Economic Implications and Repercussions of Possible Development of Western Hemisphere Sources of Strategic Raw Materials

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BCQHOEIC RJPmCUSSXOJMS AMD IMPLICATIONS OF POSSIBLE OTSTii-Mf H1MISPHBRB PE03-UGTI0N OF STRATEGIC RAW MATI£BIa L8

by RacVe^

v

C* Addison Hickman

A d is s e r t a t io n subm itted in p a r tia l fu lfillm en t o f the requirem ents fo r the degree of D octor of P h ilo so p h y , in the Department o f B ionom ics, in the Graduate C o lleg e o f the S ta te U n iv e r sity of Iowa. May, 1942

ii c'o^?, icL,

ACKNOWLEDGMENT

14001941

»E»T2

•? .

Tile w r ite r g ra tefu lly -a ck n o w le d g e s tlie fr ie n d ly guidance and a s s is t a n c e o f Dr* Paul R* Olson and Dr* Harold H. McCarty*

534660

in

TABLE OF COHTEOTS Page In tr o d u c tio n

1 PART X

The B a ited S ta te s and S tr a te g ic Raw M a teria ls Chapter

I

Chapter

II

Chapter

III

Chapter

IV

Chapter

The S tr a te g ic Raw M aterials

V

6

Uses o f th e S tr a te g ic Raw M a teria ls

12

U nited S ta te s Requirements o f S tr a te g ic Raw M a teria ls

27

U nited S ta te s S e lf - S u f f ic ie n c y in th e S tr a te g ic Raw M a teria ls

42

U nited S ta te s Imports o f S tr a te g ic Raw M a terials

63

PART I I Western Hemisphere Production# A ctual and P o te n tia l# o f S tr a te g ic Raw M aterials Chapter

VI Antimony

83

Chapter

VII Chromium

94

Chapter

V III Coconuts

103

Chapter Chapter Chapter Chapter

IX Manganese X M anila F lh er XI Mercury X II Mica

110 122 126 133

Page Chapter

XIII

Chapter

XIV

Chapter

XV

Chapter

XVI

Chapter

N lek cl

140

Quartz C ryatala

150

Quinine

154

Rubber

163

XVII

S ilk

169

Chapter

XVIII

Tin

196

Chapter

XIX

Tungsten

216

PART I I I E f f e c t upon th e United S ta te s Economy Chapter Chapter Chapter

XX E f f e c t upon U hlted S ta te s F oreign Economic P o lic y XXI XXII

226

E f f e c t upon United S ta te s F oreign Economic P o lic y , Continued

239

E ffe c t upon U nited S ta te s F oreign Economic P o lic y , Continued

252

Chapter

XXIXI

E ffe c t upon U nited S ta te s F oreign Economic p o lic y , Concluded

268

Chapter

XXIV

E f f e c t upon U nited S ta te s F oreign Investm ent

276

XXV E f f e c t upon U nited S ta te s F oreign In vestm ent, Continued

288

Chapter Chapter

XXVI

E ffe c t upon U nited S ta te s F oreign In vestm en t, Continued

303

Chapter

XXVII

E f fe c t upon U nited S ta te s F oreign In vestm en t, Continued

315

E f f e c t upon U nited S ta te s Foreign Inve stm ent, Concluded

331

Chapter XXVIII

V

Page Chapter Chapter Chapter

XXIX

E ffe c t upon u n ited S ta te s F o reig n 343 Trade

XXX E f f e c t upon U nited S ta te s F oreign 34B Trade, Continued XXXI

E ffe c t upon U nited S ta te s F oreign Trade, Concluded 359 PAKT IV

E f f e c t upon th e Economies o f th e other Western Hemisphere Nation® Chapter

Chapter

Chapter

Chapter

Chapter Chapter

XXXII

E ffe c t upon th e F oreign Economic P o lic y o f the Other Western Hemisphere N ations

369

E f fe c t upon the F oreign Economic P o lic y o f the Other Western Hemisphere Nations# Continued

374

E ffe c t upon th e F oreign Economic P o lic y o f the Other Western Hemisphere N a tio n s, Continued

378

XXXV E ffe c t upon th e F oreign Economic P o lic y o f th e Other Western Hemisphere N a tio n s, Concluded

383

E ffe c t upon F oreign 'Trade o f Other Western Hemisphere N ations

388

XXXIII

XXXIV

XXXVI XXXVII

E ffe c t upon F oreign Trade o f Other Western Hemisphere N a tio n s, Continued 399

Chapter XXXVIII

E f fe c t upon F oreign Trade o f Other Western Hemisphere N a tio n s, Concluded 410

Chapter

XXXIX E ffe c t upon th e Domestic Economies o f Other Western Hemisphere N ations

419

Vi

Page Chapter

Chapter

Chapter

XL

XLI

XLII

Chapter XLIII

E ffe c t upon th e D om estic Economies o f Other w estern Hemisphere n a tio n s . Continued

424

E ffe c t upon th e Dom estic Economies o f Other Western Hemisphere N a tio n s, Continued

434

E ffe c t upon th e Domestic Economies o f Other Western Hemisphere N a tio n s, Continued

444

E ffe c t upon the Domestic Economies o f Other w estern Hemisphere N a tio n s, Concluded

450

PART ? World-Wide R ep ercu ssion s Chapter Chapter

XLIV

World-Wide Hepereus slo n s

XLV World-Wide Hepercus s 1o n s, Concluded

456 469

TABLES

Table

1

0*3# Production# Consumption# and S e l f - S u f f ic ie n c y , Antimony

Table

2

U.S* Production# Consumption, and S e lf -S u ffic ie n c y # Chromium

Table

$

U#S* Production# Consumption# and S e lf - S u f f ic ie n c y , Manganese

Table

4

U#S* Production# Consumption# and S e lf - S u f f ic ie n c y , Mercury

Table

5

U.S# Production# Consumption, and S e l f - S u f f ic ie n c y , Mica

Table

6

U .S . P rod u ction , Consumption, and S e lf - S u f f ic ie n c y , H lck ei

Table

7

0*S« P roduction and Consumption o f Primary Tin

Table

a

U*S* P rod u ction , Consumption, and S e lf-S u ffic ie n c y # Tungsten

Table

9

w estern Hemisphere and World P roduction o f Antimony

Table 10

Mexican and B o liv ia n Exports o f Antimony Or© to th e U nited S ta te s

Table 11

Western Hemisphere Production o f Chrome Ore

Table 12

Western Hemisphere Exports o f Chromit to th e United S ta te s

Table 15

Western Hemisphere Production o f Manganese Ore

Table 14

Cuban and B r a s ilia n E xports o f Manganese to th e U nited S ta te s

v iil

£&B£« Table 13

Mexican and world p rod u ction o f Mercury

128

Table 16

Western Hemisphere P roduction o f Sheet Mica

134

Table 17

Canadian and World P roduction o f N ick el

141

Table 18

Canadian and World Production o f N ick el# by P erio d s

142

Table 19

B r a s ilia n and World Rubber Production

168

T able 20

P rop ortion o f U*S. Rubber Imports Coming from B r a s il

169

Table 21

Western Hemisphere Exports o f Crude Rubber to th e U nited S ta te s

172

Table 22

U#S* Im ports o f Uuayule Rubber

176

Table 23

B o liv ia n and World Production o f Tin Ore

198

Table 24

B o liv ia n and World Tin Quotas and P roduction

206

T able 23

Western Hemisphere P roduction o f Tungsten Ore

218

Table 26

Manganese Ore P r ic e s i n th e U nited S ta te s

229

Table 27

R ecip ro ca l Trade Agreement C oncessions on S tr a te g ic Raw M a teria ls 255-262

Table 28

Commercial Control o f the I n te r n a tio n a l N ick el Company# March 31# 1934 282

Table 29

U nited S ta te s D ir e c t Investm ents Abroad

305

Table 30

U nited S ta te s in vestm en t in L atin America, 1913

309

ix

Pages Table 31

U nited S ta te s Investm ent in L a tin America, 1929

310

Com position o f U nited S ta te s D ir e c t In vestm ents Abroad, 1936

316

U nited S ta te s D ir e c t In vestm en ts In L a tin Am erica, 1936

318-323

Table 34

U nited S ta te s D ir e c t Investm ent In Canada and Newfoundland, 1936

324

Table 35

Export-Im port Bank Loans R e la tin g to L a tin America, December 31, 1935 March 31, 1941

335,336

Table 36

Value o f U nited S ta te s Imports o f S tr a te g ic Raw M a teria ls

344

Table 37

Share o f Each o f th e L atin American R epublics In th e T otal Imports and Exports o f th e United S ta te s

