416. Memorandum From the Director of the Office of Emergency Preparedness (Lincoln) to the President’s Assistant for National Security Affairs (Kissinger)1

SUBJECT

  • Stockpile

General

Although I do not know the specifics of the Bureau of the Budget stockpile proposal, e.g., whether they propose a 50 percent cut in inventories or in objectives, the following information may assist you in evaluating the proposal. This paper describes the national stockpile, discusses disposal programs and problems, and summarizes the stockpile objectives system.

Description of Stockpile

The stockpile exists pursuant to legislation; the value of the current inventory in the stockpile is $6.7 billion. Of this total, $2.87 billion (43 percent or nearly half the inventory) is excess to our current stockpile objectives. Tab A2 lists the commodities in the stockpile, showing inventories, objectives, excesses, and quantities available for disposal.

Quantities of Sales

GSA, which manages the stockpile under OEP policy guidance, has been selling excess stocks as rapidly as legislation, the market, and other conditions permit. (OEP Deputy Director Fred Russell devotes a great deal of his time and talent to assisting GSA in legislation and sales.) More than $2 billion in excesses (Tab B gives annual and cumulative figures) has been sold in the past five years. We expect to sell about $240 million in excesses during Fiscal Year 1970. Even if the current stockpile objectives were disregarded by the Executive Branch and Congress were willing to provide authorizing legislation, we estimate [Page 1030]that GSA could sell no more, at a maximum, than another $580 million (see Tab C) within one year after the restraints were removed. ($360 million of this amount would be from nickel and copper; the latter was the material involved in the major criticism of President Johnson for stockpile releases.)3 The other commodities cannot be sold rapidly, for a variety of reasons. As a practical matter, Congressional and other restraints would largely prevent the sale of additional materials.

Restrictions on Sales

There are now rigid restrictions on sales from the stockpile:

a.
Legislative authority is required to make such sales. Congress has vigorously rejected omnibus disposal legislation in the past.
b.
The law provides that sales must be made in a way which does not destabilize the market.
c.
The Department of State can object to disposals on the ground that they will have adverse international effects. (Only the President can overrule such objection by State.) A current case in this category is tin; we would like to sell excess tin but State has maintained that such disposals would be inimical to our relationships with Bolivia and Peru.

(Tab D lists the twelve excesses of highest dollar value, and the obstacles to disposing of them.)

Congressional Involvement

There are at present eight bills on stockpile sales being considered by the Congress. The one that has the best prospect of early enactment is the cadmium bill, which would involve a total of about $14 million. I propose to seek a meeting with Senator Symington, who is Chairman of the key Senate Sub-committee, to ask his help with these bills, but my advisors are not very optimistic.

OEP is proposing legislation that, if passed, should alleviate significantly the existing legislative obstacles to our disposal efforts. There is serious question, however, that such legislation will win approval. Even minor bills on stockpile matters meet major difficulties in Congress. It is very difficult to obtain legislative approval for detailed items for disposal, partly because Congress will not act without industry agreement.

Congress is jealous of its authority over all disposals other than those made by the President for the common defense under Section 5 of the Strategic and Critical Materials Stock Piling Act. Arbitrary action on the stockpile would likely further estrange an already distrustful Congress. Congressional distrust of the Executive Branch management of the stockpile was made very explicit to me during my confirmation [Page 1031]hearings earlier this year, in the form of questions by Senators Symington and Stennis. Senators Symington and Russell, in an earlier OEP confirmation hearing in 1967, said that they viewed with apprehension the constant downgrading of the estimates of what is needed in the stockpile in case of national emergency in order to accommodate current economic needs.

Summary on Disposals

In summary, as far as disposal of materials excess to our objectives is concerned, the problems are with the Congress and with industry; the Executive Branch has been making every reasonable effort to push authorized disposals.

Stockpile Objectives

Current stockpile objectives are based on a policy determination by the President on October 31, 1968, following a report by an interagency Special Committee on Stockpile Objectives, which was presented by the Director of OEP to a meeting of the National Security Council.4 Since that Presidential determination, the objectives have been calculated on the basis of the need to cover estimated shortages of materials for a three year emergency period, with substantial allowances being made for supplies from sources outside the United States during the second and third years (the JCS provide assumptions as to accessibility of the materials, and State provides assumptions as to political and economic reliability of the source country or area). Specific objectives have been established by OEP with the assistance of an Interdepartmental Materials Advisory Committee which includes representatives from Commerce, State, Defense, Interior, Bureau of the Budget, and other interested departments and agencies.

Need for Stockpile

The United States is critically dependent in peacetime as well as in war on certain strategic materials not found in the United States. Our dependence is growing. Because of such shortages, we are vulnerable to blockades, political actions by other nations and even to strikes within friendly nations—strikes that cannot be controlled by some of our closest allies.

It seems evident to me that we need to maintain reserves of such critical items as copper and nickel, for example. It is worth noting in this connection how the nickel supply to the United States was virtually cut off for a long period by strikes in Canada.

Need for NSC Review

[Page 1032]

Any major changes in stockpile objectives should clearly be made on the basis of a review of our national security requirements rather than on budget considerations alone. I have been developing a plan for a national materials study that would include a review of the assumptions and procedures for establishing stockpile objectives. I believe such a study should be conducted under the auspices of the National Security Council. This study should examine the full range of our stockpile policies, but if properly done, should be a “national materials study”, going beyond narrowly national security aspects. The last such study was the Paley Report in the early 1950’s. The Department of Interior agrees with my view on the requirement for such a study, and also agrees with me that the current stockpile should not be arbitrarily run down for a budgetary purpose—like the purpose which was alleged to have motivated President Johnson in the release of copper which occasioned massive criticism from some quarters. (This release of copper constituted a substantial portion of the $2 billion sales mentioned above.)

Defense Production Act funds are available to OEP for the initiation of the study—an enterprise that might be attractive enough to warrant mention in the State of the Union message; however, OEP under current budgetary restrictions does not have the resources to lead such a study.

Comment

Finally, I do note that the Bureau of the Budget has never made any proposal to me concerning the stockpile, other than an informal exchange with their Deputy Director who at that time suggested a “go at the stockpile after Christmas”. I assumed he meant an NSC or other interagency study—to which I have long been committed.

G.A. Lincoln 5
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 396, Stockpile. Confidential. Attached to a November 28 memorandum from Lindjord to Haig in which Lindjord highlighted Lincoln’s belief that a materials policy study should be considered in the NSC, since the United States was running out of raw materials and there had been no comprehensive study of the issue since the Paley Commission during the Truman administration (see Foreign Relations, 1952-1954, vol. I, Part 2, p. 857). Lindjord added that Lincoln had also asked the State Department to reconsider its refusal to permit sales of tin from the stockpile.
  2. None of the tabs is printed.
  3. See Foreign Relations, 1964-1968, vol. IX, Documents 297 and 374.
  4. See ibid., Document 375.
  5. Printed from a copy that indicates Lincoln signed the original.