WELLINGTON NEWS

Hokitika Guardian, 26 March 1932, Page 6

WELLINGTON NEWS

THE WOOL POSITION

(Special Cor respondent.)

WELLINGTON, March 23

At the March sales in London and the Dominion wool values were very much depressed, almost making one despair of the market ever recovering. I'o adopt -such; an attitude would illogical and not warranted by the facts. It is pretty certain that the past clips will not see much of an improvement in price, if any, and that holds good with respect to the others of our primary export products, but when the position is examined closely the outlook is not so cheerless as h would appear. With wool. its with other commodities, 0 is desirable to take a long view, and the long view presents many encouraging (actors. It was stated bv a Bradford correspondent that, for four months exceptional business has been completed in the wool industry. It is agreed that it lias been tile best trading quarter since the War period. Unemployment in the ’ industry, which in wptembei last showed a total of 50,000 is now down .to 19,000. Scores of firms that were'“fating bankruptcy in the autumn are now prospering. Spinning and weaving mills are now working doub’e ■shifts twenty-four hours a day. Export business is slow but improving. These statements should be thoroughly digested by those who are inclined to be pessimistic about the markets lor our produce. Bradford is busy supplying the British market, and that Bradford is busy, is cheering. Wool is going in L O consumption fast, and the pace will be accelerated when the export business expands. The export business is held up through the exchange difficulties. Wool is being consumed, and as trade expands ft will toot be long before the heavy carry-over of greasy wool passes into the hands of manufacturers. Bradford wool-combers are working 24 hours a day turning out tops and noils, and they must be eating into stocks, and as more hands secure employment the consumption of goods must increase arid at a- rapid pace. Pessimists should take particular note of the statement of the Bradford correspondent. He s ayS : “Scores of firms facing bankruptcy in the autumn are now prospering. It stands to reason that one section of the trade cannot prosper without that prosperity being reflected- on other section, but this takes time. Bradford has experienced many lean years, but Bradford is now .'recovering and that in the long run must be helpful.

Also we must not forget the ;rapid strides Britain is making towards recovery. The latest pleasing item is the fact that the. Bank of England has reduced its discount rate from 4 per cent, to 3’ per cent. 'Early in February the rate was 6 per cent, and itrtodie course of four Welts" caihe down to 3£ per cent. The reason <lor it is renewed confidence in sterling engendered by the outlook for the British Budge! which is certain to be balanced and show a surplus. The reduction in the Bank rate means that money is in plentiful supply and advantage has been taken of tlia.l by the British Government to stage a conversion loan. Cheap money in London must trade, it has the effect of lowering deposit and overdraft rates, and bills are. discounted at a cheaper rate.

'lib' s eems probable .that the Bank rate will again fall to 2.1 per cent., and that, should happen before June. Jf this forecast proves correct the New Zealand Government will' probably he able to renew the £4,000,000 ol Treasury Bills which mature ill. June, and at a' lower rate of interest. When these, bills were discounted last year gold was rushing out ot London and the financial situation was becoming grave. Now there are plenty of funds and lenders will he glad to have their money out on interest. If the Government is able to iimew the treasury Bills it will mean a saving of £400,000 ill exchange and will tend to ease the local position. Thus, although wool has been, at, a low price throughout the season the prospects for next sea..on ate good.