Senate Report Number 140, ECA [Economic Cooperation Administration] and Strategic Materials - Report of the Joint Committee on Foreign Economic Cooperation Created Pursuant to Section 124 of Public Law 472, Eightieth Congress

44 ECA AND STRATEGIC MATERIALS ECA AND STRATEGIC MATERIALS 45 ration through storage, acquisition and stock piling of these materials prior to war D. DEPLETION OF DOMESTIC RESERVES will make available larger amounts of shipping space to move such commodities as coffee, sugar, palm oil, cocoa beans, copra, and other important seasonal or The domestic production of certain minerals and metals in this war has in- perishable items. In particular, during the war, necessary heavy movements of creased beyond all previous records, and our reserves have been depleted at an coffee and sugar from the Caribbean area and South America have imposed ship- alarming rate. The quantity of minerals produced in 1943 was 57 percent ping shortages in these areas, necessitating a very great allocation of space for greater than the output in 1918, and 23 percent above that in the boom year strategic or critical materials. 1929. Unless new reserves are discovered, therefore, our country in the future Obviously, the necessity for importing extraordinarily large tonnages of raw will be even more dependent upon foreign sources than it has been in the past; materials vital to the munitions program, under the most hazardous conditions, and, to a large extent, stock-pile goals must therefore be raised. The continuance imposes heavy responsibilities on the Navy in escorting such movements and, in of the existing domestic program of exploration of natural resources is clearly consequence, reduces the availability of fleet units for direct military operations. imperative. In addition, the rapid depletion of our domestic reserves emphasizes the extreme importance of developing a program for obtaining information on the location and extent of world resources and for acquiring stock piles of raw B. EXPANDED REQUIREMENTS IN WAR materials in which this country is largely deficient. Aside from shipping difficulties, the Nation has been faced with the problem of obtaining sufficient supplies of imported raw materials from established sources. E. GENERAL CONSIDERATIONS Experience has proved that the mining and other production of raw materials cannot, without many difficulties, be expanded to meet the rapidly increasing manila fiber and quinine and other materials accumulated under the act of June On account of the considerations discussed in the foregoing, the stock piles of 7, demands of our own military services and those of our allies. Considerable time is required to develop new sources of supply and to increase the production of 1939, and the stocks of crude rubber acquired by other arrangements, have proved existing mines and smelters. In this war it has been necessary sometimes to invaluable. Likewise, the early action of the Reconstruction Finance Corpora- adopt extraordinary measures, such as the furloughing of soldiers for work in the tion in procuring manganese and tin has been most helpful to the war programs. mines, in order to increase the production of copper and zinc. It has further We should also note that the initiative and patriotism of the manufacturers of the Nation in building up their working stocks of needed materials before the war proved necessary in some cases to establish costly incentives for vital materials to insure production of adequate supplies thereof. and in the early phase of the war alleviated the situation with respect to critical The securing during wartime of safe margins of reserve stocks for wartime use materials. Nevertheless, it still proved necessary strictly to conserve existing Con- of strategic or critical materials is a difficult undertaking, and is indeed impossible stocks in order to meet military requirements and essential civilian needs. in many cases. Such margins of reserves require procurement of these materials servation in this war has necessitated drastic reduction in, or substitution of, less in amounts substantially in excess of amounts required for current consumption. desirable materials for materials normally used in our manufacturing processes. Acquisition of supplies from foreign sources is hampered by rapidly rising prices, The results, in some cases, were higher costs, higher replacement rates, and delays increased shipping and insurance costs, and trade barriers. Furthermore, our caused by altering industrial processes and rearranging facilities, as well as some have enemies during a war are actively engaged in preclusive buying. less desirable products for civilian consumption. Much effort and time could been saved for other important tasks had a program been started well in advance of the war to accumulate strategic raw materials and to plan for the expansion of C. WARTIME EFFICIENCY facilities for their production. Moreover, during the last two major conflicts, this Adequate stock piles of strategic and critical materials at the outset of hostilities terials in friendly countries. A different alinement of nations in a future war, country has been fortunate in having access to large foreign sources of raw ma- permit a more effective form of governmental control of supplies than would otherwise be the ease. The materials can be more efficiently allocated to im- involving enemy control of different geographic areas, might drastically curtail portant needs, and available shipping space can be more effectively utilized to the movements of such materials into the United States. bring in those materials which must be imported. Stock piles would also tend In concluding this discussion of the reasons for stock piling, we interpose a word of to eliminate much of the confused competition among procurement and consuming of caution as to the extent of reliance which is to be placed upon this means agencies, both here and abroad, and the practice of hoarding which prevailed to national security. We must not delude ourselves by adopting a Maginot-line some degree in 1941 and 1942. psychology by relying solely or too heavily on stock piling as a measure of na- Acquisition prior to a war of materials of grades and qualities not economically tional defense. Our strategy of national defense will be properly based upon available in this country also makes possible the greater use during an emergency many other considerations of which stock piling is one of the essential parts. of certain lower-quality domestic materials which would otherwise not be usable by our manufacturing industries, and which can be mixed or blended with the high-grade materials from the stock pile. Amother obvious advantage of prewar stock piling is a more efficient utiliza- APPENDIX II tion of labor and equipment. To the extent that adequate stock piles are main- tained in this country, available labor and facilities can be used more effectively MUNITIONS BOARD for other purposes. During this war many less desirable materials had to be substituted for materials NATIONAL MILITARY ESTABLISHMENT available elsewhere in the world, with the result that end products were often less WASHINGTON 25, D. C. useful or less convenient than would otherwise have been the case. We recognize, however, that shortage of facilities and manpower have also contributed to our Circular No. 53 September 23, 1948. forced acceptance of less desirable products. We want to emphasize that the ultimate goal of the Army and Navy Munitions Board is a sufficient supply of CURRENT LIST OF STRATEGIC AND CRITICAL MATERIALS materials so that this Nation, in event of a future emergency, can develop an efficient military machine in the shortest period possible, and, at the same time, (The following forms an inseparable part of maintain a sound civilian economy. If the Congress deems it advisable to adopt the strategic- and critical-materials list) the program outlined herein, and if continuous efforts are made to adjust the 2. 1. The following definition of strategic and critical materials is issued, pursuant MB Circular No. 46, dated August 27, 1948, is hereby rescinded. program to changing circumstances and unforeseen developments, it is believed that there will be less need to make use of substituted and more expensive materials to Public Law 520, Seventy-ninth Congress, insofar as it refers to stock piling, and in the event of a future war.