811.24 Raw Materials/301

Memorandum on the Arrangements for Implementing the Agreement for the Exchange of Cotton and Rubber 47

Cotton

Specification and Ports of Shipment.

(1) In accordance with the terms of Article 1 of the Agreement the Government of the United Kingdom has submitted to the United States Government the following specifications as to grades and staples:—

Strict low middling
Bales
Middling
Bales
Strict middling
Bales
Good middling
Bales
Total
Bales
⅞″ staple 42,000 30,000 18,000 90,000
15/16 staple 78,000 60,000 18,000 156,000
1″ staple 30,000 72,000 72,000 30,000 204,000
11/16 staple 30,000 48,000 48,000 24,000 150,000
Total 60,000 240,000 210,000 90,000 600,000

(2) It is understood that the majority of the ⅞” and 15/16” staples will come from Texas, Oklahoma and Arkansas and of the 1” and 11/16” staples from the Memphis district. At the same time the United States Government will endeavour to include a proportion of ⅞” and 15/16” staple cotton from Georgia, Alabama and the Carolinas so far as it is practicable to do so.

(3) Classing of the cotton to be made available by the United States Government will proceed as rapidly as possible. As soon as additional information regarding the class of cotton in storage is available the United States Government will provide estimates of quantities of cotton which will be made available at ports to be specified and the dates at which it will be available. The United States Government will notify the Government of the United Kingdom or its agent of the specific amount of cotton available for shipment from each port from time to time as the cotton becomes ready for delivery [Page 259] following classing. The United States Government has informed the Government of the United Kingdom that such cotton is expected to be available for shipment from October 1st, 1939, and the Government of the United Kingdom has stated that, notwithstanding the earlier entry into force of the Agreement, they will not regard the United States Government as incurring any liabiliy to make cotton so available before that date. If, however, earlier shipments are possible the United States Government will inform the Government of the United Kingdom without delay.

Sampling and Shipment.

(4) In accordance with Article 1 (c) of the Agreement the United States Government will make cotton available at the warehouse at the port of sailing and notification will be given to the Government of the United Kingdom or its agent that such cotton is available for shipment. The United States Government will pay storage and insurance charges for a period of fourteen days subsequent to the date of such notification; any storage charges thereafter will be paid to the warehouse at the port of sailing by the Government of the United Kingdom. The United States Government will weigh and load cotton conforming to the above specifications on ships to be provided by the Government of the United Kingdom in accordance with the arrangements set out in Article 6 of the Agreement. The Government of the United Kingdom will, if they so desire, arrange for their agents to be present at such weighing and loading. The bales of cotton will be freshly marked and the relevant samples, so labelled as to be identifiable against the bales, will accompany each shipment. The United States Government will make out the necessary shipping documents, transmitting the originals to the agent appointed by the Government of the United Kingdom and retaining copies for its own records.

(5) The samples will be checked on arrival in the United Kingdom and any samples of which the classification is disputed will be submitted to a Board of Referees constituted as laid down in Article I (b) of the Agreement, and acting in the United Kingdom.

(6) The expenses of the United States representatives on the Board of Referees will be borne, if the United States Government so desires, by the Government of the United Kingdom.

(7) The Government of the United Kingdom by waiving its right to inspect the samples at port of shipment, thereby waives its right to reject bales of cotton falling outside the specifications shown in paragraph (1) above, but the United States Government agrees that any such bales may be replaced by purchases of cotton of United States origin of correct specification and that this replacement shall be considered as a replacement within the terms of Article 4 of the Agreement.

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Transfer of Ownership.

(8) It is confirmed that the property in the cotton passes to the Government of the United Kingdom after it has been placed on board at the port of shipment, and documents evidencing such loading obtained.

Rubber

Date of Purchase of Rubber.

(9) It is agreed that the period of six months referred to in Article 2 (c) of the Agreement shall begin 15 days after the date at which there becomes available any rubber released by the International Rubber Regulation Committee in response to a request made by the Government of the United Kingdom under Article 5. The Government of the United Kingdom intends so far as possible both to regulate its purchases of rubber in accordance with such releases and to arrange that the rubber shall be delivered at regular intervals. Nevertheless, with a view to avoiding any difficulties which the United States Government would experience in providing before March 1st, 1940, storage accommodation for more than half the quantity of rubber to be delivered under the Agreement, the Government of the United Kingdom will use their best endeavours to secure that not more than half the quantity of such rubber arrives in the United States before that date.

Specification.

(10) In accordance with Article 2 of the Agreement the United States Government has informed the Government of the United Kingdom that it desires that all rubber supplied under the Agreement shall be of grade No. 1–X Ribbed smoked sheets (United States Rubber Manufacturers’ Association grading) but that if during the period of purchase unusual price differentials develop, it will be prepared to make some modification of this specification, preferably limited to the acceptance of not more than 20 per cent, of the total in the form of No. 1 Ribbed smoked sheets, the remainder to be No. 1–X Ribbed smoked sheets.

(11) It is agreed that if rubber of grades lower than No. 1–X Ribbed smoked sheets is accepted it may be replaced by rubber of Grade No. 1–X Ribbed smoked sheets and that this replacement shall, as in the case of cotton, be considered as a replacement within the terms of Article 4 of the Agreement.

(12) The United States Government desires that all rubber shall be supplied in cases of 10 to the ton, but it is prepared to accept a small proportion in cases of 9 to the ton should any be shipped.

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Inspection and Shipment.

(13) In order to facilitate the purchase of rubber by the Government of the United Kingdom, the United States Government waives its right to inspect the rubber at Singapore or other ports of shipment. The Government of the United Kingdom will therefore purchase on the basis of the normal c. i. f.48 contract (subject to any modifications or amendments necessary to carry out the arrangements set out in paragraphs 16 and 18 of this memorandum) on through Bill of Lading to New York or other ports in the United States. The United States Government will inspect the rubber at port of entry, but retains the right to reject any rubber found on inspection to be outside the desired specification, subject to the arrangements agreed upon in paragraph (10) above. Any disputes will be settled, as contemplated in Article 2 (b) of the Agreement, in accordance with the normal custom of the trade relating to c. i. f. contracts providing for delivery in the United States of America.

(14) The United States Government will supply, as soon as possible, information as to the ports of entry into the United States and the approximate quantities of rubber to be shipped to each port.

(15) The expenditure incurred by the Government of the United Kingdom for freight or insurance shall be refunded by the United States Government. It is agreed that, in refunding the cost of freight to the Government of the United Kingdom, the amount shall be calculated on the basis of the rate payable on rubber in bales.

(16) In arranging for shipment by the sellers of the rubber the Government of the United Kingdom will, in accordance with Article 6 of the Agreement, distribute the tonnage equally between the ships of the two countries, provided that the shipping space required is obtainable at reasonable rates.

Transfer of Ownership.

(17) It is confirmed that the property in the rubber passes to the United States Government after it has been placed on board at the port of shipment and documents evidencing such loading obtained.

Insurance.

(18) The United States Government will, if it so desires, arrange for the insurance of rubber that has passed into its ownership, in which case the Government of the United Kingdom will supply the United States Government with full information regarding cargoes of rubber shipped, such information to be transmitted in a form to be agreed upon.

  1. Copy transmitted as enclosure to despatch No 3269, August 25, from the Ambassador in the United Kingdom, received September 5. Correspondence regarding the drafting of this memorandum is not printed.
  2. Cost, insurance, and freight.