Feb. 26. the most careful attention, and, we believe, support.
The position of the rubber industry is too well known to require amplifying here. Various measures have been proposed to remedy the present evil. Restriction of tapping to the extent of twenty-five per cent., proved hardly a palliative, for so large are the stocks of the raw material which have accumulated in Great We would commend to the most careful consideration of our readers the announcement made in our advertising columns to-day of the formation of the Shanghai Plantations Trust Limited. Upon its success, we believe, depends the future of a majority of the rubber companies owned in Shanghai, and the loss to be faced in the event of its failure is one not to be contemplated Britain and the United States that the effects of restriction, even almost of total cessation, would not be felt for many months, and these are the critical months. Labour forces must be maintained {during this period, for weeding must go on unless jungle is to overcome the land} now cultivated, and even the tapping forces may not be disbanded recklessly, for once they with equanimity.
According to} are gone the arduous labour of the prospectus of the Trust} recruiting them again must be Shanghai has invested upwards] incurred. It all means that com-of fifteen million taels in rubber panies must find a source from estates, and when we remember} which to draw money while the high prices to which shares} prices remain below cost of pro-have risen on occasion it is evi-duction, and the question pre-dent that this total is small in sented to the shareholder is comparison with the cost to share-; whether he is prepared to assist holders, as individuals, of the in finding this money and so save amount of stock they now hold. his original capital. It may be Owing to the depressed state of argued "that there are a number the industry, the price of the raw lof successful companies which do material being in most cases be-not require assistance, that they low that of production, a great can stand on their own legs, and proportion of this money is in that it is always open to the dire jeopardy. Unable to meet needy companies to proceed to a their running expenses some of debenture issue. Judging by the smaller estates owned by some efforts made elsewhere that Chinese have already reverted to} scheme holds out few prospects jungle, and unless assistance is forthcoming others must follow suit. The banks are not in a position to finance them until such time as the trade depression will be at an end, that would be outside the bankers' proper province, and, unless other means are devised, ruin, immediate and complete, faces only too many companies, with probably a total loss to their shareholders. The Shanghai Plantations Trust is a courageous attempt to overcome; these financial difficulties, and: on that account it should receive of success. In unity, however, there will be seen the main chances of strength. It will be found that a large number of shareholders hold stock in several companies, whose needs will be found to differ considerably.. The shareholder will naturally incline to support the company in which he has most faith: to that company he will give his financial; support. In doing so, however, he will run the risk of starving the other concerns in which he for him should be whether all his has an interest. The question companies cannot be saved. From his own point of view, and from the point of view of the' general good, it is his duty to try to do this, and if we are not mistaken the present Trust scheme will solve his difficulties, and bring about salvation.
It is a strong company which has been formed. The directors, Messrs. H. E. Arnhold, A.*W. Burkill, N. G. Maitland and A, J. Welch, should give the. community confidence in the scheme, and, if possible, should. secure support from quarters -outside the ranks of shareholders. This support is desirable. Not only is a considerable proportion of a capital of fifteen millions at stake, the loss of which would react unfavourably on the general busi-hess capacity of the community, but there is the question of the dividends. In the year 1917 the dividends of the Shanghai com panies' amounted to practically three million taels, by no means a negligible sum in a community' budget. At that time the price of rubber averaged about two shillings and tenpence'a pound, while the cost of production was below the present figure. We may not, perhaps, be able to hope for such a price again, and in taking the general situation into consideration we have to remem ber that production costs are today higher than 1917 and likely to remain so, but at the same time we must conclude that rubber will not remain at its present price. When trade is once more upon a normal footing consumers. will no longer be able to buy the raw material below the price of production, they will have to pay a rate which will cover estate and management costs besides providing a fair return to shareholders. Such an economic price, we be lieve, may be stated at two shu lings. This will not give Shang hai three million, taels of divi-dands, but will give it-a substantial amount, one—worth working for and spending money for at the Present time. And in our opinion: this "Trast-scheme—offers
Text read from the printed page and cleaned; old type leaves the occasional error.