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be possible for estates to recruit the necessary additional labor from India and elsewhere. For this two months at least would be required. 7. Again His Majesty's Government consider that there are grave objections to any interference with the present scheme until it has been established beyond doubt that the present abnormal price is more than a purely temporary development. While giving all due consideration to the representations and the requirements of the consuming interest in the rubber industry, they feel there is no less need to have careful regard for the reasonable protection of the producers by whose enterprise this great industry has been built up in quite recent times. The plantation of rubber on its present extensive lines is, in fact, a matter of such recent history that the producing companies have not, in many cases, large reserves of capital to fall back upon in times of depression. Many of these companies were virtually exhausted and faced with the necessity of allowing their estates to go out of cultivation at the critical stage when the present scheme was introduced for their relief. If no such relief had been afforded by government action, the situation for consumers might have been considerably worse than it is today, since the producing area would, in 1922 and 1923, have been appreciably restricted by the collapse of a number of estates and small holdings.

8. I would here draw attention to the fact that during the two years immediately preceding and following the war the average price of rubber was approximately 2s a lb.; for seven out of the eleven quarterly periods during which the scheme has been in operation the average price has been below 1s/3d a lb. Thus, for the larger part of this period consumers have been able to obtain their supplies at less than the price of 1s/3d to 1s/6d per lb. which they, in common with the other sections of the industry, agreed to regard as reasonable; only for the last two quarters of this period has the average price exceeded 1s/6d per lb. Judging from the latest estimates of the statistical position which have been brought to the notice of His Majesty's Government, there is every reason to believe that, provided that the average price of rubber during the next few quarters does not fall below 1s/6d a lb., any risk of a shortage in the supplies of rubber on the world's markets has now passed. The information which I had the honor to request in my note under reference will be of material assistance to His Majesty's Government for purposes of confirmation and comparison with the statistics already in their possession.

9. While regretting their inability for the above reasons to give effect to the proposals of the United States Government, except in so far as this has been done by the measures described in §§ 4 and 5 of this note, I desire to assure Your Excellency that His Majesty's Gov

ernment will continue to keep a careful watch on developments as regards the price and other aspects of the market and will hold themselves free to intervene if at any time it appears that substantial injustice is being done or is likely to be done by reason of the present scheme. It is, as surmised in your aide-memoire, the policy of His Majesty's Government "to stabilise the price of crude rubber at a price that would best serve the common interests of the grower and the consumer."

10. Your Excellency must permit me to add that, as you very frankly admitted to me, the inconveniences of which the American users of rubber complain were not inherent in the Stevenson scheme but arose out of the speculative attitude adopted by those users towards the scheme and out of their consequent failure to make in time steady purchases at the low prices which prevailed up to so recent a date as the end of last year. Nevertheless I trust that the measures which His Majesty's Government have taken as above described will be found effective to remove the graver consequences of this unfortunate lack of prevision.

I have [etc.]

AUSTEN CHAMBERLAIN

841.6176/21 : Telegram

The Acting Secretary of State to the Ambassador in Great Britain

(Houghton)

WASHINGTON, September 5, 1925—3 p. m. 285. Your despatch 272, August 17. If receipt of note not already acknowledged please make appropriate acknowledgment, stating that British note has been received in Washington and that this Government appreciates the attention which has been accorded your communication; that this Government hopes the British Government will continue to give sympathetic consideration to the question; and that you may wish to communicate further with Mr. Chamberlain on the subject after the matter has had the further consideration of this Government.

GREW

841.6176/83

The Ambassador in Great Britain (Houghton) to the Secretary of State

LONDON, November 9, 1925.
[Received November 21.]

MY DEAR MR. SECRETARY: I spent the week-end at Hatfield with the Salisburys. Among the guests there was Amery, the Colonial Secretary. . .

126127-40-vol. 11- -22

Our particular subject of discussion was the rubber situation. The Stevenson Plan, as you know, comes under Amery's control. We drifted into the talk quite informally, but it gave me a chance to review the whole subject from our point of view and to say to him that the conditions at home were distinctly bad and showed little hope of improvement. Amery said that if the Plan were now abandoned, the situation, he thought, would be materially worse. I replied that, so far as I was aware, our people did not object to the Plan per se, but did feel that its administration had failed to give adequate consideration to our really desperate needs. Amery said that while he recognized that the great bulk of the demand for rubber came from America, other factors must also be kept in mind, and he pointed out that the whole matter was constantly being reviewed by an advisory committee. That gave me the opportunity I had been seeking, and I said that, speaking wholly for myself, it did seem to me that if the Plan was to be worked out satisfactorily, it could only be done with American cooperation and agreement, and I suggested, therefore, the possibility of two representatives of the American rubber interests being on the advisory committee. That would, of course, bring the opposing factors of supply and demand together, and would enable a more adequate consideration of present and future needs and tend directly toward the satisfactory development of the rubber industry as a whole. Amery said that the suggestion was most interesting and that he would like to think it over.

