811.20 Defense (Wool)/584: Telegram
The Ambassador in Uruguay (Dawson) to the Secretary of State
[Received 1:24 p.m.]
683. Department’s telegram No. 471, August 3, 8 p.m. Present wool surplus is estimated between 35,000 and 38,000 bales which is considered large and is causing concern. An undetermined but probably considerable portion of this wool is in the hands of brokers who took an over-optimistic view of market and will take heavy losses if compelled to sell at current United States prices. Largely as a result of this situation pressure is being brought on the Uruguayan Government to induce us to take the wool at prices which will insure a profit.
We cannot be expected to assume the speculative losses with which brokers are threatened. However, to show our willingness to take Uruguayan wool we consider it advisable that Boston houses offer to buy substantial quantities on the basis and in the manner proposed in the Department’s telegram. If indications are that prices will rise and that Uruguayan holders stand to gain by awaiting developments, this should be pointed out by the Boston houses in making their offers. Otherwise we incur the risk of being accused of having squeezed the Uruguayan trade.