September 1, 1921 



THE INDIA RUBBER WORLD 



913 



4. All rubber harvested by members will be consigned as at 

 present and sold as authorized by the court of directors through 

 the usual channels, the brokers being responsible for passing di- 

 rectly to the Corporation the charge referred to. 



DIFFICULTIES AND OBJECTIONS 



The statement is officially made that unless two-thirds of the 

 planted area agree to come into the corporation, the latter will 

 not be brought into existence. If the corporation does not even- 

 tuate and matters are allowed to take their course unguided, it 

 seems clear that a large acreage of rubber will have to be aban- 

 doned or sold to the highest bidder. The object is to save the 

 industry collectively, not to inflate the price of rubber in an un- 

 sound way. • 



The plan is opposed on the part of both British and Dutch 

 interests on the ground that it will prove ineffective and tem- 

 porary and that the universal law of supply and demand cannot 

 be evaded by artificial means, o:ie objector claiining the fatal 

 defect of the scheme to be that the combine cannot effectually 

 control supplies of crude rubber and its competitive substitutes 

 (meaning rubber from estates not in the combine, wild rubber, 

 reclaimed rubber, fillers and rubber substitutes), and, so far as 

 it succeeds in raising prices it must stimulate all outside pro- 

 ducers and competitors to greater production. 



THE RUBBER CRISIS IN MALAYA 

 BANKRUPTCY IN SIGHT 



THE danger that threatens the rank and file of the rubber 

 planters in the Far East is very real and of vital interest to 

 all users of rubber the world over. Cessation of tapping on 

 the part of at least 25 per cent of the English, and all of the native 

 plantations, spells a very general disaster. Nor is the way out at 

 all plain at present. This is pictured to a degree in the following 

 letter from an American resident in the Federated Malay States : 



Things are in a terrible condition here as all movements of 

 up-country rubber have ceased, destroying all business. We had 

 the failure of 20 organized companies last year and many more 

 private firms and failures have continued along steadily all this 

 year, and the future looks much worse than anything we have 

 had as yet. 



It seems that the first requests for assistance to the Home 

 Government by the Colonial Government were refused by Lord 

 Churchill. We think that those requests were not properly ar- 

 ranged or worded and that the Government was ill advised, and 

 possibly by certain strong financial interests who are looking for- 

 ward to buying up all bankrupt properties in another nine months 

 or a year. It would be a shame to make a monopoly of the sev- 

 eral hundred plantation properties here. I very much fear that 

 will be the outcome unless something is done at once. It is not 

 for the interest of our rubber mills and importing firms to have 

 all this rubber go into a monopoly controlled in London. 



Along the same lines are the wcrds of the correspondent of the 

 Financial Times, London, cabled from Kuala Lumpur. 



A year ago a man who had 50 acres of rubber in bearing was 

 a rich man ; today he is a pauper discarded by his bank and 

 harassed by his creditors. Big firms which held stocks worth 

 millions are still holding those stocks, now worth a fraction of 

 their original price, and are tottering on the brink of bankruptcy. 

 The Federated Malay States, which twelve months ago boasted of 

 a surplus of over $100,000,000, lias now been obliged to seek a 

 loan of $15,000,000 from the Straits Settlements in order to carry 

 out urgent public works. Those are the circumstances in which 

 we now live, and until companies can be reconstructed to fit in 

 with the altered conditions I cannot see any hope in the situation. 



There are alleged to be in this country 1,250,000 acres of rubber 

 in bearing, yielding something near 160.000 tons a year. No one 

 can be dogmatic about these figures, because no one knows what 

 the figures are. Fancy a country possessing such an important 

 industry being ignorant of the most elementary statistics pertain- 

 ing to it. That is only by the way. Theoretically the market 

 price of rubber here is between 30 and 32 cents a i)ound, but even 

 at that figure very few transactions take place. Formerly the 

 average Malay villager tapped his dozen trees in the morning, 

 brought the produce to the bazaar and got his dollar and his pro- 

 visions for the day. Today his rubber can find no market, and he 



has no other means of subsistence, because long ago he had for- 

 saken his natural avocation of agriculture for the more alluring 

 prospects of rubber. 