349,350

Table 38

U nited S ta te s Imports by Areas

351

Table 39

U nited S ta te s Exports by Areas

352

Table 40

U.S# Merchandise Trade w ith N etherlan ds E ast I n d ie s

356

Table 32 Table 33

Table 41

Share o f Each C ontinent in th e Exports and Imports o f th e U nited S t a t e s , by Commodity C la sses 360,361

Table 42

Share o f Each Commodity C lass in th e E xports and Imports o f th e u n ited S t a t e s , by C on tin en ts

3 6 2 ,363

Table 43

Com position o f th e Import Trad© o f th e Larger American C ountries 365

Table 44

Com position o f the Export Trade o f the Larger American C ou n tries 366

Table 45

P ercentage D is tr ib u tio n o f Exports o f Twenty American R ep u b lics, by Country o f D e s tin a tio n , S e le c te d T ears 400

X

Pages Table 46

p ercen ta g e D is tr ib u tio n o f Im ports o f Twenty American R ep u b lic s, by Country o f O rig in , s e le c t e d Y ears

401

Table 47

Share o f th e U nited S ta te s In th e T otal Im ports and Exports o f Canada 402

Table 48

Share o f th e U nited S ta te s In th e T otal Imports and Exports o f Each o f th e L atin American R ep u b lics 4 0 4 ,4 0 5

Table 49

A rgen tin e E xports by Major Commodities to th e world and to th e U nited S ta te s 409

Table 50

P o p u la tio n o f the Western Hemisphere

426

Table 51

F i r s t Grade Raw Rubber p r ic e s , London, 1906-31

466

CHARTS Chart Chart

1

D e r iv a tio n o f S tr a te g ic Mica from T otal P rod u ction , 1938

18

2

Sources o f S tr a te g ic Mica by C o u n tries, 1938

73

1

IHTROOTOTIOM Si no® th e lau n ch in g o f th e n a tio n a l d e fe n se program, plann ing fo r th e procurement o f v i t a l in d u s t r ia l and m ilita r y m a te r ia ls has been g iv en con tin u ed study* The outbreak o f war has accen tu ated a n a ly s is in t h i s sphere* Modern l i f e makes enormous demands upon in d u stry ; such demands c o n tr ib u te to th e b u ild in g o f our v a st and in t r i c a t e in d u s t r ia l s tr u c tu r e .

Modern t o t a l i ­

ta r ia n war a c c e n tu a te s many o f th e s e demands and adds s t i l l o th e r s .

Ihe procurement o f v a st q u a n titie s o f

m a te r ia ls becomes a m atter o f major n a tio n a l con cern , th o se v i t a l raw m a te r ia ls produced in abundance by d om estic in d u stry o f f e r l i t t l e problem, save fo r problems o f tr a n s p o r ta tio n and f a b r ic a t io n . Many e s s e n t ia l in d u s t r ia l and m ilita r y raw m a te r ia ls , however, are not produced in adequate q u a n tity d o m e s tic a lly .

Those v i t a l m a te r ia ls which p resen t a cu te

procurement problems have been d esign ated as s t r a t e g i c m a te r ia ls .

K ich ly endowed w ith natural re so u r ces as th e

United S ta te s may b e , th ere remain a number o f th e s e m a te r ia ls fo r th e supply o f which she has been fo rced to lo o k to o v e r se a s.

2

Tiiere are a number o f way© in which

d e­

pendence upon source© o u ts id e th e hem isphere might be m inim ised,

one o f th e s e i s th e la r g e - s c a le d ev elo p ­

ment o f Western Hemisphere so u rces o f s t r a t e g i c raw m a te r ia ls .

T his stu d y i s devoted to th e a n a ly s is o f

t h i s approach, but i t i s not to be regarded as a p lea or an apology fo r such developm ent.

The a n a ly s is does

not r e s t upon an im p lic it assum ption th a t such a pro­ c e s s i s d e s ir a b le , nor does i t n e c e s s a r ily lea d to th at c o n c lu s io n .

Xt i s m erely an attem pt to examine a few

o f th e many economic e f f e c t s and r e p e rcu ssio n s th at might r e s u lt from such a developm ent. h i t t i e attem pt i s made t o a n a ly ze, save very c a s u a lly , any o f th e numerous other p o s s ib le approaches to t h i s procurement problem.

According to th e Army and

B&vy M unitions Board, which com piles th e o f f i c i a l l i s t o f s t r a t e g ic m a te r ia ls , th er e are a t le a s t four o f th e s e oth er c o u r se s.

These in c lu d e : development o f

dom estic p ro d u ctio n , p e r fe c tio n o f s u b s t it u t e s , m aintenance o f trad e r o u te s t o th e p r in c ip a l s u p p lie r s , and c r e a tio n o f adequate s to c k p i l e s .

Other approaches

might in clu d e: cu rtailm en t o f u se , more in te n s iv e 1.

Army and havy M unitions Board, The S tr a te g ic and C r it ic a l M a te r ia ls . p . 2.

3

secondary recovery# arid accent cat ed r e se a r c h .

One stu d en t

o f th e s t r a t e g i c raw m a te r ia ls problem has su g g ested th a t S at l e a s t fo u r te e n such avenues might he ex p lo red . This stu d y i s r e s t r ic t e d to an a n a ly s is o f hut one o f th e numerous approaches -■* development of Western Hemisphere s o u r c e s.

Further a n a ly s is o f th e se oth er approaches i s

e q u a lly urgent and o f e q u iv a le n t im portance.

Wherever

development o f Western Hemisphere sou rces might i n t e r f e r e with# or preclude# any o f th e se oth er approaches, th a t fa c t w ill

he In d ic a te d . The a n a ly s is i s d iv id ed in to f i v e p a r ts .

Part I

i s a sh ort stu d y

of

th e p o s itio n

o f th e United

S ta te s

in regard to s t r a t e g ic raw m a te r ia ls . T h is s e c tio n

in c lu d e s a d e f i n i t i o n and l i s t of products# th e u ses to which they a re put# probable U nited S ta te s requirem ents# th e ex ten t to which th e U nited S ta te s i s s e l f - s u f f i c i e n t , and th e scope and sou rces of U nited S ta te s im p orts. Part X i s d esigned m erely to g iv e p e r s p e c tiv e to th e remainder o f th e t h e s i s . Part IX i s an a n a ly s is o f p a s t, p r e s e n t, and p o te n tia l s t r a t e g ic m a teria l production in th e Western Hemisphere.

Xt ta k es up each o f the s t r a t e g i c m a te r ia ls

in turn# on th e b a s is o f a v a ila b le in form ation as to resou rces# production# e x p o r ts, and other p e r tin e n t

3.

Roush, G.A.# S tr a te g ic M ineral S u p p lie s , p p .19*29.

4

fa c to r a b ea rin g on p o te n tia l expansion*

This su rvey

d e a ls w ith a l l th e Western Hemisphere n ation s# ex clu d in g th e U nited S t a t e s , th a t co n ta in any a p p r ecia b le r e s o u r c e s . Part I I I i s a study o f e f f e c t s th at la rg e* s c a l e Western Hemisphere development would have upon th e economy of th e U nited S ta tes*

I t d e a ls f i r s t w ith

U nited S ta te s fo r e ig n economic p o lic y , s t r e s s in g t a r i f f p o lic y , q u o ta s, and commodity agreem en ts,

i t th en

a n a ly zes th e e f f e c t upon United S ta te s fo r e ig n tr a d e , d e a lin g w ith th e volum e, d ir e c t io n , and com position o f trade*

F in a lly , t h i s part in c lu d e s a stu d y o f th e e f f e c t s

upon U nited S ta te s investm ent abroad,

i t d e a ls f i r s t

w ith p r iv a te investm ent and then w ith governm ental loan s through th e Export-im port Bank. Bart IV d e a ls w ith the re p e rcu ssio n s upon th e dom estic economies o f oth er Western Hemisphere n a tio n s . I t a n a ly se s f i r s t t h e ir fo r e ig n economic p o l i c i e s , th en th e volume and o r ie n ta tio n o f t h e ir fo r e ig n commerce, and f i n a l l y t h e ir In te r n a l economic s tr u c tu r e s . iflart V m erely su g g e sts c e r ta in w orld-w ide e f f e c t s o f Western Hemisphere s t r a t e g i c m aterial d ev elo p ­ ment.

