What to Do with Jumbo?

What shall the U.S. do with its $700 million worth of synthetic rubber plants? Last week the Inter-Agency Policy Committee on Rubber,* chairmaned by William L. Batt, laid down a broad program for the care and feeding of this wartime monster which might easily turn into a peacetime white elephant.

As long as natural crude rubber remains scarce and private industry does not assume the job, the program calls for Jumbo to be maintained as a public charge. Labor difficulties and political upheavals in Far Eastern producing areas will hold 1946 U.S. imports of crude to about 250,000 tons. First postwar shipments arrived early in January, but total receipts so far have been only 57,608 tons.

For 1947, the outlook is slightly better. But no one expects imports of natural rubber to come near meeting annual U.S. requirements of 900,000 tons until 1948. As the supply of crude increases, the report recommends that the least efficient synthetic plants be closed down, put up for sale to private industry. (Two high-cost plants have already been shut.)

But, said the rubber committee: "The security of the U.S. and the essential needs of its citizens must never again be jeopardized by inadequate or uncertain rubber supplies." Consequently, it recommends that 1) natural rubber should be stockpiled, and 2) sufficient synthetic rubber capacity to meet at least one-third of U.S. rubber requirements (roughly 250,000 tons) should be kept in operation "regardless of cost." Plants capable of producing another 350,000 tons should be kept in stand-by condition.

The committee hoped that ultimately private industry would take over the plants kept in production. In fact, this should be a "major objective" of rubber policy. But the committee carefully avoided talk of subsidies or protective tariffs, hoped that improvements in production would permit synthetics to compete in a free market. As yet, private industry has shown no eagerness to ride on Jumbo. It fears that improvements may not come fast enough, that the price of natural rubber, now 22 1/2-c- a lb., will again drop below synthetic, now 18 1/2-c-. If private industry won't do the job, the committee implied that Government must.

* Representing the Departments of State, War, Navy, Commerce and Justice, Reconstruction Finance Corp., Office of Rubber Reserve, Rubber Development Corp., War Assets Corp.

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