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Wednesday, 25 June 1930

Senator CHAPMAN - That was written long before this bill was introduced. Unless the primary producers of Australia meet organized buying with organized selling, they will be undone. Again, Mr. Hurst says -

For example, the May monthly future sales in 1929 in Chicago amounted to 1,040,212,000 bushels, whereas the entire United States crop is 840,000,000 bushels for the entire year.

In one month, the speculators in future sales dealt with 1,040,212,000 bushels of wheat, whereas the entire crop for the United States of America amounted to only 840,000,000 bushels! Mr. Hurst's article continues -

It can certainly bc generalized from much other experience that future sales in Chicago alone are eleven times the United States crop per' annum. A still more interesting commentary is revealed by a study of the figures published by the Grain Futures Administration of the United States Department of Agriculture, which show that during September and October, 1929, the average open trades on a single day in Chicago amounted to more than 232,000,000 bushels. This single day's open position represents 58 weeks' import requirements of the United Kingdom. In other words, the open commitments on a single day in Chicago alone represent about thirteen and a half months' bread requirements of 50,000,000 people of Great Britain and Ireland. We may say that the 200,000,000 bushels imported by Great Britain in the course of a year represents merely one fortyfifth of the future transactions per annum in Chicago alone, without regard to those in other markets. Great Britain is far and away the greatest importer of wheat of any country in the world.

Senator Sir Hal Colebatch - There seems to be a good deal of competition in the buying of wheat.

Senator CHAPMAN - These people do not legitimately buy wheat. Combinations of capital are formed to depress values and bear down prices. There is also combination and speculation to get a profit as between the legitimate wheatgrower and the consumer of wheat. In regard to Canadian wheat, I ask what would have happened to world's prices if the 148,000,000 bushels held by the Canadian pool in February, 1930, had been thrown on the market regardless of price. Speculators would also have sold, thus breaking the market, in which case, Australia would have received many millions less for her wheat. The Canadian pool acted in the interests of the farmers. It realized that it would not be wise to dispose of the wheat it held regardless of price. The provincial parliaments of the great wheat-producing States of Canada supported the pool. The position would have been much worse had the 565,000,000 bushels of Canadian wheat produced in 1928-29 been dumped in the world's market regardless of price. Had that been done, Australian farmers would probably have . received not more than 2s. 6d. a bushel for their wheat. The provincial governments of Canada foresaw that the flooding of the market would mean disaster.

On the 27th February a bill was introduced into the Parliament of the province of Alberta, Canada, to enable the Government to guarantee advances made by the banks to the wheat pool. This action was taken after conference with the governments of the two other wheatgrowing provinces, Manitoba and Saskatchewan, both of which were introducing similar legislation. The Premier of Alberta, Mr. Brownlee, explained that the action his Government proposed had become necessary owing to the large holdings of wheat not in the pool, which threatened to endanger the market. Mr. Brownlee, speaking on the first reading of the bill, said -

The financial position was even more reassuring than we had previously anticipated. As a result of the margins already established by the sale of wheat at substantially higher prices than 'at present existing, the unsold wheat will have to hesold at considerably less than one dollar per bushel before' any loss can result to the provinces on the guarantees. It will thus be seen that at the lowest price to which wheat has so far declined the guarantee has not been endangered. As a matter of fact, wheat would have to sink to' a level never reached on Canadian markets before the Provincial Governments would suffer any loss.

Pool not Gambling.

As the wheat pool has been subjected to the most severe propaganda of an adverse nature since its inception, a word or two might not be out of place to assure the public that a very great part of this propaganda is misleading. For example, the pool has been accused of gambling in wheat. The statements submitted showed that the pool has conducted its business this year in accord with its established methods as approved by its membership from year to year, and the public need have no alarm whatever that its position has been endangered by any improper methods.

It has been consistently urged in this propaganda that the pool is engaged in a huge gamble in holding back wheat from the market, and that the present situation is a struggle between importing countries and the Canadian wheat pool.

These facts should be kept in mind -

1.   That year by year since its establishment the export sales of. the pool have been well in keeping with its proportion of handling of Canadian wheat.

2.   That its carrying-over at the end of any year has been within its fair proportion of Canada's total carry-over.

3.   That for the crop year, 1929-30, Its handling is slightly over50 per cent, of the total crop, so that the other 50 per cent is held by other interests, and yet the export sales for this year show that no larger percentage of non-pool wheat has been exported than pool wheat,. so that if there is any huge gamble all holders of Canadian wheat, non-pool as well as pool, have been equally responsible, and yet the propaganda is directed only at the wheat pool.

Pool Policy Justified.

The simple fact is that there was a large over-surplus of world wheat in the 1928-29 crop, and that much of this was dumped on the market at sacrifice prices, particularly from the Argentine, and that the wheat pool, as a matter of policy, refused to compete in these slaughter prices. Bad it done so the situation to-day in Canada would have been considerably worse.

The misrepresentation to which Mr.' Brownlee there referred has been broadcast throughout Australia for political purposes. A little while ago a gentleman named Mr. Sandford Evans attempted to discredit the Canadian pool, and his statements were broadcast throughout Australia. A cable was sent to America by the Victorian Wheat Corporation, asking for authentic information. To this the following reply was received: -

Evans is the only member of three provincial legislatures to oppose the pool bill. No word of truth in his contention that pool is beaten. It is in sound financial condition. The morale and membership are the best in the history of the organization. Many new members every day. Only relying upon provincial governments for moral support. Guarantees solely precautionary measure to avoid any possibility forced liquidation in case our collateral with banks, which is still valued in excess of 15 per cent, over and above amount of bank loans, should temporarily fall below 15 per cent, surplus security required by banks.

Senator Sir Hal Colebatch - What is the date of that cablegram?

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