The Secretary of State to Diplomatic Representatives in the American Republics

Sirs: The Department refers to individual instructions to the Missions enclosing estimates of supply for the second quarter of 1943 for Class B (Groups I and II) controlled materials products.8 Because the issuance of import recommendations predicated on estimates of supply for fabricated products involves an entirely new procedure for the Missions and the country agencies, it is felt that some interpretative comment would be helpful.

The Controlled Materials Plan undertakes to pattern the entire industrial economy around the available supply of three basic materials, steel, copper, and aluminum, divided between claimant agencies on the basis of forward estimates of requirements for specific production programs. In practice, this division of raw materials alone is insufficient without a like division of the production of the so-called Class B products using these three basic materials, which products themselves are common to and required for the production programs of all of claimant agencies under the Controlled Materials Plan (Army, Navy, BEW, etc.). Facilities for the production of many of these common components are severely overburdened, and the War Production Board has found it necessary to control the production schedules of manufacturers of these products to assure that adequate quantities are provided to the various claimants when actually needed, and, conversely, that orders of some claimants placed far in advance [Page 112] of the actually needed delivery dates do not prevent the production of these same critical components for others.

A list of these critical common components is enclosed.9 Because of the nature of the production problem, it would be desirable if the country agency would process import recommendation applications for these items before those for other B products. It would also be desirable if the total dollar value of each of these items covered by approved import recommendations could be forwarded to the Department as soon as the country agency and the Embassy have finished their work. This would permit the BEW to check more promptly with WPB10 the relation of approved import recommendations from all countries and available supply, thus expediting export licensing by BEW and scheduling for production by WPB. Although the necessity is somewhat less urgent, the same procedure should be followed for Class B products by groups conforming to estimates of supply.

As the technique of processing import recommendations by the country agency and the Embassy becomes perfected, and it is possible for these recommendations to be issued well in advance of the probable production period, a collation of the amounts of Class B products by the Office of Exports from its copies of import recommendations will provide accurate figures for presentation to the War Production Board as requirements under the Controlled Materials Plan. At the inception of the operation of both Decentralization and the Controlled Materials Plan, however, this procedure is not possible since, under present time schedules, the import recommendations will not arrive sufficiently in advance of the production period to serve as requirements figures.

The BEW has, in the main, based its estimate of supply of “general requirements” for B products on past United States export statistics. In many instances, these figures will be too small because they fail to take into consideration imports by the other American republics from sources of supply no longer available and also changed conditions resulting from the war. On the other hand, past trade figures may include exports for purposes no longer deemed essential to the war economy of the other American republics. In some instances, these figures may be grossly inaccurate with reference to the real essential needs of the specific country. The Embassy is requested to point out any flagrant discrepancies that come to its attention as soon as possible.

It is suggested that the Missions consider, and so inform the country agencies, that these figures are merely a guide to aid in the consideration [Page 113] of import recommendation application; that applications for these recommendations would be processed by the country agencies on the basis of real essential need in an effort to minimize the total dollar value of all requests. If the total dollar value of import recommendations for Class B products considered to be essential in each category is not too far above the estimate of supply, there is a reasonable possibility that the products can be manufactured. If these totals vary materially from the estimates of supply, either above or below, it is requested that the Department be so advised as soon as possible as outlined in the above paragraph on critical common components.

Although it must again be emphasized that the issuance of an import recommendation is not tantamount to licensing and production, it is believed that supply assistance under Decentralization and the Controlled Materials Plan will be far more effective than under the old priority system. This will be particularly true if the export demand for manufactured products competing with direct military needs is kept to a minimum through the operation of decentralized export control.

Very truly yours,

For the Secretary of State:
Dean Acheson
  1. None printed.
  2. The list, not printed, included automobile parts; building, machine, metal cutting, and precision measuring tools; radio and radar equipment; jewel bearings; and general industrial equipment.
  3. War Production Board.