446E.119/7–1952: Telegram

The Secretary of State to the Embassy in Ceylon1


25. Goonetilleke, Corea and party accompanied by Clyde,2 Chairman UK Rice Board and FonOff Rice Adviser, had mtgs with Byroade, Thorp and Secy Agri3 July 18.

Goonetilleke stressed hope for consideration Ceylon’s polit importance despite size; recalled Ceylon’s World War II contribution, slaughter-tapping, etc; noted internal struggle against Marxists and mandate given PriMin by people in recent elections; mentioned Ceylon’s need plan econ development concentrated on agricultural development rather than industrialization, and need settle problems with US before such planning.

Fol pts made:

Ceylon needs US purchase rubber contract.
Ceylon needs US rice and flour.
Wants purchase 2 cargoes rice for Sept US shipment.
Goonetilleke empowered contract up to 100,000 tons rice delivery through Feb.
Wishes arrange with US producers for supply 200,000 tons annually for next 3 to 5 years. Goonetilleke said Ceylon willing to cover risk involved for US producers but did not elaborate; said long range prospects Southeast Asian supply versus demand not bright.
Desires US advice on how, when, where and at what price make purchases.
Goonetilleke emphasized need development of water storage and of existing millions acres paddy and other acreage through Agri extension and improved implements; reclaiming up to half-million acres jungle possibly for cattle raising. He stated: [Page 1529]
Ceylon foreign assets $250 million; now drawing down $40 million year; can continue at this rate for little over two years.
Need US aid on basis fon exchange and local currency requirements. (Need for US aid meet local currency requirement questioned indirectly by Dept and reaffirmed with some uncertainty by Goonetilleke.) He added that econ development in Ceylon was “military measure” in support world democracy.
Goonetilleke made no direct reference Battle Act but stated once econ development under way (implying joint US—Ceylon effort) Ceylon cld make even greater contribution free world coop.
Clyde said UK vitally interested Ceylon rice problem and prepared make every effort help. UK will release dols for current purchases.

Dept expressed deep concern Ceylon’s problems; said importance of Ceylon fully recognized by Dept and that importance not related to island’s size; Dept will follow Washington discussions closely.

Dept Agri advised make purchases 100,000 tons rice in cargo lots without reference full quantity lest price be unduly affected.

Corea making excellent recovery but still far short full vigor. Goonetilleke appears cautious and as yet uncertain precise procedures and pressures to use.

Goonetilleke and Corea (latter to present new credentials) to see Secy July 21. Goonetilleke and delegation scheduled July 21 call on Acting TCA Administrator,4 lunch Byroade; July 22–23 working group mtgs re details any proposals rubber, rice and flour, and pt four; Battle Act discussions expected work in with latter three mtgs. Goonetilleke departs July 25.

  1. This telegram was repeated for information to London as telegram 436.
  2. William Clyde, U.K. Adviser to Ceylon Mission.
  3. Charles F. Brannan.
  4. Jonathan B. Bingham.