prevent the skyrocketing of world prices if other countries went into the market vigorously. It therefore became apparent last fall that international action was necessary, and the United States, the United Kingdom, and France set out to organize some international machinery. This led to the setting up of what is known as the International Materials Conference. The Conference has a Central Group with ten members, namely Australia, Brazil, Canada, France, India, Italy, the United Kingdom, the United States, and representatives of the Organization of the American States (OAS), and of the Organization of European Economic Cooperation (OEEC). This group provides geographical representation as well as that of producer and consumer countries. The Central Group is responsible for initiating action in connection with any commodity where its members feel that international consideration would be helpful. The form which action has taken has been to set up specific commodity committees whose members are representatives of the leading producing and consuming countries in the free world of the particular commodity to be considered, usually about a dozen countries in all. Each commodity committee therefore includes the main producers and the main consumers who, after all, are those most concerned with the behavior of the commodity. Neither the Central Group nor the commodity committees have any charter or bylaws, but they are merely a group of responsible government representatives gathered together to consider with each other what can be done to deal with whatever seem to be the immediate problems for their particular commodity. There are now seven committees dealing with the following groups of commodities: copper, lead and zine; cotton and cotton linters; manganese, nickel and cobalt; molybdenum and tungsten; pulp and paper; sulphur; and wool.

These committees have no powers except to make recommendations to governments. Therefore, the solutions which are devised must be so reasonable and equitable as to command acceptance. Up to the present time, technicians have been sent to Washington by almost thirty countries to participate on one or another committee, and they have been at work for several months. Each committee has made a survey of world requirements and supply. It has listened to suggestions and received information from representatives of nonmember countries who wished to appear. Already, agreed recommendations have been developed for the conservation of tungsten, molybdenum, manganese, cobalt, nickel, and copper. The meetings together have also stimulated technological improvement; i. e., as a result of the discussions, French experts have visited this country to learn about boron steel. In turn, French experts have made useful suggestions to reduce the sulphuric acid requirement in fertilizer production. Already we can see specific international action in four particular cases. Tungsten and molybdenum are metals of particular importance in making heatresistant steel. There is no doubt but that present world production is far short of present world demand. What the international committee has done, beyond developing recommendations for conservation, is to estimate the available supply and then recommend to governments the fair distribution of this supply among the various consumer countries for the third quarter of this year. The governments concerned have accepted the recommendations of the committee. Furthermore, with one exception they have agreed that the prices shall not exceed those which have been the ceiling prices in the United States.

The third case, that of sulphur, is one in which the United States is the chief producer and the demands by various countries for American sulphur have far exceeded our ability to supply. What the commodity committee has done is to develop a fair basis for distributing sulphur among the various countries, thus relieving the United States of what would have been an exceedingly difficult problem, and a type of problem hardly calculated to create friends. In the fourth case, that of paper and pulp, the committee has already agreed upon emergency allocations of newsprint to take care of special shortage situations in some eleven countries.

During World War II the problem of the equitable allocation of raw materials was handled by a board with only two members-the United States and the United Kingdom--and the decisions which were reached were effectively enforced through the control of the world's shipping. Today there is no such sanction and one must rely on international cooperation. It is to me a most encouraging sign that the International Materials Conference is working so busily and so well on an entirely voluntary and cooperative basis. International machinery cannot solve problems unless individual countries are prepared to do their part also.

2 Bulletin of July 2, 1951, p. 23.

However, international consideration can be of incalculable value in developing common national actions in the areas of supply and requirements, and of eliminating the dangers of an international scramble for these materials with the inevitable results of high prices and wasteful utilization.

ALLOCATION OF MANUFACTURED GOODS

I do not wish to make it appear that all commodity problems relate to raw materials, for there are serious shortages in manufactured products as well. This shows up particularly in the international field where the interest of many countries in the American market is focused particularly on short supply items such as fertilizer, agricultural machinery, electrical generating equipment, freight cars, and tin plate. In every one of these cases American supply is affected by the diversion of steel and other materials to armament production as well as the high level of demand of the American civilian economy. In every one of these cases foreign countries, many of which are earning large supplies of dollars through sales of raw materials, are eager to buy in the American market, and again the problem of a proper and appropriate allocation enters into the picture. Our interest in these matters is not merely one of maintaining trade channels, but of seeing that essential requirements of other countries are met, and that their programs of economic development are carried forward so far as possible. We have machinery available through the export license system for establishing a pattern among foreign claimants by limitation, but it cannot bring about the acceptance of foreign orders by American business men. There still remains the exceedingly difficult problem of the proper division between domestic and foreign requirements, and the possible necessity for meeting such foreign requirements as are essential through D. O. orders which establish priorities, allocations, or actual setasides.