I t f i r s t s tu d ie s th e re p e rcu ssio n s upon c a r t e ls

and n a tio n a l m on op olies, and concludes w ith an a n a ly s is o f th e in flu e n c e upon world h o ld in g s of v i t a l m a te r ia ls and th e d r i f t toward au tarchy.

PART I THE UNITED STATES AND STRATEGIC RAW MATERIALS

6

Chapter I tm

STRATEGIC BA# JSMmiALS

A ccording to a statem en t issu e d by th e Army and Havy M unitions Board, s t r a t e g ic m a te r ia ls in c lu d e : *th ose e s s e n t i a l to n a tio n a l d e fe n s e , fo r th e aupxaly o f which in war dependence must be p laced in w hole, or in s u b s t a n t ia l p a r t, on so u rces o u ts id e the c o n tin e n ta l lim it s o f th e United S ta te s ; and fo r which s t r i c t co n ser v a tio n and d is t r ib u t io n c o n tr o l measures w i l l be n ece ssa r y * ** C r i t ic a l m a te r ia ls a re th o se which are a ls o n ecessa ry but which present a l e s s d i f f i c u l t procurement problem, w h ile e s s e n t ia l m a te r ia ls a r e th o se needed but which p resen t no p a r t ic u la r ly troublesom e procurement problem. 2 The fo r e g o in g d e f in it i o n o f s t r a t e g ic raw m a te r ia ls tend s to s t r e s s the n a tio n a l d efen se or war* tim e r o le o f such p ro d u cts,

This was a ls o th e emphasis

during our p a r tic ip a tio n in World War X and in th e years im m ediately t h e r e a f t e r .

During th e la t e r post-w ar

y e a r s , th e emphasis s h if t e d to th e in d u s t r ia l uses and requirem ents o f s t r a t e g i c m a te r ia ls . 4 How, with renewed

1. 2. 3. 4.

Army and Havy M unitions Board, The St rat egi c and C r it ic a l Mat e r i a l s , p . 2 . hoc, p i t . 'Sees War I n d u s tr ie s Board, American In du stry in th e War Roush, Cr. A ., S tr a te g ic M ineral S u p p lie s, p . 3 .

7

i n t e r e s t in n a tio n a l d efen se and m ilit a r y req u irem en ts, m ilit a r y u ses are again b e in g em phasized.

The d i s t i n c t i o n

between in d u s t r ia l and m ilit a r y s t r a t e g i c m a teria ls# however# i s more apparent than r e a l.

It is v ir tu a lly

im p o ssib le to e s t a b l i s h a c le a r -c u t l i n e o f dem arcation between in d u s t r ia l and m ilita r y requirem ents o f s t r a t e g ic m a te ria ls*

Modern war i s waged on a t o t a l i t a r i a n b a s is

and th e e n t ir e economy becomes in essen ce a war economy. A th r iv in g p ea ce-tim e in du stry# made p o s s ib le in part through adequate s u p p lie s o f s t r a t e g ic raw m a teria ls# i s v i t a l a ssu ra n ce o f a nation*© a b i l i t y to compete in war. Any such broad d e f in it io n o f s t r a t e g ic m a te r ia ls a© th e one g iven above must be rath er a r b itr a r y . Sach n a tio n must prepare i t s own l i s t o f s t r a t e g i c raw m a te ria ls* s in c e each has d if f e r e n t requirem ents# d om estic production and resources# and procurement problem s.

A g iv en n ation must a ls o vary and r e v is e i t s

l i s t from time to tim e , as dom estic production s h if ts # te c h n o lo g ie s change# fo r e ig n sou rces are a lte r e d * and new tech n iq u es o f war d ev elo p .

It i s a ls o tr u e th at a c e r ta in

m a te r ia l may or may not be s tr a te g ic # depending on th e 5 nation© which may be enemies or l i k e ly enem ies. I f th e a c tu a l or p o t e n t ia l adversary happens to be a c h ie f s u p p lie r of t h e m aterial# th a t product then becomes

5.

Bckeia# fi.» ‘♦ S tra teg ic M inerals in War and P eace54# M ineral ffeono«ftos, p .178.

a s t r a t e g ic *

I f th e c h ie f su p p lie r or su p p lie r s# con tin u e

fr ie n d ly # however# procurement problems are m inim ised. C on siderab le v a ria n ce in op inion e x i s t s as to what m a teria ls# in a g iv en n ation d uring a g iv e n period# sh ou ld toe c l a s s i f i e d a s s t r a t e g i c .

In the past two

decades# a la r g e number o f o f f i c i a l # s e m i - o f f ic i a l# and c i v i l i a n l i s t s have been p u b lish e d .

Even among l i s t s

p u b lish ed during th e same year# o c c a sio n a l n o ta b le d iffe r e n c e s can be n oted . While many o f th e s e c i v i l i a n or s e m i - o f f i c i a l l i s t s have co n sid e ra b le m erit# th ey w i l l not toe used as th e b a s is o f t h i s

stu d y . . The l a t e s t l i s t p u b lish ed toy

th e Army and tfavy Munitions Board i s

th e o f f i c i a l l i s t

o f the United S ta te s government # and i s used as a gu id e in th e sto c k -p il© and procurement program.

This i s th e

s u c c e sso r of l i s t s p ub lished in th e past toy th e War Department # Javy Department # and th e Army and Navy 7 M unitions Board. These l i s t s appeared in 1922# 1923# 1927. 1923, 1952, 1936, and 1939.

6.

7.

Some o f th e s e l i s t s are found in : Erneny# B rooks, The S tra te g y o f Haw M a te r ia ls: L eith# O.K.# World M inerals "a nd W r T o lyoCTt i'o s ; " McBride# R .S ., ^Ttrat eg i c M inerals and Metals**# E ngineering and Mining J o u rn a l, 13d:7# January# 1935; Eouah# op. c i t . Eor a p a r t ia l com p ilation of th e s e l i s t s # l o o , c i t . la s t c ita tio n .

9 The 1940 l i s t c o n ta in s fo u r te e n ooim iodities and i s one o f th e s h o r te s t y et p u b lish ed .®

I t c o n ta in s:

antimony# chromium# coconut s h e ll char# ferro g ra d e mah&a nese# m anila fib e r # mercury# mica# n ick el# q u arts c r y s ta l# quinine# rubber# s ilk # tin # and tu n g ste n .

T his

l i s t fu r n ish e s th e b a sis fo r th e su cceed in g c h a p te r s. 3?©ur of th e se m a te r ia ls — manganese# n ick el# chromium# and tu n g sten — f a l l w ith in th e f e r r o - a l lo y group.

Three - - tin # antim ony, and mercury — are non-

fe rro u s m e ta ls.

Two — mica and quarts: c r y s t a ls — are

n o n -m e ta llie m in e r a ls.

3?©ur — coconut s h e l l char#

m anfla fib e r # quinine# and rubber — are non-m ineral p ro d u c ts. While th e o f f i c i a l l i s t o f s t r a t e g ic raw m a te r ia ls has a d m itted ly changed from year t o year# n ea rly a l l o f th e s e fo u rte en com m odities have been on the l i s t s in c e i t s in c e p tio n .

P arin g World War I# a l l of th e s e

except coconut s h e l l char, q uarts c r y s ta ls # and q u in in e were d esig n a ted by th e War In d u s tr ie s Board as s t r a t e g i c . In the subsequent o f f i c i a l l i s t s issu e d by the s e r v ic e departments and l a t e r by the Army and Havy M unitions Board# most of th e fo u rte en were in clu d ed as s t r a t e g i c

8. 9.

Army and Havy M unitions Board, The S tr a te g ic a nd. O rit l e a l M a te r ia ls . War"T ndustries S o ard , American In d u stry in th e War.

9

10

in every l i s t . * 0

Hence# alth ou gh th e l i s t o f m a te r ia ls

i s a lte r e d sp o r a d ic a lly # ap p aren tly th e se fo u r te e n have remained o f p e r s is t e n t im portance.

I t i s q u ite p o s s ib le #

o f course# th a t some of th e s e may fo llo w sh e lla c # camphor# n i t r a t e s , and wool from th e s t r a t e g i c l i s t .

11

T ech n o lo g ies o f In d u stry and war change# dom estic r e ­ so u rces a re developed# and new and more r e a d ily a v a ila b le so u rces may be e x p lo ite d .

But up to th e present# a l l o f

th e s e commodities have p resen ted c o n s ta n tly d i f f i c u l t procurement problems and have remained la r g e ly i n d i s ­ p en sa b le. These s t r a t e g ic m a te r ia ls are not of equal in tonnage# v a lu e , procurement d i f f i c u l t y , or s t r a t e g i c im portance.

