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Rubber Strategy for Post-War Malaya, 1945 – 48

Published online by Cambridge University Press:  24 August 2009

Martin Rudner
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Extract

Rubber, derived from the latex of the tree Heva brasiliensis, has from the First World War been the economic mainstay of the Malayan peninsula. Not only has rubber constituted Malaya's leading economic sector, but from 1914 down to the outbreak of war in Southeast Asia (with the two marginal exceptions of 1939 and 1941) Malaya was the world's largest single supplier of natural rubber. The revival of Malayan rubber was therefore of prime significance not only for the economic rehabilitation of Malaya but also for the global recovery of rubber consuming industries.

Type
Articles
Information
Journal of Southeast Asian Studies , Volume 1 , Issue 1 , March 1970 , pp. 23 - 36
Copyright
Copyright © The National University of Singapore 1970

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References

1 On the pre-eminent role of rubber in Malaya's economy, see Yah, Lim Chong, Economic Development of Modern Malaya, (1967), Chapter 1Google Scholar. For an account of the history of the rubber industry, see Bauer, P. T., The Rubber Industry: A Study in Competition and Monopoly, (1948)Google Scholar and Schidowitz, P. and Dawson, T. R. (eds.), History of the Rubber Industry, (1952)Google Scholar.

2 Bauer, P. T., The Rubber Industry, IntroductionGoogle Scholar.

3 On pre-war rubber regulation, see Bauer, , The Rubber Industry, especially Chapters 6–14Google Scholar; on the Stevenson Scheme, see Rowe, J. W. F., Special Memorandum No. 34, London and Cambridge Economic Service, 1931Google Scholar. For the effect of regulation on Malaya and competitive position generally and that of smallholders in particular, see Bauer, P. T., Report on a Visit to the Rubber Growing Smallholdings of Malaya, July-September 1946, HMSO, 1947, pp. 15–18Google Scholar (Henceforth: Report) The NEI was not party to the Stevenson Scheme and administered the IRRS less thoroughly with regard to smallholders than Malaya did, thereby gaining long term competitive advantage.

4 Synthetic rubber is not, as commonly believed, a chemical production of natural latex; rather it is a distinct compound with certain latex-like qualities which is superior to natural rubber for certain purposes, inferior for others, and a close substitute for a range of uses where price determines choice. On synthetic v. natural rubber, see Bauer, , The Rubber Industry, Chapter 5Google Scholar, and Mills, L. A., Malaya: A Political and Economic Appraisal, (1958), Chapter 8Google Scholar.

5 Vid. “National security demands that these synthetic rubber producing plants be maintained so that this Nation will have a source of supply at all times”, Rubber: First Annual Report, Washington, US Department of Commerce, 1949Google Scholar.

6 On Malayan Planners and the rubber industry, see Donnison, F. S. V., British Military Administration in the Far East, HMSO, (1956), pp. 242–3Google Scholar, and Rudner, M., “The Organization of the British Military Administration in Malaya”, Journal of Southeast Asian History, (03 1968), p. 68, passimGoogle Scholar.

7 President H. B. Egmond Hake's address, RGA General Meeting, 2 May 1945.

8 MREOC Circular, London: 21 July 1945. The Colonial Office was to have representation on the Company's Board of Directors.

9 MREOC Circular: “His Majesty's Government having accepted responsibility for taking care of the needs of smallholdings under 100 acres …” See also Colonial Secretary's statement in the House of Commons, Hansard, 7 November 1945, Col. 1406.

10 Sir John Hay, address to United Sua Betong Rubber Estate Company general meeting, 26 June 1945.

11 Chairman's address, RGA general meeting, 2 May 1945.

12 Malaya: Rubber Statistical Handbook, 1941, Table 18.

13 In fact many estates joined the MREOC only because they believed membership in the quasi-official body to be compulsory; see Holt, E. G., Report on the Malayan Rubber Industry, Washington, D. C., Department of Commerce, (1949), p. 4Google Scholar.

14 MREOC Circular.

15 Hansard, 22 August 1945, Col. 6367.

16 Hansard, 24 August 1945, Col. 983.

17 cf. MrJones, Creech, Hansard, 16 05 1945Google Scholar.

