856D.6176/407: Telegram

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

108. Your No. 171. The Department suggests that in the conferences with the British Government on Tuesday regarding the rubber situation, Atherton and Butterworth, while expressing full appreciation of the willingness of the British Government to consider our presentations, maintain firmly the view that the situation still awaits effective remedy and action on the part of the British Government. Of course, if the British authorities have arranged this meeting in order to inform the Embassy of certain prospective changes in the plan or program, Atherton and Butterworth will be guided by the course of the discussion in the presentation of their views.

The behavior of the rubber market since the last meeting of the Committee is additional proof of the comparative shortage of rubber that has resulted from the operations of this scheme, of the tendency to exorbitant prices and of the speculative character of the market, which is bringing huge gains to speculative interests at the expense of the American consumer. The position of American rubber-using industry today is, according to the Department’s information, more uneasy [Page 901] than at any previous time, and critical judgment is continuing to rise.

The Department will shortly forward a reply to the British note of March 1133 and endeavor to put forward certain precise suggestions. However, it believes that the proper method of presentation remains the continued insistence upon the responsibility of the British and Dutch Governments for the operation of the restriction scheme and consequently the immediate obligation that rests upon them for formulating and applying measures which will ease the existing situation, bring prices back to a reasonable level, and provide more adequate safeguards for the future results of the restriction plan.

Incidentally, should the British authorities endeavor to explain the trend in rubber prices as merely part of a general world-wide trend in raw material prices, you may emphasize the fact that the rise in price of few, if any, raw materials has been as marked as that of rubber; that this increase in the price of rubber has come about with a much smaller increase in proportional demand than in the case of most of the other raw materials; and that the gap between present market price and average cost of production is exceptionally great. But it is probably advisable not to let the British authorities transfer the question into this complex field of price comparison.

  1. Not printed; for summary, see telegram No. 139, March 12, 7 p.m., from the Ambassador in the United Kingdom, p. 894.