Hearts and Prices

One morning last week Mr. Francis Breese Davis Jr. looked at the newspaper. In 1909 Mr. Davis was hired by the du Ponts as a civil engineer. Since then he has had one du Pont job after another: black powder, sporting powder, guncotton. smokeless powder, cellulose. General Motors, Pyroxylin, safety glass. Four years ago the du Ponts gave him the toughest job of all: made him president of U. S. Rubber just a few months before the crash. U. S. Rubber, the only great non-Akron rubber company, has had a hard row to hoe, even for a rubber company. Its annual deficits have been: 1930, $18,000,000; 1931, $13,000,000; 1932, $11,000,000.

Last week when he looked at the paper Mr. Davis' heart must have stopped in its beat, for the inflation boom had boosted rubber above 4-c- a pound -- from 3 1/2-c- a week before, from less than 3-c- a few weeks ago. U. S. Rubber has 100,000 acres of rubber plantations in the Dutch East Indies and Malaya. From millions of trees it collects the milk which it turns into 50,000,000 lb. of rubber a year. A cent-a-pound increase puts $500,000 a year in his company's pocket. What is more, 3 1/2-c- a pound is the company's estimate of its present cost of producing and shipping rubber to the U. S. The advance beyond 3 1/2-c- therefore meant that his rubber plantations would again begin to earn money, something they have not done for a long time.*

Another whose heart must have warmed last week to the morning newspaper was Mr. William Donald Lippitt who heads Great Western Sugar Co., producer of about half the beet sugar made in the U. S. He had just gladdened the hearts of his stockholders by reporting to them a profit for 1932 of $2,500,000, not large compared to the $12,000,000 Great Western made in 1924, but infinitely large compared to its $1,000,000 loss in 1931. Last year's profit was largely made by scaling down prices paid for beets. Last week boosted the price of raw sugar (duty paid) to 3 3/10-c- a pound compared to less than 2 3/4-c- in February. If his company can make an extra 1/2-c- a pound on its annual output of about one billion pounds it will make an extra $5,000,000 profit.* Rubber, sugar, silk, copper, silver, wheat, corn, coffee, meat, hides, wool, cotton, cocoa--each one in a long, long list of commodities last week brought just such startling dreams of profits to manufacturers, traders, producers, to states and to countries in all quarters of the globe./-

No commodity, however, held so much hope for any one man as tin did for Simon I. Patino. Starting a poor native of the frozen mountains of Bolivia, he has wangled himself power and untold millions out of the tin mines in the mountains. Today he lives in a gilded Parisian palace, envoy extraordinary and Minister Plenipotentiary of Bolivia to France, with a daughter married to a Spanish marquis and a son married to a Bourbon princess, master in his own right of 15% of the world's tin resources. A rise of 4-c- a pound in tin, a rise which took place last week, put some $2,000,000 a year into his pocket. The only person in the world who can vie with him is good Queen Wilhelmina of Holland who controls the Dutch tin industry, producer of 20% of the world's tin. But alas for both of them, their prospective profits were in dollars which, translated into francs and guilders, would be very much diminished.

Yet not only the Dutch Queen and the Bolivian Minister had a drawback to their hopes. All those who hoped for better commodity prices had last week to face one unassailable fact: there is no immediate prospect of most prices going to scarcity levels. The world can easily produce 800,000 tons of rubber and last year it consumed only 670,000 tons. The world can easily produce 29,000,000 tons of sugar and last year it consumed 26,000,000 tons. The world has 9,583,000 bales of raw cotton waiting use compared to 6,616,000 in April 1929.

But if surpluses are reduced, as they are being reduced in sugar (from 12,000,000 tons in 1932 to 10,000,000 tons in 1933), and if consumption once more starts on the uptrend (for the first quarter of 1933 sugar consumption was up 2.5% over the same period of 1932) then regardless of inflation better prices will bring in profits.

* Costs of producing and shipping as late as 1930 were estimated at 18-c- (considerably above prevailing 1930 prices). U. S. Rubber attributes its present low cost to general economies and scientific grafting that has greatly increased rubber yield per acre. --If rumor was correct, Mr. Lippitt's was not the only heart that beat with sugar prices. E. A. ("Doc") Crawford, cotton broker, spent the weekend sunning on the beach in Miami. Well known for the profits that he has made by guessing right in cotton since last summer, only two weeks ago he made his first invasion of the sugar market, is said to have profited by $2,000,000.

/-Some countries whose economy is closely associated with one commodity: Rubber --Malaya Sugar--Cuba Tin--Bolivia Copper--Congo Wool--Australia Silk--Japan Coffee--Brazil Tobacco--Greece Cotton--Egypt Nitrates--Chile Meat--Argentina Lumber--Finland Silver--Mexico

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