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Old And Sold Antiques Digest Article

Textile Fibers
Historical Sketch Of The Textiles
Mechanical Devices For Preparation Of Textiles
Cotton Production
Cotton Marketing
Cotton Manufacturing
Geography Of The Cotton Trade
Prices Of Cotton Goods
Classes Of Wool
Production Of Wool
Wool Marketing
Manufacture Of Wool
Geography Of Wool Production
Mohair, Its Nature And Uses
Raw Silk Porduction
Silk Manufacturing
Silk Waste
Imitations Of Silk
Construction, Color, And Finish Of Cloth
Dyeing And Printing
Cloth Finishing
Care Of Textiles
Textile Tests

Wool Marketing

( Originally Published Early 1900's )

Local wool marketing.-The American wool grower disposes of his raw wool in a variety of ways, depending upon the locality, the amount of wool offered for sale, the customs of marketing, the wool grower's knowledge and shrewdness in marketing, the opportunity for cooperation among wool growers, and other factors of less importance. Wool growers who produce large quantities are generally able to get better prices than small producers. Competition among buyers leads to better prices, whereas combination among the buyers, with consequent lack of competition, leads to lower prices for the wool.

Sales to local dealer.-The method of marketing wool most common among the farmers in the eastern and Mississippi Valley states is that of selling to local dealers in near-by towns, men who usually combine wool buying with other business, grain buying perhaps, or storekeeping. The local dealer examines the wool that is brought to him, estimates its value as well as he can, and then offers a price which he thinks will give him a profit when he in turn sells the wool to some merchant, commission house, or manufacturing concern. Sometimes the local dealer ships all the wool he buys to some commission house or wool mer chant. In a word, he may act as the buying agent for such a concern, the concern supplying him with buying funds and otherwise assisting him in getting the raw wool.

Selling to local dealers is not always entirely satisfactory.

The dealer's judgment of the quality of wool may not invariably be good, for wool judging is a most difficult art. Good wool brought to such markets often brings less than it should because of willful or ignorant failure to rate it fairly. Producing better grades of wool is therefore not always encouraged by this system. Sometimes, it is alleged, local dealers buy high-grade wools at low-grade prices, the wool growers themselves not being sure of the grades of their wool; these dealers then sell the same wools at a profit illegitimately large. Such practices have made growers suspicious of middlemen in wool, and have led them to seek other methods of marketing their product.

Sales to commission houses.-Large wool growers, especially those in the western states, often send their wool direct to commission houses or wool merchants in Boston, Chicago, or Philadelphia. In these cases the wool is hauled to the railroads, loaded upon the trains, and sent east by the grower, not being judged or graded until it arrives at the commission house or other destination. These transactions are often completed entirely by mail, although representatives of the commission houses frequently travel throughout the wool-growing country, making contracts for the wool at stipulated prices, sometimes long before shearing time. Under this system, the wool is graded very carefully by experts; as a general rule, therefore, there is little complaint of such unfairness as is found in selling to local wool buyers.

Sales by auction.-Another system of marketing is to be found in the sheep-range country of the West; namely that of auctions. This is the regular marketing method of Australia and New Zealand, but has been used only slightly in this country. The method of procedure is as follows: On a given date after shearing time all the wool is brought to town, and put up at auction in various lots. Buyers from wool-manufacturing and commission houses have been notified of the date, and all who are interested are represented at the auction.

Sales direct to mills.-In certain parts of the Middle West, the growers sell their wool direct to factories, or to the representatives of factories. Woolen mills that buy in this way are scattered throughout Iowa, Minnesota, Wisconsin, Tennessee, and Ohio. Each mill buys as much as possible direct from the near-by farmers, to the advantage of both parties. The buying expense of the mills is reduced, while the farmers get a slightly higher price for their wool than they can get from the average middleman.

Farmers' cooperative sales agencies.-In a few cases farmers' cooperative associations take charge of the wool produced by the members, selling it either to dealers or to manufacturers in amounts large enough to get the fairest prices. The Minnesota Wool Growers' Association not only collects the wool from its members, but also manufactures woolen goods in its own mills. In this particular case the results are said to be very satisfactory to the wool growers.

