800.6354/172
Memorandum of Conversation, by Mr. Roy Veatch of the Office of the Adviser on International Economic Affairs
| Participants: | Sir Owen Chalkley, Commercial Counselor, British Embassy, |
| Mr. John Summerscale, Commercial Secretary, British Embassy, | |
| Mr. Feis,91 | |
| Mr. Veatch. |
Sir Owen first presented a written statement regarding the price of tin (copy attached) which he said he had been instructed to hand [Page 942] to the Department of State. In commenting upon this statement Mr. Feis and Mr. Veatch said that this Government’s representations to the British Government with respect to the policies of the International Tin Committee at the present time had been concerned with the limitation of supply rather than price. It was recognized that unusual circumstances had caused a wide differential between the price in Singapore and the price in New York for a period of a few days or weeks and that the present New York price still ranged considerably above the Singapore price because of the uncertainties regarding the cost of freight and insurance in the future.
Sir Owen then referred to the desire of the Bolivian Government to secure a loan in the United States,92 stating that he had discussed the matter with Mr. Pierson, President of the Export-Import Bank, on the previous day. He had understood that the question of collateral or guarantee of repayment of this loan had been an important consideration and that there had been some hesitation on the part of the United States due to the fact that the only important Bolivian export product, tin concentrates, is shipped principally to the United Kingdom, and in no case to the United States since there is no tin smelting industry here. With respect to this matter Sir Owen said that he was quite sure that the British Government would be prepared to facilitate some arrangement whereby Bolivian tin concentrates shipped to England might be earmarked as collateral for an American loan to Bolivia.
Sir Owen went on to point out, however, that his Government understood that Bolivia had suggested that in connection with such a loan a tin smelting industry should be subsidized in the United States. He wished to make it clear that his Government would naturally be opposed to any such move, creating subsidized competition with the existing smelting industry in the United Kingdom, and that they would be prepared to cooperate in earmarking for this Government Bolivian concentrates arriving in the United Kingdom, only if they were assured that the United States Government would not subsidize tin smelting in the United States.
With respect to this point Mr. Feis assured Sir Owen that this Government is not actively pursuing the suggestion of a subsidy for tin smelting, although quite naturally from a defense point of view it would be interested in the development of tin smelting in this country on a commercial basis.
Mr. Feis went on to say, however, that the proposal to subsidize tin smelting in the United States has been given rather wide consideration in Congress and is likely to receive further consideration [Page 943] as a defense measure because of the International Tin Committee’s continuing policy of restricting the supply of tin unduly. He pointed out to Sir Owen and Mr. Summerscale the dangerous position of the United States because of short supplies of tin in this country and suggested that the best possible argument against a subsidized smelting industry dependent upon Bolivian ore would be the existence of adequate reserves of pig tin in the United States.
Sir Owen then mentioned a further communication which he had received from his Government requesting him to inform this Government that the United States should experience no difficulty in securing a reserve stock of four to five thousand tons of tin at the present time. In response to an inquiry Sir Owen said that this information had come to him by mail and that he had received no subsequent information from London on the subject. Mr. Veatch then read the paragraph embodied in the minutes of the International Tin Committee’s meeting earlier in the week (transmitted to the Department in London’s 2231, October 31, 10 p.m.) to the effect that the Committee was of the opinion that United States purchases for reserves at the present time would accentuate existing difficulties. He also read the information received from the American Embassy at London that the British Colonial Office had formally expressed the hope that the United States Government would defer its purchases.
Mr. Feis and Mr. Veatch explained that delivery on purchases made by the Procurement Division of the Treasury might be made within a period of six months and that therefore purchases at this time would not bring pressure on the market unless the International Committee fails to release sufficient tin during the first quarter of next year. Sir Owen was reminded that International Committee has just announced that releases during the first quarter “will not be less than sixty percent”, although releases for the present quarter have been increased to one hundred percent. Both he and Mr. Summerscale appeared to be informed regarding the policies being followed by the International Committee and they seemed sympathetic with the American position that the Committee has been shortsighted in its policy of restricting unduly the amounts of tin available in consuming markets.