856d.6176/444

The British Secretary of State for Foreign Affairs (Eden) to the American Ambassador in the United Kingdom (Bingham)42

My Dear Ambassador: The Departments concerned have been studying very carefully your note of the 1st May43 with regard to the International Rubber Regulation Committee. I am rather reluctant, especially at the present time, to continue an official controversy in which, if there is one thing that is quite clear, it is that there is much argument to be heard on both sides of the case.

I have endeavored to keep myself acquainted with the situation; but my principal concern is, and will always be, to see that this delicate question of rubber prices does not lead to ill-feeling between our two countries.

The present difficulty has arisen, so far as I see it, mainly from the fact that rubber prices took a sharp upward turn towards the end of last year; and this, of course, happened not only with rubber but with all, or nearly all, raw materials. That such prices should rise has [Page 913] been the avowed policy of both our Governments. The reverse side of the picture shows that we both have to pay more for supplies bought from abroad. In this country we have to pay more for raw materials imported from the United States.

The diconcerting element has been that some months ago prices rose not gradually, but steeply and suddenly, and that speculation played a considerable part in the rise, though it has now been somewhat checked.

One special factor in the rubber situation seems to be that during a considerable part of 1936 everyone, including producers, manufacturers, and authorities outside the business, had miscalculated the demand for rubber which arose towards the end of the year. The Regulation Committee therefore found almost overnight that releases which everyone had considered ample became insufficient. Since that time they have done their best to remedy the situation, and actually rubber exports this year from the controlling countries should exceed those of 1936 by something like 335,000 tons or 40%. This, as I think you will agree, shows the great degree of flexibility in the scheme. But rubber is not a commodity the supply of which can be increased indefinitely at a moment’s notice, and some delay must elapse before the position is fully restored.

I enclose for your confidential information the minutes of the last meeting of the Regulation Committee; and I think that, when you have studied this document, you will agree with me that the Committee are doing their best to cope with the situation fairly to all parties. You will see that it was finally agreed that the question of an increased release at the end of this year should be discussed later. I understand that the manufacturers are now content that this discussion should not take place before the end of July. Meanwhile the price of rubber has now fallen back to a more normal level.

One thing I know to be a fact; the Committee always seek the closest and most cordial cooperation with the manufacturers.

In paragraph 9 of your note of the 1st May you refer to the assurances given in our note of the 26th April, 1934. Such assurances were, of course, assurances as to the motives and considerations which prompted His Majesty’s Government to support the Regulation scheme; while I know that they are at all times present to the minds of the British members of the Committee, they were not assurances that we would or could intervene in the work of an international committee, in order to dictate what should be their policy. The committee have, admittedly, been confronted by very abnormal conditions; and I consider that, in the circumstances, they have done their best to be guided by the principles referred to in that paragraph of our note to which you draw attention. The scheme has not run into the dangers [Page 914] of the Stevenson plan; exports are and will be determined by demand; and the export quota is being varied as circumstances dictate. The scheme in fact has proved, and is proving, its flexibility. If the events of the last few months have put a real strain upon that flexibility, that is because demand expanded with a rapidity which was wholly exceptional and unexpected. If the scheme has succeeded in weathering so unusual a storm without a more severe crisis, I feel that it should be able to cope with any emergency in a manner that is fair to all. I am quite sure that there is not, anywhere, any desire to extort an unreasonable price from the manufacturers in America or elsewhere.

Yours sincerely,

Anthony Eden
  1. Copy transmitted to the Department by the Ambassador in his despatch No. 3170, July 1; received July 9.
  2. Ante, p. 903.