January 1. 1914. 



THE INDIA RUBBER WORLD 



185 



Will 1914 See a Shortage in Rubber? 



By Our Correspondent Resident in Singapore. 



I WONDER whether the originators of tlie present bear raid 

 on rubber ever dreamed of the raniilications it would ex- 

 pand into ! I am of opinion that it will act as a boomerang 

 — which, if it misses its primary object, returns to, and prob- 

 ably hits the thrower harder than it would have hit tlie 

 "throwee." One result is the shutting down altogether of 

 operations on new areas now ready for tapping — which I ad- 

 vocated months ago. Also a great restriction in outputs is 

 imminent, as the bulk of the crop now produced will not do more 

 than pay expenses — and barely that — at 2s. per pound. 



The net result is that unless there is a very big rise in the 

 selling price in the coming year, the crop may conceivably 

 be very little bigger, if any, than this year's, which will bring 

 about a serious shortage of output. Manufacturers are taking 

 all that is now being produced, including remnants of cheap 

 rubbers, so that a minimum of consumption has already been 

 established of about 120,000 tons per year. 



As the present prices have caused the closing down of 

 practically all the cheap wild rubbers, Congo, West Africa, 

 East Africa, etc., and as there is great distress in Brazil re 

 the cheaper grades, so that these will no longer be available 

 as part of the world's supply, it is quite conceivable that the 

 1914 crop will not amount to more than 100,000 tons in all. 

 Manufacturers have been counting on a supply of about 140,- 

 000 tons of cheap rubber for next year. If they are caught 

 short 40,000 tons of prospective supply, what then? How 

 about future contracts for the delivery of goods? The col- 

 lapse of the rubber boom will be child's -play compared to 

 the result of manipulators' greed arising out of the present 

 situation. 



Rubber cannot be produced in a moment, and wild rubber 

 collecting .schemes, once abandoned, take a lot of reorganiz- 

 ing, especially when it is well known that there is no perma- 

 nent future for it, and that it must cease again in a year at 

 most. On all estates here managers are cutting down ex- 

 penses in every way, coolies are being dismissed and a gen- 

 eral state of arrested development is the universal condition. 



The price of rubber having been forced below the average 

 possible price of production for the year, the financing of 

 many estates has become an acute problem, which will be 

 permanently reflected in the possibility of their future exist- 

 ence. It has apparently been forgotten by the manipulators 

 that fully one-half of our planted areas are not yet in bearing, 

 and that a great deal of this has to be maintained and equip- 

 ped out of revenue, or by raising debentures in place of 

 reserve shares which it is no longer possible to place 

 on the market. All this has had a most unhealthy effect, 

 because it has come a year too soon. It has just happened 

 as it would to a child if it were forced to try to walk alone 

 before it was a year old. Given another year of reasonable 

 price, say 3s. 6d.. for rubber, and the great majority of estates 

 would have turned the corner with the bulk of their planted 

 areas opened to tapping, and so would have been self-support- 

 ing and able to maintain a steady yield sufficient to guarantee 

 manufacturers against unexpected shortage, as the plantation 

 crops can be estimated almost to a ton. 



If the present price continues, which seems inconceivable, 

 then many estates will shut down altogether for a year or 

 so. On the other hand, if the atteinpts made to form rub- 

 ber growers' protection associations, in England and here, 

 take full efifect, then manufacturers and manipulators will be 

 caught between the upper and the nether millstones and free 

 trading in the crop will be at an end. They will have only 



themselves to thank for this, too, as they have simply driven 

 plantation investors to drastic measures in self defense. The 

 manipulators who have attacked a British industry with a 

 capital of £60,000,000 sterling, have some nerve and will 

 want more before they are through. 



If the manufacturers — and this appeals with great force to 

 those in the United States of America, as they use about 

 one-half of the world's supply — would only get into closer touch 

 with the plantations themselves, they would avoid much of the in- 

 convenience they make for themselves by their conservatism. 

 The present system of buying through brokers in New York 

 and Boston came into being in the old sailing ship days when 

 it took many months to get anything from the tropics and 

 there was no cabled information. Now, a manufacturer in, 

 say, Akron, can know the exact state of the market, the 

 visible supply and the future prospects in, say, Singapore or 

 Colombo, in a few hours, so that he is in a position to make 

 any arrangements he likes with regard to supply, with a 

 certainty of being able to obtain his requirements direct 

 from the producing centers without upsetting the market and 

 the producing end. I take it that a steady supply at an aver- 

 age price would suit the manufacturer better than 100 per 

 cent, fluctuations. He will certainly learn a lesson shortly 

 about the results of playing with an immature supply. 



The yield for Mid-East plantations will be about 45,000 

 tons for 1913 (it would have been 50,000 tons but for the 

 slump), and if the low prices continue no new areas will be 

 brought into tapping at all in 1914, so that only a normal 

 increase on present tapped areas will ensue, yielding, say 

 55,000 to at most 60,000 tons— instead of 70,000 tons or more. 

 Brazil will certainly be down 10,000 tons; Guayule is no more, 

 at least for the present; Congo and East and West Africa 

 will only produce a few thousand tons at best in place of 

 20,000 tons odd. Borneo rubber and jelutong are simply 

 wiped off the slate already, and Central America will not 

 produce anything like anticipated yields — so there you are. 

 The year 1914 is likely to open with a crop prospect of be- 

 tween 100,000 and 110,000 tons, in place of the 140,000 tons 

 manufacturers have been counting on, and as they start mak- 

 ing forward contracts for supply for next winter's goods 

 they will find themselves "up against it." This will send up 

 the price tremendously, but no one is likely to reopen up 

 wild rubber to any great extent on the strength of it, as all 

 the world knows now that by 1915 plantations can supply 

 all that the world is likely to want, together with the best 

 Fine Hard Para, which alone of wild rubbers has a possible 

 chance of survival. 



Manipulators have, in fact, counted on an overproduction 

 that did not exist, and on the possibility of plantations try- 

 ing to average profits by increasing outputs, not understand- 

 ing planting finance. Instead of this, many estates have 

 ceased tapping, partially or altogether, and almost all are 

 restricting their outputs, cutting down expenses drastically 

 to average up profits a bit. 



There is, however, a silver lining to every cloud, and the 

 present totally unlocked for artificial crisis has caused all 

 companies to think furiously, with the result that real efforts 

 are now being made to produce better quality of rubber; 

 and standardization will certainly come into being shortly. 

 I know of several ways of vastly improving the quality of 

 rubber and there is some small chance now that companies 

 will take these methods up. Before, they were too "sombong" 

 (a Malay term best translated as haughty and purse proud) 



