856D.6176/400: Telegram

The Secretary of State to the Ambassador in the United Kingdom (Bingham)

83. Tour 139, March 12, 7 p.m. Please say to the British authorities that we are reserving full comment and analysis on their reply until we have the full text and have had time to study it carefully. We wish however to immediately convey to them some observations regarding a few of the most salient aspects of the immediate situation. The Department agrees with your suggestions that it is highly desirable to do this and to place a written reply on record before the forthcoming meeting. This reply should include the following points:29

That the British communication seems to stress out of proportion any degree of concurrence the Consumers’ Panel may have given to any of the decisions reached by the International Rubber Committee. From the very beginning the consumers representatives have felt that their role and the method by which they were permitted to participate in the deliberations of the Committee fell far short of what was necessary for effective representation. (In this connection, if no unwise delay is thereby incurred, please discuss fully with Viles and Blandin the attitude of the Consumers’ Panel.)
Furthermore, from the very origins of the scheme this Government has expressed to the British Government doubts as to the effectiveness of consumer protection. Beginning last September it put before the British Government with seriousness its views in regard to the prospects for rubber supplies and prices, and suggested adequate and immediate action. It cannot be maintained therefore that the [Page 898] present situation was unforeseen by all parties concerned, or that the failure to take adequate action is shared between the interested parties, including this Government.
With reference to the allegations that rubber is not a factory product, that exceptional difficulties are expected to be presented in securing rapid despatch of more rubber and that “no control scheme which is unsupported by the possession of large stocks under a controlling authority can control such a situation fully over a short period”, please make the following observations:
Quote paragraph 3 (b) of the Foreign Office’s note of April 26, 1934,30 which recites the “several factors in the scheme on which the United States can rely for rapid price protection in the event that temporary fluctuations occur.”
That in its earlier communications this Government foresaw the development of this particular situation and cited it as requiring adjustment in the operation of the scheme, and it now wishes to cite it as indicating the need for some basic revision of the scheme.
That the responsibility of the British Government seems to be more extensive than that described in paragraphs 2, 3 and 4. It is true that the British Government has some measure of control only over the British delegates, but these may be assumed to have a most important if not decisive role in the decisions of the Committee. Furthermore, the whole operation of the scheme rests completely on legislative action, supported by penalties, enacted by British governmental authorities. Without such direct governmental powers the Rubber Committee could not possibly operate any control scheme.
Irrespective of the extent to which this Government may agree with the observation of the British Government that “so long as such regulation is able to maintain prices at a reasonable level and to provide alike against abnormal scarcity and excessive production”, the principle of regulation is not in itself objectionable, it cannot agree that the operation of the rubber restriction scheme has during recent months satisfied these criteria.
This Government of course does not wish to protract unnecessarily the argumentative interchange of views and judgments with the British Government on this subject. The forthcoming meeting affords opportunity to the British Government to bring it about that the present situation is remedied and that the bases of the plan are revised in such a way as to guard against further abnormal situations. It most earnestly again asks the British authorities to consider all the necessary steps in that direction. Messrs. Viles and Blandin are now in London prepared to present and discuss detailed suggestions to that end.
Action which will immediately guard against a price for rubber decidedly out of line with computations of reasonable profit and reasonable price for consumers, and which will give assurance that adequate stocks will be available in the future will forestall a situation which is almost certain to influence worldwide judgment as regards the attitude of the British authorities on the whole raw materials question.

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In view of your repeated reports that Sir John Campbell is again giving warning against the activities of this Government in the matter, you may within your discretion say to Mr. Eden or the Colonial Secretary that such a position on the part of Sir John Campbell seems unjustified. In the origins of the scheme, in the formal assurances that have been given by the British Government to the American Government, and in interest which this Government must necessarily have as representing the largest rubber consuming country of the world, it considers that it has every fair reason for taking a constant interest in the development and results of the rubber restriction scheme.

In drafting the actual communication please use your discretion as to how closely to follow the suggested language, and as to whether to include everything above presented.

The Department has discussed all phases of the situation with complete frankness with Messrs. Viles and Blandin and the Embassy may do the same within its discretion.

  1. A note in the terms of the Department’s instruction was sent on March 15 by the American Ambassador to the British Secretary of State for Foreign Affairs.
  2. Foreign Relations, 1934, vol. i, p. 653.