sumption, and, whatever they be, their nature is not that of a passing influence, but bears a permanent character which nothing short of a complete revolution in the whole scale of values could change. It is a mistake, consequently, to use a standard of comparison which no longer exists. We think that in estimating the present position of prices we should go no further back than the year 1885, when the lowering influences of which we have spoken may be said to have expended their force. Considerable fluctuations have taken place since 1885, so considerable as to probably mark the extreme of any likely changes both in an upward and in a downward direction. The present prices are equidistant from both the very low and the very high rates of 1886, and, judged thus, stand at a fair average point.

LONDON, January 9, 1890.

A review of the past year leaves an impression of great prosperity in all branches of the wool trade. Rarely has there been a period marked by such an entire absence of complaints, or in which the satisfactory and profitable nature of the business has been so freely and generally acknowledged. While to the grower the range of prices has been such as to recall old times, the dealer has been favored by the continuous upward tendency of the market which in its turn again has in its advancing steps been generally so steady, circumspect, and moderate as to never impede the industry. Of the returning prosperity, visible in many commercial pursuits, the wool trade and all concerned in it have in fact had a full share.

It is satisfactory to record that there is not the usual reverse of the medal to this favorable account, but that the condition of the industry is no less fundamentally sound than its activity is profitable. The year has not been wanting in tests on this point, the chief one being the increased supply from the colonies and the River Plate States. It will be remembered that at both these sources the production in 1888 had shown a considerable surplus, no less in fact than 192,000 bales. 1889 brought a fresh increase of 138,000 bales, making 330,000 bales, or nearly 20 per cent, in the course of two years. With a less robust market the effect of this rapid growth would scarcely have failed to have shown itself, but as a matter of fact no feeling of pressure was experienced at any time of the year, and instead of weakness we have had, concurrent with increasing supplies, ascending prices. The truth is, the industry has lately grown quite as fast as the production, manufacturers working to the full measure of their capacity and continually adding to their plant. The creation of new and the enlargement of old establishments on the Continent has been a conspicuous feature of the year. It is still going on, and the full effects of the demand it creates have still to be felt.

Another point in favor of the soundness of business is the very mod

erate part played by speculation. Throughout the year the situation never looked other than promising, yet, with everything to stimulate them, speculators could never bring themselves to take any prominent share in the purchases, and the prices may be said to have always been determined in the most legitimate way by the bona fide consumer.

In the November sales a wrong estimate of the requirements of the industry led to a temporary exaggerated rise which as soon as its unjustifiable nature was perceived was lost again. But the relapse which under more precarious circumstances would certainly have disconcerted the market for some time had no lasting effect. Confidence was nowhere seriously shaken, and the situation was considered as healthy as before. In whatever way, in fact, the soundness of matters has been tried the test has always returned the true ring.

The value of wool has gradually risen; it stands row nearly on a level with September, 1886-a period looked upon as exceptionally high in these later years-and it bears comparison with former times. No special reason can be assigned for this recovery from among the circumstances surrounding the article. Neither has there been any new departure in the demand nor a falling off in the supplies. The improvement seems rather the outcome of an amelioration of trade in general. After long years of depression there is a reaction for the better. The times are more peaceful, there is more confidence, and while the necessaries of life remain cheap the consuming power of the masses has risen. Add to this the effects felt and still to come of last year's good harvests in this country, and the elements for a prosperous trade are given. What is noticeable in wool is that, without, as we have shown, any special reasons of its own, it has benefited by the general improvement more than other great articles of consumption. Its value, relatively, is high. This is worth bearing in mind, the sound position of the article notwithstanding.

LONDON, January 8, 1891.

The past year has completely belied the favorable anticipations under which it opened, and its history is a record of disappointment and of losses quite exceptional in their magnitude, and presenting a striking contrast to the unbounded prosperity of the preceding twelve months. No particular flaw can be discovered in the reasoning which a year ago led the trade generally to forecast very different results. On the most important point, viz, the heavy decrease in the River Plate clip, the predictions of producers, often so misleading, proved for once absolutely correct. The full estimated deficit-100,000 bales-was realized, and not only was this the case, but the Cape production, too, fell off by 20,000 bales, while the greater part of an increase in Australia was neutralized by the delay which the Australian strikes caused in the autumn shipments. Nor can it be said that the strength which the

market should have derived from these circumstances was in any way counterbalanced by unexpected adverse circumstances from without. The financial crisis appeared too late in the year to affect prices, the vast bulk of supplies having been sold; and though it added to the depression in the small December sales, it can hardly be said to have caused it. The effects of the McKinley bill might seem more serious, but here, too, on a balance of facts, it is doubtful whether much injury was done. For the tariff increased the American demand for raw wool, and if it checked the European export trade in goods, it was the cause also of much anticipatory buying for the United States during the summer months. All remaining general external influences-undisturbed peace, plentiful harvests-should have told in favor of a strong, not a weak, market.

The fact, however, is that the history of 1890, with its downward course of prices and its severe losses in the face of an unparalleled decrease in the supplies and of generally favorable circumstances, is intelligible only if viewed in the light of a reaction; a reaction from an undue expansion of trade in 1889, from the day and night activity of the industry which absorbed the largely increased supplies of that year not only without any lowering of values, but with constantly rising prices and which at the end left all markets absolutely bare of stocks and in apparently the soundest condition. Certainly, the supplies had been well cleared and there were never lighter stocks of wool than at the close of 1889; but at the cost, as events have since shown, of heavy stocks of the the manufactured article, yarns and goods. No factor so completely defies accurate measurement as this question of the stocks of goods, and it is natural that at a period of great prosperity, such as existed at the close of 1889, it should have been entirely hidden from the trade. But facts assert themselves in the long run, and in the light of last year's events it is clear that many more goods were manufactured in 1889, than the actual consumption required, and that with the losses of 1890 the trade has paid the penalty of this overproduction.

