Institute of Pacific Relations

Fears of Wool Shortage Seem UnfoundedAuthor(s): Jack ShepherdSource: Far Eastern Survey, Vol. 8, No. 24 (Dec. 6, 1939), pp. 288-289Published by: Institute of Pacific RelationsStable URL: http://www.jstor.org/stable/3022301 .

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288 Fears of Wool Shortage Seem Unfounded December 6

railroad of playing an important part in the future

development of the country's transportation system. As pioneers early in the century, however, before the

day of the motor car, the few railroad lines in the

Philippines contributed greatly to the areas they served and to the total economic development of the country. The Manila Railway on the Island of Luzon, and the

Philippine Railway in Panay and Cebu, were respon? sible for introducing new farming methods, bringing in new settlers and carrying out rapidly increasing products from the country through which they passed. The Manila Railway now has a complete length of 760 miles, connecting such far distant points as San Fernando in La Union, on the northwest coast, and

Legaspi, near the extreme southeastern point of Luzon. Since this railway also operates passenger and freight busses, it has been able to enlarge its service to meet

competition from the constantly increasing motor ser? vice on the highways of Luzon. (This has, however, led to some conflict between the owners of motor trans?

port companies, largely Americans, who have chal-

lenged the policy of the Commonwealth Government in

allowing its railroad company to invade what they consider their exclusive rights.)

In 1937, a prosperous year for the Manila Railway Co., it carried over ten million passengers and two million tons of freight, and these figures were increased in 1938. The Luzon Bus Line, subsidiary of the rail?

way, carried well over two million passengers in 1938, a marked increase over the previous year.

In Panay, the 72 miles of the Philippine Railway are still considered valuable, furnishing fast and relatively inexpensive transportation for the sugar, coconut, corn and rice produced in the island. Although reports on the condition of the line are not available, it has prob? ably been meeting expenses. This is not true of the Cebu branch, where the 60 miles of railway have suf? fered more from the competition of highway and water

transportation, and annual returns are falling behind

operating expenses. The relative importance of the lines in Panay and Cebu is seen in comparison with highway development in the two islands. Panay, an area of

nearly 4,500 square miles, has only 950 miles of roads; Cebu, with a land area of 1,700 square miles, has 600 miles of highway. The last report of the United States

High Commissioner to the Philippine Islands contains the following paragraph with reference to these lines: "Due to absence of long-haul freight, and competition of bus and truck lines on parallel highways, it is very doubtful that the Philippine Railway can be operated at a profit. This conclusion bears especially on the

Cebu division. The Iloilo (Panay) division can be more

nearly sustained on basis of sugar freight. With the

impending imposition of export taxes on sugar and the

gradual extinction of the industry, the major revenue of the Iloilo division will be lost. It is therefore recom? mended that the government as receiver proceed to the

liquidation of the Philippine Railway Co. and that under no circumstances its investment therein be extended."

Transportation in its most modern phase, air service, has made great strides in the Philippines in the last

eight years. The Philippine Aerial Taxi Co. began operating late in 1931, and it now has regular flights between Manila and Baguio, Paracale, Naga and

Legaspi. The Iloilo-Negros Air Express began opera? tions in 1933, and now has services between Manila, Iloilo, Bocolod, Cebu, Surigao and Davao, the service to Mindanao having been inaugurated two years ago. In 1938, nearly 22,000 passengers were carried by com? mercial planes in the Commonwealth. The reliability of the service is rated at nearly 100%. Possibility of fu? ture extension of private services is seen in the records of two prominent gold mines, inaccessible by other

means, which are using airplanes to transport laborers and supplies.

The uneven development of transportation in the

Philippines is somewhat characteristic of other parts of the Far East. In Siberia, in interior China, as in Luzon and Mindanao, one commonly sees the farmer

hauling his produce in rude carts along narrow muddy trails, just as his forefathers did, while a modern air-

plane, carrying passengers, mail, and some freight, flies above him on regular schedule between far distant

points. One can now fly from Manila to Davao, in the southeast corner of Mindanao, a distance of over 600

miles, in a short day. Thousands of farmers all over the country still face a hard day's trek to transport their produce over a few kilometers to the nearest distribution center.

Obviously, the primary transportation need in the Commonwealth is for more roads, especially of the "farm to market" class. It is upon this phase of the work that Philippine officials are now placing greatest emphasis in the endeavor to improve the general eco? nomic condition of the country. Perhaps the railroad era can be skipped altogether; and it will be a long day before the airplane can transport heavy cargoes of

sugar, coconuts and hemp, or before the Filipino farmer can afford to use such modern services.

