841.6176/40: Telegram

The Ambassador in Great Britain ( Houghton ) to the Secretary of State

[Paraphrase]

358. Department’s telegram number 345, November 24. Work, President of the Goodrich Company, told me following late yesterday:

Several months ago Winston Churchill89 proposed to certain persons that a banking syndicate composed chiefly of Americans should be formed to regulate the price of raw rubber. Such a syndicate under the lead of Dillon, Read of New York was formed to cover rubber demands of Fiske, Goodrich, Goodyear and United States. Their representatives, Dunn of Fiske and Erdman of Goodyear, came to England, but found it impossible to work out a satisfactory agreement. Work later joined them, and an entirely new plan was developed, acceptable to these American interests. Dunn has sailed for America to see you to learn if you are willing to inform the Government of Great Britain broadly that a plan acceptable to the Rubber Association will be acceptable to you. The plan in substance contemplates the removal of all restrictions on February 1. Three months later, should the price decline, it shall be supported at the rate of 3 shillings 6 pence a pound, but each succeeding quarter the supporting price shall be reduced 3 pence a pound until the price of 2 shillings is reached. This will be regarded as the permanent base price. Stevenson will accept this plan provided the Government of the United States gives its assent; and inasmuch as it will prevent violent fluctuations of price and move the base price steadily downward and is open to all purchasers of rubber, Work and his associates think it should be accepted. Dunn will furnish you with the details. Churchill has assured Work and his associates that much of his interest in plan is based on his desire to strengthen British position in international exchanges. According to Work, Stevenson’s position has been seriously shaken because of our representations. The British apparently will deal with Work only with your approval.

This new development has taken me wholly by surprise. In our talk at Hatfield House,90 Amery mentioned casually that certain American interests had been seeking to purchase rubber on long-time contracts, and, as reported to you, Chamberlain yesterday spoke a [Page 264] little more definitely. Aside from this I have received no information at all regarding the formation of an American syndicate to control the entire rubber supply or that negotiations to that end had been carried on for several months. Whether the same is true of the British Foreign Office I cannot say. Would it not be advisable for me to inform Chamberlain that the Government of the United States is wholly without information regarding this movement?

Houghton
  1. British Chancellor of the Exchequer.
  2. See letter from Ambassador Houghton to the Secretary of State dated Nov. 9, 1925, p. 259.