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Malaya and the International Tin Cartel

Published online by Cambridge University Press:  28 November 2008

John Hillman
Affiliation:
Trent University, Peterborough, Ontario

Extract

Although there has been considerable support for primary commodity agreements in the Third World, the experience of one of the pioneering agreements, the International Tin Restriction Scheme of the 1930s, has been very critically assessed, especially as regards its impact on the largest tin producer, Malaya.

Type
Articles
Copyright
Copyright © Cambridge University Press 1988

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References

1 Knorr, K., Tin under Control (Stanford, 1945);Google ScholarEastham, J. K., ‘Rationalisation in the Tin Industry’, Review of Economic Studies IV (1936);Google ScholarMay, Elizabeth, ‘The International Tin Cartel’, in Elliott, W. Y., International Control in Non-ferrous Metals (New York, 1937);Google ScholarUngphakorn, P., ‘The Economics of Tin Control’, Ph.D. dissertation, University of London, 1949;Google ScholarBaldwin, W. E., The World Tin Market (Durham, NC, 1983).Google Scholar A sympathetic account is by Fox, W., Tin, The working of a Commodity Agreement (London, 1974).Google Scholar

2 Hoong, Yip Yat, The Development of the Tin Industry in Malaya (Kuala Lumpur, 1969).Google Scholar

3 Yip, Tin Industry in Malaya, p. 272.

4 Eastham asserts that Malaya was compelled to join by the Colonial Office under pressure from those holding tin stocks, ‘Rationalisation’, p. 21. Yip suggests the process was more subtle, p. 272.

5 Several of these companies were controlled by Cornishmen; Gopeng Consolidated was one of their most profitable companies and their best organised grouping was Osborne & Chappell. Since there was no one set of connections that held them together, here they will be referred to as the Cornish. Their leading figures were Mair, F. and Thomas, C..Google Scholar

6 Yip, Tin Industy in Malaya, p. 273.

7 The treatment of costs has been quite naive with little sense of their determination by political processes or of the way in which they in turn actually determine economic outcomes.

8 Freund, Bill, Capital and Labour in the Nigerian Tin Mines (London: Longman, 1981), is a first-rate study of the Nigerian industry; there is nothing comparable on Bolivia.Google Scholar

9 Ken, Wong Lim, Malayan Tin indushy to 1914 (Tucson, Ariz., 1965), is the definitive study of the period, as is Yip for the subsequent one.Google ScholarThoburn, J., Primay Commodity Exports and Economic Development (London, 1977) is also very useful.Google Scholar

10 Kelly and Walsh, Guide to Malayan Tin Companies (Singapore, 1927).Google Scholar

11 Eastham, ‘Rationalisation’, pp. 20, 26. May seems to be the source of the mistaken claim that Anglo-Oriental was a high-cost producer, pp. 277, 316. In Nigeria it soon realised very dramatic cost reductions, Freund, Capital and Labour, p. 123.

12 He had a reputation for floating worthless companies, and was eventually sent to prison for issuing a fraudulent prospectus.

13 They included close links not only with Patino, but also with the California Engineering firm, Yuba Dredging.

14 Public Record Office, Kew, CO717/73/72410, S. Patino to Sungei Way Dredging Co., 27.2.1930.

15 FO371/14750/F3438/61, record of meeting with Sims, G. W., 23.4.1930.Google Scholar

16 Clementi actually prepared legislation and was supported by the Foreign Office, but Cunliffe-Lister lobbied against this on the grounds that it might provoke Patino into shifting his smelting interests from the UK to the USA, and that it might also affect cooperation with the cartel, CO717/73/72410, Cunliffe-Lister to CO, 7.1.1931, Cunliffe-Lister and Pearce visit to CO, 14.1.1931.

17 CO323/1311/32588, Campbell minute, 12.6.1934.

18 CO852/4/6/15020/B8, Campbell to Shenton Thomas, 12.7.1935.

19 Ibid..

20 CO323/1311/32588, memo by Straits Trading, 9.1931.

21 It is unfortunate that there is no detailed account of the Chinese sector after 1914 since it was highly differentiated. The FMS Government treated them as a whole as high-cost operations, but Yip cites an official report which suggests that many were not, Tin Industry in Malaya, p. 210.

22 Ungphakorn, ‘Economics of Tin Control’, p. 231.

23 Fox, Tin, p. 126; the Billiton Board formally ratified the proposals on 12.12.1930.

24 Just how this occurred is not clear since a DEI official told Clementi they would ‘leave economic laws to take their course.’ Clementi to CO, 5.9.1930, CO323/1108/71462/I.

