800.6354/156: Telegram

The Ambassador in the United Kingdom (Kennedy) to the Secretary of State

1987. After informal consultations with the Dutch and in view of Todd’s telegrams which the Embassy has also brought to the attention of the Colonial Office, the Chairman of the Tin Committee has circularized its members for approval of the issuance of a modification of the quotas to 120 percent for the third quarter, with retroactive effect, and 70 percent for the fourth quarter. Campbell expects to be able to obtain formal concurrences so that announcement can be made tomorrow morning.

The Colonial Office gave assurances that in the case of Malaya, Dutch East Indies and Nigeria the 120 percent quota would not merely constitute a paper gesture but a reality. The Colonial Office explained that this course had been adopted to avoid the possibility of lowering the quota for the first quarter of next year below the level of the last quarter of this year. The tin producers are convinced that at some point American buying will slow down decidedly and therefore they wish to avoid an abrupt contraction of production; in this connection they cite the fact that American tin futures are at “pre-war levels”. Be it here noted that if American tin consumers expect to obtain exchange advantage they had better get the American market on to a sterling price basis.

The Colonial Office states that there should be no shortage of Straits tin since the Dutch have closed down their Holland smelter [Page 935] which is only 10 miles from the German border (no doubt due to pressure brought by the British in restricting coal exports) and Dutch tin is being smeltered in the Straits Settlements and Liverpool. Sir John Bagnall has stated that the Straits Settlements smelters will be working at almost capacity.

Copy to The Hague.

Kennedy