A sharp cu rtailm en t o f manganese or rubber

im ports would have a much more damaging e f f e c t upon th e United S ta te s economy than a r e d u ctio n in im ports o f m anila f i b e r .

Some o f th e s e m a te r ia ls can be produced

in co n sid e ra b le q u a n tity# in t h is country, w h ile dom estic production o f o th er s remains n e g l i g ib l e .

For some, th e r e

e x i s t r a th e r adequate s u b s t it u t e s # w h ile fo r oth ers th ere seems to be no s a t i s f a c t o r y replacem en t.

This stu d y w i l l

make no sy ste m a tic attem pt to rank th e se s t r a t e g ic

10. 11.

Housh# pp. p i t . , p p .8 -9 . Array and Mavy M unitions Board, The S tr a te g ic and C r i t ic a l M a te r ia ls # p . 4 .

11

m a te r ia ls In order o f e lg n iflo a n e e * t h e degree o f s e l f s u f f i c i e n c y a tta in e d , or by any o th er a r b itr a r y c r it e r ia * I f such a ranking i s made, e it h e r e x p l i c i t l y or i m p l i c i t l y , i t w i l l be sim ply in c id e n t a l t o the main purposes o f th e a n a ly s is .

Rather than attem pt su ch a

sy ste m a tic ran k in g, th e com modities w i l l b e an alysed in a lp h a b e tic a l order*

13

Chapter XI USBS OB THE STRATEGIC HAW IIATERXALS Each o f th e fo u r te e n s t r a t e g i c m a te r ia ls i® of th e utmost m ilita r y as w e ll a® in d u s t r ia l s ig n if ic a n c e .

Without continued procurement o f th e s e

com m odities, America*a m ilit a r y p rep a ra tio n s would he thwarted and her in d u s t r ia l economy would f a l t e r . This ch ap ter c o n ta in s a b r i e f a n a ly s is o f th e s t r a t e g ic u ses o f each of t h e s e v i t a l m a te r ia ls . Antimony There are a number o f s i g n i f ic a n t in d u s t r ia l u ses o f antim ony.

These in c lu d e th e manufacture o f

p la t e s fo r s to r a g e b a t t e r i e s , ty p e m e ta l, cable co v e rin g , b a b b itt and other b ea rin g m e ta ls , ch em icals and p ig m e n ts.3* Pure antimony m etal has l i t t l e use beyond a sm all amount fo r ornamental c a s t in g s , w hile the bulk of th e output i s employed in a l l o y s w lth other n on -ferrou s m e ta ls, p r in c ip a lly le a d . I t i s a ls o claim ed th a t antimony has perhaps more u ses o f a d i s t i n c t i v e l y m ilita r y ch a ra cter than any oth er member of th e s t r a t e g ic raw m a te r ia ls group*2

1. 3.

Army and Havy M unitions Board, The S tr a te g ic and C r it ic a l M a te r ia ls , p . 3 . MouSh, pp. "c"'^"* , p .339»

13

X*i a d d itio n t o m ilit a r y a p p lic a tio n s o f th e above I n d u s tr ia l u s e s , antimony i s used w id ely in primer m ixtures# p y r o -te o h n ic s o f many typ es# and b u lle t a l l o y s . Chroroium Chromium i s a ls o one o f th e more im portant s t r a t e g i c m a te r ia ls . I t s in d u s t r ia l u ses f a l l in to th r e e group© — m e ta llu r g ic a l, r e fr a c t o r y , and chem ical — in 4 th e order o f im portance a s l i s t e d . As th e s t e e l i n d uatry s h i f t s to a l l o y s t e e l s from s t r a ig h t carbon s t e e l s , chromium ten d s t o assume added im portance. Chromium ch em icals are a ls o employed in th e tan n in g o f le a t h e r , th e manufacture o f pigm ents, and in e le c t r o ­ p la t in g . These in d u s t r ia l u ses are a ls o of im portance in w ar-tim e, e s p e c ia lly as in crea sed m ech anisation rend ers s t e e l ever more v i t a l . In a d d itio n , th er e are 5 o th er m ilita r y u s e s . These in clu d e th e manufacture o f a rm o r-p la te, arm or-p iercin g p r o j e c t i l e s , s t a i n l e s s s t e e l used in n aval c o n s tr u c tio n , and a s an elem ent in th e dye used t o c o lo r a liv e -d r a b c lo t h .

3. 4. 5.

i b i d . , p . J241 . Army and Havy M unitions Board, The 3t rat eg! c arid C r it ic a l M a te r ia ls . p*6. Koush, op. a l t .7'!>* 103. Kmeny, op. o T t. , p.§G.

3

14

Coconut Shell Char Coconut © hello are o f s t r a t e g ic s i g n i f i ­ cance to th e U nited S ta te s becau se th ey supply a raw 6 m a te r ia l fo r producing a c t iv a t e d carbon. Coconut char­ c o a l i s s t i l l one o f th e b e st vapor absorbent© known, both i n d u s t r i a l l y and in m ilita r y u s e s .

In p e a c e -tim e ,

i t i s used to remove I n d u s tr ia l ste n c h e s from th e a i r , fo r th e recovery o f g a s o lin e and b en zo l from th e a i r , and in oth er s im ila r f i e l d s *

7

Ihe s h e l l s a ls o fu r n ish

a common c e l l u l o s e b ase fo r lin oleu m and o th er p la s t ic s *

g

During w ar-tim e or p rep aration fo r war, coconut s h e l l char i s used in gas masks*

Charcoal made

from coconut s h e l l s , by f i r i n g th e s h e l l s in a con fin ed sp ace w ith l i t t l e or no oxygen, has lon g been con sidered th e b e s t absorbent f i l l i n g fo r gas mask c a n iste r s* ^ However, a la rg e p rop ortion o f coconut s h e l l s never reach th e market because th ey are burned as f u e l in th e d ryin g o f th e meat to produce co p ra .* 0

8. 7. 8* 9. 1®»

I b id .» l a t t e r c i t a t i o n , p*161. “sn oS grass, JKatharine, Copra and Coconut O il, p .2 5 . W ilson, C h a rles, “Buy Hemisphere Pr od uct a 1*, Harper’ s * 18Ss1 4 1 -5 , January, 1941. Army and Havy llu n itio n s Board, th e S tr a te g ic and C r it ic a l M a te r ia ls * p . 7 . B sc. c i t .

15

111® p r in c ip a l cla im of manganese to s t r a t e g ic

im portance is i t s u se in th e p rod uction o f s t e e l .

It is

th e th ir d elem ent v i t a l t o s t e e l m anufacture, and in every ton of s t e e l approxim ately fo u r te e n jmunds o f manganese in th e form o f ferrom anganese are r e q u ir e d , 11

th e s t e e l

in d u str y r e q u ir e s m e ta llu r g ic a l grad© ore c o n ta in in g a minimum of 4S?& manganese,

This i s obtained from 78% to

BQ% ferrom anganese, w hich i s th e e s s e n t ia l a l l o y . Manganese s e r v e s two purposes In s t e e l making — as a d e -o x id iz e r and p u r ify in g a g en t, and a s an a llo y in g element fo r s p e c ia l-p u r p o se s t e e l s .

There a r e , o f co u rse ,

many r e l a t i v e l y minor in d u s t r ia l u s e s . Any raw m a terial in d isp en sa b le in th e p rod u ction o f s t e e l i s a b a s ic m ilita r y as w e ll as in d u s t r ia l m a te r ia l. Without manganese, i t would be v i r t u a l l y im p o ssib le fo r a modern army to f u n c t io n , M anila F iber Manila f i b e r , o fte n termed m anila hemp ©r sim p ly abaca, i s one of the more important hemp v a r i e t i e s , There i s no known s a t i s f a c t o r y s u b s t it u t e fo r m&nila fib e r in producing th e high grade rope n ecessa ry fo r many in d u s t r ia l t a s k s I t 11. 12.

is e s p e c ia lly v i t a l fo r marine

I b id . , p .a . Chisholm*a Handbook o f Commercial geography, 1939 E d itio n , pV 147 V

16

cordage* a s w e ll a® in o i l w e ll and c o n s tr u c tio n work* M anila f ib e r i® in v a lu a b le fo r marine cordage* which, become® in c r e a s in g ly e s s e n t i a l in war-tim e*

It is

used fo r t h i s purpose because i t has g r e a t t e n s i l e stren gth * e l a s t i c i t y * and lo n g l i f e * and r e t a in s i t s s i z e even when w et. ^

Mercury has lo n g ranked as a s t r a t e g ic m a te r ia l, s in c e many o f i t s c i v i l i a n a s w e ll as i t s m ilita r y u ses are e s s e n tia l,

in d u s t r ia l ard c i v i l i a n u ses in c lu d e th e

manufacture of f e l t * d ru g s, d e n ta l amalgam, mercury vapor lamps* g o ld , a n t i- f o u lin g p a in ts fo r s h ip b ottom s, and s c i e n t i f i c in str u m e n ts .14

i t i s a ls o used in th e gen era­

t io n o f power from mercury vapor lamps* One o f th e most s ig n if ic a n t I n d u s tr ia l u ses and probably th e most im portant m ilita r y use i s in th e manufacture of fu lm in a te fo r d e to n a tin g h ig h e x p lo s iv e s , t h is u se , to g e th e r w ith th e manufacture o f a n t i- f o u lin g p a in ts and s c i e n t i f i c instrum ents* makes mercury a v i t a l w ar-tim e m a te r ia l.