The planters here tried to bring home to their employers at 

 home the seriousness of the position, and put forward a scheme 

 the success of which depended a great deal on the assistance 

 vvhicli the Home Government was prepared to give in its hour 

 of need. But .Mr. Winston Churchill, returning fresh from his 

 pourparlers in the Mid East, turned down the scheme of compul- 

 sory restriction on grounds which, to my mind, appear to be 

 ratlier weak and unreal ; but, since Mr. Churchill's decision was 

 communicated to this country, the rubber growers have been busy 

 putting forward other schemes. There are six of these at present, 

 including a new scheme which, I hear confidentially, the Rubber 

 Growers' Association in London is now considering. "The local 

 schemes may be summarized as follows : 



The Physick scheme proposed compulsory restriction to the 

 extent of 50 per cent, and the method for the raising of tlie money 

 required was by the industry subscribing one-half, the Govern- 

 ment being asked to subscribe the other. The fund so raised was 

 to be administered by a local body having powers conferred on 

 it by the Government. 



The Carey scheme, the main feature of which was to impose 

 a tax on all rubber produced, the money so raised to be regarded 

 as a loan from contributors which would bear appropriate interest 

 and be loaned out to producers at a higher rate of interest. The 

 scheme involves a measure of compulsory restriction, but it can 

 be worked with that measure eliminated. 



The Kelly-Smith scheme, aimed at restricting output bv SO 

 per cent by imposing a heavy export duty on all excess ove"r 50 

 per cent of the normal output, the duty not to exceed 10 per cent 

 ad valorem, or 5 cents a pound of rubber. The scheme suggested 

 that the Government should allow the free export of a certain 

 proportion of the restricted output and impose taxes on any excess 

 of that amount. Taking the present output of rubber at 160,000 

 tons a year, the Government revenue at present is next to nothing. 

 If under this scheme the Government were to allow the export 

 of 100,000 tons free of any duty, the balance of 60,000, at the rate 

 of even 5 per cent, with the price at 30 cents a pound, would 

 secure to the Govermnent a revenue of $2,016,000. If the maxi- 

 mum price suggested was $1 a pomid the revenue would be 

 $6,720,000. But $1 is too high a price to calculate on. Taking 

 the price at 80 cents, the revenue would be $5,500,000. The scheme, 

 therefore, is more or less of a sporting nature. 



The Straits Times scheme is fundamentally not very dift'erent 

 froin the Duncan Committee's scheme for compulsory restriction, 

 which has been turned down, and I do not think that the Govern- 

 ment will agree to it. 



The main features of the Braddon scheme are: (1) the regu- 

 lation of supplies; (2) the creation of an international rubber 

 assurance association; (3) the election of a board to control the 

 association by the rubber-growing industry in different countries 

 of the world; (4) the association is to be a combine, but its meth- 

 ods of operations shall be above board; (5) to assure the success 

 of the association a membership of 70 per cent of the total rubber 

 area is considered sufficient ; the association being designed pri- 

 marily to protect the vested interests only of existing producers. 

 Its management and control will be entirely in their hands, but 

 the cooperation of others is to be invited, especially those de- 

 pendent on the industry— namely, present licensed local dealers 

 in rubber, buyers on commission and buyers for consumption, who 

 should be admitted as non-proprietary members ; (6 ) the member- 

 ship to be confined in the case of producers exporting their own 

 rubber to those whose output is 10 tons or more annually, and 

 among dealers to those whose dealings amount to the same' quan- 

 tity; (7) the conditions of membership are to be (a) to restrict 

 output vvholly or partially, as may be required bv the association 

 from time to time, (b) not to sell below the minimum price fixed 

 by the committee, (c) not to sell to (or through) parties not 

 belonging to the association, and (d) in the case of dealers, not to 

 deal outside the association. 



At present compulsory restriction of crop is the bugbear of the 

 planting community, because it is feared that any scheme which 

 contains even a touch of compulsion in it will not find favor 



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