856D.6176/208: Telegram
The Ambassador in Great Britain (Bingham) to the Secretary of State
151. As suggested in the Department’s 127, March 31, 4 p.m.,23 the aide-mémoire was presented to the Foreign Office yesterday and today this, with the Department’s 131, April 2, 8 p.m., were discussed with the Foreign Office and Colonial Office representatives. In due course I expect a written reply to the aide-mémoire, but the following oral information was offered by Sir John Campbell, the Colonial Office representative, in reply to Department’s questionnaire.
Question 1. Campbell’s only answer to this question was “the very nature of the scheme itself”.
Question 2, also involved a reference to the scheme itself and to “current adjustment of the production and export to consumption needs”. He explained at this point, in regard to the first three questions, that under the proposed scheme producers may hold stocks equivalent to from 6 to 8 weeks’ production; dealers in the producing countries may hold stocks equivalent to one-eighth of the annual world production (say 100,000 tons); also it envisages the probable creation of a pool managed by the Control Committee, similar in character and design to the pool operating under the Tin Convention. However, unlike the Tin Committee, the International Rubber Committee will be made up of plenipotentiaries, not delegates, and the members will have the power to bind their governments. There will be no arbitrary restrictions on the frequency of meetings although [Page 644] Campbell was of the opinion that normally they will take place once a month. Those provisions would in his opinion insure quick action and an adequate safeguard against extreme price movements.
As regards Question 5 he believed that if a maximum price is set it will be interpreted as a minimum price and that the governments represented on the Control Committee will be subjected to continuous pressure from the producer and speculative interests to maintain it at the maximum level. He added that none of the current international commodity stabilization schemes contain such a price declaration.
Question 6, is covered by the producer, dealer and pool stock provisions, together with the fact that the Control Committee might at any time increase the production quotas even beyond immediate demand.
Question 7, the International Rubber Committee will consist of some 17 to 20 members, of whom 7 will represent the governments of the producing countries, and these 7 are the only ones who will have voting power. Within a few days after the constitution of the initial committee, the scheme provides for the appointment of three consumer representatives, presumably an American, an Englishman, and a continental European. It is anticipated the British member will be appointed through the good offices of the Board of Trade, in all probability a Dunlop Tire Company official, and the Department of State would have the opportunity to nominate the American consumer representative if it wished to do so.
The Colonial Office representatives were unwilling to accept the American interpretation of clause 4–D of the resolution of the World Economic Conference, but nevertheless they stressed the point that this scheme was the first occasion that consumer interests had been represented solely as consumer on such a committee.
Question 8. While the present scheme does not provide for such statistical services, it was stated that figures would be available at frequent intervals, as in the case of tin.
I surmised that the initial restriction would be at about 60 percent and that the native Dutch production question is still troublesome. Campbell stated that native Dutch production capacity now totals some 200,000 tons or approximately one-fourth of the total annual production and that, by next year, according to the Dutch Government, native production capacity will aggregate some 350,000 tons.
Campbell, who is obviously directing the Colonial Office policy in this connection, is also the Chairman of the International Tin Committee. He was at one time connected with the League of Nations and known to Atherton in Greece as an outspoken critic of the United States. This mentality was obvious in his remarks today, particularly [Page 645] with reference to a continuous stable price level. He took exception to our references to the tin scheme contained in the aide-mémoire and explained that practically all of his difficulties in this connection were from the uncertain speculative character of American buying. He further defended the tin price level, using as a basis 1913 price computations and citing the fact that informal consultations with large American tin consumers had elicited the information that they were primarily interested in price stability, that the present level was not in their opinion too high, and that they were in fact not opposed to a slightly higher price. In this connection he raised the Administration’s policy of cotton restriction which a Foreign Office representative pointed out might well be the subject of British Embassy representations to the Department of State.
Campbell was obviously impressed by the measure of stability introduced in tin prices through the International Committee and I estimate his endeavor in this rubber situation will be very clearly based on his experience in tin. Needless to say, in this conversation with the obvious chief British Government negotiator I stressed—
- (1)
- the points set forth by the Department,
- (2)
- the difference in the production character of tin and rubber,
- (3)
- doubts as to whether any scheme would be considered fair, open, and well balanced if the mechanics of the consumer price protection were entirely a reliance upon the good faith of individual members of a control committee.