RUBBER rOMMFRCIAI. AND FINANflAI DFVFI OPA^FNT FROM THF TREE TO PAYMENT OF DIVIDENDS UPON' TMF. CAPITAL INVESTED W. E. SIMPSON The Wall Strehi Journai • Dow. .lotics ^ 4^0./ 42-44 Broad Stpfji, NEW Y(M.'K. RUBBER ITS COMMERCIAL AND FINANCIAL DEVELOPMENT FROM THE TREE TO PAYMENT OF DIVIDENDS UPON THE CAPITAL INVESTED — BY — Wl E. SIMPSON PUBLISHED BY The Wall Street Journal (Dowt Sones ^ CoJ 42-44 Broad Street, NEW YORK. OCTOBEP., 1900. 1 58867 Library of Concf^i^e ^wd Copies Keceiwc* OCT 5 1900 Cofy right entry SffONO COPV. Offtvered to OWOER DIVISION, OCT 18 1900 <% /^O \U;, \tN \xr CONTENTS. PART I— COMMERCIAL, CHAPTER I. HISTORICAL. Derivation of Names 1 First Commercial Rubber 1 Goodyear's Experiments '. 2 Discovery of Vulcanization 2 Earliest Manufacturers 2 Growth and Extent of Industry 8 CHAPTER H. CRUDE RUBBER. Indigenous Home of Rubber 4 Producing Localities 4 Stability of Supply 5 United States Source of Supply 5 Labor Situation 5 Methods of Procuring Rubber 6 Preparation for Market .. H Criide Rubber Statistics Crude Rubber Prices for 30 Years 7 Exports from Para 7 Consumption in United States S Preparation for Manufacture y CHAPTER HI. SUBSTITUTES AND RECLAIMED RUBBER. jy Prime Factors in Manufacture 10 u Value of Substitutes 10 . Experiments in Substitutes 11 , Use of Reclaimed Rubber 11 CHAPTER IV. BOOT AND SHOE MANUFACTURING. The Art of Making ir Process of Manufacture 12: ' CHAPTER V. MECHANICAL GOODS MANUFACTURING. Variety of Articles Made 13 Manufacture of Belting 13 " Hose 14 " " Packing 14 " " Mats and Matting 14 " " Valves and Gaskets 14 " "/ Rubber Clothing 14 " " Mackintoshes 15 " " Carriage Clothes 15 " Mold Goods 15 " " Cements 15 " " Dental and Rubber Stamp Supplies 15 " " Dry Goods Notions 15 " " Druggists, Stationers Sundries and other Mold Goods 16 " Toys 16 CHAPTER VI. RUBBER TIRE MANUFACTURING. Kinds of Tires Made 17 Manufacture of Single Tube Bicycle Tires 17 " Double Tube. Bicycle Tires 17 " " Solid and Pneumatic Vehicle Tires 18 " " Cushion and other Vehicle Tires 18 CHAPTER VII. HARD RUBBER MANUFACTURING. Difference Between Soft and Hard Rubber 18 Manufacture of Hard Rubber Articles 19 Hard Rubber Imitations 19 CHAPTER VIII. GUTTA PERCHA AND BALATA MANUFACTURING. \/Commercial Sphere of Gutta Percha 19 Method of Treatment 19* PART II— FINANCIAL. CHAPTER I. GENERAL TRADE CONDITIONS. Rubber Business Financially Successful 22 .-^Principal Companies in the Industry 22 Stability of Industry 23 ^ Benefits of Consolidation 23 Standardizing Product and Brands 23 Value of Compounding 24 ^ Regular Earning Ability 24 Prospective Increase in Consumption 24 L^ Export Ti*ade and Foreign Conditions 25 CHAPTER n. CRUDE RUBBER COMPANIES. System of Fixing Prices 26 Brazillian Export Duties 26 Buying and Selling Methods 26 w Cx-ude Rubber Speculation 27 / Names of Crude Rubber Houses 27 , Tlie Crude Rubber Company 27 CHAPTER HI. BOOT AND SHOE COMPANIES. ^ Volume of Boot and Shoe Trade 28 • Why the United States Leads 28 The Weather and Increase in Consumption 29 I Concerted Management 29 . Economies of Consolidation 30 I The United States Rubber Company 30 The President's Report 31 Financial Condition 31 The Earning Capacity 32 Management of United States Rubber Company 32 l/ Dividends Payments 33 Other Boot and Shoe Manufacturers 33 CHAPTER IV. MECHANICAL GOODS COMPANIES. ^ Diversification of Product .33 Increase in Manufacture 34 Stability of Business 34 Tlie Rubber Goods Manufacturing Company 35 Officers and Directors 35 The President's Annual Report 36 Tlie Treasurer's Annual Report 37 Dividend Payments 38 Increased Earning Capacity 38 Plan of Organization 39 CHAPTER V. RUBBER TIRE COMPANIES. Bicycle Tire Business 39 Vehicle Tires 39 Consolidated Tire Company 40 Volume of Business 40 CHAPTER VI. HARD RUBBER COMPANIES. American Hard Rubber Company 40 Ooodyear Vulcanite Company 41 CHAPTER VII. I RECLAIMED RUBBER COMPANIES. Method of Conducting Business '. 41 Principal Users of Reclaimed Rubber 41 CHAPTER VIII. GUTTA PERCHA COMPANIES. ^ Control of Trade '. 42 Bishop Gutta Percha Company 42 INTRODUCTORY. The object of this publication is to place between two covers, in as concise a manner as the subject will permit, such information as will be of use to the lay mind upon the subject of rubber in its various ramifications. In no sense is it the desire to prepare a technical treatise for the direction of those familiar with the rubber industry. The matter contained herein is primarily for the instruction of investors and those who are not intimately connected with the industry, who wish knowledge of the salient features of the commercial and financial development of rubber So far as convenient, inconsequential details are eliminated and controlling factors given the greater prominence. The subject is treated in the natural order of its develop- ment — from the extraction of the milky fluid from the trees to the payment of dividends upon the capital invested in the production of crude rubber and the sale of the manufactured product. The growth of the rubber industry is comparatively recent. In some respects it has been phenomenal, and, while the period of uncertainty has been passed, the commercial scope of rubber may conservatively be said to be in its infancy. The range of articles manufactured, in which rubber is used as a basic material, is constantly widening. Tens of thousands of articles are now profitably manufactured and a notable commentary on their success is that comparatively nothing in the rubber line has been offered since the inception of the business, which has not enjoyed a steadily increasing favor. As methods of production are being simplified, the tendency of the public grows towards greater consumption. From the financial standpoint probably the strongest feature of the stability of the industry is in its diversification. The information contained herein is the result of investiga- tion among practical men successfully engaged in the busi- ness. To these, the editor wishes to acknowledge the receipt of many favors. October, 1900. W. E. Simpson. PART I COMMERCIAL SHOWING THE METHODS OF PRODUCING AND MAMFACTURING CRUDE RUBBER AND PREPARING THE PRODUCT FOR MARKET. CHAPTER I. HISTORICAL^ DERIVATION OF NAME.— Rubber first became known to the civilized world when Columbus discovered America. He found the South American Indians using- rubber balls and the Spanish soldiers, who followed in his wake, smearing their cloaks with gum to make them water- proof. The first accurate description was made by a French- man, M. de la Condamine in 1735. Fresnau and Aublet some- what increased the knowledge regarding the plant, but it was not until 1770 that rubber was brought into commercial use. At this time Priestley, the English chemist, introduced India Rubber for effacing lead pencil marks. It is from this trivial circumstance that rubber derives its name ; the "India" coming either from the fact that it was gathered by the Indians of South America, or, possibly because some of the early importations into Europe came from India. FIRST COMMERCIAL RUBBER.— The first rubber imported into the United States reached Boston in 1800, being the year of the birth of Charles Goodyear, who, through his discovery of vulcanization, was the prime factor in giving rubber its present commercial prominence. In 1820, rubber shoes were imported into Boston from South America. Through a belter knowledge of chemistry, surgical instru- ments were made in England. Charles Mackintosh com- menced the manufacture of waterproof garments in Glasgow in 1823. From this time on experiments were freely made, with precarious results, until 1842 when Goodyear patented his process of vulcanizing by mechanical methods. 1 GOODYEAR'S EXPERIMENTS.— In the meantime patents were secured for gum elastic varnish and rubber shoes were m.ade by the Roxbury India Rubber Co. in 1833. For twenty-five years the name of (joodyear probably covers the development of the industry, although several other in- ventors are mentioned. Their results were only incidental. Goodyear was born in New Haven, Conn., drifted to Phila- delphia, where, in his early business life, he was not success- ful. It was as a bankrupt that he commenced investigating rubber. Three different times he believed he had solved the problem — first, when he mixed his crude rubber with mag- nesia; second, when he boiled this compound in quicklime and water, and third, when he washed the surface of this mixture with nitric acid. Half success in each case was soon turned into failure. DISCOVERY OF VULCANIZATION.— Goodyear's scientific researches availed him little in the final discovery. It was through a simple accident in striking a handful of rubber and sulphur against a kitchen stove that the secret of vulcanization was discovered. At this time, his entire circle of acquaintances had become weary of his attempts, and it was not until a later period that he was able to enlist any capital in the industry. A factory was built in Springfield, Mass., in 1840, where, four years later, he took out a patent for preparing rubber by vulcanization and began to sell licenses for the manufacture of various articles under his patents. EARLIEST MANUFACTURERS.