18 Economist, 28.7.45, p. 130.

19 Lock, Tan Cheng, “Comments on the ABM memorandum on the Reconstruction of Malaya”, British Malaya, (02 1945), p. 114Google Scholar; the author was then head of the Overseas Chinese Association, a representative body of Malayan Chinese in wartime exile in India.

20 RGA General Meeting, 2 May 1945.

21 MREOC figures, of British Malaya, October 1945, p. 205, Holt, Report on the Malayan Rubber Industry notes that some companies joined the MREOC on the belief that membership was compulsory.

22 MREOC statement published in British Malaya, October 1945, p. 205.

23 According to its constituent Circular (21 July 1945) “every applicant for election” to MREOC membership had to submit a formal application backed by an initiation fee of 1s. per planted acre of rubber, plus an “approved” bank's guarantee for a further sum of up to £1. per planted acre of rubber to be placed at the Company's disposal on demand. Though not difficult for British-based companies, it must have been quite beyond the financial capabilities of estates domiciled in Malaya to fulfil these conditions under the prevailing post-liberation circumstances.

24 Donnison, , British Military Administration in the Far East, p. 261Google Scholar.

25 cf. Holt, , Report on the Malayan Rubber Industry, p. 20Google Scholar.

26 Hansard, 7 November 1945, Col. 1406.

27 See Donnison, , British Military Administration in the Far East, pp. 343–6Google Scholar, on the planning of relief supplies for post-war Malaya.

28 Donnison, , British Military Administration in the Far East, pp. 243, 268Google Scholar.

29 The seven groups and their total acreages were:

30 As a result of the distribution of essential supplies, by April 1946 the Harrison-Crosfield group was tapping 53% of its acreage while the MREOC average overall was 27%. By May the gulf had increased to 65% and 32%; see Holt, , Report on the Malayan Rubber Industry, pp. 18–19Google Scholar.

31 On smallholders' supply position and a detailed critique of the Rubber Buying Unit's distribution practices see Bauer, , Report, pp. 52–6Google Scholar.

32 Colonial Secretary, Hansard, 9 July 1947, Col. 2201.

33 See Governor's statement, Malayan Union Advisory Council Proceedings, 29 June 1946, p. 1336.

34 Compare these prices to the average inter-war London rubber price of about 9d. per pound. Even higher wartime prices were paid by the USA for Brazilian and native American natural latex after the fall of Malaya and the NEI.

35 Colonial Secretary Hall, George, Hansard, 25 07 1946, Col. 242Google Scholar, and statement by wartime Colonial Secretary Stanley, O., Hansard, 9 07 1946, Col. 270–1Google Scholar.

36 SirSwettenham, Frank, “Administration in British Malaya”, British Malaya, 11 1945, p. 222Google Scholar, and “Concerning the British Rubber Industry and Mr. Get-Rich-Quick”, British Malaya, 03 1945, p. 128Google Scholar.

37 See Bauer, P. T., Report, pp. 300–14Google Scholar, on the comparative efficiency of the smallholding sector.

38 H. F. Coperman, Chairman, address to RGA general meeting, 27 April 1944, and Hake, H. B. Egmond, The New Malaya and You, (1945), p. 76Google Scholar. Rubber regulation was now envisaged “in accordance with a forecast of world demands, under the auspices of all the governments concerned, and in close collaboration with consumer interests.”

39 Hake, H. B., The New Malaya and You, p. 98Google Scholar.

40 Sir Eric MacFadyen, address to Golden Hope Rubber Estate Ltd. general meeting, 30 July 1946.

41 Sir Eric MacFadyen, address to Lanadron Rubber Estates Co. Ltd. general meeting, 13 June 1944. Sir Eric was a leading figure in the estate industry and in the pre-war rubber regulation scheme: see Bauer, , The Rubber Industry, p. 330Google Scholar. Sir Eric was not alone, however, in his vision for post-war rubber marketing: see Gottman, J., Raw Materials in the Western Pacific, French Paper No. 1, 9th IPR Conference,January 1945 (mimeo), p. 7Google Scholar.

42 Although reciprocal aid ceased with Japan's surrender, the wartime system of raw materials allocation was to be maintained until 31 March 1946.

