Evening star., 1925-05-25
BIG RUBBER PROFIT
C0vERSDEBT TOU.S.
One Source of British Wealth
Enough to Assure All
RepaymentS.

Investigation now drawing toward
conclusion by the Commerce Depart
91ent indicate that extra profits from
only one of the source of British
Nealth-the rubber plantations of the
East lndieS-will be sufficient to cover
all of that nations future repayment
OF its war debt to the United States.
American imports of raw rubber,
which cost S1S5. 900. 900 during the
calendar year 1924. probably will cost
S400,O00.000 for 1925, and at least a
part of this prospective increase is
unoff1cially laid to the operation of d
scheme for production restriction
worked out by the plantation inter.
ests through the British Colonial Of
fee
A partial report of the investigation
undertaken at the direction of Secre-
tary Hoover was made public today
TO meet the pressure for information
from the rubber industry in view of re-
cent sharp price increases. Crude rub
Der that sold as low as II cents a
pound in 1924 reached 46 cents last
January and is now tiuctuating be-
tween SO and 20 on nervous markets,
while the worlds visible stocks are
disappearing, and exchange prices of
English plantation company shares
are soaring.
L. 5. Uses 20 Per Cent of Rubber.
This country. with three great in
dustries concerned-petroleum auto
mobile and rubber goods manufac-
ture-is particularly interested in the
situation. because it's consumption is
30 per cent of the worlds total out
put.
Secretary Hoover. in a foreword to
the partial report. expressed no opin.
ion as to whether the Government
restriction on production in the Eng
lish colonies was responsible for the
great price advance. but warned that
the falling off in new planting was
likely to create a real rubber shortage
by 1929 or 1880. One of the American
objectives, he indicated. should be to
find means to stimulate competitive
production" in other tropical areas of
the world
The producing industries of the
world would be much better off in the
long run if combinations in restraint
of international trade were abandoned
on all Sides" he said In general,
their effect is to hoist both the pro-
ducing and the consuming industries
upon artificial bases, ultimately re-
sulting in economic difficulties to pro-
ducerS as well as to consumers. The
sitting of consumption, stimulation of
rival production, the use of substi-
tutes, and the paralyzing of industry
generally, are their ultimate results. .
English Own Most.
The government special agents
found that 69 per cent of the rubber
plantations were in English colonies,
with 20 per cent in Dutch possessions.
where a good deal of English capital
was invested. The Stevenson restric-
tion act, which the English colonial
authorities put into operation in 1922.
was an outgrowth of conditions exist
ing during two or three postwar
years, when rubber dropped to II
cents pound. The act cut down the
export of rubber from British posses
sions, according to percentage scale
based on the market price. When rub
Der is selling at 80 cents pound the
British plantations may market only
so per cent of their rated capacity
production, the percentage increasing
if the price advances and diminishing
If the price decreases.
The restriction worked effectively in
British possessions, reducing their ex-
ports from 271 900 tons in 1922 to
2o5,o27 tons in 1924, the Commerce
Department agents found, but the
Dutch East Indies, which were left
untrammelled, increased their produc-
ton and exports from 102,111 tons i'll
1922 to $4,000 tons in 1924, and other
producing areas also increased their
activities. The growth in the world
consumption. however. more than kept
pace with the resulting increase, and
all plantations are now close to their
maximum production basis.
Annual Profits 26 Per Cent.
The report estimated that rubber
plantation represented an invest
ment of from $500 to $400 per acre.
With 400 pounds of rubber an acre
a good yearly production rate and the
production costs on 60 British Ma
laya companies averaging 15.1 cents
p pound, it was found that a price
of 16 or II cents d pound in New
York was about the lowest at which
the plantations could recover their
operation expense. An addition of
15 cents to this figure would give at
least Is per cent return on invested
capital for even the higher-cost plan
tationS.
There is now S505.o00,o00 invested
In British plantations, the report
further estimated, and SS76,000,000 in
~Y