Evening star., 1926-03-07
FUTURE SHORTAGE in RUBBER
INDUSTRY PRESENTS PROBLEM
Present Situation of Artificial Restriction During
Period of High Demand Leaves Outlook
of Trade Uncertain.

within the control of the government.
ON the other hand. the naintena nee
of an extremely high level of prices
/ would stimulate large planting in
other countries, which would in turn
demoralize the coffee industry in
Brazil. Although the natural environ
ment and the large scale methods of
| production favor coffee production In
| Brazil. the potentialties for competi-
tion abroad are quite ample to upset
an unrea sonable monopoly.
| The brazilian government lustt-
fies it's defense policy on the propo-
| sition that this extreme irreSula ritY
/ of the Santos crop makes for tre-
mendouS price variation. which jeopar-
! dies the economic life of the State.
! The government control, however. Will
| have to be exercised with extreme
| vigilance and discretion if it Is not
to run afoul of the world forces Of
| supply and demand. Brazil is a coun-
try rich in economic resources. 1t is
to be hoped that the future develop
ment of the country will render 1t less
! dependent on the fortunes of one in
| dustry.
! The intimation from British sources
| that the present high price of rubber
| may be aSCribed to increaSe Sed Amer
| lean demand is undoubtedly founded
on impressive statistical evidence. \
/ factor ia this increased demand WAS
| the large scale adoption of The bal
/ loon tire. The growing demand has
/ been reflected in Il spectacular rise
/ in price, which in turn has focused
| popular attention on the export re-
striction plan.
| AS recently as 1910 the apidly
| developing autOmotive and rubber
I ,,fz =
cent of their rubber on the wild prod
net of Brazilian and African jungles.
Rising prices stimulated planting to
such an extent that by 1920 a long
period of overproduction. with de
pressed prices. was threatened. The
development of rubber plantations ha d
| involved the risking of large amounts
| OF capital in pioneer industry. Al
/ though the planters had been reward
ed handsomely in the first years of
their enterprise. they were now suffer
ing serious reverSeS and the economic
life of British Malaga in particular
| was imperied.
Results OF Restriction.
The restriction act established a
STANDARD production" for each rub
, Der estate. and alloCated a
certain percentage of that standard
| for eXporta ton in each quarter year.
depending upon the average price dur
| ing the preceding quarter. Cost of
production figures arrived at by the
! Department of Commerce indicate
that the fair price" aimed at was
not excessive, considering the nature
! of the industry. Nor can 1t be said
that the plan drove prices up to un-
| reasonable levels during the first two
! years of it's operation.
That the administration of the ex-
! port restriction scheme has recog-
| nized the abnormality of the present
situation is indicated by the fact that
i the export allowance has been in
crea sed Is per cent for the current
/ quarter. The present allowance is
! 100 per cent OF the standard. On the
| other hand. one of the leading rubber
firms maintains that inadequate labor
will limit production in the restricted
area to 95 per cent.
! The serious problem now facing the
| industry is the prospect OF a serious
shortage within a few years although
the increa sing use of reclaimed rubber
and the vagaries of consumption NAV
upset present calculations. The ef-
forts of American manufacturers to
enter the field of rubber production on
a large scale is an entirely praise.
worthy enterprise. In so far as rub
ber plantations can he developed
within the political jurisdiction of this
! country. reserve will be built up
which may serve in national
emergency.
| 1t was unfortunate that there was
artificial restriction of supply during
a period of highly augmented demand
which would have assured good prices
to the producer. 1t should be noted.
however, that restriction did not re-
duce the total output from the Middle
East. In connection with the present
and prospective situation it may
| be mentioned that the phenomenal
growth of demand in the last two
years was partly owing to factors
which could not have been foreseen
at the time the restriction act was
passed.
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