A sweet, mortuary smell drifts down the muddy Batanghari River and hangs over a harbor crowded with rafts, sailing ships and coastal freighters.

The odor is that of raw rubber, brought from upcountry to mills here for processing into neat, 75-pound "blocks" ready for American tire plants.

Jambi is halfway around the world from Akron, Ohio, and its sights, sounds and smells are not portrayed in the annual reports of the great tire multinationals based in the American Midwest.

Yet, Jambi and the tropical forests around it are essential to the U.S. tire multinationals -- and vice versa. The fortunes of Akron and Jambi are intertwined by rubber.

Most of the 100,000 tons of rubber leaving here each year end up in the United States. Two-thirds of that goes to a single company, Goodyear.

In Jambi and the surrounding countryside, vast numbers of Indonesians labor to keep Goodyear and other tire multinationals supplied with rubber.

None of them is employed directly by Goodyear, but all of them depend for their livelihood on the U.S. companies.

The system is feudal in structure.

Its peasantry is one million Indonesian "smallholders" -- rubber farmers with a few acres of rubber trees.

Its serfdom consists of thousands of other Indonesian mill workers laboring in hot, fetid plants.

In the middle reaches of the hierarchy are the rural rubber mechants and the mill owners. Virtually all of them are of ethnic Chinese background -- members of the trading and business class that dominates the economy of Southeast Asia.

At the top of the hierarchy are a handful of giant customers: tire companies, large dealers and the state trading monopolies of the Soviet Union and China.

For those at the bottom, life is poor, unhealthy and sometimes dangerous.

Indonesian small holders who eke out an existence far upstream from the mills are locked into primitive farming methods.

In many cases, they catch the oozing latex from their rubber trees in coconut shells, and coagulate the latex in a cut-off kerosene can or in a hole in the ground.

These smallholders usually have only one outlet for their rubber: the local tengkulat or middleman, who pays them in rice, kerosene or tea.

The average income of Indonesian rubber smallholders is $250 a year. Some are underfed. Others suffer from malaria, cholera and vitamin deficiencies.

"Instead of slowly improving, [their] condition is declining," a 1972 Indonesian government report on smallholders said. "In some areas a farmer must tap his trees and sell his latex to the middleman before he can buy rice for breakfast."

After the rubber leaves the hands of the smallholders, it is floated down the Batanghari River on rafts, through leopard-infested jungles, or trucked 100 miles or so to Jambi and other Sumatran rubber ports.

By the time the rubber reaches the mills of Jambi on the bluffs along the Batanghari River, it has been blackened by dirt and oxidation, is full of sand, leaves and rocks, and resembles chunks of anthracite coal.

The working conditions in many of the Indonesian mills would never be allowed in the United States.

North of Jambi on the Sumatran coast, young Indonesians working in the mills race over wet concrete floors, while other workers cut up chunks of rubber at circular power saws whose blades are unguarded.

A factory manager notes that the men only work four-hour shifts. The job is too strenuous to keep going longer.

Here in Jambi, barefoot men clad only in shorts because of the heat and spray from the cleaning operations heft grimy, slippery 100-pound slabs of rubber.

Their pay is about $1 a day.

Strikes are illegal in Indonesia, unions are rare and millers aren't required to give sick leave.

"I guess you'd have to say some of the mills really are like Dante's 'Inferno'," said a U.S. rubber company executive.

But in Indonesia's job markert, getting work at the mills is considered a lucky break.

If Jambi's economy is totally tied to the multinationals, the reverse is more true today than almost ever before.

While the tire corporations all moved heavily into synthetic rubber manufacturing following World War II, natural rubber usage has also increased steadily over the past 30 years.

Some natural rubber is essential in all tire compounds because of its special resilience, resistance to internal heat and adhesion.

The new, high-performance radial tires that are now standard equipment on most American cars, moreover, require even more natural rubber than their predecessors. So for the multinational tire companies, natural rubber supplies have become unusually critical.

Demand for natural rubber has strengthened in the past five years, and prices have been rising. Trade reached $2.2 billion in 1977.

