THE WOOL TRADE

Southland Times, Issue 18858, 25 June 1920, Page 2

THE WOOL TRADE

INTERVIEW WITH SIR ARTHUR GOLDFINCH. Some information regarding the wool contracts was given to the British-Australasiau last mouth by Sir Arthur Goldfinch the Director-General of Raw Materials. Speaking in his London office, Sir Arthur Goldfinch said it was impossible yet to state what the final payments to the Australian and New Zealand producers would be. The contracts had provided that the British Government should pay for Australasian wool 55 per cent, over the pre-war price, and that after providing for the public needs of Britain and the Allies it should share with the Australian and New Zealand Governments any profits which might be made by selling wool for civilian purposes. “Up to March 31 last,” said Sir Arthur “the total sales of Australian and New Zealand wool exceeded £250,000,000 sterling. The total amount of the wool still unsold was about, 2h million bales. Up to Februao’ 28. 19/19, the cash account was still in debit, but there were the stocks in hand, and we were getting very near the hour when they might be regarded as all profit. If anyone can tell me.” he added, “what this wool will sell at during the course of the coming year, I can tell him what profit Australasia will receive.” To a further question on his views of the future, Sir Arthur replied that they were sanguine. He refused to commit himself to any figure but assuming that the wool now on hand should fetch from £3O to £SO a bale, which was not extravagant, then it followed from the facts given that in addition to the price already paid Australasia would share with the British Government a profit of £BO,000,000 to £100,000,000. The 40 or 50 millions which were Australia and New Zealand’s share would be handed over to the respective Governments of those countries with which the Imperial authorities dealt, having no direct relations with the woolgrowers themselves. The British authorities had been criticised for selling limited quantities of wool at an upset price to spinners and manufacturers at the same time as wool was being sold by auction at very much higher prices. This course was taken, said Sir Arthur, with the full prior knowledge and approval of the Australian Central Wool Committee, anti the Prime Minister of New Zealand. “You must remember.” he said, “that the novelty was the auctiofl sales; not the offering at an upset price, which had been going on throughout the war. In April, 1919, when the auctions began, there was a general feeling of panic—Bo per cent, of the British mills had been occupied with military cloths during the war, and when peace J came and orders for doth given to maimj factoring firms were cancelled right and left, j the inference almost universally drawn was that, when the mills were released to make j civilian clothing, there would be a great j fall in prices all round. As a matter j of fact the exact opposite occurred. But | who was to he wire at that time ? Our j great object was to establish stable condij tions. I should explain that, coupled with | the issue o; wool at nn upset price, this i price was made the minimum at the auctions and also that it was on the average 25 per cent, above the price paid to the growers for the wool. In addition to the 55 per cent, above pre-war prices, the growers would get 121 per cent., half of 25 x>er cent.., extra profit ou this wool sold at the j upset price. I “ We wanted a stable market and the re- ! starting of the wool industry. The upset 1 prices were not regarded as by any means I cheap at the time, and it was only gradually 1 that the upset prices were substantially exj ccedcd by those paid at auctions. There | was throughout very little difference be- ! tween the average prices at auction and i issue on low and matlium crossbreds. On I merinos the difference, also small at first, increased month by month between April and October, until eventually it amounted to 20d, but such a rise as this was never expected. We mav have shown want of foresight, but if wc had not acted as we | did, who c an say what would have happened ? Sentiment is of great importance, and it- was desired to create a state of mind in which people would operate. We deemed it to b? of paramount importance to the wool-grower to set the wool texije industry going again throughout Fur-ij-c.” “Everyone was surprised at the turn taketi by prices. Here is a striking fact in proof of it. Before the armistice the United States Government bought 300,000 bales of wool at the upset price—a total purchase of about £12.000.000. In June, 1919, after the auctions had proceeded for some months America, being convinced that prices were going lower, asked to have the contract cancelled. Sht was released from the bargain, and Australia took exception to the release, being inclined to think that it was bad business. It would seem not to be very logical to blame us at the same time for selling wool at an issue price and to blame us for cancelling a contract, doing so after we had seen bow wool was trending. After the cancellation of the contract the wool sold to America was offered at auction in Boston, and sold there at 100 per cent over the price at which the American Government had refused it. Half the profit on this transaction —several million pounds—would go far to recoup the Australian growers for any loss there may have been on lower prices realised than could have been obtained at auction on the 430,000 bales sold since April, 1919, at the issue price.” To a suggestion made that Australian and New Zealand growers had been inclined to think their interests had been sacrificed to those of British traders by the sale of wool to them at a lower price than could have been obtained at auction, Sir Arthur replied; “One thing should be borne in mind. Whether the price was low or not, and I have said that we consider it a good price to sell at, it was not a privilege given specially to British manufacturers. The wool was offered at the same fixed schedule of prices to the manufacturers of France, Belgium and Italy, with the object of getting the industry started again on a stable foundation. As a matter of fact, the machinery was not available to put all the wool required on the market at once by means ol auctions, which was another reason why issue was for a time continued, the amount issued being gradually reduced. From April onwards until the end of the year we distributed 70 per cent, more Australasian wool than was distributed in a normal pre-war year. “ From the beginning of the contract, and right up to date, the manufacturers of Australia and New Zealand have been buying the wool they needed at cost price, which is 25 per cent, less than the 1919 issue price her;, and neither had they, of course, to pay the cost of carriage and other charges.” Questioned generally as to his opinion on how Australia and New Zealand had fared under the contract, Sir Arthur Goldfinch said that, when the growers sold their wool at 55 per cent, over pre-war prices they

acted fairly and patriotically, but not with the object of making a present to the Imperial Government. They had been paid in advance whether the wool was shipped or not, Britain paying for storage and taking all the risks of sea carriage, and they would make a very substantial profit over and above the original price paid to them. The profits reaped by Australia would be much greater than those of New Zealand, because the former had the vast bulk ot the merino wool, for which there was such extraordinary demand. For low and medium crossbreds on the other hand, the demand was so comparatively slack that at times, as, for instance, three or four months ago, the British Government would have been glad to cancel the contract. Low crossbreds had actually been sold at auction for civilian purposes at a lower price than that charged to the Amy. Now the demand was improving, and there was a prospect of a market for crossbreds in countries of Europe which could not, with the present rate of exchange, afford the tremendous price paid for merinos.