800.6354/202: Telegram

The Secretary of State to the Chargé in the United Kingdom (Johnson)

336. Your 428, February 20, 8 p.m. Your analysis of the situation seems sound. The Department suggests stressing the following points both in London and The Hague and suggests that they be repeated to The Hague:

1.
The course of tin consumption in the United States during the next few months is uncertain but the trade expects higher consumption during the second quarter than at the present time.
2.
The estimates of American consumption during the last quarter of last year and during January as indicated by Lyttleton appear to be low.
3.
A quota designed to hold production below consumption or to balance the two would create grave dangers, especially since there is no tin in the buffer pool.
4.
Arrangements for purchases for the buffer pool, in the event that excess tin were not purchased for consumers’ stocks and became a depressing factor on the market, should afford adequate price protection for producers.
5.
In view of the above points and the probability that Bolivian production will not be increased, a quota of 100 percent or near that point would seem justified from the standpoint of the producers. The interests of consumers would be endangered by greater restriction at this time.
6.
Should it prove possible and desirable to build up the buffer stock again in the near future, every effort should be made to have that stock held in whole or in large part in the United States and to maintain a large proportion of the stock as Straits tin.

Hull