Foreign Relations of the United States, 1946, General; the United Nations, Volume I

Secretariat Files

Memorandum by the Acting Executive Secretary of the Executive Committee on Economic Foreign Policy (Dennison) to the Members of the Committee ⁸⁶

[Washington,] November 6, 1946.

On October 26, 1945 the Executive Committee approved a statement of its views with respect to the proposed stockpile program, which was to be submitted to the appropriate authorities after legislation, then pending, had been enacted. The legislation, entitled Strategic and Critical Materials Stockpiling Act, was approved by the President, July 23, 1946, and an initial appropriation of $100,000,000, has been provided for the current fiscal year. In indicating his approval the President issued a statement regarding the “Buy American” provision of the law which presumably may be taken as a guide in its administration. Copies of the Act and of the President’s statement are attached to the document (sent to ECEFP members only).⁸⁷

Since the legislation approved in July contains certain provisions which were not anticipated by the Executive Committee in October 1945, it seems advisable to make some changes in the Committee’s original statement. The original statement, D–140/45,⁸⁸ has not yet been submitted to the Secretaries of War, Navy, and Interior, and it is now proposed that a revised statement, D–85/46, be substituted for it⁸⁹

Eleanor E. Dennison

[Attachment]

Establishment of Stockpiles of Strategic Materials

confidential
ECEFP D–85/46

[Washington,] November 6, 1946.

The Executive Committee on Economic Foreign Policy submits to the Secretaries of War, Navy, and Interior the following statement pointing out considerations of economic foreign policy in the administration of the stockpiling program:

1. The stockpiles established for national defense purposes under the Strategic and Critical Materials Stockpiling Act should not be used as buffer stocks for purposes of regulating prices. It is noted in this regard that the law, although making necessary provision for the disposal of stocks subject to deterioration or obsolescence, prohibits the sale of materials from stockpile except under national emergency.

2. So far as practicable and consistent with the main purposes of the stockpiling program, it should be the policy in making purchases for the stockpile, particularly in the immediate future, to refrain from purchases of a kind, whether domestic or foreign, which might interfere with or otherwise impede the reconversion of industry to peacetime conditions and the furtherance of the United States program for the expansion of international trade.

3. As a matter of long-range policy, purchases of materials for a stockpile should, as far as practicable, be made at time of ample supply rather than at times of short supply, so as to avoid undue stimulation or depression of markets at home or abroad.

4. Particular note should be made of the statement made by the President upon his signing of the legislation, with particular reference to the “Buy American” provision of the law, that “the stockpiling program should not be used as a means of generally subsidizing those domestic producers who otherwise could not compete successfully with other domestic or foreign producers” and to the effect that the Act “should not be used as a device to give domestic interests an advantage over foreign producers of strategic materials greater than that provided by the tariff laws.”

86. For information regarding the organization and functions of the Executive Committee on Economic Foreign Policy, see footnote 36, p. 1283.
87. Not reproduced.

88. ECEFP D–140/45, November 14, 1945, which was sent to the chiefs of all United States missions, reported that on October 26, 1945, the Committee had taken the following action with regard to the establishment of stockpiles of strategic materials:

    “If and when pending stockpile legislation (S.1481) is enacted, the following views of the Executive Committee should be submitted to the appropriate authorities for consideration in the administration of a stockpile program in so far as those views are found to be consistent with the provisions of the law and provided that administration in accordance therewith shall be entirely subservient to the requirements of national security:

    • “1. The stockpiles established for national defense purposes should not be used as buffer stocks for purposes of regulating prices.
    • “2. Purchases and sales made under such a program should in so far as may be practicable and consistent with the purposes of the program be timed to avoid undue stimulation or depression of markets, either foreign or domestic.
    • “3. The program should, in so far as may be practicable, be geared into a possible program for the conservation of resources and for the lowering of tariffs on imported materials. (By giving the domestic industry a reasonable period in which to adjust itself to less mining and more dependence on imports, it should be possible to shift workers to other employment, and to readjust financial structures without undue burden.)
    • “4. In making purchases, account should be taken of Allied countries whose mining industries have been greatly expanded to meet war needs and which require assistance to adjust their economies to peacetime conditions without severe economic shock.
    • “5. Expenditures should be made with due regard to prudent use of funds, so as to provide such economic protection as may be needed without undue cost or undue encouragement of high-cost producers.” (Secretariat Files)

89. The Committee took no further action on this matter in 1946.