856D.6176/149: Telegram
The Chargé in Great Britain (Atherton) to the Secretary of State
[Received 10:45 a.m.]
82. As a result of an interview I had on February 25 with the appropriate officials of the Foreign Office in which I again strongly presented the American viewpoint particularly as set forth in the Department’s 61, February 23, 6 p.m., I have today received a personal and confidential letter covering the two points raised in the Department’s telegram. In the circumstances it seems advisable to telegraph the full text of this letter.
“I am writing to tell you that negotiations are still in the hands of the producers’ organizations and that His Majesty’s Government have no official cognizance at present as to the form which the regulation scheme will take. It is understood, however, that the producers’ negotiations have reached an advanced stage and that it may be possible for them to sign an agreement in the near future. It is at this point that the Governments concerned will step in; they will have to decide whether ‘restriction’ is possible or not, and will have to secure that any scheme will be operated in accordance with the conditions which they ‘the Governments’ think should apply. One of these conditions is that stipulated in the resolution of the World Economic Conference, which laid down that any restriction scheme should be fair to all parties, both producers and consumers, and should so far as possible be worked with the willing cooperation of consuming interests in importing countries.
I cannot say at this date how this condition will be fulfilled; but I do not think it is too early to say that, if an agreement is reached, and if His Majesty’s Government approve its terms, they will see to it that consuming interests are given reasonable and continuing opportunities to express their views.
This is as far as I can go at present in replying to the second question which you put.
As regards the first question, the object of any scheme which may be evolved would be to maintain prices at a reasonable level, and to secure price stability as far as that was practicable. There is, however, no idea of permitting rubber producers, even if it were possible, to form a monopoly agreement in order merely to exploit the consumers. Such a policy would not in our view be desirable, either in the interest of the industry itself, or for more general reasons; further, it seems to us wholly impracticable, for any price level above that giving [Page 628] a reasonable return to moderately efficient plantation producers (at a given rate of production and export) would almost certainly, on present information, lead to the gravest difficulties in holding the very large native production at the stipulated level of production and export. Put bluntly, if the price went really high, control over native production would prove impossible, and any restriction scheme would break down. Further the more able men in the industry are fully alive to the menace of native production, and they realize that the future of rubber, as a[n] ‘eventuality’ industry, depends primarily upon keeping the price low.
You must accept the above as an expression of my own personal opinion, after having gone very carefully into the present situation. The present negotiations being of a private character, it is impossible for us to give you any official reply which would be of satisfaction to yourself and your Government, but, as I fully appreciate their anxiety in this matter, I have dictated the above remarks in order to let you see the picture as I myself see it.”
Department’s telegram 68, February 27, 7 p.m. decoded after this message coded. I will not act upon it until after the Department has an opportunity to consider this letter and is able to instruct me further.