811.24 Raw Materials/1633: Telegram

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

1665. Department’s 1372, April 24. Campbell and Pawson51 called yesterday and delivered the following reply of the International Rubber Regulation Committee to the Rubber Reserve Company’s message:

“Memorandum on rubber supplies to America with reference to United States of America Embassy’s cable handed to us on 25th April, 1941.

The fulfilment of the agreements of June and August within the period specified was necessarily conditioned by two facts, first that releases should be based on known demands, vide clauses 2 of June and August agreements, and second that there is a limit to the amount of rubber that can be produced and transported within a specified time.
American demand within the period under review was a threefold one, first 150,000 tons under the June agreement and 180,000 tons under the August agreement; second, provision for manufacturers’ stocks; and third, provision for trade consumption. The first was clearly specified at the outset and has not been varied. As regards the second, the agreements under clauses 1 (b) provided for a trade stock of 150,000 tons, but actual trade stocks have been built up to and maintained at a much higher level and at 31st March last were 210,000 tons. Consumption has since the last quarter of 1940 consistently and substantially exceeded your estimates upon which the Committee made releases in accordance with their undertakings.
We can appreciate that after the conclusion of our agreements with you there may have developed good and unforeseen reasons for the acquisition and maintenance of trade stocks above the figures specified in the agreements and we do understand how difficult it is to estimate future consumption closely, especially in the circumstances that existed, but nevertheless these excesses in total represent a very large subtraction from the rubber that would otherwise have been available for purchase by the Rubber Reserve Company. Moreover, owing to the shortage of freight during March rubber which would otherwise have been shipped to America was left behind to increase stocks at eastern ports and on estates. But for these occurrences and the fact that the Rubber Reserve Company have as a matter of policy subordinated their purchases to the unpredicted needs of manufacturers, the Reserve Company could have obtained all the rubber required by them within the period specified.
Since the conclusion of our agreements of June and August the rates of releases have been fixed in agreement with the panel of consumers and although your representative has been absent we have on all occasions had the benefit of his advice and agreement through the medium of cable and telephone.
Immediately Sir John Hay returned in November last and made his report regarding your views on American requirements, the I. R. R. C. fixed permissible exports for the first quarter at 100% and in February decided to permit the continuance of exports for the second quarter at the same rate and actual exports over the last 6 months have greatly exceeded anything ever formerly attained within any similar period.
It should be appreciated that the flow of rubber is subject to seasonal influences, that output cannot be increased beyond the capacity of labor available and that the circumstances of the war and all that they imply have made their impact increasingly felt on the main rubber-producing territories.
Owing to what is termed wintering, the flow of rubber from the trees is unavoidably diminished generally in the 3 or 4 months following January. Due to the sudden and abnormal demands made upon it for simultaneously greatly increased production of rubber and tin produced within the same major territories labor has in many parts been difficult and intractable and only by quick conciliatory action and well-timed substantial concessions have serious troubles been averted and production maintained. But for the fact that all authorities were prompted by a desire to meet fully and quickly all your requirements, production and exports could not in the circumstances and in the time have been so raised to and maintained at such an unprecedented high level.
From the foregoing we hope that you will feel that the Committee and the industry have done all that is possible to assist you by permitting and producing rubber at full capacity despite adverse seasonal influences, labor limitations and difficulties and increasing political threats and disturbances and that for overseas transport from British territories we have latterly and must in the future continue to be wholly dependent on your providing freight.
In accordance with our undertaking we have all along actively encouraged producers to be willing sellers within the agreed price range and we have seen no evidence that there has been at any time any resistance to that course. The industry through its organization has emphatically reaffirmed its willingness to carry out fully and faithfully the obligations placed upon it but they have asked us to point out that it has long been the established practice of most of their members to sell forward some months ahead and that the Reserve [Page 498] Company can only assure itself of acquiring such rubber by conforming to that practice and that producers who export from territories from which the regular shipping facilities have been withdrawn can only now sell on go-down terms since any other terms would involve an obligation on them to find freight, an undertaking which they are no longer in a position to fulfill.
Whilst regretting the absence from our meetings of Mr. A. L. Viles, the American manufacturers’ representative on the panel of consumers, we have welcomed the exchange of views and reports which have recently taken place between him and Sir John Hay. In the course of these exchanges Hay has made a number of suggestions for facilitating the quick conclusion of sales and purchases between producers and the Reserve Company. We would mention particularly the suggestion contained in his cable to Viles of the 31st March and in his notes to your Embassy dated 10th and 22d April. (Embassy 1438, April 11 and 1610, April 24.)52 We believe that if these suggestions are adopted and observed in practice they will greatly facilitate business between seller and buyer.
As long as production is maintained without serious interruption, and it will be the constant endeavor of all concerned to maintain it in all circumstances, and as long as America continues to make good the shortage of freight, rubber will continue to flow to America in sufficient quantities to increase stocks rapidly, but for reasons given here it must be evident to you that the full accomplishment of your aims cannot now be attained within the period originally anticipated.
It is the very earnest desire of the Committee to meet fully your requirements and if you have any practical suggestions to offer for the better and quicker promotion of that end we should be glad to receive them and to give to them immediate and sympathetic consideration.
By this message and by former discussions between Viles and Hay we hope that we have helped to a clear understanding of the position in all its implications. We realize, however, the limitations of telephone and cable communications and we should warmly welcome any representative whom you would choose to send here and would be very glad to discuss the matter with him frankly and fully.”
  1. A. G. Pawson, secretary of the International Rubber Regulation Committee.
  2. Neither printed.