By April 1942, Japan had cut off almost all US supplies of natural rubber, a key raw material for which the country had effectively no domestic sourcing. The resulting shortage aggravated downward pressure on manufacturing productivity and seriously jeopardized military capability. The risks that this would happen, widely foreseen, could have been mitigated by more or earlier stockpiling, subsidization of domestic plant-based sources of latex, or development of a synthetic rubber industry. At the time of Pearl Harbor, each route had been pursued in a limited fashion or not at all. This paper explores why, highlighting the outsized role played by businessman/politician Jesse Jones, as well as the multiple channels through which the rubber famine adversely affected the country’s wartime economy. This history starkly illuminates a policy dilemma still with us: How much “insurance” should a country carry when it depends heavily on interruptible foreign sourcing of a strategic input?
