Institute of Pacific Relations

Record Output of Petroleum in Netherlands IndiaAuthor(s): Alvin BarberSource: Far Eastern Survey, Vol. 8, No. 11 (May 24, 1939), pp. 130-131Published by: Institute of Pacific RelationsStable URL: http://www.jstor.org/stable/3022386 .

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130 Record Output of Petroleum in Netherlands India May 24

of the agreement countries. Other producers exporting even smaller amounts

than the French colony are subject to highly restrictive

quotas, but there is no limit to the permissible exports of this producer. The only requirement as far as ex?

ports are concerned is that a portion of any exports in excess of 60,000 tons a year during the life of the

agreement must be delivered to the International Rub? ber Regulation Committee. The colony has, however, agreed not to increase the planted areas at a faster rate than that permitted the quota countries. This means that after the area now planted reaches its maximum

output the rate of growth can not be maintained in-

definitely, though the total production and the volume of exports can be increased at least in proportion to the permissible increase in the planted acreage even after maximum output from present plantings has been reached. But as the maximum production will not be reached in the immediate future, exports will probably continue to increase for some time.

This development is not the result of pure chance. After a careful survey of the possibilities in the early twenties, the French Michelin Tire Co. decided that the

colony offered good possibilities for rubber production. It began serious development work in 1926-27, and by 1929 the area was exporting rubber equivalent in vol? ume to over 21% of the net French imports. This success aroused the interest of the French Government, and arrangements were made to subsidize further devel?

opment work. In March 1931 an import tax was levied on all rubber imported into France, and the proceeds were used to meet the costs of this subsidy. By 1934 rubber production in Indo-China was on such a firm and profitable basis that the French Government was able to withdraw the subsidy without slowing up the rate of growth. In fact, while it took four years of subsidies to double the 1930 volume of exports, the

industry had become so firmly established by 1934 that it took only two more years after the subsidy was with- drawn to double the export volume again. It is claimed, as evidence of the scientific methods used in developing the rubber industry in the colony, that a larger propor? tion of grafted buds is to be found among the rubber trees of Indo-China than among those of any other

important producing country, and that this growth has been no temporary affair secured by overtapping but

represents the output of healthy trees which have been well taken care of. The figures published by the I.R.R.C. indicate that by 1938 the rubber exports of the colony had reached a volume equal to that of the

net imports of crude rubber into France and suggest that they now probably exceed the domestic absorption of the mother country.

The position of France as a sizable importer of rub?

ber has been a major factor in making possible this

rapid growth. It is the principal reason why no serious

effort has been made on the part of the I.R.R.C. to

secure an agreement to limit production, despite the

fact that such agreements have been secured from other

countries producing even smaller amounts. The French

Government has always been able to point out that

France and its colony, taken together, have been net

importers, and that even now, when the production of

the colony has begun to equal the consumption of the

mother country, the volume of net exports is very small in terms of world exports and particularly small when

compared to the net exports of Netherlands-Nether- lands India. Total exports of Netherlands India less

net imports of Holland in 1938, for instance, were over

293,000 long tons, as against practically no net exports, or possibly even a small volume of net imports, for

France plus French Indo-China. As far as world demand is concerned, it makes no

difference that Indo-China happens to be a dependency of France, but as far as bargaining power is concerned, it makes a great difference. The exports of the colony

go into the world markets, just as they would if the

colony were an independent country. Whether addi- tional quantities of rubber are thrown on the market

by colonies or by countries, it is necessary for the

quota countries either to reduce their exports by amounts equal to the exports of the colonies or to

accept a reduction in the world price. And the exports of Indo-China have made necessary a reduction in per- missible exports of about 6% more than would have been required if the output of the colony had been kept at 1929 levels. With permissible exports during the first six months of 1939 at the lowest ratio to quotas for this

period of the year in many years, this curtailment hits the quota countries particularly hard. Nor is there any

hope that the end is in sight. The only hope lies in the fact that, probably because of military necessity, new

plantings are restricted, and most of the increase in

exports in the future will be the result of increased

yields of trees already planted. But for some time to

come, other countries must make even larger allowances for the output of the French colony, when they adjust their output each quarter, than they have had to make in the past.

Robinson Newcomb.

