British hegemony and restrictions on rubber supply after World War I and competing interests in the United States auto industry

Abstract

In the late 19th century, British brought rubber from Brazil and planted it in the British Malaya resulting in Southeast Asia becoming the world's largest source of rubber raw materials in the early 20^th century. Prio to this, the European and American automobile industries relied on natural rubber from Brazil. Later, in the early 20^th century, the European and American automobile industries expanded, thus the British foresaw the opportunity for profits from this type of economic crop. Therefore, a large numbers of rubber cultivation had been promoted in their colonies. However, following World War I, rubber was oversupplied leading to the price falling as the automobile industry in Europe suffered greatly during World War I. On the contrary, the automobile manufacturing industry in the United States was growing and expanding. During that time, the US automobile industry was a major consumer of 75% of rubber raw materials from the British colonies. The US automobile industry benefited from rubber oversupply and was considered as the raw materials security that supplied the automobile industry of the United States. The fallen rubber price causing the British and colonial government to issue the Stevenson Restriction to control rubber export, hence, the US auto industry had a conflict of interests between the automobile industry and rubber raw material producers. Then, Ford Motor Company, invested in planting 2.5 million acres of rubber in Brazil, and Harvey S. Firestone invested in Liberia about 1. million acres. By investing in large-scale rubber plantations, neither the Ford Motor Company nor Harvey S. Firestone was successful in growing rubber as they encountered a great deal of management obstacles. This was different from rubber plantations in Malayan colonies that had the characteristics of a partnership; sharing business interests with local Chinese merchants.