THE RUBBER BOOM
The boom was a very big gamble, in which men and women of all classes
and nationalities took part. The great game was to buy shares, which
is to say, partnerships, in companies that went in for rubber-growing,
and to sell them within a few hours, or days, at a profit. The game
was played with great success by many people for several weeks. Two or
three examples will show you in plain figures how fortune-making was
possible.
At the beginning of the boom, the value of shares in a certain rubber
company was 19s. each; during the boom the great demand for these
shares forced their exchange price up to 70s. each. Suppose, therefore,
someone had bought 4,000 of them at the 19s. price; if he was lucky
enough, or smart enough, to sell them when they were fetching 70s.
each, he would clear, roughly, about £10,000, after paying commission
to a member of the Stock Exchange whom he had to employ to carry out
the deal for him. Again, on a certain night shares in another company
were selling at 27s. each. The next morning some favourable remarks
about this company’s rubber plantations appeared in the newspapers, and
so anxious were people to get shares in the concern that they at once
offered 35s. apiece for them. Therefore, people who had bought these
shares during the previous afternoon had the chance of selling them at
a profit of 8s. apiece within a few hours.
Under ordinary conditions, people buy shares with a view to holding
them, and receiving a proportion of the profits made by the enterprise
in which they have taken a partnership. During the Rubber Boom, no one
bought shares with this idea. The game, as I have told you, was to buy
at to-day’s price, utterly regardless of whether it was a fancy figure,
and trust to luck that very soon there would be some other people so
anxious to get the shares that they would be willing to give a much
bigger price for them.
The Boom provided a fine opportunity for cheating, of which some
people took advantage. The public were invited to buy so-called rubber
plantations, that were mere tracts of jungle. And genuine plantations
were offered to them for a sum much above their value. No one made
any inquiries as to what he was buying--all that anyone wanted at the
moment was a piece of paper which set forth that he was the owner of
some rubber shares, so that he could sell his rights to someone else at
a profit. But on the whole, seeing how big was the chance for cheating,
the public were not made victims by many unscrupulous folk. They were
their own worst enemies during the boom, for by their mad eagerness to
gamble in rubber shares, they forced up the price of shares in the many
thoroughly genuine plantations to a value that was out of proportion to
the profits which could be made on the rubber produced--at any rate,
for some time to come.
Of course, the day came at last when the public began to feel they were
playing a reckless game. Newspapers were warning them of the risks they
were running; rumours were abroad that certain shares were not worth a
penny, since they represented partnership rights in land which had not
been cleared of jungle, let alone planted up with a single rubber-tree;
hints were going round that the rubber-trees on some of the genuine
plantations were being overtapped in order that for the moment big
profits should be made at any cost, to compare well with the present
high price of shares. People saw themselves losing heavily, sooner
or later, if their shares were left on their hands. Now everyone was
feverishly anxious to sell, and hardly anyone wanted to buy. Prices
which had risen so rapidly went down with a slump even more rapidly.
More fortunes were lost in that Slump than were made during the Boom,
and some of the folk who were most badly hit in the end were people
who had won large sums at the beginning of the game, and had thus been
tempted to go on playing more and more recklessly.
Among the few who profited in the long-run were men who had pinned
their faith to plantation rubber long before the Boom. Some of them
had brought the rubber plantations into existence, had worked hard at
clearing jungle and planting rubber-trees, had struggled to pay their
way whilst they brought up those trees to producing stage, in the days
when the public would not have risked a penny on any such hazardous
venture as rubber-growing, even if they had been wide awake enough to
know that a few enthusiasts and a few hard-up planters were trying
to establish this new branch of agriculture. When these men had been
obliged to get a few friends to help them turn their property into a
partnership concern, because they wanted ready money to go on with,
they had taken some of the purchase price of their property in the
form of shares, so that they themselves could be partners. Fortunes
were also cleared by outsiders who had had enough faith in plantation
rubber to buy shares when the earliest planted estates were turned into
companies, for all the people who had taken over or bought shares for
a small sum were able to sell their partnership rights at a big profit
in the early days of Boom. Many of them bought back shares when prices
fell, and bargain after bargain was picked up during the Slump by
people who knew which companies possessed the best plantations.
You must not imagine that the crash put an end to rubber-growing. True,
the faith of the public in this industry had been roughly shaken at
the critical time when that faith was just beginning to bud; but the
industry was sufficiently well-established to withstand this check, and
go on fighting to attain its main object--to become more popular than
Wild Rubber with the manufacturer.