May I, 1909.] 



THE INDIA RUBBER WORLD 



281 



"Valorization" of Rubber in Effect. 



THE legislation requisite for giving effect to the projects for 

 the so-called "valorization" of rubber in Brazil has now 

 been enacted as regards two of the three important rubber 

 producing districts in that republic. The measure adopted by 

 the legislative assembly of the state of Para [see The India 

 Rubber World, January i, 1909 — page 154] has been signed by 

 the governor, and this applies to all the rubber produced in the 

 state of which Para is the capital. The national budget law of 

 Brazil for 1909 authorizes the president of the republic to grant 

 a reduction from the export duty on rubber produced in the 

 federal district of Acre on terms similar to those embraced in 

 the proposals adopted at Para. The third and remaining rubber 

 producing district in Brazil of first importance is the state of 

 Amazonas, of which Manaos is the capital. 



The federal law, No. 979, of January 6, 1903, offered certain 

 inducements to syndicates that might be organized in the agri- 

 cultural and rural industries, the benefits to be participated in 

 only by Brazilians. The effect of the legislation at Para is to 

 extend definitely the provisions of the law of 1903 to the rubber 

 interest, and the act adopted at Rio de Janeiro is of the same 

 purport. The first and major advantage from the proposed legis- 

 lation is to afford a reduction in export duties on rubber to 

 those who comply with the terms of the law — a reduction so 

 material as to affect seriously foreigners who may be engaged in 

 the exporting of rubber. The object, of course, is to give 

 Brazilians the preference, and the idea evidently prevails that 

 with so large a volume of rubber exports from the Amazon ther.3 

 must be correspondingly large profits, which profits hitherto 

 have gone to foreign firms, thus being in a sense a drain upon 

 the resources of Brazil. 



Hitherto the exports of rubber from the Amazon, involving an 

 important amoimt of capital, have been financed by the exporters, 

 who are almost wholly foreign. The collection of rubber in the 

 Amazon region is facilitated by local merchants who advance 

 supplies to the proprietors of rubber camps on the islands and 

 up the rivers, who in turn distribute these goods to the rubber 

 workers and make shipments of the rubber collected to the 

 provisioncrs, principally at Manaos and Para. These latter, 

 termed at'iadorcs, arc the receivers of rubber in the primary 

 markets, from whom the export houses at Para, for example, 

 purchase day by day their requirements for the world's trade. 

 Under the new regime the plan is for the aviadores, working in 

 connection with the producers of rubber, to keep in touch with 

 the product until it has reached the consumer. The plan looks 

 further, however. There is involved not only earning for 

 Brazilian capital the profits of exporting rubber, but the possibil- 

 ity of controlling prices for the product to a degree which has 

 not yet been witnessed with respect to Para rubber. In other 

 words, the working out of this system would involve the hold- 

 ing of rubber stocks whenever prices were not satisfactory to 

 the sellers until more favorable opportunities offered for mar- 

 keting the rubber. In the past the aviadores, receiving rubber 

 constantly from upriver customers against advances of merchan- 

 dise, have been interested in marketing the same as promptly as 

 possible, whether or not a profit was realized, and working inde- 

 pendently and without the assistance of other than their own 

 capital, any other course was scarcely open to them. 



A new element has been introduced into the situation by the 

 establishment at Manaos and Para of branches of the Banco do 

 Brazil, of Rio de Janeiro, practically a national institution and 

 descended directly from the first bank known in Brazil founded 

 by royal charter in 1808. The authorized capital of this bank 

 is 70,000,000 milreis and the amount subscribed to date is 

 45,000,000 milreis, amounting at par of exchange to $24,570,000. 



The Banco do Brazil, based practically on the natural resources, 

 is in position to make advances to aviadores on their rubber to 

 an extent impossible in the past by any banking institution on 

 the Amazon, and upon this possibility evidently is based the 

 hope of the rubber producers to hold their rubber in times of 

 low market quotations, and to a degree control the production 

 of rubber. What will be the effect of the new system only 

 time can tell, of course. The valorization of coffee, a product of 

 the southern Brazilian states, has been in effect now for nearly 

 two years, on a somewhat different basis, but' opinion is divided, 

 first, as to what results have already been obtained, and secondly, 

 as to what the final and lasting effect upon the coffee market will 

 be. It is clear, however, ,that the coffee valorization plan has 

 appealed Strongly to the native rubber interest, and that the new 

 legislation in reference to rubber is a direct outgrowth from 

 what has been done in respect of coffee. 



Two features in the rubber market to-day are attributable to 

 the valorization movement: (l) reports come from Para that 

 rubber is being held there by certain parties at higher prices 

 than those obtaining in the consuming markets; (2) statistics of 

 stocks of rubber in the consuming markets embrace an unusual 

 volume of "consigned" rubber, implying that rubber is being 

 shipped to New York and Europe through other than the usual 

 channels, which must be regarded as rubber handled by or for 

 Brazilian syndicates under the new system. There are reports 

 of offers of rubber to manufacturers at slightly higher prices 

 than the regular importers are quoting by parties who are sup- 

 posed to represent such syndicates as are here referred to. 



WHAT "LE BHESIL" (PAKIS) SATS. 



Wishing to pursue, in the general interest of this country, our 

 inquiry regarding the laws recently passed in Para and Rio in 

 consideration of the valorization of india-rubber, we have inter- 

 viewed a person established in the Paris market who is 

 thoroughly posted in regard to this product and to its Brazilian 

 and European markets. This gentleman proved to share the ad- 

 verse opinions we have previously expressed in respect to these 

 measures which their opponents consider unconstitutional, and 

 he likewise considered them to be merely an artificial expedient 

 which would in the end produce results wholly contrary to the 

 commendable purpose which the governments of Rio and Pari 

 had in view. 



There is, first of all, reason to fear that the producers will find 

 themselves in the near future .confronted by a market of insuffi- 

 cient volume, as soon as the ample absorbing facilities and elas- 

 ticity which it has heretofore enjoyed shall have disappeared 

 in consequence of the partial or complete withdrawal of the 

 foreign firms established in Brazil. The producers will then have 

 to deal exclusively with the domestic syndicates, which will 

 compel them to pass under their yoke, unless they resign them- 

 selves to wait for higher quotations than those which the syndi- 

 cates are willing to offer them. 



This condition will result in the accumulation of large stocks 

 of rubber in the places of production. In this connection it will 

 be well to remember that rubber will show a loss of weight of 

 about I per cent, per month during the first few months after it 

 is placed in storage. 



As long as the active trade in the Brazilian market enabled pro- 

 ducers to sell all their supplies in advance for future delivery, 

 they were not compelled to face this large contingent loss which 

 may henceforth absorb, or even exceed, the small benefit which 

 the new law intends to reserve for them. They will then be 

 compelled to look to Europe for advances by shipping their 

 cargoes, the arrival of which may cause sudden and disastrous- 

 declines in prices. 



