The Netherland Minister for Foreign Affairs ( De Graeff ) to the American Minister in the Netherlands ( Emmet )4
Mr. Minister: Referring to the letter of Mr. Warden McK. Wilson, dated December 28, 1936, No. 353,5 I have the honor to inform Your Excellency that the opinion of the Government of the Queen in the matter of the rubber restriction policy is as follows.
The decision of the meeting of the International Committee for the regulation of rubber of December 15, 1936, in virtue of which the authorized exportation for the first half of the year 1937, at first fixed at 70% of the basic quota, was raised to 75% for the months of January, February and March, and to 80% for the months of April, May and June of this year, can in no manner be considered as a modification of the policy of the Committee.
In fixing the authorized quotas of exportation for rubber, the International Committee has always taken as a base statistical figures gathered with care. In regard to the considerable increase in consumption during recent months, the Committee has decided to modify the quotas established at its meeting of October 27th, and to permit an increased exportation during the coming months. It is very probable that by this measure the equilibrium between supply and demand will be established in such a way that for the first half of 1937 the stocks of rubber will not be further reduced.
The fact that—entirely contrary to the prognostications of the International Committee—the price of rubber has increased considerably since the above-mentioned decision of the Committee, must be in large part attributed to speculuative operations of commerce. Although the Committee has the function of regulating the exportation from producing countries, it has no power over rubber bought by commerce.
On the other hand, the Committee has indeed the means of stimulating the exportation of “ready rubber” from the producing countries in case a shortage is imminent. The Government of the Netherlands Indies is active along these lines at the moment.
With reference to the statement that the price of rubber will be raised much above the level considered appropriate by the Government of the Queen, it must not be overlooked that there is a tendency for all commodities to improve their prices on the world markets. [Page 878] However, the Government of the Queen remains of the opinion that moderate prices acceptable to consumers are always desirable.
The Government of the Queen is impelled to state that in fixing the percentages of rubber restriction, the observations and warnings of the delegate of the American consumers have indeed been taken into account. But all the decisions of the Committee relative to the percentages of restriction, and it is self-evident that these decisions have a direct repercussion on prices, have been made in mutual agreement with the delegates of the consumers in the Committee. This is notably the case with respect to the decision of December 15th mentioned above, which had the entire adhesion of the “Consumers Panel”, in which figure the representatives of the American rubber manufacturers.
The Committee is always aware of the interest in sufficient rubber exportations in the different consuming countries. In consequence the fears of the American interests, which are shared by the American Government, do not appear to be justified.
Moreover, the direct shipments to the United States during recent months are in no way disquieting, whereas the stocks of manufacturers and brokers (négotiants) are important. A considerable shortage is not to be feared. Naturally the International Committee will not delay in revising the percentages of restriction in case the statistical position of the market becomes sensibly modified.
The Committee is well aware of the importance of the fact that the stocks of rubber are not entirely available for commercial centres of first demand. However, the Committee has only an indirect influence on this situation.
It follows from the above that the rubber restriction has not greatly exceeded the objective set for it, as well as that this Committee is determined to safeguard insofar as it is possible the interests of the consumers.
The Government of the Queen can very well understand the very special interest of the Government of the United States in the present subject. Thus the Government of the Queen is impelled to declare again that it will remain faithful to its policy of the maintenance of a moderate price level, although remunerative for efficient rubber producers, and that it will always take into consideration the interests of the American consumers. However, it cannot admit that the recent increases in quotas are not adequate to assure for the year 1937 a stable and satisfactory price; on the contrary, it is of the opinion the present and future measures taken in the producing countries for the stimulation of rubber shipments shall have produced their effect.
Please accept [etc.]
The Secretary General