811.24 Raw Materials/428: Telegram
The Ambassador in the United Kingdom (Kennedy) to the Secretary of State
[Received November 20—1:45 p.m.]
2407. Our 2382, November 16.55 The following just received from MacDonald:
“As you will have seen, the I. R. R. C., at the meeting held on the 15th of November, fixed the quota for the first quarter of 1940 at 80 percent of the 1940 standard tonnages.
[Page 897]“I am informed that, before coming to this decision, the Committee carefully considered all the relevant factors. They had before them the latest figures of U. S. A. consumption and stocks; the shipments afloat to America; estimates of world consumption; information as to United Kingdom stocks; the views of the Ministry of Supply as to the rubber position; a communication from Mr. Riddell, the Ministry of Supply buyer; and the views of the Rubber Manufacturers Association of America, communicated by Mr. Viles.
“The situation created by the acceleration of shipments during the current quarter was also considered in detail by the Committee.
“Campbell tells me that, at this as at the previous meetings, the opinion of the other members of the Committee was practically unanimous. They were reluctant to raise the quota as high as 80 percent; but they eventually agreed to that, with the object of meeting your Government’s views, as far as they considered it possible, having regard to the extension of the buying period for the ‘barter’ rubber.
“The Committee’s decision was also influenced by the fact that Mr. Viles’ estimate of United States consumption, for the last quarter of 1939, and for the year 1940, rather to their surprise, remained unchanged. His estimate of consumption for 1940 still remains below the estimate of consumption for the current year. The Committee were, as formerly, alive to the consideration that it was their duty not to sanction, if they could avoid it, undue and ephemeral increases of production, which would result in sharp quota decreases later on. The interests of the producing countries cannot be ignored, in this connection; and the Committee appreciated the disturbances to labour, and to the smooth working of the industry itself, which large increases in the quota, followed by rapid and material decreases, would inevitably involve. An average quota over the whole of 1940 of 70 percent will provide sufficient rubber to cover the barter purchases and the estimated absorption, and add over 100,000 tons to world stocks, after allowing a margin for possible losses at sea. Therefore, the elements of a difficult future labour situation already exist which will be accentuated if the absorption estimate is not realized.
“Campbell adds that every aspect of this most difficult matter has now been exhaustively discussed by the Committee at the latest or at the previous meetings; the point of view of the United States Government has been clearly explained, and the Committee’s final decision—80 percent for the first quarter of 1940—was arrived at, with varying degrees of reluctance; some members were in favour of remaining at 75 percent; none were prepared to go beyond 80 percent, apart from Campbell himself.
“After discussion with my advisers here, I feel that the best plan is to see how the position works out with the shipments of the ‘barter’ rubber spread out over the first half of next year.
“Indeed I should like to return to the suggestion that it should be spread over the first three quarters.
“I agree that the Government buyer can come in to support the market when commercial demand weakens. But the time when such support will be needed in order to avoid a sudden falling away in demand, and to secure a more gradual transition to lower production levels, is likely to be as much in the third as in the second quarter. If barter buying is to be completed by the 30th of June, then in present [Page 898] conditions a sudden drop after that date seems almost certain. It was for this reason that an extension of barter shipments to 30th September was suggested, and I still hope that your Government may find it possible to agree to some part of the shipments being made during the third quarter if this should be found desirable.
“The Committee do, I am sure, fully recognize the very great responsibilities placed upon them; they are naturally jealous of the independence of their position as plenipotentiaries under an international agreement; they are knowledgeable and experienced; and they command, in a large measure, the confidence of the industry, and of the governments of the producing territories.”
- Not printed.↩