OUR YORKSHIRE LETTER. (From Our Special Correspondent.)

Otago Witness, Issue 2817, 4 March 1908, Page 8

OUR YORKSHIRE LETTER. (From Our Special Correspondent.)

THE FINANCIAL ASPEOT OF THE WOOL TRADE, BRADFORD, January 10, 1908. It is common knowledge to every careful reader of this journal that wool values have seriously fallen 6ince the middle of Jast October, involving rather serious loss to one or two sections of the trade. It is well to state at the outset that it is now a common practice for the largest users of the raw material, including both Home, Continental, and American manufacturers, to jro out to Australia, New Zealand, and Buenos Aires about the month of August to bo ready for the opening of the season's sales. At the fifth series of London sales, which began last September 24, merino wools took a sudden jump, amounting) for good combing produce to as high as 2d per lb. This followed a steadily advancing market from the very beginning of 1907; consequently at the end of the September-October series prices for fine wools looked rather dangerous. The trade was fully warned at the time that in view of adequate supplies current prices could not be expected to last ; and yet for all that many Home and Continental buyers rushed in headlong and bought heavily at extreme prices early in the sea^sn. Just as showing the course of events, the following table sets out the full course of " tops " — i.e., combed wool, in Bradford since the highest point was touched : —

The above facts mean that considerable losses have now to bo faced, and with comparative dear money the financial aspect of matters is appealing very poignantly to many. The question arises, How far has Brad/ord been hit? The natural conclusion one arrives at by a study of the above facts is that handlers of crossbreds have been heavily hit, and that is so. All last year the strong fibred wools never assumed the healthy appearance that merinos did, and as considerable stocks were held, corresponding losses have to be faced. It is felt locally that those dealing in merino wools have not suffered co severely as those handling crossbreds. The actual trouble will be confined to importers and topmakers, spinners and manufacturers not being anything like co severely affected. That rise last October upset the whole apple-cart of the majority of users, especially spinners and manufacturers. At the time a good many were ready for placing heavy contracts for " future " delivery, but that rise was felt to be dictated so much by special circumstances as to be unnatural ; consequently many users refused to go forward. Jtist when they were again in a? temper for contracting forward news came from Australia that things were easing, this having the effect of causing the majority to again put off buying. On the other hand, it is to be feared that importers who went out to Australia have fallen into the trap of purchasing in the hope that things would peep up, and where no " futures " were sold forward at the then ruling price the losses are certain to be considerable. It is a very common practice in Bradford from August to December for importers to sell " forward "' tops at the then ruling price, and those who did that will come out falirly well, but those who simply bought wool on "spec" are bound to be severely hit. It is here worthy of remark that " futures " have been sold forward in Bradford as low as 25d for a super 60's top, and such foolish sales cannot but result in a loss. German buyers have led the van in colonial markets, and they must be badly hit. It is common knowledge that financial difficulties have been very pronounced, and Bradford, which does a huge trade in yarns and tops, has had during the past four months a very uneasy time. As far back as last July, September, and October the stringency was keenly felt, and remittances much delayed, but during the past month considerable improvement has been noted in this particular. The failures have been unimportant in the Fatherland, though one big shipping house in Bradford with a very large Continental connection suspended payment in November, which for the time being seriously upset this market. It shows how easily local financial institutions will give credit when one bank allowed an overdraft of £60,000, and another £50,000, the latter having practically no security. German purchases in Australia have been heavy, and nobody need yet be surprised to hear tell of wool being re-offered for sale in Bradford or transhipped to London. Naturally, banks have been, and still are, of a very inquiring turn of mind. They realise that they have very much at stake, and as wool credits in the past have been very cheap, they naturally are looking on with considerable concern. So far there has been no diffioultv in financing arrivals, but the real tug-of-war will be felt in February, .TNlareh, and April, when wool will be pouring in in tremen-doiis quantities. Of course, there has been during December many forced sales, one of the largest houses in Bradford surprising everybody with throwing overboard mostly crossbred tops and selling same for cash at ridiculous prices. The future of wool values is pre-eminently a financial one, coupled with the return of renewed confidence. During the past week things have »6sumed a much more satisfactory attitude, and values for tope have risen about a penny per 1b from the lowest point, but it is too early yet to say that the crisis is over. Considerable relief has been felt during the past week at the lowering of the bank rate from 7 to 6 per cent., and while I am writing this it is not unlikely that the Bank of England direotors will bring it down to 5 per cent. In that case things are assuming a more normal attitude, and in consequence a decided improvement is already observable, while more confidence

is expressed over the future. Everybody rejoices that this is so, for a fortnight back a very depressed feeling possessed, the entire trade. I can't say that the announcement the American Woollen Company closing its huge mills is a "bull" factor, but the directors say they have done this in the be6t interests of the trade, and to prevent a serious fall, which would be inevitable if over-production became general. This limiting of consumption of wool rather means that stocks are likely to accumulate, and this is bound to make itself felt in lessened competition in every selling market in the world. The money stringency in America is undoubtedly of a more serious nature and more widespread than is generally supposed, and ifc is going to take some time before its dire effects have passed away. In England there has never been any shortage of gold : only commercial men. with a 7 per cent, bank rate are bound, in their own intereste, to seek outside assistance as little as possible ; but thanke to the level-headed character of the managers and directors of Bradford banking institutions, they have never charged their clients more than 5 per cent. Th© worst ie undoubtedly passed, but at the same time I don't think there is much likelihood of wool values materially improving in face of very large supplies for some months to come, but the bottom has been touched. A TURN FOR THE BETTER, With the opening of the year a marked change comes over the wool situation, and considerable business has been.\done. There is no doubt that the improvement in monetary conditions has been a prime factor in bringing about a corresponding development in wool oircles, and the market wears a totally different aspect to what it did before the holidays. \?hether or no it will be permanent remains to be seen, but for all that the outlook has vastly improved, and good business has been done. The principal movement has been in low crossbreds, these having, of course, suffered the most. For two or three days before the actual movement came off many felt that the bottom was about touched, and directly men saw a lowering of the bank rate, in they came. The last market day of the old year saw good 40'e tops change hands at a shilling, but these were forced sales. Still, it was easy to buy a good combing at l2id, whereas yesterday the same sellers could command 13£ d, plenty of transactions taking place at that figure. Other purchases in 44\s, 46's, and 50's took place at about id advance, the weight shifted being, a long way the. heaviest for several months back. Evidently spinners were covering orders they had accumulated during the quiet time, and also export yarn houses were doing likewise. The Bradford market during the past year has become much more spasmodic in its movement, and trade seems to come all at once, and to be off in the same way. Those who bought at^ the bottom secured some good 6tock. and many cheap lines both in merinos and crossbreds have been picked up. The movement in fine wools has been nothing like so heavy as in crossbreds, though two or three firms have 6old considerable quantities. Plenty of good super 60's have changed hands at 2s Id, but to-day's price is more like id to Id more. Direct arrivals are coming forward somewhat heavily, and so far these are being lifted. It seems to me that the direct importer holds the key to the entire wool situation, and according to the ability of these men to lift and finance arrivals will future prices be governed. The movement has undoubtedly strengthened the whole fibiic, and the future is being looked forward to with considerable hope. There are some fair stocks of crossbreds being held, and vet for all that prices are now so reasonable that the situation is capable of a sound development in a iforward direction ,

70' s 60'e 50's 403 36' a Price on Oct. 18. d. Colonial tops .. ..31 „ „ (super.) .. 29 „ „ .. ..22 „ „ .. .. 17 „ .. .. 15* Price on Dec. 30. a. 2,7 25| 18* 125 12