811.24 Raw Materials/621: Telegram
The Chargé in the United Kingdom (Johnson) to the Secretary of State
[Received February 14—2:40 p.m.]
387. The following letter has been received today from the Ministry of Supply:
“I have been discussing with Riddell the question of future purchases of barter rubber. You are of course aware that there remains about 40,000 tons still to be purchased and that he has already bought about 18,000 tons for shipment during the second quarter. There have, I believe, been considerable forward purchases, more particularly by your own manufacturers, and just at the moment Riddell is receiving relatively few new offers. Nevertheless I anticipate that he will be able to purchase substantial further amounts for shipment in the second quarter. I feel sure however that if he were to remain tied to purchasing the whole of the additional 40,000 tons by the end of June, it would have a very disturbing effect on the general stability of the market. His difficulties in buying without creating such disturbance are of course accentuated by the fact that he is limited to a narrow range of grades.
I should therefore be glad if you would raise with your Government the question of an extension of the buying period into the third quarter. This was the suggestion made when the question was first raised in my letter to Mr. Ferris24 on the 10th November last (Embassy’s 2329, November 10, 7 p.m.25) the concentration of barter buying in the first half of the year means undue pressure on the market for the time being, followed by a market drop in the latter half of the year. This is good neither for the manufacturers nor for the producers. For this reason I suggest that we should have a wider spread of the barter buying period.
[Page 264]I hope therefore that it will be possible to agree that Riddell should continue his present policy of buying as rapidly as possible consistent with the maintenance of the general stability of the market, but that he should be allowed to extend his buying into the third quarter so far as this may be necessary to achieve that object.”
The Embassy has discussed this request and the general position with the appropriate officials of the Colonial Office. A meeting of the official and unofficial British members of the Rubber Committee is to be held tomorrow for the purpose of acquainting them with the British Government’s view that the quota for the second quarter should not be reduced.26 A good deal of groundwork has been done and a written commitment has been obtained from Hay27 that he will support 80 percent. Hart28 has apparently been talking of 75 percent but Campbell proposes to arrange the procedure at the forthcoming meeting of the Committee so that 80 percent will be more or less established before Hart is called upon to give his views.
In all the circumstances and particularly in view of the postponement of the cotton deliveries, the Embassy does not feel that the Ministry of Supply’s request can be appropriately refused. Furthermore there is every indication that the Committee would in any case be unwilling to increase the quota beyond 80 percent. As indicated in my 337 of February 8,29 Hay has committed himself in public against any increase and the British Government also feels that 80 percent is the appropriate level. In the absence of specific figures the Embassy did not comment upon this aspect of the situation, particularly as a 5 percent increase in the quota would not permit the agreement rubber purchases to be completed during the second quarter unless the American rubber manufacturers restricted their buying.
However before passing the Ministry of Supply’s request to the Department, the Embassy obtained an assurance from the Colonial Office that should the Committee authorize 80 percent and should the American Government extend the period of rubber delivery through the third quarter, the British Government would promptly take steps to obtain a reconvening of the Committee if, for any reason, a shortage of rubber developed and was reflected in a sharp price increase. The Colonial Office also expressed the firm opinion that in these circumstances [Page 265] it was clear that the purchasing of the agreement rubber could be completed during the third quarter.
A copy of this telegram has not been sent to The Hague.
- Walton C. Ferris, Consul at London.↩
- Foreign Relations, 1939, vol. i, p. 892.↩
- In telegram No. 394, February 15, 6 p.m., the Chargé in the United Kingdom reported that at the meeting it was agreed practically without discussion that 80 percent was the appropriate quota level (811.24 Raw Materials/623).↩
- Sir John Hay, member of the Malayan delegation on the International Rubber Regulation Committee.↩
- G. H. C. Hart, head of the Netherland delegation on the International Rubber Regulation Committee.↩
- Not printed; it quoted a statement made by Sir John Hay at the annual meeting of one of his companies (811.24 Raw Materials/607).↩