493.46E9/10–551
Memorandum by the First Secretary of Embassy in Ceylon (Black) to the Ambassador in Ceylon (Satterthwaite)1
Subject: Effect of Purchases for China on Ceylon Rubber Market
In his conversation with you and Mr. Gufler this morning, I understand that Sir Oliver Goonetilleke took the position that during July, August, and September there were few orders on the market for Ceylon rubber and that if large scale purchases by China for shipment on the Mickiewicz had not been made, rubber prices on the local market would have dropped drastically.
This is quite contrary to my previous understanding of the situation which was that Ceylon rubber would have moved freely at world prices even if China had not entered the market. This would seem to be confirmed by the fact that the shippers with Chinese contracts were forced to pay premium prices to other shippers for rubber in order to divert it from its normal markets.
This noon I checked with four of the leading rubber shippers in Colombo.* I asked two questions:
- (1)
- Would there have been a firm demand at world prices for Ceylon rubber during the past three months if China had not entered the Ceylon market?
- (2)
- Is there any foundation whatsoever for the claim that prices of Ceylon would have dropped below world prices if China had not entered this market?
To the first question the answer from all four firms was an emphatic and categorical “Yes”, to the second, an equally emphatic and categorical “No”.