RAW MATERIALS

Evening Post, Volume CXL, Issue 79, 1 October 1945, Page 9

RAW MATERIALS

"STOCK-PILE" POLICY

SECURITY SAFEGUARDS

No single country—except, perhaps, the Soviet Union when its natural resources can be fully developed—is favoured by Nature with adequate supplies of all the principal materials within its own frontiers, says an article in "The Times." Even the United States, at present the largest raw material producer in the world, lacks key products such as tin, natural rubber, and industrial diamonds, and is very short of steel alloy metals. International control of raw materials might thus be a valuable instrument in the prevention of war; its consideration within the San Francisco system is imperative. An effective system of control, however, has yet to be discovered. Its difficulty is illustrated by the fact that the Axis countries, in spite of a far-reaching deficiency in natural resources, were able to accumulate formidable reserves during the nineteenthirties. There is thus growing support for the accumulation of raw material reserves by the peace-loving countries on their own. account as a necessary part of security policy. Mr. Henry Wallace, the present United States Secretary of Commerce, declared a year ago that "one of the best ways to make sure that there will not be another war is to build up in all j peaceful countries such large supplies of the materials of which each is short that no friendly nation anywhere in the world will ever be caugtit helpless and unprepared by sudden attack." In the United States "stock-piling" has become a first-class political issue. The American interest is natural. Even before the war the Strategic Materials Act of 1939 started a practical experiment on a small scale. But the war brought home to the Americans the extent of their dependence on foreign supplies; and the purchase. r-i large quantities, of raw materials with public, funds has directed attention to possible methods of reducing- this dependence in the future. Apart from the primary aspect of strategic security, such purchases might help to overcome difficulties arising from surplus production, and by providing' foreign countries with dollars might stimulate United States exports of manufactured goods. * ' . ARGUMENTS IN AMERICA. But American jplans for the accumulation of strategic reserves are by no means uncontroversial. Both during Committee debates on the Scrugham Bill, put forward by the Senator for the mining State of Nevada, with strong support from mining interests, and during the discussions on the War Surplus Property Act, the Administration had to work hard to prevent the policy of accumulating war reserves from being reduced to an instrument for the assistance of high-cost domestic producers.. This danger has been temporarily removed by the side-track-ing of the Scrugham Bill and the inclusion of safeguards in section 22 of the War Surplus Property Act. Opinion is by no means undivided, however, even 5n the Administration itself. Last autumn the drafting of a Bill had to be postponed because of the conflict of views between the various departments concerned. Legislative action, however, seems to be intended, based on the Act of 1939 but increasing the scale of permissible accumulations, which under that Act were limited to 100,000,000 dollars over a period of four years. The main features of the 1939 Act were simple. It stated that "it is the policy of Congress to provide for the acquisition of stocks of strategic materials . . . and thereby decrease and prevent wherever possible a dangerous and costly dependence of the United States upon foreign nations for supplies of these materials in times of national emergency."

It authorised and directed the Secretaries of War, the Navy, and the Interior, through the Army and Navy Munitions Board, to determine which materials should be bought, and to fix the quality and quantity required. The Secretaries of State, the Treasury, and of the Commerce Department were to appoint representatives to co-operate with the Service Ministers and the Secretary of the Interior. Stocks purchased were to be earmarked for specific purposes. It was enacted that materials acquired under this Act, except for rotation to prevent deterioration, should be used only upon the order of the President in time of war or when he shall find that a national emergency exists with "respect to national defence as a consequence of the threat of war. The immediate problems which this policy raises are, however, not strategic but economic. The accumulation of reserve stocks will be a dominating factor in the world's raw material markets, and whether its influence will work for good or evil depends both on the supply position and on buying policy. The widespread idea that there must be unwieldy surpluses of everything after the war must be treated with reserve. It is true that both the United States Government and, to a much smaller extent, • the British Government, will be left with formidable stocks. In addition, large supplies of metal scrap and other reclaimed materials will be forthcoming. But there is an acute shortage of raw materials in all other parts of the world. For a period the shortage of plant in the industries producing consumer goods, more especially in Europe, will limit consumption of raw materials in those industries. On the other hand, this may well be more than offset, however, by the requirements of capital reconstruction. WARTIME EXPANSION. During the war there was a large expansion in the production of light metals, alloy steel, plastics, synthetic fibres, and synthetic rubber, and these materials are to be excluded from the United States stock-piling programme since American capacity is adequate. Capacity for the production of many mine and plantation products has also increased greatly. But in many cases this was achieved by uneconomic ex-

ploitation of the richest and most easily accessible mineral deposits, while plantations have been undernourished and undermaintained owing to shortage of fertilisers and of labour, and have had more taken out of them than could in the long run be continued.

Against this background the buying policy Of the stock-piling agencies will be of particular interest. As last year's discussions on the Scrugham Bill and the War Surplus Property Act showed, there is a powerful group in Congress which would like to see most of the United States Government's stocks at the end of the war included in the stock-pile. As these will form the major part of world stocks, any such policy might lead to world shortages, and the Administration is ! strongly opposed to it. If the United States official purchases: ;are limited to I the acquisition of genuine international surpluses they may prove of immense value. But, even then, if they were j carried out in unconsidered competition with commercial demand, they would tend to raise prices and limit supplies, • Careful timing and the exclusion of sectional influences can do much to minimise this danger. But the Secretaries fpr War and the Navy have the dominant voice in the execution ot the buying programmes, and their departmental concern will not necessarily be in line with commercial needs. At the same time, the United States is now in general a high-cost producer of most materials and might possibly be disposed to seek a higher level of prices than would suit the rest of the world. THE USE OP SURPLUSES. On the other hand, the raw material surpluses of today may be needed to meet the deficiencies cf tomorrow. This is. expressly recognised by the outline of policy for the post-war regulation of commodity markets laid down in Resolution 25 of the Hot Springs Conference, and further developed by the Interim Commission on Food and Agriculture. These reports demand the creation or maintenance of "adequate reserves to meet all consumption needs" as a basic principle of any future regulation scheme. But such reserves, unlike the United States strategic stock-pile, would require to be drawn upon whenever commercial needs arose. Strategic reserves might undoubtedly be a powerful instrument for increasing military preparedness. But full employment and expanding world trade are probably still better means for removing at the root some of. the conditions making for war. Clearly the best solution would be. to combine both policies. According to present plans sponsored by the .United Nations^ a Central Raw Materials Authority is to be formed within the general political organisation to supervise all raw material questions, including the working of buffer pools. Raw material policy could thus be integrated into the policy of collective security; and, through the dispersion of buffer stocks to the main marketing centres and industrial areas, the United States and the other United Nations could at all times have recourse to them in emergencies. Such j a scheme, the technical details of: which should not present serious diffi- j culty, is perhaps capable of meeting the real aims of the American stockpiling policy without encouraging potential dangers. j