848A.24/180a: Telegram

The Secretary of State to the Consul at Capetown (Denby)9

19. For the Minister.

1.
Since you left Washington the Department and other agencies of this Government have continued their discussions of the problem of war production in South Africa, especially as it is affected by the present volume of gold mining. As you know, they are not interested in the monetary uses of gold or in the quantity of, fine ounces produced in the Union; they are concerned only with the fact that the gold mines use labor and materials needed by industries more directly connected with the war effort. For similar reasons American gold mines have been closed by an order of the War Production Board.
2.
The mission that was sent by the Board of Economic Warfare to study the supply requirements of the Union believes that a substantial reduction in the present rate at which ore is milled, perhaps 25 percent, could be achieved within a year; this would effect an approximately corresponding saving in the materials needed by the gold mines and a somewhat smaller saving in labor. The mission also believes that such a reduction could be absorbed by the Union economy, if the United States would make available the supplies needed to support the war industries of the Union. We would consider further reductions, possibly to a total of 50 percent, according to the needs of the war effort and the economic position of the Union.
3.
You are already familiar with Prime Minister Smuts’ attitude on this question. He has definitely refused to consider any agreement by the South African Government to impose a quantitative restriction on gold mining operations, but, according to the BEW10 mission, he believes that these operations may eventually be reduced by the shortage of necessary supplies, and that a gradual reduction brought about in this way could be absorbed by the Union economy without creating political difficulties.
4.
The Department and the other interested agencies of this Government agree that the Union Government should not be pressed to give a formal commitment to curtail gold mining operations, but they are not willing to provide sufficient materials for the maintenance of such operations at current levels. They have accordingly decided to suggest to the British Government that both Governments make available to South Africa the material assistance required to maintain and expand the war industries of the Union, but to indicate at the same time that there will inevitably be a substantial reduction in supplies for other purposes.
5.
On October 15 there was a formal meeting of the Board of Economic Warfare, attended by the Vice President,12 the Secretary of the Navy,13 the Under Secretary of War,14 Assistant Secretary of State Acheson, the Lend-Lease Administrator,15 and other representatives of the departments and agencies that are members of the Board. The following resolution was adopted:

Whereas, The successful and early conclusion of the war requires the most effective utilization of all the resources of the United States and of the United Nations;

And whereas it is believed the Union of South Africa is in a position to lend further aid to the war effort of the United Nations by maximum conversion of its industries to war production;

Now therefore be it resolved, That the Board of Economic Warfare recommends that maximum and rapid conversion of the South African economy to a full war economy be achieved, that the appropriate U.S. agencies assist in such conversion by making available such supplies, within the limits of production and shipping facilities, as are necessary for the further development of South African war industries, and that appropriate administrative measures be taken for carrying out this program aggressively.”