25 CO323/1108/7 1462/II, Cunliffe-Lister to Wilson, CO, 4.1.1931. Cunliffe-Lister became Colonial Secretary later in 1931 and actively promoted the cause of tin control until his retirement in 1935.

26 CO323/1108/71462/I, Grindle minute, 6.11.1930.

27 Ibid., Campbell minute, 28.11.30; Martin minute, 28.11.1930. Campbell was the Economic Adviser to the Colonial Office and would play a leading role in the control of both rubber and tin.

28 Ibid., Grindle minute, 29.11.30.

29 Ibid., Cunliffe-Lister to Wilson, CO, 27.11.1930; Howeson to CO, 29.12.1930.

30 CAB27/447, Tin Restriction Committee, 17.2.1931. The Cabinet endorsed the report the following day, CAB23/66.

31 CO323/1108/71462/I. The Colonial Office thought them ‘very fair to Malaya’, Martin minute, 19.12.1930; Campbell pointed out the continuing strength of the Dutch case to Shenton Thomas (successor to Clementi), CO852/4/6/15020/B8, 11.7.1936.

32 CO323/1154/81298/I, FMS Gvt to CO, 7.1.1931; the point of the delay was to coincide with the beginning of the Chinese financial year. It was a major, though unappreciated, concession.

33 Ibid., Howeson to Wilson, 5.1.1931.

34 Ibid., Mair to Clementi, quoted in Clementi to Grindle, 6.1.1931.

35 One company, Pahang Consolidated, was opposed on principle and ended up challenging restriction in court. It was a conservative lode mining company with diversified interests. Daily Mail commented on the opposition: ‘Two of the most powerful Eastern groups are out to smash the scheme at all costs and force the small Chinese producers out of business’. 8.1.1931.

36 Ibid., FMS Gvt to CO, 13.1.1931.

37 Ibid., Mair to Ellis, 16.1.1931.

38 CO323/1154/81298/III, International Tin Conference Minutes, 27.2.1931.

39 Yip, Tin Industy in Malaya, p. 274. Yip suggests that it was legally impossible to change the agreement at this stage. This is not so; had the FMS wished to commit economic and political suicide the Colonial Office would not then have stopped her.

40 FMS Gvt cabled its official ratification on 4.3.1931, and expressed the hope that the second quota be for six months, CO323/1154/81298/III.

41 An indication of this is found in the complaint by Glenister in Federal Council that Nigeria had surrendered tonnage to the Dutch rather than a fellow member of the Empire, as though the Dutch had no claims, and as though Nigeria had it to spare, Nigeria to CO, 3.6.1931, Ibid..

42 The Governor of the Bank of England intervened during the impasse in the negotiations for the 3rd agreement, Campbell to Boyd, 28.10.1936, CO852/33/7/15020/B8/II.

43 Knorr, Tin under Control, p. 130.

44 CO852/72/14/15020/BII, Clauson minute 31.12.37.

45 CO322/1242/11730/4, Minutes ofConference, 26–27 April 1933, Singapore. They also discussed the Dutch proposals for a buffer pool, but on this the Malayan delegation was divided between the government and industry representatives.

46 Yip supposes this was the effect ofthe high price secured by the ITC, p.283. In fact it was the result of an entirely new area being opened up and the pressure on the Congo economy as a result in the fall in copper prices. Low tin prices would have accelerated output.

47 CO852/4/6/15020/B8, Howeson to Campbell, 9.10.1935. The Gopeng group voted in favour conditionally; the Tronoh group against conditionally.

48 CO852/4/6/15020/B8, FMS Chamber of Mines Council, 2 1.8.1935; FMS Chamber, 25.9.1935; FMS Gvt to CO. 1.10.1935.

49 CO852/33/6/15020/BI, Shenton Thomas to Lowinger (Malayan delegate to ITC), 2 1.12.1935. He was referring to an Advisory Council composed of both official and industry representatives.

50 FO371/21226/816, Crosby (Chargé d'affaires, Bangkok) to Orde, FO, 2.2.1937. Crosby remarked that Malaya was even prepared to meet Siam's demand from its own standard tonnage.

51 Yip is the definitive guide to this problem, Tin Industy in Malaya, pp. 200–1; he also shows how capacity even in 1929 was greater than output, pp. 277–9; the gap shrank significantly by 1941, p. 253.

52 The Nigerian Government established a minimum for small miners ensuring their viability, but then these were European, Freund, Capital and Labour, p. 122.

