811.24 Raw Materials/963
The Under Secretary of State (Welles) to President Roosevelt 5
My Dear Mr. President: The problem of our continued supply of strategic materials has once more come to the fore because of recent developments. The materials which are of greatest concern to us at the present moment are tin and rubber, which come very largely from the Middle East, and which would be difficult to secure if hostilities broke out in that area or if there were any interruption to shipping [Page 254] over the very long supply routes from the Netherlands Indies and British Malaya.
Rubber stocks on hand in this country would meet current consumption requirements for only three months, whereas the minimum safety level would be twelve months’ stocks. We are securing 87,000 tons of rubber from the British Government for a Government reserve, but the minimum safety level of such reserves should be 250,000 tons, and commercial stocks, now at the unusually low level of 150,000 tons, should be maintained at well over 300,000 tons.
Tin on hand in this country would supply consumption requirements for a little over three months, but the War and Navy Departments estimate the minimum safety level at approximately twelve months’ supply. A Government stockpile of 4,000 tons has already been purchased under the Strategic Materials Act, but this reserve should be at least 50,000 tons.
Fortunately, additional supplies of both rubber and tin will be available from the primary sources of supply over the next few months. The production rate of both tin and rubber was greatly increased during the past six months in order to meet the high rate of consumption following the outbreak of the war. The consumption level has now fallen off considerably, however, and producers will have surpluses available for stock-piling.
The present situation has been carefully canvassed by the agencies charged with responsibility in this field in the various departments, and I believe you will wish to give consideration to the following suggestions which they set forth urgently:
- 1.
- Of the total amount of $12,500,000 appropriated under the Treasury Department Appropriation Act approved March 25, 1940, for the purchase of strategic and critical materials, only $3,000,000 was made available immediately. It is believed that the remaining $9,500,000 should also be made available for immediate expenditure. It is the opinion of officials in the Procurement Division of the Treasury, and in the other interested Government agencies, that this amount could be expended with the best effect during the present period of slack commercial demand, and that contracts for such materials should be let without delay so that delivery can be made before there are interruptions in production or transportation.
- 2.
- It is believed that Congress should be requested to appropriate at least an additional $12,500,000 to be made available at the beginning of the 1941 fiscal year. There is no doubt but that a much larger sum could be used to good purpose during that fiscal year, but you may consider it desirable to withhold a request for a larger amount at this time.
- 3.
- The sums mentioned above would be expended principally for tin and certain other strategic minerals. The purchase of expensive stocks of rubber would not be feasible with only such limited funds available, and it is suggested, therefore, that a formal approach be made to the British Government regarding the possibility of a further [Page 255] agreement for the exchange of American agricultural surpluses for additional stocks of rubber.6
- 4.
- As an immediate means of bringing about an increase in the rubber stocks in this country, it is believed that the American rubber manufacturers could be encouraged greatly to increase their holdings of rubber if the Reconstruction Finance Corporation could make available to them sufficient funds to cover the major part of the cost of acquiring such additional stocks.
Is it your desire that this problem be attacked along the lines suggested? If you wish to consider the matter further before coming to a decision, I shall be glad to have additional material supplied or to arrange whatever discussion of the subject you may desire.
Faithfully yours,
- Attached to the file is a memorandum dated May 3, 1940, for the Secretary of the Treasury from President Roosevelt stating: “Will you speak to me about this at Cabinet today?” On the margin of the memorandum is the following notation in long hand: “S. W. OK—Tell Dir. of Budget & J. Jones & H. M. Jr. F. D. R.” J. Jones was Jesse Jones, Secretary of Commerce and Director of Federal Loan Agency; H. M., Jr., was Henry Morgenthau, Jr., Secretary of the Treasury.↩
- See pp. 261 ff.↩