43 H. J. Welch, Chairman, address to London Asiatic and Produce Co. Ltd. annual general meeting, 6 May 1946.

44 Chairman's address to Kamuning (Perak) Rubber and Tin Co. Ltd. annual general meeting, 27 November 1945.

45 Chairman's address to Kamuning (Perak) Rubber & Tin Co. Ltd. annual general meeting, 27 November 1945, and Sir Francis Voules, Chairman's address to Kuala Muda Rubber Estates Ltd., general meeting, 21 December 1945.

46 T. B. Barlow, President's address to RGA general meeting, 25 April 1946.

47 T. B. Barlow, President's address to RGA general meeting, 25 April 1946, and Rubber Representative Blunn, W. G. C.'s address to Malayan Union Advisory Council, Proceedings, 1 04 1946, p. 1313Google Scholar.

48 Chairman's address to Kamuning (Perak) Rubber & Tin Co. Ltd. annual general meeting, 27 November 1945; see also Blunn, W. G. C., Advisory Council Proceedings, 30 04 1946, p. 13222Google Scholar.

49 Economist, 29 September 1945. p. 457.

50 Economist, 23 March 1945, p. 466.

51 President of the Board of Trade, Belcher, J. W., Hansard, 20 03 1946, Col. 371Google Scholar.

52 Parliamentary Secretary to the Board of Trade, Belcher, J. W., Hansard, 13 02 1946, Col. 11Google Scholar.

53 Hansard, 13 February 1946, Col. 629.

54 Holt, , Report on the Malayan Rubber Industry, p. 6Google Scholar.

55 Note that Donnison, in his official history of the British Military Administration in Malaya, nowhere mentions any role for the Malayan Planning Unit in the formulation of post-war rubber prices.

56 MrCreech-Jones, , Hansard, 7 03 1946, Col. 634–5Google Scholar. Thus six months after the official buying price had been fixed it was still “impractical … to form even an approximate estimate of the current cost of (rubber) production …”

57 Colonial Secretary Hall, George, Hansard, 6 02 1946, Col. 1703–4Google Scholar.

58 See Holt, , Report on the Malayan Rubber Industry, p. 6Google Scholar, on this point.

59 Statements in the House of Commons by Cripps, Stafford, Hansard, 11 02 1946, Col. 21Google Scholar, and Hall, George, Hansard, 13 02 1946, Col. 357Google Scholar. According to the Report of the Malayan War Damages Commission, the captured stocks came “from estates in Malaya” (p. 17) though it is left unclear if this term also included smallholdings.

60 Report on British Dependencies in the Far East, HMSO, (1949), Cmd. 7709, p. 22Google Scholar.

61 Major SirSpence, Nevel, Hansard, 7 03 1946, Col. 629Google Scholar.

62 RGA Annual General Meeting, 25 April 1946.

63 Colonial Under-Secretary Creech-Jones, , Hansard, 7 03 1946, Col. 634Google Scholar.

64 Holt, , Report on the Malayan Rubber Industry, pp. 27–31Google Scholar.

65 Holt, , Report on the Malayan Rubber Industry, p. 32Google Scholar.

66 Baucer, , The Rubber Industry, pp. 318–26Google Scholar, maintains that a Malayan price half that offered by the Rubber Buying Unit would still have been profitable for efficient producers while creating new opportunities in the US market.

67 The UK officially admitted to capturing 50,000 tons, but this figure referred to Japanese stocks alone. Another 10–15,000 tons of rubber were found on plantations, etc., and were added to “captured” stocks; Holt, , Report on the Malayan Rubber Industry, p. 29Google Scholar.

68 SirCripps, Stafford, Hansard, 11 02 1946, Col. 21–2Google Scholar.

69 Financial Secretary of the War Office, Bellenger, F. W., Hansard, 13 03 1946, Col. 233Google Scholar.

70 At the Rubber Buying Unit price of $720/ton the Japanese stocks alone would have fetched about $36 million while the full 65,000 tons were worth $46·8 million.

71 Written reply, Advisory Council Proceedings, 9 October 1946, pp. 13124–5.

72 Colonial Secretary Hall, George, Hansard, 5 12 1945, Col. 1299Google Scholar.

73 Colonial Secretary Stanley, O., Hansard, 5 02 1945, Col. 2567Google Scholar.

74 Included in this price was a cent charge for the benefit of the London Traders, which would have accrued to Malayan producers had Americans been permitted to trade direct.

