Memorandum by Mr. Willys R. Peck of the Division of Far Eastern Affairs84

Economic Assistance to Thailand

This morning I invited the attention of EA (Mr. Feis) to an AP84a telegram from Singapore, dated July 10, 1941, published in the Evening Star, July 10, to the general effect that Japan was buying rubber in the open market in Thailand and apparently had contracted for two years’ output, paying cash in advance. I also invited the attention of Mr. Feis to enclosures nos. 14 and 15 with Bangkok’s despatch no. 222, of June 17, 1941,85 two translations of Bangkok news items, to the effect that purchases of rubber and tin in Thailand had resulted in the termination of export of these products to Singapore. I remarked that information regarding the purchase of rubber in the open market in Thailand seemed contradictory to the tenor of statements oral and written made to the Department by the British Embassy, which clearly implied that the Thai Government was in position to allocate rubber output as it might wish. I observed that our proposed method of acquiring rubber from Thailand was based upon the supposition that the Thai Government would be able to control the destination of rubber exports.

Mr. Feis said the situation in Thailand in regard to rubber was the same situation that confronted the efforts of the American Government to acquire certain raw materials in many South American countries, that is, Japanese agents entered the open market and forced the price of such materials to sometimes fantastic heights. The American Government has not been attempting to meet such competition in the open market, which would only force prices higher still, but has been pointing out to the governments concerned that if they wished to acquire such American products as the United States might be in position to release for export, they could obtain the American products by making their own exports available to the American Government at reasonable prices. It was Mr. Feis’ opinion that it was within the power of the Thai Government, as of the South American governments in question, to effect arrangements of mutual assistance in these matters, if it desired to do so.

Mr. Feis remarked that the method that had been adopted toward obtaining Thai rubber and tin was exactly similar to the method that had been followed in the case of certain South American products, in [Page 205] that the Department is offering the Thai Government assistance in purchasing American products, within the limits set by our national defense needs, on the condition that the Thai Government shall assist the American Government to obtain by purchase as large a portion as possible of Thai rubber and tin.

Incidentally, Mr. Feis thought that the Rubber Reserve Company was probably aware of the open market buying of rubber in Thailand and that it was unnecessary, therefore, to bring to the attention of the Rubber Reserve Company the information that had reached the Department through the press here and in Thailand.

  1. Approved by the Adviser on International Economic Affairs (Feis).
  2. Associated Press.
  3. None printed.