— The license to manu- facture rubber boots and shoes-was given to Leverette Candee of New Haven, the founder of L. Candee & Co., a company v'hich has continued to the present time to be an important factor in the American rubber footwear industry. The license to manufacture rubber gloves was given to Goodyear's India Rubber Manufacturing Co., of Naugatuck, Conn. 2 Daniel Hodgman of New York, became the licensee to manu- facture door screens. Further licenses to manufacture boots and shoes were given to Ford & Co. (now the Meyer Rubber Co.) ; the New Brunswick Co. ; the Hayward Co. (which grew into the Colchester Rubber Co.) and The Goodyear's Metallic Rubber Shoe Co. Mechanical rubber goods then commenced to receive considerable attention. Clothing and druggists' sundries soon followed. The prosperity of the early rubber companies developed important patent suits, which were finally adjudicated in 1852. Daniel Webster was paid the largest fee up to that time in the history of the country in successfully defending Goodyear's patent. GROWTH AND EXTENT OF INDUSTRY.— The growth of the rubber industry in its early days was almost wholly in boot and shoes. The business began to assume some prominence in the early fifties. The impor- tation of crude rubber at Salem, Mass., where almost all of it arrived, in 1851, was only 334,000 pounds; in 1852, 1,961,000 pounds; in 1854, 2,055,000 pounds. The increase was rapid from this time on until in 1899, 51,745,000 pounds were imported into the United States. In the boot and shoe industry in i860, the yearly output was 1,200,000 pairs, valued at $795,000. In the season of 1899-90, the output was 70,000,000 pairs, valued at $35,000,000. The consumption of rubbfer goods has been largest in the United States, although England has been a close follovver. The Civil War gave a great impetus to the industry ; the government giving out large contracts for clothing, etc. Mechanical goods advanced rapidly in popularity shortly after the war. This was largely due to the increase of railroad building, which called for quantities of packing and steam hose. Rubber belting came into demand for mills, elevators and outdoor machinery. In fact, the rubber mechanical goods industry has reached enormous propor- 3 tions and present indications are that the increase will be practically constant. It is by far the largest branch of the trade in diversity of articles made. In the early 8o's, the making of rubber tires for bicycles became prominent. The solid tire was first used, which gave way to the cushion tire, which, in turn, has been superceded by the pneumatic tire. The solid tire for vehicles is rapidly becoming one of the most important branches of the rubber trade. In fifty years the rubber industry of the United States has grown from practically nothing, in the various branches of manufacture, to a value of product annually of $70,000,030. Through greater elftciency in manufacture, consecjuent economy through improved machinery and better modern business management, rubber is becoming more stable and in condition to successfully compete in foreign markets. CHAPTER II. CRUDE RUBBER INDIGENOUS HOME OF RUBBER.— Under the name of India Rubber, there are almost numberless varieties of gum broadly known as Crude Rubber. The proper name of the substance most commonly used is caoutchouc, pro- nounced koo-chook. This is the product of a great variety of trees, shrubs and vines indigenous to a belt of land in tropical and sub-tropical regions running round the world, where the temperature varies from 60 to 107 degrees Fahrenheit, and an average rainfall of about seven feet. PRODUCING LOCALITIES.— The principal grades in commercial use are South American, commonly known as "Para ;" Central American, commonly known as "Centrals ;" African and Indian. South America furnishes the greatest quantity and the finest quality. Central America grades next, 4 although the quantity is not so large as that produced in Africa, which is inferior to that produced in India. The United States uses the bulk of the Para rubber, while Euro- pean markets take the most of the African and the Indian. Several ^qrades of rubber reach the United States from South America which are necessary in the making of various quali- ties of goods. STABILITY OF SUPPLY.— The area from which crude rubber is now produced is so large that it will be many years before there will be any scarcity. The supply seems to be practically inexhaustible, although there is some restriction at times, owing to unreliable Indian labor. For this reason, some efforts have been made towards cultivating rubber trees. As it takes, however, seven years to produce rubber from a cultivated plant, it will probably be several genera- tions before the cultiv^ated article is grown in sufficient quan- tit}^ to supplant the natural product. UNITED STATES SOURCE OF SUPPLY.— South American rubber, in which the L'uited States is interested to the greatest extent, is classified at Para and Manaos in three grades, known as fine, medium and coarse. Para rubbers are divided into two principal classes, known as "Islands" and "Upriver," the former coming largely from islands located in the delta of the Amazon, while the latter is the product of the couijtry bordering the Amazon and its tributaries above Para. There are almost innumerable designations given to the various kinds of rubber produced, which, however, are not necessary to describe in a sketch of this character. For the purpose of giving a simple idea of the crude rubber situa- tion the methods in use of producing and marketing Para rubber are given. LABOR SITUATIOiN.— The territory covered by the Amazon River forms a watershed as large as the United States, exclusive of Alaska, with a population of only about a quarter of a million people. This will explain the difficult labor problem. Rubber is gathered in many different ways. The most common is for a family, or a number of natives, un- der the head of an outfitter, to select a desirable locality, where operations are carried on somewhat in the following manner : METHODS OF PROCURING RUBBER.— An incision is made in the tree from which the milky juice, or latex, is collected in small tin cups, the contents of which are emptied into a calabash or urn. A fire of brushwood is then built, over which a clay pot is hung. A club-shaped stick with a flattened clay mould on the end is repeatedly dipped into the bucket of milky juice and turned in the smoke until a big ball of crude rubber is formed. This is taken off by breaking the clay mould and shaking out the pieces. This produces what is known as a "bottle." This process evaporates the water; kills all substances wliich decompose or ferment, and absorbs the oxidized resin. Lower grades are created b)^ imperfect fumigation and the mixing together of scrapings, residues, etc. There are several other systems of fumigating and coagulating rubber. In some instances palm nuts are used to produce a thick smudge. This smoke has been found to contain acetic acid and creosote — the latter being a well- known preservative of rubber. PREI'ARATION FOR MARKET.— The bottles and bundles of rubber are purchased from the gatherer by trad- ers who transport the product to Para or Manaos, where middlemen or warehousemen cut the bundles into strips to determine quality. "Biscuits" weighing from 8 to 60 pounds are then packed in wooden boxes, in which form it is ex- ported. CRUDE RUBBER STATISTICS.— The statistical devel- opment of the crude rubber business, with special reference to the American conditions, is given in the following tables: 6 I CRUDE RUBBER PRICES FOR 30 YEARS. COMPARATIVE : RATES OF FINE PARA. TOTALEXPORTS FROM PARA. PARA WEIGHTS. •LIVERPOOL. NEW YORK. s. d. s. d. 1870 2 8 to 3 8 $0 80 to $1 07 10,528,000 Hjs. I87I 2 8 to 3 I 72 to 80 12,768,000 '■ 1872 3 li to 3 4 68 to 87 IT, 200.000 '■ 1873 2 5 to 3 64 to 80 14,890,000 " 1874 2 2^ to 2 8 5^ to 75 14,234,000 *'' 1875 2 I to 2 5 58i to 67i 15,144,000 •' 1876 2 2 to 2 4i 57i to 64 14,490,000 " 1877 I ii-| to 2 3i 48^ to 60 16,148,000 " 1878 I 8 to 2 I 40 to 52i 17,618,000 " 1879 2 to 4 48 to I 00 17,600000 " 1880 3 to 3 9 65 to 92 18,889,000 " I88I 3-1 to 3 9 74 to 91 20,174,000 " 1882 3 5i to 4 II 82 to I 20 22,730,000 " 1883 4 8 to 3 loi I 15 to 95 22,033,000 " 1884 4 to 2 48 to 98 24,274,000 " 1885 2 3 to 2 8 54 to 65 29,310,000 " 1886 2 6 to 3 6 60 to 83 30,793,000 ' 1887 3 6 to 2 Hi 83i to 68^ 31,393,000 " 1888 2 10 to 3 3 67 to 78 33,000,000 " 1889 2 7 to 3 I 60 to 73 34,900,000 " 1890 2 io| to 4 I 66 to I 00 36,300.000 " I89I 2 5 to 3 7i 60 to 95 39,200,000 '■' 1892 2 8 to 2 II 62I to 74 41,274,000 " 1893 2 ID to 3 3 64 to 29 42,068,000 " 1894 2 9 to 3 I 64^ to 73 40,870,000 " 1895 3 oi to 3 4i 70 to 8ii 46,363,000 " 1896 3 to 3 9 70 to 85 47,366,000 " 1897 1898 3 5 to 3 6 to 3 4 9i 4i 79 to 81 to 89* I 06* 49,786,000 " 48.204,000 " 1899 1 3 iq| to 4 7i 92 to I 12 56,824,000 ■' CONSUMPTION OF INDIA RUBB^ER BY THE UNITED STATES AND CANADA. All in Pounds. Imports to United States Exports to Liverpool and Continent Add Stock on Jan. ist . . L,ess Stock close of year Deliveries to Manuf't's 1882. 