Stevenson Plan
Encyclopedia
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
.
was made from naturally occurring latex
which is found in the sap of certain plants. These plants form a section of the Family Asteraceae
called Cichorieae
. The most useful of the Cichorieae for latex production is the rubber tree, whose cultivation is restricted to tropical climates. At this time about 75% of rubber was controlled by British corporations, spurring efforts in Russia
, Germany
and the United States
to reduce dependence on British rubber. All three countries were trying to develop methods of manufacturing synthetic rubber, and the United States Rubber Company
began producing natural rubber in Sumatra
in 1910. However, synthetic rubber was not yet practical, and natural rubber sources develop rather slowly (rubber trees must grow for six or seven years before they are productive).
Between 1914 and 1922, natural rubber prices fluctuated between $0.115 and $1.02 per pound for several reasons. One reason is a blight that affected rubber trees in Brazil
that reduced productivity and caused British and Dutch
rubber producers to start new plantations in Malaya
and in the Dutch East Indies
.
A second reason was that after the 1917 October Revolution
, Russia renewed its effort to make synthetic rubber as part of two projects: 1) Project Bogatyr in which rubber is made from ethyl alcohol, and 2) Project Treugolnik in which the feedstock is petroleum. These projects succeeded in reducing Russian demand for British rubber.
A third reason is that during World War I
(1914-1918), demand for rubber was high resulting in new sources of rubber being developed. Following the War, demand for rubber diminished, creating a glut of rubber on the market and very low prices. The world became keenly aware of the importance of a stable supply of rubber for containing and initiating a modern war.
, Winston Churchill
, for help. Churchill initiated a committee of inquiry, the Rubber Investigation Committee, consisting primarily of Association members and chaired by Sir James Stevenson
, to come up a plan to stabilize rubber prices. The committee came up with the Stevenson Plan which would stabilize prices by limiting the tonnage of rubber exported. The plan was enacted by the governments of Ceylon
and British Malaya
. The Federal Legislative Council
of the Federated Malay States
passed the Export of Rubber (Restriction) Enactment in October 1922, to take effect on November 1st.
, and needed to have a profitable rubber industry. The Dutch refused to go along with the plan out of a philosophical reluctance to regulate their industry and because they would profit from a unilateral action by the British. In the United States tiremaker Harvey Firestone
reacted angrily to the act as did Secretary of Commerce Herbert Hoover
.
By 1925 high prices resulting from the Stevenson Act were beginning to threaten the "American way of life", so Hoover informed the British that if the Stevenson Plan stayed in effect, the United States would try to protect itself in any way it could. DuPont
, under the direction of Elmer Keiser Bolton
had been working on synthetic rubber since 1920. Thomas Edison, along with several tire companies, was trying to create American-based rubber production, but with little success. By 1928, the Stevenson Act was repealed, but not after expanding Dutch rubber plantations had successfully captured most of the rubber market in the United States.
in the 1930s lowered demand for rubber, and again rubber prices plunged. Rubber producers once again turned to regulation to maintain prices. This time it was done under the auspices of the International Rubber Regulation Agreement
which was signed by all major rubber producing countries. This law succeeded in governing the price of rubber to the satisfaction of producers and most consumers. However, Japan
was a consumer of rubber in the 1930s, using rubber to support its war effort in Manchuria
and China
, and its leaders were not happy with the price of rubber. This was one of the provocations said to motivate the Japanese to the attack on Pearl Harbor
and the United States entry into World War II
.
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...
government to stabilize low rubber prices resulting from a glut of rubber following World War I
World 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...
.
Background
In the early 1900s, increased reliance on the automobile and the use of rubber in common products such as boots were driving demand for rubber. At that time rubberRubber
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...
was made from naturally occurring latex
Latex
Latex is the stable dispersion of polymer microparticles in an aqueous medium. Latexes may be natural or synthetic.Latex as found in nature is a milky fluid found in 10% of all flowering plants . It is a complex emulsion consisting of proteins, alkaloids, starches, sugars, oils, tannins, resins,...
which is found in the sap of certain plants. These plants form a section of the Family Asteraceae
Asteraceae
The Asteraceae or Compositae , is an exceedingly large and widespread family of vascular plants. The group has more than 22,750 currently accepted species, spread across 1620 genera and 12 subfamilies...
called Cichorieae
Cichorieae
Cichorieae is a tribe of plants in the family Asteraceae that includes 100 genera and more than 1,600 species. They are found primarily in temperate regions of the Eastern Hemisphere....
