811.24 Raw Materials/157: Telegram

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

763. Your 400, June 1, 11 a.m. My silence has not meant inactivity. It merely reflects the difficulties that have arisen. I have cautiously pressed for action and urged as large a deal as possible and have drawn on the arguments supplied in your various telegrams. I have discussed the matter several times with the Prime Minister, Halifax,39 Simon, Tobin and various other officials. But the fact of [Page 249] the matter is frankly that none of the important British officials, permanent or political, have any enthusiasm for this proposition and Chamberlain and Halifax are the only two who are at all willing to push it. Although I continue to take the line that the deal is not barter but an exchange of [apparent omission] for war emergency purposes, I think you should know that the word barter has stuck and that it is criticized—and aside from the vested interests—more or less sincerely—as contrary to the spirit of your commercial policy.

I have not yet been able to get them to go beyond the 500,000 bales but despite some backsliding tactics this remains a firm offer. However, it may be necessary to take all this out in rubber. Simon and his Treasury officials have their eye very much on the exchange problem and in the case of rubber they can buy in the London market, which normally obtains most of its supplies from British areas which in any case produce a larger proportion of rubber than tin. I am reliably informed that 60 percent of any tin to be bought would entail losses for sterling. The British are prepared to take up with the rubber committee the matter of enlarging the quotas so as not to cause any permanent net reduction in commercial stocks by this deal.

Under the Ministry of Supply Bill, which has already had its first reading in the House of Commons, the British Government will have power not only to buy commodities to hold but to buy them to exchange for other commodities. Naturally they want to use the available funds for acquiring those commodities which are most necessary for them and rubber is not one of these. They therefore want to know how they can proceed to buy rubber in the market until they are sure that we are really the ultimate purchaser. They state that if the agreement has to be ratified by the Senate, given their past experience, they are unwilling to move until after the ratification. In that case what price basis could be used? Is it possible for you to get an enabling amendment added to the commodity bill now in joint committee, which would permit us to do this deal without prior ratification? Incidentally with wheat and whale oil the British found it advantageous to buy before the market knew what they were really doing.

The British state that they expect to present more or less concrete proposals on Tuesday but they would like apparently to have the answer to this ratification question by then. I should also like to know whether we are prepared to insist on some quantity of tin. I will do my best to get it for you if you really want it but there is a chance that if we dig our toes in they may use this as a way out.

  1. Lord Halifax, British Secretary of State for Foreign Affairs.