Over-Production

"America has already given us that perfection of methods of production. . . . Now we have reached a point where we dare hope . . . that American genius may be able to devise a definite formula which will allow this world to establish a more lasting and satisfactory balance between manufacturer and consumer. . . . For this last problem, as I see it, is the most important practical issue that faces the people of the year 1930." So last fortnight wrote Albert Einstein in a statement for the U. S. Press.

Even while learned Professor Einstein was formulating his statement, a learned U. S. attorney, Thomas Lincoln Chadbourne was in Brussels attempting to persuade the world's sugar-growers to adjust production to consumption (TIME, Dec. 15). Although he had previously succeeded in uniting Java growers with the Cubans, he failed to draw the European beet-sugar producers into the agreement. Just as the conference was drawing to a close, the powerful German delegation left Brussels, announced they could not conform to the schedule given them. Private negotiations will continue, for other nations have agreed to the restriction, contingent upon Germany's eventual consent. But for the present, sugar remains one of the commodities in which overproduction outrides profits.

Practically universal is the present condition of overproduction. Some of the suffering fields have made notable but unsuccessful attempts to save themselves.

Rubber. In 1922 the British Empire passed the famed Stevenson Act which restricted the export of rubber from British colonies. Although British exports were checked, Dutch competition grew more intense, more rubber trees matured in British territory. In 1928 the restriction was removed. Since then, "tapping holidays" have failed because of the lack of cooperation from native growers.

Rayon. More than 80% of the world's rayon production is controlled by a small, potent group. Members are confined to one specialty, underselling in foreign markets is prohibited. Yet last week the rayon group met in London, failed dismally to stabilize prices.

Wheat. The Canadian Wheat Pool was a full-fledged organization in 1924. It attempted to control world prices, failed. The Federal Farm Board, set up last year, has pegged the price of wheat in the U. S. but found no way of disposing of its surplus. The result may be transferring the loss from the farmers to all the taxpayers. To limit production in future, the Board has for months been urging, begging, warning U. S. farmers to plant less wheat, at least 15% less. Last week the Department of Agriculture reported a 1.1% acreage reduction in 1931 winter wheat. Meantime, the new Canadian crop is reported about 30% bigger than last year.

Petroleum. In 1924 President Coolidge appointed an oil conservation board, saying: "The supremacy of nations may be determined by the possession of available petroleum and its products. . . . Over- production in itself encourages cheapness, which in turn leads to wastefulness and disregard of essential values." Fear of anti-trust prosecution has retarded oil curtailment in the U. S. In certain states there seems no legal way to coerce small producers. The Federal Oil Conservation Board has suggested a six-day refinery week; the American Petroleum Institute since its organization in 1920 has championed curtailment; California's law prohibiting the waste of natural gas has been a way to force reduced production. Now many oilmen hope the conception of an oilfield as a mutually owned unit will be the solution. Production by Royal Dutch-Shell has increased overproduction, but Sir Henry Deterding stoutly maintains he has reduced his production in proportion to U. S. curtailment.

Steel. Last week the European Steel Cartel renewed itself, but has abandoned an ambitious program, will concentrate on settling Franco-German differences. In the U. S. steelmen cooperate as shown in the recent price raise (TIME, Dec. 15). The fact that most steel companies are completely integrated units is beneficial.

Copper. Many an effort has been made to stabilize the price of copper. Copper

Exporters, Inc. was formed in 1926 to fix the price of copper in Europe, and for a long time U. S. producers seemed to have a gentleman's agreement on price. In copper as in other U. S. industries, however, anti-trust laws prohibit definite price agreements. Copper producers now are attempting to curtail production, but the price was back last week to 10-c- after its recent jump from 9-c- to 12-c- (TIME, Nov. 24). The world copper situation is complicated by potential African production which may soon overbalance U. S. curtailment. Tin. Attempts to curb tin production have been hindered by the rivalry between Bolivia and the Far East, and the introduction of much modern equipment into the latter territory. In London last week the world's tin producers met, sought to limit production. Silver. An abrupt decline in silver has accompanied the drop in other metals, but this is due more to developments in the currency situation. Last week Irving Trust Co. blamed Great Britain for the drop in silver, saying it was caused by putting India on a gold standard. Causes? Great economists differ on the question of whether the World Depression was caused by the crash of U. S. stockmarkets, or whether the latter merely foresaw the business trend.* Similarly, an endless debate goes on concerning the problem of whether Over-Production was a cause of the Depression or has been merely accentuated by it. To industries already faced with Over-Production. the Depression has been an almost fatal blow. Oil consumption was nearing stability on a basis that allowed for an annual increase of 10%. The 1930 increase will be abnormal and the difference upsets all plans for stability. Too much competition seems to have been at the root of many cases of overproduction. Small competitors cannot afford to restrict output, prefer to sell by price-cutting. International competition has also been a major difficulty. And mechanical improvements have upset many an industry. Chadbourne. That smart Lawyer Chadbourne realizes sugar is in the same bowl with many another industry was shown in a speech he delivered at last week's Brussels meeting. "All industries," said he, "have transgressed good economic laws. . . . The capitalistic system is on trial. If you think the people who are running the industries of the world can by reason of this greed bring about such depressions as this and then not promptly take steps to mend them, no matter what the sacrifice to individuals may be, you are mistaken."

* Among those who blame Wall Street is Benito Mussolini (see p. 14).

This file is automatically generated by a robot program, so reader's discretion is required.