THE RUBBER -MARKET.

Auckland Star, Volume LVI, Issue 208, 3 September 1925, Page 4

THE RUBBER -MARKET.

ABE THE HIGH SHARE PRICES JUSTIFIABLE 1 AMERICA'S COMPLAINTS. (From Our Special Correspondent.) , LONDON, July 30. « "Once bitten, twice shy," and having ~ been in the first rubber boom of the i ! post-South African war period, I have looked with a wary eye on the liveli ; ness in the rubber share market." There ;, . are numbers in the same position, for } although there are always "mugs" in , the investment world they are getting 3 shyer, and therefore scarcer. Still on s 'Change they are rejoicing in a body of , business it hasn't had for many a long day. The boom, however, lias reached , ;*■• its crest, as this week's slump in prices indicates. How far will the slump go? \ That is a very vital question, and our , American friends are keen on the scent a- of the trough and its dimensions. f' Company directors who have had to address their shareholders this week have been frank in their facing the reactions in America. We quote as being typical of the feeling here exI pressed alike in daily and other jour- "< nals the chairman of Kawie (Java) ; ■ Estates. — "Opinions as to the Stevenson scheme 3 . should be based, not so much on the present-day position of the rubber mar- .. ket, but more upon -what the price of •• .the commodity might have fallen to in 1923 and since had over-production been prolonged. Most people agreed, except <• those with the proverbial 'nxe to grind,' .■■ • that the scheme, had saved.from disas- ,. . ter, or possibly a transfer to another : . nation, a great industry in which nearly ■• £2,000,00.0,000 of British capital was an. '••■ ployed, and upon which hundreds of ■ . thousands ,of ■ .British, subjects depended ' : for a livelihood. - "It would seem ■ from some of the ' articles that have appeared lately, that ' Tthere ,ia more sympathy for the . American, manufacture?, who has only, him- \ . self to blame, for, the. fact. that, he has ','* .temporarily, to pay. a longish price for t'rliis spot rubber than- was ever shown jj for ...the ..planting .industry .during the • ! .many, unremunerative years it- has. ex- !.. perienced since the war." f "This -is said nioro - brutally by the J ■•■ '^Outlook":— !■■ ■ x 'Tor a good ; .share in the high cost ','■ ...of. rubber, .the..American, manufacturers T-.are : doubtless responsible. They ~arc i always ready.to,take advantage,of a . .shVorjtage to , raise prices, .particularly .', when, ithey .can. blame someone «lse. If :i. ..th.ere.is. to be talk, about .tribute, .our ~' annual- debt payments come more nearly i iinder that . definition. than a purely ij- legitimate-business measure.-The AineriV cans were, caught napping in regard to I rubber, and it is their own fault,if they ( ; are .now feeling the draught. "The .truth .is that if the Stevenson - rubber restriction scheme had not been J jput in., operation as the result of l a com- .,- mission appointed ..by Tvlr. Winston i Churchill _ during the . Coalition ..Gov.ern- '. ment the British rubber industry,would i - liavc drifted into bankruptcy, and •! doubtless -have- been- bought up by the 1 Americans: at ■ bargain prices. Thanks .•' -to 'the scheme our companies have been ■| .enabled to,make substantial profits, and \ .get. the industry, through a.bad period. . '.It is a debatable point whether the mrr ...dufltry is strong enough npw to permit . the. ;li£ting .of. the restrictions. -As soon -..,as..it is .definitely established. that. the • demand for rubber is sufficiently- large ; "to"- permit open competition 'then the \ -question -may- be- seriously .-discussed." ji Jlr.-.Austen Chamberlain .refused to be •, jdrawn'-. in the-House yesterday .when : ' Commander Kenworthy asked if ..the . . United .States Government had made , any protests with regard to. rubber restriction, asked us ,pot to..try to I Vpay all our. debt in that elastic sub- . stance. lAll-that the- Foreign -Secretary ( confess was receipt of the protest > but no, .more. r • One usually sound financial expertj , asked whether the rise in rubber shares ; has-reached its limit, refused to answer , one way or the other. It does not. depend ./alone on .the . economics, of rubber I?; production, but on the psychological ~, factors ■ .which, play ,a,part, in the rise ;■-.arid fall .of stocks .and shares. >Never.the.less..he_ declares, the late..autumn will • see,,a-further riseiin.rubber sharea,.and '.that—apart from the.speculative coun- ,/, ters, already referred to—rubber shares, j* epeaking, should be held for »; 'myjßsiiinent purposes. IK "■ This was Ms reasoned conclusion,after i' - having discussed what price producers i , /Will be able to get for the. rubber they Well' for delivery during thie .next. year j. or so; rlf this, he.says, is in the neigh- .-,- bourhood of 2/.the present -general- level '' of share - prices • is' fully justified. "1 ;■ believe,"''Lβ adds, "that rubber will . --fetch the price named, and possibly ■ more, •.d.uring the,.next year or. two, and ,"that,.even ;rf restriction .were..abolished, ',-it. would.make no, material.difference, as ;-. tlie -, additional labour required. to > .bring -. ftbout filll production ia -simply not ,t}fere. Kubber. shareholders ;ajre an in- ; ii^ucted : lot of people,..and.realise.the '.„.importance.of. these factors; the doubt- • •■siful -.point. is .the ■■ number .new. people wto- have' rushed in to buy, who may : .Tje ; .s\vg.yed , sentimentally . by. a fall. in .;,the spot j price, [or by . anything savour- • ing of a; removal of restriction."