June i, 1909.J 



THE INDIA RUBBER WORLD 





307 



Publifthed on ths lit of each Honth b^ 



THE INDIA RUBBER PUBLISHING GO., 



No. 395 BROADWAY. NEW YORK. 

 OABLB ADDREaS: IBWORLD. NSW YORK. 



HENRY C. PEARSON, 

 EDITOR. 



HAWTHORNE HILL, 

 ASSOCIATB). 



Vol. 40. 



JUNE 1. 1909. 



No. 3. 



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TABLE OF CONTENTS ON LAST PAGE READING MATTER. 



THE BUSINESS SITUATION. 



THE recent sharp advance in crude rubber, practi- 

 cally equalling the record prices of the past, can- 

 not be considered due to any decline in the world's 

 net production at this time. It certainly cannot be 

 held due to any falling off of the output from the 

 Amazon regions. It is not impossible that it may 

 have been stimulated to some degree by the efforts of 

 rubber syndicates organized under Brazilian laws, to 

 which reference has been made recently in these pages. 

 Direct evidence of this, however, remains to be gained. 

 This advance is more notable in that it follows so 

 closely the very exceptional decline of a little more 

 than a year ago. It is probable that the condition of 

 the market is the result as much as anything else of 

 indications of an improvement in the rubber industry 

 everywhere. 



So far as the United States is concerned, the status 

 of the tariff discussions at Washington has remained 

 apparently unchanged during the past month, but 

 opinion is general that very shortly a conclusion will 

 be reached and that this temporary obstacle to busi- 

 ness activity will have lost its effect. Whether the 

 provisions of the "Payne bill" or of the ".Aldrich sub- 

 stitute" shall most fully characterize the new tariff act, 



it is certain that the country will be saved, and the 

 feeling seems widespread that' the industries of the 

 country will shortly be found very much more active 

 than for some time past. In that event there would be 

 plenty of work for the rubber factories, for it is ap- 

 parent that from the beginning of the late financial 

 crisis many important buyers of rubber goods have 

 been out of the market to a greater or lesser extent. 

 Railroad and mining interests cannot refrain from 

 buying rubber indefinitely, which is one of the facts 

 that doubtless have had an influence in the recent up- 

 ward movement of crude rubber prices. 



It may be mentioned incidentally that the number 

 of new rubber factories recently formed or planned in 

 the United States is in itself an evidence of increasing 

 optimism, while in the same class of news is the tend- 

 ency of many of ihc old concerns to enlarge their facil- 

 ities. 



FACTORY COSTS AND PROFITS. 



WHEN the directors of a rubber manufacturing 

 company, in reporting to their shareholders a 

 decline in sales within a year of $9,971,074.62, can 

 point at the same time to an increase in the total op- 

 erating profits of 25 per cent., with no decrease in the 

 rate of dividends, the situation would seem to justify 

 , some comment — part of which is intended to be of 

 interest to the rubber planters. 



The "operating profits" in this case include what 

 ffemains of the company's revenue after deducting actu- 

 al manufacturing costs, and also freight, taxes, insur- 

 ance, and general selling expenses, but not interest or 

 deductions for bad debts. Of course the heavy outlay 

 for raw materials is included in manufacturing costs. 

 It happens, in this case, that the report referred to 

 covers a year in which was witnessed an exceptionally 

 low range of crude rubber prices. It is possible that 

 a large amount of the rubber used during the year was 

 purchased at lower prices than had prevailed at any 

 time since 1902, and that the larger operating profits 

 were due in good part to the comparatively low cost 

 of rubber. 



The company under review did not, however, re- 

 duce the prices of products on account of cheaper rub- 

 ber, as some other concerns in the industry are known 

 to have done, evidently considering the cost of Para 

 grades in 1908 to have been abnormally low. If such 

 was their conclusion it is proved to have been justified, 

 since at this writing rubber is quoted at prices only a 

 cent or two lower than at the highest prices ever 

 reached — for a short period in 1905. Those concerns 

 which did reduce their selling prices on account of the 

 ''slump" in rubber last year will doubtless find it much 

 harder to revise their lists upward than it was to re- 

 vise them downward. 



There are people in the trade who evidently con- 

 sider the cost of rubber a sufficient guide to fixing of 



