THE OUTLOOK.

Taranaki Daily News, 11 December 1920, Page 2

THE OUTLOOK.

| FOR NEW ZEALAND'S PRODUCE. STATEMENT BY BANK OF NEW ZEALAND CHAIRMAN. Wellington, Yesterday. At yesterday's half-yearly meeting of ! the Bank of Xew Zealand, Mr. Harold i Beauchamp, chairman of directors, istated: During the first three or four months of the current year the wool outlook was satisfactory, but in May there was a sudden change. At the sales at Antwerp, held on May 21, 125,000 bales of colonial wool were offered, and prices declined from 10 to 15 per cent. About the same time 18,569 bales —mostly merinos and.other fine grades —were offered in New York on behalf of the British Government, and prices suffered a decline of from' 10 to 20 per cent. Since these sales the market has been depressed, and w'hile fine wools are in demand at reasonable prices, medium and coarse crossbreds have slumped appreciably. The average prices obtained for wool tinder the Imperial Government's Requisition, were as follows: Greasv Merino: Medium to good, 15d to 17% d; inferior, 13d to 14Jd. Half-bred: Medium to good, 15d to ISJd; inferior, 14d to ISJd. Crossbred: Medium to good, 14d to I7d; inferior and coarse, 12d to 14d. Lambs: Good, 17d to 20d; medium, I4d to 16% d. The new clip from Australasia is not under requisition, and is therefore free to be marketed how and when the producers choose. The statistical position is against any recovery in values for some time to come. In the closing hours of the session the Prime Minister was able to make an authoritative statement as to the quantity of wool Jield on behalf of the British Government on September 30 last. The figures were: Australian 1,870,622 bales New Zealand ..... 765,356 bales

2,035,978 and the quantities of the different grades: Merino ............ 914,134 bales Crossbred t-..•••■■. 1,571,017 bales Slipe 150,227 bales 2,035,978 Thp grades of New Zealand's proportion of 765 : 3"v6 bales were as under: Merino 12,939 bales Crossbred 602,190 bales Slipe 150,227 bales 705,356 The Australasian total of 2,635,978 bales was not*' the only wool that was available to the world's woollen mills. At the end of September, Argentine growers held about 22,471,231 kilogrammes of wool, there were thousands of tons of domestic wool in the United States, and considerable quantities in South Africa. The demand as it exists to-day is not equal to absorbing the available supplies in a reasonable time, consequently efforts must be made to stimulate the consumptive demand; but this demand, if it is to increase, must be tempted into expansion by low prices. So ' long as the statistical position of wool remains as menacing as it is, low prices will rule for this staple. What is best to be done to get the large volume of wool into consumption? It- was thought at one time that the United States, with its wonderful accumulation of war wealth, would be able to consume a fair quantity of wool, but 'the position in that country is unsatisfactory. A cable message, dated New York, October 16, and published in the local papers, stated at Salt Lake City, Mr. Marshall Secretary of the National Woolgrowers' Association, announced that the woolgrowers of the United States would ( make a determined effort to secure legislation placing an embargo on foreign (wool. As the new President is a Republican, we may be sure that the woolgrowers of the United States will secure all the protection they want—in fact, protection of farmers was one of the chief- planks of Mr. Harding's political platform. We cannot, therefore, look with any degree of confidence to America as. a buyer, to any extent, of Australasian wool.

A RAY OF HOPE. The only ray of hope visible at present is in poverty-stricken Europe,- chief among the countries being Germany. But Europe, unfortunately, has not the cash or the credit to pay for wool, land it would appear desirable that New Zealand should adopt some scheme of extending to Continental buyers of wool long credits. The Argentine scheme is designed to give foreign buyers two years in winch to pay for their purchases of wool, and New Zealand might find it advantageous to arrange similar terras. In any case, it must be evident : that nothing like the prices obtained under the British commandeer can be expected for this.country's free wool. In the twelve months ended September 30 last 165,521,5081bs of wool, valued at £12,351,396, were exported from New Zealand. For a similar weight of wool now we should get probably about £7,000,000, and a good deal of that money will be owing to foreigners on long term credits. To assist growers who desire to hold their wool, the Government has obtained authority to guarantee advances, and it is probable that many will take advantage of this privilege." If so, that will mean the creation of a considerable additional amount of banking credit, which will be locked up in comparatively long-term investment. Such advances would naturally tend to curtail credit in other directions.

