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

No. 653

Sir: I have the honor to refer to the Legation’s despatch No. 638, of January 27, 1937,18 and previous correspondence concerning the international rubber restriction.

Professor van Gelderen, the Chief Netherlands Delegate on the International Committee, returned from London on Friday and Mr. Wilson had an informal talk with him yesterday. He said that the meeting of the Committee had, as usual, been extremely cordial and pleasant and that also as usual no vote had been necessary in order to assure the success of the compromise measure of 85% free rubber for the third quarter of 1937, which had been adopted to please the consumer interests, particularly the Americans. He added that in his opinion Colonel Townsend and his other associates were satisfied with the situation, although he quite understood that it was their business and served their interests best to fight the restriction.

When asked whether or not the percentage of rubber might be raised to 90% for the fourth quarter of the year, Professor van Gelderen said that he thought it very likely, but that in any case he was satisfied that the 85% rate of production for the third quarter would more than take care of the situation and would probably raise reserve stocks by thirty or forty thousand tons. He added that while speculators might still have some fun in the rubber market, the recent decisions of the International Committee had put an end to the possibility of any speculation based on actual shortage.

He then went on to discuss the suggestion he had made in London that the consumer interests organize in a cooperative purchasing plan. He said that no decision had been reached or could be until a thorough study of the matter had been made, but that he thought that Colonel Townsend and the other consumer representatives had been impressed by the arguments. It was difficult to ask the producers to rapidly increase their production at great expense merely because of some political or economic condition in certain consumer countries, since they were also in business and had to use their own judgment as to the possibility of events taking a different turn from what is now generally expected. In other words, it would be more reasonable to ask for increased production if there were some guarantee for the growers that they would have a minimum market and that in critical times they would not have to carry enormous stocks themselves. He added that another point had been brought up which he thought the [Page 885] American interests should take into consideration, namely, that the amount of shipping available is not sufficient to take care of any large increase in exports of rubber for the moment.

I understand that the Minister of Colonies, Dr. Colijn, has ordered the Governor General of the Netherlands East Indies to encourage increased production, particularly in Sumatra, where growing had been greatly curtailed due to difficulties in the labor situation.

Respectfully yours,

Grenville T. Emmet
  1. Not printed; see footnote 4, p. 877, and footnote 6, p. 879.