848A.24/236: Telegram

The Secretary of State to the Minister in the Union of South Africa (MacVeagh)

111–113. Your 409 April 17 from Capetown.

The British note accepting the proposal for the Supply Council was received on April 24. The texts of this note and the original one from the Department to the British Embassy will be forwarded to you in a separate telegram. The interested agencies here are anxious to proceed with the establishment of the Council as soon as possible, and the combined views on our objectives and the nature of the Council are given below. It is hoped that this will be a sufficiently comprehensive [Page 195] statement to serve as a guide and program in your further negotiations.
When the South African Supply Council was originally proposed, it was believed in Washington that the Union Government would not enter any agreement which had expressly to do with a quantitative reduction in gold mining operations. On the other hand, it was hoped that the South Africans would consent to a supply organization which they knew would emphasize the requirements of the war industries at the expense of industries not directly related to the war. The Supply Council was to pass on all orders for materials to be obtained from overseas and, by judicious discrimination, to bring about an expansion of the war industries and a gradual reduction of gold mining.
The negotiations, however, have taken a different turn. The Prime Minister’s aide-mémoire of February 19 indicated that he was willing to consider how far the gold industry could be reduced, and to reach an agreement with the American and British Governments on the extent of the reduction, provided there was a joint understanding in advance that within the agreed limits supplies would be made available. Assurances on this point were given in the Department’s telegram no. 63 of April 7. It appears, therefore, that the reduction of gold mining will be the subject of a joint agreement by the three Governments concerned. In that case the reduction will presumably be effected by action of the South African Government, rather than by the activities of the Council. The Council will administer a supply program which has been accepted by the American, British and Union Governments, and in which provision is made for expansion of the South African war effort and maintenance of gold mining on a reduced scale.
In these circumstances the functions of the Council will be essentially the same as those of other joint supply groups which have recently been proposed by the British for establishment at Leopoldville and Brazzaville. The Council will aim to agree upon and approve an overall statement of South African import requirements that will reflect the desired role of the various South African industries in the prosecution of the war. This statement will be transmitted to London and Washington for examination by the appropriate supply authorities, and for a final determination in Washington of the actual quantities to be made available and of the sources from which they are to be obtained. The facts on which the statement of requirements will be based will presumably be taken from the Lend-Lease requirements forms number 1 now being prepared in the Union. The Council will consider this information in relation to the objectives of the requirements program and will determine whether further information [Page 196] is needed. The Council will revise the basic statement of requirements whenever it becomes necessary to do so. It will provide information concerning the end use of supplies for the Union, and it will determine upon request whether specific orders fall within the program, both with respect to amount and end use. The Council will deal with all types of problems in the requirements field; it will endeavor to reach unanimous conclusions, and it will make recommendations as to policy and action which we are confident will be followed. The decisions on reduction of gold mining and expansion of war industries will be made outside the Council by the three Governments. A more detailed statement of the proposed functions and operation of the Council will be forwarded to you in a separate telegram.
In agreement with the interested authorities here, the Department designates you as the American member of the Council. The question of an alternate was considered in Department’s 104 of May 28.42 You are requested to discuss the nature of the Council, as outlined above in paragraph 4, with the appropriate British and South African authorities and endeavor to obtain their early cooperation in selecting representatives for the Council and arranging as soon as possible for the start of its activities. We suggest that the Council’s first task is to examine the information necessary for a statement of total Union requirements. According to your 114 of May 19 from Pretoria,42 this work is already in process, and we agree that it should not be interrupted in order to revise the original BEW report.
The objectives of the requirements program were stated in the President’s message and accepted in the Prime Minister’s reply. Our general aim is to provide the supplies essential to the South African economy, in such a way as to promote expansion of the Union war industries and curtailment of activities not directly related to the war effort. At present our particular objectives are as follows, subject to your further recommendations and consideration of telegram 202 of May 15 from Johannesburg:42
Coal requirements of the east coast of South America for bunkers, shore depots and inland use are estimated at 160,000 long tons monthly. In the case of Brazil, the United States is responsible for 50,000 tons, including 5,000 for bunkers; the balance of 10.000 tons required for bunkering is moved by Brazilian ships and requirements of 5,000 tons for shore depots are British responsibility. Uruguay’s requirements are estimated at 10,000 tons for shore depots and 20,000 tons for inland use; it is the United States’ responsibility to move 10,000 tons of the inland requirements. Argentina’s requirements are 50,000 tons for inland use, 8,000 tons for shore depots and 7,000 tons for bunkers. Except for 15,000 tons, which it is desirable to move [Page 197] regularly from the United States to Argentina in Argentine ships and for an occasional shipment in United States or British vessels to one of the three countries when space is conveniently available, it appears to us highly desirable for South Africa to supply the balance. However, we cannot speak for the British who are responsible for the requirements of shore depots in all three countries and for moving in British controlled vessels that part of the inland requirements of Argentina and Uruguay not met from the United States. We do not include in these requirements any Wankie coal from Rhodesia which because of its price and for other reasons is not acceptable in South America. Our information leads us to believe that no difficulties of either inland transportation or shipping should prevent South Africa handling approximately 140,000 tons of the South American program. It is possible that in the future it may be desirable to meet some of the bunker and railroad requirements of West Africa and North Africa from South Africa but these requirements are British responsibilities and shipping is not believed to be available at present. If in order to meet increased requirements for export of coal it is necessary to divert transportation facilities from other uses, we believe they should be diverted from use in transporting coal to the gold mines. Furthermore, we believe that this objective must be achieved without supplying additional equipment. What do you believe would be the effect on the gold industry if one million tons of coal a year were diverted from consumption by the gold mines to export?
