841.6176/43: Telegram
The Secretary of State to the Ambassador in Great Britain ( Houghton )
352. Your 357,91 358,92 and 362.93
- (1)
- Until receipt of your recent messages I was entirely ignorant of these negotiations of rubber interests. You may so inform British officials.
- (2)
- This Government cannot countenance any plan to fix the price of rubber or any other commodity. Furthermore, participation by American citizens would certainly be a violation of the spirit if not the letter of our anti-trust laws.
I would be glad if you would as soon as possible take occasion informally to explain to Chamberlain our views in a much wider sense than the question of rubber. We believe that the whole fabric of international commerce and even of wholesome international relations may be undermined unless a halt can be called to governmental price fixing of commodities in international trade. And we believe that Great Britain and the United States, the two greatest importers of raw materials, have the most to lose by such a development. At the present time the price of some 12 different commodities is being fixed by direct or indirect governmental action, and price fixing in at least two more important commodities is now in process of negotiation between different governments, in both of which American and British industry and consumers will be the sufferers. Moreover, the apparent success of price fixing in rubber has given great strength to the movement along similar lines among American cotton growers and among other American agricultural industries where the costs of production have been inadequately met by world prices. If our government becomes a party to such practices as to imports it cannot consistently refuse to allow such combinations upon our own soil. This trend in [Page 265] international commerce cannot fail to increase unless the great trading nations unitedly oppose it. Recently an attempt to finance the coffee price-fixing in São Paulo with American capital was prevented by our government in the interest not only of our consumers but of those of the rest of the world.94 We felt that it was a primary duty to discourage international combinations to fix prices from becoming interlocked with international finance, although we understand that British financiers may supply the capital wanted to continue this combination. We have the same situation in potash.
We do not come to our conclusions solely from the above reasons. It appears to us that the very fact of discussions between ourselves and Great Britain upon rubber prices is but an indication of the inevitable result of governmental price fixing in that the discussions; which should be kept to the markets, will be at once elevated into international negotiations between governments with the addition of innumerable conflicts and arousal of bitter public sentiments upon all sides. Moreover, we know that in the long run industry itself will not develop efficiently or wholesomely under price fixing. It discourages progress in production methods, stifles consumption, increases the use of less efficient substitutes, stimulates abnormal production in non-price-fixing areas where production cannot exist on a sound economic basis.
It would seem to us a most forward step in the progress of international trade and world welfare if the British Government would join with us in discouraging such combinations and the financing thereof. This would, of course, imply the abandonment of the rubber control in respect to which our conclusion is that the world outlook, both consumption and production, makes profitable prices to planters a certainty for many years to come and no such control is longer necessary.
Our government trusts these considerations may appeal to the British Government as put forward in every sincerity and in the interest of the world as a whole.