856D.6176/381b: Telegram

The Secretary of State to the Minister in the Netherlands (Emmet)

6. Legation’s despatch No. 614 of December 28, 1936,3 and preceding. The International Rubber Committee is meeting in London on January 26. The situation which you outlined well in the memorandum which you presented on December 28 to the Netherland Government remains the same with the genuine prospect that it would become more accentuated. The Department is informed that the recent decline in rubber prices is due solely to (a) the strikes in the automobile industry and (b) the fact that most of the American manufacturers had, at the suggestion of the International Committee, kept themselves out of the market for the last month. However, the situation developing as regards world stocks continues to increase the likelihood of a possible genuine shortage and violently fluctuating prices. Speculative interests throughout the world are fully acquainted with the situation and very active, and the American manufacturers fear that if there is no change in the prospective schedule of allowed production made promptly, when they return to the market they will face a very difficult situation.

Please call at once upon the proper officials and outline this condition again. You may emphasize the fact that a continuation of the course of events such as the inauguration of the scheme will cause increasing dissatisfaction throughout the United States. Furthermore, constantly rising prices under conditions of strict control will strengthen the impression both in this country and elsewhere that private interests are generally using their control over a volume of raw material for their special advantage. Any such impression is necessarily to be regretted at a time when an effort, of perhaps great world significance, is being made to assure opinion in countries not possessing raw materials that they will have fair access to such materials.

The Department suggests that the Government of the Netherlands use its influence to bring about, (a) a further lessening of restriction to an extent necessary to permit world stocks to be built up again without any further increase in prices, (b) an improvement of the position of the consumers’ representatives on the Committee.

You may inform the Dutch Government that similar presentation is being made to the British Government.