AUSTRALIAN WOOL.

Taihape Daily Times, Volume XI, Issue 3495, 25 May 1920, Page 6

AUSTRALIAN WOOL.

MARKETING ‘THE FREE CLIP.

MR HUGHES’ PROPOSALS.

PAYING A DEBT VVITH PROFITS‘

Details are given in ms Ausfralian press of proposals made by the Prime Minister, Mr'W. H. Hughes, for the marketing of ~?_§eg~l92o-21 Wool clip and of the wool purchased by the Imperial Government under the"re(i’uisition terminating on June 30. An’ outline of this scheme was cabled to England, -but not to New Zealand; some of the English comments have been published. 1

The position is‘ that at the“end of June there. will ‘be a carry-over in Australia. of about 1,600,000 bales, this including wool that Will then be _on the water. The Imperial Government will have pai'u"for all this wool, representing about ‘5532,000,000. In addition, the Imperial Government is understood to hold in England about 800,000 bales, representing over £16,000,000/. or a total investment of about £48,000,000. f The proposals maTc’le by Mr Hughes are as follows:-—(1) No export of new 1920-21 clips from Australia prior 1 to Oétober 1, 1920. (2) No auction} sales of Australian wool in Lontlzonl after September 30, 1920, until’ my 1, 1921. (3) The earliest nzotificatiqn of this to be given so that bnyel:s.will know that Australian wool will be procurable only in Australia between the I dates mentioned. I

(4) No auction sales of wool will be held in ‘Australia until October 1 next. From this date on""2Xustralian wool brokers would auction the 1920-21 clip on owners’ account and pro"c‘éed'with the auctions without interruption up to May 1, ‘1921, from which date onwards. normal conditions could prevail, viz.:———'l‘he~ British Govcrnnicat would resume selling its left-over wool, and auctions‘ eould'T)e held concurrently in Australia of any small ‘quantity that might then be left of the 1920-21 clip. (5) The low-class wool which has been held back in Australia said to be about 500,000 bales, not to be shipped until after Mgay 1, 1021, unless the: following transaction‘ can be negotia-i ‘ted, viz,:—The British Government‘ to sell this wool to the Central Euro} pean Powers at, say, three times the} appraised price in English currency, taking payment of one-third"in gbid and the rest in bonds repayable in three years. Afistiefliafs share of the profits would be half of the bonds. (6) Any wool remaining in Australia. at October 1 next, in‘, which the’ British Government has an inter-est, -to be disposed of by auction in Austra-5' lia on account of the Bi7itish°Gover'n-i ment and the ‘Australian wool pool; after May 1. 1 I PROFITS FROM .THE . R-EQUISITION. ‘ i The Australian growers are entitled to half the profits from" the resale of wool purchased'by the Imperial Government under the requisition, and in this connection the Prime Minister has made the following proposals:—— (1) The Commonwealth ’ Government to negotiate with the British Govern- _ ment for payment of £10,000,000 immediately on account of accrued pro~l fits, such am.ount'to lbe"liséd by the Commonwealth Government to reduce its indebtedness to the B‘ritish Government. . (2)The Commonwealth . Government to issue bonds (having'_ a currency of five y'e'a_l"§T"r.o- AuStral~l ian owners for this .e10.000.000_. and at the same time to make available temporarily for the assistance of banks, say, £3,000,000 sterling if necessary, wherewith to lead up to 50 per cent. on the bonds to woolowners requiring accommodation to tide over until the proceeds of the 1920-21 clip are available. (3) As to the balance of the wool pro-fits, all amounts ' as they accrue to be credited by the Brit- I ish Government to the Commonwealth Government and to he set off against] Cerninenwcalth Government inde.betedness to a similar amount. The‘ Commonwealth Goveinnient to simultaneously issue five-year negotiablel bonds to the Australia wool owner for the amount of siich ’.‘.':l:mCe of such 1 WOOI profits. A. HEAVY 'ri?:.\ni«; 8.-‘il..-LYCL‘. ‘ A speeeli relating to the l'i’11ll‘k(“illlg‘_, of wool was delivered by Mr. I‘lll:_',"i,l(,‘S‘ at It private lumzixeon :11‘ the C7olnnlon—l wealth Bank, on April 27. and a re-; .port was made available after the pub- I lication of his wool scheme. 'He began by discussing the problem of transferring to Australia the credit which is accurriulatiiig in London. “Our exports 'are exceedingly large relatively: ?to our imports,” he said. “The‘ figures for the period July 1, 1919, to January 30, 1920, are:-——l-mports. £45,913.000; exports, £B-£347,000. This shows an excess of exports over imports of £65,88T,000 per annum, -and in {these figures o’ur wool exports are V7‘l“Pd only at appraised prices, which are much below world values. TO bring to Australia this .-.iccumulat.ion -ofcnenr-y presents the very greatest