The text of this resolution is given only for your confidential information.
6.
Pursuant to this resolution, the American Government intends to offer to the Union Government assurances of its best efforts, consistent with other war needs, to furnish the supplies required to support the war effort of South Africa. Among these supplies are materials for the ISCOR16 extensions, which it is hoped may be ready for shipment early in 1943, instead of late in that year. Supplies for the Union would consist largely of steel, petroleum and related products, machinery, and industrial chemicals. The greater part of these materials would be allocated to the Director General [Page 177]of War Supplies, with smaller quantities to other essential industries, railways, agriculture, etc.
7.
Supplies for direct use by the gold mines would be considerably reduced. According to the Transvaal Chamber of Mines, the gold industry could maintain its present level of operations through 1943, if it could acquire about 41,000 tons of supplies from the United States for direct use in gold mining, and if it would draw on its stocks to a point that would leave a 6 month stockpile at the end of the year. According to BEW, the gold industry could maintain present operations through 1943 by using only 13,000 tons of American supplies and by reducing its stockpile position to a 3–month basis. With slightly less than 10,000 tons from the United States, the industry could make a 25 percent reduction in the rate at which ore is milled and have a 3–month stockpile at the end of 1943. We would accordingly expect to furnish not more than 10,000 tons to the gold industry during 1943, and most of this would be delivered toward the end of the year. If there were not during the year a satisfactory reduction in the rate at which ore is milled, a much smaller quantity of supplies would be delivered. This paragraph and the preceding one are for your confidential information.
8.
The ability of the United States to furnish these supplies will depend, among other factors, on the shipping situation. The War Shipping Administration can make no definite statement about the availability of shipping space until it has first consulted the British Ministry of War Transport about coordination of shipping from the United States and the United Kingdom to South Africa. This will be done as soon as the supply program has been submitted to Prime Minister Smuts.
9.
The list of materials to be supplied by the United States must be accompanied by a schedule of materials which the United Kingdom would also endeavor to furnish to the Union of South Africa during 1943. Consumption goods, for example, should come mainly from the United Kingdom, for only a small quantity has been included in the American list.
10.
To regulate the flow of supplies to the Union, it is proposed that there be established in South Africa a Supply Council upon which the United States, the United Kingdom and the Union of South Africa would have equal representation. The Council would consider all Union requirements of materials that must be obtained from overseas. Every effort consistent with the war needs of the United Nations would be made to provide these materials in accordance with schedules accepted by the three Governments concerned. If there should be a deviation from these schedules that was not unanimously approved by the Council, the objecting Government would be released from its obligation to conform to the schedules. The Council should give first [Page 178]consideration to the needs of the Union war industries, and should approve only minimum quantities of supplies for industries not directly connected with the war effort.
11.
We would expect the activities of the Council to cause a substantial reduction in gold mining operations. There are several benefits to be derived from such a reduction. One is the release of manpower and equipment for use in the Union’s war industries. The advantages of producing additional quantities of war supplies in South Africa, which is relatively near the areas where the supplies will be used, should outweigh possible objections that the manufacture of these materials can be conducted more economically in the United States and the United Kingdom. Another benefit from a reduction in gold mining operations would be the saving in materials needed by the gold mines, not only the relatively small amounts required from the United States, but the substantial quantities that are obtained in South Africa. Perhaps the most important advantage would be the reduced consumption of coal by the gold mines and related industries. If enough coal were available in South Africa, a large amount of shipping now used for the transportation of coal could be released for other purposes. The present movement of coal to the eastern coast of South America from the United States is 50,000 long tons a month, and from the United Kingdom 70,000 long tons a month. It is estimated that if the Union could, in addition to its present exports, make 120,000 tons of coal available each month for shipment to South America in vessels returning in ballast from the Indian Ocean, the total saving in shipping would amount to 500,000 deadweight tons. This saving is equivalent to the full-time use of 50 new vessels with a carrying capacity of 10,000 tons each, and the War Shipping Administration states that no greater economy in shipping can be envisaged at the present time, other than the saving which would result from using the Mediterranean route to the East, instead of the route around the Cape of Good Hope. The importance of such an economy cannot be overemphasized, and the War Shipping Administration is most anxious that it should be accomplished at the earliest possible moment. If the increased shipments of coal should cause congestion in the use of railway and port facilities, we will take up with the supply authorities here the question of giving priority to coal over other exports from the Union.
12.
