Show r Rubber Industry T Tests Strength Strength-f I f 4 By GEORGE E. E ROBERTS Vice Vice President the National City B Bank of New York The principal manufacturers of rubber goods have f formed farmed a pool for the purchase of crude rubber The situation that made such organization tion necessary and the probable result of f the steps taken to meet it are discussed by a a leading lead lead- ing financial authority The rubber situation has had bad n numerous numerous develop developments ments ments In the past year and a half the latest of ot which ja is s the formation of a crude rubber purchasing organization to represent the principal manufacturers of rubber products in tills this country This section presumably has been prompted b by bythe the he violent price fluctuations in crude rubber In the last ast two years and the control over prices exercised by y the organization of ot British rubber products sUPported supported supported sup sUP- I ported as they are by the Colonial of office rice through the Stevenson act Prior to about twenty years jears ears ago the worlds world's supply supply supply sup sup- ply of ot rubber w was s wholly from natural sources and mainly from Brazil The increased de demand demand demand de- de mand created by the dEv development of ot the automobile resulted in plantation production ion The cultivated rubber tree produced more abundantly and moe mor e cheaply than the wild tree and by 1920 plantation rubber was selling at lower prices than wild rubber ever ha had sold for and the latter was almost eliminated eliminated from t the e competition In 1921 crude rubber sold as as' Mow low as ab 15 cents Planting was vas vas overdone overproduction resulted and ind the industry was in a bad way when at the solicitation of ot the producers the British Colonial office undertook to Improve the situation by means of ot the Stevenson act limiting exports from the BritIsh British Brit Brit- Ish sh colonies the principal source of ot supply The act provided for fixing a certain standard production for or every plantation a certain percentage of ot which which- may be exported at a minimum tax rate The surtax is s prohibitive but the percentage percenta e of standard which may be exported at the minimum tax increases as the price rises When the scheme went Into int effect large stocks existed outside of ot the colonies which prevented any immediate effect upon price but in the spring of 1925 these stocks were rapidly depleted to the vanishing point and the price of ot rubber rose to above 1 l per ner pound before the m machinery of the act rele released sed enough new new production to neet the tile demand By February 1926 lOff per cent of standard production was released and at this rate stocks began to accumulate and prices prices declined to about 40 cents per ler pound At this joint e exports ports from the colonies were restricted again binnIng l ning November 1 1 1926 the authorities defend defend- in action upon the ground that production was vas exceeding consumption and that if this was allowed t to continue prices would decline to figures res Although f American manufacturers who use rubber rubber rub rub- ber bez as their raw material express their willingness to pay a fair price for it they seriously object to the wild fluctuations to which they have been subject They recognize that a price so low v as to make the production ion tion ion of plantation rubber unprofitable would discourage discourage age ge planting and eventually curtail supplies but on the other hand they are not satisfied to be subject to an arbitrary control which they feel has been their p position under the administration of the Stevenson act They are of the opinion that the rubber industry of the United States is strong enough to be a factor in the determination of ot the price of ot its raw material and they have organized for this purpose The rubber situation is another sign of the tendency tendency tendency tend tend- ency which is marked throughout industry to regulate production and distribution with a view to securing greater stability and economy There Is waste and ruin to lo producers in overproduction and high prices bring inconvenience and disappointment to consumers in scarcity Violently fluctuating prices inflict losses upon dealers and manufacturers All parties are best served when supply and demand meet each other by close lose adjustment for thereby production costs and the he prices of all products may be lowered towered Copyright op right 1926 Cosmos Cosines Newspaper S Syndicate Inc i 0 A |