811.20 Defense (M) Brazil/1355a: Telegram
The Secretary of State to the Ambassador in Brazil ( Caffery )
2721. It is considered urgent here that immediate agreement be reached with the Brazilian Government for the establishment of mutually satisfactory prices for the purchase of rubber products by the United States (presumably Rubber Reserve Company) as contemplated by paragraph 7 of the Rubber Agreement of March 3rd. Prices have been established for the purchase of tires but we think we should now endeavor to establish prices for other manufactured rubber products.
There has been correspondence between Korkegi82 and Rubber Reserve regarding the problem of curtailing production of nonessential rubber products such as rubber thread, rubber toys and the like. The present object of the Rubber Reserve and BEW83 is not only to obtain [Page 718] the cooperation of the Brazilian Government in the curtailment of the manufacture of nonessential rubber products but also to assist in the conversion of existing facilities to the production of essential rubber products. To this end Rubber Reserve stands ready to purchase existing surplus stocks of manufactured rubber products held by manufacturers and upon specific recommendations of the United States Purchasing Commission in Brazil, and assuming that such curtailment can be accomplished, Rubber Reserve will help in the conversion depending upon the merit in each case.
Some system of control should be established by the Brazilian Government to restrict so far as possible the manufacture of miscellaneous rubber goods except tires and the possible prohibition of the manufacture of nonessentials such as cut thread, toys and the like. It would seem appropriate that the Brazilian Government exercise the suggested control of the allocation of crude rubber to the manufacturers and that the appropriate agency of this Government assist in such control by the licensing of shipments of chemicals and supplies to such manufacturers from this country.
That this matter is of great urgency is shown by Korkegi’s reports that the manufacture of non-essential rubber products in Brazil is definitely on the increase, as illustrated by an account of the increase of the production of rubber thread in the case of one manufacturer from 800 kilograms to 1400 kilograms per day, and that the present exportable surplus of rubber thread alone is estimated at 35 tons per month.