856D.6176/356
The Minister in the Netherlands (Emmet) to the Secretary of State
[Received May 9.]
Sir: I have the honor to report that increased world consumption of rubber, the consequent reduction in rubber stocks and fairly steady prices have brought about a feeling of satisfaction among Netherlands Government officials and business men connected with the rubber trade. This is true in general and optimism is encountered more frequently than it was six months ago, when everyone gave the rubber situation a cold, analytical inspection which did not uncover anything very encouraging. There was in fact little to prove that the restriction plan was a success.2 It is not yet a complete success but there is no longer any attempt to deny that planters and traders alike find the outlook more pleasant than two years ago, when the scheme was first adopted.
The international rubber committee met in London on April 28th, and voted to increase the production quota from 60% to 65% or, vice versa, to decrease the restriction percentage from 40% to 35% for the two final quarters of the year 1936. This action (the first increase since the organization of the committee) in itself is an indication of an optimistic outlook on the part of Government experts. It was unexpected by the trade and caused a flurry in rubber prices, but Government experts and speculators always differ as to what constitutes a satisfactory figure for world stocks and consequently as to the correct application of the restriction.
It is my understanding that Government experts here consider that half a million tons is not too great a reserve supply, whereas people in the trade think that three hundred thousand tons would be more advantageous. However, the outlook for the future must seem satisfactory [Page 504] in the eyes of the International Committee experts at least, since world stocks are supposed at present to be over half a million tons and yet an increase in production has been voted.
As far as the Dutch planters are concerned, there is still a very unsatisfactory situation in regard to native producers. The Department has been kept informed by the Consulate General in Batavia concerning this problem, so it will be unnecessary to comment at length. It is sufficient to say that the Government’s (actually Premier and Minister of the Colonies Colijn’s) idea that exports of native rubber should be restricted by application of export duties, has not been a success. It was the wish of the East Indian Government originally to avoid individual restriction and to give the native grower as much freedom as possible while controlling exports and prices through the application of a duty which, originally Fl. 10.00 per one hundred kilos, was expected to be effective and which has since had to be raised gradually to Fl. 35.00 per hundred. With each slight increase in the price of rubber the native growers were apparently able to make a small profit despite the very high export tax, so that whereas originally plans were made, in connection with the restriction scheme, to prevent native rubber exports in excess of ninety thousand tons, the East Indian Government is now struggling with the problem of controlling native exports of about one hundred and fifty thousand tons. Exports of non-plantation rubber for the month of March were estimated at fifteen thousand tons. By this token, native export figures for the first quarter will exceed the quota by about five thousand tons. This explains the two most recent increases in the export duty, i. e., April 6th, to Fl. 34.00 per hundred kilos and April 19th to Fl. 35.00 per hundred kilos. The problem still remains unsolved and the Government may turn to another plan as Premier Colijn is determined to reduce native production. This determination, as pointed out in previous despatches, remains our safeguard for high price rubber means increased native growing.
Respectfully yours,
- The rubber producers’ restriction agreement was signed on April 28, 1934; see telegram No. 30, same date, from the Minister in the Netherlands, Foreign Relations, 1934, vol. i, p. 657.↩