846E. 2395/4–552: Telegram

The Secretary of State to the Embassy in Ceylon


376. Re rubber, Deptel 323 Feb 271 and Embtel 502 Mar 7,2 numbered pts (a) made in GOC aide-mémoire Mar 10 [(11],3 and (b) in US response dated Apr 4:3


(a) GOC willing enter 2-year agreement covering 72,000 tons per annum or average up to 6,000 tons per month.

(b) Providing other terms satis, US wld accept 2-year agreement. US wld accept 72,000 tons year or average 6,000 tons month, but shld GOC prefer lesser amt, US wld accept any stipulated quantity average between 3,000 and 6,000 tons month.


(a) Purchases by US private trade or GSA or both. GOC understands GSA purchases wld normally be for stockpile and cover residual amt left by private trade.

(b) Purchases expected be made US private trade. GSA purchases only residual for US stockpile.


(a) GOC hopes all purchases be made in open market at current Colombo market prices. While recognizing prices Colombo market have tended slightly higher than Singapore or elsewhere, GOC states both markets highly competitive and small price variation in single day. GOC prefers as little interference in free market as possible.

(b) US unable adopt Colombo prices as basis rubber purchases since perhaps 70 percent rubber entering Colombo market absorbed under agreement, price fluctuations in small quantities left cld be unrepresentative. US proposes either (1) price based on Singapore price on date purchase or (2) price based on 30-day average price Singapore in preceding month. Re acceptable types crepe, US willing pay Singapore average price thin pale crepes or alternatively agreed percentage above Singapore price No. 1 ribbed smoked sheets.


(a) GOC wld agree secure any shortfall in residual quantity which GSA required purchase. In event GSA purchases rubber procured by GOC, GOC wld require price one US cent above corresponding Singapore price.

(b) US unable accept one cent premium payable GOC since agreement between two govts neither acting as agent other.


(a) Of 72,000 tons year proposed, GOC requests breakdown 36,000 tons sheet and balance not exceeding 36,000 tons in either sheet or crepe as may be available or desired by purchaser.

(b) Div 72,000 tons year as proposed by GOC acceptable provided GOC wld give US its assurances 40 percent of total will be thick pale crepes nrs 1X, 1 and 2. US prepared accept not less than 15 percent of total in crepes but in event assured quantity crepe less than 40 percent, duration and total quantity involved in agreement wld be decreased.


(a) Purchase Ceylon crepe wld be left to open market Ceylon and GOC cannot undertake assist purchase crepes. Provided US has bought all sheet procureable exceeding minimum 36,000 tons, US cld claim exemption from shortfall. GSA not obliged buy crepe at price more than 8 US cents per pound above current price best grade sheet Colombo market.

(b) Crepe component important to US. US must have firm assurances crepes forthcoming agreed amts. GOC aide-mémoire does not meet point adequately. US aware GOC desire avoid interference ordinary processes Ceylon rubber market and willing consider any other GOC suggestions re arrangement which wld meet US requirements.


(a) Finalization agreement subject consultation local trade.

(b) Our response implied approval if terms basically acceptable to GOC

US memo also (1) expressed belief proposed agreement advantageous GOC in assuring regular source US dollars, of direct aid in meeting pressures world demand on commodities imported Ceylon, (2) again advised GOC circumstances in which conclusion agreement appropriate will not obtain in indefinite future.

Copies both documents air pouched.4

  1. Ante, p. 1508.
  2. Ante, p. 1510.
  3. Not printed.
  4. Not printed.
  5. Aide-mémoires mentioned in the first paragraph.