493.46E9/12–1551: Telegram
The Chargé in Ceylon (Gufler) to the Secretary of State
382. Today’s Daily News carried front page feature article headlined better price for rubber sought alternative to stop export to China which reported in part GOC has asked US guarantee purchase rubber at better price for reasonable period in order maintain stability Ceylon economy. Ceylon has told us latter should provide alternate form help if Ceylon to overlook recent Red China offers sell rice in exchange for rubber. Top level discussions now being carried on between US and GOC re this matter particularly regarding immediate problems correcting downward price trend.
According government sources China prepared sell Ceylon high quality rice at rates cheaper than now paid and in addition China will buy Ceylon rubber at above world market prices. Ceylon contends if she foregoes these opportunities US should review rubber market so Ceylon may not suffer losses which would severely affect country’s purchasing power. Ceylon’s food bill requires allocation considerable revenue and unless world markets favourable for her three main products food requirements will use disproportionately large amount revenues. If US agrees buy Ceylon rubber at better price and Ceylon undertakes not sell rubber to Red China then Point Four aid will be automatically restored.
Dept pass London, sent Dept 382, rptd info London 129.