24,141,000 626,000 23,515,000 736,000 24,251,000 2,153,000 22,098,000 1883. 21,625,000 1,060,000 20,565,000 2,138,000 1884. 24,064,000 585.000 23,479,000 2,742,000 22,703,000 I 26,221,000 2,742,000 I 2,997,000 19,961,000 23,224,000 Imports to United States Exports to Liverpool and Continent Add Stock on Jan. ist . . Less Stock close of year Deliveries to Manuf't's 1885. 24,871,000 331.000 1886. 29,351,000 260,000 1887. 29,193,000 450,000 24,540,000 . 2,997,000 29,091,000 2,879,000 28,743,000 3,808,000 27.537.000 2,879,000 3 1 ,970,000 3,808,000 32,551,000 3,748,000 24,658,000 28,162,000 28,803,000 Imports to United States Exports to Liverpool and Continent Add Stock on Jan. ist . . Less Stock close of year Deliveries to Manuf't's 1888. 30,362,000 600,000 1889. 28,989,000 260,000 1900. 31,949,000 517,000 29,762,000 3,748,000 28,729,000 3,610,000 31,432,000 1,669,000 33,510,000 3,610,000 32,339,000 1,669,000 33,101,000 2,822,000 29,900,000 30,670,000 30,279,000 Imports to United States Exports to Liverpool and Continent .Add Stock on Jan. ist Less Stock close of year Deliveries to Manuf't's I89I. 36,180,000 2,200,000 1892. 34.348,000 1,100,000 1893. 36,780,000 1 ,600,000 33,980,000 2,822,000 33,248.000 2,435,000 35,180,000 2,725,000 36,802,000 2,435,000 35,683,000 2,725,000 37,905,000 2,322,000 34,367,000 32,958.000 35,583,000 Imports to United States Exports to Liverpool and Continent Add Stock on Jan. ist . . Less Stock close of year Deliveries to Manuf't's 1894. 32,797,000 875,000 1895. 36,250.000 725,000 1896. 31,506,000 1,100,000 31,922,000 2,322,000 35,525,000 3,182,000 30,406,000 1,251,000 34,244,000 3,182,000 38,707,000 1,251,000 31,657,000 1,411,000 31,062,000 37,456,000 30,246,000 Imports to United States Exports to Liverpool and Continent Add Stock on Jan. ist . . Less Stock close of year Deliveries to manuf't's 1897. 38,879,000 550,000 38,329,000 1,411,000 39,740,000 1,639,000 1898. 42,115,000 350,000 41,765,000 1,639,000 43,404,000 1,121,000 38,101,000 j 42,283,000 1899. 51,745.000 575,000 51,170.000 1,121,000 52,291,000 i,666,oco 50,525,000 PREPARATION FOR MANUFACTURE.— The prep- aration of crude rubber for manufacture differs in method accordino^ to tlie article for which it is mtended. In a o-op.cral M^ay, the first process is to soak the crude rubber in hot water 9 for the purpose of softening. It is then masticated in specially contrived machinery, after which it is washed for the purpose of removing all foreign substances. After being treated by the macerating machine and cleansed, it is sheeted out in thin sheets and hung up to dry, usually with artificial heat. All traces of moisture are ehminated and tlie rubber refined by running it between 'lot cylinder rollers, bringing the whole to the required consistency. It is then compounded^ preparatory to vulcanization and adaptation for specific ar- ticles. CHAPTER III. SUBSTITUTES AND RECLAIMED RUBBER^ PRIME FACTORS IN MANUFACTURE.— Pure rubber may be properly describefl as the basic material in the manufacture of rubber goods. The essential ingredient in making it durable is sulphur. The mixing of rubber and sulphur in variable proportions, according to the result de- sired, and submitting them to intense heat, or vulcanizing it^ fits the material for commercial use. This mixture, however,^ is only suitable for a comparatively limited number of articles. It therefore becomes necessary to introduce other sub- stances, such as oil, whiting, reclaimed rubber, etc. VALUE OF SUBSTITUTES.— In the literal sense, there is no substitute for rubber. The introduction of so-called substitutes into pure rubber is for the purpose of providing certain qualities which are necessary for the manufacture of the great majority of rubber, articles and not contained in rubber in its pure state. Substitutes are also used to cheapen the cost of manufacture. The prominent substitutes are made from oxidized oils, principally linseed, rapeseed, cottonseed, mustard, peanut or corn oils. The two so-called substitutes mostly used are known as black and white. The black is 10 made by boiling oil with sulphur and the white by treating oil with chloride of sulphur. The use of these substitutes tend to preserve rubber and resist acid. EXPERIMENTS IN SUBSTITUTES.— When rubber and substitutes are mixed they have the faculty of softening or dissolving each other, allowing the whole to cure into smooth goods. Many experiments have been made with various chemical combinations, and earnest investigations are being conducted with fibres of various plants, such as Ramie, to find a perfect substitute for rubber, but none have as yet stood all the necessary tests. Persistent research is more than Hkely to develop an equivalent to rubber, although consider- able time must elapse before perfection of manufacture is se- cured and the article made popular. USE OF RECLAIMED RUBBER.— There is more re- claimed rubber used in the manufacture of rubber goods in the United States than so-called substitutes. This is because it is easier and cheaper to get than compounding substitutes, and, for the purpose for which it is used, it is much better. If it were not possible to use reclaimed rubber, the price of crude rubber would be very much higher as 25^0 to 30% of the total product of manufactured goods may be said to be the result of its use. The method or procedure is to masti- cate old boots and shoes, and reduce them to a state approach- ing powder, then pass the whole over magnetic plates, to ex- tract metals, then through a machine to shake out the dirt. The mass afterwards goes into a big vat, where it is boiled in an acid solution thereby destroying the fibre. After the fibre has been removed in a washing tub, the material goes, to a drying room and then to a mill where it is refined. U CHAPTER IV. BOOT AND SHOE MANUFACTURING. THE ART OF MAKING.— There is probably no busires m which skill of a higli order is as necessary in the manu- facture of product as in the rubber industry. Patents on formulae and secret compounds are not considered of prime importance. In fact, individual natural talent is of the high- est importance. Rubber of apparently the same grade varies much in quality, requiring modifications of the usual formulas and great judgment as to time in vulcanizing. The instincVive knowledge of cookery is the relative ability required in rubber ■compounding. PROCESS OF MANUFACTURE.— The compounding room is the most important part of a rubber factory. The essential additions to rubber in the manufacture of boots and shoes are sulphur and litharge. After the rubber has been milled, it is siii)nutted to the compounding process and the various ingredients put into a mill with the rubber where all are kneaded into one composite substance. That which is intended for uppers, after being compounded, is run through another mill called a calendar, where a sheet of cotton fabric is combined with the rubber forming a sheet of rubber cloth. The rubber for soles is run through another calender which turns it out marked with the pattern of the sole. These are the two principal parts, although the ordinary rubber shoe consists of seven or eight different parts, while twenty-three parts are necessary in the composition of a rubber boot. x\ll the additional parts are run through their proper calendars, after which the various pieces are cut out, usually by hand. The various pieces are then put together over a smooth last, 12 the boot or shoe varnished and revulcanized for seven or eight hours at a temperature of 260 Fahrenheit. The product is then ready for market. CHAPTER V. MECHANICAI. GOODS MANUFACTURING. VARIETY OF ARTICLES MADE.— The general name of mechanical goods as used in the rubber industry covers something over 10,000 articles almost wholly made of soft rubber. While there are some articles used in mechanical lines made of hard rubber, the process in manufacture is so completely different that articles used for mechanical pur- poses made from hard rubber are placed in a class with sta- tionery's supplies and some kinds of druggists' sundries. Clorhing is made by manufacturers engaged in the mechanical gr.ods business because soft rubber is combined with the cloth. In volume of business, belting, hose, packing, mats and matting, valves, gaskets, tubing and mold goods, in the order given, are the notable articles made under the head of mechanical goods. The great diversity of the product multi- plies to a considerable extent the methods of manufacture in secret compounds, patents and machinery. Crude rubber as used in the manufacture of mechanical goods is prepared in the same way as for boots and shoes until it reaches the compounding stage. MANUFACTURE OF BELTING.— The basis of strength in belting is cotton duck frictioned with rubber in the calenders. Belting is made in various plies. The inner plies are simply frictioned, or coated, with rubber, while the two outer plies are frictioned and then passed through the calenders and afterwards coated. It is then taken to a fold- ing machine and after being folded a strip is put on. The last ply envelopes the ends of the others. The belting is then 13 stretched and placed in a hydraulic press, where it is sub- mitted to the required degree of heat, governed by the quality of the belt, at a pressure of 1800 pounds. MANUFACTURE OF HOSE.