15. Id*

Army and Jfavy Muniti one Board, rhe S tr a te g ic and C r it ic a l M aterial® * p*9. I b id ** 'p •10♦ Roush, op. c i t *. p p .2 7 8 -9 .

17

SJLsb Mica i s not th e name o f a m in era l, b u t ra th e r a term co v erin g a group of n e a r ly a dozen m in e r a ls, a l l o f the same g en era l typ e and p o s s e s s in g c e r ta in common 15 q u a lit ie s * Mica can a l s o be c l a s s i f i e d a s t o th e amount o f trimming and s p l i t t i n g th a t has been done. Waste and scr a p m ica, com prising 74$ o f world p ro d u ctio n , i s not con sidered s tr a t e g ic * 16 B lock mica* c o n s t it u t in g th e rem aining 36$ o f world p rod u ction , i s not always s tr a te g ic .

$*rom b lo c k m ica, how ever, come sh eet mica

and mica s p l i t t i n g s , c e r ta in forms o f which are s t r a t e g i c . S p l i t t in g are used fo r armature w in d in g -ta p e, commutator segm ents, r in g s , c o n e s, and tra n sfo rm ers.

S tr a te g ic

sh eet mica i s used fo r con d en sers, trim m ers, high grade spark p lu g s, rad io tube b r id g e s , and magneto con d en sers, th e s e u ses become v i t a l in a n a tio n p o s s e s s in g a th r iv in g in d u stry and a mechanised m ilita r y e sta b lish m e n t.

¥/h ile

mica may not be o f paramount im portance in terras o f tonnage or d o l l a r s , i t i s very v a lu a b le indeed in terras o f s t r a t e g ic s ig n if ic a n c e .

S in ce th e v ariou s ty p es o f

mica have so many and v a r ie d u s e s , and t h e ir s p e c i f i c a t io n s , d e r iv a tio n , and so u rces are h ig h ly co m p lica ted , sou rce afcd d e r iv a tio n in fo rm a tion i s given in Chart l . 15* 16.

Xdfd. , l&tt©r o1 ta t io n , p .5 3 9 . Army and Bavy M unitions Board, fhe S tr a te g ic and C r it ic a l Mate r i a l s , p . 1 1 . ~

C h a rt i

17

DERIVATION OF STRATEGIC MICA FROM TOTAL PRODUCTION -1938 IN SHORT TONS

IO O %

WORLD PRODUCTION ALL MICA 34,299 TONS NON -STRATEG IC MICA

74% WASTE SCRAP 2S285 TONS

26%

FOR GRINDINGFOR USE IN WALL PAPER RUBBER BUILDING PAPER RAINT ETCJ

BLOCK MICA 9,015

TONS

U S. PRODUCTION 2 0 2 5 7 TONS

SPLITTINGS 6,012 TONS STRATEGIC

1.1 %

SHEET 1 0 0 2 TONS

MICA

"ELECTRIC" SHEET 2 ,40 0 TONS TO A STE R S FLAT IRONS LAM P SH ADES TUBING. ETC.

I 17

Ibli-

«$

TERMINAL INSULATION D IS C S WASHERS RESISTANCE SU PPO R T S. ETC. HOUSE-HOLD APPLIANCES

pro 11-1 i:

SPLITTINGS FOR

STRATEGIC USES (ESU14II TONS

RADIO SHEET

(ESt)6ooT

ARMATURE W INDING -TA PE. ETC. CO N D EN SERS COMMUTATOR SEG M EN TS TRIM M ERS RINGS, CO N ES, ETC. SPARK PLUGS TRANSFORM ERS RADIO TUBE BRIDGES U A . PRODUCTION - NONE

U.S. PRODUCTION EST. 7 5 TONS

19

SiLsJssik M c k e i perhaps rank© below manganese and chromium in tonnage but i s more v a r io u s ly used in 18 in d u str y than e i t h e r , over 89# o f annual p rod u ction goes in t o s t e e l a llo y s in old er to impart in crea se d 19 h a rd n ess, to u g h n ess, ard stre n g th * B iek el s t e e l i s h ig h ly important in th e autom otive and oth er in d u s tr ie s where s p e c ia l s t e e l s are needed*

S t a in le s s s t e e l s have

a r e l a t i v e l y h ig h con ten t o f n ic k e l and chromium* and n ic k e l i s a ls o an im portant a ll o y f o r copper, s i l v e r , and aluminum* 20 I t i s a ls o employed as a c a t a ly s t and i s e x t e n s iv e ly e le c tr o p la te d on oth er m e ta ls.

These

u ses make n ic k e l a v i t a l m a te r ia l in th e production o f motor v e h ic k le s and farm m achinery, and a ls o en ab le i t to p la y a r o le in a v ia t io n , r a ilw a y s, m ining, sh ip p in g and co n stru ctio n * Many o f i t s m ilita r y u ses are id e n t ic a l with ordinary I n d u s tr ia l uses*

S t r i c t l y m ilita r y u ses are

fo r arraor~plate, arm or*piercing p r o j e c t i l e s , gun b a r r e ls , r e c o i l c y lin d e r s , and many item s o f naval co n stru ctio n * 18* 19* 20i, 21 •

21

I t i s rep orted th a t t h e E n glish

Per a d e t a ile d l i s t o f th e u ses o f n ic k e l, s e e : S k elto n , Alex* “M e k e l1*, In te r n a tio n a l Control in th e Hon-fferrous M etals, p p .l8S -6* The lew I n te r n a tio n a l yearbook* 1941, p p .561*2. Army and^K vyM unltTons Board* The S tr a te g ic and C r it ic a l M aterial© * p . 12. [l»o'ci'*" ojCt

30

b a t t l e s h i p s .Belaon and K.odney co n ta in 800,000 pounds o f n ic k e l ap iece,* 22 w h ile th e new U nited S ta te s 3 5 ,000 ton b a t t le s h ip s co n ta in some 796,000 pounds of n ic k e l a p i e c e . i n

1939, about 15% o f th e enormous 24 world consumption o f n ic k e l wento in to armaments.

Quartz Cry sta ls Quarts c r y s t a ls have wider in d u s t r ia l u ses pg than any oth er gem sto n e except diamonds. i h i s m ineral has s t r a t e g i c s ig n if ic a n c e d isp r o p o r tio n a te t o i t s tonnage.

N o n -str a te g lc q u artz crystal® are used fo r

je w e lr y , e l e c t r i c a l ap paratu s, p iv o ts and la b oratory v e s s e l s , and o p tic a l equipment.

p a

Quartz c r y s t a ls o f s p e c ia l s t r a t e g ic im­ portance in both peace and war a r e th o se having p ie z o 37 e le c tr ic c h a r a c te r is tic s . I h is ty p e o f c r y s t a l i s used t o c o n tr o l the freq uency o f rad io tr a n s m itt e r s , in te le g r a p h y , in depth-sounding ap paratu s, in b a l l i s t i c d e v ic e s , and deion&tion-measurement d e v ic e s . Such a c r y s t a l must meet c e r ta in very r ig id s p e c i f i c a t i o n s . 23. 23. 24. 25. 26. 27. 28*

“H ick el Tear**, rim e, 2 7 ;4 8 , January 6 , 1936. Hews week Rep o rts on l& itional D e fe n se , p .6 . “H ickel Colossus**, ffWOTeeK' 1 8 :4 0 , August 25, 1941. U .S . Bureau of 111nesT'lS n e r a I s . Ifearbook 1940. p. 1463. Army and Havy M unitions Board, We"'s^'rat'eH? and Q r iti c a l t e t e r i a l s , p . 13. “C ry sta ls th a t C ontrol W ave-lengths’*, S cien ce D ig e s t , 8 :9 0 -2 , November, 1940. Army and Bavy M unitions Board, rhe S tr a te g ic and C r it ic a l M a te r ia ls , p .1 3 .

