Rubber

The House of Representatives last week passed a resolution providing for a committee investigation of "the means and methods of control of production and exportation of crude rubber, coffee, silk, nitrates, potash, quinine, iodine, tin, sisal (a fibre used for cordage), quicksilver, pulpwood . . . their effects upon the commerce of the United States, both as to supply and to price. . . ."

The day after this incident Secretary of Commerce Hoover issued an exhortation to automobile users, garage men, et al., to save tires, declaring that, without decreasing the use of automobiles, by patching and proper use of tires it would be possible to decrease the U. S. consumption of rubber 25% and partly protect the country from a loss of $700,000,000 a year in excess profits being taken by foreign rubber producers.

So the campaign began--the attack on extortionate prices for rubber and other raw products which the U. S. imports. The rubber situation came about in this way:

The British Commonwealth produces nearly three quarters of the world's crude rubber and the U. S. consumes about the same proportion. During the War prices were about 50-c- a pound. Following the War, prices dropped to around 17-c-. A fair price is somewhere in the neighborhood of 30-c- or 35-c-. Following the War the British rubber producers were in much the same trouble that U. S. agriculture is in today--overproduction and ruinously low prices. To remedy this a special type of export tax was devised to reduce the production of rubber. It was so arranged as to discourage production when prices were low, and to allow larger production during periods of high prices. The measure went into force in 1922. This year its effects began to be felt. Rubber rose in price from around 35-c- a pound to around $1 a pound. This is the condition complained of.

The other products listed in the resolution are or may be controlled in similar ways by various foreign countries. Brazil is protecting her coffee growers. Canada is talking of an export embargo on pulpwood to conserve her timber, etc. But at the present time rubber is the outstanding case.

The problem is rather delicate as well as difficult. What can the U. S. do about it? Retaliation in other ways is always a dangerous procedure, leading to cut-throat practices. Yet price regulation by restriction of production is purely a domestic policy in the countries concerned, with which we cannot directly interfere.

The British press on hearing of the action of Congress immediately retorted:

"The Americans are bad losers. They have had control of too many raw products like wheat, oil, cotton and tobacco to take it coolly when the other fellow happens to get something they haven't got." As a matter of fact if the U. S. could apply to farm produce something like the scheme the British are using with rubber, our farm difficulties would be solved.* Both the British and the Democrats in Congress pointed to the U. S. high tariff as an instance of a similar policy of protection to native industries.

None the less it goes ill with rubber manufacturers to be compelled to pay extreme prices, and it goes down ill in Congress that the British are taking $700,000,000 a year out of the U. S. in rubber--an amount which more than pays the British debt annuities to the U. S.

*It happens that the British rubber scheme involves an export tax. Imposition of export taxes is forbidden by the U. S. constitution.