General Review of 1925.
Progressive improvement was made during the years 1922-4, but
the rude reaction in 1925 more than out-balanced all the advance made.
Signs of impending trouble were noticeable in December 1924, and
these rapidly developed into a slump in wool prices, which threw every
section of the Trade into disorder. The previous rapid rise in wool
values in October and November was never really justified, and succeeding
events emphasised the underlying weakness. Several influences were
at work .—
(1) The rush to buy wool, irrespective of the strong resistance
at the manufacturing end, prompted by low stocks in users’
hands. Speculation, encouraged by events in the two
preceding seasons.
2) There is no doubt that the total world’s clips were less than
pre-war, but sufficient weight was not given to the influence
of subnormal machinery activity.
3) In 1921 and 1922, when prices were low, large stocks could
be bought and carried, and current clips, together with
the B.A.W.R.A. surplus, were successfully marketed ; but
the volume of wool marketed under such conditions could
not be taken as the normal amount actually consumed,
nor as the amount which the Trade would absorb at a much
higher level of prices.
1) The strongest influence of all was the inability of later
sections to continue converting to more advanced stages
at unremunerative prices. For two years trade had been
in this unsatisfactory position, and by December 1924, the
breaking point was reached and all consuming centres
found it impossible to continue.
The fall in values continued steadily until May, in spite of several
artificial attempts to prevent it. Australian auctions were suspended
entirely from February 19th to March 9th, and finally the revised pro-
gramme was suspended until July 1st. The Trade, however, was in
the grip of the slump and artificial measures were powerless to prevent
a complete re-adjustment of values. The wool end of the Trade was too
hard hit to cope with the situation, while manufacturers for three years
previous had been squeezed between ever-rising wool prices and low
world purchasing power and, in all centres, were determined to avoid a
repetition of the experience. Even after prices ceased to fall new business
Was very slow to come forward, and a tedious period of adjustment set in.