38

q u in in e q u in in e i s th e b e s t known, moat g e n e r a lly a c c e p te d , and moat g e n e r a lly used s p e c i f ! o fo r p re­ v e n tio n and treatment of m a la ria .

As su c h , i t has

enormous importance both in peace and in p erio d s o f s tr ife .

Each year* m alaria h i l l s and d e b i l i t a t e s m i ll io n s

throughout t h e world , usurps about o n e-th ird of the working tim e o f t h e people of th e southern p o rtio n o f the United S t a t e s , and e x a c ts a y e a r ly t r ib u t e of 2Q perhaps a h a l f b i l l i o n d o l la r s from t h i s n a tio n . tr o o p s are dosed w ith q u in in e b e fo r e , d u rin g, and a f t e r exposure t o known m a la r ia l c o n d it io n s . These d osages are co n sid e red e s p e c i a l l y v i t a l when armies are op eratin g in t r o p ic a l or s e m i- tr o p ic a l r e g io n s .

The United S ta te s Army has maintained a so sm all r e s e r v e o f about 2 ,0 0 0 ,0 0 0 ounces. This s t o c k I s more s i g n i f i c a n t as a m a n ife sta tio n o f th e importance

atta ch ed t o quinine as a product o f war-time importance than i t i s as an adequate s t o c k - p i l e . Bubb er I t i s s c a r c e ly n ecessa ry t o e la b o r a te on th e importance o f rubber t o a great in d u s t r ia l n ation at war

29. 30.

Bat c l i f f # “Tropic K iller*1# C o lli er>ei,; IQ efegv p iu s, August 10, 1940. . Emeny, op. c l t . , p. 153; a l s o “We Can CorErWt^, Too14, B u sin ess 'Week, p . 22, Ju ly 6 , 1940. '

22

or in peace*

Hubber I s in d isp e n sa b le in th e manufacture

o f motor v e h ic le s * airp lan es* submarines* b a llo o n s , e l e c t r i c m otors, ©hips, r a ilr o a d t r a i n s , s t r e e t c a r s , e l e c t r i c l i g h t s , te le p h o n e s , ty p e w r ite r s , p rin ters* r o l l s , w ir e le s s ap paratu s, r a d io s , m edical goods, I n d u s t r i a l , f i r e , and garden h o s e , m ilking machines, a t h l e t i c g o o d s, s h o e s , and a host o f other products*

in

a d d itio n , rubber i s employed but i s probably not i n d is p e n s a b le in t h e manufacture of many oth er goods* fo rm a lly about 8G$ o f U nited S ta te s rubber imports are u t i l i s e d in th e motor v e h i c l e in d u str y ,

i n rubber

b o o ts and s h o e s , and 16^ f o r variou s o th er products. 31 The importance of rubber i s v a s t l y in crea sed during war or p rep a ratio n f o r war, e s p e c i a l l y with t h e in c r e a s in g importance of mechanised and motorized w arfare. I t i s e stim a te d t h a t n a tio n a l d efe n se orders a lrea d y c o n s t i t u t e n early 2Qf& o f the United S t a t e s rubber 32 industry*© t o t a l s a le ® . Hot o n ly does the d e fe n s e program req u ire m i l i t a r y v e h ic le s o f a l l t y p e s , as w e ll as many p eace-tim e rubber products, but i t a l s o create© a demand fo r a h ost o f s p e c i a l i z e d rubber p rod u cts.

31* 32.

These in c lu d e b u l l e t * s e a l i n g t i r e tu b e s ,

Army and Bavy Munitions Board, The S t r a t e g ic and C r i t ic a l M a te r ia ls , p . 17* ^luSber^Spee^lip*^ B u sin ess Week, January 11, 1941, p . 14.

23 s e l f - s e a l i n g a ir p la n e f u e l tanks , gas masks, a ir p la n e d e - ic e r s # i n f l a t a b l e rubber boats# rubber tracics and tr ea d s for tanks# and o th e r s .

Although rubber i e

o b v io u sly o f Importance in land and a i r warfare# i t i s not g e n e r a l l y realiased t h a t i t i s a l s o v i t a l f o r naval purposes.

Some 160#00G pounds of rubber a r e used on

each of th e new 35#000 ton United S t a t e s b a t t l e s h i p s . 33 Indeed, i t has been estim a ted t h a t of t h e 34#O0Q rubberb u i l t a r t i c l e s under patent or w ith patent pending, n ea rly 25,000 are b ein g used in b u ild in g th e United S t a t e s Army# Havy* and Air Corps. 34 MM R e s p ite th e encroachment o f rayon and other c o m p e titiv e fib e r s # s i l k s t i l l h as a number ©f Important in d u s t r ia l# c i v i l i a n # and m i l i t a r y u s e s .

V&ile s i l k i s

more or l e s s o b v io u sly employed in th e h o s ie r y i n ­ dustry# i t i s a ls o used i n in d u stry f o r the i n s u l a t i o n 35 o f w ire and cable# and a host o f other purposes. Hecent e v e n ts have focused p u b lic a t t e n t i o n upon th e s t r a t e g i c importance o f s i l k during w ar-tim e. M ilita r y u ses o f s i l k are la r g e ly tw o - fo ld .

High grade

raw s i l k i s used f o r parachutes, not o n ly f o r men but 33. 34. 35.

Hewsweek Deports on n ation a l D efen se , p . 6. ' d e f e n s e "Brings Hew Age~"o^fuffier’^t Popular Science# 139;96-103# September# 1941. Army and Havy Munitions Board, The S t r a t e g ic and O r i t i c a l M a t e r ia ls , p . 17.

24

a l s o for v a r io u s ty p es o f f la r e ® .

36

Waste s i l k i s used

fo r the ponder bags for l a r g e - c a l i b e r guns.

I t i s s a id

th a t th e procurement problem i s more d i f f i c u l t f o r the h igh -g ra d e ran s i l k , h u t t h a t th e problem o f o b ta in in g adequate s u b s t it u t e ® i s more troublesom e w ith the w aste s i l k . 57 tin t i n b e lo n g s near th e top of any l i s t o f s t r a t e g i c m a t e r ia ls .

While not e s s e n t i a l l y a m i l i t a r y

m e ta l, i t i s o f paramount importance in in d u stry and in m ilit a r y e f f o r t .

Burlng t h e ea r ly s t a g e s o f World War I ,

t i n was not regarded as a rtwar met&l**, but w ith th e s lo g a n , ^Pood w i l l id n th e war*** t i n m s the cause o f 38 in c r e a s in g a n x ie t y . t i n has become in d isp en sa b le in the p r e s e r v a tio n o f fo o d , s in c e i t fu r n is h e s a p r o t e c t iv e c o a tin g fo r our s o - c a l l e d t i n c a n s,

f i n i s used in t h e

manufacture of au to m o b iles, and f o r th e making of 39 b e a r in g s, s o ld e r s , b r o n z e s , and gun m e ta ls . t i n can be r o lle d i n t o f o i l and h as a number of u ses as a chem ical. An a n a ly s is o f t i n consumption in th e United S ta te s r e v e a ls the f o llo w in g p ercentages of uses t in p la t e * 41^;

36. 37. 38.

hoc * e i t . ho o » piTt. U .S. G e o lo g ica l Survey,World A tla s of Commercial Geography, Part X, p . 61; “Smith, G.O., t h e S tr a te o f M in erals, p . 196. : 3 9 . Army and Havy MunibL on® Board, the St rat e g ic and C r it ic a l H a t e r ia ls , p .1 8 .

26

s o l d e r i 22%\ b a b b itt b r o n z e ,

c o l l a p s i b l e tu b e s , 4^;

and g a lv a n is in g , ty p e m eta l, f o i l t i n n in g , te r n © p la te , and ch em ic a ls, each approxim ately 2 $ .^ ° th e r e are a few d i s t i n c t i v e l y m ilit a r y u s e s . For in s t a n c e , t i n la used in th e form o f t i n tr ea * e h o lo r id e , which i s important i n producing g la r e s and i n co n ce a lin g smoke i n e x p l o s i v e s . 41 Aside from a few s p e c i a l i s e d uses o f t h i s ty p e , ordinary c i v i l i a n u ses are a cc en tu a ted .