— The usual way of mak- ing seamless hose is to friction the duck the same as in belt- ing, forcing the whole through a tubing machine, like run- ning lead through a die, to the diameter required, and thert running the mass on a pole 52 feet in length. All hose is. made 50 feet long. Rubber is then put on in a sheet, the whole being placed in heaters and vulcanized by machinery. Hand labor is sometimes used, but at greater cost. PACKING.— The whole operation of making packing is from the calenders. The frictioned duck and rubber sheeting are placed together to the right thickness and vulcanized be- tween hydraulic plates. MATS AND MATTING.— Mats and matting are run from the calenders of proper thickness, then put into a press, in molds and vulcanized. In fact, the calenders almost complete the operation, except vulcanizing. VALVES AND GASKETS.— Valves, gaskets and like goods are made principally through hydraulic pressure and vulcanization in molds according to the shape desired. RUBBER CLOTHING.— As in the manufacture of all other goods, in which rubber is the basic material, experience in manipulating the ingredients is the important feature irt making rubber clothing. This is modified according to the aesthetic feature of the trade and as fashions vary. The cal- endered, or what is commonly, known as the all rubber coat, is the big article of commerce in the clothing line, although ponchos, a rubber blanket used by horsemen, and mackin- toshes are important branches. Most of the work of making the all rubber coat is done on the calender, where duck is frictioned and coated. It is then cut into patterns and 14 made up by hand. For service the calendered, or rubber surface clothing, where the rubber is driven into the meshes of the fabric under heat and pressure, is considered the best. MACKINTOSHES.— Mackintoshes are made by a spreading process. The rubber is reduced to a liquid state by naptha and churning. It is then spread on the fabric by placing the fabric to be covered between hot cylinders, where a knife is pressed down close enough to the surtface of the cloth to allow the liquid to pass under. This is done probably ten times, the result being that a very thin coat of rubber is pressed into the cloth, leaving it flexible. CARRIAGE CLOTHES.— In carriage clothes, after cal- endering, the goods are grained on embossing rolls, var- nished, and run into a dry heat. MOLD GOODS. — The usual equipment of rubber ma- chinery utilized in making mold goods which belong either to the mechanical or druggists' sundries lines, is added to through special appliances for filling and emptying molds. A wide field for experiment in compounds is probably the principal feature. CEMENTS. — Hundreds of different formulas are used in making cements used in leather shoes, bicycles and other manufactured rubber articles, according to the stickiness, waterproof quality and cheapness necessary. Crude rubber is mixed as in the general rubber business and made into a solution in churns. DENTAL AND RUBBER STAMP SUPPLIES.— Un- vulcanized crude rubber for dentists and rubber stamp makers is compounded, but cured and finished by the dentist or stamp manufacturer. DRY GOODS NOTIONS.— In the manufacture of no- tions, such as dress shields, children's aprons, waterproof dress bindings, the principal feature is in deodorizing so that 15 objectionable smells are done away with, otherwise the goods are manufactured by the usual dry process. Special machines for forming and caring the goods in their particular shape are also necessary. DRUGGISTS', STATIONERS' AND OTHER MOLD GOODS. — Druggists' surgical and stationers' sundries, such as water bottles, air pillows, cushions, bandages, stationers' rubber bands, erasers, etc., require somewhat more skillful manipulation in manufacture than in other rubber lines. In a general way, these articles are either made by hand from the calendered sheet — partly in mold and seamed by hand — or, in mold altogether and vulcanized and submitted to pres- sure where necessary. The distinct feature in making hollow work, such as balls a*nd bulbs, is in inflating the general shape of the mold, while it is being cured in open steam heat, with a few drops of water or ammonia, which swells under the heat developed to perfect the shape and give the proper surface both outside and inside. The coloring of rubber in these articles is also important, as no trace of lead must be left. The whites, blacks, reds and other colors must be mixed in separate mills with the greatest care. TOY MANUFACTURE.— Toys are made in much "The same manner as other mold goods, except that a larger pro- portion of hand labor is necessary. The rubber toy business is a larger branch abroad than in the United States, as they are more generally used in foreign countries. While some toys are manufactured in the United States, the saving in labor abroad is quite sufifiicient to offset a greater develop- ment in the United States. CHAPTER VI. RUBBER TIRE MANUFACTURING. KINDS OF TIRES MADE.— The rubber tire business may be divided into two general classes — bicycle and vehicle. Two general styles of 'bicycle tires are made known as single and double tube. In vehicle tires, there are three principal kinds; solid, cushion and pneumatic. Although the vehicle tire business is in its infancy, the volume amounts to many thou- sands of dollars. But two kinds are generally used, broadly known as solid and pneumatic. SINGLE TUBE BICYCLE TIRES.~The manufacture of bicycle tires is being conducted along firmly established lines. The process of manufacture in both the single and double tube during the preparatory stages, is about the same as in clothing. The fabrics are frictioned, rubber run on, and then placed on forms which shape the tire. In the mak- ing of single tube tires, the forms are removed and the tube filled with air and water. The process of vulcanizing is to heat the water to the point of generating steam, thereby creat- ing a high pressure and forcing the rubber against the sides of the mold. This process expands the rubber to fit the mold perfectly and leaves a smooth surface on the outside. DOUBLE TUBE BICYCLE TIRE.— The outer tube of the double bicycle tire is built on an endless mandrel. After the tire is vulcanized, it is sliced on the inner periphery and the ring removed. The inner tube is made in lengths of proper measurement, after the manner of hose, except that the ends are closed. The inner tube is then inserted in the outer tube, or shoe, which latter is then laced up. 17 SOLID AND PNEUMATIC VEHICLE TIRES.— The solid vehicle tire is made by the simple process of mixing the prepared compound, forcing it into shape through a tubing machine and molding it in steam heat. This tire is fastened on the wheel by electrically welded wires. The pneumatic vehicle tire is built in much the same manner as ihe bicycle pneumatic tire, except that the construction is much heavier. CUSHION AND OTHER VEHICLE TIRES.— The cushion tire is also made in a great variety of forms. Prob- ably one of the most serviceable is a modification of what might strictly be termed a cushion tire. It is a sort of com- bination of the solid and pneumatic tires. A thick wall of rubber is used, which is built of frictioned rubber, carefully vulcanized and coated with the highest class of rubber. The diameter of the air chamber is about one-third the thickness of the walls, making it difficult to puncture and yet stable enough to stand up under the weight and not break the rim of the wheel. CHAPTER VII. HARD RUBBER MANUFACTURING. DIFFERENCE BETWEEN SOFT AND HARD RUB- BER. — The manufacture of hard rubber articles differs prim- arily in the treatment of crude rubber after it has been cleansed and macerated. A larger proportion of sulphur is used than in soft rubber and a more intense heat required. For a long time the rule was to use two pounds of rubber with one pound of sulphur, subjected to a heat of over 300 degrees Fahrenheit for several hours. As the business developed, however, many compounds were introduced, so that almost any degree of quality, hardness, or price is now provided. 18 According to the result desired, the compound is made be- fore vulcanization, and the article vulcanized in molds ; or, the article made after vulcanization by turning on lathes and machinery used similar to that in hardwood working. HARD RUBBER ARTICLES.— The principal articles are combs, druggists' sundries, valves, surgical instruments, etc. The chemical action of crude rubber and sulphur mixed in the proper proportions, and subjected to a high degree of temperature, is to make a black horn colored substance, which will take a hig'h polish. Hard rubber is colored by dusting the crude material with the finely powdered coloring desired or enameling by rolling the coloring matter into the material. Hard rubber scrap is devulcanized and remixed in the cheaper grades of goods, although where elasticity and a high grade is needed, it is not used. HARD RUBBER IMITATIONS.