Bringing Up Baby

A big U.S. war baby, the $700 million synthetic rubber industry, was ready to stand on its own feet. So said President Truman last week as he sent Congress a detailed plan for the care & feeding of the youngster during the next ten years. His most important recommendation: dismiss the baby's Government nurse and send the child out into the competitive world. The Government, said Harry Truman, should get out of the rubber business "as soon as possible" by selling or leasing its 28 synthetic plants to private industry.

But the President did not want to lose sight of the child altogether; he asked Congress to make him its legal guardian. He wanted to keep his power to 1) set prices, 2) tell the industry how much synthetic to produce (a minimum of 200,000 long tons annually), and 3) specify how much synthetic must be used (at least one-quarter of total U.S. consumption).

To maintain "effective competition," the President suggested that, wherever possible, synthetic plants should go to smaller rather than bigger companies. No single company, he said, should get to buy plant capacity to make more than 75,000 long tons of GR-S (a general purpose synthetic) a year until the Government has disposed of equipment with an annual capacity of at least 250,000 long tons.

Long-term Federal controls were needed, said the President, to keep the synthetic industry strong in the event war should cut off natural rubber imports.

Michigan's Republican Paul W. Shafer, author of present rubber legislation, promptly complained that the President had demanded "too much for too long." Shafer favored immediate disposal of the synthetic plants, and limiting of controls to three years.

In any case, the Government's rubber experts agreed that synthetic rubber would be a firmly established competitor of natural rubber within a few years. At its current price of 180-c- a lb., natural rubber has a slight edge over synthetic, priced at 18 1/2-c-. But the presidential report anticipated that new techniques might soon bring down synthetic's price.

If & when synthetic again undersells natural rubber, a big new problem will be created. Natural rubber sales to the U.S. from Southeast Asia are the biggest source of dollar revenue for the sterling area. If that source is dried up, the economies of Far Eastern countries would be imperiled. In short, said the report, the U.S. had to make sure that in looking to its own defense, it did not ruin its friends.

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