TOPICS OF THE TIMES

Southland Times, Issue 21099, 3 June 1930, Page 6

TOPICS OF THE TIMES

That violent fluctuations in prices will be the result of the conflict between “pools” and "trusts” is the principal conclusion of a discussion on recent. changes in the methods of wheat marketing by Mr A. H. Hurst, who writes with an intimate knowledge of the grain trade based on long experience of the trade in both Europe and America. The rise of wheat pools in Canada and Australia, the organization of the Farm Relief Board in the United States, and the concentration of the grain export trade of the Argentine in two large concerns mark the rise of monopolistic control of wheat exports. The wheat merchant is thus being displaced, but the functions he performed arc not fully discharged by the new agencies that are supplanting him. In Great Britain the milling industry has been trustified and free competition among both sellers and buyers has been destroyed. The miller buys very largely to meet his immediate requirements, while the sellers, now organized in pools or other controlling agencies, seek to withhold supplies for a favourable market. Price fluctuations are consequently more violent than in the days of the supremacy of the wheat merchant, and the risks involved in milling and baking are greater. Under the pre-war methods of marketing undue speculation in wheat was checked by the wheat merchant. “If a pool operated in Chicago,” says Mr Hurst, “and set prices up artificially by reason of manipulation in the Pit, the grain merchant in, say, Britain or Germany who realized that at that moment Argentine wheat was on a cheaper basis was perfectly willing to sell to Chicago at its own exaggerated levels and replace with Argentine and other wheat on an attractive competitive basis.” Efforts at cornering supplies thus failed, and “it became an axiom that no corner in wheat was possible.” But, with the rise of powerful producers’ organizations and the steady elimination of the merchant, there is no safeguard against such manoeuvres. If present tendencies in wheat marketing continue, Mr Hurst suggests that concentration among sellers should be met by the establishment of a single buying agency under the auspices of the British Government. In this way wheat could be purchased and stored, and continuity of supplies at relatively stable prices assured.

An official report of the tariff truce negotiations at Geneva was recently presented to the House of Commons. It gave the texts of the various agreements which were signed, and proves that there is no more in them than appeared from the reports published at the time of the proceedings. “It seemed incredible that so many able men should have laboured so hard for over a month to produce so little. But the incredible turns out to be perfectly true,” says the Times. “According to the first intention the delegates were to negotiate a ‘tariff truce’ during which no fresh customs duties were to be imposed, and no existing duties increased. It was, from the start, a nonsensical idea from the point of view of a country like Great Britain, which admitted the trade of other countries duty free and whose own trade was handicapped by heavy duties, and which had nothing to gain and much to lose by binding itself not to disturb such an inequitable state of affairs. Mr Graham, however, believed that, if such a truce could be negotiated, it would give a breathing space during which proposals for a general reduction of tariffs could be discussed. . . . Many countries, including all the British overseas dominions, refused to take part in it, and several which did agree to participate prepared themselves for the negotiations by raising the already high tariff walls with which they protected their own industries against outside competition. It is true that a convention was signed by 11 States, including Great Britain, binding the signatories not to denounce before April 1 next the bilateral commercial treaties which any one of them has concluded with any other, and binding those of them ‘who do not consolidate their customs duties by treaty’ (i.e., Great Britain, Denmark, the Netherlands, Norway and Portugal) not to increase their existing protective duties or to impose new ones. But these engagements are hedged about with all manner of reservations and exceptions even by the 11 States which were induced to sign them, and, moreover, the convention is not in any case to become legally binding before November, until which date the signatories still retain the right to increase their duties, or, if they so wish, to withdraw from the convention altogether. The whole thing really amounts to nothing at all.”