The Gisborne Standard AND COOK COUNTY GAZETTE. Published Every Tuesday, Thursday, AND Saturday Morning. Thursday, May 8, 1890. THE PRICE OF WOOL.

Gisborne Standard and Cook County Gazette, Volume III, Issue 451, 8 May 1890, Page 2

The Gisborne Standard AND COOK COUNTY GAZETTE. Published Every Tuesday, Thursday, AND Saturday Morning.

Thursday, May 8, 1890. THE PRICE OF WOOL.

Be just and fear not; Let all the ends thou aim’st at be thy country’s, Thy God’s, and truth’s.

Many complaints have been made in London in regard to the new system of British and Continental buyers making purchases in the Australian market, and the fall in price has been attributed to this cause. A circular from Messrs Buxton and Co., of London, written in March, is now to hand, and we find the following reference to their contention that the purchases in Australia unsettles the whole market :—

It will be remembered that the condition of the industry during the latter part of 1889 was most encouraging'. Mills were in full work, additional machinery was in course of being laid down, stocks of wool were in unusually reduced compass, and, so far as human foresight was competent of judging' prospects boded well for some months to come. Apprehension was alone felt lest the outlook might be spoiled, as had happened twelve months before, by colonial purchases. For even with the fullest use of cable communication, there must always exist the danger of operations not being conducted with sufficiently close regard to passing events in Europe. The earliest news in September was to the effect that prices in Australia had opened too high to permit of orders being executed, but the rapid improvement of European markets during October and November stimulated the action of buyers, and sellers in the colonies were apparently only too pleased to part with their wool at prices comparing favorably with—what? Current Euro' pean values ? By no means. They were content to take as a landmark the basis of a corresponding period of the previous season. So far it is in evidence that colonial markets during an important period ruled under relative European currency. Then what happened ? The November series opened here at a rise of 10 per cent,, and after the first urgent wants were filled, the market was about to settle down upon a slightly easier basis when, during the first week in December, buyers here were daily apprised by cable of orders filled in Australia on a lower basis than obtained in London. The effect was most natural. That was the beginning of the rift in confidence that has not'ceased to widen ever since. The margin between general confidence and partial distrust is greater than any mere expression of money decline. The chief objection against this new development of direct colonial buying is that it must ever be of so uncertain and speculative a character as to seriously prejudice the trade at large. It is not London which is principally affected; it is the collective interests of the whole industry which suffer. Buyers can and will make mistakes in London, but they are in such close proximity to the scene of ultimate action that a remedy is soon applied, whereas in cases where a market slips away at the approach of long-date purchases, as has been recently, and is still, unfortunately, being exemplified, large quantities of the staple are thrown upon the market, disturb confidence, financial pressure arises, and, in some degree, forced sales ensue, consumers seize their opportunity, restrict purchases to the utmost, and depress values accordingly. This is very much the position to-day. No one with any acquaintance of the subject believes that trade has so completely deteriorated during the past two months as reports would seem to indicate, but the circumstances are such that they must be reckoned with, and it is not too much to say that until the mass of colonial purchases now floating, not to say weighing upon European markets, be absorbed, the chances of a healthier tone on this great centre are small. It is quite clear that this is not a matter which ean be disposed of by the enunciation of personal views. The successful development of such a business must depend upon purely economical grounds. We have contended during the past few years that, in principle, this direct Australian buying is mere speculation, and that while it can permanently benefit no one but the comparatively few whose interest it is to promote it, the results must, more often than not, be adverse to the best interests of the general trade. The character of the business is perfectly well regarded, and it must remain for buyers to realise whether the adherence to the sound policy of reducing operations within the shortest possible limits of time is not worth observing. Even the most ardent advocates in Europe of direct colonial business have latterly recognised the inexpediency, not to say disadvantage, of submitting wool acquired in this manner to the test of London catalogues, where it is immediately indentified and often correspondingly tabooed. But it is forgotten that, in business, circumstances often become more or less masterful, and wool not intended for London often finds its way here. Nothing cou'd better illustrate the essentially speculative nature of operations during the past Australian season than the irregular results obtained for some 10,000 bales passed through the catalogues during the last series of sales here,

Of course it must be remembered that this criticism comes from an interested quarter, from those who look through spectacles which may not exactly suit the colonial growers, and the depression in price may only be made conveniently useful as an argument for the occasion. One argument used was that when purchasers dealt directly with Australia their absence from the London market lessened competition, but when only 85,000 bales had been withdrawn out of a total of 470,000, that view would seem to have little weight, excepting in an inverse degree, that competition would thus be increased. We think that the real causes of decline have to be looked for elsewhere. The aggregate quantity was 75,000 bales in excess of the quantity at the corresponding series of sales last year, when there was great activity in the iron trade. Since then there has been a reaction in that trade, and as the price of wool was one of the chief gainers by the renewed activity it stands to reason that it would also be affected by a decline in other industries. There is no doubt that the extent of the sales in the colonies is largely increasing, and there are indications that in a few years the colonies will have control of the business in their own hands. The London brokers find it hard to bring themselves to a thorough understanding of the change which a few years has been working in the colonies, and it is difficult to force them to recognise that the time is arriving when the colonial wool-producers will be able to do a good deal of their own business in direct communication with the buyers, and though in the transition stage “tabooing” some consignment maybe an effective check, it will only (increase the desire of colonial producers to be free to do business on their own account.