There is enclosed a memorandum indicating some of the sacrifices which
the American manufacturing and consuming public have been called on to
make because of material shortages. It is hoped that this information
will be of assistance to you in explaining officially and privately that
at least equal treatment is being sought in every instance for the
requests of the other American republics and that extensive sacrifices
are being made in this country. While it is not desired that officers
carry on any concerted campaign to get these data before the public in
the country to which you are accredited, nevertheless it may be possible
in your discretion to use the material
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to advantage in discussions with governmental
officers, influential trade and financial circles, and possibly in
public addresses which you might be called on to make in the normal
course of affairs.
[Enclosure]
Memorandum Concerning Sacrifices Being Made by
Industry and Consumers in the United States Because of the
Shortage of Strategic Materials
It is not generally realized, in countries outside the United States
unable to obtain desired American supplies, to what extent the
defense program has entailed sacrifices within the United States.
Civilian needs have been severely cut, much “priority unemployment”
has developed and many manufacturers, particularly those whose
plants are not readily adaptable to defense production, have been
compelled to reduce greatly their operations or to close. In spite
of plans to alleviate the situation by the Supply Priorities and
Allocations Board, by giving special consideration to “hardship”
cases, it appears inevitable as more and more of the national effort
is devoted to defense, that many industries will be adversely
affected to an ever increasing degree.
No general discussion or outline of the national defense program can
be given in this brief memorandum. The policy of the United States
government to make the United States the arsenal of democracy has
been amply conveyed to the field in speeches of the President and of
various officers of the government. The Department is making every
effort to keep the field supplied with current information. In
addition to data contained in the Department’s Radio Bulletin,
various publications have been forwarded, including copies of the
most recent issue of the Comprehensive Export Control Schedule, No.
4; a pamphlet entitled “Materials for Defense” issued by the Office
of Emergency Management containing a series of eleven articles on
shortages of various critical materials; Press Release PM791 of July
28, 1941 containing a tabulation of orders issued by the Division of
Priorities;18 (a later tabulation PM1568 dated November 13,
1941 has been mailed) the official weekly bulletin of defense
agencies in the Office of Emergency Management entitled “Defense”,
has been forwarded for some time to the missions in the American
Republics and arrangements are being made to dispatch it to consular
offices.
[Page 167]
However, a few brief comments might be made on the defense program.
Appropriations have already been made totaling over sixty billion
dollars. The problem was considered by many a year and a half ago
when the defense program first got under way, to see how such a
program could be set upon the top of a regular business framework of
our economy; today, the problem is to find to what extent and in
what manner the regular business framework can be set on top of the
defense program. Official estimates indicate that about eighteen
percent of our industrial effort is now devoted to defense and that
within twelve months this percentage will probably reach between 45
to 50 percent with a probability of even greater increase
thereafter. The effect of this change-over upon industry’s ability
to supply civilian requirements is obvious. There is the further
factor that civilian demand, owing to large general expenditures,
has very greatly increased.
Instrumentalities and methods of control to achieve the end of
supplying defense production with needed raw materials include the
system of priorities, the subject of the Department’s circular
instruction of October 22, 1941, file 810–20 Defense/1638a,19 inventory control,
allocation of raw materials, limitation orders prohibiting the use
of specific materials in certain finished products, limitation of
production as in the case of automobiles, the development of the use
of substitutes, the standardization of manufacture as for example in
planes of the same general type ordered by various airlines, the
redrafting of specifications such as those of building codes,
reducing wherever possible the use of particularly critical
materials, and requisition by the Army and Navy. Compliance with the
various orders involved is being vigorously enforced and severe
penalties have already been imposed upon violators.
It would appear possible that at least some of these measures could
be adopted in some of the American Republics, particularly the use
of substitute materials. Nine thousand tons of tin per year are now
being saved in the United States by a slight reduction in the
thickness of tinplate for cans.
A definite trend towards extension of the system of allocating raw
materials has been evident in the past few months, replacing in
effect the use of priorities.
Mr. Donald M. Nelson, Executive Director of the Supply Priorities and
Allocation Board, was reported on November 13 as stating that the
priorities system had reached the point where critical shortages of
materials threatened its complete collapse. He stated that within a
few months the government might have to begin rationing supplies to
industries and that he could think of no civilian which would get
[Page 168]
all of the materials
he would like to have. The less essential the industry is to the
national well being, the sharper will be the curtailment. The
necessity of greatly reducing the scope of their operations and in
many instances of being forced entirely out of business is already
clear for many industries. In the case of many critical items,
shortages are so severe that even a high priority rating does not
enable the holder to obtain supplies because of the higher ratings
issued and the short supply available. As stated by Mr. Nelson on
November 7 before the Associated Manufacturers of America, there is
no way by which we can make all of the things we have to make in
national defense and lead a normal commercial life on top of it
all.
An official of the Division of Priorities of the Office of Production
Management stated on November 13, “the ratio of civilian demand to
available supply for aluminum is ten to one, today: ten orders for a
ton of aluminum, to every ton of aluminum that can be sold. There
are three customers for every ton of copper, four for every ton of
brass, two for every ton of steel—and in greater or lesser degree
the same kind of ratios apply to all of the other critical metals,
to most of the important chemicals, and to many of our basic
fibres”.
