500.C1199/321

The Secretary of State to the Minister in Switzerland ( Harrison )

No. 341

Sir: Reference is made to the Legation’s despatch No. 242, February 18, 1938, enclosing a circular letter from the Secretary General of the League of Nations, requesting the observations of this Government regarding the principles formulated by the Economic Committee of the League, with respect to commercial access to raw materials, in its report to the Council on the work of its forty-seventh session. You are instructed to transmit the following observations of this Government to the Secretary General of the League of Nations:

1.
The Government of the United States has studied with a great deal of interest the comments of the Economic Committee upon the report of the Committee for the Study of the Problem of Raw Materials and the principles which the Economic Committee has formulated regarding commercial access to raw materials, to which, in the [Page 920] opinion of the Committee, governments should conform, so far as possible, both in their metropolitan territories, and in the colonies, protectorates and other territories over which they exercise effective authority. The considerations mentioned in paragraph 4 of the Committee’s comments on commercial access to raw materials, and the other difficulties which might be encountered in securing action on this subject are recognized by the Government of the United States, but it is felt nevertheless that the possibility of prompt action should be given further and continuous consideration. For its part, the Government of the United States will be prepared to give the most sympathetic consideration to whatever action may be proposed.
2.
It is the opinion of the Government of the United States that action in this field should be as far-reaching and as effective as proves to be possible. In this respect it is felt that the third principle formulated by the Committee, concerning international regulation schemes relating to the supply of raw materials,3 falls short of supplying the assurances that should be extended to the consumers of raw materials regulated by such schemes. Although the Government of the United States is sympathetic to efforts to organize production and marketing efficiently and on a remunerative basis, it is felt that there is need for much more study and specific consideration of the problems created for consumers in connection with international control schemes. It is the opinion of the Government of the United States that it would be unfortunate if this third principle should be adopted as at present drafted, countenancing insufficiently safeguarded restrictions on the movement of raw materials by international agreement or control. This declaration appears to leave the way open, with insufficient safeguards, to the sort of restriction on the supply and movement of raw materials, through the action of international groups, which would be condemned as unwarranted and untenable on the part of individual governments under the first principle formulated by the Committee. [Page 921] The observations of the Government of the United States upon this point will be limited at present to the brief remarks set forth above, but it is prepared to discuss the problems involved in this field in greater detail.

Please supply the American Consul at Geneva with a copy of this instruction. In any discussions regarding this subject which may arise with the Secretariat, reference can be made to the Department’s telegram No. 164 of December 3, 1937, 5 p.m., to Geneva,4 transmitting for Thompson from Grady5 comments, prepared after consultation with this Department, regarding the Secretariat’s draft declaration concerning commercial access to raw materials; the comments contained in that telegram apply equally well to the draft declarations now under consideration.

Very truly yours,

For the Secretary of State:
Francis B. Sayre
  1. The third part of Section I of the report of the Economic Committee reads as follows:

    “C. International Regulation Schemes relating to the Supply of Raw Materials.

    “International regulation schemes should be so framed as to admit effective association of consuming interests with their administration, and to make available adequate information regarding their operation. They should be administered in such a way as to provide consumers with adequate supplies of the regulated material, to prevent so far as possible, the price of the regulated material from rising to an excessive height and to keep that price reasonably stable.

    “In so far as Governments are themselves parties to a scheme, they will of course be responsible for seeing that the scheme is framed and administered in accordance with these principles.

    “In so far as Governments are not themselves parties to a scheme, they should be ready, so far as circumstances permit, to use their influence to secure the application of these principles by their nationals parties to the scheme.

    “In either event, they should be ready to take all possible steps to ensure the investigation of complaints by other countries in regard to the operation of the scheme.”

  2. Foreign Relations, 1937, vol. i, p. 823.
  3. Henry F. Grady, American member of the Economic Committee of the League of Nations; in Mr. Grady’s absence, he had been represented by Llewellyn F. Thompson, American Consul at Geneva.