296. Minutes of the Cabinet Meeting0
[Here follow a list of participants and discussion of unrelated subjects.]
Copper Stockpile—Gov. Hoegh reviewed the situation of the Strategic and Critical Stockpile and also the Defense Production Stockpile as regards copper. He posed the question of whether it were desirable at the present time to dispose of 129,000 tons of copper surplus to the Defense Production Stockpile. The governing policy exists, he said, that there should be no action taken adverse to the national economy. He noted that it had been necessary for him to make a statement the preceding week that the Administration policy was to act with great care and that if any copper were sold from the stockpile, the action would be gradual and careful. Gov. Hoegh stated that his Agency thought the disposal should be carried through during this period of a healthy market.
There was an inconclusive discussion as to the significance of recent fluctuations in the copper market.
The President asked if Defense Department still provided materials to producers for certain activities. Mr. McElroy said the possibility of utilizing some copper in this way was being studied but that it would undoubtedly raise similar strong objections.
Mr. Stans pointed to the fact that some $3 or $4 billion worth of materials in the stockpile are classified as excesses, hence the review of this subject as a possible means of helping out in the present tight budget situation. He stated that Mr. Floete believes disposal of the 129,000 tons now would be in the interest of the economy by removing the threat of this overhang.
[Page 607]Mr. Stans spoke of the desirability of getting shortened the current requirement that any proposal for disposing of material for the Strategic Stockpile must lie in front of Congress for six months prior to action. A shorter waiting period would help avoid “missing the market.”
Mr. Stans also suggested in connection with “put” contracts that it might be cheaper merely to pay the difference of $45 million between the present market price and the contract price, rather than to take the materials at the full contract price.
Mr. Stans also noted that certain government actions are being brought into line with stockpile excesses rather than making purchases on the market, as for instance Treasury purchases of copper for pennies.
Mr. Stans thought that all of these problems and the additional ones of barter—which merely serves to increase surpluses in the stockpile—and the 3-year stockpile concept should be reviewed and brought together in a Cabinet paper.
Sec. Anderson spoke at some length of various aspects of the problem and concluded that he would hesitate to sell copper now, preferring to await any undue increase in the price of copper or a real shortage of it. Mr. Herter concurred in Mr. Anderson’s view because of the problems a present sale would occasion in our foreign relations as regards Chile, Mexico and Peru. Sec. Seaton stated that Interior opposes sale at this time, though he recognized that it was merely a matter of timing and that the day must come when the government disposes of these stockpile surpluses.
The President was not certain that the government should ever dispose of these materials until a real need for them existed somewhere. He thought things like copper were much more desirable to hold on to even than the gold that is buried at Fort Knox. The reason for this, he repeated, was that the supplies of these things were necessarily limited and eventually the day would come when they would be very much needed. The President allowed that they also might be used to defeat market speculation, such as that which occurred in coffee.
The President reaffirmed his favor for bartering perishable materials for nonperishable. The latter could be considered as money in the bank. Sec. Seaton agreed that he would be happy to see them retained if it were possible to remove the threat of overhang.
Dr. Saulnier recalled the government’s interest in directing its actions against inflation and he favored a limited program to dispose of this copper over a 2-year period in order to moderate the inevitable rise in the price of copper. As for the industry being worried about the overhang, the only way to guarantee that the stockpiles would be permanently locked up would be by dumping them in the ocean, [Page 608] hence he favored a very close appraisal of the stockpiles to see if the government could get out from under by a very gradual and orderly disposal.
It was agreed that there should be further study of the matter looking to a full scale presentation at a later date.
Gov. Hoegh believed some announcement ought to be made as to the present status of things. The President opposed any formal announcement but was agreeable to further informal statements by Gov. Hoegh such as he was already involved in.
Mr. McElroy urged that there be discussions with the industry, if that had not already been accomplished, on how to dispose of the excesses since it was possible they could be very cooperative. Adm. Strauss noted that even copper producers are not of one view. Sec. Mitchell was anxious that there be no uncertainty as to the Administration’s position, since labor contract negotiations are coming up in the industry and there could be great pressures upon the government to sell or not to sell should a strike occur.
The President commented that if sale of this copper were to be accomplished as an anti-inflationary measure then it should be done at a time when the situation was much more difficult than it is now and when a major government sale could have an impact instead of passing unnoticed.
[Here follows a briefing on the domestic economic situation.]
- Source: Eisenhower Library, White House Office Files, Cabinet Secretariat. Confidential. Drafted by Minnich.↩