A press release of November 7 reported that preparation of allocation
of all critical materials throughout American industry was called
for on that day by parallel actions of the Supply Priorities and
Allocations Board and the Office of Production Management. SPAB
announced that it would authorize its executive director to obtain
detailed production programs for 1942. It is a program which will
take considerable time to put into effect; it is expected to give
defense officials a clear over-all picture of the nation’s total
requirements for raw materials.
The following outline of some of the restrictions and prohibitions
imposed on domestic industry will serve as examples.
Production of automobiles for the first six months of the model year,
beginning August 1941 and ending January 1942, will show a drop of
at least 36.3 percent. The cut for August, September and November
was 26.5 percent; for December it will be 48.4 percent and for
January 1942, at least 51 percent. Before the model year is over on
July 31, 1942, the drop in output of passenger cars will probably be
much greater since manufacturers of passenger cars receive no
general preference rating to enable them to obtain raw materials or
component parts such as truck manufacturers receive.
Washers and ironers for domestic use were cut 17.3 percent for the
period August 1 to December 31, 1941. Further cuts may come.
Of the total United States production of paper and paper products
defense will take at least 30 percent so that civilian needs will
have to be curtailed by that or a greater amount.
[Page 169]
Under an order of October 21, 1941 the use of copper as a component
part of more than 100 types of civilian articles was restricted 40
percent for the remainder of 1941 and completely prohibited after
January 1, 1942. Savings, it is hoped, will go far to strengthen our
copper position and, avoid a shortage. Some of the more striking
items affected are: a long list of automobile and garage equipment;
an extensive list of building supplies and hardware; all kinds of
burial equipment; dressmaking accessories; house furnishings and
equipment, including office and institutional items; household
appliances, including fans, heaters, stoves, upholsterers’ supplies,
lamp stands, shades, et cetera; jewelry and novelties; and a
miscellaneous collection such as beauty parlor equipment and barber
shop supplies, beverage-dispensing units, bicycles, motorcycles,
fire extinguishers, keys and locks, ladders and hoists, livestock
and poultry equipment, photographic equipment, radios, street signs,
vending machines, and office supplies.
The Supply Priorities and Allocations Board announced October 9 a new
policy under which no public or private construction projects which
use critical materials such as steel, copper, brass, bronze,
aluminum, et cetera, may be started during the emergency unless
these projects are either necessary for direct national defense or
are essential to the health and safety of the people. This applies
to public projects—Federal, State, and local—such as the building of
post offices, courthouses, and similar structures; to the
construction of roads and highways; to river and harbor
improvements; and to flood control and power projects. It applies to
the construction of factories, lofts, warehouses, office buildings
and all other commercial construction. It applies to residential
construction and to construction for public utilities.
By an order issued by the Director of Priorities on October 30,
electric power was rationed in seven states of the Southeast. Large
power consumption by defense industries, particularly aluminum
plants, coupled with a severe drought necessitated power
conservation. The program calls for the curtailment of power by
large commercial and industrial users in seven states, effective
November 10; the immediate discontinuance of the use of power for
such non-essential services as sign lighting, show window lighting
and floodlighting of athletic fields; and the immediate mandatory
pooling of power by inter-connecting systems of 40 publicly and
privately owned companies in 13 states.
On November 8, the use of cellophane and similar transparent
materials derived from cellulose was ordered by the priorities
division of OPM in the interest of national defense for curtailment.
Some of the items affected are: the packaging of razor blades,
cosmetics and soap, candles and wax products, decorations and
novelties.
[Page 170]
It was reported during the second week of November that shortage of
ships for war supplies to Britain and Russia and the corresponding
tightness of scarce materials to the United States will shortly
become reflected in a number of industries. The question to be
decided by OPM officials is whether shipping allocations of non-war
materials should be cut now as a conservative measure or later as
the war effort demands. A cut of this character would make possible
the bringing in of larger quantities of manganese, ore, rubber, tin,
tungsten and other source materials.
Shortages of kraft pulp and of the supply of chlorine have affected
the production of kraft paper. Due to the increasing demand for
defense purposes, the allocations of chlorine for paper production
will be further reduced shortly. The industries using kraft paper
are through conservation and curtailment of use reducing the
civilian demand.
The following quotations from recent speeches by Donald M. Nelson,
Executive Director, Supply Priorities and Allocations Board, may be
of use:
“The simplest explanation is that the national defense job we
have taken on is so enormous that it is going to change the
pace and scope of every other job in America. In all history
no nation ever set out to do so much in so short a time. We
would not be attempting it if to do anything less would make
us safe. We cannot succeed unless we give the job everything
we have. It means that on all of the important materials we
use military requirements come first. Modern war eats metals
at an unimaginable rate. It is hard to think of one
important metal of which, after our military needs have been
met, there will be anything remotely like enough to meet all
the ordinary civilian demands. We are going to run short on
everything. These shortages are overall shortages. They mean
that we can get through this crisis only by cutting down on
the amounts that go to civilian industry.
These are not minor inconveniences that we have been talking
about today. They are major hardships. They are obviously
going to mean that many factories, many business men and
many workers can no longer produce the things they have been
producing. That is going to bring extremely difficult
problems to many cities. I cannot pretend that the period of
adjustment which is now beginning is going to be an easy one
to get through. Yet it would be equally wrong to pretend
that the problem is insoluble, or to say that we are just
naturally doomed to have a depression which we cannot remedy
grow up inside of our tremendous defense effort.”
