Office of the Historian

856D.131/8–751: Telegram

The Secretary of State to the Embassy in Indonesia

secret
Washington, August 7, 1951—6 p. m.

170. Embtel 190, Aug 6.1 US wld not agree upward price revision even if failure to agree led Indo cancel contract. Dept not yet approached by Indo or other country. Thai Amb has appointment Aug 8 discuss with Dept price provisions proposed contract but exact purpose his visit not known. Proposed Thai contract provides for sales to US at world market price.

Fol statistics afford background possible discussion with Indos points raised reftel. World exports natural rubber totalled 1,166,266 [Page 696] long tons 1937; 1,232,500 in 1947; 1,765,000 in 1950. Bulg, Czech, Pol, USSR, Hung, Rum, Chi, Hong Kong imported 62,085; 86,251; and 188,554 of which Chi and HK 6,534; 31,457; 70,204 same years. US imported 592,528; 684,253; 795,502.

Fol facts and line emerge these figs:

1.
Sovbloc took 5 percent world exports prewar; 7 percent 1947; 11 percent 1950. Increased take assists warlike preparations bloc and believed not result expanding peaceful economy. Helped create chaotic 1950 rubber market. To extent Brit actions in stopping shipments to Chi and limiting shipments to other Sov countries influenced world market effect was to restore normality which in longterm interest all countries.
2.
Together Chi and Hong Kong took only 4 percent world exports in 1950. Thus there is no justification for Indo claim embargo destroyed free Singapore market. Complete elimination Sovbloc take wld leave 90 percent world market untouched.
3.
Chi take too small for its elimination to destroy freedom Singapore market but large enough for its elimination to cause sensitive market to react in absence compensatory demand by other countries. Since US buys about half world’s rubber it can not disclaim all responsibility for failure such demand to materialize. On other hand US cannot undertake unilaterally to underwrite world market. At Rome conference consuming countries including US offered stabilizing program which producing countries including Indo rejected.
4.
US repeatedly has told Indos that in long run price of natural rubber must approximate price synthetic or natural will lose its market. Therefore US regards recent downward movement natural rubber prices as necessary and no ground for revising US Indo contract.2

Acheson
  1. In telegram 190 from Djakarta, August 6, Ambassador Cochran reported that the new Minister of Trade and Industry, Mr. Wilopo of the PNI, had told him on August 4 that he wanted to discuss soon an amendment to the United States–Indonesia rubber purchase agreement. Ambassador Cochran was uncertain as to the contents of this amendment, although he had been confidentially informed that the Indonesians were seeking an upward revision of prices. To be certain of the Department of State position, however, he wanted guidance in this matter. (890.2395/8–651)↩
  2. On August 9, in telegram 176 to Djakarta, the Department of State amplified its instructions to Ambassador Cochran contained in telegram 170 to Djakarta. In the later cable, the Ambassador was told that if the Indonesians officially approached him regarding the revision or cancellation of the rubber contract, he was to express surprise that the Indonesian Government was “quibbling about fulfilling contractual obligations.” (856D.2395/8–951)↩