811.24 Raw Materials/449: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received 7 p.m.]
2472. My 2470, November 28, 1 p.m. and your 1496 and 1497 November 24.57 The points given in your 1496, November 24 and in Singapore’s November 25, 1 p.m. to the Department58 were sent to MacDonald by letter today and informally discussed at the Colonial Office last night, Sir John Campbell being present. His object in attending was not only to hear and comment on the Embassy’s message, but also to second MacDonald’s effort of yesterday to impress upon us that the British feel strongly that the method we have used in presenting requests concerning rubber and tin is ill-chosen. This he did very frankly, attributing much of the difficulty recently experienced to our failure to take into account the Committee’s plenipotentiary status and the fact that the regulation scheme is an international treaty which is as much entitled to punctilious observation as the Exchange Agreement59—which, incidentally, they still resent.
What the Committee want is Viles’ attendance—Campbell and Figg both made kind references to the manner in which he represented rubber consumers when in London on former occasions; or, if that is not possible, then attendance by anyone else who can argue with them as the authorized spokesman of the American consumers. They want to deal on a man to man basis and not to have “four point seven diplomatic guns fired at their heads two days before meetings, telling them what quota to fix”.
The conversation yesterday brought the following comments from Campbell on the points you raise.
(1) The figures given in your numbered paragraph 4 are “quite wrong”, and corresponding ones printed in the Times yesterday appear to be correct. They are as follows: “Malayan production of rubber last month was 56,725 tons. Stocks held by estates of 100 acres or over amounted on October 31 to 35,121 tons and by dealers 8,670 tons”.
[Page 901](2) He wants detailed information on lengthened shipping schedules and routes. This is being obtained from Spencer.60
(3) “All the arguments that you present were considered at the meeting of November 15, and the answer to them is that the Committee decided against them.
[“]Figg and Miller and I favored using first quarter coupons in the fourth quarter and permitting over-export but the Dutch did not agree. It was no use my casting my Malayan vote, as that would have created a deadlock.
“The Dutch were of the opinion that a 75% quota was sufficient, but conceded 80% as a gesture. I was the only one in favor of 85%. I argued that, issuing first quarter coupons in the fourth quarter, there would be no occasion actually to step up production to 85%, and that the necessities of the situation could be taken care of and the quota later reduced without trouble. This was not acceptable.”
(4) He then went on to outline three of the main reasons for the quota decision taken on the 15th, the first being resentment at our methods, mentioned above.
The other two were put as follows:
- (a)
- “Secondly, there was the experience of last year, when American stocks were low and they could have gotten all the rubber they wanted, below cost of production, We pointed this out to Viles time and time again, urging him to buy; but he argued that they looked not only at physical stocks but also at forward contracts placed, and that so regarded they had stocks as high as they had ever carried. This argument we could not accept, and accordingly it does not go down well with the Committee now to be asked to help the Americans to restock, recalling as they do last year’s experience.
- (b)
- “In the third place, it has struck the Committee as astonishing that, while all this argument has been going on since the war, America has actually been sending rubber abroad, a thing they have never done before. We have had information as to two shipments, of 10,000 and 7,500 tons respectively, and rumors of a third to Vladivostok. We realize that you have no export control, but that does not detract from the bad impression created.”
(5) It was made plain that Campbell does not expect the Committee to reverse its decision of the 15th, but that it may not meet at all to discuss our requests. In the face of this attitude, there appears to be nothing further that we can do, unless something happens as the result of the letter to MacDonald. If Viles were to come over, however, the Committee would doubtless be glad to meet him to discuss all the facts.
[Page 902](6) Campbell made the following remark on Viles’ rubber consumption estimates:
“Viles’ estimate for 1940 consumption is, I am convinced, an underestimate. The Americans have for a long time consistently overestimated in periods of falling consumption, and underestimated in periods of rising consumption. The Committee’s estimates have always been closer than the Americans’, and it is so in this case.”
(7) At the end of the conversation, we referred briefly to tin, saying that we would have something on that subject soon. He made two comments on this.
“One thing that has been puzzling us and we have not been able to get any light on it from Todd,61 is exactly what has happened to make Americans want twice as much tin as formerly, before the war. We know that the demand is present, but have no idea where the increase can be going in terms of ultimate consumers. Business of the consuming industries has not, as far as we can see, increased to anything like that extent. Any details on this would be helpful.”
Later he said:
“You need not worry much about tin, as Todd will probably get about what he wants, but not for the reasons that he gives; if we do not give a high quota the price might go through the roof, and after all that is what the quota is for.”
A letter from Lyttelton to Campbell dated November 21st of which we have just received a copy, estimates American monthly consumption at 9,500 tons during the next 3 or 4 months, including 500 in Government purchases, and recommends 100% for the first quarter, and a retroactive increase to 120% for the fourth quarter, in order to bring into circulation some of the Nigerian stocks of 1300 tons.
In view of the above, we feel that it is probably unnecessary to take further action, and we are of the opinion that it would not serve any useful purpose to say anything about the second quarter at this time.
The above quotations are of course only approximate records of a long and rapid conversation, but they convey the sense of what was said.
- For telegram No. 1497, November 24, see p. 944.↩
- Latter not printed.↩
- i. e., Anglo-American rubber-cotton agreement.↩
- W. A. Spencer, District Representative of the United States Maritime Commission at London.↩
- William B. Todd, representative of the Steel Export Association of America, resident in London.↩