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16. Memorandum From the Deputy Director of the Office of Management and Budget (Malek) to President Nixon 1

SUBJECT

  • Stockpile Disposal Program

In March you directed me to take action to reduce the National Stockpile and you subsequently approved a number of actions for so doing (see Tab A).2 This memorandum reports progress since then and outlines further steps to be taken.

1. Aggregate Sales. Sales by GSA in April and May have totaled $170 million. These sales exceed the new target you approved by 80% and are 320% above sales at an unaccelerated rate. While these sales have not yet had much impact on the industrial commodities sector of the wholesale price index, they should help absorb some of the excess industrial demand and prevent sustained price increases for certain key commodities. We will continue to ensure maximum sales efforts by GSA. Our overall impact will be improved upon passage of the stockpile legislation discussed below.

2. Commodities Under Long-Term Contracts. Sales of aluminum, lead, and zinc have increased over that required by binding long-term contracts and are greater than the target rates. Aluminum producers have agreed to double their FY 1974 purchases from $60 million to $120 million. This represents roughly 20% of the aluminum stockpile and should help ease a tight supply situation. The Cost of Living Council is meeting with the lead/zinc producers this week to discuss increased disposal rates. GSA will follow up with a meeting next week to renegotiate the long-term contracts.

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3. Legislation Introduced. The stockpile disposal bill has been introduced in both Houses of Congress.3 This would give us additional disposal authority for roughly $4.1 billion worth of commodities. Dates for hearings have not yet been set, but I will be working with Bill Timmons to speed up Congressional consideration and action.

4. Foreign Consultations. State Department foreign consultations resulted in short delays in the sale of some commodities. However, accommodation has been reached in most areas with no major problems. The letters you signed last week to the heads of state in Thailand and Bolivia permit us to move ahead now with tin sales.4

5. Foreign Sales. The Council on Economic Policy has been asked to develop a foreign sales program. An increase in foreign sales will help long-range price stabilization goals while supporting our balance of payments objectives. CEP will be working closely with the Council on International Economic Policy in this effort.

In sum, we are exceeding your sales targets and have no major problems. The chief remaining roadblock is securing passage of legislation which will permit greatly increased sales.

  1. Source: National Archives, Nixon Presidential Materials, White House Special Files, Staff Member and Office Files, President’s Office Files, Box 22, President’s Handwriting Files, June 1–15, 1973. No classification marking. Sent for information. Nixon wrote, “good job,” on the memorandum. In a June 14 memorandum to Special Assistant to the President Bruce A. Kehrli, Scowcroft concurred with Malek’s memorandum. (Ibid., NSC Institutional Files (H-Files), Box H–238, Policy Papers, NSDM 203)
  2. Document 10.
  3. On April 16, Nixon had sent a special message to Congress in support of such a measure, and on September 10 he complained in another special message that Congress had yet to pass legislation authorizing the disposal of stockpiled commodities. On December 31, however, the President announced the signing of six bills approved by Congress on December 28 authorizing the GSA to dispose of approximately $900 million of aluminum, copper, zinc, molybdenum, silicon carbide, and opium. (Public Papers: Nixon, 1973, pp. 767, 1031)
  4. On June 4, Nixon sent letters to General Hugo Banzer, President of Bolivia, and Field Marshal Thanom Kittikachorn, Prime Minister of Thailand, informing them of his decision to reduce sales of stockpiled tin to 1,500 tons for the remainder of FY 1973 and to 5,000 tons for the first six months of FY 1974, after which time the sales’ impact on the price of tin would be reviewed. In a July 19 memorandum to Nixon, Malek recommended that, as the price of tin actually had increased by 18 percent since the beginning of the year, the disposal rate be increased to 17,000 tons for the first half of FY 1974, subject to review. The President initialed his approval of Malek’s recommendations and directed the Department to begin consultations with tin producing nations. (National Archives, Nixon Presidential Materials, White House Special Files, President’s Office Files, Box 22, President’s Handwriting Files, July 1973)