WELLINGTON NEWS

Hokitika Guardian, 31 March 1931, Page 5

WELLINGTON NEWS

THE WOOL MARKET. (Special Correspondent.) WELLINGTON, March 28. Midst a welter of worries and anxieties afflicting all classes of the community, there is solac© in the stat 0 of the Wool Market. In London, Australia and the Dominion the wool market shows a buoyancy which, were the circumstances a bit different, would have caused the widest optimism. As it is, one hears th e cheering expression again and again “Never mind wool is up!” It is both consolation and encouragement. ■ln London the market owes not a little of its strength and buovance to the operat ions of Yorkshire, and tin’s is one of the most significant as it is one of the .most* cheerful incidents associated with the wool market. Bradford and wool are practically interchangeable terms for it is impossible to think nr speak of Bradford without associating wool with it. It is the home of the woollen industry

and what the wool men of Bradford, don’t know about wool from the fleece to the finished product is not worth learning. Bradford is just now a keen buyer of wool, and when the biggest wool operator is busy, others are bound to follow the lead. It is sometime since we have heard anything about America, but the United States lias troubles of its own, troubles created for Itself by the selfish pursuit of isolation a« expressed in a prohibitive tariff'. The United States has yet to learn that isolation is unprofitable and we must wait until that lesson is learned. At the sales in Australia and New Zealand, brokers in their reports have frequently acknowledged the indebtedness of the trade to Japan. This Eastern country has been buying wool in Australia and New Zealand very freely and has thus helped to harden the market. If Japan has helped the market, the market has helped Japan, for the prices have been low enough to help Japan. The woollen textile industry there is of comparatively recent development, and Japan has not the handicap of obsolete machinery over capitalisation, and the other bugbears of many post-war manufacturers in Europe.

The low prices ruling for tfie raw material have enabled manufacturers in Japan to increase their activity, and output has been so increased tr-at the country is now independent of imported woollens. Just as low prices for wheat encouraged its consumption in the East, and to some extent displaced rice as a staple diet, so the low prices for wool have to some extent displaced cotton in Japan and increrta eel its capacity as a buyer enormously. Wool is at present meeting with very good markets but many are wondering how long the markets will hold up. That is difficult to answer, and it is doubtful whether the most experienced in the trade would venture to express a definite opinion on that point. Judging the wool market by the experience of the past and the experience of other commodity markets, there will he a recession iri wool values sooner or later. Rubber, which is a world commodity, slumped to 3d per lb. sometimes back and then recovered to over sd: it is now down to 3id. Wool will lose ground, hut the price will not fall to the low level of, say, January last.

It will stop short of that and then rise again to a point higher than when the reversion, began. This seeJsaw

of prices will be witnessed again and again until a point of stabilisation is readied. We must not be alarmed if there is a set-back in wool, for any such set-back is certain to be temporary. Butter, after vising to 120 sin the London market, is down to 112 sor fis below the pre-war price. Butter, will rise and fall again and of this we can make certain, that butter will not see the high prices of 1929. The wholesale prices of many commodities have receded recently but they will recover again. In the opinon of keen observers, the upward trend in wholesale prices will be very gradual and will, therefore, be a lengthy process. We are dependent for our National income on the wholesale prices of the primary products we export As these wholesale prices will take some time to advance., we can. ease the position for ourselves only by reducing costs of production. We must endeavour to make- cost of production meet wholesale prices half way and. when we accomplish that, we shall be earning profits and the purchasing power of the community will expand.

Deduction of salaries and wages is ore point in cost of production, and it is regrettable that there should be so much hostility’ in Parliament to this.