AMERICAN WOOL TRADE.

Taranaki Daily News, 27 October 1920, Page 8

AMERICAN WOOL TRADE.

CAUSES OF RECENT SLUMPj SUDDEN FINANCIAL GRISTS. Christchurch, Oct. 22. Writing on September 4, from Salt Like City, to Mr. 0. H. Elisor, of White Rockn, ltangiora, Mr. W. T. Rich, of the First Wool Brokerage Company, who visited the Dominion some years ago, gives interesting information regarding tb.B wool position in -the United States Mr. Rich states that some time previous to tho date of his letter a sudden aud unexpected financial crisis in the United States caused a terrible slump in the price of wool, which finally finished in a complete standstill of wool marketing 1 . There were many causes for the sudden crisis, such as over-stocking in non-essentials, gambling in oil and mining stock, extravagance, and the spending of large sums of money on luxuries. When it was seen that the banks could net go on loaning money and that much j of what they had already loaned was riiiky, owing to the inevitable drop caused by their action, they were obliged to shat down on all advances without waiting to discriminate between essential and non-essential industries. A miney panic was narrowly averted, but at the date of Mr. Rich's letter all danger of anything of the kind had passed and during the two or three weeks prior to September 14 the financial situation had improved, and an early revival of trade was certain within the next month or so. WOOLLEN MILLS CLOSE DOWN.

"When the financial crisis occurred," Mr Rich -continues, "manufacturers and wool dealers ceased buying wool, and selling brokers were besieged with offers of consignments to such an extent that they could not advance loans on 25 per cent of the clips offered. Then the woollen mills shift down, and stood idle for several weeks. The excuse given whs threatened labor troubles, and their determination to exhaust the accumulated- funds of the trades unions, to prevent them from continuing to cripple the industry with numerous strikes. This, to a great measure, was true, but another object was to exliau-1 the stocks of manufactured materials in order to eroate slow delivery and maintain high prices. Charges of profiteering were brought against many manufacturers, anil although these charges were justified, the manufacturers are determined not to reduce their present scale of profits if they can help it.

BID FOR HIGH TARIFFS. "In addition to these (roubles the j griratest reason of all for the present stagnation of the wool industry is the approaching Presidential election: Mdnufaeturers are determined, to have h'ijfh tariffs, in order to mafiUain their prosent high profits created during the war. These huge profits ran only be mf.'intained by increasing the present taiiff considerably, and increased tariffs cannot be secured wiLhout, returning the i'ratectionist Parity to power, namely, the Republicans. In order to secure united support for the Protectionist Party the tariff agitators have combined with Eastern manufacturers to starve thii \\ estern wool growers into submission. Western woo! growers are naturally protectionists, and they are being fuictfd to demand high protection for llu.ir wool. Political and financial juggling resulted in reducing the value of Western sheep by fully To per cent., 4S .hours after the slump commenced. Values are now slowly recovering, with tin: premise of returning to normal by November* 1, but, flock owners are hard up for money and cannot get any adI viMees frflin the banks.

HOPES OF AX IMPROVEMENT. "At the recent ram sales at various] centres in tliL> West prices were yery j nuich lower in the majority of eases, but even when ordinary flock rams were offered at practically butchers' price in so/lie cases, flockowncrs were unable to buy them because they Jid not have any money. When flockowners sell their lambs 011 the first of next month (October), anil their wool on the opening of the market in November yon will again sre higher prices ami healthy trade conditions. Politics are very corrupt in til is country, and every election year results in upsetting trade to a certain ex'tent, but the disturbance this year has been worse than usual. Although the slump is serious, it is only temporary, j and you have really no reason to be dis- | touraged regarding future prospects, although it may give you some disappointment in the way of expected exports during the next few months."