In previous discussions with Prime Minister Smuts and John Martin17 there has probably been too much emphasis on closing the gold mines and too little on developing Union war production. It is therefore hoped that the present offer, which is of a more constructive nature, will be less likely to have political consequences and will [Page 179]be more acceptable to the South African Government. The offer has been approved by the President and is to be transmitted in the form of a personal message from him to Prime Minister Smuts. You are requested to deliver this message, orally and in person, directly to the Prime Minister. The message is as follows:
13.
“My advisers have taken up with me the increasing difficulties in producing and delivering supplies for the United Nations. I am sure you will agree that all materials produced should be utilized to the maximum extent possible for the direct prosecution of the war, and that the minimum amount possible under the circumstances should be retained for other essential purposes.
14.
“The difficulties attendant upon the sending of supplies from this country to the Union of South Africa are apparent, and it is essential that all supplies sent fill a vital need. The considerable and valuable contributions to the war effort made by the production of war supplies and by ship repairing and base metal mining in the Union of South Africa are known and appreciated by the Government of the United States.
15.
“This Government is anxious to assist the Union of South Africa to increase the production of those materials and supplies which are required for the war effort of the United Nations. We regard as particularly important an early increase in the quantity of coal available in the Union for shipment to South America, in order to achieve a substantial saving in the use of shipping by the United Nations. The interested agencies of this Government will make every effort consistent with the war needs of the United Nations to send to the Union the supplies necessary to maintain and expand its war industries. It is contemplated that the Union Government would likewise make every effort to expand the industries directly devoted to war purposes, and to increase the amount of its resources available to these industries.
16.
“The success of such a plan would depend entirely upon the approval and full cooperation of the South African Government. An expansion of the war industries of the Union would require a readjustment within the Union of available resources, including manpower, equipment, and other facilities. I realize that this could be accomplished only at the expense of those industries which do not contribute directly to the prosecution of the war. The United States Government will endeavor to furnish supplies not only for the direct war needs of the Union, but also for other urgent requirements. However, because of the lack of materials and shipping space, it will not be possible to avoid a substantial reduction of supplies to industries which have only an indirect share in the war effort.
17.
“If these ideas meet with your approval a detailed proposal to establish a supply program for South Africa, together with a Supply Council to carry out that program, will be presented to your Government and to the Government of the United Kingdom. I believe that such a program would have the most beneficial results in maintaining the war economy of your country.”
18.
The British Embassy here is being informed of the President’s message, and the substance of this telegram has been forwarded to the [Page 180]American Embassy in London. If Prime Minister Smuts agrees in principle with this proposal, we expect the next step to be detailed technical discussions concerning the supply requirements of the Union. The British Government will be asked to prepare a schedule of materials to be made available by the United Kingdom to South Africa during 1943. For your information, the Board of Economic Warfare has already prepared a list of supplies to be furnished by the United States. The two schedules must be coordinated with each other and then discussed and approved by the three Governments concerned.
19.
In your conversations with Prime Minister Smuts and other representatives of the Union Government you should emphasize that the purpose of the program is to maintain and expand the Union war industries. The only commitments that we expect to ask from the Union Government are (1) an early agreement to increase the available quantities of coal; (2) the establishment of the Supply Council; (3) agreement with the principle that there should be the maximum application of Union resources to direct use in the war effort. Because of the urgent need of shipping space, we hope that the arrangements with respect to coal can be completed first, even though the other points may not have been settled. There should be no specific agreement regarding the gold mines, since the program is not directed primarily at them.
20.
We hope that it will not be necessary to discuss at length the question of curtailing gold mining operations, and we suggest that you do not mention the subject first. If the subject is raised, you should make it clear that our interest in the matter is as stated in paragraph 1 of this telegram, but you should not refer to the contents of paragraphs 2, 5, 6, or 7. It is true that the effect of the program will probably be to curtail the operations of the gold mines, but we feel that such a reduction is bound to take place whether or not the program is accepted in its present form. It is most unlikely that this country will be in a position to supply materials for the maintenance of any industry that does not contribute directly to the prosecution of the war.
Hull
  1. Approved by President Roosevelt with notation: “OK FDR”.
  2. Board of Economic Warfare.
  3. Henry A. Wallace.
  4. Frank Knox.
  5. Robert P. Patterson.
  6. Edward R. Stettinius, Jr.
  7. South African Iron and Steel Industrial Corporation, Ltd.
  8. South African Purchasing Commissioner to the United States, temporarily in South Africa.