3. It is evident from the above table that, although our domestic reserves of petroleum, tungsten, and zinc may suffiice to meet consumption requirements for the next decade, they will be almost entirely dissipated by the end of that period; in the case of manganese, chrome, mercury, and lead our resources are too limited to satisfy even probable domestic requirements of the next 10 years. The number of strategic materials for which our reserves are very low and which can be produced in the U. S. S. R. is greater than indicated above, and includes platinum, vanadium, graphite, and mica. 4. Although our reserves of strategic materials could be somewhat expanded, given an increase in price to make possible further developments of marginal resources, the necessity of growing United States dependence on foreign sources of supply in order to satisfy anticipated postwar industrial requirements and to maintain adequate security reserves, is inescapable. (See attachment I for complete table on United States metal reserves.) U. S. S. R. UNTAPPED RAW MATERIALS RESERVOIR 1. The U. S. S. R. is richly provided with a wide range of strategic raw materials, including metals, minerals, timber, and petroleum, but the unequal degrees to which these have been developed will limit the number and volume that may be available for export in the immediate postwar years. 2. Rapid ecoonmic reconstruction and expanded resources development could greatly enhance the export surplus of the U. S. S. R., could sustain large-scale exports of metal and metallic ores, petroleum, and timber at an average annual value of at least $500 million, not including exports of other materials such as furs and semimanufactures. 3. It therefore appears that a financial agreement whereby the United States would extend a credit of $5 billion to the U. S. S. R. for the purchase of industrial and agricultural products over a 5-year period, to be repaid in full over a 30-year period, chiefly in form of raw material exports, would not only be advantageous to the United States, as well as helpful to the U. S. S. R. but would be within the limits of feasible trade between the 2 countries, since the amount we would wish to purchase would be in excess of the repayment which the U. S. S. R. would be required to make under the proposed loan terms. (See attachment II for suggested terms of U. S. S. R. repayment for United States credits.) IS THE PROPOSED FINANCIAL AGREEMENT PRACTICAL AND DESIRABLE? The proposed financial agreement appears practical because: 1. The prewar restricted pattern of trade should not be used to define the potentials of postwar trade between the United States and U. S. S. R. since both economies have been fundamentally restructured by the war. In both the United States and U. S. S. R. the accelerated expansion of production capacity and national output which has been achieved during the last 3 years indicates the new and larger dimensions which foreign trade can assume in both economies in the postwar period. (See attachment III for a summary of United States-U. S. S. R. trade relations during the interwar period 1918-38.) (a) The low level of prewar international trade relations were both a symptom and a cause of deteriorated economic and political international relations. It is realistic to assume that as compared with prewar years a decreasing proportion of expanding Soviet resources will be devoted to war industries, thereby creating an enlarged export potential through the release of resources. 3. Since the U. S. S. R. has completely State-controlled economy, the extent and character of its surpluses and deficits (i. e. imports and exports) are largely determined by planning decisions covering the allocation of manpower, materials, and equipment, it will be possible for the United States to influence the Soviet pattern of anticipated national surpluses and deficits. 4. If United States trade plans are premised on an expanded volume of trade and a correlative increase of United States import requirements, the expansion of trade between the United States and U. S. S. R. need not necessarily involve a reduction in total United States imports from other areas. The proposed financial agreement appears desirable because: 1. The United States will obtain access to an important source of strategic raw materials which are expected to be in short supply in the Untied States after the war. 2. The United States will also be assured an important market for its industrial products since the U. S. S. R. represents one of the largest single sources of demand in Europe and is ideally suited to supply us with a large and varied backlog of orders for both producers' and consumers' goods. Such a sustained demand could make an important contribution to the maintenance of full employment during our transition to a peace economy. 3. Moreover, the United States will not only be assured a desirable market because of the anticipated volume of demand the U. S. S. R. will exercise, but because of its superior repayment potential compared with other foreign buyers of American products. 4. An arrangement of this character would provide a sound basis for continued collaboration between the two Governments in the postwar period. HDW: WHT: ISF: SG: gp 3/7/44 Copy: gsa. ATTACHMENT I.-Estimated production, consumption, prices and reserves of selected important minerals in 1943 Source: Preliminary Estimates of Reserves of Important Minerals in the Ground as of Jan. 1, 1945. Department of Interior, Geological Survey. (This schedule deals with the repayment period and rate interest at 3 percent repayment period 30 years.) This attachment not reproduced at this time, felt too relatively unimportant. ATTACHMENT III (Summary of facts on trade relations between the United States and U. S. S. R during the interwar period, 1918–38.) Not copied at this time. |