In general, the policy of the United States is that we are willing to share where sharing is needed. We place armament and essential civilian requirements first, both at home and abroad. In terms of our immediate national interest, we need a program of international cooperation, for we import many more essential materials than we export. In fact, there are 70 commodities in the list of our strategic requirements which come wholly or partly from foreign sources. More important, however, is our basic desire to build strength in the free world. And that requires the most effective and efficient use of the deficit commodities throughout the world.

I have discussed the adjustments which are being made in the supply and demand aspect of these commodities because that is the basic answer to the problem of efficient utilization and also to our hopes of achieving price stabilization. However, there is another set of problems which arise directly in the price field. I have already discussed the combination of circumstances which drove raw material prices up so rapidly-active civilian demand, armament demand, stockpile purchases, and speculative buying. We made a valiant effort to stop further price advances when price ceilings for transactions in the United States were established at the levels of the beginning of this year. But this, of course, did not control prices in other countries, and for many commodities, the world price level advanced still further. This meant that sellers were likely to sell to purchasers in other countries wherever possible rather than to American buyers. The United States copper ceiling was 24 cents, but the world market price was nearer 30 cents and sales have been reported at levels as high as 50 cents. The dilemma thus created is a real one. Either American buyers are unable to purchase in foreign markets, or the price ceilings on imports must be raised with the effect of weakening the entire efforts to stabilize. Therefore, we have a real interest in the price levels of other countries. In one instance, we have forced a major reduction in price, that of tin, by simply staying out of the market. Obviously, that is not a long-run solution.

As a matter of fact, this problem of domestic versus world prices has been met in a number of ways. Many imported products, particulary consumers' goods, are allowed to come in with only the American additions to the foreign export price being under ceiling control. For some raw materials which must be obtained abroad, where their use is limited and specialized, and where they constitute a very small part of the cost of finished goods, the ceilings have actually been removed. For other products, Government purchasing has been established and the material then resold to the American consumer. Of course, this technique of Government purchase and resale might be used to equalize prices

with the Government absorbing the difference, and this is one of the authorities presently being requested in the extended Defense Production Act.

While I am talking about our present-day commodity problems I must interject still one further complicating factor, and that is that the military program in which we are interested is not merely the program of the United States but the program of many other countries. To the extent to which we assist these countries to build their military strength by sending them equipment and other military material, the process merely adds their requirement to our own American defense production program. However, we also have a major interest in encouraging military production itself in other countries. This may mean additional requirements for them in the way of raw materials as well as new machine tools and other equipment. It may even call for finished consumer goods in cases where it has been necessary to divert productive capacity from civilian to military use. These elements also have to be included in all calculations.

I have not tried to give you the full detail of the many commodity problems which appear in a period of shortage, but merely to suggest the variety and the complexity of considerations which have suddenly become important in the last 13 months. These are difficult problems but at least I think we are entitled to feel that we have made substantial progress toward increasing the supply, and in assuring the most effective use both nationally and internationally of that supply which is available.

Even the most successful plan for the distribution of goods is of little effectiveness unless purchasing power is available to carry out the distribution. Therefore, in facing the new economic problems of the day, we must work not only in terms of the prospective requirements and supplies of commodities, but in terms of changes in the flow of dollars needed to achieve the desired flow of commodities. In the United States, this particular problem is most serious in connection with the greatly increased schedules for military goods. The problem therefore is that of how to assure an adequate supply of dollars in the hands of the purchaser, which is of course the United States Government, and gets us at once into questions of fiscal policy, taxes, Government borrowing, and the like. The problem does not stop at that point, of course. On a broader scale, the location of purchasing power among various groups within our economy has substantial influence on the effectiveness of our efforts at stabilization. These same problems are also present in every country which is accelerating the strengthening of its military structure.

