Foreign Relations of the United States, 1946, The Far East, Volume VIII

892.61317/4–2546: Telegram

The Acting Secretary of State to the Chargé in the United Kingdom (Gallman)

secret
us urgent

Washington, April 25, 1946—6 p.m.

3506. 1. Yost Apr 22 reported⁴⁸ Brit FonOff has forbidden proposed premium payments, authorized higher prices up to 15 pounds per ton Siamese rice and directed Thompson express Brit doubt regarding 40 to 1 exchange rate.⁴⁹ “These instructions conflict in several respects with comprehensive rice program already submitted to PriMin by Butler,⁵⁰ citing Kahn’s concurrence, and with Thompson and Yost approval. Presentation took this form to show combined nature of work being done in anticipation of Commission, but avoid American direct participation in rice clause negotiations. In Butler’s views and ours, Thompson’s new instructions would undermine program already under way and jeopardize attainment maximum flow rice. We also took exception unilateral Brit action on exchange rate without prior agreement and consultation Wash. Butler and Kahn at Butler’s request and with approval of myself and Thompson taking plane to London to attempt to correct misunderstandings which seem incurable by exchanges of slow and usually garbled cables”.

2. US considers establishment Siamese exchange rate prerogative Siamese Govt. Treas prefers make no recommendation regarding exchange rate (Deptel 3366 Apr 19⁵¹). Following receipt further info prices and situation Bangkok and urgent plea for action sent Apr 23 by Yost,⁵² Dept willing waive any doubts (Deptel 3186 Apr 12⁵¹) and accept unanimous recommendations of both Brit and American representatives Bangkok that program they urge should be put into effect at once. Yost reports that for weeks there has been only a trickle of rice exports which, had there not been prolonged argument in London over each recommendation made by Brit experts Bangkok, would probably by this time have been going forward in considerable volume. Imperative necessity of getting rice out of Siam to meet world famine is being held up by “discussion of long-range economic and financial policies. Meanwhile Siamese rice market is completely stagnant, Siamese Govt is confused and losing impetus to which it had been aroused a month ago and Thompson, Butler and Doll⁵³ are in despair”.

3. Emphasize to FonOff that this Govt believes famine conditions do not permit luxury further debate as to best exchange rate, best price or effectiveness proposed premium payments to secure immediate delivery rice. It considers unanimous views Brit and US representatives on spot should be followed and that immediate action must be taken. Further delay more costly than possible defects in program. Furthermore Dept does not consider that either Wash or London under present circumstances is in better position than trusted men on spot to gauge prospective effectiveness program.

4. If proposed rice program not immediately adopted, Dept feels insistence on details must not be permitted jeopardize primary consideration which is action. Dept would have no objection any increase sterling price which Brit willing pay since increased sterling receipts would increase Siamese resources for importing incentive and rehabilitation items.

5. Dept informed that Brit price proposals include export duties and war taxes as well as bags. Dept hopes prices will be stated in conformity Paras 4, 5 and 11 Memo Understanding. These provide for standard sample and appropriate price differentials other grades and do not contemplate inclusion export or other duties in basic contract price.

6. Secure confirmation Dept understanding that proposed premiums would be applicable all rice delivered during periods specified and payable by whatever country purchases such rice. Also that both same sterling and tical price (aside from premium) will apply all present stocks and new crop through period required for sale new crop by farmers—say Mar 1, 1947. For your info Dept informed that Doll considering further increase value tical about Dec which, although sterling price unchanged, would drop tical price. This would appear breach of faith with farmers and cast doubt good faith Rice Commission.

7. Dept again earnestly requests (Deptel 3186, Apr 12) that Brit moderate penalty on Siamese for failure achieve target figure. Prefer elimination altogether but at most applicable only shortages below 800,000 tons next 12 months.

8. Discuss this telegram with Kahn upon his arrival.

Acheson

48. Telegram 420, not printed.
49. That is, between the Siamese tical and the British pound.
50. Somerset Butler, a British national who became Chairman of the Combined Siam Rice Commission when that body was established in May 1946.
51. Not printed.
52. Telegram 423, not printed.
51. Not printed.
53. William A. M. Doll, British adviser to the Siamese Government.