75 President of the Board of Trade, Sir Stafford Cripps, 5 May 1945, cited in British Malaya, May 1946, p. 3.

76 Palmer, S. B., Advisory Council Proceedings, 29 06 1946, p. B54Google Scholar.

77 Advisory Council Proceedings, 9 October 1947, addresses by S. B. Palmer, pp. B120–2, and G. F. Gomes, p. B136.

78 Address to Kamuning (Perak) Rubber and Tin Co. Ltd. general meeting, 3 December 1946.

79 Chairman F. D. Ascoli, RGA general meeting, 24 April 1947.

80 Cmd. 7709, p. 23, and statements in the Malayan Union Advisory Council, Proceedings, 11 July 1947, by the Governor, p. B156, and by Khoo Teik Ee, p. B141.

81 Address to the United Sua Betong Rubber Estates Ltd. general meeting, July 1947.

82 Ee Kim, Yew, Advisory Council Proceedings, 4 10 1947, p. B229Google Scholar.

83 Address by Sir John Hay to Linggi Plantations Ltd. general meeting, 11 June 1947, and to Kamuning (Perak) Rubber and Tin Co. Ltd. general meeting, October 1947; and Sir Eric MacFadyen, report to Lanadron Rubber Estates Ltd. general meeting, 5 September 1947, on this point.

84 P. T. Bauer, The Rubber Industry and Report on a Visit to Rubber Smallholdings in Malaya

85 Silcock, T. H., “The Economy of Malaya: Relevance of the competitive Laissez-Faire Model in Hoover, C. (Ed.), Economic Systems of the Commonwealth (1961) p. 338Google Scholar.

86 ABM “Memorandum on the Reconstruction of Malaya”, British Malaya, (07 1944), p. 187Google Scholar, and Lock, Tan Cheng, “Memorandum on the Future of Malaya”, British Malaya, (02 1945), p. 34Google Scholar; H. B. Hake, The New Malaya and You, insists interestingly enough, that the new planting restrictions were of the “paramount” interest to smallholders! p. 34.

87 cf. Bauer, , Report on a Visit to Rubber Smallholdings in Malaya, p. 38Google Scholar, on this point.

88 Malayan Union Agriculture Department Report (1947), p. 4, and Written Reply, Advisory Council Proceedings, 5 May 1947, p. 1376.

89 Bauer, , Report on a Visit to Rubber Smallholdings in Malaya, esp. p. 25Google Scholar.

90 See Bauer, , Report on a Visit to Rubber Smallholdings in Malaya, pp. 70–4Google Scholar, and Holt, , Report on the Malayan Rubber Industry, pp. 21–2Google Scholar, on conditions on smallholdings during 1945–47.

91 It should be noted that the estates, who were large employers of labour, generally escaped strict enforcement of measures designed to have them grow at least part of their food needs.

92 Bauer, , Report on a Visit to Rubber Smallholdings in Malaya, pp. 40–2Google Scholar, on this point. The Department of Agriculture restricted itself to crops other than rubber, mainly to padi.

93 Rubber Statistics Handbook (1948).

94 Rubber smallholding, being non-seasonal, kept smallholders relatively free from rural indebtedness and attendant socio-economic evils. Bauer, , The Rubber Industry, p. 347Google Scholar, comments on the deplacement of peasant proprietorship as a result of post-war policy: “this hardly seems in accord with declared British colonial policy.”

95 For a powerful critique of post-war rubber policy, see Bauer, P. T., “Malayan Rubber Policy” in Silcock, T. H. (ed.), Readings in Malayan Economics, (1964), pp. 300–14Google Scholar.

96 For an analysis of political factors in the development of Malayan rubber see M. Rudner, The State and Peasant Innovation in Rural Development: The Case of Malaysian Rubber, Paper No. 5, Franz Oppenheimer Memorial Symposium, Jerusalem (1969), published in Rudner, M. (Ed.), Society and Development in Asia, Asian and African Studies Special Number, Jerusalem, 1970Google Scholar.