811.24 Raw Materials/121: Telegram

The Minister in the Netherlands (Gordon) to the Secretary of State

64. Department’s 38, May 5, 6 p.m. I have seen the Prime Minister and the Foreign Minister and put before them the points which the Department directed me to stress as well as taking up various background aspects including points touched upon in the conversation reported in the Department’s instruction No. 236 of April 25.9

I saw the Foreign Minister first, leaving with him a note covering the points enumerated in the Department’s telegram and taking up the others orally. Subsequently I saw the Prime Minister and I shall report the conversations in the order in which they took place.

The first comment the Foreign Minister made in reply to the exposition of our views was that unfortunately the Netherlands did not want or need our wheat and cotton; this point had been carefully considered before giving us their reply of April 29 and all the interested Ministers had agreed; the Minister of Economic Affairs had assured them that there was a reserve stock of wheat in the Netherlands for human consumption which would last for one year and they had never considered it necessary to form reserve emergency stocks of cotton. He felt that this was a fundamental objection. In reply I stated that the figures which we had compiled in the Legation from [Page 664]Government sources as to reserve wheat stocks did not agree with the estimate of the Minister of Economic Affairs (see second paragraph of Section 2 of my 59, April 29, 4 p.m.9a). The Foreign Minister replied that both estimates might be correct; he freely admitted that in saying they had a year’s reserve stock available it meant that the human consumption wheat in bread and other forms would of course be greatly decreased in case of war.

Putting aside this objection for the moment I further pressed upon him our view that as our proposal was based upon the fundamental condition of keeping these reserve stocks off the market and in no way could be deemed to constitute an ordinary commercial transaction it should be free from the criticism and difficulties feared by the Netherlands Government. To this the Foreign Minister replied that the Netherlands Government could not see it that way that sooner or later these stocks would have to be liquidated—and wheat stocks presumably much sooner than stocks of tin or rubber—and that when the moment for liquidation came these stocks would be bound to have an effect upon the market; that although the possibility of war of course must be taken into account, if as they still hope the danger of war should within a measurable time pass away the Netherlands would not wish to keep reserve stocks of wheat and cotton on hand indefinitely. I pointed out that the question of how long the reserve stocks were to be kept on hand and of whether reserve stocks of wheat and cotton might be liquidated at a different time than stocks of rubber and tin was one of the points which could profitably be studied and negotiated.

The Foreign Minister then said that in any event whatever form the proposed transaction might take his Government, as he had told me before, felt convinced that other countries, and particularly Germany, would demand that the Netherlands conclude a similar transaction with them and would declare their readiness to take rubber and tin on just the same terms as the Netherlands would be furnishing them to us. In this connection he said that although he did not wish to put it in writing he might point out that whereas the Netherlands could rely on the United States and England scrupulously fulfilling any undertaking to keep reserve stocks of rubber and tin off the market they could not have the same confidence in these other countries—in other words Germany—abiding by the commitments they might make in this respect.

He again referred to the fact that although an agreement had not been signed the Dutch had decided to propose to Turkey an arrangement whereby the former supplies ships and docks in return for taking a large quantity of Turkish wheat which it will be at liberty to reship [Page 665]to other countries—the reasoning here is that the Dutch are taking the Turkish wheat not because they want it but only in order to enable them to sell ships and docks so why should they take more wheat from us which they do not want when the only quid pro quo is to be able to dispose of rubber and tin which they can sell anywhere at any time.

As regards the possibility of the Dutch suggesting some way of attaining the desired objective without the appearance of a barter arrangement the Minister’s view was that whatever might be devised in this connection would still lead to the same unwelcome demands on the part of third countries. Further as regards the possibility of the proposed transaction being made more palatable to the Netherlands if publicity could be avoided the Foreign Minister said that the matter had now reached such a stage after Chamberlain’s declaration in the House of Commons last Thursday10 that he did not see how such avoidance could be attained.

