Catastrophic Experiment

"Every motor car would be headed for the scrapheap; every loudspeaker would be silent; every telephone would 'go dead'; every electric light would go out. The gloveless surgeon would be unable to perform his life-saving operations. . . . Contemporary man could not get along. . . . Life would be devoid of half its conveniences and comforts. . . ."

Such was the alarming prophecy, last week, of able Dr. Julius Klein of the U. S. Dept. of Commerce. He was recalling the ancient and modern history of the commodity of rubber. Columbus, exploring the island of Hispaniola, was the first to see natives playing with balls which seemed to bound miraculously to Heaven. Three centuries later, Chemist Joseph Priestley advised his fellow Englishmen that the miraculous substance would erase pencil-markings, might well be called "rubber." It was only 100 years ago that a Scotchman named Mackintosh dissolved rubber in naptha and perpetuated his name in an overcoat. And in 1839, U. S.-born Charles Goodyear dropped rubber (mixed with sulphur) on a hot stove and witnessed the first, accidental process of vulcanization.

Scholarly Dr. Klein knew that in 1926, rubber led the list of U. S. imports, that 1927 imports were valued at $340,000,000. In vivid, effective phrases, he pictured civilization "suddenly and permanently" deprived of rubber.

Point was undeniably given Dr. Klein's prophecies by the occasion which prompted them. He spoke on the eve of the most important day the rubber industry has seen in six years. Fortunately, the day gave happy instead of dismal point to Dr. Klein's vision of a rubberless world. For on Nov. 1, the six-year British experiment in restricting export of rubber from Malaya came to an abrupt and official end.

British historians, writing of the great post-War recovery, acclaiming the return to the gold standard and the rebuilding of the merchant marine, will deal briefly and reluctantly with the effort to control the rubber markets of the world. The experiment which began Nov. 1, 1922, which ended last week, will be held an economic catastrophe. Hundreds of fortunes were drawn into the maelstrom of its collapse.

In conception, the plan appeared both simple and practical. Of the world's rubber supply, Great Britain in 1922 controlled about 67%. British plantations in the East, principally in Malaya, produced in that year 300,000 tons. Dutch plantations, in Java and the East Indies, produced only 95,000 tons. Prices were low. In an attempt to boost prices, establish a monopoly, Great Britain undertook, by the Stevenson Restriction Act, to regulate exports from Malaya. The idea was to fix the price of crude rubber at between 30 and 40-c- a pound.

For a time, the restriction was brilliantly successful. Prices soared far above 40-c-., reached a high in 1925 of $1.21 a pound and in that year averaged 73-c- U. S. rubber users, tiremakers, were in a public panic. They pressed a campaign of conservation. They began to "reclaim" used rubber. They started a world-wide search for plantations where the U. S. might produce its own supply. They commissioned Thomas Alva Edison to study how to extract rubber from such plants as milkweed. And, in 1926, tiremakers formed the Rubber Pool to buy a great supply at between 35 and 41-c- a pound.

Before desperate U. S. remedies could be effective, the British plan had failed. England had not counted on the Dutch East Indies. Lured by phenomenal prices, both the Dutch themselves and the Javanese natives pushed production. Last year, they furnished 225,000 tons. By 1928, Britain controlled only a little more than half (55%) of the world supply, could not possibly control world prices.

The break came with dramatic suddenness last February. Crude rubber fell to 26.9-c- in March, 17.2-c- in April. Members of the Rubber Pool took a staggering loss on their inventories, emerged in August with slashed profits or deficits for the half year (TIME, Aug. 27). Many a British speculator accepted ruin. The experiment had failed, finally and disastrously.

U. S. tiremakers, last week, cut prices from 2 1/2 to 7 1/2%, the second major slash of the year. Linked by the new Rubber Institute, manufacturers saw three hopeful signs for the future:

1) Tire prices are now scaled down to the price of crude rubber.

2) Cutthroat competition from mail order houses is being met by better merchandizing, better advertising.

3) With the Stevenson restrictions officially abolished, crude rubber will reach a normal price level. Manufacturers can replenish stocks, experiment with new uses.