Office of the Historian

328. Memorandum of Conversation1

Washington, October 5, 1966, 12:58–1:05 p.m.

SUBJECT

  • GSA Rubber Disposals

PARTICIPANTS

  • Deputy Prime Minister of Malaysia Razak
  • Tan Sri Ong Yoke Line, Ambassador of Malaysia
  • President Johnson
  • William P. Bundy, Assistant Secretary of State, FE

Deputy Prime Minister Razak said that the fall in rubber prices to a lower point than at any time over the past 12 years was a cause of grave concern to the Government of Malaysia. He said that Malaysia produced [Page 798] about 40 per cent of the world’s natural rubber, and that Indonesia and Thailand together accounted for another 40 per cent. The drop in rubber prices from little over 25 cents last spring to about 22 cents at present represented a loss of foreign exchange for these countries of over $240 million on a yearly basis. With Malaysia’s development plans dependent upon foreign exchange earnings, loss of income from rubber was a real disaster for Malaysia. He said it was impossible to attribute to one or another factor fluctuations in rubber prices but the United States Government’s program of disposing of stockpile rubber played, in his opinion, a significant part in the decline of rubber prices. The Deputy Prime Minister said that he hoped that the United States could reconsider present rubber disposal policy, particularly in view of the President’s much appreciated expressions of interest and support for the development plans of the countries of the Southeast Asia region—of which Thailand, Indonesia and Malaysia are such important parts.

2. The President reminded the Deputy Prime Minister that the United States faced critical budgetary and balance of payments difficulties owing to the high costs of war in Viet-Nam. He spoke of the fact that stored rubber had to be sold or it would deteriorate in quality. He assured the Deputy Prime Minister, however, that he would have our rubber disposal program looked into in light of the views expressed by the Deputy Prime Minister.

  1. Source: Johnson Library, White House Central Files, Confidential Files, CM (Tin—Watches). Confidential. Drafted by Robert W. Barnett (FE). On the source text the time of the meeting is 12:30, which is incorrect. The actual time of the meeting is taken from the President’s Daily Diary. (Ibid.) An attached undated note from Barnett to Rostow, noted that GSA suspension of sales had to be for an indefinite period pending completion of the review discussed by the President and the Deputy Prime Minister. Barnett’s note concluded: “Suspension for the rest of this quarter would be in effect locking the barn, etc.”↩