r~ -difficuties, and ‘the greater the accumulation the greater the_ difiiculties. “Such an increase in imports in UlO immediate flitul‘e as would bridge this gap of (55 mlTlions is impossible, even if it were desirable. To atteinpt 110 - ‘import gold to Austraia, which is normally an exporter of gold, would, 1 on the fact of it, be absurd. Yet by , some means or other we must adjust , our trade balance if ,we‘a.rc not to ; reach an impasse. How great the ac- ' eumulation of .-’&l'lstralian money in ' England is likely to be. during the . next 12 months can be gathered from the following ligures:——Estilnated amount of inoney now lying in London on Australian account at -short call, £40,000,000; excess of exports over; imports for 12 months ending June 30,’ 1921, at present rate, £65,587,000; Aus-' tl‘alia’s share of profits to accrue in‘ London 011 wool to be sold——-and here I make only a very rough gues's——say,¥ £30,000,000; increased value of Australian wool clip for season 1920,21,? compared with present appraised basis of value, £40,000,000; total, £175,887,000. Of this, there may be, say, £-10,000,000 to be paid 'in. England for interest on loan money, public and pri-: rate. It thus appears that the accumulation of money in London by June, 1921, will have amounted to 135 millions over the amount of exchange to be provided by imports of the same volume as at present. Side -by side with this credit. to private ae- : count there is an indebtedness to the : ‘British Governmentt by the Common-’l wealth Government, which "has not 1 been funded or in any Way providedli for, of some’ £el0,000,000.” , ( . I (

~ WOOL SALES IN AUSTRALIA_ Mr Hughes proceeded to arfgue that the re-establishment of wool sales 1:1‘ Australia was essential to the inter:-I e:-is of ‘the growers, and furtllorth:ntl' “if Australian wool can be pzu-f c:u,ed only in Austra‘.ia it will farce Brifish banks to proy_ide the nece-cl _sar;,' credit, and ensure t‘-la‘; sl.fiEeu=«r: buying power is centred in All.<frui'a.t T~o.,Jift the 1920-21 clip at (present, w<4l'J_}l’s parity ruling in L).lln:g.. ‘I

! “'Aust:ralia’s share of she Wool lprqifits is to be paid over, not i::. Ausltralja, but in London. Haw is it ‘Within the realms of possibility that theqthirty millions of wool profits or wh_a,tever they will be, can be ‘L3I-ought yto .;&ustralia. in the form of momy, ,iII. éiddition to other requireni-3.=i.’s and lto the $380,000,000 that. will be \v:lllted to pay for the 1920-1921 wool clip. Whatever inoney is transferred to Australia and paid over to owners on account of wool profits during the next year will to the same extent. lessen the amount that will be available to pay out on account of the new wool_clip. “There is another aspect and this is that. the Comnionwealth indebtedness in England must be paid. The Governnient of Austl'alia~must raise at least £40,000,000. I am sure that wool-growers will be acting in their own interests and in the best interests of Australia if they will cooperate with the G<.>vol'nnl€.nt in overcoming the financial impasse and so help to remove some of the difiic-ulties tliut. will face wool buyers aml their bankers in pl'o‘»'i(ling the money in Australia to pay for the $920-1921 clip at the full worlrl’s parity of price. It‘is obvious that by setting off the Conimonwealth’s iII(IC‘bTCI.‘IIICSS to the‘ British Go\'el'nine'nt"s iiidebtetlness to the Commonwealth for ‘W6OI profits in; London. the financial position will be made much sounder, and the posi—bility of dislocation. of Allstl'alia’s-:‘ e:~:po1't trarlo in wool and other ‘land’ products will be I]'llllll|llSC'tl. In the ‘scheme stiggestecl I lmve provided‘ machinery both for I'hi.~= or-«l for payment to growers of ‘their share of the profits in .-\izs‘rmli:i'Ti ilin only way

.-fth-at seems to. me to be a pl'ac.tiica.ble ’ one. “In accepting Australian bonds for their share of prefits, woul—g'rowers will not be making any real sacrifice. N 0 oiher section of éthe community {will have auytliing like the sum of 530,000,000 Payable to it in London. [No other section has before it the ipossibility of realising during next yezti‘ even a, fraction of the amount" that wool-gl'owcrs are likely -to get for the new wool-clip, if i'l is handled} properly. I

. “Whatever wool-growers as abody , do voluntarily, they will not be Acalléd 1113011 to do again in connection with any call that may have -to be 1111350 in the same direction upon the lgeneral community. I want to im'pross upon you that time is the es‘sence of the contract. If anything is to be done it must be done quickly.” g Speaking in the House of Representatives, Mr Hughes said the scheme was only advice and only his own iopinion. “My last‘ advice to Noo]-i growers,” continued Mr Hughes, “is to sell their wool in Australia, and‘ make the other countries come here: {and buy it in the open inarkef, so} that they will‘ get the world ’s price} The Ministry will not interfere. Wltll‘ them, but it will request the .Briiis‘h Government. to do what it should do, and refrain from selling wool which it now has while we are selling our new clip. That is a perfectly fair and legitiniate request They have had our wool during the war for only one third of its true value. We have not received one penny piece of the, excess price; nor can we get any account of how much is owing. _'["alerel is no indication whether it is £1,000,or £50,000,()00. That is not business; it is’ not fair play. In conclusion, I say to the woolgrowers of'Australia,a nnikeup your minds ‘lo sell your! wool in Australia, and notify the world that youare going to do so. Whatever the world‘ may say when you 11/Ifl.kO that notification, once you have made it, it must fall“ in will) your resolution, and come here to buy.”