Herbert Hoover, Great Britain, and the Rubber Crisis, 1923-1926

Abstract

This paper examines the controversy arising out of Great Britain’s decision to implement the Stevenson plan. It examines, in particular, the role played by Herbert Hoover, both behind the scenes and in an effort to affect the repeal of the Stevenson scheme and at the same time to encourage and support the development of new sources of rubber under the control of American producers. During the period 1920-1922 rubber producing countries were confronted by the specter of overproduction. The existence of even a short term oversupply coupled with the business slump, a reaction from the war, led to a decline in the price of rubber. British producers succeeded in inducing the British Colonial authorities to support a scheme whereby rubber exports would be regulated in order to bring about an increase in the price of rubber. This plan, developed by the Stevenson Committee, called for a small minimum tax on all exports. Moreover, it soughtto limit production by establishing a quota based on the actual production of rubber during the 1919-1920 growing season. A progressive tax was applied to exports beyond standard production. American reaction to the scheme was varied. Secretary of Commerce Hoover, while publicly stating that the price of rubber had been low and was supportive of efforts to regulate production, behind the scenes showed a great deal of concern about the actions of the British government in regulating a commodity of which the United States was the single largest consumer. He was also linked, by some, to the idea that Great Britain sought to pay its war debt to the United States through the application of this tax. Much was made in American newspapers and the British press about Hoover’s criticism of British rubber restrictions. He was not opposed to regulating the supply of rubber, but only to the involvement of a government in the process, especially when it affected American producers and consumers. In response he proposed a scheme, supported by the government, to investigate the production of synthetic rubber, and the development of rubber plantations by American producers.