Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 2

824.2544/9–2153

The Secretary of State to the Secretary of the Treasury (Humphrey)¹

confidential

[Washington,] October 5, 1953.

Dear George: I refer to your letter of September 21² concerning the forthcoming tin negotiations.

The simple answer to your question is that we believe it would cause serious complications for us to fail to carry out our expressed intention of attending a negotiating conference on tin, if convened. However, in view of the concern you express, I want to discuss in this letter several of the considerations that entered into the original decision to participate.

There is no disagreement here with the concern you have about international commodity agreements. We share your feeling that it is in the nature of these agreements to do violence to our beliefs in the free operation of the marketplace with a minimum of governmental interference. I would go on to say that the basic attitude of our Government towards any proposals of this character should be a presumption against entering such agreements.

However, this is but one aspect of the case and various other important considerations must be carefully weighed in reaching a governmental decision which reflects the broadest national interest. One such consideration is the deep concern regarding violent commodity price fluctuations which are felt by the underdeveloped areas, and indeed by many of our important allies in Western Europe. In the face of this concern, a failure on our part even to sit down internationally and consider common action with our allies to meet these problems could not but have the most adverse effect on our Foreign Relations, especially with Asia and Latin America.

Secondly, we must bear in mind that these are the very underdeveloped areas about which we are concerned and watchful as to their political and economic stability—and where we have mounted substantial economic development programs as a stabilizing factor—and they, rightly or wrongly, consider commodity agreements a possible answer to some of their preoccupying economic difficulties. Furthermore, it is hard to see how the United States can afford to take a doctrinaire position, no matter its consistency with our fundamental economic philosophy, if we are not to ignore our security interest in these areas—and in the face of the fact that in wheat and sugar, where we are major producers, we too have sought an answer to our problems by way of commodity agreements.

Thirdly, it is well to remember that there have been international tin agreements in the past. One of the principal complaints of consuming countries like the United States has been that these agreements were operated without their participation and without regard to their interests. United States participation is not essential to conclusion of an agreement, but there is room for serious doubt that we should now take a position which would virtually assure that we would be unrepresented in any agreement that may be negotiated.

Fourth, the tin situation presents dangers to our national interests. Those dangers cannot be removed by refusing to consider a price stabilization agreement. For instance, an extended period of distressed prices would be a serious threat to our interest in economic and political stability in Bolivia and strategic areas of Southeast Asia and the Belgian Congo. In the absence of an international agreement, tin might sell below an economic price for a considerable time, but this windfall would not be an important advantage to consumers, as it would eventually cause shortages. Further, the period of unreasonably low prices and the later period of unreasonably high prices would stimulate accusations and recriminations of a type which have been serious irritants in international relations in the recent past. And, finally, the Soviet bloc requires imports of tin but we believe that these have not been large enough to allow stockpiling behind the Iron Curtain. A persistent surplus in the West could easily play into their hands.

In short, it seems to me that this is a difficult area of our international relations and one in which the decision must rest on the broadest national interest—one in which we must analyze a series of factors, one of which is certainly the issue you raise.

On the understanding that the conference may be resumed in November, the American Iron and Steel Institute has nominated Mr. Carl A. Ilgenfritz, Vice President—Purchases, United States Steel Corporation, to serve as an industry adviser in our delegation. Mr. Ilgenfritz would represent the tin plate industry which is the principal consumer of tin in the United States. He has served ably in this capacity in previous international meetings. I am sure that he would be glad to come to Washington to discuss these questions with you from the standpoint of the largest consuming industry. We would be glad to suggest this to him, if you wish.

Sincerely yours,

John Foster Dulles

P.S. We have just received your letter of September 29³ which raises related questions about rubber. The international situation is quite different in rubber, and we shall write you further on this matter shortly.

1. Drafted by Schaetzel on Oct. 2.
2. Not found in Department of State files.
3. Not printed; it expressed the fear that U.S. participation in the meeting of the Management Committee of the International Rubber Study Group scheduled for London on Oct. 12, 1953, might involve the United States in a costly commodity agreement. (398.2395/10–853) A draft letter of reply, with drafting date of Oct. 7, stressed the same points contained in the letter concerning tin, but there is no indication that Secretary Dulles signed it as drafted. (398.2395/10–853)