The British Ambassador ( Lothian ) to the Secretary of State

The British Ambassador wishes to refer to his communication to the State Department of May 24, 1940,58 on the subject of the importation of cotton into the United Kingdom.

[Page 117]

The British Government have now reviewed their programme of purchases from the United States during the second year of war in the light of their dollar resources. In the case of cotton they have had to reach the conclusion that, having regard to existing stocks in the United Kingdom and to the balance of the cotton, estimated at 77,000 tons, which remains to be shipped during the coming year under the cotton-rubber exchange agreement, their further commercial purchases of United States cotton during the 12 months ending August 31, 1941, will not exceed 7,000 tons (or say 30,000 bales) for which licences have already been issued for shipment in September and 3,000 tons (or say 15,000 bales) for which it is proposed to issue licences for shipment in October, with the addition of any forward contracts which it may prove impossible to cancel.

The United States Government will realise that the British Government must take any step open to them to conserve their dollar resources to pay for their essential war requirements and they regret that the existing exchange position does not permit them to see any possibility of exceeding these estimates.

With regard to purchases from other countries, it is contemplated that Brazilian cotton will be purchased at about the pre-war average (50,000 tons) and that certain purchases will be made of other growths of American-type cotton from the African colonies, especially from the Belgian Congo, which are necessary to support belligerent Allied countries and do not involve exchange difficulties.

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