe fall in values lias increased the purchasing power of those having fixed money claims, but these'have'not used their funds for the purchase of capital through the investment market, hut have dumped the funds on the short loan market,, and rates on that market are very low. In New York, Paris and Switzerland the rate is 2$ per, deni, and ili London. There is obviously an abundance of short term credit and cheap credit revives confidence, and ~ enterprise grows with it. The upward trend in commodity values appears to be the first signs, of reviving confidence, at least we may all hope so. But those who believe that because of the slight indication all our own troubles will end abruptly are making a huge mistake. Prices for our. produce may show a slight. recovery, hut over the next year or two we will have to face strenuous times, for we must undergo the gruelling process of readjustment. The old familiar prices of our export products will not return! for very many years, and we ' must i therefore make up our minds to regu-1 late our costs to fit in with the new level of prices. . . ,