NOVEMHER I, I903.] 



THE INDIA RUBbER WORLD 



41 



RUBBER STOCKS, PRICES, AND SPECULATION. 



THE charts which have appeared lately in The India 

 Rubber World show how wide is the range of fluctu- 

 ations to which the crude rubber market is liable, es- 

 pecially if a term of years be taken into consideration. 

 The marked advances and declines may not be repeated with 

 any sort of regularity, but it is safe to assume that the same re- 

 lation of cause to effect exists whenever prices go to'an extreme 

 level. Five and a half years ago, when the market had an up- 

 ward tendency, and manufacturers were concerned about the 

 future of prices, The India Rubber World gave space to an 

 extensive discussion of the question " Has There Been Specu- 

 lation in Rubber? " suggested by the feeling in some quarters 

 that the then prevailing high prices were due to manipulation 

 by selling interests. On looking back through our files we find 

 two articles — from well informed sources — that have so direct 

 a bearing upon the market conditions of to-day that it seems 

 worth while to reproduce them, without any change. The 

 reader should keep in mind, however, that the references to 

 dates and prices in the lines which follow applied to the early 

 part of 1898, and not to the latter end of 1903. Otherwise, the 

 articles might have been written in the very same terms this 

 month. 



A LARGE MANUFACTURER SAYS "NO." 

 [From The India Rubber World, February lo, 1893.] 



" I do not believe that there is or has been any speculation 

 in crude rubber that can be charged with its high cost to-day,' 1 

 said another manufacturer. " I am a large buyer of rubber, and 

 long have been, and I believe that I can detect a speculative 

 element in the market when one exists. I get reports from im- 

 porters in New York and Liverpool, and from the leading ship- 

 pers in Pard, and when I know certainly how much rubber is 

 being shipped, and who receives it, and all the various reports 

 of stocks on hand agree to within 50 tons, I am inclined to 

 believe the reports to be correct. Why, there are no large 

 stocks of rubber anywhere to speculate on. You can't hide 

 rubber. The rubber merchants are strong competitors one 

 with another in Pard, they are so in New York, and they are so 

 in Europe, and every shipment is kept track of until it is in the 

 hands of the manufacturers. 



" In New York for months past all arrivals have been turned 

 over at once to manufacturers. There is rubber due us to-day, 

 rubber that we ordered months ago, which the importers assure 

 me cannot be had. There is no such rubber in stock. Don't 

 you think that they would be delivering the rubber and collect- 

 ing for it if they could get it? At the same time we are receiv- 

 ing rubber now, bought some time ago, at the prices prevailing 

 then, for future delivery, which is costing the importers more 

 money than it is billed to us for. Here is a bill for a lot of rub- 

 ber now on the way to our factory, at 12J4 cents a pound less 

 than we could go into the market to-day and buy it at, but we 

 contracted for it early in the season. If the current prices of 

 rubber were the result of speculative movements, do you think 

 that our importers would have got themselves into such a 

 fix as this? Several months ago we began to observe how 

 closely the factory demand here kept up with the arrivals of 

 rubber, and began buying for forward delivery. We have 

 orders out for delivery in May, and the saving by this course 

 has been very important. 



" I believe that fine Pari rubber will shortly reach $1 ; it isn't 

 so far from it now. The increase in production down there is 



never large from year to year. It can't be. Then Madagascar 

 rubber has fallen off ; we can't buy Assams at any price ; it is 

 hard to get Benguela sorts, and so on. The people who talk 

 about prices being due to speculation are not well informed. 

 There never has been less of it in the market than to-day. We 

 are declining orders for rubber goods for future delivery at 

 present prices, in view of the probability of still higher crude 

 rubber." 



A TALK WITH A BROKER. 

 [From The India Rubber World, February 10, 1898. J 



" When I am asked how far the high prices of rubber are 

 due to speculation," said a broker, " it must first be understood 

 in what sense that word is used. To a certain extent all buy- 

 ing and selling is speculation. But you mean, of course, the 

 buying of rubber by large operators, with the object of gain- 

 ing control of heavy stocks, in order to be able to sell out at 

 higher prices when manufacturers' supplies have become ex- 

 hausted, and their needs compel them to pay practically what- 

 ever may be asked. There is another class of buying which 

 is also speculative— where people outside the trade invest in 

 rubber, in the hope of a rise, just as they would take a 

 'flyer ' in wheat or in stocks. My answer to your question is 

 that I don't believe there has been enough buying of rubber in 

 either of these classes, in a good many years, to have influ- 

 enced prices. Certainly there has not been of late." 



" What is the true explanation of the present dearness of 

 rubber ? " the broker was asked. 



"It is a question of supply and demand. We must all the 

 time take account of stocks. Other things being equal, the 

 price of rubber advances as stocks decline, just as with other 

 commodities. Whenever the available supplies of rubber be- 

 come low, either from a shortage in production or because of 

 activity in manufacturing, sellers become firmer in their de- 

 mands and prices go up. We know that the production of 

 Para rubber has not fallen off, and yet the visible supplies of 

 this class at the beginning of this year were smaller than at 

 the same date in any year since 1882. Para rubber stocks 

 generally have been smaller for three years past than formerly. 

 There is good reason for believing that the rubber has been 

 bought on factory account, instead of being withheld from the 

 market for speculative purposes. In the case of Africans, 

 however, excepting Congo sorts, there has been some decline 

 in the output, which has helped to sustain prices." 



" Can the world's supply of rubber be estimated accurately ? " 



" No. It is to every importer's interest to conceal the 

 amount of his holdings, and as statistics of rubber stocks are 

 based usually on statements made by the importers, it is plain 

 that these figures are not always a safe guide. One never 

 knows at what moment an unsuspected lot of rubber may be 

 brought from its hiding-place, to the confusion of his best- 

 laid plans to profit from a particular situation in the trade. 

 On the other hand, all the rubber produced in the world, 

 at some stage, is accounted for in governmental statistics, 

 which have the confidence of the trade, and which serve to aid 

 in checking private estimates as to the total volume of trans- 

 actions. Besides, the broker who is on the alert generally can 

 detect movements of a speculative nature." 



" But people speculate in other commodities ; why not in 

 rubber? " 



" First, there are no such organized facilities for trading in 



