800.6176/122: Telegram

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

2075. Department’s 1220, October 13, 9 p.m. The rubber situation was discussed at length with Pawson today. In the course of the conversation Pawson asked if the following message from Campbell to Viles could, to save time, be telephoned from Washington. Viles is meeting with the members of his committee this afternoon and Campbell wishes Viles to be able to communicate this information to them:

“Your telegram 13th October. Am informed that exports to Russia will go into immediate consumption. Quantities involved depend on quantity of timber supplied and not determinable at present but at most are likely to be within Russia’s normal takings. Length of buying period is likely to be short. It seems to follow that amount of rubber being sent to Russia by British Government probably no greater than 5,000 tons estimated by Committee for last quarter Russia consumption this year and estimate of world consumption, therefore, remains unaltered. This minor addition governmental buying balanced by equivalent reduction normal market buying.”

Pawson is of the opinion that it would be impossible to get the Rubber Committee to change the rate of release for the current quarter unless new and extraordinary factors could be represented as having arisen since the last meeting. I am inclined to agree and feel that before embarking on any such step we should realize and measure the antagonism which such an attempt would evoke, certainly from the commercial members of the Committee. In this connection Pawson showed me in confidence the minutes of the last meeting, a provisional copy of which was mailed to Viles about 2 weeks ago. Dr. Hart is quoted as stating:

“If the Committee agreed to 75%, he would like it made clear that the position in which this further increase was given was exceptional, and that it would be very difficult to make any further changes this quarter. Any further change could only be justified by the existence of a most serious emergency. He did not wish to change the ordinary formula as regards revision which was incorporated in all their communiqués; but he wanted to draw attention to the present position, and to avoid the possibility of the Committee being asked to reconsider their present decision because of some sudden temporary jump in price, or because of some similar situation, which did not in itself constitute a really serious emergency.”

Accordingly I urged Pawson to make every effort to arrange that the Committee have its next meeting at which the quota for the first quarter will be set as soon as possible. Pawson explained that the [Page 883] date was contingent upon (a) the collection and dissemination of certain statistical data which would not be available until the end of October and (b) Dr. Hart’s plans because he wished to arrange to deal with his tea and other meetings in London at the same time. Pawson agreed to do what he could to ensure that a meeting be held before November 14.

Pawson expressed a personal and confidential opinion that the Committee would, on the basis of information now available, find it difficult in increase the quota beyond 75% for the first quarter and he indicated how important it was that Viles should make, preferably through personal appearance, if not in a long telegram, a complete case before the Committee meets. I feel he should not only give full particulars of probable American consumption but emphasize the fact that due to the over export situation Malaya is not in fact at present producing at a 75% rate and the fact that wintering will occur February/March. It is also important that he should deal with the final sentence of Campbell’s telegram contained in my 1832, September 26,47 indicating how far the American manufacturers are prepared to go in increasing their stocks to hold. The Committee is greatly impressed by the fact that current production runs considerably beyond current consumption and that at some point it may have to reduce production decidedly. According to Pawson it is prepared to facilitate the gradual building up of American manufacturers’ stocks but cannot contemplate other than a gradual process. In this connection Pawson expressed great appreciation of the manner in which Viles had acted to dampen down the market movement in the United States and hoped that American manufacturers would continue to pursue a “reasonable policy”. I will deal with the Agreement rubber situation in another telegram at a later date.

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