For in s t a n c e , during th e r e l a t i v e l y

short p a r t ic ip a t ion in World War I , the A .E .F. used 20 0 .0 0 0 .0 0 0 cans o f milk; 1 60,000 ,0 00 cans o f corn, p eas, and s t r i n g beans; 1 90,000 ,0 00 cam o f tomatoes; 6 0 .0 0 0 .0 0 0 cans o f salmon; 760,000 cans o f s a r d in e s ; and presumably b i l l i o n s o f cans o f corned b e e f and baked beans.

Much o f t h i s war-time use i s i n a d d itio n

to the normal United State© use o f 1 6 ,0 0 0 ,0 0 0 ,0 0 0 cans 43 a y ea r. Tungsten Tungsten i s an element required to impart h igh t e n s i l e c h a r a c t e r i s t i c s to a l l o y s t e e l s .

In in d u str y i t

i s w id ely used fo r h ig h -sp eed t o o l s t e e l , lamp fila m e n t s ,

40* 41. 42. 43.

hoc• c i t . iroeny, op . c i t . , p . 89. Clark, B e l b e r t , l,The E s s e n t i a l Tin Can**, The Mew York Times Magazine. February 2 , 1941, p . 25. X»0Q• pl.t.

26

and in v a rio u s chem ical p r o c e s s e s .

44

In most years*

90$ o f th e tu n g ste n consumed in th e United S ta te s 45 goes i n t o h ig h -sp ee d t o o l s o f v a rio u s t y p e s . Mass production would he Im p ossib le without h igh -sp eed t o o l s . Inasmuch as th e conduct o f modern war re q u ir e s a great i n d u s t r i a l plant o p era tin g at f u l l c a p a c ity , tu n g sten thus becomes an e s s e n t i a l war-time prod uct,

There are a l s o a number o f d i s t i n c t i v e l y

m il i t a r y u s e s .

Tungsten i s employed in th e a l l o y s t e e l

cores in arm or-p iercin g p r o j e c t i l e s , in l a r g e - c a l ib e r naval guns, in th e manufacture o f arm or-p late, and as 45 an e r o s io n - r e s i s t a n t l i n e r In heavy ordnance. Although only a sm all prop ortion o f th e tu n gsten output i s d i r e c t l y employed in such u s e s , t h e s t r a t e g i c m ilit a r y as w e ll as i n d u s t r i a l valu e o f th e m a te r ia l should not he m inimised.

44. 45. 46.

Army and M&vy Munition© Board, The 3 t r a t e g io and C r i t ic a l m a t e r i a l s , p . 19. MpxSTncott, I s a a c , Economic Resources and I n d u s tr ie s o f th e World, p . 195. Roush, ©£. q i t . , p . 133.

Chapter III v m r m s t a t e s REQpiRsassMrs oe s t r a t e g i c r a w m a te r ia ls In order to i n d i c a t e th e scope of America1© procurement problem, a n a ly s i s o f United S ta te s r e q u ir e ­ ments o f th e s t r a t e g i c m a te r ia ls i s e s s e n t ia l*

This

chapter in c lu d e s e stim a te s o f p resen t and probable fu tu r e United S ta te s needs o f each o f th e fo u r te e n products o f f i c i a l l y d esig n a ted as s t r a t e g i c .

Such a study i s

ad m itted ly rendered d i f f i c u l t by th e la r g e number of v a r ia b le s Involved i n e stim a tin g requirem ents.

I t must

a ls o be noted th at tonnage requirem ents are not n e c e s s a r ily i n d i c a t i v e o f th e p r e c is e s t r a t e g i c s i g n i f i ­ cance of the variou s m a te r ia ls . Antimony Various e s tim a te s have been advanced as t o antimony requirem ents of th e United S t a t e s .

In th is

c a s e , as w ith a l l o f th e other s t r a t e g i c m a te r ia ls , many v a r ia b le s are in v o lv e d .

I n d u s t r ia l requirem ents

s h i f t , and th e len g th of th e c o n f l i c t , th e methods of w arfare, and the tech n o lo g y o f th e period would have to be hhown to enable a cc u ra te calcu la tion © to be made. A recent p r iv a te estim a te p la c e s United S ta te s r e q u ir e ­ ments fo r in d u stry and m unitions at 25,000 ton© o f

28

antimony metal per ye&r*^

United S ta te s ex p erien ce i n

World War X o a s ts some l i g h t on probable req u irem en ts, although c o n d itio n s are not s t r i c t l y an alogous.

Fre*

war consumption of antimony ranged between 20,000 and 30,000 tons of antimony, of which t h e United S t a t e s to o k roughly 45$.

World War I consumption, however,

reached a peak o f 78,000 to n s in one y e a r . 2

ih is

f ig u r e would in d i c a t e th a t th e p reviou s estim ate i s c o n s e r v a tiv e .

I n c i d e n t a l l y , during World War I over

70$ of th e antimony used i n the United S ta te s was u l t i l i a e d in th e m i l i t a r y program.

The War I n d u s tr ie s

Board concentrated i t s a t t e n t i o n upon keeping th e sh ip p in g lan es open, fo r even th e impetus of war-time p r ic e s did not s tim u la te th e dom estic in d u stry t o adequate l e v e l s o f ou tp ut.

F o r tu n a te ly , th e m ilit a r y

requirem ents did not assume a n tic ip a te d p r o p o r tio n s. Chromium As in th e case o f th e other m a te r ia ls , estim a tes o f th e probable requirem ents of chromium are a r b itr a r y and u n s a t i s f a c t o r y .

1. a. 3.

$he e s tim a te s vary

* I a tin America’ s Bole in U .S. B efense production**, Pan A m rica n Hews, 2 : 7 , June 19, 1941. S t a f f s U .S. C eo lo g ica l Survey and U.S. Bureau of M ines, Report upon C ertain D e f ic ie n t S t r a t e g ic M a t e r ia ls > p . 34. War" I n d u s tr ie s Board, American In d u stry in the War, p . 153. !

29

l a r g e l y w ith th e u nderlying assumptions concerning s t e e l p ro d u ctio n .

On th e b a s i s o f an a n t ic ip a t e d s t e e l

p rod uction o f 6 0 ,0 0 0 ,0 0 0 t o n s , perhaps 5G0»QGG ton s o f 4 chrom ite would be required* Another recen t e s tim a te , based upon a somewhat h ig h e r assumed s t e e l output, p la c e s th e t o t a l annual requirem ents at 600,000 tons o f 5 chrom ite. Coconut S h e ll Char Ho a ccu rate estim a te of probable United S t a t e s requirem ents has been attem pted,

i t i s noted

th at during th e 1926-30 p erio d , t h i s country imported an average o f 6 5 ,2 8 9 ,0 0 0 coconuts a y e a r .6

While

consumption during most o f th e 1930-40 decade did not reach that t o t a l , i t did average w e ll over 5 0 ,0 0 0 ,0 0 0 per year during th e 1931-35 p erio d ,

imports ranged

from 2 5 ,0 0 0 ,0 0 0 to 50,0 0 0 ,0 0 0 over the 1939 p e r io d . With th e t r a in i n g and ©quipping o f a new mass army, United S ta te s demands fo r gas masks w i l l be d r a s t i c a l l y in c r e a s e d .

I f la r g e p o r tio n s of t h e c i v i l i a n p op u lation

should a ls o re q u ire gas masks as p r o te c tio n a g a in st

4. 5* 6.

S t a f f s o f 0 . 3 . G eolo gical Survey and U.S. Bureau of Mines, Keport upon C ertain D e f ic ie n t S t r a t e g ic M a t e r ia ls , p . 12. *Zat i rT Amer i e a f e B o le in U .S. D efense iProduction*1, Pan American Hews, 2 : 7 , June 19, 1941. U .S . Department of Commerce, S t a t i s t i c a l A bstract of the Unit ed S t a t e s , 1940, pTSST* ~ ’— —

p o s s ib le a ir ra id s.

These masks would be produced on

a s c a l e unprecedented i n United S ta te s h i s t o r y .

This

development would a ls o d r a s t i c a l l y in c r e a s e th e demand fo r such component raw m a te r ia ls as coconut s h e l l char. Thus, p r e d ic t io n s a s t o requirem ents are l e s s s a t i s ­ fa c to r y in t h i s c a s e than fo r almost any other product l i s t ed. Manganese S ev era l e stim a te s have been made as t o probable manganese requirem ents, most of them p red ica te d upon c e r t a in assumptions as t o s t e e l output*

Although

th ere are many other u ses to which manganese i s put, most o f i t i s u t i l i z e d i n s t e e l production and e stim a te s are l a r g e l y based upon th at u se .

