500.C1199/343: Telegram

The Secretary of State to the Consul at Geneva (Bucknell)

81. The observation of the Secretariat officials that you report in your 146, June 30, 5 p.m., seems to be based on misinterpretation or misunderstanding of our attitude. Department certainly is not suggesting the omission of any statement of the nature of that quoted, but is expressing the view that the statement is neither decisive or extensive enough. It is realized that the actual arrangements for consumer participation would have to vary in the case of each international production arrangement. On the other hand, it is believed both feasible and essential to formulate some general statement regarding the character of that representation and the objectives of the restriction schemes that is applicable to all of them.

Just by way of completely tentative suggestion the Department puts forward the following alternative presentation:

“All international regulation schemes should provide adequate participation of consumer interests in their administration of such a [Page 923] character as to extend effective protection to the legitimate interests of such consumers and to guard against the imposition by the restriction schemes of unfair burdens upon consumers. The schemes should be administered in such a way as to make available at all times adequate supplies of the regulated material to consumers within a relatively stable price range which is reasonable with regard to the costs of efficient production.”

For Grady’s background information: Department’s contemporary experience with the operation of the tin and rubber restriction plans7 proves how difficult it has been to secure for consumers’ representatives any real influence, how inadequate and difficult it is to determine from the material made available, the reasonableness of prices in relation to cost, and how dominant the controlling producers’ attitude is likely to be.

Therefore a strengthening of the statement on the line of consumers’ protection seems to be important. Leith-Ross’8 explanation of the difficulties is read here in connection with the fact that the British interests represented in tin and rubber have always done their utmost to sustain price, no matter how strict or far-reaching the necessary reduction in production. The working arrangements between the British Government and the producers’ interest is very close. End background.

Replying to other queries in your cable:

This Government does not wish to suggest a League study of international regulation schemes or to take steps looking towards an international conference on this subject.
It is suggested that the attitude outlined above should create no embarrassment to the conversations dealing with arrangements for a cotton agreement. This Government would willingly accept arrangements for adequate and effective consumer representation in any cotton control scheme, just as it took the initiative in securing consumer participation in the International Sugar Agreement.9

  1. For correspondence relating to the restriction of rubber production, see pp. 925 ff.

    The United States was not a party to the agreement effective March 1, 1931 (subsequently renewed and extended) to regulate the production and export of tin through an international committee representing Bolivia, Malaya, Netherlands East Indies and Nigeria; for text see British Cmd. No. 4825, Papers Relating to the International Tin Control Scheme (London, 1935). See also Tin Investigation: Report of the Subcommittee of the House Committee on Foreign Affairs ... on H. Res. 404, 73d Congress, 2d Session and H. Res. 71, 74th Congress, 1st Session, to Authorize an Investigation into the Extent to Which the United States is Dependent upon Foreign Nations for its Supply of Tin, and for Other Purposes, 1934–1935 (Washington, Government Printing Office, 1935), pp. 517 ff.

  2. Sir Frederick Leith-Ross, chief economic adviser to the British Government.
  3. See Foreign Relations, 1937, vol. i, pp. 931 ff.