811.20 Defense (M)/696
Statement by the Federal Loan Administrator (Jones), Released July 1, 1940
Under authority of the amendment to the Reconstruction Finance Corporation Act approved by the President June 25, 1940, which gives to the RFC, when requested by the Federal Loan Administrator with the approval of the President, the right to create corporations with power to acquire and carry strategic and critical materials in order to aid the Government of the United States in its National Defense Program, the RFC on Friday, June 28, created two such corporations, the Rubber Reserve Company and the Metals Reserve Company, each with a capital of $5,000,000.
The Rubber Reserve Company will acquire and carry a reserve supply of crude rubber, and the Metals Reserve Company will acquire and carry a reserve supply of critical and strategic materials, principally tin and manganese.
The Rubber Reserve Company has agreed with the International Rubber Regulation Committee, represented by Sir John Hay, that it will buy a reserve stock of rubber of 150,000 tons over a period of months, at a price range basis between 18 and 20¢ a pound, c. i. f. New York.60 This 150,000 tons, with the 85,000 tons recently acquired through the barter agreement with Great Britain in exchange for cotton, will provide a reserve supply of rubber in the United States of approximately 235,000 tons, in addition to current stocks held by the industry.
[Page 300]The capital of the Rubber Reserve Company will be owned one-half by the RFC and one-half by the principal rubber manufacturers, and the reserve supply will be acquired from additional production of rubber allowed by the International Rubber Regulation Committee as a result of this contract, so that there will be no lack of rubber to meet current demands, and no occasion for unusual competitive bidding by the industry for normal requirements.
The RFC has authorized loans to the Rubber Reserve Company of $65,000,000 to purchase and carry the rubber. The rubber producing countries are: Malaya; Netherlands Indies; French Indo-China; Ceylon; India; Burma; North Borneo; Sarawak; and Thailand.
The Metals Reserve Company has agreed with the International Tin Committee, represented by Victor A. Lowinger of London and John Van den Broek of Batavia, that it will buy 75,000 tons of tin which it will hold as a reserve stock. The world supply of tin is controlled by the International Tin Committee and the agreement calls for an increase in world production of tin so that the reserve can be acquired without interfering with the current demand for tin or affecting the current price. The Metals Reserve Company has agreed to buy its reserve stocks at 500 a pound, c. i. f. United States ports to be specified by the company.
The RFC has authorized loans to the Metals Reserve Company of $100,000,000 with which to buy and carry the tin and other metals. The tin producing countries parties to this agreement are: Belgian Congo; Bolivia; French Indo-China; The Malay States; Netherlands East Indies; Nigeria; and Thailand.
- For text of rubber contract signed June 29, 1940, see The History of Rubber Regulation, 1934–1943, p. 210.↩