840.48/2650: Telegram

The Acting Secretary of State to the Ambassador in France ( Wallace )

482. For Rathbone from Davis. Treasury R–260.

Reference my 243 February 22 [24] and my 249 February 25 [27].10

At request of Barnes President has written him following letter.

“I have your statement of flour stocks accumulated in protection of the Wheat Price Guarantee, as required under the Act of March 4, 1919.

These statements indicate that there has been no considerable reduction in stocks for the last five months, and that they are substantially in excess of 500,000 tons. I note your statement that you have exhausted every means to sell these stocks at home and abroad, for cash, and have been unable to more than sell the equivalent of necessary current purchases, without being able to effect a reduction [Page 262] in the accumulated quantities; and that, with warm weather approaching, you fear the deterioration of these flour stocks.

There has developed, evidently, that situation contemplated in the Act of March 4, 1919, when authority was given to sell for cash or on credit.

It is desirable that you should take steps to dispose of these accumulated stocks on credit, if you cannot do so for cash, to such buyers, and on such terms and conditions as best protect the interest of our Government.

On these points, it is desirable that the views of our own Department of State and of our National Treasury should be secured.”

I have just received following telegram from Barnes: “Suggest no publicity on this matter at present but also suggest advisability cabling Rathbone today that you are able to assure them that in some manner 300,000 tons of flour will be made available the exact designation of which among the various claimants will be worked out shortly but meantime it is essential to begin to provide early tonnage immediately loading if possible and particularly in respect to tonnage for immediately loading with option of loading at gulf ports instead of Atlantic to the extent of 30,000 tons or less at Grain Corporation option. Suggest you might advise Rathbone possibly arrange additional quantities later and also desirability of making no public statement there on this arrangement at present, also suggest to Rathbone that American Shipping Board anxious for freight could probably furnish immediate loading and would probably meet any commercial rate of freight British expect to pay.” See in this connection our 249, paragraph 2.
Barnes takes position that he is selling wheat on credit under the Act of March 4, 1919 solely because flour must be sold and that he does not feel empowered to extend that credit to any one country in preference to others requesting it unless “the Treasury Department with its large commitments in present loans to various European countries and also the State Department should recommend such a course as a means of maintaining social and political stability in Europe”.
It is hoped that a conference in immediate future between Barnes, State and Treasury Departments will result in formal request to Barnes, which he will consider sufficient to warrant his extending credit to European countries most urgently in need of relief for enough wheat to meet emergency. Pending outcome of this conference, of which I shall keep you informed, suggest you undertake negotiations with British for tonnage as suggested in Barnes’ telegram quoted in my paragraph second above.
  1. Department’s nos. 406 and 437, respectively; neither printed.