811.24 Raw Materials/330: Telegram
The Secretary of State to the Ambassador in the United Kingdom ( Kennedy )
1089. With reference to the interpretation of “a major war emergency” in Article 4 of the Cotton–Rubber Agreement, discussed in your 1832, September 26;51 and your 1776, September 22, 6 p.m.:54 There is no disposition here on the part of any governmental agency concerned to interpret this phrase in such a way as to place this Government in a position to release rubber for the purpose of influencing commercial markets. There is full agreement that the stocks are to be acquired as a reserve against a real war emergency for this Government, [Page 265] that is, an emergency arising out of war which would affect the supplies of rubber to this country in a major way; there is every intention to hold the reserve stocks acquired until such time as normal supplies from abroad shall be cut off in whole or in major part, thus necessitating the use of this reserve. This Government would not wish to draw upon its reserve, even were it engaged in a major war itself, if it were able to meet current requirements by imports from abroad. This interpretation has been cleared here with all agencies concerned, and the British Government may be so informed. The same information is being transmitted to The Hague, since the Department is informed that the Netherlands Government is agitated over the report that this Government considers itself free to use currently the rubber to be acquired under the Agreement.
For your information, it would be impossible to accept an interpretation of Article 4 which would make the stocks of rubber acquired available only in case this country were at war. It has been the intention of this Government in all of its plans for reserve stocks to protect itself against interrupted supplies from abroad in time of major warfare, irrespective of whether this Government were a neutral or a belligerent; should the present war in Europe result in cessation or a major interruption of supplies of rubber from the East, this Government would of course expect to be free under the terms of Article 4 to use its reserve.
Regarding the rumor reported in your no. 1776, September 22, to the effect that American manufacturers have been buying “hand over fist” in London and in the Middle East, Viles has informed Campbell that a survey of purchases by American manufacturers indicates clearly that the only purchases being made in the East are those normally made there by some manufacturers and that only an occasional purchase of a C. I. F. New York contract has been made in London. Manufacturers continue to remain out of the New York market and are of the opinion that a resumption of normal purchases in the market will cause speculative price increases unless the International Committee announces an extra 10-percent fourth quarter release.