856D.131/8–1351: Telegram
The Ambassador in Indonesia (Cochran) to the Secretary of State
242. Since submission Embtel 190 Aug 61 have not been approached orally by Indo officials and so have not used arguments contained Deptel 170 or expressed surprise as suggested Deptel 176.2 Have now received, however, fol letter dated 8th from Econ Min Wilopo to which I [Page 697] will make no reply pending opportunity Dept instruct me specifically (begin verbatim text):
“Connection with conversation some days ago during which rubber contract was discussed, which was closed between US (Gen Wilson) and Indo in Apr this year, I would kindly like to bring to your notice fol in respect thereof. Copy of referred to contract attached hereto for completeness sake.
“During time negots were held Djakarta rubber trade was entirely free so that rubber would be sold freely to all countries in world.
“On this basis of free market system contract was concluded consequently.
“Approx same time export license system was introduced in London and Singapore, closely followed by embargo towards Chi.
“Indo Govt kept ignorant of fact that such like system was being prepared to be introduced.
“If Indo Govt had been informed thereof beforehand, fixing of price wld naturally have taken place on different basis.
“If during time of negots in respect of subject contract US Govt had not been in position as to inform Indo Govt of far reaching measures, which were announced few days after closing of oral discussions in respect of referred to contract, it wld appear desirable to my govt if further reconsideration of conditions under which contract has been concluded, cld be realized.
“Goes without saying that question of delivery of quantity of 1200 tons per month has no interference whatsoever with objections mentioned above. Delivery thereof will be carried out with pleasure.
“I would like very much however to discuss a further consideration concerning: (a) Price to be fixed, (b) Quality of rubber, and (c) Force-majeure clause, in respect whereof fol explanation may be added.
“a. Re price fixing, price for first four months based on average Singapore price of present month of August.
“I would prefer new basic point to be decided at 70 cents US per pound for sheets number one.
“If monthly discount is fixed at 1½ cents US, average price during 18 months cld amount to 56½ cents US, which price cld be accepted as floor price during contract period.
“In event rubber price might arrive at level higher than this floor price, then ruling market price shld be taken.
“For calculation of average rubber price, method of present contract is preferred to be followed.
“b. Re concluded delivery of 1200 tons estate rubber, I wld be prepared eventually to modify this delivery on above stated basis in one of 1200 tons sheet number I, II and III, same under guarantee of my govt.
“Possibility of claims, which is inevitable by forwarded delivery of lower grades, is then prevented.
“c. As no force-majeure clause has been taken up in subject contract so far, arrangement to that effect shld be left possible.
“In connection thereof I wld like suggest fol force-majeure clause be added to contract to appear as proposed article 9:
[Page 698]“a. Shld one of contractors be prevented from performing under this contract by reason of unforeseeable causes beyond its control and without its fault or negligence, including but not restricted to acts of public enemy, acts of one of contractors or a foreign govt, fires, floods, epidemics, quarantine restrictions, strikes, lockouts, combinations of workmen, freight embargoes and unusually severe weather, or if any of contractors places of business become inoperative due to conditions beyond control of Indo Govt and such cause continues for period of 12 months, any undelivered portion of this contract shall be automatically cancelled without cost to either party; shld such cause continue for a period of less than 12 months, any undelivered portion of this contract shall be shipped as soon from date such cause ceases to operate.
“b. Unless the one contractor shall furnish the other and with written notice of nature and extent of any force-majeure condition referred to in para (a) above which is claimed to exist, will in reasonable time after happening thereof, terms and conditions of said para (a) shall not become operative with respect thereto.
“I will appreciate it very much if you would inform me of your views concerning above in due course.” (End verbatim text.)
With ref Deptel 1723 have not been able discover whether press article on US–Indo rubber contract had been planted by Indo Govt. Believe preferable not disclose contract to UK Govt before settling present difference with Indos.