Office of the Historian

308. Memorandum From the Under Secretary of State for Economic Affairs (Mann) to President Johnson1

Washington, December 9, 1965.

I hope you have had time to read Tony Solomon’s attached memorandum of December 6, 1965 on stockpile disposals.2 The disposals recommended will cause us difficulties with a number of countries. We estimate, however, these will be manageable.

[Page 762]

Our views on rubber are at page 4 of the memorandum. The question is not whether we are free to dispose of rubber at a faster rate. (Our only commitment is to consult in advance.) Rather our recommendation was:

  • First, as to the extent we can increase disposal for U.S. Government uses at the expense of synthetic rubber, there is no problem.
  • Second, it is not in our interest to reduce further export earnings from rubber of Indonesia, Malaysia (or, to a lesser extent, Nigeria) because:
    a)
    Malaysia and Indonesia depend on the export of natural rubber for the bulk of their foreign exchange earnings.
    b)
    The price of natural rubber in world markets has been declining and natural rubber’s share of total world rubber consumption has also been declining. The proposed increase in commercial sales of our stockpile rubber (as distinguished from increased United States Government use of natural rubber) will not only reduce United States imports from these countries by 25% but will depress even further the world market price that these countries can obtain in their worldwide sales.
    c)
    Malaysia is our most stable ally in South East Asia and the political and economic impact of this action will be very great.
    d)
    The Indonesian military are still struggling with Sukarno and the communists for power in their country and this action could tilt the scales against the military.
    e)
    Even though our stockpile of natural rubber is “over age” it is frozen solid and the rate of deterioration is, I am told by the experts, negligible.
    f)
    The proposed disposal rate would mean an annual saving to the United States Government of approximately twenty five million dollars which although substantial may not be worth the consequences outlined above. This amount of budgetary saving through stockpile disposals could be achieved in other commodities.

Thomas C. Mann
  1. Source: Johnson Library, National Security File, National Security Action Memoranda, NSAM 321, Review of Strategic Stockpile Objectives, Box 6. Secret.↩
  2. Document 305.↩