811.24 Raw Materials/373: Telegram

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

2099. 1. Referring to my cable of yesterday,48 the British rubber buyer states in confidence that he has completed the purchases in this market of 5,000 tons of rubber which is the now anticipated amount to fulfill the Anglo-Soviet timber for rubber-tin arrangement.

2. To date the British rubber buyer has only been able to purchase in Eastern markets about 25 tons of Agreement rubber for shipment before the end of the year. As previously reported he has pursued a cautious policy of staying out of the market whenever it firmed up and he privately expressed the opinion yesterday that if under present circumstances he attempted to obtain the requisite amount of Agreement rubber during the current quarter he would move the price up a couple of pence. As discussed in my No. 1095 of October 3,49 this is obviously not in the broader interests of the United States. Accordingly I think we should have in mind the fact that very little Agreement rubber will be shipped from the Middle East before the end of the year.

I gather most of the rubber which would have gone to fulfill the Agreement is now passing into the hands of our manufacturers whose stocks should show an increase before the end of the year and this should act as a sedative to the market.

My own view is that we should not be disturbed by the prolongation of the period during which delivery of the rubber will take place. It was always contemplated that the cotton could be more quickly made available than the rubber because it would be regarded of the latter stock which our Government could acquire by legislative fiat whereas the rubber had to be produced and purchased under world market conditions. In any case the prolongation of the period of delivery [Page 885] of rubber likewise prolongs the period during which we have some leverage over the rubber situation. Insofar as the British rubber buyer can be persuaded to pursue a cautious policy so far shall we have in effect a means of making available if necessary an extra quota to American manufacturers of which the Rubber Committee does not have immediate control. It it not hard to imagine how very difficult the present position would be if this was not now being done.

  1. Telegram No. 2075, October 18, 2 p.m., p. 882.
  2. Not printed.