856D.6176/208: Telegram
The Secretary of State to the Ambassador in Great Britain (Bingham)
140. Your 151, April 4, 6 p.m. The Department is not at all satisfied that Campbell and the Colonial Office are making a genuine effort to adapt the actual terms and operation of their plan to the purposes stated. It believes it wise to exhaust all possible means of discussion with the British and Dutch authorities with a view to bringing the scheme in assured conformity with these principles before considering an attitude of opposition. Please, therefore, immediately follow up your discussions with the Foreign Office and present the following observations in regard to Campbell’s observations:
- (1)
- As regards the view that a maximum price would tend to become the minimum price, the likelihood of this would depend primarily on the nature of the plan and the actions taken by the Control Committee. If the release of supplies were properly adjusted to the idea of a reasonably remunerative price that result would be avoided. It [Page 646] would be the task of the Control Committee to meet the pressures on which Campbell dwells, which are the very pressures in fact that this Government feels will in the absence of any price provisions create a supply situation that will lead to large price movements.
- (2)
- Hence the emphasis of this Government on definite price protection whether in the form of a specified maximum price (possibly variable every 6 months or every year) or certain specified provisions regarding the release of supplies in relation to price. In this matter the Department is open to consideration of all alternative suggestions that may serve the purpose effectively.
- (3)
- The Department is pleased to note the concern of the Foreign Office with respect to the possible influence of speculative buying on price and is encouraged to hope that a mutually satisfactory system of price protection will be elaborated. It is exactly “the uncertain speculative character of American buying” which Campbell complains of in relation to the tin plan that this Government would anticipate in regard to a rubber plan which had no provisions of the type which the Department is proposing. It should not surprise the Foreign Office that such a situation arose in regard to tin and effort should be directed towards giving the consumers such assured protection that it could not arise in regard to rubber.
- (4)
- As to the reference to cotton the Foreign Office will recognize that the American action is limited to part of the world supply, that cotton is raised in many other places, that its production is readily expansible (it is reported that the Egyptian acreage this year will be record acreage) and that in the event that the American price of cotton is increased unduly it would speedily lose its share in the export market. The situation gives assurance to consumers which they cannot have in regard to a complete world supply arrangement as is contemplated in the field of rubber.
- (5)
- If the suggested rubber pool is to be considered as a serious proposal in this regard, the Department should be informed as to (a) the extent of the stocks to be held, (b) how and from what sources they will be secured, (c) how and under what circumstances they will be released, and (d) how and by whom control over them will be exercised.
- (6)
- The Department still lacks vital information regarding the
following points:
- (a)
- A price only “reasonably remunerative to efficient producers”;24 since the plan evidently is designed to assure such a price, it would aid the Department in its evaluation of the plan if it could learn what this price is considered to be, at least approximately, and what factors are taken into consideration in determining it (even though it is not to be established as a maximum price in the plan).
- (b)
- Production of export quotas; how and on what basis will they be adjusted to demand in the first instance, and on what basis and how frequently will they be readjusted.
- (c)
- Consumer representatives; specifically what would be their status and their powers.
Confidential for the Ambassador. Department also wants this matter presented in same fashion at The Hague and therefore asks you to inform The Hague fully as regards recent interchanges with the Department and the British Government. It is informing The Hague that you will do so.25