800.6176/139a: Telegram
The Secretary of State to the Ambassador in the United Kingdom (Kennedy)
Washington, November 24,
1939.
1496. This Government is far from reassured by the action of the International Rubber Regulation Committee and by MacDonald’s letter (your 2407, November 20) in spite of its convincing tone. It is regretted that the Department must ask you therefore to press the discussion further, emphasizing the following points:
- 1.
- Rubber released during the past 3 months has merely been sufficient to meet current consumption requirements, and this has been achieved only by virtue of overexports from the production areas, and particularly the advance release of fourth quarter coupons in Malaya.
- 2.
- The “afloat” figures are not particularly significant because of the present extended shipping routes, and the heavy shipments to the United States reported for the past month or two will only serve to replace commercial stocks used up during September and October because of reduced buying to halt speculation and the lengthened shipping schedules.
- 3.
- There is now the prospect that even less rubber will be forthcoming during the rest of this year due to the near exhaustion of fourth quarter coupons in Malaya and the possibility that the International Committee may require the reduction of overexports before the end of the year; the market is already sensing this possibility and speculators are bound to run the price up unless something reassuring is done immediately.
- 4.
- The Department is informed that stocks in Malaya now exceed 70,000 tons with 30,000 tons available for immediate shipment; furthermore, it is reported that there is sufficient tonnage available to transport all the rubber that can be shipped before the end of the year and that ships will sail with only part cargoes if no action is taken to release more rubber.
- 5.
- The least that could be done to meet the immediate situation would be a release of first quarter coupons in Malaya and a decision by the International Committee to allow overexports to be carried into next year.
- 6.
- Such action would be only a palliative, however, and at best would merely serve to postpone the day when this country may be seriously affected by a shortage of rubber.
- 7.
- If the suggested action is taken now, making available much of the first quarter 80 percent for shipment before the end of the year, then quotas above 80 percent for the first and second quarters of next year should be entirely practicable and out of fairness to producers and consumers alike such action should be taken without further delay.
- 8.
- The possible inability of some small estates to produce at 85 percent or above can hardly be advanced seriously as a compelling reason for rejecting the proposal to increase quotas in as much as coupons are exchangeable and since in any event production quotas are not mandatory.
Please repeat the above to the American Legation at The Hague, which is being requested to discuss the matter with the Netherlands Government.56
Hull
- Department’s telegram No. 147, November 24, 6 p.m., not printed.↩