811.20 Defense (M) /5849k: Telegram

The Acting Secretary of State to the Minister in El Salvador (Frazer)

59. Rubber Reserve Company is prepared to enter into commitment with El Salvador an Government to purchase entire production of rubber in El Salvador except for an appropriate amount (to be agreed upon) necessary for domestic consumption, at price of 35 cents per pound c. and f. United States continental port for usual good quality castilloa rubber as understood in New York, with appropriate differentials for other grades. The term of the agreement would be for 5 years, prices being subject to adjustment after 2 years by mutual agreement if conditions change. The Government of El Salvador would agree to restrict export licenses to Rubber Reserve Company or its nominees. The exportation of manufactured rubber, if any, would be restricted to the United States. El Salvador would agree to use its best efforts to cause maximum amount of rubber to be produced and made available for sale to Reserve. Local labor would be financed locally for necessities for collecting rubber. Some Salvadorean agency might be designated as the single buying agency under the contract, if this seemed best way of securing results; otherwise sales would be made through usual trade channels now in existence. Price on sales to Rubber Reserve would also be fixed as local sales price.

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Foregoing proposal corresponds generally to agreements entered into with Brazilian Government on March 3.1

For your information we understand certain other American republics are negotiating to acquire rubber production in some Latin American countries. Please consult immediately proper El Salvadoran authorities and request their prompt consideration of proposal. If El Salvadoran authorities agreeable in principle to sale of rubber to United States, Rubber Reserve willing to enter into an agreement immediately to acquire it. Upon consummation of purchasing agreement we will be prepared to discuss with El Salvadoran authorities any useful joint arrangements to increase rubber production.

  1. See bracketed note and telegram No. 640, March 13, 7 p.m., to the Ambassador in Brazil, vol. v, p. 692.