CROPS: Good Clip

During the summer of 1938, earnest, acidulous President Arthur Besse of the National Association of Wool Manufacturers took a look at his industry. He saw that its 560 firms had a net loss of more than $10,000,000 in the preceding six months and he grew sarcastic. Soon the trade received from President Besse a three-page printed blast against price cutting and reckless competition.

“In Memoriam—the Profit Motive,” read a black-bordered box on the cover. “Honorary pallbearers will be men prominent in the textile industry.” Inside the pamphlet the textile industry read the summary of its sins—a loss of $98,094,000 for the ten years ending with 1935. Said he, ironically: “Perhaps if we defend our privileges and rights (to sell for less than cost) we may be able to lose even more in the period from 1936 to 1945.”

Last week, before the Government’s Committee for Reciprocity Information at Washington, Arthur Besse made an earnest plea: 1) terminate all Mr. Hull’s reciprocal trade agreements (which would get rid of reduced tariffs on wool goods) for the duration of the war; 2) consider upping tariffs to prevent flooding of the U. S. market by foreign producers. Said he: “When the war is over we will be powerless to prevent a flood of foreign fabrics.”

Whatever may happen “when the war is over,” the wool industry last week was neither in need of tariff favors nor in danger of price cutting. It was in the midst of making a cleanup out of the war. For wool is a real war commodity—needed for soldiers’ uniforms, overcoats, blankets. The U. S. has no wool surplus and the British Empire has forbidden wool exports outside of the Empire. Besides raw wool, millions of yards of woolens normally imported from Britain (1938 imports: 4,800,000 sq. yds.) will have to be made in the U. S.

Clothiers have predicted that men’s suits will be up $5 apiece by spring. If so, that rise will cost U. S. consumers about $280,000,000 in the next twelvemonth. All sections of the wool industry last week appeared to be shearing their percentage of this fine clip: raw wool skyrocketed some 60% for the benefit of wool growers; yarns were up 45% to 50%, sweetening the pot for the spinners; and when the U. S. Army went into the market for uniform fabrics, it found prices up about 30% over the bids it could have gotten Sept. 1, indicating that the mills were sharing the war profit.

Although the U. S. is the world’s No. 2 wool producer (1938 total: Australia 938,000,000 lbs.; U. S. 436,500,000; Argentina 385,000,000) it is not self-sufficient. Relatively mild climate makes U. S. wool fine-fibred, usable only for apparel, draperies, upholstery, etc. Yet in the apparel class alone the U. S. produces only 70% of its consumption, had to import 94,000,000 lbs. in 1937. With the chief suppliers, Australia and New Zealand (1937 aggregate, 51,000,000 lbs.), now out of the market, wool producers today can see bright days ahead.

Of coarse wool needed for carpets, the U. S. produces not a bit. All of it is imported. Chief U. S. supplier in 1937 was Argentina with 28,000,000 lbs., and China was second with 20,000,000. Because of the Japanese war, China’s exports to the U. S. are now zero. Because of war in Europe, other suppliers of carpet wool have had their entire clip embargoed.

Last week, for a second time since September1, U. S. carpet prices were raised—a total increase of 10% since World War II began. Big carpet makers, like Bigelow-Sanford, Mohawk Carpet Mills, Alexander Smith Co., wondered where next year’s carpet wool was coming from. War and embargoes had wiped out some 75% of the carpet wool supply. Meanwhile, after a deficit year in 1938 (Bigelow-Sanford lost $1,491,000, Mohawk $1,486,000), they stood to make a handsome inventory profit in 1939.

Also standing to profit are Argentina and Uruguay, only major producers of carpet wool in South America. Now the U. S. should become their A1 wool customer, which will suit everybody. For the more wool the U. S. buys in Latin America, the more exchange Latin America will have with which to satisfy its needs in the U. S. market.