811.24 Raw Materials/1597a: Telegram
The Secretary of State to the Ambassador in the United Kingdom (Winant)
1140. The Secretary presented to the British Ambassador today a memorandum regarding the flow of rubber to the United States, text of which is transmitted for the Embassy’s information:
“The interested consideration and aid of the British Government is asked to assure the flow in ample quantities of rubber to the United States. In brief, the history of the present position has been outlined as follows by the Federal Loan Administrator, who is directing this procurement activity through the Rubber Reserve Company:
‘On three occasions agreements have been entered into by the Rubber Reserve Company, Reconstruction Finance Corporation and the Federal Loan Administrator with the International Rubber Regulation Committee to purchase for the account of the Rubber Reserve Company a total of 430,000 long tons of rubber:
‘The first agreement, dated June 29, 1940,48 provides for the purchase of 150,000 long tons on the basis of 18¢ to 20¢ per pound, c. i. f. New York, for standard smoked sheets, and further provides that the rubber manufacturing industry will maintain its normal inventories at not less than 150,000 long tons in addition to purchasing its current consumption requirements.
‘The second agreement, dated August 15, 1940,49 provides for the purchase of an additional 180,000 long tons on the basis of 17¢ and 18½¢ per pound f. o. b. transoceanic ships, Asiatic ports, for standard ribbed smoked sheets.
‘The third agreement, dated March 7, 1941,50 provides for the additional purchase of 100,000 long tons on the same terms as the second agreement; this additional amount being agreed upon with a view of tapering off production so as to least disturb the economic conditions in the producing territories.
‘In connection with the above agreements the Committee represented by John George Hay, Kt, agrees to permit the release of such quantities of rubber as may be necessary to accomplish the purposes desired, and further agrees to encourage producers of rubber to be ready sellers at the range between the two prices mentioned in the agreements.
‘Agreements have been entered into by the Rubber Reserve Company with several steamship lines for certain tonnage space at specific intervals during the remainder of 1941. These agreements provide for the use of such space for crude rubber and if cargo is not available the Rubber Reserve Company is liable to the steamship company for “dead freight” at the then existing conference ocean rates.
‘Notwithstanding the fact that the Rubber Reserve Company is furnishing shipping, and notwithstanding the statement of the Colonial Office that three Malayan ports are full of rubber and the storage at plantations is filling rapidly, neither the Rubber Reserve Company nor the rubber manufacturing industry is able to buy within the price range at the Malayan ports.
‘It is, therefore, necessary that immediate steps be taken by the British and Dutch Governments to make rubber available within the price range in order to fulfill the agreements heretofore entered into, and to avoid the great waste of shipping space by ships having to return home from Asiatic ports with unused space, as well as Rubber Reserve Company having to pay “dead freight”.
‘It will be noted that of the 430,000 tons which the Rubber Reserve Company has agreed to buy, to date we have only been able actually to buy 131,445 tons, and we would like to complete the entire purchase in 1941.[Page 495]
‘It is important to the British as well as ourselves that we get the rubber on our soil.’
This Government will not undertake to indicate with finality what steps may be necessary to deal with this situation effectively. It may be that action which would bring forward immediate offers of rubber within the reasonable price range established would be sufficient. It may well be however that to get an effective result it will be necessary to increase the production and export quota now in force. Circumstances make it inadvisable further to prolong the period of delay involved by a continuation of the effort to try to find a solution through the ordinary protracted processes of discussion solely with the members of the International Rubber Regulation Committee. For that reason, and in the light of the high importance of this for the defense production of the British Empire and the United States, and the very great effort being made by this Government in similar situations of procurement faced by the British Government, it is hoped that adequate action will be taken at once.”