611.47H31/63
The Secretary of State to the Consul General at Wellington (Bucklin)
Sir: Reference is made to your despatch No. 77, dated February 8, 1935,7 in regard to a trade agreement between New Zealand and the United States. The despatch has been read with a great deal of interest, and full consideration has been given to the points raised which were designed to show that certain new conditions had brought about a favorable opening for the negotiation of a trade agreement with New Zealand.
Since the dispatch of my instructions dated September 17 [18], 1934,8 and January 28, 1935, there have occurred no changes in conditions which have appeared to us to alter the prospect of opening negotiations with New Zealand. The temporary shortage of butter in this country, which caused prices to soar to a point where foreign butter could surmount the present tariff and for a short time be sold profitably, cannot be taken as a favorable opening. For your confidential information, we would entertain the fear that, should an attempt be made to use that short lived condition as an opening to reduce the tariff on butter, sectional interests opposing a reduction might proceed to petition for a higher duty on the ground that the present duty is not sufficient protection, as witnessed by the large importations in January and February.
For your information, the imports of New Zealand butter in January amounted to 539, 124 pounds, while the figure for the February imports has been estimated by the Department of Agriculture at 3,623,984 pounds. The total of these figures tallies with your estimate of shipments totalling 1,925 tons. At the beginning of February the wholesale market price in New York of “92 score” butter was $.385, a top price in recent years. It becomes evident that butter quoted in London at between $.17 and $.1925 could pay a duty of $.14 and be sold profitably. The high prices last month resulted from domestic shortage, but since consumer demand has fallen off owing to the high prices and since both domestic and foreign supplies have increased, the price has fallen to $.315, thus making it problematical whether foreign butter can continue to compete.
There is enclosed for your confidential information a copy of a memorandum of a conversation held on February 28, 1935, between Mr. A. H. Hansen, of the Trade Agreements Section of the Department, and Mr. R. B. Campbell, High Commissioner for New Zealand [Page 74] in London.9 This memorandum sets forth other considerations which might militate against the conclusion of a mutually beneficial agreement.
The trade agreements calendar is crowded at present and even with conditions favorable it would probably be necessary to defer for some time the opening negotiations with New Zealand.
The above should not, of course, be taken to mean that the Department is not interested in any information of this nature which you may be able to report.
Very truly yours,