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With over 200 wholesale distributing points outside of the U. S., Goodyear is a world-wide organization. Ramifications in this country include a 37,000-acre cotton plantation in Arizona, coal mines in Ohio, textile mills in California, Georgia and New England.
Probably Mr. Eaton's main reason for choosing Goodyear for his entrance into rubber is because it is the world's largest rubber company. But another is that while many rubber companies are suffering from poor earnings, Goodyear is prospering. A few days after Mr. Eaton's control was reported, the Goodyear 1929 statement was released. Its profits were $19,864.374, the best since 1925, and standing against $13,327,843 in 1928. Net sales made a new record of $256,227,067 despite lower prices, while the number of tires sold went up 14.6%.
Since Mr. Eaton's policy in rubber will probably resemble his steel methods, it is likely he will first absorb smaller units, then effect a large merger. The Seiberling Rubber Co., whose Frank A. Seiberling is a onetime (1898-1920) president and now director of Goodyear and an Eaton friend, is expected to be the first acquisition. A merger with the U. S. Rubber Co., control of which recently passed to the du Ponts, is regarded as an ultimate possibility.
Conditions. When Herbert Clark Hoover was Secretary of Commerce he wrote: "The world has often enough seen attempts to set up private monopolies, but it is not until recent years that we have seen governments revive a long-forgotten relic of medievalism and of wartime expediency by deliberately erecting official controls of trade in raw materials of which their nationals produce a major portion of the world's supply, and through these controls arbitrarily fixing the prices to all of the hundreds of millions of other people in the world."
The conditions to which he referred were exemplified by the British Stevenson Act, passed in 1922 and aimed at the stabilization of the price of rubber. The general effect of the Act was to restrict production to about 80% of capacity, and to regulate exports so that the price would hover around 30¢. The result was of course that other rubber-producing countries entered into full production, and soon the price of rubber fluctuated over wide margins. The Act was repealed last November, with crude rubber selling around 15¢.
Low prices of crude material caused large inventory losses to companies which had stocked up, serving to unsettle the industry in general. The demand for rubber is inelastic in that it does not expand with lower prices. The result is that lower prices are not offset by increased sales. These conditions were reflected most of all in the tire trade.