— There are many counterfeits of -hard rubber, which are made of cellulose, gums and animal, vegetable and earthy matters. These do not, however, meet the service for which hard rubber is best adaptable. Like Gutta Percha, these counterfeits are often mistaken for hard rubber, because they look like ebony. CHAPTER VIII. GUTTA PERCHA AND BALATA MANUFACTURING. COMMERCIAL SPHERE OF GUTTA PERCHA.— Gutta Percha and Balata is in no sense a substitute or counter- feit for India rubber. Not only is the cost of Gutta Percha prohibitive, but it contains qualities which give it a distinct classification. The supply of Gutta Percha comes from the Malay Peninsula and Island of Sumatra and is gradually growing less — due to imperfect methods of gathering. METHOD OF TREATMENT.— Gutta Percha is ^rst treated by coagulation, chiefly through exposure to air and 19 cleansed mechanically by passing- through specially con- structed machines, or chemically by submitting it to suitable solvents. In many respects Balata, coming from an entirely different plant, the Bullet Tree, is a substitute for Gutta Percha, although it is more generally used as an adulterant in the making of Gutta Percha articles. The most important application of Gutta Percha is for submarine and subter- ranean cables and golf balls. Surgical instruments and bot- tles for holding corrosive acid and caustic alkalies are made because of the antiseptic qualities of both Gutta Percha and Balata. Submarine cables are made in screw presses in which the wires are covered with a seamless material. Gutta Percha. hardened by the extraction of its resin, is used in the manu- facture of golf balls. As the specific gravity of the material is low, it will float in water and through proper treatment almost any degree of elasticity can be made. The capacity for compounds in Gutta Percha and Balata are reduced ia the minimum. 1 20 PART II FINANCIAL SHOWING THE FINANCIAL DEVELOPMENT OF THE INDUSTRY; THE COMPANIES EN- GAGED THEREIN AND THEIR EARNING ABILITY. 21 -^ ' " CHAPTER I. GENERAL TRADE CONDITIONS. RUBBER BUSINESS FINANCIALLY SUCCESSFUL — There is no doubt of the earning abiHty o'f rubber manufac- ufacturers. In fact, since the days of early experiments and incomplete results, there has not been a failure in the rubber business in the United States which is not clearly traceable to mismanagement of the grossest kind. In the beginning success depended mainly upon patents and the energy dis- played in introducing the new product. As the business is now conducted its success is the simple result of conservative management, and progress in the art of manufacturing. PRINCIPAL COMPANIES IN THE INDUSTRY.— So far as the general investing public is concerned, there are but two principal companies engaged in the business. These are the United States Rubber Co., which almost exclusively man- ufactures boots and shoes and the Rubber Goods Manufac- turing Company, which makes the bulk of mechanical goods and druggists' surgical and stationers' sundries, clothing, bi- cycle and vehicle tires. These two companies do not conflict in their trade or financial relations in any manner. The causes governing the success of either does not necessarily affect the earning capacity of the other. For a clear under- standing of the financial conditions surrounding the invest- ment of capital in any branch of the rubber industry, it is therefore advisable to enumerate the specific advantages and disadvantages in each of the principal companies. The status of the companies engaged in other and quite as important 22 branches of the industry is briefly described for the purpose of indicating the comparative importance of the companies of larger capitalization. ] STABILITY OF INDUSTRY.— There are specific influ- ences which operate in favor of the rubber business in all its branches. Probably the education of the masses as to the adaptability of rubber is responsible for greater energy in de- veloping new articles for consumption. The increased diver- sification of articles manufactured, which have become both popular and profitable, is shown in the fact that the rubber industry has been particularly free from labor troubles ; and this, in the face of the improvements in machinery and the consequent relative decrease in the amount of hand labor employed. BENEFITS OF CONSOLIDATION.— Another import- ant factor, which is giving renewed impetus to the trade is the consolidation of interests engaged in similar lines of man- ufacture. Not only are the ordinary economies of consolida- tion conserved, such as administration, sales and patents, but a remarkable advancement in efficiency in manufacture is the result. This is due to the fact that the manipulation of rubber in manufacture has not yet been reduced to the basis of an exact science. The lack of uniformity in the quality of crude rubber as at present gathered, makes it necessary that special skill be developed in attaining fixed results, while the various materials utilized are in process of manufacture. STANDARDIZING PRODUCT AND BRANDS.— The individual mixer uust not only have an intuitive sense,. but years of experience. This results in keeping the product up to a standard quality, and, to a very large extent, gives value to brands. As a rule, the chief value in the brand of any manufactured article is in the capital invested in intelligent advertising. This not only applies to the rubber business. 23 n but must be augmented by the ability to keep the article pro- duced upon an even plane of efficiency or the brand immedi- ately loses its value. VALUE OF COMPOUNDING.— There is no danger that the supply of crude rubber or raw material will become so short as to cause prohibitive prices in the manufacture of the product. The area in which rubber producing trees and plants grow is so large that the source of supply can hardly be exhausted in many hundreds of years at the present ratio of increase of demand. The price of the best grade of crude rubber known as fine Para has ranged from 40 cents to $1.15 per pound in the last thirty years. This price has varied ac- cording to the conditions surrounding the gathering of the material and not as the result of an increase in the consump- tion of the goods manufactured. The advancement in the art of compounding has so greatly reduced the cost of the pro- duct that even the highest prices for crude rubber could pre- vail without injury to the earning capacity of the companies engaged in the business. REGULAR EARNING ABILITY.— The general busi- ness conditions prevailing in the United States are not likely to greatly influence earning ability in times of depression as so many articles are made of an economical nature that in times of restriction rubber products are more likely to be used. Rubber footwear is cheaper than leather shoes and the introduction of rubber in mechanical lines has proved to be economical. The enormous increase in the use of rubber tires is. also permanent and economical. In fact, no substi- tute is at present available in competition with rubber for any purpose for which it has as yet been used. PROSPECTIVE INCREASE IN CONSUMPTION.— In point of consumption of manufactured rubber articles, the ■following countries rank in the order named : United States, Germany, Russia, England, Italy, Canada, Norway and 24 Sweden and Japan. Since the inception of the rubber business, the United States has led in the consumption of shoes, tires, belting, hose and other mechanical goods. It is a notable feature of the business that where rubber has been introduced it has rarely been supplanted by any other material because of its adaptability and economy. When rubber tires, cloth- ing, boots and shoes, horse shoes, packing, insulation and all articles for personal comfort or medicinal purposes are once used they are always used. With the march of civilization and opening up of new territory and the consequent intro- duction of water works, electrical apparatus, etc., new fields are available. EXPORT TRADE AND FOREIGN CONDITIONS.— As the result of concentrated effort, through the general con- solidation of interests in the principal rubber lines, the exportation of goods to foreign countries is be- ginning to show an appreciable increase. The ofificial figures show that for the nine months ending April I, 1900, the ratio of increase was 37^ per cent. In countries where rubber is manufactured, the increase in the exportation of the American article is not likely to be so great, owing to the cheaper labor abroad, which, however, is largely offset by the decreased cost in manufacture in the United States through the use of improved machinery and the better compounding system which prevails. Up to the present time, the production of rubber goods has not been suf^ciently increased to warrant competition for foreign busi- ness. The growth of the business in this country, however, • is such at the present time that the most satisfactory results are being obtained through the introduction oi rubber articles at reasonable profit in countries like South America, Africa, Australia, Mexico and the Far East. On the other hand, foreign competition in the United States markets is of no importance. Information is given of the companies engaged in various 25 branches of the rubber industry in the order of their pre- cedence for convenience of reference in point of manufacture a^nd estabhshment. CHAPTER II. CRUDJB RUBBER COMPANIES. SYSTEM OF FIXING PRICES.