THE RUBBER BOOM.

Dominion, Volume 3, Issue 829, 30 May 1910, Page 6

THE RUBBER BOOM.

Twice recently the raw rubber market has suffered a relapse, buyers refusing to pay the high prices. These may be regarded as premonitions of a collapse that ■may prove more or less lasting. Should the raw rubber market get a set-back, rubber shares must necessarily decline, but these two events are not likely to happen just yet. The primary cause of the rubber boom has been the great increase in consumption, side by side with a not too rapidly expanding production. Rubber trees take time to mature, and it was considered that despite the large number of flotations of rubber companies in.London of late, on the score of production at least the market was safe for another couple of years. What is required to be known, however, as the Economist suggests, is not merely how much was coming on the market, but how much is likely to be needed by rubber consumers. It is extremely difficult to say exactly how much of the raw material is used by different industries, and it is not easy to discover even the average quantity that goes to a single motor tyre. The figures are not to be had, and so the problem of demand remains unsolved; but one point is perfectly clear and demonstrable by statistics, and that is the enormous importance of the United States as a purchaser of the raw material. The growing use of rubber shoes and the increase of the motor industry in America have led in the last few years, and particularly in the last twelve months, to an extraordinary expansion, and a comparison of American imports with the world's production gives some rather striking' results. The following figures state the estimated output of the past three years, the total American imports, and the ratio of those imports to the supply: World's American Supply. Imports Eatio. Year. Tons. Tons. Per cent. 1907 ... 60,000 30,600 4-1 1008 ... 65,000 34,000 A 2 1903, - 69,000 M.MO 61 These figures show clearly enough how much the United States have to do with the recent rise in prices. The maintenance of high prices depends largely upon two pointsfirst, is the American import of rubber going into consumption? and, second, is the activity of American trade likely to last? The first point is not easily settled. It is known, of course, that the motor trade has developed very quickly during'- the last few years, and. the number of cars ; manufactured is said to have risen from 30,000 in 190G, to 115,000 in 1909; but rising commodity pr.ices invariably foster speculation in America,' and it is quite possible that large quantities of rubber are being stored now, just as large stocks of copper were stored in 1907. As to the soundness of American trade, opinions differ; but there can be little doubt that traders were speculating too freely last autumn, that much of the raw material recently imported was being bought with borrowed money, and that a big strike or a disturbance in the moncy-mar-ket would place American manufaci twers in a vm.Y awkward .position,

As to the gambling on the Stock Exchange it is described as being' intense. A graphic pictr.ie is drawn of scramble c-arly in April just before the first slump. The twoshilling shares were in demand by the public, and the jobbers made no secret of the fact that they had lines to sell, and that the public would have to pay higher and higher prices as the demand increased. In certain shares the dealers got caug'.ifc short, and sold almost in the dark not knowing where to go to replace the sales, but hoping for the turn of the tide which would send buyers streaming back to .realise after the fury had exhausted itself. From all parts of the country poured in orders to buy : and the market itself was sheer Bedlam. Brokers over and over again abandoned the attempt to deal, and wrote down their orders for jobbers to execute. The jobbers, making money at the rate of one to five pounds per minute, drove frantically into the crowd, and made prices gaily in shares of which they scarcely knew the name. The scene drew men from every part of the Stock Exchange to watch it. While the jobbers made money "hand-ovor-fist" the brokers were worked to death. Two well-known brokers set the whole of the Stock Exchange talking by the issue of a circular to their clients begging for no fresh orders for a fortnight. Another firm handed printed notices to their agents asking them to introduce no fresh clients until further notice. Yet another large broking firm had under consideration a suggestion for transacting fresh business only on alternate days of the week. Brokers, in self-defcnce, were obliged to raise their scale of charges, but even so the commission was paid willingly. Then came a slump, and the public, for a' few days, were nearly as eager sellers. The rubber boom was going simultaneously with an oil boom, and the market appeared capable of sustaining both, but the end of the rubber boom cannot be far off. The American situation is somewhat, precarious and by November rubber will probably have reached about its normal level.