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THE INDIA RUBBER WORLD 



[November i, 1900. 



THE RUBBER PRICE SITUATION. 



T -1 1 1 K continued high price of rubber, with no indication 

 * of an early decline, continues to form the subject of 

 first importance to rubber manufacturers. While there are 

 those who deem the recent fluctuations in rubber merely tem- 

 porary incidents of the trade, to be dealt with perhaps by an 

 equallj temporary advance in decline in the prices of manu- 

 factured products, others regard the present situation as having 

 a deeper foundation. 



"There is an upward tendency of all prices," said a leading 

 rubber manufacturer to a representative of The India Rubber 

 World. "The constantly increasing rate of gold production 

 renders the buying capacity of the dollar less. Hence there 

 must be a general readjustment of values — a new relation of 

 costs and selling prices, wages, cost of living — a gradual ap- 

 proach to a new economic basis. The higher cost of rubber, 

 cotton, and the other raw materials of our industry are only 

 incidental to the new condition that is unfolding throughout 

 the world. 



"The present situation in relation to crude rubber is but an 

 illustration of what I have asserted in regard to business in 

 general. It will be admitted by everybody, I believe, that the 

 year 1907 witnessed a reduced volume of business, generally. 

 According to all precedents, there should have been a con- 

 siderable surplus of crude rubber as a result. But whatever 

 surplus of rubber may have accumulated had disappeared within 

 a year, and we have what is nearer a rubber famine than the 

 trade has ever known. The price of crude rubber today alone 

 is proof of this. With a further improvement of business, 

 the prices of raw materials must be further advanced. 



"The trade need not look for rubber at prices as low as 

 prevailed when most of the rubber manufacturers now active 

 entered the industry. Before a long continued decline to the 

 old level can return the production of rubber somewhere will 

 stop. The theory of the upward tendency of prices carries 

 with it the idea of higher cost of living throughout the world, 

 expressed in terms of money; hence should the market price 

 of Amazon rubber decline to the figures of 20 years ago, for 

 instance, the number of rubber gatherers would be lessened, 

 without regard to the amount of rubber available. 



"Of course the rubber manufacturers will continue to buy 

 on the best terms possible, and likewise consumers of rubber 

 goods. But both classes will make a mistake if they do not 

 regard the present as the precursor of new permanent condi- 

 tions, for which preparation should be made by increased 

 economies of production, improved systems and methods of 

 administration, and all that sort of thing." 

 * * * 



To the Editor of the India Rubber World: The present 

 situation of crude rubber is such as to give serious concern to 

 all branches of the trade — importers, manufacturers, and dealers 

 of every kind ; in fact, all interested in any way, shape, or man- 

 ner in rubber goods. As usual, and naturally, during an epoch 

 of high prices, the importer, in the minds of the manufacturers, 

 is the scapegoat of the situation; and the old bugbear, the com- 

 bine for bullish speculation, is held to be responsible for the 

 ills that the trade are. or imagine they may be, suffering from. 



Doubtless prices, which are at present ruling on crude rub- 

 ber, have already caused, and will in the future infallibly cause, 

 a still greater loss to many branches of the rubber industry. 

 But those manufacturers who find that the present prices of 

 crude are such as to greatly reduce, if not actually eliminate 

 the possibility of marketing their product at a reasonable profit, 

 would do well to bear in mind that the "survival of the fittest" 

 is the absolute rule in this as in all mundane affairs. Either 

 by chemical or factory research and experiment, by possible 

 improvement in the science of compounding, or by more eco- 



nomical factory and selling costs, much will undoubtedly be 

 effected toward meeting the situation created by the increased 

 cost of crude rubber, and the sooner the trade in general recog- 

 nize tlie undoubted fact that a permanent materially higher 

 level of crude rubber prices is here to stay, the sooner will 

 the necessary readjustment in the industry be satisfactorily ac- 

 complished. Those branches which cannot profitably operate 

 will have to disappear, and those interested in them devote their 

 energies and capital in other more profitable directions. 



We are disposed to believe very firmly that the present 

 high prices of crude are the direct result of the "laws of 

 supply and demand," and not of undue speculation on the part 

 of dealers or importers. In fact we are convinced that those 

 laws have more absolutely governed the present situation than 

 at any other period in the past of extremely high or low 

 prices. 



So long as the automobile industry continues to develop 

 as at present, so long will the supply of fine Para be barely 

 adequate for the needs of the world's industry, and while un- 

 doubtedly considerable relief will be experienced from the 

 steadily increasing output of the eastern plantations, the increase 

 from them will not be sufficient or rapid enough to prevent a 

 very high level of prices for Para rubber for several years 

 to come. 



The situation on the Amazon certainly is one which does 

 not hold out much hope for lower prices. In- one respect this 

 region disproves the almost universally true theory that high 

 prices must inevitably cause a larger production. The labor 

 question there is such that notwithstanding every effort on 

 the part of producers to take advantage of existing prices, 

 the Para rubber crop for the first three months of the present 

 crop shows a shortage of over 5 per cent, as compared with 

 the corresponding period of last year and the drought which 

 has been experienced there during the past two or three months 

 has kept most of the rivers so low that the crop movement has 

 been greatly retarded. Undoubtedly this drought will cause a 

 reduced flow of latex but this may, at least in part, be com- 

 pensated for by the greater opportunity for gathering afforded 

 by the dry weather. 



To sum up the whole situation, we have every confidence in 

 the intelligence of the rubber manufacturers to meet successfully 

 not only the present but far more difficult emergencies. 



New York, October 27, 1909. AN IMPORTER. 



* * * 



The following expressions are from letters from two rubber 

 manufacturers to the Editor of The India Rubber World: 



"I am short of rubber, and losing money on every contract I 

 fill. I have raised prices as far as I can. Am turning down 

 business right along. Of course I was 'warned' that rubber was 

 going up. Have been warned all my life by those who wanted 

 to sell. Sometimes they were right and sometimes not. I 

 did not have the cash or the nerve to go in largely, and am 

 not a speculator anyhow," 



"The goose that lays the golden eggs (the rubber manu- 

 facturer) is being slaughtered. It may he that there is no specu- 

 lation on the part of the wealthy and far-sighted handler of 

 crude rubber, hut who profits by the high prices, and who 

 loses? Somebody (the importer?) or something, (the law of 

 supply and demand?-') is jeopardizing the trade to an unbearable 

 degree." 



The sale is reported of rubber from the Chilian Exploration 

 and Development Syndicate, Limited — a London company with 

 plantations in the Mexican state of Oaxaca — between January 15 

 and October 5, of this year, of 6458 pounds of rubber, at prices 

 ranging from 3 shillings [ = 73 cents] to 5 j. 4 u 2 d. [= $i.3oJ4]. 

 The latter price was realized for the first results from the new 

 season's tapping, which began on August 5. 



