F.— ECONOMIC SCIENCE AND STATISTICS 137 



was opened in 1926 and acquired its present habitation in 1929. This is 

 the St. Coombs Estate. 



Research hitherto called upon to assist expansion is now helping the 

 difficult task of restriction. The supply of tea is not a tap that can be 

 turned off and on at will. The produce cannot be left like tin or copper 

 to lie in the ground until the market is better. But restriction being a 

 fact, it must be carried through with the least financial and technical 

 damage. A large company with numerous estates, some on high and 

 some on low land, is in the better postion. It will consider whether it is 

 not better to close up one estate and put it down to ' care and maintenance,' 

 allowing the other estates to work to capacity. A small company has 

 less scope for this kind of rationalisation. It must decide whether it 

 will (a) buy export coupons from others, so as to produce as much as 

 before ; (b) export only the higher grades of tea, putting the lower grades 

 on the home market ; (c) restrict production to its quota by discarding the 

 poorer fields. But the home market is a small one and crowded with 

 native small-holders, who are in the same case ; while cutting out particular 

 fields may bring a small company down to a production level which is 

 well below the technical optimum. Therefore the Institute is engaged 

 in working out the kind of reduction which is least harmful technically 

 for estates in different situations. 



The Export Control regulations are as follows : — 



The International Tea Agreement fixes for each country a standard 

 output. ' The standard upon which regulation is based shall be fixed 

 on the maximum exports of tea from each producing country reached in 

 any of the three years 1929, 1930 and 193 1.' For each crop year the 

 international committee sets a regulation figure, which so far has been 

 at the following rates : 1933-34, 85 per cent, of standard exports ; 1934-35, 

 87! per cent, of standard exports ; 1935-36, 82^ per cent, of standard 

 exports. The reduction in 1934-35 was at the request of the tea trade, 

 but it proved excessive and therefore the rate was raised by 5 points 

 for the ensuing year. 



It is the task of each country to assign to its own producers their 

 individual share in the country's quota. Thus in Ceylon each estate is 

 given export coupons for a certain quantity of tea based on past production 

 as shown by the estate books. Native small-holders are allowed so many 

 coupons per acre, inasmuch as they had no books showing their poundage. 

 As the industry consisted in the main of companies possessing statistical 

 records, the control scheme escaped the inaccuracies and ' overstatements ' 

 (for which it may or may not be possible to work out a ' coefficient of 

 mendacity '), which obstructed the initial operations of production control 

 in the tobacco industry of the United States. 16 The coupon is a quantity 

 and not a quality coupon. The owner may export so many pounds weight 

 of tea, not so much rupees' worth of value ; and pro tanto the scheme 

 favours quality production. But this has been neutralised by the recent 

 increase of 2d. per lb. in the British import duty, which is expected to 

 prejudice quality production by diverting British consumers to cheaper 



16 Cf. H. B. Rowe, Tobacco under the A. A. A. (Brookings Institution), 1935, 

 pp. 164-181. 



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