841.6176/83
The Ambassador in Great Britain (Houghton) to the Secretary of State
[Received November 21.]
My Dear Mr. Secretary: I spent the week-end at Hatfield with the Salisburys. Among the guests there was Amery, the Colonial Secretary. …
[Page 260]Our particular subject of discussion was the rubber situation. The Stevenson Plan, as you know, comes under Amery’s control. We drifted into the talk quite informally, but it gave me a chance to review the whole subject from our point of view and to say to him that the conditions at home were distinctly bad and showed little hope of improvement. Amery said that if the Plan were now abandoned, the situation, he thought, would be materially worse. I replied that, so far as I was aware, our people did not object to the Plan per se, but did feel that its administration had failed to give adequate consideration to our really desperate needs. Amery said that while he recognized that the great bulk of the demand for rubber came from America, other factors must also be kept in mind, and he pointed out that the whole matter was constantly being reviewed by an advisory committee. That gave me the opportunity I had been seeking, and I said that, speaking wholly for myself, it did seem to me that if the Plan was to be worked out satisfactorily, it could only be done with American cooperation and agreement, and I suggested, therefore, the possibility of two representatives of the American rubber interests being on the advisory committee. That would, of course, bring the opposing factors of supply and demand together, and would enable a more adequate consideration of present and future needs and tend directly toward the satisfactory development of the rubber industry as a whole. Amery said that the suggestion was most interesting and that he would like to think it over.
I need hardly say to you that I made the suggestion wholly personally and on my own initiative, and that Amery understands this fact. I have little hope that the suggestion will be carried out. I am sure, however, that if such a plan could be put into operation, it would remove much of the difficulty since it would enable the American representatives to know at all times the exact market conditions, and so tend at least to remove the suspicions which naturally attach themselves now to any action taken by the British alone. In any event, I want you to know precisely what I said.
One word more. Hood, the head of the Rubber Association, cabled me some weeks ago that in their belief a seventy-five per cent, release meant, in fact, only a sixty-five per cent, release. I mentioned this statement casually to Amery, who replied at once that in his opinion rather the reverse was true. The eighty-five per cent, release on November 1st would, he indicated, be made a ninety-five per cent, release on February 1st. Amery added that if this full twenty per cent, release had been made on November 1st, it would have resulted merely in a war among the rubber producers, by which the stronger would have hired labor from the weaker in order to take advantage [Page 261] of the situation, and in this way have pushed up wages and, therefore, costs and prices. By making the increase only ten per cent, now, but indicating an intention to add another ten per cent, on February 1st, the effect would be to bring in new labor, especially from China, and leave the wage level substantially undisturbed.
If, for reasons of your own, you disapprove of my suggestion of American participation, I would be grateful if you would cable me in order that I may make the fact known to Amery. As I said, however, I doubt if the suggestion will seriously be entertained. There is a basis of national pride in maintaining the present situation and that would likely, I think, make our participation improbable.
With assurances [etc.]