800.6176/163: Telegram
The Chargé in the United Kingdom (Johnson) to the Secretary of State
[Received November 27—8:35 a.m.]
3856. The interview with Hay yesterday took place at a luncheon, which was also attended by Clauson, Campbell, Figg, and Hart.
In a most forceful presentation, Hay urged adoption of a 100 percent quota for the first quarter, as well as recourse to article 5 (1). [Page 286] The latter point was the subject of very little argument, Hay appearing to be satisfied with the pre-issue of 1941 coupons, and Hart indicating that technical difficulties prevented his Government from following the British example.
Hay’s argument for 100 percent based largely on impressions gathered from the leading American negotiators, particularly Secretary Jesse Jones (by whom he was evidently deeply impressed, and whom he described as a man of “sympathetic approach, understanding, large capacity and wisdom”) and on what he estimates would be the probable reaction in the United States to a refusal by the Committee to accede to the American request for such a quota. He urged that the question be considered in its broad political aspects rather than solely as a technical and statistical question, and dwelt at some length upon the connection between this quota question and that of synthetic rubber.
Addressing himself particularly to Hart—who at the beginning of the conversation asserted very positively that his Government would never consent to 100 percent for the first quarter—Hay described the present situation as ticklish, in which either solution chosen [could be?] held dangerous: going to 100 percent would bring the danger of labor troubles and of a too rapid readjustment when the inevitable time came for much lower quotas; but refusing in present circumstances to go to 100 percent (which incidentally he described as a more moderate request than some of the suggestions he had heard from Washington) held dangers which seemed to him considerably greater.
It was in this context that he said that the American interest in synthetic rubber was based upon the widespread popular demand for adequate supplies of rubber and other essential raw materials in the United States. This demand has been growing rapidly in recent months, Far Eastern developments having given rise to apprehension as to future rubber supplies. Aside from the possibility of war in the Western Pacific, there were fears of interference in production, shortage of shipping space, and increasing risks at sea. Whether or not these apprehensions were well founded was, he said, immaterial; they existed in fact and resulted in pressure upon the United States Government in general and Secretary Jones and the Defense Commission in particular to see to it that adequate supplies of rubber were physically in the United States as soon as possible. If by Committee action the plantations could be induced to supply enough natural rubber to satisfy this demand well and good; if not it would have to be satisfied by recourse to stimulating synthetic rubber production. Hay cited the limitations of synthetic rubber, which he said were also appreciated by Secretary Jones and the principal companies; but he expressed the conviction that, should a nation of the power and financial resources of the United States go in for it [Page 287] seriously, efforts to achieve a high synthetic production would be persisted in in spite of high costs and other difficulties, vested interests would be created which later would not easily let go, and in the end the results might be very carefully considered for the natural rubber industry.
Hay referred comparatively little to statistics, confining himself in answering Hart’s observations based on final report to reiterations of his confident belief that (a) the present demand for rubber, especially in the United States, was greater than the supply, and (b) 100 percent export (as distinguished from production) in the first quarter, and probably in the last month of the fourth quarter, was practicable. (On this point all present were in agreement, in view of inclusion in the quarter of exports of rubber produced in December and January, two excellent producing months; but all also foresaw the need for quota reduction in the second quarter.)
He concluded his statement by asserting that, in the present situation, none could know for sure whether 95 or 100 percent was scientifically correct; and that even though the decision taken should happen not to be correct, 5 percent was a small thing to boggle at in view of the more important political issues involved.
There followed statements by Clauson, Campbell, and Figg each of whom committed himself to 100 percent. Clauson said that last week he had been a 95 percenter, solely because he was convinced that that was the figure calculated to produce the most rubber; but that since he was now convinced that 100 percent would be possible he had changed his mind. He had been all along in favor of giving the United States the maximum amount of rubber during the next 4 months and that, he said, was the view of the British Government. This view he attributed frankly to nonstatistical reasons, i. e., a desire to help the United States in its desire to achieve security for itself, and to play its part in the common venture in which, he said, Britain, Holland, and the United States were all involved, although in different respects and to different extents. He urged a spirit of mutual accommodation, referred to the fact that there had been no hesitation on the American part in agreeing to furnish 50 percent of its airplane production (when it might have insisted upon 45 or some other percentage), and felt that in some considerably smaller issue it was up to the Allied Governments to comply with the American request.
During all this discussion Hart interjected questions and remarks designed to support his position, and each brought a quick rejoinder from either Hay or Clauson. Hart criticized American buying policy as unreasonable and uncoordinated, whereupon Hay strongly dissented, stating that in spite of an individualistic approach by the large rubber companies, Viles had succeeded in large measure in coordinating purchases.
[Page 288]Hart said that there could be no rubber shortage in the United States at present because there was available in the non-Government stock rubber which the Rubber Reserve Company might acquire. Hay’s reply was “not within the price range”, and Campbell added that he had from the first regarded the 150,000 non-Government stock figure as too low. Hart felt that neither his Government nor the Committee was under any obligation to supply more rubber when the statistics did not show a probable demand for consumption sufficient to justify a high release; that if the demand was merely, as he supposed, to permit of the building up of stocks high enough to make the consumers temporarily independent of the producers, he saw no reason to satisfy it. Hay reminded Hart that he had gone to the United States not as a British representative but for the Committee and all its members (at which point Hart interjected an expression of his and his Government’s approval of Hay’s actions and the contracts he had entered into), and expressed the view that the Committee, under the contracts, had an obligation to meet the American requests if at all feasible.
In every particular Hart, whose objections had been growing less forceful, suggested that Hay present his views personally to the Netherlands Colonial Minister, and forthwith arranged an appointment for tomorrow. Since Hart began by indicating that 90 percent was as far as he could advise his Government to go, and ended by agreeing to favor 95 percent, it is evident that some progress was made.44
- In telegram No. 3874, November 28, the Chargé in the United Kingdom reported a first quarter rubber quota of 100% (800.6176/164).↩