Memorandum of Conversation with Secretary of State Dean Acheson and William C. Foster

1050 CONFIDENTIAL 328 December 8, 1952 390 Mr. Foster, Deputy Secretary of Defense, telephoned the Secretary this morning on the subject of Egyptian cotton. Mr. Foster said that while he did not have a final report, he would pass along what he had on the situation. He mentioned that we already had the story on the stock-pile situation. We have in stock about 240,000 tons. We have reduced our purchases partly because of the availability of other types of fibers, in- cluding synthetics. The latter have cut down our cotton re- quirements and, in addition, under the incentive program we are getting a greater yield out of the U.S. crop. The incentive pro- gram has had another impact. We asked the Department of Agri- culture to increase production as quickly as possible in the U.S. They went into the price offered - $1.05 per pound - with the idea of increasing it and also asked us to guarantee a market (if it wasn't moved in the commercial market) for somewhere between 50 and 55,000 bales which runs well over our stock-pile. We have looked carefully at the expected level. The only way we would have room in stock-pile for purchases from outside is if we could get out of the stock-pile commitment to Agriculture. We don't want to let them down. to let them The second method, and it has some possibility of success, is through our own American purchases of Egyptian cotton. The quota is 91,000 tons and so far 60,000 tons have been procured. There is a provision in our appropriation, something like the O'Mahoney statute on wool, which is designed to require us to buy domestic long-staple cotton. We are attempting to arrive at the Department's legal position on this, and I have asked that this determination be accelerated. If that comes out favorably on the basis where we can buy foreign cotton at a price which is equivalent to parity price plus a certain percentage - if this comes out as I think it should, there might be a possibility between now and the end of the quota year in February, of the procurement of something around 20,000 to 25,000 bales. That runs to around $12,000,000. I have asked Charlie Coolidge to bring that determination to a conclusion as quickly as possible. While that is not/specific or definite amount, I think we may be able to do something within the next sixty days. I will push that and see what we can get. DECLASSIFIED E. O. 11652, Sec. 3(E) and 5(D) or (E) 10-26-26 Dept. of State letter, Aug. 9,1973 CONFIDENTIAL By NLT- HC NARS Date 11-3076