RECORD OUTPUT OF PETROLEUM IN NETHERLANDS INDIA

Crude oil production in Netherlands India reached a record high in 1938, amounting to 7,398,586 metric tons on preliminary figures. This represents a gain of

about 2% over the previous high of 7,263,481 metric tons in 1937. In barrels, the yearly totals stand at ap? proximately 57,481,000 for 1938 against 56,724,000 for

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1939 Washington Works on Barter Scheme 131

1937. While petroleum production in Netherlands India continued its upward trend, world production declined approximately 3%, a drop accounted for by diminished output in the United States and Mexico. Netherlands India retained its place as the fifth rank-

ing producer among countries of the world, following the United States, the Soviet Union, Venezuela and Iran in that order. Its share of world production, however, remained small, amounting to only 3%.

Exports of petroleum products from Netherlands India manifested the same trend as production and at the year's end, aided by large shipments in the last

quarter, were about 2% above the level of 1937 when

5,868,000 metric tons (valued at 165.2 million guilders) were exported. Through September, direct exports of

heavy Tarakan crude oil to Japan were less than half of shipments in the same period of the previous year, amounting to 984,000 barrels against 1,988,000 barrels in January-September, 1937. With the exception of the Tarakan crude, practically all the petroleum produced in Netherlands India is refined near the producing fields. As in earlier years, the greatest export of refined

petroleum products in 1938 passed through Singapore, Poloe Samboe and Poloe Bintan (Riouw). Beyond these transshipment points it is virtually impossible to trace the course of exports accurately. Direct ship? ments of fuel oil, gas oil and diesel oil to Australia and

New Zealand increased during the first nine months of 1938 over the January-September period in 1937, but

exports of gasoline and other products to these import? ant markets decreased in the same or greater propor- tions. Shipments to China, which normally obtains its

principal supply of motor fuels, kerosene and fuel oil from Netherlands India, showed decreases all along the line. (See "The Play of Petroleum Forces in the Far

East," Far Eastern Survey, Sept. 7,1938.)

During the past year the question of oil reserves in

Netherlands India became more pressing. Many of the

present producing fields have passed their peak and, although all companies have conducted extensive explo- rations in the vast areas covered by their concessions, the results have been termed unsatisfactory. It is now

reported that the conviction is growing that Nether? lands India has no great petroleum reserves and the

opinion is expressed that, unless New Guinea provides new sources of supply (see Far Eastern Survey, Apr. 20, 1938, p. 91), a drop in production can be anticipated within the next several years. Similar pessimistic re?

ports in regard to petroleum reserves of other countries, however, have so of ten been followed by important new discoveries that it might be wise not to conclude too

hastily that the old Dutch areas are in serious danger of exhaustion.

Alvin Barber.

WASHINGTON WORKS ON BARTER SCHEME

The intergovernmental barter scheme put forward

by Administration spokesmen in Washington early in

April is now the subject of international negotiation. The proposal centers around the accumulation of war reserves of tin and rubber in the United States by ship? ping abroad surplus stocks of American cotton and wheat for a similar purpose in England, France, the

Netherlands, and Belgium. On April 24 Ambassador

Joseph P. Kennedy opened talks in London with the British Government, which announced two weeks later that it accepted the principle of the transaction. Nego- tiations with other governments are proceeding as well.

For the United States the advantages of such a

swapping agreement are apparent. Her major sources of rubber and tin are thousands of miles away in Neth? erlands India, British Malaya, Siam and French Indo- China. Southeast Asia accounted for two thirds of the world's output of tin last year and for virtually the entire output of rubber. A general war interrupting communications with the Far East and Europe would threaten at least a temporary shortage of these basic commodities. Shipping facilities would doubtless be at a premium; American vessels might run the risk of attack and perhaps require convoys and patrols; and the United States would be exposed to pressure from

belligerent governments controlling the materials it

urgently needed. Such risks, it is believed, might be

reduced, or even eliminated, by the prudent building up of stock piles sufficient to cover American needs through the period of adjustment (see "The United States and Southeast Asia's Strategic Products," Far Eastern

Survey, Apr. 12, 1939). Accordingly, as international tension has gathered this spring, various proposals have been put forward in Washington.

One approach is represented in bills which have now

passed the House and Senate authorizing the expendi? ture of some millions by the Army and Navy for the

purchase and storage of strategic materials in which the United States is deficient. More widely publicized, however, is this barter plan put forward by Senator

James F. Byrnes and endorsed by the Administration. It has dramatic flavor, for one thing; but aside from that it is politically strategic, for it combines the appeal of national defense with relief for hard-pressed cotton and wheat farmers. According to the plan, the Ameri? can payment for foreign rubber and tin stocks would take the form of cotton and wheat supplies now held by the government in huge quantities. The participating governments would agree upon the volume bartered, the

price at which the exchange should take place, and the terms under which stocks might be disposed of. Each would hold its reserve off the market, storing it against

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