800.6176/97: Telegram

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

884. Your 1528, September 8, 4 p.m. Viles is prepared to issue a statement along the following lines if in your judgment it will meet MacDonald’s and Campbell’s purpose:

“The Rubber Manufacturers’ Association has been in touch with the American Government, which in turn it is understood has been in discussion with the British authorities, as regards the prospective supplies of rubber. We now have reliable information that all of the rubber required in consuming countries can and will be supplied at reasonable prices throughout the duration of war. It is pointed out that the production of rubber in all producing territories will go on unhindered by a European war. There is more than enough rubber available in these territories to supply all conceivable demand in war time and there is no indication whatever that the governments of the producing countries or the International Rubber Regulation Committee [Page 871] will have any interest in preventing, or any desire to prevent this rubber from flowing to consuming markets as required.

As for shipping, there is substantial evidence that adequate shipping is available and that it will continue to be provided regardless of adjustment of routes and lines. The United States Maritime Commission has expressed its willingness and its ability to give aid if necessary.

After a careful canvass of all factors involved, it is clear that there is at present no basis for concern regarding rubber supplies for the United States, unless such concern is created by a speculative movement. It is of course true at the present time, as at any time, that competitive bidding for limited supplies immediately available would create an unwarranted price situation, harmful chiefly to manufacturers and other consumers themselves.

This statement has been submitted to the Department of State in Washington which, while taking no responsibility for the views expressed therein, finds them in accord with the information and advices which it has received from the officials of the British Government most directly concerned.[”]

You can inform the British authorities that the rubber manufacturers here are cooperating fully in efforts to prevent unwarranted price speculation. Viles sent out telegrams to the 400 members of the Association on September 6, reassuring them in such terms that they generally kept out of the market.

Viles believes it highly desirable to include in any statement he releases reference to serious consideration by the International Committee of the recommendation of the American consumers that an additional 5 percent be released for the fourth quarter in order to meet estimated consumption requirements. The Department concurs and is of the opinion that even larger releases are desirable (see the Department’s no. 758, September 2, 3 p.m.32). We are not reassured by Pawson’s statement of Campbell’s view that the Committee would release more rubber “if any speculative movement in America should cause a run on rubber and an increase in demand leading to much higher prices”. It seems clear that what is needed now is a substantial increase in releases to prevent a run on rubber; it is unlikely that consumers will be greatly reassured unless sufficient rubber is available to enable them to build up stocks to more reasonable levels.

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