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with the USSR. An interdepartmental meeting was held in Washington in November
1948 at which it was generally agreed that:
(1) US policy should be directed toward maintaining a friendly attitude on
the part of the Government of Ceylon, and preventing Soviet influence there.
(2) US procurement of rubber in Ceylon should not prejudice the interests of
other producing areas.
(3) It would be impractical to deprive the USSR of all natural rubber because
of the growing world surplus, the ease of smuggling, and the existence of British and
Netherlands trade agreements with the USSR.
(4) Preclusive buying of rubber would invite Soviet retaliations on manga-
nese and chrome.
(5) No funds are presently available for direct US Government purchase of
Ceylonese rubber with dollars.
It was agreed that the feasibility and desirability of purchasing Ceylonese
rubber with ECA counterpart funds would be explored, that the Department of State
would stand ready to discuss the whole rubber problem with the Ceylonese Ambassador,
and that further consideration would be given to general assistance to Ceylon. The
Department of State and the ECA have since concluded that the use of counterpart
funds would be inadvisable at this time.
The British Government has indicated that it has no funds available for the
purchase of Ceylonese rubber.
Costs of production of rubber in Ceylon are reported to be high, about 19-20
cents per pound, compared with the late December New York price of 19 cents for the
best grade. Prices in Ceylon have declined below the cost of production since the
decision on the Soviet offer became known. Statements have been made that unless
prices affording a reasonable profit were received, a substantial part of the rubber
plantings would be replaced with more profitable crops. Rubber trees were over-
tapped during the war when they were the Allies' principal source of natural rubber.
Its production, which reached 105,000 tons in the peak war year, declined to 89,000 in
1947 and is estimated at 90,000 in 1948. The United States is the principal buyer of
Ceylonese rubber. There were no exports to the USSR in the first ten months of 1948.
4.
THE CURRENT RUBBER SITUATION IN THE USSR.
a.
Production of Synthetic Rubber.
The USSR began production of synthetic rubber in the early 1930's and by
1940 was producing an estimated 100,000 tons annually, which was greater than the
German output. Production declined sharply following the German invasion, but
removal of some plants to the East and completion of new plants raised production to
an estimated 95,000 tons in 1945. In 1946 and possibly in 1947 the output is believed
to have been smaller owing to cessation of war demands for rubber, and disrepair and
rehabilitation of some plants. In 1948, however, a large increase in production appears
to have taken place. The actual level of production of synthetic rubber from 1945 to
1948 is very obscure. British estimates of 190,000 tons of synthetic rubber output in
8
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"ocrText": "with the USSR. An interdepartmental meeting was held in Washington in November\n1948 at which it was generally agreed that:\n(1) US policy should be directed toward maintaining a friendly attitude on\nthe part of the Government of Ceylon, and preventing Soviet influence there.\n(2) US procurement of rubber in Ceylon should not prejudice the interests of\nother producing areas.\n(3) It would be impractical to deprive the USSR of all natural rubber because\nof the growing world surplus, the ease of smuggling, and the existence of British and\nNetherlands trade agreements with the USSR.\n(4) Preclusive buying of rubber would invite Soviet retaliations on manga-\nnese and chrome.\n(5) No funds are presently available for direct US Government purchase of\nCeylonese rubber with dollars.\nIt was agreed that the feasibility and desirability of purchasing Ceylonese\nrubber with ECA counterpart funds would be explored, that the Department of State\nwould stand ready to discuss the whole rubber problem with the Ceylonese Ambassador,\nand that further consideration would be given to general assistance to Ceylon. The\nDepartment of State and the ECA have since concluded that the use of counterpart\nfunds would be inadvisable at this time.\nThe British Government has indicated that it has no funds available for the\npurchase of Ceylonese rubber.\nCosts of production of rubber in Ceylon are reported to be high, about 19-20\ncents per pound, compared with the late December New York price of 19 cents for the\nbest grade. Prices in Ceylon have declined below the cost of production since the\ndecision on the Soviet offer became known. Statements have been made that unless\nprices affording a reasonable profit were received, a substantial part of the rubber\nplantings would be replaced with more profitable crops. Rubber trees were over-\ntapped during the war when they were the Allies' principal source of natural rubber.\nIts production, which reached 105,000 tons in the peak war year, declined to 89,000 in\n1947 and is estimated at 90,000 in 1948. The United States is the principal buyer of\nCeylonese rubber. There were no exports to the USSR in the first ten months of 1948.\n4.\nTHE CURRENT RUBBER SITUATION IN THE USSR.\na.\nProduction of Synthetic Rubber.\nThe USSR began production of synthetic rubber in the early 1930's and by\n1940 was producing an estimated 100,000 tons annually, which was greater than the\nGerman output. Production declined sharply following the German invasion, but\nremoval of some plants to the East and completion of new plants raised production to\nan estimated 95,000 tons in 1945. In 1946 and possibly in 1947 the output is believed\nto have been smaller owing to cessation of war demands for rubber, and disrepair and\nrehabilitation of some plants. In 1948, however, a large increase in production appears\nto have taken place. The actual level of production of synthetic rubber from 1945 to\n1948 is very obscure. British estimates of 190,000 tons of synthetic rubber output in\n8"
}