Catherine Porter

FEARS OF WOOL SHORTAGE SEEM UNFOUNDED

Although the announcement, early in September, that Great Britain was purchasing the entire Australian and New Zealand wool output for the duration of the

European war sent wool prices skyrocketing in the United States and other neutral countries, fears of a

shortage now seem to have been without foundation,

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1939 India and Japan Seek to Reach New Agreement 289

at least in respect of fine merino wool of which Aus? tralia is the principal producer.

Britain's main wartime need is for the coarser cross- bred wools used in the manufacture of uniforms. But of Australia's total output only about 18% is of cross- bred quality, the remainder being fine merino. New Zealand's wool is 97% crossbred, but South Africa's is almost entirely merino. The only other important ex?

porters of crossbred wools are the Argentine and Uru-

guay, in whose clips the coarser type predominates. Britain will probably need all the available New Zea? land wool for her own purposes and in addition is likely to draw upon the South American countries for addi? tional crossbred supplies. In consequence, it is possible that a shortage of wool of this type will develop in neutral countries.

But in the case of fine merino wool the position is

very different. Britain has never taken more than 40% of the Australian clip, which averages about 3 million bales annually, while the bulk of the comparatively small South African clip has usually gone to foreign countries, notably Germany and Japan. During the current year Germany had arranged to buy about half of the South African supply. The military demand for merino is relatively small and civilian consumption in Britain is likely to decline rather than increase under wartime conditions. The same tendency may be ex?

pected to affect other European countries which manu? facture woolen textiles, such as Belgium, the Nether? lands and France. In addition, the fine wool which would normally have gone from Australia and South Africa to Germany and Czechoslovakia, will now be available for sale elsewhere.

Thus, instead of a shortage of fine wool developing as a result of the British purchase of dominion clips, Britain is confronted with the problem of disposing of

surplus stocks. For reasons of policy she has found it

expedient to acquire the entire Australian and New Zealand clips for the duration of the war, but it will be

necessary for her to resell in neutral countries that

portion of the stocks acquired in this manner, which she herself is not able to use. The British Government is naturally anxious to avoid a recurrence of the situa? tion which arose at the end of the last World War, when it was left with some five million bales of Aus? tralian wool on its hands. Moreover, Britain has only agreed to take from South Africa a portion of that

dominion's clip sufficient to maintain the price there at a level equivalent to that being paid for Australian and New Zealand wool. Thus, with the former German mar? ket cut off and the Japanese market dwindling, South Africa will also have to look to neutral countries to relieve her of a surplus.

At the time of writing, no announcement had been made of the terms on which the British Government will be prepared to resell the surplus of fine wool ac?

quired from the dominions. The Australian clip has been purchased at 10.75d. (Stg.) per lb., which is

aproximately 28% higher than the average over the wool year ended June 30, 1939. British sources suggest that the price for resale to neutrals will be fixed just

sufficiently above the price paid to the dominions to cover the administrative cost of government control, and to allow reasonable interest on the money invested.

In disposing of their merino surplus, the British Government will look most hopefully to the United States as one of the few important markets for raw wool as yet undisturbed by the war. Formerly, the American demand for fine merino wool has been ex?

tremely variable. In the wool year 1936-37 which saw a marked improvement in business conditions, the United States took some 276,000 bales of wool from

Australia, but with the subsequent recession during 1937-38, imports dropped to a mere 9,000 bales. During 1938-39, with a measure of economic recovery, the

figure rose again to 76,000 bales. Prior to the outbreak of the European war, the stock position and the greatly increased activity of the woolen textile industry made it seem likely that there would be a further increase in American imports of fine merino in the 1939-40 season. During the month of September the rate of wool consumption in the United States was higher than in any September since 1921. Imports of some-

thing like 200,000 bales of Australian wool were

anticipated. The extent to which the situation will be changed as

a result of the war and of the British Government's action in cornering the bulk of the fine wool supply, remains to be seen. A great deal will depend on the

price fixed for the resale of wool under the control scheme and the continuance, or otherwise, of the cur? rent burst of activity in the American woolen textile

industry. Jack Shepherd

INDIA AND JAPAN SEEK TO REACH NEW AGREEMENT

Negotiations for the renewal of the Indo-Japanese cotton trade agreement began in New Delhi in the latter part of October. The agreement expires on March

31, 1940, and the Indian Government has given notice that it will not renew on the same terms. Discussion of the problems involved in renewal has been going on in

both Japanese and Indian trade circles since last sum?

mer, but since that time the situation has been altered

by the outbreak of war in Europe. The original agreement, it will be recalled, was con?

cluded in 1934, after a bitter trade dispute in which India boosted tariffs on Japanese textiles and Japan

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