811.24 Raw Materials/1384: Telegram
The Chargé in the United Kingdom (Johnson) to the Secretary of State
[Received November 18—6:40 p.m.]
3779. Department’s 3487, 15th.
1. There were present at the Colonial Office this morning only Clauson and Figg, and unless instructions to the contrary are received from the Department in the light of the contents of this telegram, no conference in the sense suggested by Klossner will be held. In the existing circumstances and particularly since it now appears likely that Hay will be present at the Committee meeting, it is believed to be best to leave direct contacts with the Committee in Clauson’s hands.
[2.] Before this morning’s meeting Klossner’s memorandum quoted in the Department’s 3487 was conveyed nearly textually to Clauson by letter in which the following points were stressed:
- (a)
- the outstanding importance of the future trend in American demand for consumption and re-stocking, the strength of which was much underestimated by the Committee a year ago;
- (b)
- the difficulty of visualizing an early return to prewar quota levels (i. e., the 60 percent for 1942 mentioned in the Embassy’s No. 3762, November 16, 2 p.m.) during the continuance of the war, in view of the fact that British and American demands on the American armaments industry have doubtless not reached their peak; and
- (c)
- the great importance of considering as tentative any advance conclusions on quota, pending the arrival of Hay with the intimate acquaintance which he now has of the present and prospective needs for rubber in the United States.
The letter concluded with a paragraph almost identical with that of the final paragraph of the Department’s No. 3487.
3. The Colonial Office made it very plain that it regards the statistical case for the quota proposal mentioned in the Embassy’s No. 3762, November 16, 2 p.m., as perfect.
[Page 283]Reckoning the absorption in 1942 at 1,000,000 tons which would allow the United States 55,000 tons a month it estimates that a 55 percent quota would fulfill actual needs in 1942 but contemplates a 60 percent quota in that year to be on the safe side. It adds that stepping down in 10 percent jumps from 95 percent in the first quarter to 65 percent in the last quarter of 1941 the Rubber Reserve Company stocks would accumulate by the following amounts by quarters: 126,000 tons, 88,000 tons, 50,000 tons, 16,000 tons; and that total American stocks including Government stocks at the end of 1941 are estimated at 580,000 tons which would be substantially one year’s supply.
Ninety, 95, and 100 percent quotas are the only three possibilities, given the fact that the Dutch are in a position to block anything over 90 percent and that the British are in a position to block anything under 90 percent (which they have every intention of doing). Of these possibilities there seems to be every prospect of 95 percent being chosen since the British wish to meet us in increasing above 90 percent and it is likely that Dutch consent will be obtained. Ninety-five percent, however, the Colonial Office regards as “the top” and it feels that 100 percent would only be “window dressing”.
To the extent that 1941 rights are used during the fourth quarter of this year the amount available for export in the first quarter will be reduced, but the Colonial Office nevertheless feels that 95 percent is practicable.
4. When asked as to why, in its estimation, Hay and American spokesmen have become convinced of the need for a 100 percent quota in view of the statistical estimates above referred to, the reply was that since there is no apparent justification therefor in the probable consumption and restocking demands in the United States, such a conviction could only be attributed to fears regarding the Far Eastern situation; and in the course of a short statement on this point, it was made very clear that the Colonial Office regards the Far East as a good deal safer than it was before Taranto and also regards the British situation in the Mediterranean as generally improved by recent events.
It was also made plain that even assuming that war may come in the East, temporarily cutting off supplies by usual routes, (a) both the United Kingdom and the United States will for a time be able to live on their stocks, and (b) there will be every likelihood of the British being able to move rubber by coasting vessels around Burma and thence to Calcutta in spite of the Japanese fleet.
Consequently, on the present views of the Colonial Office, it seems unlikely that it would fall in with changes in present quota plans asked for solely on the basis of the Far Eastern situation. If those plans are to be changed, it will probably have to be as a result of a factual case brought by Hay, capable of rebutting the one summarized above.