The year is 1912. The place is the New York Stock Exchange, the center of the financial world. The world looks to Wall Street to gauge the price of most goods, and natural rubber is no exception. Most of the world's rubber comes from the wild rubber trees in the jungles of Brazil, and the price of natural rubber is low, but there is a problem. The Brazilian trees have nearly been tapped out and are producing less latex every year, and a leaf blight slows production even more. The problem is further complicated by an increase in world rubber consumption.
Not to worry, the British and Dutch are waiting in the wings to pick up the slack with their plantations in Malaya and the Dutch East Indies. Anyone who has ever changed their address knows that moving can be very difficult and expensive, and the shift of rubber production from South America to the East Indies was no exception. The change and the mushrooming rubber industry causes chaos on the Stock Market. Between 1914 and 1922, natural rubber prices fluctuate from 11.5 cents to as high as $1.02 per pound.
In an attempt to balance supply and demand for natural rubber, the British propose a plan to regulate production. The Dutch, seeing a chance to increase their share in the rubber market, refuse to go along with the plan. On November 1, 1922, the Stevenson Plan is put into effect. Under this plan, plantation owners are given export coupons which limit the amount of rubber they can export at any time. This raises the price of natural rubber, but fails to balance production with consumption, and, in 1925, a shortage occurs raising the price of natural rubber to a whopping $1.12 per pound!
In 1925, the United States is consuming about 76% of the world's rubber, and the high prices pose a significant threat to the American way of life. The U.S. has to take action. Herbert Hoover, the Secretary of Commerce, threatens the British that if the Stevenson Plan stays in effect, the U.S. will try to protect itself in every possible way. Thomas Edison, and various rubber companies try to develop American controlled rubber production, with little success. However, British control of America's rubber has been decreasing since the Stevenson Plan went into effect, and by the time the Plan ends on November 1, 1928, America's rubber comes almost entirely from the expanding Dutch plantations, and the price natural rubber comes back down to reasonable levels.
That is until the the 1930's. During the Depression, people are not buying as much rubber, but the plantations keep exporting it at the same rate. This drives the New York price of natural rubber to a record low, and plantation owners begin thinking about regulation again. In 1934, a committee of delegates from all the major rubber producing colonies and states sign the International Rubber Regulation Agreement. This agreement works. Prices become reasonable and production and consumption are balanced.
Confused? Tired of cartels, price fixing, and the natural rubber price rollercoaster? So were the Japanese. They have to buy rubber too, and are sick and tired of the market inconsistencies. In 1941, they decide to do something about it.
The price of natural rubber was not the only reason synthetic rubber was developed. The pressure of a war and the resulting blockade forced the Germans to develop one type of rubber.