. The most useful of the Cichorieae for latex production is the rubber tree, whose cultivation is restricted to tropical climates. At this time about 75% of rubber was controlled by British corporations, spurring efforts in Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
to reduce dependence on British rubber. All three countries were trying to develop methods of manufacturing synthetic rubber, and the United States Rubber Company
United States Rubber Company
The United States Rubber Company was founded in Naugatuck, Connecticut in 1892. It was one of the original 12 stocks in the Dow Jones Industrial Average, and became Uniroyal Inc...
began producing natural rubber in Sumatra
Sumatra
Sumatra is an island in western Indonesia, westernmost of the Sunda Islands. It is the largest island entirely in Indonesia , and the sixth largest island in the world at 473,481 km2 with a population of 50,365,538...
in 1910. However, synthetic rubber was not yet practical, and natural rubber sources develop rather slowly (rubber trees must grow for six or seven years before they are productive).
Between 1914 and 1922, natural rubber prices fluctuated between $0.115 and $1.02 per pound for several reasons. One reason is a blight that affected rubber trees in Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
that reduced productivity and caused British and Dutch
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...
rubber producers to start new plantations in Malaya
British Malaya
British Malaya loosely described a set of states on the Malay Peninsula and the Island of Singapore that were brought under British control between the 18th and the 20th centuries...
and in the Dutch East Indies
Dutch East Indies
The Dutch East Indies was a Dutch colony that became modern Indonesia following World War II. It was formed from the nationalised colonies of the Dutch East India Company, which came under the administration of the Netherlands government in 1800....
.
A second reason was that after the 1917 October Revolution
October Revolution
The October Revolution , also known as the Great October Socialist Revolution , Red October, the October Uprising or the Bolshevik Revolution, was a political revolution and a part of the Russian Revolution of 1917...
, Russia renewed its effort to make synthetic rubber as part of two projects: 1) Project Bogatyr in which rubber is made from ethyl alcohol, and 2) Project Treugolnik in which the feedstock is petroleum. These projects succeeded in reducing Russian demand for British rubber.
A third reason is that during World War I
World 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...
(1914-1918), demand for rubber was high resulting in new sources of rubber being developed. Following the War, demand for rubber diminished, creating a glut of rubber on the market and very low prices. The world became keenly aware of the importance of a stable supply of rubber for containing and initiating a modern war.
The plan
Around 1920 the British Rubber Growers Association turned to then Secretary of State for the ColoniesSecretary of State for the Colonies
The Secretary of State for the Colonies or Colonial Secretary was the British Cabinet minister in charge of managing the United Kingdom's various colonial dependencies....
, Winston Churchill
Winston Churchill
Sir Winston Leonard Spencer-Churchill, was a predominantly Conservative British politician and statesman known for his leadership of the United Kingdom during the Second World War. He is widely regarded as one of the greatest wartime leaders of the century and served as Prime Minister twice...
, for help. Churchill initiated a committee of inquiry, the Rubber Investigation Committee, consisting primarily of Association members and chaired by Sir James Stevenson
James Stevenson, 1st Baron Stevenson
James Stevenson, 1st Baron Stevenson , known as Sir James Stevenson, Bt, between 1917 and 1924, was a British businessman and civil servant.-Education:Stevenson was educated at the Kilmarnock Academy...
, to come up a plan to stabilize rubber prices. The committee came up with the Stevenson Plan which would stabilize prices by limiting the tonnage of rubber exported. The plan was enacted by the governments of Ceylon
Sri Lanka
Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka is a country off the southern coast of the Indian subcontinent. Known until 1972 as Ceylon , Sri Lanka is an island surrounded by the Indian Ocean, the Gulf of Mannar and the Palk Strait, and lies in the vicinity of India and the...
and British Malaya
British Malaya
British Malaya loosely described a set of states on the Malay Peninsula and the Island of Singapore that were brought under British control between the 18th and the 20th centuries...