Wool merchants.-The wool that does not go direct from grower to manufacturer goes to the great wool markets of the country for resale, storage, regrading, etc. Boston is the great wool market of the country. Many of the oldest wool merchant houses are located there, and the largest woolen mills in America are only a few hours' ride from the city. Philadelphia and Chicago rank next as centers for this country's home trade in raw wool.

Wool warehouses.-In these cities are found large storage buildings in which the wool may be kept until demanded by manufacturers. Boston has a wool warehouse large enough to hold 100,000,000 pounds, all immediately accessible. It is thus possible to store almost one-third of the nation's annual clip in this one building. The American Woolen Company is said to control the corporation owning this structure, and to buy most of the wool stored therein. Other large warehouses are to be found in Philadelphia, New York, Chicago, and in the western wool concentration points at Billings, Big Timber, and Great Falls, Montana, at San Francisco, and in several other west coast cities.

Functions of wool merchants.-The wool merchants occupy an important place in the present system of wool marketing. Most of them have large capital that can be used in buying large quantities of wool on cash terms, often long before any sales can be made to manufacturers. Since their sales to manufacturers are often on credit, they may have money tied up not only in the wool stock in their warehouses, but also in manufacturers' goods in process of making. This extension of credit to manufacturers is naturally a function of banking; hence such merchants are sometimes called wool merchant bankers or textile bankers.

These wool merchants also exercise their banking function at times with regard to the producers of raw wool, especially in the range country. A sheep rancher finding himself short of funds to pay the wages of the herders and the other expenses that come up before the time for selling the wool, often makes an agreement with an eastern wool merchant whereby the merchant lends him the desired amount and takes a lien on the unshorn wool. In other cases the merchant buys the wool outright to be delivered at the proper season. The wool merchant's need of large capital is thus clear. He may have money invested in wool yet on the sheep's back, in wool stored 'in some warehouse waiting for a buyer, and in wool in process of manufacture.

Buying wool "on the sheep's back" often takes a speculative turn. Merchants, on looking over the world's sources of probable wool supply during a coming season, may conclude that this supply will be inadequate for the demand and that consequently prices will go up. In such a case some of the merchants are likely to try to gain an advantage from the expected rise in prices by going into the woolproducing territory and offering to buy at advantageous prices the wool still growing on the sheep. In 1909 such an advance in price was expected, and an unusual quantity of western wool was sold by contract to eastern merchants long before the sheep were shorn. Some of this early buying takes place every year.

In addition to buying, selling, and financing the wool business, the wool merchants also perform various necessary functions, such as accumulating large supplies of wool in certain centers patronized by manufacturers. These merchants are likewise the importers of foreign wool. Much of this is purchased by their representatives in the great wool markets abroad, in London, Liverpool, Cape Town, Buenos Aires, or Sydney. When the wool comes to the warehouses, it is graded carefully and then stored in such manner that any quantity of any grade may conveniently be taken out, sold, and delivered to manufacturers. A manufacturer can thus generally go to a big wool merchant and get without difficulty just such grades of wool as he wants in the proper quantities.

Eliminating the wool merchant.-For these services, the wool merchant charges his profit. Some have thought this profit too large and have attempted to eliminate the wool merchant, or "middleman" as he is called, by having sales made direct from producers or local dealers to manufacturers. Various systems of handling the wool have been proposed, among which cooperative organizations of producers have been quite prominent on the one hand, and large associations of manufacturers buying direct through their own organization on the other. Furthermore several wool growers' associations have been formed, but so recently that it is hard to say whether or not they will be successful in marketing their product. Most of the first attempts ended in failure. Buying direct by manufacturers seems to be increasing in direct ratio with the increase in concentration of capital in the wool-manufacturing industry. The small wool factory must of necessity buy through the merchants except in limited and exceptional cases. The large corporation controlling several woolen mills can provide a buying organization comparable in every way to that of the wool merchants.

The auction system of marketing.-The systems of marketing in Argentina, Uruguay, and Russia are similar to that of America; that is, the wool is generally bought and sold by private buyers and sellers under ordinary marketing arrangements. But in England, or at any rate in London and Liverpool, and also in Australia, New Zealand, South Africa, and in the German markets, wool is generally sold at public auctions held on prescribed dates. The wool markets of these countries are controlled by public or semipublic bodies, the wool is graded by official graders, and sold (in much the same way as wheat or cotton in the large American exchanges) by grade instead of by sample.

