been developed, to help this important primary industry to preserve intact its productive capacity. The trained labor forces on the estates had been recruited from distant countries, and their impending repatriation on a large scale would have thrown out of gear the whole mechanism of production for a long time. On tropical estates neglect of upkeep means the rapid encroachment of rank vegetation, and the subsequent reclamation of estates which had been abandoned would have been possible only at heavy cost, after the price of rubber had been for some time at a figure high enough to warrant the necessary outlay. In fact there would have been a wanton sacrifice of many years' laborious human effort, and of one of the best achievements of our generation.

Fortunately, action was taken before it was too late, not merely in the interest of producers, but for the benefit of the whole world, which depends on this industry for regular supplies of this essential raw material. The "Stevenson plan", intended to coördinate supplies and prices, was then adopted, and it was entirely in harmony with the economic law of supply and demand, inasmuch as it provided that unless the users of rubber were prepared to pay in the open market a price for the commodity sufficient to keep the plantation industry in a solvent condition, supplies of new rubber would be withheld on a graduated scale. The human factor came into play soon after legislation to this effect had become operative in Malaya and Ceylon in November, 1922. Manufacturers in the United States were very optimistic about the rapid increase in their need of rubber, and as a member of a delegation from the Rubber Growers' Association in London to the Rubber Association of America I spent some time while there endeavoring to convince manufacturers that under the Stevenson plan there would be sufficient rubber to satisfy their requirements, provided they saw to it that the price was kept above the pivotal price of thirty to thirty-six cents on which additional export releases depended.

The agitation in America at that time was the direct cause of encouraging substantial buying of rubber by speculators, who unloaded later in the year at a heavy loss to themselves and to those same manufacturers who, in the early part of 1923, were so concerned about an imminent shortage. When the manufacturers

found, as we had told them, that there was no difficulty in buying all the rubber they needed, they virtually forgot all about the Stevenson scheme and their obligations under it; the fact being that as long as a commodity can be bought easily, the future is left to take care of itself. In the face of a steady diminution in world stocks of crude rubber, the average price in the three months of May, June and July, 1924, was less than twenty-two cents a pound, and the origin of the subsequent high price in 1925 must be attributed directly to insufficient buying during the second half of 1924. Even in January, 1925, manufacturers failed to protect their own interests by keener buying to ensure the maximum release. A contributory reason for this error of judgment is to be found in the policy of hand-to-mouth buying, which has been so strongly encouraged by American bankers, and it is obvious that such a policy, while minimizing risks in one direction, opens up the possibility of trouble in others.

In these days of speculation it is bad business to attempt by public agitation to undo the consequences of a wrong buying policy, as that is a direct inducement to speculators to come into the market on the "bull" side. It is now established beyond question that the extreme agitation about rubber during 1925 had the effect of encouraging tire dealers and automobilists to believe that tires must continue to advance in price, and to buy in excess of immediate requirements, thus further accentuating the demand on the available supplies of rubber. A reaction was bound to come, but I venture to assert that much less harm would have been done if there had been no such publicity.

In the course of 1926 world stocks of crude rubber increased to a figure which is more in keeping with the needs of the industry, but there has recently been a growing tendency to view these stocks as a burden instead of a boon. All those who have the welfare of the rubber and automobile industries at heart must, however, hail as a step in the right direction the establishment of a substantial fund of American capital to be used for the carrying of a "cushion" stock of rubber, which, if handled with discretion, should tend to eliminate some of the fluctuations in prices which are so detrimental to the best interests of the industry and of the consuming public. The Stevenson plan was explicitly designed

to put into the hands of the buyers the power of attaining greater stability in market prices. The opportunities it afforded were not sufficiently appreciated, but it is sincerely to be hoped that the lessons of the last two years have been learned, and that the cushion" stock will be administered with sound judgment, taking a long view and not a short one.

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It is well that the automotive industry is associated with the rubber manufacturers in this important project, because the firstnamed is really part of the rubber industry in its large sense. Serious mistakes in the handling of the situation from time to time can be averted only if all component parts of the industry are reasonably well informed in regard to the salient factors which govern demand as well as supply. The acute depression which has overtaken the sugar and cotton producing industries as a result of over-production is a reminder that the economic system of the world is still far from perfect. "Stability" in commodity values is at best only a relative term, and whereas in the case of crops, which are the result of annual or biennial planting, overproduction can be corrected in the course of one or at most two seasons, there is naturally much greater difficulty in adjusting supply to demand in the case of rubber, where six or seven years elapse after planting before you get any appreciable crop, and ten years before the trees are really at capacity.

