Gums, Resins, 



390 



[November, 1911* 



RUBBER WORLD REMAINS 

 INTERESTING. 



Millions of Pounds Invested and 

 all Paying Good Dividends - 

 Estimate 800 Pounds to 

 Every Acre. 



(From the Manila Bulletin.) 



That the position iu the rubber world 

 is still an interesting one will be readily 

 conceded. Without aspiring to the lole 

 of the prophet— a thankless position 

 and one that we should be loth to 

 assume— those who are well qualified to 

 know look for an average price for 

 plantation rubber for the current year 

 of probably not inferior to 5s. 6d. per lb. 

 We need scarcely remark that for the 

 bulk of the producing companies this 

 could not be otherwise than a very satis- 

 factory price, the result of which should 

 be that very good dividends would be 

 earned. On just how much of the forty 

 to fifty millions sterling that has now 

 been embarked in the plantation in- 

 dustry the world over dividends will be 

 paid is beyond us to state. But there 

 will undoubtedly be many companies 

 added to the list of dividend payers, 

 whilst the older ones will have ample 

 balance ot which to dispose. The result 

 is that many shareholders are naturally 

 concerned with the attitude that will be 

 assumed by the Boards of Companies 

 as to the policy of dividends fairly 

 liberally, or of retaining large sums, or 

 of allocating a good slice of profits to 

 the creation of leserve funds against 

 the day when the profits cannot in the 

 ordinary nature ot things economic, be 

 as large as at present.- In an interesting 

 communication Mr. A. S. Baxendale con- 

 troverts the necessity for the building 

 up of large reserve funds. Shareholders, 

 knowing that they will receive 12 to 15 

 percent., with as good security as an 

 investment other than rubber yielding 

 more than 6 per cent, would give, natur- 

 ally object to the earned profits being 

 withheld. Pew who know will quarrel 

 with the statement he makes as 

 follows :— All will agree that a reserve 

 fund equivalent to the capital of the 

 company is desirable, not only in rubber, 

 but in all other companies, and a very 

 fair start has already been made by the 

 best companies, but I trust and believe 

 the view that appropriations to reserve 

 should be proportionate to the dividends 

 will not meet with general support, as 

 the only argument in its favour would 

 seem to be that rubber shares would 

 then afford a more attractive security 

 for those who know nothing about the 

 value of the property of the company. 



The requirements for a reserve fund in 

 a rubber venture are not so imperative 

 as they are in mines and in most in- 

 dustrial enterprises where much more 

 may be lost in bad years than is prob- 

 able would be the case with rubber 

 estates. The best course to assume is 

 probably a medium one. Dividends 

 should be paid on fairly liberal basis, 

 and the individual shareholder can 

 make what provision he himself con- 

 siders prudent. A moderate provision 

 to reserve is all that is necessary ; a sum 

 sufficient, that is to place the estate in 

 the best fighting position a few years 

 hence to meet the fall, whether it be to 

 2s. 6d. or Is. Od. gross selling price. In 

 this respect a thoroughly equipped 

 estate, with its buildings and factories 

 all in good order, and its area compact 

 and clean so that it can produce at the 

 lowest rate is likely to fare better 

 than one of double its planted acreage 

 which is not iu perfect condition. 

 To achieve this, it does not seem that 

 more than moderate provision need now 

 be made, whilst a few more acres 

 can be brought forward and thus reduce 

 the capital cost per acre as shown by 

 the balance sheet. To remain in the 

 dividend paying list a few years hence 

 means that up-to-date appliances are 

 absolutely necessary. Present profits 

 can provide these. One statement 

 recently made is that the smoking pro- 

 cess drives off most of the surplus water, 

 leaving the rubber aome 90 per cent, fine, 

 containing a little more water than the 

 present style of dried sheet does, and 

 therefore according to many authorities, 

 possessing more resiliency than ordinary 

 dried sheet can ever aspire to. Rapidly 

 drying by means of a drying chamber, 

 through which perfectly dry air is 

 drawn by means of a fan (the air 

 rendered anhydrous by some cheap 

 desiccator, such as lime or calcium 

 chloride, &c.) is the only sound method, 

 states one authority. 



We may, perhaps, before closing, call 

 attention to one or two — shall we say 

 comfortinar, or optimistic? — statements 

 made by Mr. Baxendale in the letter 

 referred to. As regards labour and its 

 increase in cost, suppose, with an in- 

 crease of wages amounting to 33 per 

 cent, on an estate entirely composed of 

 10 years' old rubber, tne cost of collec- 

 tion would still be about one-half the 

 cost of collection on the same estate 

 when it was five years old, owing to the 

 fact that the yield of the older trees is 

 at least four times as great, and, roughly 

 speaking, a coolie can tap as many old as 

 young trees. An increase of 33 per cent, 

 in wages would be sufficient to attract 