— There is nothing par- ticularly unusual in the method of buying a^nd selling crude rubber as conducted by the principal concerns in this coun- try. The United States, England and Germany are the con- trolling factors in determining prices. The visible supply of crude rubber is very well known at all times. The statistics of crude rubber in South America, Africa and Central America ; the amount afloat out of these countries to Ant- werp, Liverpool and New York ; and the stocks held at the various receiving ports are accurately known each month. From this basis the price is gauged. Where there is an ex- cess demand in any of the principal markets the price is modi- fied plus transportation and duties, if there be any. In the United States crude rubber is admitted free under a liberal definition of the tariff on milled rubber. BRAZILIAN EXPORT DUTIES.— In a broad sense, the United States depends for its supply of rubber upon the product of Brazil ; England from South America and Africa, while Germany secures the great bulk of its product from the Congo Free State, Central America, and, partially from South America. The Brazilian government charges an ex- port duty at Para of 23.815% on the official value, which covers the government, state and municipal taxation on crude rubber. BUYING AND SELLING METHODS.— The traffic in crude rubber in the United States is in no sense governed 26 by any trust, pool or other agreement, either as to methods of buying in Para or Manaos, or in extraordinary facilities for selling to consumers. The various companies and firms engaged in the business purchase crude rubber in South America either through agents, brokers, or warehousemen. No special means of transportation are employed. Steamers are chartered in the usual way whether buying in the South American or Continental markets. When crude rubber is received in New York, its sale is governed by the demand. The price is fixed according to the ability of the individual seller to supply the precise grade and quantity desired. The statistical tables published in Chapter IL, Part I., give the range of prices and exports from Para for thirty years and consumption with United States for eighteen years. CRUDE RUBBER SPECULATION.— The speculative feature in buying and selling crude rubber is reduced to a minimum, although attempts have been made from time to time to control the market on the part of inexperienced man- ipulators, which have resulted in loss due to the breadth of the crude markets. NAMES OF CRUDE RUBBER HOUSES.— The prin- cipal companies engaged in the crude rubber business in the United States, named in the order of volume of business transacted are : Crude Rubber Co., 30 Broad St., N. Y. City. The New York Commercial Co., 290 Broadway, N. Y. City. Geo. A. Alden & Co., Boston. Reimers & Co., 61 Pine St., N. Y. City. Otto G. Mayer & Co., 44-8 Cedar St., N. Y. City. Lawrence Johnson & Co., Philadelphia. In addition, there is a class of individual brokers, while cer- tain manufacturers buy their product through agents located at Para and Manaos. THE CRUDE RUBBER COMPANY.— The Crude Rub- ber Company is capitalized for $1,000,000, and has a surplus 27 of $400,000. This company handles about three quarters of the Crude Rubber business in the United States. The com- pany was first started in 1869, incorporated in August, 1897, and has gradually increased in growth. The officers are Henry Earle, president and general manager : P. de Lacey Lieberman, treasurer and secretary. The securities of the companies are not listed and are closely held. The New York Commercial Company is a close corporation and no state- ment concerning its affairs is available for publication. The other concerns engaged in the business are co-partnerships. CHAPTER HI. BOOT AND SHOE COMPANIES. VOLUME OF BOOT AND SHOE TRADE.— In a sense, the growth of the companies engaged in the manufac- ture of rubber boots and shoes is equivalent to the history of the whole rubber industry of this country. The problems of vulcanization, compounds and machinery were first worked out in the effort to make boots and shoes. The perfection of this particular branch of the rubber business has been greater than in any other. The volume of product consumed is larger than in any other rubber article. The business has grown from an annual output in i860 of $795,000; in 1870, to $8,000,000 ; in 1880 to $16,000,000 ; in 1890 to $24,000,000. At present the annual output is $35,000,000. In 1895, an ag- gregate capital of $20,000,000 was invested in the rubber boot and shoe manufacturing business; 15,000 workmen em- ployed and 40,000,000 pairs of boots and shoes produced. The present capital invested in the industry is $55,000,000, and the annual output of boots and shoes 70,000,000 pairs. WHY THE UNITED STATES LEADS.— The United States has greatly outstripped Europe in the manufacture of 28 rubber boots and shoes. There has been a greater incentive for making inventions and improving machinery, due to the greater cost of labor in the United States ; secondly, the great body of the working people in this country are better able to afiford the luxury of rubber footwear. In Europe, rubbers are only worn by the well to do ; here they are worn by every- one — the yearly average consumption being a pair of rubbers to every other person. Probably the most important reason however, is that rubber boots or shoes are the cheapest and most economical form of footwear. THE WEATHER AND INCREASE IN CONSUMP- TION. — Owing to the nature of the product, weather condi- tions have a great deal to do in determining the volume of consumption. The season's business begins about the first of April, when price lists are issued and discounts fixed for the fiscal year's trade. Blanket orders are then taken for delivery according to the particular needs of the purchaser. With a long severe Winter, the sale of the product is largely increased ; but the normal increase in the shoe business for the past ten years has probably been io% over and above the consumption caused by the natural increase in popula- tion. The average of increase fluctuates according to weather conditions. CONCERTED MANAGEMENT.— Before there was concerted effort on the part of the larger manufacturers, re- sulting in the organization of the United States Rubber Com- pany, there was considerable loss through attempts to intro- duce odd and undesirable patterns, as well as other injudi- cious forms of competition. As the industry became special- ized and gravitated towards a better form of management, economy in manufacture became an enormous item. The ex- perience of the most skillful manufacturer was utilized for the benefit of the whole, while a more uniform system of selling greatly benefited the industry. 29 ECONOMIES OF CONSOLIDATION.— It has not de- veloped that the bringing together of these great interests- under one management has advanced the price of the product in a greater ratio than is legitimately warranted by the fluc- tuations in the cost of crude material. On the contrary, the business has become more stable with a tendency towards giving greater value to consumers. As the volume of the rubber business increases, the ability to utilize reclaimed rubber becomes an important item. Reclaimed rubber can be devulcanized and used very freely at a cost of from 13 to 15. cents per pound as against Para rubbers at from 55 to $1.00- per pound. THE UNITED STATES RUBBER CO.— The United States Rubber Company is the largest factor in the rubber boot and shoe business in the United States. It controls 80% of the business. The company is capitalized under the laws- of New Jersey for $50,000,000, divided equally between 8% non-cumulative preferred and common stock. The officers are Frederick M. Shepherd, President ; James B. Ford, Vice- President; Charles R. Flint, Treasurer; H. M. Sadler, As- sistant Treasurer ; Samuel P. Colt, Secretary. The directors- are: E. S. Converse, Samuel P. Colt, H. E. Converse, Charles R. Flint, James B. Ford, J. Howard Ford, Robert M. Galloway, Henry L. Hotchkiss, Charles L. Johnson,. Lester Leland, Frederick C. Sayles, Frederick M. Shepherd, Charles Stewart Smith, John D. Vermeule, George E. Weed and Samuel N. Williams. The executive committee is com- posed of Frederick M. Shepherd, Henry L. Hotchkiss, James B. Ford, Charles R. Flint, Samuel P. Colt, John D. Vermeule,. Charles L. Johnson and Lester Leland, New Jersey Headquarters — Brunswick, N. J. General Offices— 9— 15 Murray St., N. Y. Registrar — ^Central TrusFCompany. Transfer Offices — 9 — 15 Murray St., N. Y. 30 THE PRESIDENT'S REPORT.