840.50/11–1544: Airgram
The Chargé in Canada (Clark) to the Secretary of State
[Received November 17—5 p.m.]
A–46. Reference Department’s A–142, September 27, 5:55 p.m.11 and Embassy’s despatch No. 1640, October 26, 1944.12 With despatch Embassy forwarded copies of contracts as offered by British Timber Controller to Canadian lumber producers.
Munro, in charge of exports, Canadian Timber Control, has advised Embassy of change in proposed eastern contracts. Eastern Canadian lumber operations are largely confined to winter and with extended negotiations on postwar contracts, eastern producers required more definite 1945 commitments. Early proposals were for contracts to become effective 28 days after end of European war.
British Timber Controller now offering eastern producers a flat contract for 1945 on the basis of 1944 prices and volume. British also offering 1946 contract with “postwar” provisions of original contracts. Industry understands that similar contract will be offered in the fall of 1945 to cover the year 1947.
Despite early announcement of British intention to obtain 1.2 billion board feet for 2 postwar years, Munro doubts that this volume will be contracted or will be obtained. In 5 years 1934–1938 Canadian lumber exports to the U.K. averaged .9 billion as compared with .4 [Page 98] billion to U.S. In the years 1939–1944 lumber exports to the U.K. averaged 1.0 billion as compared to .9 billion to U.S. In 1944 exports to the U.K. were 1.0 billion and to the U.S. .9 billion.
Accordingly, even if announced totals of exports to Britain were obtained, they would only represent a level of lumber exports to the U.K. as has previously been attained in years of large production and export. For example, from 1936–1940 average exports to the U.K. amounted to 1.2 billion.
There is, however, no guarantee that the U.K. will receive stated objectives. Munro stated that the British Government attempted to obtain volume commitments direct from the Canadian Government itself. As the Canadian Government has refrained from buying and then re-selling lumber even during the war, it was not prepared to make any such postwar state trading commitment. Furthermore, the Department of Munitions and Supply was not prepared to allow the British Government to “stake out” a definite volume of the Canadian lumber trade even with private operators. Thus Canadian operators have only been able to guarantee to the British a certain percentage of their annual production. All the contracts provide that the operators can change the volume of shipments in the event the Canadian Government should demand increased lumber for domestic purposes or should decide upon an alteration of export markets.
The net result therefore is that the British Government is offering to buy a certain volume and to pay operators in Canadian dollars. Volume available will probably be based not only on a percentage basis but can be adjusted in the event of some contrary policy decision by the Canadian Government.
There has been no change in the provisions for price variation nor in the manner of determining cost variation in connection therewith.
Munro stated that revised contracts are now being prepared and that they would soon be available to the trade and to the Embassy. At such time the Embassy will report further.