811.24 Raw Materials/392: Telegram
The Ambassador in the United Kingdom ( Kennedy ) to the Secretary of State
[Received November 4—6:18 p.m.]
2281. Your 1339, October 31, 6 p.m. and 1360, November 2, 9 p.m.
(1) In compliance with the instruction in your 1339 I prepared and sent to Malcolm MacDonald the strong statement.
(2) Rubber Committee yesterday deferred action on quota decision and appointed a special committee consisting of Sir John Hay, Eric Miller50 and Dr. Hart to confer with Riddell concerning his buying policy, the conference to take place prior to the next meeting of the Committee, fixed for November 10.
This action resulted from a letter from Riddell to Pawson asking about the desires of the Committee in connection with his buying policy, whether it was their desire that he should buy rubber during the appropriate period to the amount specially released for Agreement purposes (approximately 10 percent) regardless of current market conditions or whether he should continue to pursue a cautious buying policy and permit the trade to take that proportion of the available rubber as long as the price continued to be at a reasonable level and then to come in with Agreement rubber purchases when the ordinary trade demand for re-stocking appeared to be satisfied.
Sir John Hay was deputed by the Special Committee to interview Riddell and in this interview Hay urged that it would be desirable (1) for the quota to remain at 75 percent during the fourth and first quarters, and (2) for Riddell to cease his rubber purchase operations so long as the present abnormal demands by manufacturers continue. In this connection, Hay discussed with Riddell the possibility that article 3 of the Agreement might be invoked.
In support of these proposals Hay painted a picture of what he considered would be the probable results on the rubber industry of an [Page 888] increase in the quota to 85 percent and at the same time of Riddell’s continuing purchases in fulfillment of the Agreement. All sections of the rubber industry would he felt suffer by an increase in the quota, the producers by having their labor upset, the rubber market by giving incentive to the speculator to enter it, thus raising prices, and the rubber manufacturers because they would be compelled to pay high prices for their stocks.
An 85 percent release Riddell says would mean an annual supply of about 1,300,000 tons, which is considerably in excess of the present or estimated future consumption requirements; and he adds that, when the present demand for re-stocking purposes was satisfied, the price would inevitably suffer a severe fall which would suit neither the producers nor the manufacturers.
Hay asserted to Riddell that the present available labor resources are being fully used at the current quota figure and raising the quota to 85 percent would necessitate the immigration of labor.
Riddell yesterday suggested the desirability of a conference between Hay, Miller, Hart, himself and the Ambassador or other representative of the Embassy in order to discuss Hay’s proposals prior to the meeting on November 10th. This morning he interviewed Campbell who, Riddell says, agrees that such a conference would serve a useful purpose in that it would offer an opportunity to bring out all the factors affecting Riddell’s buying policy; but Campbell added that no representative of the Colonial Office should be present and that of course no question of invoking article 3 could be discussed in any formal sense.
We would appreciate your views regarding the response to be made to this suggestion. Since Hart will be in London only until the 10th, such a conference would have to take place before then.
(3) Incidentally the following are the shipment periods for the total purchases made by the British Government’s rubber buyer up to and including October 27, which he has supplied in confidence:
October/November sellers option, 455 tons; October/December, 100 tons, November, 15 tons; November/December sellers option 1935 tons, December, 15 tons; 1940, January, 1985 tons, January/February sellers option 315 tons; January/March 75 tons, February 1995 tons; February/March sellers option 2455 tons, March, 1970 tons; total 11,315 tons.
In American ships to Boston, 2900 tons; in American ships to New Orleans, 8415 tons.
To date the Consulate General at Singapore has reported that 40 tons of rubber have been shipped.
- Member of Malayan delegation on the International Rubber Regulation Committee.↩