Auctions in this country.-The auction system has been tried in this country several times during the last few years, but with no success. In 1894 the New York Wool Exchange was established with the idea of conducting the wool business on the same basis as cotton marketing. Auctions were announced, but both buyers and sellers failed to appear. Within four years the system had to be abandoned, and the New York Wool Exchange passed out of existence. In 1908 the Wyoming Wool Growers' Association established an auction system and built a wool warehouse at Omaha; this enterprise also failed within a year. In 1909 the National Wool Warehouse and Storage Company of Chicago was formed, a large warehouse was built, and the auction system again attempted. The auctions failed, but the company, instead of passing out of existence,

undertook to buy and sell wool on commissions in the fashion of some wool merchants. The National Wool Growers' Association aided this company financially, and its success as a commission house seems assured.

Why the auction system fails in this country.-The auction system which works well in England and Australia is so unsuccessful in the United States largely because of unevenness in American wool qualities, and because of the business habits of our people. Australian wool, while of many grades, is fairly uniform as compared with wool produced in the United States. Australian, English, Cape, and German wools can be graded evenly since the sheep raised in each of these countries are of fairly constant breeds, and the conditions of production are generally about the same. Not so in the United States! The New York Wool Exchange began by defining two hundred grades of wool under which they expected to handle the American product. Within a short time it was found that this number of grades was entirely inadequate. No system of grading for American wools has yet been found applicable in the public market. Sheep raising in this country must first be so standardized in each section that there will be no such continual change as now exists from breed to breed or from one condition of production to another.

A second reason for the failure of public wool auctions in this country is to be found in the psychology of the American wool producer and dealer. Regulations and market rules are more or less odious to him. What he wants is a direct chance to sell or to buy, and to exercise his bargaining instincts in every possible way. That he risks considerable loss in his private bargaining because of mistakes in judgment or because of fraud or deception, weighs not half so heavily with him as the sporting chance of winning something more than would be possible in the regulated public market. It is only another illustration of the dominant idea among so many of our American business men, "to get rich quick," and the willingness to "take a chance." In the European markets, conservatism marks the trader rather than plunging. He takes a lower margin, but he is more secure in this margin. He has learned the lesson that plunging has too many probabilities of disaster to be profitable in the long run.

Factors of successful marketing.-Successful wool marketing calls for special facilities for so handling and storing the wool that such quantities of any quality may be procured and later distributed as demanded by wool manufacturers. Somewhere in the system such means must be provided. No adequate method of holding back the wool on the farms or ranches until needed by the manufacturers has yet been suggested. Local dealers cannot do this holding any better than the wool growers can. Most manufacturers find outlet for practically all of their capital in the production and marketing of the finished goods. To organize the buying of raw wool too would be more than any save the very largest companies could do. The present system of collecting, sorting, and storing wools through the medium of the great wool merchant houses has much to recommend it as regards economy and efficiency.

Marketing of wool also calls for an expert knowledge of qualities. Not only are there the great number of grades mentioned in preceding chapters, but there are qualities or grades within grades. Dirt, grease, dead, straight, shiny fibers called "kemp," and matted wool all detract from the value of the wool. Consider, for instance, the item of natural grease found in wool as it comes from the sheep. What part of the total weight of the fleece shall be allowed for it? What part of the fleece is grease and what part pure wool? In the washing or scouring processes all of this grease comes out. The shrinkage in scouring varies from 10 per cent to 75 per cent of the original weight, no two kinds of wool being likely to show the same shrinkage. Nor are any two sheep likely to have the same amount of grease in their wool even when raised under the same conditions. In fact the same sheep will have differing amounts of grease in its wool in different seasons. Yet certain varieties raised under given conditions come to have a fairly uniform shrinkage. This is the basis upon which most buyers work. For example, the full-blood, half-blood, and crossbred sheep under a given environment will each probably have a certain percentage of grease; and each variety will have a different percentage for every different environment. To illustrate: in Wisconsin each pound of threeeighths-blood fleece usually sells for a few cents less than does the Ohio three-eighths-blood, the reason being that Wisconsin wool shrinks more in the scouring. Probably the causes are differences in climate, food, and care. But whatever the causes, the conditions as outlined exist and must be considered in the markets.

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