Monday, Nov. 03, 1952

Rubber & Rice

"If we try to get close to Russia," said Ceylon's late, respected Premier Don Stephen Senanayake, "we would be embracing danger, we would be embracing the bear."

Last week Ceylon (whose Prime Minister is Don Stephen's son Dudley) was hugging Russia's partner in crime, Red China. Occasion for the dangerous embrace: a chance to do some trading in rubber and rice.

Tiny, scenic Ceylon (pop. 7,500,000), a free member of the British Commonwealth since 1948, is heavily dependent on rubber exports. When the Korean war broke out in 1950, the price of natural rubber zoomed from a sickly 18¢ a pound to about 90¢. The U.S., by curtailing its purchases and relying largely on its own synthetic rubber, forced the price of natural back down to about 30^. That slump hurt Malaya and Indonesia, as well as Ceylon; but on top of it, Ceylon had a rice crop failure this year. It had to reduce the ration to a bare subsistence level.

Red China, which needs large quantities of rubber for the war in Korea, tempted the desperate Ceylonese with a proposal to sell Ceylon rice if China could buy more rubber. The government in Colombo, which has no ambassador in Peking, sent a trade mission to Peking, headed by Robert G. Senanayake, a cousin of the Prime Minister. In Peking, where it was lavishly feted, the Senanayake mission contracted to buy 80,000 tons of rice at the low price of $156.80 a ton; with the purchase money, the Reds would buy 22,321 tons of rubber. Last week the missioners were back in Colombo with a Chinese offer to buy Ceylon's entire rubber output (about 54,911 tons annually) at 33¢ a pound for the next five years. Colombo seemed on the verge of accepting.

Ceylon, which is not a U.N. member (it was vetoed by Russia), is the only commonwealth nation that has shipped any rubber to Red China in 1952. The U.S. State Department has retaliated by cutting off sulphur exports to Ceylon, and by canceling $500,000 in Point Four aid.