and Magazine of the Ceylon Agricultural Society. 



m 



MR. FRITZ ZORN ON THE RUBBER 

 INDUSTRY IN 1908. 



The name of Mr. Fritz Zorn of the well-known 

 Stock Exchange Firm of Messrs. Zorn & Leigh- 

 Hunt is not unknown in Ceylon and we ven- 

 ture to think few will disagree with us when 

 we pronounce him one of the mo3t careful 

 students and penetrating critics of the rubber 

 industry m England today. Mr, Fritz Zorn 

 is perhaps best known through his handy and 

 uaeful manual of rubber planting Companies, 

 compr ising particulars of the leading Com- 

 panies engaged in the cultivation of rubber 

 (either alone or in conduction with other crops) 

 in tho Straits Settlements, Ceylon, Borneo, 

 -Java, Sumatra, Southern India, &c, &c. The 

 third edition of this book revised and brought 

 up-to-date reaches us by this mail. It contains 

 many new features including a review of the 

 year 1908 in relation to rubber planting ; a table 

 of fluctuations in the price of rubber for 

 the last three years ; and highest and lowest 

 prices of the leading Rubber Companies' 

 snares during 1907 and 1902. Another fresh 

 feature, which will be found useful, is the 

 inclusion with regard to a number of pro- 

 ducing Companies of " unofficial estimates " 

 of the crop3 for future years, The first of 

 these new features we find pregnant with 

 shrewd comments and interesting deductions 

 from the experience of the past year, upon 

 which is founded a careful prediction oi 

 the outlook for the future. The review is 

 in our opinion quite one of the most useful 

 of the 1908 rubber year which we have yet seen. 

 The soundness of the authority and the interest 

 of his subject warrants us referring to it 

 at some length. Mr Zorn starts with a 

 reference to the slump of 1907-1908, and— after 

 commenting on the profound iguorance of the 

 facts which led to the depression being attri- 

 buted to the overproduction of plantation 

 rubber in the Middle East — remarks that the 

 Wild Rubber industry must continue to domi- 

 nate the situation for a considerable time to 

 come; and as cultivated rubber can be produced 

 at a very much cheaper rate than the Brazilian 

 product, the fear of over-production must for a 

 good while be a mere bogey, so far as plantation 

 enterprises are concerned. The recovery in the 

 value of the raw material, which has taken place 

 contemporaneously with the passing away of the 

 depressed conditions in the United States, 

 which had been the true cause of the fall, 

 he regards as affording ample proof of this. 

 The figures regarding supply and demand in 

 1908 are carefully dealt with and a good deal 

 of space is then devoted to the " Share 

 Market." It is considered noteworthy by Mr 

 Zorn that the recent improvement in the share 

 market has been nothing like proportionate to 

 the recovery in the price of the raw material 

 and, having regard to the iucreasod profits 

 which will accrue from the rise in rubber to 

 companies ihat have reached the producing 

 stage, he considers that at the existing quota- 

 tions rubber shares offer considerable scope to 

 the investor. In spite of all difficulties, how- 

 ever, Mr Zorn declares the market has shown 

 a broadening tendency during the year and the 



circle of investors putting their capital into 

 the planting industry is steadily growing. He 

 gives the Exhibition at the Olympia credit tor 

 being an important factor in bringing about this 

 result. Dealing with the crises through which 

 rubber passed in 1908 Mr. Zorn summarises 

 its effects as follows: — 



First : Tho non-expert Rubber Investor got 

 frightened by the slump and threw away his 

 shares at rubbish prices. 



Second : The " plungers " both here and 

 in the East who (with plenty of expert know- 

 ledge of tho industry, but no proper sense 

 of caution) had involved themselves in un- 

 wieldy commitments, both in regard to planting 

 and share operations, for the most part had 

 to "go under." 



Third : New planting ha3 boon brought 

 down to much more reasonable limits, as 

 there has necessarily been a general curtail- 

 ment of extensions. 



Fourth : Tho management of the estates 

 has been carefully overhauled and drastic 

 economies effected, thus reducing the coat of 

 production. 



Fifth : " Wild cat " promotions of worth- 

 less new Companies has been rendered practi- 

 cally impossible. 



There is an interesting paragraph on the cost 

 of production of plantation rubber. This h 

 put by Mr, Zorn at present at about Is 6d per 

 lb. Per -onally we shall be very much surprised 

 if in Ceylon, at any rate, before many years 

 the cost of production will not have decreased 

 by half this sum. As estates gain experience in 

 dealing with larger quantities and greater num- 

 bers of trees, the tendency will be in the 

 direction of reduced cost. Who would believe, 

 when tea in Ceylon was as young an in- 

 dustry as rubber is at present, that the cost 

 of production would ever be reduced to the 

 existing level '? Already the cost of rubber sold 

 locally from Vogan estate has averaged 10^d 

 per lb. as the cost of production for 1908. The 

 review concludes with a reassuring pronounce- 

 ment on "The Outlook"; under this head Mr. 

 Zorn remarks that the annual reports which have 

 appeared during the past twelve months have 

 afforded a striking illustration of the advantages 

 of low capitalisation when bad times have to be 

 faced ; he adds that it cannot be denied that 

 a moderate basis of capitalisation is one of the 

 merits of most of the leading Rubber Planting 

 Companies. Alluding to the Brazilian "valorisa- 

 tion scheme" he points out that the main im- 

 portance of the suggestion, as far as theEastern 

 Planter is concerned, lies in the effect upon 

 price and remarks that the scheme is at the same 

 time a significant indication of the way in which 

 Brazil is waking up to the potentialities of 

 Eastern Rubber planting. It is hardly to be 

 expected ^nd for tho sake of expanding demand 

 it is not to be desired) that rubber should main- 

 tain its present high quotation, but Mr Zorn 

 thinks that the fall, when it does come, will not 

 be a serious one. He concludes as follows : — 



The underlying strength of the present posi- 

 tion lies in the fact that, taking the World over, 

 consumption of Rubber is more than equal to 

 production. Consequently, the whole position 



