811.24 Raw Materials/944b: Telegram

The Secretary of State to the Ambassador in the United Kingdom (Kennedy)

875. The primary concern of this Government and of American manufacturers is to get the maximum amount of rubber into the United States as rapidly as possible. By one means or another, we will be prepared to acquire all rubber available above consumption requirements over a considerable period of months. In the Department’s opinion it is likely that this acquisition will be in the form of purchases by the rubber manufacturing industry, probably acting through a central corporation which would be prepared to take responsibility against the rubber overhanging the market since manufacturers are as anxious as producers to avoid price fluctuations. Should there be delay or difficulty in arranging this method of purchase, then this Government would be prepared to take the available rubber in exchange for American agricultural products along the general lines which will be indicated in a further telegram to be sent to [Page 269] you within a few hours.33 If the British Government is prepared in principle to enter into such an exchange arrangement, then they should feel that our willingness to take rubber in that way will serve as adequate assurance that excess rubber for stocks will be removed from the market even though definite details regarding a stock purchase by manufacturers cannot be worked out before the International Committee’s meeting.

For your own information, it is quite possible that fairly large sums will be available for direct purchases of reserve stocks of rubber by this Government in the event that other methods prove to be inadequate. Nothing definite on this point can be said however until the desired appropriations are secured.

It now seems clear that this Government will wish to place before the British Government, at least by May 20, a formal request that the International Rubber Regulation Committee set the quota for the third quarter at 90 percent. This request will be based on the assumption that we will be in a position later to request that the quota for the fourth quarter be maintained at that level or above.

The details of ways in which rubber in excess of consumption requirements released by such quotas would be taken for stocks here will be ready for presentation at the earliest possible moment although almost certainly not before May 21.

The Rubber Manufacturers Association statistics for April and their latest estimates for the third and fourth quarters will be available shortly. It is understood that these conservative estimates will indicate that a 70 percent quota for the third quarter and 60 percent for the fourth would supply all the rubber required for consumption. It is quite possible that consumption will be considerably higher than that estimated but even in the event of low consumption during the rest of the year, we will want and will be in a position to take for stocks all of the excess rubber available with a 90 percent quota.

Hull
  1. Telegram No. 888, May 17, not printed; it stated that the Department was not yet in a position to authorize the Ambassador to negotiate a further agreement, but it transmitted for his consideration bases for a new agreement to be used for exploratory discussions (811.24 Raw Materials/956b).