— The President, in his last annual report, dated May 15, 1900, in part said: "The business of the year presents some remarkable features. In the mid-Winter, it appeared that perhaps the amount of sales would be smaller than those of the previous year. But the total result proved the contrary and the business has been most satisfactory. The loss by bad debts during the year is also remarkable in that it amounts to less than one-hun- dredth of one per cent, of the total sales, a most gratifying evidence of the prosperity of the trade with which we have dealings. The relations between the company and the em- ployees in the manufacturing department and with customers continue harmonious and friendly." FINANCIAL CONDITION.— The balance sheet, show- ing the condition of the company's business, March 31, 1900, compared with the previous year is as follows: Assets. Mar. 31, 1900. Mar. 31, 1899. Cash $628,630.84 $557,666.79 Notes and accounts receivable 1,887,506.78 1.799, 155-88 Merchandise on hand 1,394,019.73 1,617,609.85 Investments 46,961,836.05 46,910,508.78 $50,871,993.40 $50,884,941.30 Liabilities. Preferred stock $23,525,500.00 $23,525,500.00 Common stock 23,666,000.00 23,666,000.00 Accounts pavable 1,417,094.75 1,711.263.50 Due companies for goods sold 253,015.04 217.634.84 Balance • • $2,010,383.61 $1,764,542.96 Reserved for dividends in April and July 1,177,680.00 941,020.00 Surplus $832,703.61 $823,522.96 31 THE EARNING CAPACITY.— The income account for the year ending March 31, 1900, follows: Surplus March 31, 1899 $823,522.96 Profits from operating plants and dividends on investment $2,246,030.42 Net income froim commissions on sales of goods 987,743.19 Total income $3,233,773.61 Less total expenses 225,886.07 3,007,887.54 $3,831,410 50 DIVIDENDS.— On preferred stock: Paid Oct., '99 $476,510 Paid Jan., '00 470,5io To be paid April, '00. 470,510 To be paid July, 00. 470,510 On common stock : Paid July, '99 $236,660 Paid Oct., '99 236,660 Paid Jan., '00 236,660 To be paid April, '00. 236,000 1,882,040.00 946,640.00 Total dividends •. $2,828,680.00 $1,032 730 50 Charged for depreciation in losses 170,026.89 Surplus $832,703.61 The undivided earnings in the treasuries of the manufacturing companies in which this com- pany has investments after charging off for depreciation, are now $2,689,367.81 The books and accounts from which the treasurer's reports were made up were certified to by chartered accountants. Upon the basis of a $100,000 subscription to the underwriting in 1892, there has been paid over 9 per cent, in dividends, and an original subscription for that amount shows an addi- tional profit of over $20,000. MANAGEMENT OF UNITED STATES RUBBER COMPANY. — As at present constituted, the company is or- 32 > > . :. gani/erl upon the basis of maintaining the individuahty of the subsidiary companies The standard required is fixed at ihe level of the best and it is the policy to bring the product of the whole to that standard. The consolidation of ownership of securities of the various companies has effected important economies in making fewer brands and adopting the best of the standard styles. Only the most modern plants are oper- ated to their greatest capacity. Selling methods are also made more uniform, resulting in a more effective system of less ex- pense. DIVIDEND PAYMENTS.— Dividends are declared quarterly and paid in January, April, July and October. OTHER BOOT AND SHOE MANUFACTURERS.— The United States Rubber Company is in no sense a mon- opoly. There are a number of companies in the different parts of the United States, making various grades of goods. Among these are the Hood Rubber Company, Boston, Mass.,. Mishawaka Woolen Company, Mishawaka, Ind., the Grand Rapids Felt Boot Co., Grand Rapids, Mich., the Apsley Mfg.. Co., Hudson, Mass., the Byfield Rubber Company, Bristol. R. I., George Watkinson & Co., Phila., Bourn Rubber Com- pany, Providence, R. I., Monarch Rubber Company, St. Louis. Mo. and the Beacon Falls Rubber Co., Beacon Falls, Mass. As the securities of the above companies are not actively traded in and public financial statements not made, their finan- cial condition cannot be shown. CHAPTER IV. MECHANICAIi GOODS COMPANIES. DIVERSIFICATION OF PRODUCT.— The mechanical goods business first showed a substantial development some twenty years after the firm establishment of the rubber boot and shoe business. The great diversification of product. however, is largely responsible for its subsequent and rela- tively more rapid development. As railroad building- in- creased and manufacturing- in other lines grew, the sources of consumption for mechanical goods multiplied. The great bulk of mechanical articles used, therefore, are manufactured in this branch of the industry. INCREASE IN MANUFACTURE.— A few years ago the greatest increase in the manufacture of mechanical goods was in belting, packing, hose, mats, tubing, valves, etc. All these have been placed upon a well defined basis. Probably the articles which are now showing the greatest increase in manufacture and consumption are bicycle and vehicle tires. It remained for companies engaged in making mechanical goods to develop this class of goods. It is fair to assume, however, that its growing magnitude will specialize the manu- facture of tires in due season. The tendency seems to be, in fact, to arrange the manufacture and sale of all kinds of rubber goods, so that when specific articles become more than or- dinarily prominent, another branch of the trade is created for the sake of efficiency and economy. STABILITY OF BUSINESS.— The degree of success of the mechanical goods branch of the rubber industry depends upon the general business conditions of the whole country. The immense diversification of the product is its strongest feature. This class of product is a necessity in almost every line of business. There is probably not one manufacturer in the country but who uses rubber goods in some form and his consumption gradually grows to larger proportions. It would be difficult tomake any rehable estimate of the volume of output in the various mechanical goods lines because of the many ramifications of the trade. The increase, however, is much above the natural increase from consumption due to greater population. The business is essentially one of great detail and capable of many economies, owing to greater ex- 34 perience in compounding, perfection in machinery and es- tablishment of brands, which latter is highly important as a brand in the rubber business is synonomous with a special grade of goods. THE RUBBER GOODS MANUFACTURING COM- PANY. — The Rubber Goods Manufacturing Company prob- ably controls 85% of the mechanical goods business in the United States. The company is organized under the laws of New Jersey, with an authorized capital of $50,000,000.00, equally divided between common stock and 7% cumulative preferred stock. The success of the consolidation of this company is best evidenced in the fact that the first year's busi- ness showed an increase of over $400,000 in excess of the net profits estimated at the time of the formation of the company. , OFFICERS AND DIRECTORS : The directors and offi- cers of the company are as follows : C. S. Smith, president ; U, D. Eddy, vice-president; W. B. Flint, treasurer, and W. A. Towner, assistant treasurer and secretary. Directors : Charles Stewart Smith, Charles R. Flint, F. W. Morgan, L. K. McClymonds, G. W. Blanchard, R. L. Edwards, Ulysses D. Eddy, George W. Hebard, Alvah Trowbridge, C. H. Dale, Henry Steers, Alden S. Swan, William M. Ivins, Wallace B. Flint and Percy Chubb. Executive Committee : Charles R. Flint, chairman; W. M. Ivins, G. W. Blanchard, C. H. Dale, L. K. McClymonds, G. W. Hebard, F. W. Morgan. General Counsel: W. M. Ivins. New Jersey Headquarters — Jersey City, N. J. Registrar — United States Mortgage & Trttst Company. Transfer Agents — Baring. Magoun & Co. THE PRESIDENT'S ANNUAL REPO'RT.