The Dominion FRIDAY, JANUARY 8, 1926. THE MARKETING OF RUBBER

Dominion, Volume 19, Issue 88, 8 January 1926, Page 8

The Dominion FRIDAY, JANUARY 8, 1926. THE MARKETING OF RUBBER

Angry protests are still being made in the United States against the policy pursued during the last year or two by British Empire rubber producers. The American Secretary for Commerce (Mr. Hoover) was quoted a few days ago, for instance, as declaring that the United States would be demanding 8 dollars a bushel for wheat, and 75 cents a pound for cotton if it followed the example of Britain in boosting the price of rubber. ... We are not in the midst of a genuine rubber famine (Mr. Hoover added), but a purely artificial one created by production restrictions for the purpose of advancing _ From this it might be supposed that Empire countries alone are responsible for the present high price of rubber, and are reaping all the profit In actual fact, only a very little more than halt of the rubber output of 1924, the latest period for which particulars are available, was produced within the British. Empire. It is certainly not to Empire producers only that American and other consumers are now paying high prices for rubber. At the same time, a restriction scheme approved by the British Government in 1922 undeniably has done something to bring about the present condition of the rubber market. In 1921, as the story was told recently in the Economist, rubber was selling at no more than 35 per cent, of its pre-war price, and large unsold stocks were rapidly accumulating. The Colonial Office in these circumstances appointed a committee under Sir James (now Lord) Stevenson to inquire into the matter. The Stevenson Committee at first considered that the co-operation of the Dutch East Indian authorities was essential in any organised restriction scheme. Later, however, the committee recommended legislation to prevent planters in the British Empire from exporting more than a stated percentage of their “standard production. It was provided that this percentage should increase or decrease at quarterly intervals when the average price was above or below certain pivotal figures. The object of the scheme, as it is stated by the Economist, “was to stabilise prices somewhere between Is. and Is. 6d. per lb., by ensuring automatic readjustment of supply to all conceivable variations in z demand.” The scheme was approved by the British Cabinet,, the necessary legislation was passed in Malaya and Ceylon, and. in November, 1922, restriction came into force throughout the Empire. Since that date, there have been extraordinary fluctuations in price. In May, 1924, rubber was down to a fraction under tenpence per lb. On July ’l7, 1925, the corresponding quotation was 4s. 6d. In September last, it had fallen to about 3s. 6d. Early last month there was a rise to 4s. 7d. A few days ago the price of rubber was quoted cit 3s Empire producers, in common with those of rubber-producing countries outside the Empire, evidently must have made very big profits during the period of high prices. Available figures place the cost of production of rubber at well under one shilling per lb. 4he present state of the market appears, however, to be due in a much greater degree to an extraordinary increase in the demand for rubber, and to unchecked international speculation, than to the effect of the restriction scheme. The world consumption of rubber in 1920 was 290,000 tons; the figure of world consumption in 1924 was 475,000 tons. An estimate of last year’s consumption was 540,000 tons. One effect of the policy of restriction has been to cut down heavily the relative share of world supplies of rubber produced within the British Empire. The rubber output of Empire countries has fallen by about twenty per cent, since 1922, the last post-restriction year, while the output of non-rcstrictcd countries has increased by fifty per cent. The extent to which supplies of rubber available, during the next few years will satisfy demands is somewhat uncertain. Those who anticipate a shortage of supplies rely largely on the fact that little rubber has been planted during the last five years, and that the rubber tree requires five or six years’ growth before tapping. It is plain in any case that Empire countries have a good deal of leeway to recover before they will occupy the same relative position, where the world production of rubber is concerned, as they did before restriction took effect. The extent to which Britain is made the target of American reproaches over the present state of the rubber market hardly seems in the circumstances to be justified.