792.94/130
The Assistant Secretary of State (Acheson) to the British Minister (Hall)
My Dear Mr. Hall: Referring to your letter of July 14 in regard to negotiations conducted by the British Minister at Bangkok for the acquisition by Great Britain of rubber and tin from Thailand, it is noted that substantial agreement has been reached in regard to the allotment of rubber. With regard to tin, you stated that there was hope of obtaining an assurance from the Thai Government that about two-thirds of the total output would continue to go to Malaya, although the Thai Government was under the necessity of finding 2,000 tons for transfer to Japan in payment for airplanes. Your letter contained the assurance that all rubber allotted to Great Britain, as well as all tin passing to Singapore, would be disposed of only by agreement between the British and American Governments. You invited an expression of the views of the American Government in regard to these and other subjects dealt with in your letter.
I assume that these concessions have been granted by the Thai Government in consideration of an offer to supply to Thailand through British and American oil companies limited quantities of petroleum products, a procedure in which, when it was suggested, this Government acquiesced.
Regarding this phase of the subject, a telegram has been received from the American minister in Bangkok4 reporting that the British Minister was so good as to supply him with an outline of a proposed agreement between the British and Thai authorities for the supply of petroleum products. You will recall that with your letter of June 4, 1941 you included a statement of the proposals that had been sent to Bangkok for transmission to the Thai Government.5 Comparing figures in the proposals and those in the report just received, it is to be noted that whereas the amount of rubber to be derived from the pending agreement has been reduced from 75 percent of the output to about 30 percent, the amounts of oil to be supplied to Thailand, where specified, have been increased by 50 percent and, in addition, there has been promised as much aviation gasoline for military purposes as the Thai Ministry of Defense may find it necessary to apply for from time to time. I realize that the instructions sent to the British Minister merely set forth a goal which, in the course of negotiations, it has proved impossible to reach. It seems to me, however, that there is decided risk in the sweeping promise made in regard to aviation gasoline for military purposes; if this clause has been correctly reported [Page 225] to us, it would appear to place the Thai Government in the position of being able either to compel the supplying of this commodity at a time when it may be undesirable to increase Thai stocks, or of being able to declare the entire arrangement void through non-fulfilment of its terms by the suppliers.
With this qualification this Government would see no objection to the concluding of the proposed agreement between the British and Thai Governments providing for an allotment of a minimum of 1,500 tons of rubber monthly to the British Government.
In regard to your assurance concerning the disposition of rubber and tin reaching British hands, I suggest that such materials might be resold to the American Government under the regular terms of existing agreements with the International Tin Committee and International Rubber Regulation Committee.
As you were informed in my letter of July 14, instructions were sent to the American Minister in Bangkok to urge the Thai authorities to supply such information as would be necessary before discussions could take place between the American and Thai Governments for the purchase by the United States of Thai rubber and tin remaining after deduction of sales to Great Britain. You will recall that the Thai Government was informed that this Government, as an inducement for the allotment to it of rubber and tin, is prepared to assist the Thai Government in the matter of American exports, within limitations imposed by the needs of American defense, such assistance to be in proportion to the willingness of the Thai Government to assist in meeting the desire of the United States to acquire rubber and tin. The American Minister in Bangkok reports that at an interview on July 17 the Prime Minister said that he would carefully consider our request for allotments of rubber and tin, but that he had agreed to furnish 30,000 tons of rubber to Japan out of the total annual output of 48,000 tons, in payment for arms and munitions he hoped to obtain from Japan, and he explained that tin was sold in the open market. The Prime Minister observed that the Japanese were constantly reminding him of services they said they had performed for Thailand and were intimating that they expected compensation. The Prime Minister promised to supply a list of American products needed by Thailand. In this connection it is not the intention of this Government to set aside in favor of Thailand any existing arrangements for the supplying of aircraft to Great Britain.
The following factors are recognized as likely to obstruct any acquisition by this country of rubber and tin by direct purchase in Thailand following the conclusion of the British-Thai agreement:
- (a)
- the necessity of inducing the Thai Government to set aside the existing allotment of 30,000 tons of rubber to Japan reported by you;
- (b)
- the unwillingness of the American Government to pay open-market prices for rubber and tin in Thailand that would tend to undermine existing arrangements for the purchase of vastly larger amounts of rubber and tin produced in other areas.
While the interest of this Government in the efforts of the British Government in Thailand remains as set forth in my letter to you of June 17, it seems only fair to inform you that the outlook for successful negotiations for direct purchase by us of Thai rubber and tin remaining after the proposed allotment to Great Britain appears, from the Department’s standpoint, far from hopeful.
Sincerely yours,