811.20 Defense (Wool)/584: Telegram

The Acting Secretary of State to the Ambassador in Uruguay ( Dawson )

529. Following receipt of your no. 683, August 15, noon, interested Government agencies have held a succession of meetings to discuss most appropriate action to take. Consensus now definitely favors some action regarding carryover and new clip as well, but all are agreed with your comment regarding speculative holdings. Uruguayan wool market is out of line with world prices and there is definite feeling here that correction of this inconsistency would be in Uruguayan interest.

It is suggested that the Uruguayan Government appoint someone here in Washington to begin conversations and with power to take action.

It is highly desirable that it be made clear in Montevideo that we have no interest at existing prices. Should the Montevideo market approximate the world price range which is substantially lower it is possible that some means might be worked out to move the carryover in spite of fact that Army and Navy have recently specified 100 [Page 698] percent domestic wools and commercial demand is limited by conservation order M–73, a copy of which is being despatched by air mail. Department is confident that if Montevideo prices can be adjusted to world levels, other agencies may be induced to place Uruguayan wool in government stockpile. If this adjustment of prices should occur promptly, it would then be possible to move Uruguayan wool with the present plethora of shipping now available in the Plate which may not be so free at a later date.

The situation is complicated by negotiations for the Australian clip but we are ready to begin conversations regarding Uruguayan carryover immediately to aid movement of stocks.

Welles