811.24 Raw Materials/916: Telegram
The Secretary of State to the Ambassador in the United Kingdom ( Kennedy )
855. Department has been exploring over a period of weeks the alternative steps which might be taken immediately toward building up rubber stocks in this country.
Since manufacturers’ stocks are still not much more than half of what has usually been considered “normal” they have been urged to take action and in view of the present world situation they are now in a mood to do so. The financing of such stocks was a problem but arrangements are now being made for the Reconstruction Finance Corporation to assist. Details must be worked out but Viles hopes to have a fairly definite proposition to place before the International Committee at least by May 21.
In view of the uncertainty as to whether such action by manufacturers will be put into practical effect, and as to whether it would be prompt or adequate, the Department began the preliminary discussions regarding another Government agreement noted in the Department’s no. 845 of May 11.32 These discussions have indicated that another deal could be worked out involving delivery to this Government of something like the same amount of rubber as involved in the present agreement. The Department is inclined now, however, to believe that it would be preferable to proceed with the rebuilding of manufacturers’ stocks before further Government rubber is acquired, holding another governmental deal in reserve, to be brought forward in the event that there is any hitch in the manufacturers’ plans or as a means of supplementing later the amount of rubber secured for stocks by the manufacturers.
Please inform the appropriate officials of the British Government that the United States will be prepared to acquire large additional stocks of rubber, as rapidly as they may be made available, and that some definite proposal regarding this matter will probably be ready for presentation before the International Committee meets on May 21. [Page 268] This will necessitate a quota, beginning with the third quarter, considerably above that necessary to meet consumption requirements and you should lay the groundwork so that the International Committee will be prepared to take such action. The Department will telegraph as much in advance of May 21 as possible regarding the quota question.
In the meantime, the Department is now preparing with the other interested agencies an instruction regarding a possible government exchange which will be telegraphed for your information within a day or two, at which time it is hoped to inform you whether to proceed or not with the active negotiation of such an agreement. In the event that the special purchase by the manufacturers should be delayed the Department would then request you to go ahead immediately with negotiations; in any event, it will be desirable to explore with the British in a tentative way the details of a government agreement, so that it could be put through with a minimum of delay.
You can assure the British authorities that it is the considered desire of this Government to keep large quantities of rubber for reserve stocks flowing into this country during the next year or more, that American interests will be in a position to acquire this rubber and hold it, and that only the details remain to be worked out if the British Government and the International Committee are prepared to cooperate.
- Not printed; it contained the information that the Department had asked the British Embassy whether the British Government would be agreeable to another transaction involving the exchange of rubber for agricultural products now held by the U. S. Government; and that the British Embassy on May 8 had presented a memorandum indicating a willingness to consider such a transaction.↩