THE DOLLAR DEFICIT

So far as international relations are concerned, the dollar problem also has new aspects under present conditions. I shall not endeavor to discuss our international assistance programs in terms of their full political, economic, and social implications, but only as they relate to their problems which I have already raised concerning requirements and supply. The greatest dollar deficit is in the availability of dollar purchasing power in the North Atlante Treaty countries and in certain other countries such as Greece and Turkey, to purchase those military items which they must get from the United States in order to achieve the rapid expansion of their military strength which is contemplated. In a sense, this is in no way a new type of American assistance. During the war we supplied enormous quantities of miltary material to our allies under lend-lease arrangements. After the war we continued to provide them with military equipment through the disposition at bargain prices of the surpluses which inevitably accumulated. In connection with the development of the North Atlantic Treaty Organization, we undertook to share in the burden of building military strength, and last year assistance was appropriated for this purpose to NATO and certain other countries in excess of 5 billion dollars, a small part of which was to aid military production. The proposal which is now before Congress would authorize assistance in the form of military end items, military training, and military assistance during the 1951-52 fiscal year of $6,250,000,000, of which $5,240,000,000 is for Europe.

However, in spite of the tremendous strides which have been made in European recovery, not every country has reached the point where, even exclusive of military requirements, it can completely pay its own way. To be sure, several Western European countries received no assistance in the form of grants last year, and grant assistance to the United Kingdom was discontinued at its request as of January 1, 1951. Some countries, however, still need economic assistance, nota

bly Greece, Italy, Austria and Western Germany, while others require assistance primarily to carry out programs of domestic production in support of their augmented military programs. After all, the Marshall Plan as originally contemplated anticipated a period of four years of operation, and it has only been in operation for three. The goals which were set at the outset seem well on the way to achievement within the four-year period. The economic assistance for Europe proposed for the next fiscal year is 1.650 billions. As a matter of fact, because of the reduction in economic assistance the proposed military and economic assistance together for Europe is approximately equal to that which was authorized last year in spite of the great increase in their military programs. However, the threat of communism is not exclusively a military threat. Marching armies are not the only means of aggression, and we all recognize that the process of building strength in the free world involves defeating those allies of communism which lead to internal instability-hunger, disease, poverty and hopelessness. There are enemies against which all believers in progress must continually fight.

For many years the United States has given assistance to other countries for their economic development, but last year for the first time such programs were established in legislation by Congress under a broad policy directive in the Act for International Development. We believe that economic development of the underdeveloped areas should be encouraged on political, economic and social grounds. At this moment, some of the underdeveloped countries do not need dollar assistance for economic development because of their substantial earnings in connection with the sale of raw materials, but there are others where this fortunate condition does not exist. There are still other instances in which cooperative programs of technical assistance, in which the United States would participate, are of value not only in demonstrating our interest and cooperation but as pilot and demonstration operations. It is to meet problems of this type that the Mutual Assistance Security Bill includes provisions for economic assistance outside of Europe in excess of 500 millions. I should mention that included within this total are certain specific programs which call for special action on our part. There is an amount of $112.5 millions which is to be available for the rehabilitation of Korea whenever the United Nations Korean Reconstruction Agency is able and ready to undertake its exceedingly difficult assignment. In addition, there is a substantial sum to be dedicated to projects intended to contribute to the resettlement of the Arab refugees. To these sums included in the Mutual Security Assistance Bill should be added assistance which will be provided in the form of loans, the chief sources of which are the Export-Import Bank of Washington and the International Bank for Reconstruction and Development.

Just as commodity requirements will not be met unless purchasing power is in the hands of those entitled to purchase, dollars do not constitute programs unless they can be converted into commodities. During 1950, as a result of all their economic transactions with the United States, foreign countries increased their gold and dollar holdings by over 3.6 billions, and this situation is continuing. Of course, this sum is not evenly distributed among countries, and in many instances is serving to strengthen their curency and other reserves. However, this continued out-flow of gold from the United States is at least an indication that commodity availability is a limiting factor on potential foreign purchases, although both imports and exports are moving at relatively high levels. least, it reinforces the basic point that our international economic foreign policy must express itself both in the equitable allocation of commodities and in the effective utilization of dollar assistance.

At

What does all this add up to? Essentially, the new situation in terms both of commodities and of dollars is based upon three simple propositions:

1. The best hope of preventing another world war lies in making ourselves and our friends strong.

2. To do this requires the intelligent development and utilization of the resources of the entire free world through international cooperation.

