International Rubber Regulation Agreement
Encyclopedia
The International Rubber Regulation Agreement was a 1934 accord between the United Kingdom
, India
, the Netherlands
, France
and Thailand
that formed a cartel
of major rubber producing nations to restrict global rubber
production and maintain a stable, high price for natural rubber.
resulting in the British enacting the Stevenson Plan
in 1921 to restrict the supply of rubber to support rubber prices and ensure the profitability of British rubber plantations in the Far East
. However, the plan had many flaws and was abandoned in 1928. By 1928 the plan both irritated the United States and lacked apparent purpose. Demand for rubber was robust due to expanded use of the automobile in the United States.
After the stock market crash
of 1929 the Great Depression
hit the United States and rubber demanded once again softened. It was in this context that the International Rubber Regulation Agreement was implemented.
, India
, the Netherlands
, France
and Thailand
to restrict the rubber supply
in accordance with the decline of rubber prices to maintain rubber prices and profitability of rubber producing firms. The agreement both prevented establishment of new rubber plantations and placed production restrictions on existing plantations. The agreement in effect formed a cartel of rubber producing nations that neglected the needs of rubber consuming nations, most notably the United States
and Japan
.
failed in an attempt to produce rubber in Brazil. The Goodyear Tire and Rubber Company
developed plantations in the Philippines
and Costa Rica
and Harvey Firestone
developed plantations in Liberia
.
Research into synthetic rubber was limited by lack of knowledge of the chemical structure of rubber compounds until after 1945. DuPont had developed neoprene in the 1920s in response to the Stevenson Plan, but neoprene was too costly for making tires. During this period the International Rubber Research & Development Board and the Research Association of British Rubber Manufacturers were founded.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
and Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
that formed a cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
of major rubber producing nations to restrict global rubber
Rubber
Natural rubber, also called India rubber or caoutchouc, is an elastomer that was originally derived from latex, a milky colloid produced by some plants. The plants would be ‘tapped’, that is, an incision made into the bark of the tree and the sticky, milk colored latex sap collected and refined...
production and maintain a stable, high price for natural rubber.
Background
Demand for rubber declined sharply after World War IWorld War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
resulting in the British enacting the Stevenson Plan
Stevenson Plan
The Stevenson Plan, also known as the Stevenson Restriction Scheme, was an effort by the British government to stabilize low rubber prices resulting from a glut of rubber following World War I.-Background:...
in 1921 to restrict the supply of rubber to support rubber prices and ensure the profitability of British rubber plantations in the Far East
Far East
The Far East is an English term mostly describing East Asia and Southeast Asia, with South Asia sometimes also included for economic and cultural reasons.The term came into use in European geopolitical discourse in the 19th century,...
. However, the plan had many flaws and was abandoned in 1928. By 1928 the plan both irritated the United States and lacked apparent purpose. Demand for rubber was robust due to expanded use of the automobile in the United States.
After the stock market crash
Stock market crash
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors...
of 1929 the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
hit the United States and rubber demanded once again softened. It was in this context that the International Rubber Regulation Agreement was implemented.
The Agreement
The Agreement was enacted in 1934 between the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
and Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
to restrict the rubber supply
Supply (economics)
In economics, supply is the amount of some product producers are willing and able to sell at a given price all other factors being held constant. Usually, supply is plotted as a supply curve showing the relationship of price to the amount of product businesses are willing to sell.In economics the...
in accordance with the decline of rubber prices to maintain rubber prices and profitability of rubber producing firms. The agreement both prevented establishment of new rubber plantations and placed production restrictions on existing plantations. The agreement in effect formed a cartel of rubber producing nations that neglected the needs of rubber consuming nations, most notably the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
.
Outcome
The United States responded by: establishing rubber plantations in territories under its control; conducting research into rubber-producing plants that thrive in the United States' climate; and reinvigorated efforts to replace natural rubber in tires with a synthetic. In the Fordlandia venture, Henry FordHenry Ford
Henry Ford was an American industrialist, the founder of the Ford Motor Company, and sponsor of the development of the assembly line technique of mass production. His introduction of the Model T automobile revolutionized transportation and American industry...
failed in an attempt to produce rubber in Brazil. The Goodyear Tire and Rubber Company
Goodyear Tire and Rubber Company
The Goodyear Tire & Rubber Company was founded in 1898 by Frank Seiberling. Goodyear manufactures tires for automobiles, commercial trucks, light trucks, SUVs, race cars, airplanes, farm equipment and heavy earth-mover machinery....
developed plantations in the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
and Costa Rica
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....
and Harvey Firestone
Harvey Firestone
Harvey Samuel Firestone was an American businessman, and the founder of the Firestone Tire and Rubber Company, one of the first global makers of automobile tires.-Family background:...
developed plantations in Liberia
Liberia
Liberia , officially the Republic of Liberia, is a country in West Africa. It is bordered by Sierra Leone on the west, Guinea on the north and Côte d'Ivoire on the east. Liberia's coastline is composed of mostly mangrove forests while the more sparsely populated inland consists of forests that open...
.
Research into synthetic rubber was limited by lack of knowledge of the chemical structure of rubber compounds until after 1945. DuPont had developed neoprene in the 1920s in response to the Stevenson Plan, but neoprene was too costly for making tires. During this period the International Rubber Research & Development Board and the Research Association of British Rubber Manufacturers were founded.