1919.] 



THE INDIA-RUBBER-WORLD 



Rubber— The One Normal Commodity. 



My //,' 



FOR REASONS good and siifticiciit, all important commodities, 

 with the single exception of india rubber, have doubled, 

 ireblcd or quadrupled in price in the last four years. Why 



the apparent indifference of the great gum elastic industry to 



the high cost germ? It is thus explained: 

 The real beginning of crude rubber expansion was in 1876, 



when the British Government succeeded in establishing a small 



orchard of Para rubber trees at Peradeniya Gardens. Henerat- 



goda, Ceylon. This was followed by the discovery of "wound 



response." In plain words this means that the Para tree, the 



Hevea, can be milked daily, while other rubber trees and vines 



must rest after milking for months and even years. 



With cheap and docile coolie labor it was soon found that 



plantation rubber could be produced cheaper and of as good 



quality as wild rubber. And numerous plantations in Ceylon, 



the Straits Settlements, Federated 



Malay States, Java and Sumatra were 



established. Just as the best of these 



came into bearing the automobile began 



its spectacular career. The demand for 



rubber became so great that from a 



normal price of $1.25 a pound it sold 



as high as $3 a pound. The dividends 



thus earned by the plantation companies, 



two and three hundred per cent, set 



English and to a lesser degree Dutch 



and Belgian investors aflame, and the 



"Rubber Craze" ensued. 



Xew companies were formed by the 



hundred and the jungles cleared and 



planted in record time. So great was 



the expansion that the 100,000 acres in 



existence in 1905 had expanded to 



nearly 2,000,000 acres at the outbreak of 



the Great War. And the world's annual 



production in that period grew from 



62,000 tons to 120,000 tons. Nor did 



the plantations stop at that figure. In 



spite of the war the product for 1917 



was 256,976 tons, or more than double 

 in two years and increasing at about 50,000 ton 

 it is apparent that there is plenty of rubber. 

 PRE-WAR CONDITIONS. 

 \t the beginning of the war plantation rubber was low. The 

 $1.25 rubber had given place to a 65 to 70-ccnt level, and it was 

 to sink even lower. In spite of sporadic upward flurries it 

 worked downward until 40 cents became the purchasing price. 

 As the cost to the planter varies from 17 to 24 cents there was 

 still a fair margin of profit, and the planters continued to sell. 

 This in spite of frantic efforts on the part of planters' associa- 

 tions and hungry stockholders to restrict output, to valorize, to 

 do anything to enhance the price. 



Keeping pace with this increase in the output of crude rubber 

 was the spectacular demand for pneumatic tires and tubes, for 

 solid truck tires and an increased demand for all kinds of rub- 

 ber goods. 



In the light of such a market almost any merchants other than 

 the far-sighted English would have held the customer up for 

 higher prices. To be sure the big users were already possessed 

 of big stocks, forward sales had been negotiated and there 

 were vast supplies of reclaimed rubber available. 



It was plainly seen that it was the part of wisdom to make 

 it to America's advantage to buy in the Far East. For should 



vear. Thus 



■The Magacwc of IVull Street." 



that supply lor any reason be withheld or fail, a very few years 

 would suffice to install great plantations perhaps in Mindanao, 

 Philippine Islands, where soil and climate are ideal, and plenty of 

 seed available. Or the great American Caslilloa plantations in 

 Mexico, which were about to be replanted with Para trees in the 

 time of Diaz, might be suddenly available were present conditions 

 reversed. If not there, perhaps in Guatemala, Honduras, Pa- 

 nama. Colombia, Venezuela or Brazil. With proper governmental 

 guaranties from the countries named and a reasonable amount 

 of sympathetic support from one's own government great plant- 

 ing projects could easily be installed. Indeed, they doubtless 

 would be if the necessity arose. 



Then there is the purely domestic experiment of "machine 

 grown" rubber, right within our own borders and eventually 

 laking its place with such enterprises as the cultivation of the 

 sugar beet. 



Then there are the extensive fonts of 

 the Amazon and her mighty tributaries 

 with a wealth of rubber trees, only the 

 fringe of which has been touched. In 

 the event of shortage the volume of 

 rubber froin Brazil, northern and 

 ,^outhern. and from Bolivia and Peru 

 would be increased enormously, and 

 -\frica. once the great rival of South 

 -America, would again figure as a big 

 rubber producer. Furthermore, several 

 uf the great American companies have 

 installed huge Para rubber plantations 

 of their own in the Far East. The con- 

 stantly increasing product of three or- 

 chards, one of which is the largest in 

 ihe world, and said to be the most eco- 

 nomically administered, had a wonder- 

 fully steadying effect upon the market 

 and was assailed by jingo papers as the 

 ".American invasion." Thus it was 

 that the planters continued to produce 

 and to sell, and in spite of lessend cargo 

 space and the thousand and one handi- 

 caps of a great war the price of rubber continued low. 



In the meantime the .American rubber business grew and grew 

 and at the time of the signing of the armistice we were using 

 three limes as much rubber as when the war began. 

 PRICES DECLINE. 

 With such a market for manufactured goods, even if the 

 basic material be low, prices might well be high. But they 

 became lower and lower during the first years of the war and 

 with only two exceptions are still far lower than those of the 

 other commodities. 



One has only to study the accompanying Lubin graphs to see 

 how remarkably low have been manufactured rubber goods. 



Low priced crude rubber does not necessarily mean low 

 priced rubber goods. The reason is rubber goods are built up 

 of rubber, fabrics, compounding ingredients and labor. The 

 rubber has been cheap but everything else entering into the fin- 

 ished product has shared in the great advance in price. 



There arc some 250 separate ingredients as solvents, fillers, 

 vulcanizing ingredients, etc., regularly used by rubber manufac- 

 turers in rubber mixing processes. The prices of some went 

 so high as to be prohibitive. Others disappeared from the mar- 

 ket. All increased appreciably in price. A good instance is 

 naphtha, which went from 13 cents to 24 cents and did not 



Pearson. 



