841.6176/14
The Ambassador in Cheat Britain (Houghton) to the Secretary of
State
London, July 23,
1925.
[Received August 4.]
No. 213
Sir: Referring to my telegram No. 224 of July
23, 5 p.m., 1925,84 I
have the honor to enclose a copy, in triplicate, of the Aide-Memoire which I left with Mr.
Chamberlain85 with regard
to the situation in the United States in the rubber industry.
I have [etc.]
For the Ambassador:
F. A.
Sterling
Counselor of
Embassy[Enclosure]
The American Embassy
to the British Foreign
Office
Aide-Mémoire
A critical situation seems to have arisen as a result of the
restriction of rubber exports from Ceylon, the Federated Malay
States and the Straits Settlements under the Stevenson Plan. The
rubber industry in the United States involves roughly one billion
dollars; it consumes more than 70 per cent of the world’s production
of rubber, and directly or indirectly gives employment to more than
one million persons. The disrupting effect to the industry of the
recent advance in prices in the short space of eleven weeks, namely
from about one shilling and sixpence [Page 255] per pound to about four shillings and sixpence,
has caused great concern in the United States. It appears that this
great advance in prices is due partly to speculation and partly
because practically no stocks exist either in London or in the
United States; and that unless some relief is afforded a partial
closing down of American rubber manufactories is inevitable.
It is perhaps useless at this time to go into the question of how the
situation might have been avoided as it would merely open up a
discussion which can in no way alter the fact that this vast
American industry is in jeopardy. To relieve the situation it has
been suggested that instead of the ten per cent release of the
exports of rubber from the States mentioned which is contemplated
under the Stevenson Plan on August 1st, an additional ten per cent
release should be made.
A delegation of the Rubber Association of America has recently
conferred with Mr. Broderick, Commercial Counsellor of the British
Embassy at Washington and made the following suggestions which, it
is understood, have been forwarded to His Majesty’s Government by
Mr. Broderick.86
- “(One) That the British Government make an announcement of
policy along the following lines: “The object of the
Government in promoting the Stevenson Act was to stabilize
the price of crude rubber at a price that would best serve
the common interests of the grower and the consumer; this is
still its purpose and it is determined to take such measures
as are necessary to check any undue speculative activity
that would defeat that purpose.
- “(Two) That the exportable allowance of crude rubber be
increased by twenty per cent (instead of ten per cent) on
August 1st, 1925.
- “(Three) That from now on and until the amount of rubber
in London reaches fifty thousand tons rubber in excess of
the exportable allowance be permitted to be shipped to
bonded warehouses in London for subsequent release within
exportable allowances.
- “(Four) To prevent the recurrence of violent speculative
movements and encourage additional planting of rubber for
insuring future supplies that the present plan be rendered
more elastic by providing for an additional five per cent
increase in exportable allowance of every three pence
increase over one and six and for suitable decreases in
exportable allowances upon decreases in price below one
shilling”.
It is essential that the price of rubber should be stabilized at a
reasonable figure if the American manufacturer is to continue
operations in a normal way and develop to its utmost the use of
rubber which, in turn, would encourage and make profitable its
growth in a manner which would serve the common interests of both
grower and consumer and restore the equilibrium from which the
industry has [Page 256] been thrown.
It is believed that the suggestions above mentioned might serve as
steps towards restoring this equilibrium.