The industrial activity of last year has been on a more restricted scale, partly in consequence of the 1889 legacy of stocks of goods, partly of the necessity imposed by the supply. Goods to the extent of 100,000 bales River Plate wool have been manufactured less, and this does not exhaust the case. There are short receipts from Russia and a heavy falling off in the imports of foreign, Mediterranean, etc., low wools. It is not too much to say that the decrease in the quantity worked up by the European industry is equivalent to 300,000 bales colonial wool; and not only has there been this enormous reduction in manufacturing, but the lessened quantity has passed into consumption at lower prices. Unquestionably a more normal state of things has thereby been brought about and though the situation looks nothing like so hopeful as a year ago, the probability is that it is in reality much sounder.

LONDON, January 9, 1892.

The past year has been one of great difficulty to the woolen industry, which has had to deal with enormously increased supplies under most unfavorable conditions. A heavy surplus in the colonial and River Plate clips was indeed foreseen from the outset, and few probably entertained very sanguine views as to what the year had in store for them. But it was hoped that the general absence of all stocks both of wools and woolen goods might prove an efficient counterpoise to the increased supplies, and that with a consumption stimulated by a severe winter the market might succeed in maintaining its level. For the first six months of the year this was indeed what happened, and it is not impossible that the trade might have managed to "pull through" had the industry been in a normal and uncramped condition. But such was by no means the case, and when therefore in September the increase appeared upon the market in proportions surpassing the highest estimates, the result was a strong fall and the reduction of the value of wool to a very low level.

Put in round numbers the augmentation in the colonial and River Plate productions amounted to 306,000 and 63,000 bales respectively, or to about 18 per cent, an increase, which, taken in the aggregate, has never been equaled before quantitively, though proportionately it has been surpassed. To meet it the wool trade should have had its activity free and unfettered in every direction instead of being, as was the case, embarrassed at several points by serious difficulties. Of these the most conspicuous and direct in its effect was the American tariff. Its importance may be measured by the fact that the exports of woolen goods from England to the United States fell from £4,800,000 to £3,000,000. We have not as yet the annual statistics from France and Germany; but if, as is probable, their exports show a proportionate reduction, the cramping influence of such a vast dislocation of trade, the difficulty and time required to find fresh outlets, and the losses involved can readily be judged. In some of the most important industrial centers of Germany a third of the looms were last summer reported as standing still, mainly from this cause. And while thus limiting on the one side the field for exports, the American tariff on the other stimulated the American demand for wool, thereby depressing the value of goods and increasing that of the raw material at the same time.

Another circumstance with which the trade has had to contend was the superabundance of machinery which under the influence of the good years 1888-'89 was set up on the continent and mainly in Germany. The trade was familiar with similar conditions in 1873, when it took some years to adjust the anomaly. The difficulty which an overgrown, industry creates lies in the excessive and artificial competition it causes between manufacturers, both in the buying of the raw material and the selling of their goods, artificial in the sense that its end is not the

natural one to feed actual demand, but simply to employ machinery. Of course the raw material profits by such a state of things and there can be little doubt that, had it not existed, the prices of wool would have fallen still lower than they did, but the unsatisfactory position in which it places the manufacturer is obvious.

We will finally mention-last but not least-the one cause of depression which on a review of the year must present itself to all observers; we mean the influence of the enormous losses which the large depreciation of securities must have inflicted, in one shape or another, upon a large portion of the community. Not enterprise but retrenchment has been the order of the day, and the wool trade has suffered from it in common with all others.

LONDON, January 9, 1893.

In the history of the fluctuations of value the past year establishes a record in two respects; it marks the lowest point to which Australian merino wool has fallen, ever since it played a leading part in the supplies of the world and-what is more significant-it is also the year of the lowest average level of values ever known for colonial wool. Twenty years ago wool was about double the value of what it is at present, but it is not necessary to go back so far for a comparison, which would indeed be misleading as the general circumstances at that time were different. The contrast with quite recent years is sufficiently striking. In 1891 the average value of a bale of colonial wool was 13 per cent higher than last year; in 1890 the difference was 23 per cent, and in 1889 very nearly 30 per cent. The weight of these comparisons lies in the fact that they do not deal with temporary and isolated extremes of price fluctuations, but are broad yearly averages. Austra lian wool has on several occasions been for a short time nearly as low before-Cape and River Plate wool have even been lower-but there have never been such low yearly averages. And this not only applies to colonial, but to River Plate, to English, to low foreign, in fact to almost every description of wool produced.

In looking for the causes of this depreciation we will pass by the fact that wool does not stand alone on a low level, but that its fate is shared by the majority of large articles of consumption, for many of which the year 1892 also marks the lowest ebb in prices. That is a circumstance of which we will only say that it seems to stamp, not indeed the depression in its extreme, but a generally moderate range of value with a certain character of permanency. Of the more immediate causes of last year's very unfavorable results, several, such as failures and a deficient harvest at home, cholera on the Continent and the tariff legislation and its present uncertainties in America, suggest themselves; but the truest and also plainest explanation lies probably in the fact that the production of wool is still in the ascendant and that it forces the pace of the consumption at the cost of prices. In every transaction the bargain is with the buyer, and the seller in the abundance of supplies never has