While Goodyear, Firestone, Uniroyal, Dunlop, Goodrich and Michelin -- six of the 10 major tire companies -- have vast rubber holdings in Asia, Africa and South America, these plantations could never supply the companies with the quantities of natural rubber they need.

These company plantations turn out mainly premium grades of rubber destined for use in manufacturing surgical gloves, contraceptives, nipples for baby bottles, rubber bands, shoe soles and carpet backing.

The tire companies thus depend primarily on the smallholders of Indonesia, Malaysia and Thailand for the lower quality rubber they consider adequate for their tire compounds.

In principle, the price of this rubber is set in the markets of Singapore, Kuala Lumpur, London and New York in bargaining and negotiations between dealers, brokers, millers, speculators and commercial companies.

But as the demand for natural rubber has increased, the tire companies have been moving to cut out the brokers by buying rubber directly from ethnic Chinese millers all over Southeast Asia.

This is creating a new situation in which the smallholders and millers are directly tied to the tire multinationals.

The trend for a few huge buyers to tie up large segments of the world rubber supply with direct contracts were strengthened in the 1960s when the tire companies began demanding a standardized product.

Until then, rubber moved into world markets as liquid latex, as cumbersome, 250-pound bales of "ribbed smoked sheets" or as "crepe" -- scrap rubber that has been cleaned and lightly milled.

The once prevalent smoked sheet, which is still the standard grade in Singapore markets, required only light processing consisting of coagulation, flattening and smoking.

Faced with increased competition from synthetics in the 1960s, Malaysia and then other rubber-producing nations moved to a system requiring more processing and capital investment.

These countries began converting to production of standardized "blocks" of rubber that are graded for dirt and other characteristics.Rubber from up country is cut into crumb-sized pieces, cleaned in steaming vats and finally compacted in hot ovens into rectangular blocks that are packaged in a polyester wrap.

The "block" factories each required a capital investment of at least $1 million -- a debt burden some feel has reduced the ability of the ethnic Chinese mill owners to bargain with the big multinational tire companies.

The tire firms, moreover, have gained a reputation throughout Asia for driving a hard bargain.

Goodyear's Singapore rubber buyer Howard Chappell, described in a company press release as a "tough player in a sometimes brutal game," has a cold reminder for millers who are reluctant to sign exclusive contracts in hopes of getting more for their rubber blocks on the open market.

"You'll need Goodyear someday," he tells them.

While not all the mill owners are under contract to Goodyear, Chappell has lined up 40 ethnic Chinese millers up and down the Indonesian coast and in Malaysia and Thailand, who supply his company with 20,000 tons of rubber blocks per month.

"The Chinese mills in Indonesia are practically an extension of Goodyear," remarks a British broker in Singapore.

In the view of Asian officials and rubber experts, neither the giant tire companies nor the ethnic Chinese mill owners are primarily to blame for the poverty and poor working conditions of the Indonesians on whom the whole system depends.

The Indonesian government has habitually neglected smallholders while financing state-managed plantations.

Meanwhile, the country's rubber acreage has been declining while world rubber prices are rising, and smallholder production has stagnated at 570,000 tons a year.

The World Bank in 1977 earmarked $18 million of a $65 million credit to help rubber smallholders in Jambi province, but the impact is uncertain. Most smallholders still are not able to break free of the middlemen to sell their latex directly to rubber processing centers.

Only the fact that Sumatra is an agricultural paradise where bananas, coconut and cassave thrive makes life bearable for many. "We need roads, we need bridges, we need processing centers, we need tools for smallholders," said a local official in Jambi.

By contrast, Malaysian smallholders average an output of 710 pounds of rubber an acre per year, about double the Indonesian average. The difference in income is evident in the fact that many Malaysian farmers haul their latex to a close-by collection point aboard a Honda motor bike.

The Malaysian government has programs to replant 100,000 acres a year with new high-yield rubber seedings, to resettle farmers and set up clean, efficient coagulating centers."

From Malaysia's experience, said Indonesian state plantation manager Nukman Halim Nasution, "it is clear that upgrading the smallholder is a question of finance, organization and education. We have a social problem -- not a rubber probelm."