FROZEN MEAT. With the exception of lamb and lightweight mutton, the market for this product is in a similar position to wool, hut there is a prospect that a certain amount of lamb and light-weight mutton will be marketed in the United States, to which country large quantities of such meat have already been shipped, and, it is anticipated, further big shipments will be sent. Still, it would be unwise to place much faith in the American market, because if the wool-growers succeed in having an embargo placed on foreign wool, then those handling domestic mutton and lamb are certain to receive similar consideration. DAIRY PRODUCE. It is, I am sure, a matter for much cnugfatulation that the butter output of tlie Dominion, available for export up to March 31 next, has been bought by the Imperial Government at 280s per cwt.—the highest price ever realised for this product. Payment for butter will be made fourteen days after it has been passed by the government grader. New season's cheese, a short time ago, was in strong demand; but serious industrial trouble, iA Great £>atftk,

bringing in" their train a large amount of unemployment, have hail a very depressing effect on the market, and values have fallen substantially. If there can be no recovery in price, it is moat prob-. able that many of the dairy factories equipped with dual plants will at once commence to manufacture butter instead of choose: so, from a financial standpoint, we should not be prejudiced to the jSamc extent that we would be were they compelled 'to confine their operations to the production of cheese only. It inav be mentioned that arrangements for 'the slrijjiniejit of "butter can be made much more promptly than those for cheese. I believe I ani warranted iil assuming that the exports of dairy produce for the present season will realise something in the neighborhood of £12,000,000,, which would far exceed the result obtained in any previous year. TALLOW, HIDES, ETC. Tallow, hides, pelts, sheepskins, rabbitskins and hemp have all dropped in value, and the outlook appears to be for a further decline. Thus it must be apparent that the income of the Dominion will be less than it has been, and the spending power of the community must contract. THE FINANCIAL CONDITIONS. The changed conditions are also marked by the vast amount of borrowing that is going on.. Bearing in mind the amount of money that will be required by the Govement, by local bodies, farmers and traders, and the less payable prices we shall receive for our produce within the near futtvre, we must anticipate a strong demand for loans and for banking credits, and an increase of the note circulation. As I have already indicated, the position is a difficult one for local bodies who are restricted to a rate of s'/ 2 per cent. That rate, or even SJ per. cent., for giltedged securities, under existing conditions, would not prove attractive to investors. True, the recently-passed Finance Act provides that the Minister of Finance may permit a local body to pay a higher rate of interest, to be prescribed by the Governor-General-in Council; but I am not aware that this provision has yet been made operative. Money is at present dearer in Australia, London and New York than it is in New Zealand, bo if the country's produce is entitled to be sold at the world's parity of value, it surely follows that those who have credit to sell will also expect to receive the world's parity. France, Switzerland and Sweden borrowed in New York during the past few months, and all three had to pay 8 per cent. The people of New Zealand, as I have already said, must expect to pay more for their loans, both public and private.

THE VALUE OF CONFIDENCE. The changes that I have endeavored to indicate are such as one would expect in a transition period. The outlook is not as promising as it was a few months ago. The effect upon our prosperity of the reduction of the national income with which we are faced will be in proportion to the prudence and courage we display in facing it. Undue optimism may prove as dangerous a3 extreme pessimism; we must keep our heads and believe that, whatever troubles may be ahead of ue in the coming year, we will surmount them—in short, we must have confidence in ourselves and in our destiny. New Zealand, with its marvellous powers of recuperation, cannot be permanently injured even by such a reduction in the value of some of its chief products as has taken place. All our past experience forbids us to expect that the low level which has been reached by some of our products will be permanent. There will be a recovery, but meanwhile those whose incomes are for the present diminished must adjust expenditure to income. And if, as seems probable, the era of low prices is coming—not only with regard to the things we produce but those in which our interest is only that of consumers—the adjustment, when it is over and settled and conditions of trade are again established, will perhaps he to the benefit of both our community and our customers in distant lands—especially our kith and kin in the Mother Country, wlio have found it hard, and sometimes impossible, to pay the high prices which during the past years have been ruling for our produce. In connection with the financial outlook of the Dominion generally, I desire to associate myself with the Kight Hon. W. F. Massey in the statement he made on that subject in the closing hours of the last 6ession of Parliament.