The Foreign Minister did show some interest in the suggestion outlined in the last paragraph of the enclosure to the Department’s instruction No. 23611 and seemed to think that this fitted in with the suggestion in the Dutch aide-mémoire concerning sending experts to the United States.

The Prime Minister, I am glad to say, saw more possibilities of working out the proposition than did the Foreign Minister. He began by saying that time and again the Dutch had refused barter arrangements which the Germans had pressed upon them and that if they should find out that the Dutch had concluded a barter arrangement of this nature with the United States “the Germans have very long toes”.

He also observed that of course the Netherlands could not hold stocks of wheat as long as we could keep stocks of tin. I replied that this was one of the practical points which would be subject to study and negotiation. He further stated that manufacturers in the United States had not kept their own stocks of rubber up to anywhere near normal. I replied that while this might have been so since the slump of 1937 this in no way meant that there would be any possibility of manufacturers bringing their own stocks up to normal from these emergency stocks as to which I again emphasized we would give the most binding commitments to keep them off the market.

However, in proposing a cash sale to us of rubber and tin he saw a possibility with the gold thus acquired of the Dutch buying some [Page 666]wheat—as for cotton he could not speak. I replied that I was delighted to hear him say this about the wheat inasmuch as I had been told that the Netherlands did not need or want our wheat to form reserve stocks. The Prime Minister said that he would not go so far as that since the matter was still under investigation (the Department will note the discrepancy between this statement and the opening comment of the Foreign Minister); he repeated that he knew nothing about technical requirements concerning cotton and so would not express an opinion with regard to it. In any event he said that an approach along these lines seemed to offer the best if not the only method of reaching the solution we desired without its being open to the objection set forth above. The suggestion in the last paragraph of the enclosure to the Department’s instruction No. 236 seemed to him a modality of such approach which should be explored.

In concluding our conversation the Prime Minister said he would reconvene his select Cabinet committee to give the matter further consideration and I told him that I should be glad at any time to talk to the members thereof either singly or jointly concerning the possibilities of approaching our proposal in a way which would offer less difficulty to the Netherlands Government and which would at the same time attain the same objectives.

In my telegram under reference as well as in my number 63 of May 4, 1 p.m.,11a I stressed the importance of seeing if we could discover some additional inducement to put before the Dutch over and above a bare offer to give them cotton and wheat as to which—even taking the Prime Minister’s words at their most optimistic value—they are not over enthusiastic, even if this inducement be in an entirely unrelated field. Even the subject matter of the first full paragraph on page 3 of the enclosure to the Department’s instruction No. 23612 came up in conversation with the Foreign Office he at once said that guns were a commodity which the Dutch would be very glad to have from us and referred to the lack of results of the Van Dulm mission13 earlier this year. I said that the main reason therefor was that our armaments manufacturers were so full up with orders that they could not guarantee deliveries desired by the Dutch. The Foreign Minister said he understood this and that they were now trying to place orders in England but he thought that his Government would be much interested [Page 667]if any possibilities could be discovered in this connection as far as we are concerned.

Gordon
  1. Not printed. This instruction transmitted a memorandum of the conversation summarized in telegram No. 30, April 25, 7 p.m., p. 657.
  2. Ante, p. 660, paragraph beginning “The reply on this phase…”.
  3. See telegram No. 607, May 4, 2 p.m., from the Ambassador in the United Kingdom, p. 239.
  4. The paragraph in question recorded a suggestion by Mr. Hart that the arrangement might be handled through the tin and rubber committees and when it was in final form be put into treaties between the various governments (811.24 Raw Materials/91).
  5. Not printed.
  6. It was stated that Mr. Hart seemed to be interested in ascertaining whether American commodities other than cotton and wheat might be available under similar arrangements (811.24 Raw Materials/91).
  7. Netherland naval mission to the United States in February 1939, interested in purchasing airplanes, motor torpedo boats, mines, and sounding equipment.