THE INDIA RUBBER WORLD 



[August 1, 1920. 



The Rubber Industry in Germany. 



By a Special 



PUZZLED is the expression tliai exactly describes the stale 

 of mind of our rubber manufacturers at the present time. 

 They are puzzled that prices should decline in a market 

 that has shown a rising tendency ; they are puzzled about the 

 fluctuations of the exchange value of the mark, and they are 

 puzzled about the attitude of other markets toward Germany. 

 These three problems have created a nervous tension that ex- 

 pressed itself in a renewed disorganization of the market which 

 first appeared early in June and has steadily increased ever since. 

 Much of the existing apprehension, no doubt, might be allayed 

 if the German manufacturers were in full possession of the facts. 

 But the news service is still very unsatisfactory, and, moreover, 

 the Germans were never known to read foreign news with an 

 tuibiased mind. The trouble started with the sudden advance in 

 ■the valiie of the mark in New York and other leading trading 

 centers of the world. True, the recovery was not particularly 

 striking and had been long talked of by every German merchant 

 and manufacturer. But it seems that no one really expected it 

 to happen. As all quotations for raw materials in Germany at 

 the present time are based on foreign exchange, the increased 

 price of the mark naturally had a depressing effect on prices. 

 That means the mark which had had a value, say of 2 cents in 

 the past, suddenly jumped to double its purchase value and the 

 prices came down accordingly. 



EFFECT OF ADVANCES IN GERMAN EXCHANGE. 



The whole occurrence, of course, had nothing to do with the 

 inherent purchasing value of the mark or the quality of the 

 goods, but it naturally tended to unsettle prices generally. Values 

 have been exceedingly high all through the period of reconstruc- 

 tion in Germany and Austria. In Austria no proper price quota- 

 tion seems to exist at all. However, Vienna has felt the effect 

 of the recovery of the mark through heavy fluctuations in values. 



Steps are now being taken in Germany to bring the value of 

 public services such as transportation, postal service, etc., into 

 better relaition to the actual value of the mark, and it is to be 

 expected that this will soon lead to some sort of price stabiliza- 

 tion. Only quite recently the Imperial Post Office settled the 

 new rates for letters and other mail. Ordinary letters that 

 formerly cost 10 pfennig are now costing 40 pfennig. Postal 

 cards now cost 30 pfennig instead of 5 pfennig. The Post Office, 

 therefore, assumes that the value of the German mark has de- 

 preciated approximately to one-fourth or one-fifth of its pre-war 

 value. Naturally such an increase in postal rates has its bearing 

 upon the whole price situation in the country. It affects mail 

 advertising and the transaction of all business. 



How upset are price quotations at the present time in Germany 

 and Austria can be seen from the fact that tennis balls have 

 been selling in Vienna for 200 to 300 kronen each, which is be- 

 tween $40 and $60 pre-war exchange. Automobiles were sold 

 a short time ago in Vienna for the phenomenal sum of one 

 million kronen, $200,000 old exchange, but have come down now 

 under the influence of the exchange recovery to half a million 

 kronen. Raw material prices, of course, are all in the air. 

 Rubber is quoted on the basis of American or English prices 

 with the exchange fluctuations as the basis of the transaction, 

 which makes the price change practically every day. Hemp yarn 

 which sold for 32 cents a kilogram former exchange, is now not 

 to be had at much below 36 marks or $9 old exchange. Cotton 

 yarns for weaving tire fabrics and similar materials have gone up 

 to ISO marks a kilogram, $36.00 old exchange, against a matter 

 of 35 cents in the past. Still more pronounced are the price 

 increases in such materials as asbestos ; the best crude is now 

 being sold at 150,000 marks a ton, compared to 1.300 marks 



Correspondent. 



before the war. No wonder that great efforts were made to 

 introduce substitutes. Substitute yarns made from old rags 

 have been offered and new fiber plants have been tried out to 

 replace hemp and cotton. For a while it was the fashion to 

 think these substitute materials were superior to the real article. 

 Since the return of peace, however, the mask has been dropped, 

 and manufacturers admit that the substitutes have been a flat 

 failure in most instances and that the industry will require stand- 

 ard materials if it is to continue manufacturing on a profitable 

 basis. Today, wherever the German substitute-made article 

 meets rubber goods made abroad from standard materials, the 

 German goods lose out, even in the domestic riiarket. This is a 

 very serious matter for the German rubber industry and there 

 is no doubt that steps will have to be taken to make available 

 sufficient quantities of standard raw materials if the industry 

 shall ever recover again. This also has considerable bearing 

 upon the future of German rubber exports. 



FOREIGN RUBBER TRADE DESTROYED. 



Right after the signing of the armistice German rubber manu- 

 facturers were very hopeful for the resumption of their former 

 export trade. The sentiment of France was then not fully 

 realized and the Germans believed that they would be allowed 

 to enter the community of nations again on equal terms. These 

 expectations have now been destroyed, and nearly two years 

 have passed in which the rubber industry has been retarded and 

 its difficulties intensified. It is now recognized that the foreign 

 trading organization of the German rubber industry is com- 

 pletely destroyed. The well equipped agencies in enemy coun- 

 tries ha\e been sold, as for instance the fine London business 

 of the Continental company, and it has not been possible to keep 

 up agencies in neutral countries owing to the high cost entailed. 

 Shortly after the signing of the armistice German manufacturers 

 made attempts to get in touch with some of their customers. 

 They found, however, more competition than had been expected 

 and that the American rubber industry especially had gained 

 ascendency in foreign business. The Germans, therefore, will 

 have to rebuild their rubber business entirely, and the question 

 has been discussed whether under such circumstances it would 

 be better to give up exporting entirely. This, however, is a 

 difficult accomplishment. 



RUBBER INDUSTRY HANDICAPPED. 



The German rubber industry has invested heavily in equipment 

 and buildings that could not be turned easily to other purposes. 

 Also, Germany has nearly 80,000 men trained in rubber manu- 

 facturing for whom no new employment could be found. The 

 German system of training industrial labor, although very effi- 

 cient in the production of high-class operatives, has the disad- 

 vantage that it makes specialists who cannot change over easily 

 from one industry to another. To reduce rubber production 

 would therefore spell unemployment for a large number of ex- 

 cellently trained men, which is a thing to be avoided at any cost. 

 This problem is still more complicated by the fact that sales in 

 many of the best paying branches of the rubber industry are 

 declining heavily. Germany has to pay off an enormous debt 

 and the Germans will be poor for many years to come. Under 

 such circumstances it has become a necessity to cut down all 

 expenditures for luxuries. The time has come when the posses- 

 sion of an automobile is not quite the thing and statistics seem 

 to indicate a rapid decline in the sale of automobiles. The auto- 

 mobile business in consequence is expected to decline heavily 

 during the coming j'ears. It is not quite clear whether the 

 demand for bicycle tires will recompense sufficiently the industry 

 for its loss in sales of the more costly article. Another difficulty 



