846E.2395/1–852: Telegram

The Secretary of State to the Embassy in Ceylon


263. Inform GOC ur discretion fol except as marked:

GSA still willing discuss possibility rubber contract with GOC but negots shld be concluded within month or two. FYIGSA indicated [Page 1501] wld have no further interest in negotiating contract after June 1952. End FYI.

View past unfortunate disclosures and exaggerated press reports US offers, Dept still believes inadvisable send official Colombo (Deptel 53 Aug 3 1951).1Dept continues interested in receiving alternative procedural suggestions from GOC.

GSA still prepared consider contract for about four thousand tons monthly for period 12 to 18 months which wld be equivalent to monthly US take Ceylonese rubber over three year period 1948–50, or close 50 percent Ceylonese production this period.2 Contract this type shld prove advantageous Ceylonese because of assurance it wld give of maintaining higher level dollar earnings than otherwise. In first nine months 1951 US purchases averaged less than 1,700 tons per month or 20 percent Ceylon production; during last three months of year US purchases from Ceylon still only one-half average level preceding three-year period. No comparable decrease US purchases throughout world.

Suggested type contract shld also prove of value by resulting somewhat higher prices per pound to Ceylon sellers. In absence contract GSA considers its purchases as residual and therefore may, when it believes rubber prices high, make its offers to purchase at several cents below market prices. GSA is however prepared sign contract with GOC to purchase at market prices (customarily determined noon Singapore market).

In view these factors benefits Ceylon by large purchase contract are positive. You may report advantages mentioned in general terms ur discretion to Ceylonese officials.

FYI only, US probably will re-establish free market for commercial purchases natural rubber with private imports by mid 1952. This will be announced well advance effective date. Results this action in conjunction possible decreased stockpile purchases as stockpile goal is neared may well result in softening of price. End FYI.

In absence suggestion for procedure by GOC, you may wish informally indicate to GOC that one way reopen discussions wld be instruct their Amb Wash to open negots here.

Shld GOC raise question Emb may say US is no longer interested exploring possibility contract for purchase other commodities (Deptel 1 July 2 1951).3

[Page 1502]

This replaces airgram mentioned Deptel 226 Dec 6.4

  1. See Foreign Relations, 1951, vol. vi, Part 2, p. 2036.
  2. Total Ceylonese exports of rubber for the previous year (1951) had been 103,633 long tons (2,240 lbs.), or an average of 8,636 long tons per month. U.S. rubber imports from Ceylon in 1951 had totalled 25,600 long tons or roughly 24.7 percent of Ceylon’s annual production for that year. (Ceylon Department of Commerce, Thirty Years Trade Statistics of Ceylon (1925–1954), Part V, pp. 1836–1837; U.S. Department of Commerce, Report No. FT 110, 1951, p. 43)
  3. Telegram 1 to Colombo stated that the Department would consider discussing contracts for other commodities besides rubber, perhaps for copra (dried coconut meat). See Foreign Relations, 1951, vol. vi, Part 2, p. 2031.
  4. See footnote 5, supra.