892.24/66½

Memorandum by the Adviser on International Economic Affairs (Feis)91

I do not anticipate that Thailand will in any way put up effective resistance to Japan. For that reason I see no reason in the field of political policy to incline us to the support of Thailand, except in so far as something can be secured which we ourselves need; viz, rubber and tin. From the beginning I have not understood why we have not just sailed ahead in negotiating for this rubber and tin with Thailand.

Of course I would rather see Great Britain secure the tin and rubber than Japan. However, if the tin and rubber is to be secured by Great Britain, will we be prepared to sanction the export to Thailand of any supplies needed for her own defense? It is to us, not to Great Britain, that Thailand would look for such supplies, with the possible exception of part of their oil. On this understanding I would not object to the consummation of the British deal. The role which the British will have assigned to us after they have concluded their own negotiation will prove in my judgment a wholly unsatisfactory one. They apparently look to us to bargain to secure the remaining one-third of the output of the Thailand tin mines. We are reliably informed that the Japanese are buying tin in the open market in Thailand at a price which may be as much as double that which Jones and Clayton92 are prepared to pay; they could not possibly pay this price, thereby imperiling their contract for vastly greater amounts of tin from other sources at fifty cents a pound. The British know that, for they themselves are parties to the agreement between the International Tin Committee and the Metals Reserve Company, which already gives the Metals Reserve Company a prior right to all the tin Britain itself does not need.

My surmise is that the same situation will be confronted in the case of procurement of rubber (in this instance, the spread between the 1,500 tons which the British are to secure and the total of 4,000 tons), in which the British will again enter the picture. Again it will be observed that the British asked us to share in the cost of any premiums they might have to pay on the tin and rubber they procured, but they take no note of the fact that any tin and rubber we procured would also be at a premium, and do not offer to share that expense.

To summarize: [Page 212]

(1)
I would rather we secured the tin and rubber directly from Thailand.
(2)
However, since the British have proceeded so far into this negotiation, and since certainly I would rather see the British get these products than the Japanese, I would not try to prevent this agreement.
(3)
I would make clear, however,
(a)
that the role assigned to the American Government in the field of procurement of tin and rubber would in all probability turn out to be an unsatisfactory and probably an impossible one, and
(b)
suggest that the tin and rubber which the British secure might be resold to us under the regular terms of our agreements with the International Tin Committee and International Rubber Regulation Committee.
(4)
I should also make clear that we are accepting no obligation as regards the furnishing of supplies to Thailand.

Herbert Feis
  1. Noted by the Assistant Secretary of State (Acheson).
  2. Jesse H. Jones, Administrator, and W. L. Clayton, Deputy Administrator, Federal Loan Agency.