811.24 Raw Materials/103
The Secretary of State to Senator Pat Harrison 12
My Dear Senator Harrison: I am glad to furnish the following report of the views of the Department of State upon the joint resolution, S. J. Res. 121, which you kindly submitted to me for consideration under cover of your communication of April 28, 1939.13
The joint resolution under consideration would authorize and request the President to negotiate, if possible, an agreement with the Government of Great Britain providing for the exchange of quantities of surplus United States butter and cheese for quantities of strategic materials required by the United States which Great Britain may have available for such exchange. The joint resolution would also authorize appropriations of sums not in excess of $10,000,000 for the purchase of such surplus butter and cheese and also such additional sums as might be necessary to enable the President to carry out the provisions of the joint resolution.
It is assumed that interest in this matter has been stimulated by the negotiations now being undertaken with respect to the exchange of surplus cotton and wheat for strategic materials. As a matter of fact, a great number of suggestions for the exchange or barter of American products for strategic or other materials have been brought to the attention of the Department since the first public mention was made of that plan. However, the negotiations which would be authorized by the joint resolution before your Committee, as well as similar proposals that have been brought forward, would differ from the plan now being negotiated in a number of respects which I believe are worthy of attention.
From one point of view the plan now being negotiated would require no new expenditures on the part of this Government, since agencies of the Government have already made financial commitments with [Page 853] respect to surpluses of cotton and wheat and must in any case arrange for ways of disposing of such surpluses. The joint resolution under consideration by your Committee, however, would authorize new appropriations for the purpose of aiding the producers of butter and cheese. This Department is not in a position to comment upon the necessity or desirability of further Government assistance to such producers, but it seems clear that such assistance would represent the major objective of the resolution and should therefore receive very full consideration.
I believe this Department is in a position to offer pertinent comment upon certain other aspects of the program which would be authorized by the joint resolution.
One of the objectives of this program would be the acquisition of reserve stocks of strategic materials required by this Government. The Department of State is on record as favoring the acquisition of adequate reserves of such materials for national emergencies. It has taken the position, however, that both in the interest of national defense and in support of a program of maintaining American neutrality, the prompt acquisition of such stocks is of major national importance and should be undertaken without the delays and uncertainties that would be occasioned by indirect methods confused by varying objectives. I am of the opinion, therefore, that the program which would be authorized by the resolution S. J. Res. 121 would not afford an appropriate or desirable means of securing needed reserves of strategic materials.
This Department would have an important interest in another aspect of the proposal. It has been noted that one of the objectives of the resolution, as stated in the preamble, would be to provide a program for the removal of surplus quantities of butter and cheese in such a way as to avoid any effect upon the normal market for such commodities for domestic consumption. Apparently there is no provision, however, for holding the supplies of butter and cheese to be furnished by this Government out of commercial markets abroad. In the case of the proposed exchange of surplus cotton and wheat for strategic materials, this Government will insist upon guarantees that the cotton and wheat will be held as reserves for national emergencies by the countries acquiring these supplies, so that these commodities may not enter into and disrupt commercial markets and the normal channels of trade. This Department would be strongly opposed to the introduction of a system of bartering or exchanging American commodities through Government agencies in such a way as to supplant normal international channels of trade or influence commercial markets.
Sincerely yours,