. The Federal Legislative Council
Federal Legislative Council
The Federal Legislative Council was the legislative body of the Federation of Malaya and the predecessor of the Malaysian Parliament. It was formed in 1948 after the abolition of the Malayan Union and the formation of the Federation, as part of the United Kingdom's promise to grant self-rule to...
of the Federated Malay States
Federated Malay States
The Federated Malay States was a federation of four protected states in the Malay Peninsula—Selangor, Perak, Negeri Sembilan and Pahang—established by the British government in 1895, which lasted until 1946, when they, together with the Straits Settlements and the Unfederated Malay...
passed the Export of Rubber (Restriction) Enactment in October 1922, to take effect on November 1st.
The outcome
In 1922, British interests controlled about 75% of rubber production and the United States consumed about 75% of the rubber produced. The British were still paying war debt to the United States following 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...
, and needed to have a profitable rubber industry. The Dutch refused to go along with the plan out of a philosophical reluctance to regulate their industry and because they would profit from a unilateral action by the British. In the United States tiremaker 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:...
reacted angrily to the act as did Secretary of Commerce Herbert Hoover
Herbert Hoover
Herbert Clark Hoover was the 31st President of the United States . Hoover was originally a professional mining engineer and author. As the United States Secretary of Commerce in the 1920s under Presidents Warren Harding and Calvin Coolidge, he promoted partnerships between government and business...
.
By 1925 high prices resulting from the Stevenson Act were beginning to threaten the "American way of life", so Hoover informed the British that if the Stevenson Plan stayed in effect, the United States would try to protect itself in any way it could. DuPont
DuPont
E. I. du Pont de Nemours and Company , commonly referred to as DuPont, is an American chemical company that was founded in July 1802 as a gunpowder mill by Eleuthère Irénée du Pont. DuPont was the world's third largest chemical company based on market capitalization and ninth based on revenue in 2009...
, under the direction of Elmer Keiser Bolton
Elmer Keiser Bolton
Elmer Keiser Bolton was an American chemist and research director for DuPont, notable for his role in developing neoprene and directing the research that led to the discovery of nylon.- Personal life :...
had been working on synthetic rubber since 1920. Thomas Edison, along with several tire companies, was trying to create American-based rubber production, but with little success. By 1928, the Stevenson Act was repealed, but not after expanding Dutch rubber plantations had successfully captured most of the rubber market in the United States.
Conclusion
Tired of regulation, rubber producers returned control of rubber prices to the "free market" (it is difficult to describe the market as "free" when British government-subsidized concerns held a 75% share of the primary capital resource). That worked well until the Great DepressionGreat 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...
in the 1930s lowered demand for rubber, and again rubber prices plunged. Rubber producers once again turned to regulation to maintain prices. This time it was done under the auspices of the International Rubber Regulation Agreement
International Rubber Regulation Agreement
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.-Background:Demand...
which was signed by all major rubber producing countries. This law succeeded in governing the price of rubber to the satisfaction of producers and most consumers. However, 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...
was a consumer of rubber in the 1930s, using rubber to support its war effort in Manchuria
Manchuria
Manchuria is a historical name given to a large geographic region in northeast Asia. Depending on the definition of its extent, Manchuria usually falls entirely within the People's Republic of China, or is sometimes divided between China and Russia. The region is commonly referred to as Northeast...
and China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, and its leaders were not happy with the price of rubber. This was one of the provocations said to motivate the Japanese to the attack on Pearl Harbor
Pearl Harbor
Pearl Harbor, known to Hawaiians as Puuloa, is a lagoon harbor on the island of Oahu, Hawaii, west of Honolulu. Much of the harbor and surrounding lands is a United States Navy deep-water naval base. It is also the headquarters of the U.S. Pacific Fleet...
and the United States entry into World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
.