53 CO852/72/14/15020/BII, 63rd Meeting of the ITC, 10.12.1937. Glenister resigned from the ITC in protest.

54 Yip, Tin Industry in Malaya, p. 185.

55 CO323/1302/31825/4H. Thomas actually wanted the Colonial Office to intervene on behalf of Pelepah, Campbell minute, 6.4.1934.

56 CO323/1156/81298/7/I, Houwert to CO, 23.6.1931.

57 Ibid., Clementi to CO, 17.7.1931.

58 CAB23/66, minutes of Cabinet meeting, 25.3.1931.

59 This meant that renewal had to be negotiated while the pool was still in existence and Bolivia took full advantage of this to blackmail the Dutch to secure a return of most of the standard tonnage conceded in 1930.

60 CO323/1197/91240/6, Howeson to Campbell, 18.3.1932.

61 Ibid., CO to FMS Gvt., 16.1.1932, 2.3.1932, Campbell minutes, 24.3.1932, 16.4.1932.

62 Baldwin is misleading on this point, p. 72.

63 CO323/1242/11730/VI, Groothoof at the 31st ITC meeting, 7.12.1933.

64 This was an oft-repeated charge especially during the Byrne scheme, Yip, Tin Industry in Malaya, pp. 195, 198, but the connection between pool and the production quotas did not mean the subordination of the latter to the former.

65 CO323/1301/31825/4D/2, Mair to High Commissioner, FMS, 17.4.1934.

66 Yip, Tin Industry in Malaya, p. 223. When the stock was formed, the Malayan quota was oversubscribed even though the Cornish did not participate, CO323/1301/31825/4D/2, Campbell to Calder, 13.7.1934.

67 Ibid., Campbell to Patino, 9.4.1934.

68 CO331/1301/31825/4/1, Clementi to CO, 20.1. 1934, Campbell minute, 3.2.1934.

69 CO852/13916/15020/B1/I, Malayan Chamber of Mines to CO, 9.3.1938; the position was repudiated by the Council members associated with Anglo-Oriental, Ibid.; Cable from Lyttelton et al. to Shenton Thomas, 18.3.1938.

70 Ibid., FMS Chamber of Mines to FMS Government, 28.3.1938.

71 Ibid., 11.5.1938.

72 Ibid., Notes on Tin, 28.5.1938.

73 CO852/139/6/15020/B10/I, Thomas, Shenton to CO, 26.4.1938.Google Scholar

74 Apart from one occasion, they could not even be bothered to accept the repeated Dutch invitations to visit what were, after all, the most efficiently run tin mines of all, CO852/139/4/ 15020/BI, Campbell to Clauson, 14.7.1938.

75 Yip suggests that the only European votes came from Anglo-Oriental, Tin Industty in Malaya, p. 248. But this would appear to exaggerate the proportion of Malayan output it actually controlled.

76 It was also a relief for the Colonial Office which would otherwise have to have chosen between ‘infinite trouble with stupid and disagreeable people’ by forcing her to join, or allowing them to ‘inflict lasting injury on a great Colonial industry.’ Clauson minute, 15.5.1938, CO852/139/6/15020/B10/I.

77 CO852/275/8/I502B, Clauson minute, 26.2.1940.

78 Lyttelton was indeed one of the links between Anglo-Oriental and Patino, and also Head of Non-Ferrous Metals Control.

79 Fox, Tin, pp. 185–6, Fishman, Leo, ‘Wartime Control of Tin in Great Britain, I 939–41’, Journal of Political Economy, vol. 54 (1946), pp. 420–2. Yip supposes that all the ITC was doing was engaging in price gouging, Tin Industy in Malaya, p. 250.Google Scholar

80 The Dutch were represented by Billiton, the Bolivians by Patino and Anglo-Oriental was also present in some capacity for Nigeria.

81 CO323/1154/81298/III, International Tin Conference, 27.2.1931, 1st ITC Meeting, 1.4.1931.

82 The Colonial Office used a variety of epithets in its internal minutes, and described them ‘remarkable alike for their thickheadedness and their malevolence’ in official correspondence, Clauson to Ministry of Supply, 23.7.1940, CO852/275/8/1502B.

83 CO323/1196/91240, Howeson to Campbell, 15.2.1932.

84 Ibid., Campbell to Calder, 17.2.1932, Campbell minute, 19.2.1932.

85 CO323/1155/81298, CO to FMS Gvt., 30.9.1931.

86 Ibid., FMS Gvt. to CO, 1.10.1931.

87 Ibid., CO to FMS Gvt., 2.10.1931.

88 As a result decisions were made on the basis of consensus and the question of the quotas was rarely an occasion for conflict.

89 CO323/1196/91240, Clementi to CO, 10.5.1932.