Foreign Relations of the United States, Diplomatic Papers, 1939, General, Volume I

811.24 Raw Materials/411: Telegram

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

Washington, November 13, 1939.

1426. Your 2310, November 8, 8 p.m., 2315, November 9, 4 p.m.,⁵⁴ and 2329, November 10, 7 p.m. This entire matter is considered of great importance here and has also been discussed fully with the Secretary of Agriculture and the War and Navy Departments. Please present the following considerations in as effective manner as possible.

1. It is appreciated that it would be desirable from the producers’ point of view if the purchases of agreement rubber could be used as a back log, entering the market only when the commercial demand may fall off, so that at least a 75 percent production level could be maintained throughout the year. It cannot be surprising to the British Government, however, that there is a sense of urgency here regarding stocks of rubber since there exists in the country now only a 3-montns supply and since there is considerable uncertainty regarding developments in the international situation. This Government is considerably alarmed therefore by the position taken by Sir John Hay against any increase in quotas above 75 percent.

2. This Government wishes to cooperate with the Ministry of Supply in meeting its purchasing problems so far as possible and will be willing therefore to extend the period in which the agreement rubber will be made available for a further 3 months, namely to the end of June, provided that adequate amounts of rubber will be released by the International Committee during that period to permit of a reasonable replenishment of commercial stocks in this country and the acquisition of the Government stock without causing price disturbances. This Government is convinced that at least a 10-percent increase in quotas over a 6-months period is required for this purpose but the International Committee could spread such increases in any way it considers wise; it might provide an 80 percent quota for the present quarter, accumulative for producers unable to take advantage of it, then 85 percent for the first quarter of next year and 80 percent for the second, or it may prefer 85 percent for the first and second quarters with no increase in the present quarter.

3. This Government’s primary concern relates of course to the level of all stocks of rubber in this country available in case of an emergency. It was intended to hold the agreement rubber in addition to “normal” commercial stocks equivalent to 5-or 6-months consumption requirements and the manner in which these stocks were to be held was clearly and stringently defined in compliance with the suggestion of the Ministry of Supply. Total stocks in this country are now considerably lower than when the agreement was signed and this Government could not lightly regard any scheme that would prevent the delivery of the agreement rubber on a reasonably prompt schedule and the gradual replenishment of commercial stocks here merely on the plea that some estate producers would be inconvenienced by an increase in the rate of production now.

4. The International Committee should have adequate assurance that prices will be supported when quotas are increased in as much as the British rubber buyer will be able to adjust his purchases in line with these releases and American manufacturers will be fully prepared to add to their stocks here as additional rubber is available.

5. The word received from Holland that the Dutch representative on the Committee has been instructed to support the American request should be helpful in securing full Committee action along the lines suggested above. In the given circumstances if British producing interests oppose merely on the ground of a possible future necessity of again contracting production somewhat, public comment here is certain to be unfavorable. The country has expected prompt execution of the cotton-rubber agreement and agencies of this Government can defend delay in the schedule of delivering rubber only if it is limited to a reasonable time and is accompanied by a sincere effort of the Committee and producers to make available all of the rubber required. In representing the above considerations to the appropriate British authorities you will of course feel free to draw their attention to the considerations set forth in the Department’s 1339 of October 31, 6 p.m.

Viles appreciated your suggestion that he fly to London but is unable to do so immediately due to the present situation within the Rubber Manufacturers’ Association. He is cabling final October statistics and a full presentation of his position regarding increased quotas.

Hull

54. Telegram No. 2315 not printed.