811.20 Defense (Wool) /584: Telegram
  The Ambassador in Uruguay (Dawson) to the Secretary of State

                              MONTEVIDEO, August 15, 1942-noon.
                                            [Received 1: 24 p. m.]
  683. Department's telegram No. 471, August 3, 8 p. m. Present
wool surplus is estimated between 35,000 and 38,000 bales which is
considered large and is causing concern. An undetermined but prob-
ably considerable portion of this wool is in the hands of brokers who
took an over-optimistic view of market and will take heavy losses if
compelled to sell at current United States prices. Largely as a result
of this situation pressure is being brought on the Uruguayan Govern-
ment to induce us to take the wool at prices which will insure a profit.
  We cannot be expected to assume the speculative losses with which
brokers are threatened. However, to show our willingness to take
Uruguayan wool we consider it advisable that Boston houses offer to
buy substantial quantities on the basis and in the manner proposed in
the Department's telegram. If indications are that prices will rise
and that Uruguayan holders stand to gain by awaiting developments,
this should be pointed out by the Boston houses in making their offers.
Otherwise we incur the risk of being accused of having squeezed the
Uruguayan trade.
                                                         DAwsoN

811.20 Defense (Wool) /584: Telegram
   The Acting Secretary of State to the Ambassador in Uruguay
                            (Dawson)

                        WASHINGTON, September 1, 1942-5 p. m.
  529. Following receipt of your no. 683, August 15, noon, interested
Government agencies have held a succession of meetings to discuss
most appropriate action to take. Consensus now definitely favors
some action regarding carryover and new clip as well, but all are
agreed with your comment regarding speculative holdings. Uru-
guayan wool market is out of line with world prices and there is
definite feeling here that correction of this inconsistency would be
in Uruguayan interest.
  It is suggested that the Uruguayan Government appoint someone
here in Washington to begin conversations and with power to take
action.
  It is highly desirable that it be made clear in Montevideo that we
have no interest at existing prices. Should the Montevideo market
approximate the world price range which is substantially lower it is
possible that some means might be worked out to move the carryover
in spite of fact that Army and Navy have recently specified 100



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