3. The strength which will come from the collective efforts of free countries will far exceed the possible achievement of the national components separately. As I have indicated, the actual carrying out of such objectives is no easy matter. We shall have to bear heavy burdens as consumers and as taxpayers. Other countries will share in carrying the economic burden, but as the richest and strongest country in the world, it will fall most heavily on us. However, present programs do not indicate that our share of this burden is too heavy for us to carry. During the war years, we devoted as much as 45 percent of our economic effort to war production. Present plans do not carry it beyond 20

percent. And with the ability of our economy to expand, it should be only two or three years before we and our allies can once again begin to see the resumption of the advance in our standard of living.

Our most serious problems lie in the degree of effectiveness with which we organize ourselves to meet the present temporary difficulties. We must find the right balance between such economic factors as prices and wages, requirements and supplies, consumption and savings, and foreign and domestic requirements. During the shortage period, we cannot permit economic forces to operate with their normal freedom. If we can manage our affairs with reasonable intelligence, the cost will be low and certainly the goal deserves our utmost efforts. We are trying to prevent World War III by building the might of America and with it the might and security of the free world.

EXHIBIT NO. 23

[General Ceiling Price Regulation, Supplementary Regulation 70]

GCPR, SR 70-ADJUSTMENTS IN CEIING PRICES FOR SLAB ZINC AND PRIMARY LEAD PRODUCED IN THE UNITED STATES, ITS TERRITORIES OR POSSESSIONS

Pursuant to the Defense Production Act of 1950, as amended, Executive Order 10161 (15 F. R. 6105), and Economic Stabilization Agency General Order No. 2 (16 F. R. 738), this Supplementary Regulation No. 70 to the General Ceiling Price Regulation is hereby issued.

STATEMENT OF CONSIDERATIONS

This supplementary regulation increases by 2 cents per pound the ceiling prices heretofore established for slab zinc and primary lead produced in the United States or its Territories or Possessions.

About one-third of the zinc and lead consumed in the United States comes from foreign sources and the wide discrepancy between world prices and prices in the United States for these strategic and critical metals has had a serious adverse effect upon the stabilization program and the defense effort. The Director of Defense Mobilization has announced the adoption of a broad program “designed to assure essential supplies of zinc and lead at stable and reasonable prices," and the action taken in this supplementary regulation, issued upon the instruction of the Director, constitutes one step in the implementation of that program. Also as part of the program, we are issuing concurrently herewith Supplementary Regulation 71 to the General Ceiling Price Regulation which establishes ceiling prices for foreign slab zinc and foreign primary lead at the general level of ceiling prices established herein for domestic material and prohibits any person from buying or receiving from any source, foreign slab zinc, foreign primary lead, or slab zinc or primary lead processed from foreign raw materials owned by him at a delivered cost in excess of the ceiling prices so established.

In the opinion of the Director of Price Stabilization, the provisions of this supplementary regulation are generally fair and equitable and are necessary to effectuate the purposes of Title IV of the Defense Production Act of 1950, as amended.

So far as practicable, the Director has given due consideration to the national effort to achieve maximum production in furtherance of the objective of the Defense Production Act of 1950, as amended, and to relevant factors of general applicability. In the judgment of the Director, the ceiling prices established in this regulation for slab zinc and primary lead are not below the lower of the price prevailing just before the issuance of this regulation or the prices prevailing during the period January 25, 1951, to February 24, 1951, inclusive.

Special circumstances involved in the promulgation of this regulation made it impracticable for the Director to consult with industry representatives prior to its issuance.

4. Incorporation of GCPR provision.

AUTHORITY: Sections 1 to 4 issued under sec. 704, 64 Stat. 816, as amended; 50 U. S. C. App. Sup. 2154. Interpret or apply Title IV, 64 Stat. 803, as amended; 50 U. S. C. App. Sup. 2101-2110, E. O. 10161, Sept. 9, 1950, 15 F. R. 6105; 3 CFR, 1950 Supp.

SECTION 1. What this supplementary regulation does. This supplementary regulation increases the ceiling prices established by the General Ceiling Price Regulation for domestic slab zinc and domestic primary lead.

39888-54-pt. 4-63