January 6, 1951
Memorandum of Telephone Conversation
Mr. Lovett telephoned the Secretary to say that Mr. Pace had told him about the Secretary's concern over the emergency orders which it was proposed to issue on rubber buying. (The Secretary had evidently heard about the matter at home last night from Mr. Thorp.)
Mr. Lovett said the reason for the proposed order was a very special intelligence report, which Mr. Lovett had thought came from the White House through General Bradley to Mr. Pace. Mr. Pace had asked Mr. Thorp to use his best interests with the British to close the open market on rubber.
The Secretary said he thought this report had gone around a circle. Some people from the White House had come over and talked to the desk officer, who told them what was already known from the last National Intelligence estimates. This, the Secretary was convinced, was all there was to the "special information." In any event, he said, the steps they were planning to take would not accomplish anything except to take rubber away from other people, to other people being our friends, to whom we would have to sell the rubber back at a very high price. Mr. Acheson said this was so because, as he understood it, there was no open market for rubber, but it was all contracted for on futures. If you take it away from someone who has already bought it, you simply run the price up even further than the present very high price. Mr. Acheson assured Mr. Lovett that they had rechecked with G- 2, General Smith, and our own intelligence people, and that there was nothing new in the situation to warrant this proposed action.
Mr. Lovett said he would have Mr. Pace get together with Mr. Thorp and work the matter out.
L.D.B.
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