— The first annual report of the company's business is as follows : 35 PRESIDENT'S REPORT. New Brunswick, N. J., February loth, 1900. To the Stockholders of the Rubber Goods Manufacturing Company : Reviewing the general business and conditions of the com- pany, in conformity with the By-Laws, the President reports as follows : This company was incorporated January 26th, 1899, and organized March 17, 1899. The properties, which were ac- quired at the outset, were as follows : Ninety-one per cent, of the Capital Stock of the Mechanical Rubber Company, which owns : (a) The plant of the Chicago Rubber Works, at Chicago, Illinois. (b) The plant of the Cleveland Rubber Works, at Cleve- •land, O. (c) The plants of the New York Belting and Packing Co.,. (i) at Passaic, N. J., and (2) at Sandy Hook, Conn. (d) The plant of the Fabric Fire Hose Company at War- wick, N. Y. (e) The plant of the Stoughton Rubber Company at Stoughton, Mass, Seventy-five per cent, of the Capital Stock of Morgan & Wright of Chicago, 111. The entire capital stock of the Peerless Rubber Manufac- turing Company of New York. The entire capital stock of the India Rubber Company of Akron, O. There has since been acquired : Eight and three-quarter per -cent, of the Capital Stock of the Mechanical Rubber Company. The entire capital stock of the Sawyer Belting Company of East Cambridge, Mass. The entire Capital Stock of the Hartford Rubber Works- Company, of Hartford, Conn. 36 The entire Capital Stock of the IndianapoHs Rubber Com- pany of Indianapolis, Ind. The entire Capital Stock of the Peoria Rubber & Manufac- turing Company of Peoria, 111. Negotiations have been completed for the transfer to the Rubber Goods Manufacturing Company of the entire Capital Stock of the iVmerican Dunlop Tire Company of Belleville, New Jersey, and arrangements have been about completed for other valuable properties and contracts which will mater- ially increase the earning capacity of the company. The Rubber Goods Manufacturing Company has no in- debtedness and the By-Laws forbid any bonded or mortgage debt to be created without the consent of the holders of two- thirds of the preferred shares, as well as of the holders of a majority of the general or common stock. The Treasurer's Report of the financial condition of the company, as of February loth, 1900, and of the operations for the fiscal year is appended. The officers and directors of the company congratulate the stockholders on this showing. Respectfully submitted, Charles Stewart Smith, President. TREASURER'S REPORT. The following balance sheet shows the condition of the company February 10, 1900: ASSETS. Cash $318,246.72 Accounts receivable 765.589-51 Net earnings of properties ac- quired prior to November 1,1899 $1,409,421.87 Less amount re- ceived to date... 852,124.83 ■ 557.297-04 Investments 22,129.732.28 Total $23,770,865.55 37 LIABILITIES. Preferred stock. . .. : $7,621,300 Common stock 15,134,600 Total $22,755,900.00 Surplus $1,014,965.55 W. B. FLINT, Treasurer. INCOME AND DIVIDEND ACCOUNT. Net income received to February 10, 1900. . . . $798,438.26 Dividends paid on preferred stock: June 15th, 1899 if per cent Sept. 15th, 1899 if per cent Dec. 15th, 1899. ... . .if per cent Total 340,769.75 Available for dividends $457,668.51 Balance of earnings reserved 557,297.04 Total surplus $1,014965.55 W. B. FLINT, Treasurer. In addition to the net earnings of $1,409,421.87, herein- before stated, the interests acquired since November ist, 1899, have made a profit to December 31st, 1899, as esti- mated, of $60,000. DIVIDEND PAY^,IENTS.— The company has paid reg- ular dividends of if per cent, quarterly on preferred stock and commenced quarterly payments of i per cent, on the common. Dividends are declared quarterly, and paid Jan- uary, April, July and October. INCREASED EARNING CAPACITY.— Since the time of the annual report, several important additions have been made to the earning capacity of the company. The most prominent of these has been through contracts with the Amer- ican Bicycle Company, the Consolidated Tire Company, and other concerns for the sale and manufacture of rubber tires. As a partial result of the new arrangement, directors of the company on June i, 1900, authorized the following memoran- dum regarding the company's financial affairs. 38 Profits year '99 $1,409,421 Preferred stock, dividends and expenses 549.779 Balance of earnings undivided $859,642 Deduct amount set aside for dividends on preferred and common stock (paid July 16) 284,835 Net balance undivided earnings year 1899 574,807 The earnings for the first six months of 1900, ending June 30, were $1,208,487, leaving a surplus June 30. after paying all expenses and dividends on the preferred and common stock of over $1,750,000. PLAN OF ORGANIZATION.— The organization and management of the Rubber Goods Manufacturing Company is unique in comparison with consolidations in other indus- tries. The individuality of the subsidiary companies is main- tained both in the competitive and manufacturing sense. This engenders a spirited rivalry in the sale of goods and con- stantly breeds new business. The paramount factor, how- ever, is that the best individual ability is fixed as the standard for all resulting in greater benefit to the whole system. CHAPTER V. RUBBER TIRE COMPANIES. BICYCLE TIRE BUSINESS.— The bicycle business has passed through its primary stages into a well established in- dustry. The product is manufactured and sold almost ex- clusively by the companies which are controlled by the Rub- ber Goods Manufacturing Company. The feature of the busi- ness, which gives it the greatest stability, is the popularity of brands. VEHICLE TIRES.— The manufacture of solid vehicle tires is also well established upon well defined lines. There are opportunities for improvement and experiment, however, 39 in the auto tire field, as new conditions, are to be met in heavier vehicles. This business is very large at present^ but is bound to grow to enormous proportions. CONSOLIDATED TIRE COMPANY.— This company makes a specialty of solid tires. It is not a manufacturing company, but sells the product of other factories through special contracts. The company is capitalized at $8,000,000. On December 31, 1899, a statement was made showing an ex- cess of current assets over current liabilities of $781,428. The chief assets of the company consist of good will, patents, cash on hand, as the result of profits, and goods carried in stock. The Grant patent, commonly known as the Kelly Tire, is the chief patent owned. This form of tire is made, however, by a number of companies. This company is by far the larg- est handler of tires in the country. VOLUME OE BUSINESS.— The total tire business of the country may be fixed at about $12,500,000 annually. Of this, bicycle tires are sold to the amount of $7,500,000; solid vehicle tires, $4,000,00; Pneumatic Vehicle Tires $1,00,000 and cushion tires about $100,000. The principal companies which make tire are Morgan & Wright, Hartford Rubber Tire Company, Goodrich Rubber Company, India Rubber Company, Akron, O., Diamond Rubber Company, Akron, O., Goodyear Rubber Company, New Brunswick Tire Com- pany, The Buckeye Rubber Company, is building a factory, at Akron, O. CHAPTER VI. HARD RUBBER COMPANIES. AMERICAN HARD RUBBER COMPANY.— The total biisiness done in hard rubber product in the United States is about $2,500,000, of which the American Hard Rubber Com- pany, composed of the India Rubber Comb Company, the Rut- 40 land Hard Rubber Company and the Goodrich Hard Rubber Company, control about three-quarters. The Goodyear Vul- canite Company produces about one-fifth of the total output. The great bulk of the Hard Rubber business is in electrical insulation, combs, surgical and stationers' supplies. There is an actual increase in the development of the business and little or no prospect of competition from foreign interference on account of an import duty of 30%. As the American Hard Rubber Company and the Goodyear Vulcanite Company are practically limited copartnerships, statements of their financial condition are not available. CHAPTER \n. RECLAIMED RUBBER COMPANIES. METHOD OF CONDUCTING BUSINESS.— The Re- claimed rubber business of the United is one of the most im- portant in the industry. Practically the same conditions that control crude rubber operate in reclaimed rubber. The busi- ness is carried on by firms which handle the reclaimed rub- ber or scraps such as boots and shoes, belting, etc., which is first collected through junk shops. The price is fixed on the basis of supply and demand. The business has become so important that a standard system of packing and grading of material has been established. PRINCIPAL USERS OF RECLAIMED RUBBER.— The companies which handle the greatest quantities of re- claimed rubber are as follows : United States Rubber Com- pany, Loewenthal Rubber Company, Philadelphia Rubber Works, Mechanical Rubber Company, Boston Rubber Shoe Company, Bloomingdale Rubber Works, Raymond Rubber Company, Diamond Rubber Company, Trenton Rubber Manufacturing Company, Empire Rubber Manufacturing Company, E. H. Clapp Rubber Comapny, United States Rub- 41 ber Reclaiming Works, B. F. Goodrich Company, New York Belting & Packing Co. Limited, Joseph Stokes Rubber Com- pany, Boston Woven Hose & Rubber Co., New Jersey Rub- ber Company, Crescent Belting & Packing Company, Dan- versport Rubber Company, Lake Shore Rubber Company. CHAPTER VHP GUTTA PERCHA AND BALATA COMPANIES. CONTROL OF TRADE.— England controls the Gutta Percha business of. the world through its better facilities in the manufacture of cables. Cables and golf balls are the principal products of manufactured articles made from Gutta Percha and Balata. The supply of Gutta Percha is so re- stricted that the price of the raw material seems to be too high to increase its use. On the contrary, the manufacture of Gutta Percha articles seems to be decreasing. BISHOP GUTTA PERCHA COMPANY.— Probably the most important element at present in the Gutta Percha business is the contemplated building of the Pacific Cable, which, if it happens, is more than likely to advance the price of Gutta Percha. This would prohibit its use and a rubber compound be used in its place. The principal company en- gaged in the Gutta Percha business in this country is the Bishop Gutta Percha Company established in 1847, which manufactures cables, insulated wires and other Gutta Percha goods. No statement of this company's affairs is publicly made. 42 OCT 5 1900