Rubber Restricted

Rudyard Kipling to the contrary, Britain's dominion over palm and pine by no means amounts to a monopoly. Britain's dominion over rubber plants, however, is the most extensive in the world. In the early 1920's rubber-growing Britons sought to control, through the notorious Stevenson plan, the world's rubber market. They managed to stretch rubber prices to $1.23 per lb., but when the restriction scheme collapsed the price did not stop shrinking until it hit 3-c- per lb. early last year. Chief reason for the plan's failure was not Secretary of Commerce Herbert Hoover's inveighing against it but lack of cooperation by Dutch planters in the East Indies. The harder the British bore down on production, the faster the Dutch planted.

Last year when neither the Dutch nor the British could make money from their plantations, a conference was called to do something. Month after month in blackest secrecy talk went on in London and The Hague. Once last autumn it was reported that a tentative agreement had been reached but technical snags were struck. Finally in The Hague last week the British and the Dutch, acting as principals for eight Far Eastern rubber lands, which together produce about 95% of the world's supply, put their hands to a five-year restriction pact.

Aside from the stubborn Dutchmen, the highest hurdle in restriction's path was native production. The nut-brown native taps when he pleases, and tales of tall plans are just so much English or Dutch to him. The conference mounted this hurdle by restricting not actual production but exports. The 1934 limit is set at 1,019,000 tons but under the guidance of an international committee the limit will rise about 25% by 1938. First year quotas (in tons): Malaya--504,000; Dutch East Indies--352,000; Ceylon--77,000; Sarawak--24,000; Siam--15,000; North Borneo--12,000; India--6,850; Burma--5,150. New planting is practically banned; replanting is held down to 20% of existing area; export of seed to potential rubber regions is forbidden.

In London and Paris rubber shares bounced upward as crude rubber soared above 14-c- per lb., highest price in nearly four years. U. S. tiremakers prepared to ask government intervention, hinted at an early rise in tire prices.

But U. S. rubber manufacturers, who use nearly two-thirds of the world's production, would have been more alarmed than they were last week had they not considered these three facts: 1) the pact has yet to be approved by the governments of the eight contracting parties: 2 ) a panel of U. S. and European rubber users will be invited to consult with the international regulating committee; 3) the British Rubber Growers Association, the power behind the pact, issued a statement declaring that "whatever its temporary attractions, an excessive price would not be for the permanent welfare of the industry."

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