832.24/4–946: Telegram

The Chargé in Argentina ( Cabot ) to the Secretary of State

secret

1017. ReDeptel 463, April 5.20 It is reliably reported that Brazil is attempting to negotiate a 5-year contract for Argentina’s natural rubber requirements on basis of 30 cents per pound in exchange for wheat. American tire companies naturally disturbed since this would result in excessive cost to them of raw materials. In view of excessive prices Argentina has been forced to pay for natural rubber, an agreement at 30 cents would appear as important victory for Col. Sauri as result of his trip to Rio.

It is very obvious that if Argentina could be assured its essential requirements of natural rubber at approximately world prices, it would welcome and even suggest cancellation of tripartite agreement. Since Dept has not authorized Embassy to inform Argentina of our willingness to guarantee specified first and second quarter allocations at prices mentioned in Deptel 463, Argentina naturally has no knowledge of US attempt to obtain fair treatment for it in present critical situation. Actually US is credited with obstructing all of Argentina’s efforts to solve critical rubber situation and our silence merely furthers current belief. This is reflected in all official conversations. I believe Brazil is making full capital of situation and not only using present natural rubber situation as club to obtain wheat, but also to emphasize Brazil’s sincere effort to aid Argentina.

I strongly recommend that Embassy be immediately authorized to inform Argentine Govt that:

(1)
A minimum supply of 550 tons quarterly of natural rubber will be made available to Argentina.
(2)
The 60-cent price will prevail for first quarter allocation and subsequent prices will be based on prevailing world prices.
(3)
US is willing to cancel tripartite agreement as soon as agreement of others is obtained.

Cabot
  1. Not printed.