It is essential to this industry, therefore, that long views shall be taken, and these necessarily involve large amounts of capital. The record of the rubber manufacturing companies, owing to excessively keen competition, is one of small profit margins, but all the time the users of tires have been amazingly well served, and today tire mileage is one of the cheapest of commodities. Larger stocks of ready rubber should be accumulated and carried to provide for further expansion of the industry, which can be confidently predicted at any rate in the rest of the world, apart from the United States of America.

TURMOIL ON THE YANGTSE: A JAPANESE

VIEW

BY K. K. KAWAKAMI

CANTON, long a retreat of "pink" idealists and "red" mountebanks, of honest patriots and scheming fire-eaters, has startled the world, much as a thunderclap out of the blue, by a sudden and unexpected sortie into the rich Yangtse Valley five hundred miles away. Its repercussion has been immediate and far reaching, as the Yangtse is the greatest artery of international trade in China, with enormous foreign, especially British, capital invested in the vast territory along its course. So profound has been the impression made upon the Powers by the spectacular military successes of the Cantonese expedition that they have been compelled to readjust their attitude toward a Government which they have for years denounced as Bolshevik or at best ridiculed as a castle in the air.

Canton's hostility toward Peking goes back to the very beginning of the Republic, when Yuan Shi-kai, leader of the northern militarists, snatched the fruits of the revolution from the hands of Dr. Sun Yat-sen, idol of the Cantonese and the logical man to be the first President of China. Toward the end of 1911, when the revolution was still aflame on the Yangtse, the Provisional Assembly at Nanking acclaimed Dr. Sun as President. At the same time Yuan Shi-kai, shrewd, ambitious, heir to the imperial traditions of the Manchu dynasty, was firmly ensconced at Peking and showed no intention of relinquishing his power. It was a far cry from Nanking to Peking, and the revolutionists, militarily unorganized and financially exhausted, could not follow up their initial victory with an expedition to the northern capital. They knew that unless Yuan was won over to their side by some peaceful means the country could not be unified. In the interest of national welfare, Dr. Sun resigned the Presidency and offered the honor to Yuan Shi-kai, who accepted it with alacrity, if with feigned modesty. As a safeguard against Yuan's imperialistic

aspirations the Republicans proposed that Nanking be made the seat of the new Government, and that the President-elect take office there instead of at Peking. The reason was obvious. Nanking was the centre of the revolutionary movement, Peking the haunts of imperialism. Could Yuan Shi-kai only be persuaded to come to Nanking, his dictatorial ambitions, the Republicans believed, would be curbed. But Yuan proved more than their equal in strategy. He declined to budge, and inaugurated himself as President at Peking in March, 1912. Defeated in their first manoeuvres, Dr. Sun and his followers devised a second line of defense in the shape of a Constitution conceived to forestall the arbitrary measures which they knew Yuan would adopt. The Constitution conferred upon the Legislature power to elect President and Vice-President, to approve or reject foreign treaties and foreign loans, to pass upon the appointment or dismissal of Cabinet officials made by the President, and to impeach the President. The resourceful Yuan was fully aware of the motives of such provisions, and accepted the Constitution with no intention of observing it.

The upshot of it all was that Dr. Sun, his Nationalist Party, and the Constitution were reduced to nonentity at Yuan's hands. Again Dr. Sun took to the path of revolution, keenly conscious of the blunder he had committed in compromising with Yuan Shi-kai. In 1913 and 1915 his followers made unsuccessful attempts to start uprisings in the South. When President Yuan died in June, 1916, the long-awaited opportunity of the Nationalists seemed at last to have come. Dr. Sun, with a fleet of warships whose commanders were in sympathy with him, left Shanghai that summer and organized at Canton a Government of his own-a Government which for ten years stood its ground against the intermittent assaults of the northern militarists.

From Canton's point of view, therefore, the revolution which started in the winter of 1911 is not yet ended. It regards as a usurper whatever Government is set up at Peking under the protection of this or that militarist. It does not recognize foreign treaties and obligations contracted by such governments. Even the International Tariff Conference, for which the United States was largely responsible, Canton looked upon as a gratuitous un