Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

275. Letter From the Director of the Office of Defense Mobilization (Gray) to the President’s Special Assistant (Randall)⁰

March 6, 1958.

Dear Mr. Randall: Enclosed is a report by the Special Stockpile Advisory Committee dated January 28, 1958.¹ One of the basic recommendations of the Committee is that strategic stockpile planning in general should be geared to the current concept of not acquiring materials beyond the requirements for a three-year national emergency. However, the Committee also concurred in the existing practice of acquiring metals and minerals for the Supplemental Stockpile beyond the quantities considered essential for defense purposes when they can be obtained in exchange for U.S. stocks of agricultural surpluses. In this conclusion it recognized the fact that such acquisitions bear no direct relationship to the usual concept of stockpiling for a national emergency.

In light of the foregoing, the Committee recommended a change in the present rules for determining the quantities of materials suitable for inclusion in the Supplemental Stockpile. These rules, as you know, presently stipulate that the amount of any strategic or critical material in the Supplemental Stockpile may not exceed the lesser of (1) fifty percent of the five-year long-term stockpile objective, or (2) the total five-year mobilization requirement after deducting all other government-owned inventories plus quantities on order. Instead of the foregoing, the Committee recommended a case-by-case consideration of barter offers.² For example, a proposed barter transaction recently submitted to the Department of Agriculture involves the disposal of 50,000 bales of cotton to Spain in return for a comparable value of industrial diamonds. Under the present rules the amount of industrial diamonds on hand precludes such a transaction.

It should be noted that the present rules are derived from security considerations, viz., long-term objectives and five-year mobilization requirements. At the same time, the materials themselves are not considered as necessary for defense purposes.

Thus, the Committee recommends, and I concur, that instead of adhering to the somewhat irrelevant quasi-defense criteria which are used presently as limitations on acquisitions, each proposed transaction should be evaluated on its merits, i.e., what objectives, tangible or intangible, might be achieved as a result thereof. I think it would be appropriate also at this time for the Executive Branch to develop some concepts as to the ultimate purpose for which the Supplemental Stockpile inventories might be used.

It is generally recognized that the relationship between the Supplemental Stockpile and the national security is at best remote. Inventories in the Strategic and Critical Materials Stockpile in most cases provide for our full mobilization requirements. In many cases they exceed full mobilization requirements. Acquisitions for the Supplemental Stockpile have generally involved materials of which amounts needed for defense were already on hand. They are in the Supplemental Stockpile essentially because the Congress considered they were preferable to perishable agricultural surpluses.

It might be appropriate to weigh further Supplemental Stockpile acquisitions in the light of what the needs of this country for metals and minerals might be in a period twenty-five to fifty years hence. For example, it has been pointed out frequently that the amount of metals consumed during the past fifty years exceeds the amount consumed during the entire preceding history of the world. It has been further pointed out that demand is constantly increasing and will further increase as under-developed areas of the world industrialize. It is axiomatic that the quantities of metals and minerals in the earth’s crust are fixed. The Supplemental Stockpile of metals and minerals might be given the role of providing some insurance against the depletion of the natural resources of this country and of the world.

Under this concept of the ultimate purpose which this present or future stockpile of metals and minerals might serve, its administration and direction would appear to be compatible with the responsibilities of the Department of the Interior. That Department could set up an interdepartmental committee, possibly with representatives of the Departments of Defense, State, Treasury, Agriculture, Commerce, the Bureau of the Budget, and the Office of Defense Mobilization, to advise it as to the types of objectives that might be achieved by the use of barter, e.g., preclusive buying, strengthening international relations, assisting the domestic economy, etc. This committee might also provide advice as to the types of materials and quantities that should be acquired on the basis, for example, of the known or estimated reserves of this country.

In light of the foregoing, I would like to commend to you the recommendations of the Special Stockpile Advisory Committee and my own recommendation that further study and consideration be given to a new concept as to the role which the Supplemental Stockpile should play in the future.³ If a formula is developed, I would also urge complete public disclosure as to the quantities of materials that may be acquired.

Pending the Council’s consideration of these suggestions, consideration should be given to the propriety of waiving the present limitation with respect to industrial diamonds so as to clear the way for disposing of 50,000 bales of surplus cotton to Spain.⁴

Sincerely yours,

Gordon Gray⁵

0. Source: Department of State, E/CFEP Files: Lot 61 D 282A, Supplemental Stockpile Criteria and Administration—CFEP 567. Confidential.
1. Document 272.
2. This recommendation was in section II, which is not printed.
3. On March 15, Randall established a CFEP Supplemental Stockpile Committee to study the questions raised in Gray’s letter and in Document 272. Don Paarlberg, Assistant Secretary of Agriculture, was appointed chairman of the committee which included as other members, Thomas C. Mann, Assistant Secretary of State; Henry C. Kearns, Assistant Secretary of Commerce; Royce A. Hardy, Assistant Secretary of the Interior; John T. Patterson, Deputy Director, Office of Defense Mobilization; and Joseph Rand, Council on Foreign Economic Policy. Randall asked for a report from this committee in two months. (Memorandum from Randall to CFEP, March 15; Department of State, E/CFEP Files: Lot 61 D 282A, Supplemental Stockpile Criteria and Administration—CFEP 567)
4. In a letter to Gray, March 10, Randall stated that the Department of Agriculture and he agreed that it would be advisable to await consideration of the industrial diamond barter proposal until the CFEP committee that he had just established completed its study and established possible new criteria for this procedure. (Letter from Randall to Gray, March 10; ibid.)
5. Printed from a copy that bears this typed signature.