493.46E9/6–2151: Telegram

The Ambassador in Ceylon (Satterthwaite) to the Secretary of State

secret

646. In discussion yesterday re Kem amend1 (Depcirtel 800 June 15)2 Perm Sec MEA informed Emb rep:

1.
He had discussed rubber embargo question with PriMin that morning and PriMin, while opposed to Communism etc, stated wld [Page 2029]be “politically” impossible for him embargo rubber to Commie countries.
2.
Moreover question is academic as no Ceylon rubber can reach China because of US and UK control of shipping and although small quantities are shipped Commie Europe, UK is selling Ceylon rubber to Commie Eur so it might as well go direct.”
3.
It is not GOC intention do anything about Kem amend at present time.

Dep UK HC 3 later informed Emb rep that PriMin expressed views (1) and (2) to UK HC Hankinson when latter sought yesterday have PriMin confirm by public statement (Embtel 640 June 19)4 his previous assurances that facilities wld not be made available for rubber shipments Ceylon to China. PriMin did however agree to HC’s sending innocuous and noncommittal statement to London re GOC position which London had suggested in event stronger statement unobtainable. HC had impression PriMin hopes need for definite action re shipments to China may never arise in view exporters failure obtain shipping space.

Ceylon Times June 19 carried front page feature article headlined “Proposal Cut Wages 300,000 Rubber Workers—Fall in Prices as Reason”. Article states in part employers reps have proposed resolution that rubber wages board reduce rubber industry basic wages approx 15½ percent for men, 25 percent for women and 31% percent for children as levels fixed last Feb when rubber prices almost double present quotations.

Emb considers industry unquestionably able maintain current wages at present prices and employers taking this step to protect principle that if wages raised when prices increase, they must be reduced as prices decline. Employers action however undoubtedly will strengthen PriMin’s determination not take any step which might depress rubber prices.

Dept pass London sent Dept 646, rptd info London 91.

Satterthwaite
  1. The Kem Amendment, Section 1302 of P.L. 45, Third Supplemental Appropriation Act of 1951, approved June 2, 1951 (65 Stat. 52), so-named after Senator James P. Kem of Missouri, provided for a ban on economic or financial assistance to countries exporting strategic materials to Communist-bloc countries. Further documentation is scheduled for publication in volume iv and volume vii.
  2. Circular telegram 800, June 15, not printed, dealt in a general way with interim exceptions from the provisions of the Kem Amendment which had been approved by the National Security Council on June 13 and transmitted to Congress on June 15. The telegram further pointed out that the NSC was completing evaluations of individual countries receiving U.S. assistance to determine whether those countries had met the requirements of the Kem Amendment. In the case of a noncomplying country, the NSC would determine whether it was in the U.S. security interest to (a) withdraw interim exceptions and discontinue assistance or (b) continue assistance and replace the interim exception by a specific exception. (400.009/6–1551)
  3. M. R. Metcalf, United Kingdom Deputy High Commissioner in Ceylon.
  4. Telegram 640 from Colombo, June 19, related a report from Mr. Metcalf that the U.K. High Commissioner in Ceylon had received instructions from London on June 19 to endeavor to have the Prime Minister confirm by public statement the latter’s assurances to him that facilities would not be made available for rubber shipments from Ceylon to China. The purpose of this statement was to enable the U.K. Government to answer questions which it anticipated would be raised in the House of Commons with respect to Ceylon’s position. (493.46E9/6–1951)