611.48N16/70: Telegram

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

2379. The Colonial Office has announced that the British Government is to purchase as a war measure the whole British West African cocoa crop for 1939/40. The prices to producers will be on a basis of 9 shillings per load for Gold Coast fermented and 16 pounds 10 shillings per ton for Nigerian f. a. q. cocoa ex scale port of shipment. The crop will be handled by shippers already established in the trade who will act as agents for the Government, purchases by each shipper to be allocated mainly on a quota system based on purchases in the last three seasons or in the case of smaller shippers in the last season only. Distribution and sales will be under the direction of the Ministry of Food with assistance of a Trade Advisory Committee and will be handled through existing trade channels. Am informed by Colonial Office that the Government purchasing scheme is not the result of any shortage of cocoa actual or prospective but on the contrary is intended to meet a condition of relative overproduction in relation to reduced demand arising from the war situation since the German market which absorbed 100,000 tons last season is now closed and the nearby neutral markets will have to be carefully rationed to prevent supplies going to Germany. Colonial Office states that while prices to consumers have not yet been definitely fixed it is expected that they will be maintained at approximately current levels and that there will be ample supplies available for the American market. The Colonial Office appears desirous of reassuring the American Government and American consumers that there is no intention of profiteering in this commodity or of restricting supplies. Regret was also expressed that it had not been found possible to proceed with the purchasing scheme proposed recently by Rockwood and Company as it had been found necessary to restrict distribution to organizations already established in the trade in line with general Government policy in the handling of essential commodities.