I need hardly say to you that I made the suggestion wholly personally and on my own initiative, and that Amery understands this fact. I have little hope that the suggestion will be carried out. I am sure, however, that if such a plan could be put into operation, it would remove much of the difficulty since it would enable the American representatives to know at all times the exact market conditions, and so tend at least to remove the suspicions which naturally attach themselves now to any action taken by the British alone. In any event, I want you to know precisely what I said.

One word more. Hood, the head of the Rubber Association, cabled me some weeks ago that in their belief a seventy-five per cent. release meant, in fact, only a sixty-five per cent. release. I mentioned this statement casually to Amery, who replied at once that in his opinion rather the reverse was true. The eighty-five per cent. release on November 1st would, he indicated, be made a ninety-five per cent. release on February 1st. Amery added that if this full twenty per cent. release had been made on November 1st, it would have resulted merely in a war among the rubber producers, by which the stronger would have hired labor from the weaker in order to take advantage

of the situation, and in this way have pushed up wages and, therefore, costs and prices. By making the increase only ten per cent. now, but indicating an intention to add another ten per cent. on February 1st, the effect would be to bring in new labor, especially from China, and leave the wage level substantially undisturbed.

If, for reasons of your own, you disapprove of my suggestion of American participation, I would be grateful if you would cable me in order that I may make the fact known to Amery. As I said, however, I doubt if the suggestion will seriously be entertained. There is a basis of national pride in maintaining the present situation and that would likely, I think, make our participation improbable. With assurances [etc.]

A. B. HOUGHTON

841.6176/36: Telegram

The Secretary of State to the Ambassador in Great Britain

(Houghton)

[Paraphrase]

WASHINGTON, November 21, 1925-6 p. m. 343. The Rubber Association of America has informed Department that situation is becoming more serious; that situation is speculative in the absence of the following information: (1) Whether Government of Great Britain intends to modify the Stevenson Plan or make it more flexible, and (2) whether when 100 percent is reached restriction will be removed, or whether 100 percent would be taken to mean 100 percent of standard production only.

Unless you perceive some objection, make inquiry of Chamberlain, informally and discreetly, regarding attitude of Great Britain on the above. You may also tell him, in your discretion, that your Government would be pleased to know whether any relief measures have been determined upon and that you earnestly hope that the Government of Great Britain, knowing the difficulties of the situation, may be able to take such measures. Cable reply.

KELLOGG

841.6176/38: Telegram

The Ambassador in Great Britain (Houghton) to the Secretary of

State

[Paraphrase]

LONDON, November 24, 1925-3 p. m.

[Received November 24-2 p. m.]

357. Department's telegram No. 343 dated November 21. This morning I saw Chamberlain and reminded him that for some months

we had been discussing the rubber situation without much apparent result. I suggested that I would be glad to know if it was the intention of his Government to take no remedial steps. Naturally Chamberlain protested that this was not his Government's attitude and he informed me that a committee of the Cabinet had been formed as a result of our talk last month, which committee was now actively studying the entire rubber situation. Chamberlain also stated that Colonial Secretary Amery in particular was investigating the Stevenson Plan's working. I told Chamberlain then that the situation in the United States was really serious, adding that the market apparently was getting into the hands of speculators. The two points raised in your last telegram on this subject were also laid before him, and he carefully noted both, stating that before he left for Geneva early next week he would give me an answer.

Chamberlain remarked during our conversation that representatives of the Rubber Association had recently been here and had discussed the possibility of a long-time contract with the proper authorities and that this arrangement was also being considered at the present time. I have no information whatsoever with respect to any such move but I suggest that it would be futile for me to discuss the matter further with Chamberlain if the Rubber Association is now undertaking to start direct negotiations.

HOUGHTON

841.6176/83: Telegram

The Secretary of State to the Ambassador in Great Britain

(Houghton)

[Paraphrase]

WASHINGTON, November 24, 1925—3 p. m.

345. Your letter dated November 9 received. The Government of the United States is opposed to government monopolies of products in any country. It would be inadvisable for the Government of the United States to give recognition to such a monopoly by being represented on the advisory committee or by having Americans represented on it. This being our policy as to all monopolies in all countries, we cannot afford to recognize them by any participation therein. I believe you should inform Mr. Amery of this.

KELLOGG

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