Bureau of Economic Affairs Files 1

Current Economic Developments 2


No. 150

[Here follows discussion of subjects not related to “Stockpiling Program”.]

Steps To Speed Up Stockpiling Program

An attempt is being made to pursue a more vigorous policy in the US stockpiling program which has been disappointing to date. Included in the steps which have been taken recently or are planned to speed up the acquisition of strategic materials for stockpiling are: 1) establishment under the Executive Committee on Economic Foreign Policy (ECEFP) of a small Working Group on Problems of Availabilities and Procurement of Strategic Materials; 2) consideration of implementation of Recovery Program legislation which provides for transfer of commodities needed by the US;3 and 3) consideration by the National Security Resources Board of resolutions which would encourage Munitions Board purchases of many commodities even though they are in short supply for civilian use.

Stockpiling Act–National Security Act. The National Security Act of 1947 which created the National Security Resources Board (NSRB), the National Military Establishment as well as the National Security Council and the Central Intelligence Agency, provides that the NSRB is responsible, among other things, for advising the President on policies for establishing adequate reserves of strategic and critical materials, and for the conservation of these reserves.

The most recent stockpiling act, the Act of 1946 (PL 520 79th Congress) amends and broadens the Act of June 7, 1939, retaining the main provisions of that legislation which was the first for the specific purpose of establishing stockpiles of strategic materials. The Act of 1946, as altered by the subsequent National Security Act, provides, inter alia, for: 1) determination by the Secretaries of National Defense and Interior of those materials which are strategic and critical and the quantities and qualities to be stockpiled. The Departments of State, [Page 569] Treasury, Commerce and Agriculture are directed to cooperate with the Munitions Board in making these determinations; 2) purchases of materials by the Bureau of Federal Supply, acting under the direction of the Secretary of Defense; 3) storage and rotation of stocks of strategic materials; and 4) release of stocks, except for rotational purposes or for reason of obsolescence, to be made only by order of the President (or a designated agency in time of emergency) for purposes of common defense. This, in effect, establishes a permanent stockpile which cannot be used for purposes other than that of national defense.

ECEFP Working Group. The recently established ECEFP Working Group on Strategic Materials consists of representatives from the Department of State, the Munitions Board and the National Security Resources Board. The Economic Cooperation Administration may be invited to membership. Other agencies are included in the deliberations when their fields of interest are involved. The terms of reference of the group are: 1) to consider problems of availabilities and procurement of strategic materials from foreign countries; 2) to facilitate the collection of and to evaluate information regarding availabilities of strategic materials in foreign countries; 3) to facilitate the preparation of programs for acquiring such materials in other countries; and 4) to make recommendations with respect to the fulfillment of various aspects of this assignment to the ECEFP, the NSRB or the Munitions Board as may be appropriate.

Problems Connected With Recovery Program. Thus far most of the problems considered by the Working Group on Strategic Materials have been in connection with the European Recovery Program. Legislation authorizing the Program provides for facilitating the transfer of commodities needed by the US because of deficiencies or potential deficiencies in its own resources for stockpiling or other purposes. The legislative history shows that these other purposes are primarily the transfer of iron and steel scrap which would not be stockpiled and other materials of strategic character which would be put into immediate use and not stockpiled. The ECEFP Working Group is now considering the inclusion of proper safeguards in the bilateral agreements to be negotiated with the participating countries and has appointed working parties to make investigations of the possibility of increasing production in territories of countries participating in the Program. These parties will then proceed to consider problems outside the Recovery Program area. The bilateral agreements will contain only general commitments for the governments to facilitate the transfer of strategic materials to the US, to stimulate increased production, and to use their good offices to secure cooperation of enterprises subject to their jurisdiction. Goals and specific measures for achievement of special programs will be the subject of supplementary agreements.

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The ECEFP Working Group recognizes that the political relations between the mother country and dependent areas will be important factors in the fulfillment of US goals. It is not yet clear to what degree the mother countries will be able to undertake to guarantee delivery of materials from areas which are classified as dependent. As yet there has been little or no comment on how the local populations have reacted to the proposals for expanded production and transfer of stocks to the US. It is anticipated that business enterprises in the colonial areas may resent shipments of materials to Europe which are to be paid for by shipments of raw materials from the dependent areas.

National Security Resources Board Resolutions. Heretofore the Munitions Board in purchasing materials for stockpiling has restricted itself to materials which the Department of Commerce has not found to be in short supply for civilian use. Proposals under consideration in the NSRB would provide that the Munitions Board should proceed to build up stockpiles after consulting with the Department of Commerce with respect to supplies that are necessary to meet only essential civilian needs. An alternative proposal would apply this formula only to stocks held by RFC. In line with this trend the Department of Commerce has removed all commodities from its Civilian Deficiency List (which has governed Munitions Board stockpile policy) except three—antimony, tin and quinidine.

  1. Lot 54D361, containing the publication Current Economic Developments for the years 1945–1952.
  2. This weekly publication, prepared by the Policy Information Committee of the Department of State, was designed to highlight developments in the economic divisions of the Department, and to indicate the economic problems which were currently receiving attention in the Department. It was circulated within the Department and to Missions abroad.
  3. Regarding this subject, see the following documents in Foreign Relations, 1947, vol. i: Recommendation by the National Security Resources Board to President Truman, December 4, 1947, p. 777, and circular airgram 1620, December 22, 1947, p. 778.