446. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon 1

SUBJECT

  • Stockpile of Strategic Material

A review of the Stockpile of Strategic Materials has been completed which shows that our present inventory of materials far exceeds national security requirements. However, before the Administration can press for disposal authority from the Congress, you need to provide new planning guidance for Stockpile policy based on national security judgments. This memorandum provides, for your consideration and decision, policy alternatives that establish such a planning basis and rationale.

Background

The hypothetical national emergency which sets the size and mix of the Stockpile inventory is at present a three year conventional war in Europe and Asia. This scenario was reaffirmed by the previous Administration as the planning basis for the Stockpile and has been used to support in the Congress this Administration’s stated Stockpile requirement of 72 materials valued at $4.9 billion. (The total Stockpile inventory is $6.6 billion, including $1.7 billion which has already been determined to be excess.)

Issues For Decision

There are three key issues in establishing a new planning basis for the Stockpile. They are:

1. The War Scenario. The war scenario that is assumed for Stockpile planning is described in terms of a) the theater or theaters in which the war occurs; b) the duration of the war; c) the military manpower level the U.S. will support.

Current Policy: Current Stockpile policy is premised on three year wars in Europe and Asia with U.S. support for a 5 million man military manpower level.

The two theater planning basis does not necessarily imply forces engaged simultaneously in both theaters, rather it entails simultaneous [Page 1092]conflicts in which the U.S. is engaged in at least one and material supply is interrupted from both theaters.

Alternatives: Your principal choices are:

A. Maintain the current policy guidance, i.e., 3 years, Europe and Asia; 5 million men. (OEP recommendation)

B. Reduce the war duration in Europe, i.e., 2 years, Europe; 3 years, Asia; 5 million men. (DOD recommendation, I concur) (Weinberger, Ehrlichman & Timmons concur)

C. Reduce further the war duration in Europe, i.e., 1 year, Europe, 3 years, Asia; 5 million men. (Most consistent with military planning for short war duration in Europe)2

D. Other, as you may specify.3

2. The Degree of Austerity Imposed on the U.S. Economy. The degree of austerity relates to sustaining growth in civilian consumption standards during war. If it is planned that the burden of meeting defense related production requirements during war will be borne largely by consumers in terms of their sacrifice of improvement in living standards, then the requirement for stockpiling materials will be diminished. For example, reduced private automobile production would increase the availability of lead and copper for defense related production, lessening the need for these materials in the Stockpile.

Current Policy: Current Stockpile guidance is ambiguous on this issue.

Alternatives: Your principal choices, are:

A.
Some austerity but quantities stockpiled should be sufficient to preclude declines below prewar levels in living standards. (DoD and OEP recommendation, I concur) (Weinberger, Ehrlichman and Timmons concur.)
B.
Other, as you may specify.4

3. Cushion to Hedge Against Unanticipated Developments. Whatever the amount of material estimated necessary to meet expected Stockpile requirements, additional amounts may be added to hedge against unanticipated developments such as high losses of materials in shipment [Page 1093]due to enemy submarine action or curtailment of exports from usual trading partners due to adverse political developments.

Current Policy: Current guidance provides a hedge by assuming imports in the first war year from normal sources outside of North America, Mexico and the Caribbean area will not be available. This add-on amounts to approximately $1 billion of the present $4 billion Stockpile requirement.

Alternatives: Your principal choices are:

A. Reduce cushion by shortening non-availability period from 1 year to 6 months and by assuming only the principal sources of foreign supply are nonavailable rather than all sources of foreign supply. (DOD recommendation, I concur.) (Weinberger, Ehrlichman and Timmons concur.)

B. Eliminate cushion.5

C. Other, as you may specify.

Stockpile Policy and Revenue Potential

The planning basis recommended by DOD in which I concur requires a Stockpile inventory of $1.3 billion. (Current requirements is $4.9 billion; current inventory is $6.6 billion.) Such a reduced inventory requirement provides an opportunity to obtain substantial revenues from Stockpile disposals, however, experience indicates that the rate at which revenues are likely to accrue to the budget is slow and can extend over a period of several decades (revenue estimates at Tab A) because:

  • —Disposals must be authorized by Congress. Authorization is often refused or is slow in coming because of views held by key Congressmen that a large Stockpile is vital to the national security and/or disposals from it are detrimental to their constituencies.
  • —Even after authorization, disposals cannot (by statute) occur at a pace which will seriously disrupt materials markets.
  • —Stockpile disposals may be an irritant to foreign governments whose exchange earnings come from material exports. We often find it advantageous to slow or forego disposals to eliminate this irritant.

Recommendation

Substantial reductions in the Stockpile inventory will not jeopardize the national security. I recommend, therefore, that you authorize the National Security Decision Memorandum (Tab B)6 that directs [Page 1094]General Lincoln to adjust downward the Stockpile inventory requirement consistent with the Department of Defense recommendations. If you wish to select other alternatives, the NSDM will be revised accordingly.

The proposed National Security Decision Memorandum7 provides guidance to lower the Stockpile requirement, but it does not establish a strategy for how and when to approach the Congress for Stockpile disposal authority or provide a plan for Stockpile sales once they are authorized. As soon as you approve a National Security Decision Memorandum lowering the Stockpile requirement, I will develop with Cap Weinberger and John Ehrlichman our recommendations for Stockpile disposal actions including a new disposal program for submission to the Congress.

Cap Weinberger and John Erlichman concur. Bill Timmons also concurs.8

Approve the NSDM

Rewrite the NSDM to reflect my decisions

Other

Tab A

Revenue Estimates
($ Millions)

Stockpile Inventory Requirements Consistent With Revenues From Excess Sales
1972 1973-75 Total Potential
Current Policy 4900 150 900 1700
DOD Recommendation 1300 1000/1200 5300
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 396, Stockpile (1973). Confidential.
  2. The President initialed this alternative.
  3. The President also checked this alternative and wrote: “Reduce even further—all this is ridiculous.”
  4. The President wrote and underscored “Cut it” next to this alternative.
  5. The President drew a line through Alternative A and initialed Alternative B.
  6. Not printed.
  7. The President circled “National Security Decision Memorandum,” drew a line to the bottom of the page, and wrote: “Change to reflect my very dim view of this whole program. Unless cuts mortally affect the economy in the U.S.—make them.” NSDM 203 was issued on February 6, 1973; the cuts were reduced. (National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 396, Stockpile (1973))
  8. The President drew a line through this last paragraph and the options below and wrote “E” over Ehrlichman’s name.