An increase in munitions and other manufacturing industries contributing directly to the war effort. Sharpstone, in his cable no. 202 of August 15, 1942,43 reported that the program of the Director General of War Supplies called for an increase of 18,000 Europeans in the next 6 months, and 24,000 in the succeeding 12 months. In view of his further comment that there was no surplus of skilled labor at that time, and in view of the fact that there has been no appreciable transfer of Europeans from gold mining, we presume that this program has not been effected. Sharpstone indicated in the cable cited above that funds might not be made available to the Director General for carrying out his program. The 1943–44 budget figures forwarded to us by Day,44 and a remark in his report of February 7 that “defense expenditures have passed their peak” further indicate that this program was abandoned. We shall have further comments on the munitions program in connection with telegram 202 of May 15 from Johannesburg.
Increase in agricultural output. We attach very great importance to an increase in food production of the Union. The food requirements of Europeans in other parts of Africa impose a burden both of supply and shipping upon the United States, at a time when the needs of other areas for United States foodstuffs are increasingly great. Moreover, the recent estimates of maize production seem to justify considerable concern regarding the welfare of the native population in Southern and East Africa. If additional agricultural labor is needed to increase output, we should suppose that a substantial further reduction in the number of natives employed by the gold mines before the next planting season would be helpful. Sharpstone. in his cable of August 15, cited above, stated that the Secretary of [Page 198] Agriculture estimated the immediate need of agriculture for 50,000 natives and more at a later date. We are interested in knowing whether this need has been met by the present limitations upon recruiting activities of the gold mines.
Increase in essential civilian industry. In so far as import requirements can be reduced by the further expansion of those industries mentioned in Day’s report of March 1 and in the reports of the Agricultural and Requirements Commission, we should suppose that such expansion of secondary industries would be desirable.
In order to attain the foregoing objectives, gold mining operations will have to be reduced. We are not yet ready to say precisely how great the reduction should be, but the sole purpose of any reduction would be to divert the maximum quantity of supplies, labor, equipment, and other facilities for use in war industries. The supply agencies in Washington are reluctant to undertake to furnish supplies directly or indirectly for gold mining unless gold mining is curtailed sufficiently to insure a very substantial increase in South Africa’s industrial war and agricultural effort. They feel that the furnishing of supplies, however small, is wasteful and permits the continued consumption of larger quantities of militarily important supplies from domestic and other sources.
Since it will take some time to complete the Lend-Lease survey, we do not want to wait until then before discussing the reduction of gold mining operations. We should like to have as soon as possible a reliable picture of the relation between gold mining and the war industries in terms of the important supplies which they both need and the labor, equipment, and facilities which they both could use. Comparative estimates of the respective advantages to be derived from different reductions of gold mining operations would be most helpful. It is our understanding that the criterion of reduction should be the quantity of ore milled rather than the amount of fine gold produced, since the milling operations require the use of much labor, equipment, and supplies. When this information is available, we shall be in a position to determine a specific figure of reduction as our minimum objective, and to set a target figure for use in negotiation.
You will recall the statement in Department’s 44 of March 6 to Pretoria that the gold mining question should not be considered separately or in advance, but together with the other supply problems of the Union. At the same time we should be glad to have the matter settled as soon as possible, and we intend, therefore, to raise the problem of reduction as soon as we have sufficient information concerning the relation between gold mining and the Union war industries. Since the problem is highly controversial, we believe that it should be considered through channels apart from the Council, in order not to complicate or prejudice the status of the Council at its beginning. We should prefer to negotiate the question in Washington, unless you see advantages to conducting the discussions in the Union. In any event, the final decision on the American side will of course be made here. [Page 199] We should appreciate your detailed comments on this question, as well as on the program as a whole.
The question of interim, short term policy towards gold mining was discussed recently in a meeting at the Department attended by representatives of the Office of Lend-Lease Administration, the Board of Economic Warfare, and the War Production Board. There was agreement that, pending a final decision by the American, British, and Union Governments on the future rate of gold mining, no supplies for the mines should be exported to South Africa from the United States except in the most urgent cases. Before considering any special application for gold mining supplies, such as Taper roller bearings, we should want to know the exact stock position of the mines and the estimated requirements for a given period of time at a stated rate of operation. We are reluctant to maintain operations at their present level, but we do not wish to cause so extensive a reduction or so abrupt a stopping of operations as to give the British and South Africans any occasion to feel that the American Government has prejudged the question of reduction and taken unilateral action accordingly.
A provision has been inserted in the recently issued British program license which provides that no release certificates may be issued by the British Supply Council in North America for export to South Africa of supplies or equipment to be used directly or indirectly in gold mining. This provision would not preclude BEW from approving the export of supplies to the gold mines in exceptional cases such as those mentioned in paragraph 9. As you know, the BEW, instead of issuing licenses for the export of individual shipments, has granted a general license to the British Supply Council to certify the export of those requirements which fall within the authorized quarterly program. More detailed information regarding this procedure has been posted to you by airmail.
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  5. Samuel H. Day, Commercial Attaché in the Union of South Africa.