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At the end of 1924 the percentage had fallen to 50, inducing a severe 
shortage of rubber in 1925 when, as will be explained below, an un- 
expected increased demand for rubber materialised. A modification of the 
scheme was introduced later whereby, whatever the price, the minimum 
percentage for export was fixed at 60 per cent. standard production. 
The United States and the restriction scheme. 
The scheme met with very adverse criticism in the United States, although 
American manufacturing interests had been strongly urging price stability. 
Stability round about 1s. 3d. a lb. could possibly have been achieved if they 
had regulated their buying policy in accordance with the provisions of the 
scheme. 1s. 8d. was a price that did not give very much profit to the 
growers, but the manufacturers, who, two years before, had been willing 
to pay 2s. 6d. and 3s, a lb. for long forward contracts, decided, soon after 
the restriction scheme was imposed, to buy ** from hand to mouth.” Manu- 
facturers, especially in the United States, did not expect that the scheme 
would be adopted, and, when it was brought into force on the 1st November, 
1922, they were short of rubber. This gave an opportunity to the speculator, 
ind three months after the scheme came into operation, the price was 
carried up to 1s. 7d. a lb. Thereafter the price fell and manufacturers 
zenerally neglected to cover their forward requirements even when the 
price was as low as ls. a lb. in the last half of 1924 resulting in the reduc- 
tion of the quota for the last quarter to 50 per cent. 
The effect of the low-pressure tyre. 
In 1925 came the new low-pressure tyre. The demand for this type of 
tyre has increased rapidly. To-day about 70 per cent. of the tyres made in 
America are low-pressure tyres, while in 1925 they were only about 12-14 
per cent. Manufacturers, in 1925, realised that this tyre would become 
immensely popular—as it is a better shock-absorber, and lengthens the life 
of the car—but it then required on the average 2 lbs. more rubber for 
each tyre. The effect of the new demand for low-pressure tyres was to 
increase the demand for rubber without affecting the demand for tyres. 
In 1925 the price of rubber rose from 1s. 6d. in January to 4s. 8d. in June, 
fell to about 3s. 6d. and then rose to 4s. 8d. in December. From February, 
1926, to the end of that year exports at full standard production were 
permitted. From May, 1927, to November, 1928, when the restriction 
scheme was removed, the percentage of standard production exported 
remained at 60. 
Effects of the violent price-fluctuations in 1925, ' 
The violent price-fluctuations in 1925 were not goed for the industry. 
Producers did not want them, Tyre manufacturers put up prices in greater 
proportion than the increase in the price of rubber, and 1925 was one of 
the most prosperous years for them. But American manufacturers were 
convinced that a shortage was coming. They were buying forward into 
1926 at prices round about 4s. a lb. The price, however, dropped from 
4s. 8d. in December, 1925, to 1s. 9d. in June, 1926. That entailed enormous 
losses to the manufacturers. In the shortage scare of 1925, many American 
purchasers had bought spare tyres, so that in addition, the demand for 
tyres in the first half of 1926 also declined. . Manufacturers ceased buying 
rubber and used their stocks. The price fell to 1s. 9d. The scheme was 
recast in April, 1926, and the pivotal price raised to. Is. 9d.—mainly to 
help the manufacturers over a very bad time. But even then people had 
the idea that the slump was only temporary, and that prices would rise 
again to 2s. and Zs. 6d. a lb. That again proved to be wrong, owing to 
several factors. ‘There was intense economy propaganda in the United