A recen t u n o f f i c i a l

e stim a te placed requirem ents between 800,000 and 900,000 to n s o f ferrograd© ore per y e a r . 7 Two re c e n t government e s tim a te s agree that about 1 ,0 0 0 ,0 0 0 tons o f ©re w i l l be needed.

The United S t a t e s Bureau o f Mines,

assuming s t e e l prod uction o f between 6 0 ,0 0 0 ,0 0 0 and 70,0 0 0 ,0 0 0 t o n s , estim a te s that about 477,000 to n s o f m eta l, or about 1 ,0 0 0 ,0 0 0 tons o f 48$ manganese ore

7*

Koush, op• c i t * j p . 32.

w i l l be r e q u ir e d .

Q

The Army and Uavy Munitions Board

a r r iv e s at a s im ila r estim ate.® based upon t h i s reason in g:

I t s estim a te i s

S t e e l in g o t production fo r

1936, 1937, and 1938, was 6 8 .4 $ , 7 2 .5 $ , and 3 9 .6 $ , r e s p e c t i v e l y , of c a p a c ity .

During t h e s e same th re e

y e a r s , United S t a t e s consumption o f manganese ore o f 35$ or more m e t a l li c content was 848,491 t o n s , 954,503 t o n s , and 509,932 t o n s , r e s p e c t i v e l y .

A year

o f approxim ately f u l l c a p a c ity s t e e l production, as would s u r e ly even tu ate during a major war e f f o r t , would req u ire about 1 ,0 0 0 ,0 0 0 lon g to n s of m e ta llu r g ic a l grade ore f o r th e s t e e l in d u str y a lo n e ,

ore consumed

in other i n d u s t r i e s would m a t e r ia lly in c r e a s e the t o t a l requirem ents. M&nila

ib er Ho a u t h o r it a t iv e e stim a te s have been made

as to probable requirem ents, about th e only b a s is fo r c a lc u la t io n b ein g p a st United S ta te s consumption.

In

th e p eriod from 1926 through 1930, United S ta te s con­ sumption of manila f i b e r t o t a l l e d 60,849 lo n g tons

8. 9.

S t a f f s o f U .S. G eo lo g ic a l Survey and U .S. Bureau of Mines, Report upon C ertain D e f i c i e n t S tr a te ^ ic Mat ©ri uls* p . 7 . Army and B&vy Munitions Board, The S t r a t e g ic and C r i t i c a l M a te r ia ls , p . 8 .

32

per y e a r •

10

Consumption slumped d uring moat o f t h e

1930-1940 decade* but had r i s e n t o 4 5 ,9 3 3 lon g to n s in 1939.

In ad d itio n * th e United S ta te s consumed an

average of 3 ,26 2 short to n s o f P h ilip p in e Islan d cordage in the 1926~30 p e r io d , and had reached an import t o t a l Of 3,844 short ton s in 1 9 3 9 . ^

I t i s l o g i c a l t h a t with

d r a s t i c a l l y in crea se d a c t i v i t y in sh ip b u ild in g and s h ip p in g , a© w e ll as in c o n s tr u c tio n work, th e s e import t o t a l s would prove an o v e r ly c o n se r v a tiv e i n d i c a t io n of U nited S ta te s requ irem en ts. Mercury The War I n d u s tr ie s Board estim ated 1919 requirements at 20,000 f l a s k s o f 76 pounds each, although the term in ation o f the war made a c t u a l procurement o f t h i s amount u nnecessary.

12

A re c e n t estim ate p la c e s

th e t o t a l annual requirements at between 30,000 and 13 40,000 f l a s k s , w h ile another p la c e s i t at 46,000 f l a s k s . 14 The Army and Navy Munitions Board e stim a te s

10. 11* 12. 13.

U.S. Department of Commerce, S t a t i s t i c a l A bstract th e Unit ed S t a t e s , 1940, p7592l ^ x'bid. , p . 593. War"*!ndustries Board, American in d u stry in t h e War, p*153. S t a f f s o f U.S. G eo lo g ic a l Survey and U .S. Bureau o f Mines, Bepprt upon P ertain D e fic ie n t S t r a t e g ic tm

wlin»l I 1,1 M l

I . # .

* ■ ■ » ! !'■

M M IM IM I

Mat eriala/ p V I t T

14.

"I&tin Am erica's Bole in U .S. D efense Production**, Pan American News, 2 : 7 , Obne 19, 1941.

3 7 ,8 0 0 fla sk ® , s i n c e th e average consumption o f mercury f o r th e past te n y ears has been about 2 8 ,0 0 0 f l a s k s , and World War I ex p er ie n c e re v ea led th at war1H tim e consumption r o s e 35$ above p reced in g y e a r s . m ica th e com plexity o f mica c l a s s i f i c a t i o n makes i t e s p e c i a l l y d i f f i c u l t to e s tim a te probable United S ta te s requirem ents.

The e s s e n c e o f the d i f f i c u l t y i s

th a t sh eet mica and mica s p l i t t i n g s can be e i t h e r s t r a t e g i c or n o n - s t r a t e g lc , depending upon the sub­ d i v i s i o n in to which th e p a r t ic u la r mica f a l l s . U n fo r tu n a te ly , United S ta te s import s t a t i s t i c s are not c l a s s i f i e d on t h i s b a s i s .

S in ce accu rate and d e t a il e d

e s tim a te s are la c k in g , import s t a t i s t i c s n e v e r th e le s s fu r n ish most o f th e a v a i l a b le e v id e n c e .

United S t a t e s

imports o f cut or s p l i t mica aggregated from 885 tons per year in the 1931-35 period t o a post-war h igh o f 16 4 ,0 3 6 tons i n 1937. U n fo rtu n a te ly , cut or s p l i t mica I s lumped with o th er ty p es of mica manufactures b efo r e 1931, and hence no c le a r c l a s s i f i c a t i o n o f mica imports i s p o s s ib le .

Assuming th a t United S ta te s consumption

o f mica f a l l s in t o about t h e same proportions a s world p rod u ction , requirem ents add up as f o llo w s : 15. 16.

Army and Navy Munitions Board, The S t r a t e g ic and C r i t i c a l M a t e r ia ls . p . 10. U.*sT fiepartment of Commerce, S t a t i s t i c a l Abstract of th e U nited S t a t e s , 1940, pTeSl.

34

I t can be a ssu m e d th a t th e b u lk o f th e U nited S t a t e s im ports are of b lo o k mica* c o n ta in in g s h e e t and s p l i t t i n g e , s in c e th e United S ta te s i s l a r g e l y s e l f * s u f f i c i e n t in w aste and sc r a p m ica. 17 I t i s fu r th e r assumed th a t about 58.8% o f t h e s e imports c o n s i s t o f s p l i t t i n g s f o r s t r a t e g i c u ses and 6.5% o f r a d io sheet* a l s o considered s t r a t e g i c . 18 Hence* on th e b a s is o f United S ta te s import s t a t i s t i c s and th ese assumed percentages# 1937 u n ite d S ta te s consumption o f s t r a t e g i c mica s p l i t t i n g s was 2*373 tons# w h ile 1937 %

consumption o f s t r a t e g i c sh eet mica aggregated some 262 t o n s .

In view o f the resurgence o f th e mica

in d u str y throughout th e world i n recen t years# i t i s l i k e l y that demand has in crea sed ap p recia b ly over even 1937 l e v e l s .

I f t h e United S ta te s a c t u a l l y b e g in s to

produce a ir p la n e s at th e r a te of 50*000 per year# th e c a p a c ity of the world mica in d u stry t o produce s u f f i c i e n t s u p p lie s might be s e v e r e ly s t r a in e d . M ck el World War 1 exp erien ce in th e United S ta te s featu red th e d iv e r s io n of over 90% o f dom estic n ic k e l

17. 18.

3Smeny# op. o i t . , p . 122; a ls o U.S. Bureau of Mines, Minerals Yearbook 1941. p p .1359-63. Supra* Chart 1* p . i s .

35

consumption In to m i l i t a r y channels*

19

In l i e u o f

encouraging an almost n o c o e x iste n t dom estic in d u s tr y . th e War I n d u s t r ie s Board urged r a d ic a l cu rta ilm e n t o f c i v i l i a n u ses and attem pted t o s t a b i l i s e p r i c e s .

In

1934. an e stim a te of requirem ents was made, based i n part upon th e assumption th a t 50% o f th e p eace-tim e consumption could be a llo c a te d t o m il it a r y need s.

This 30 e stim a te f ix e d requirem ents at 34.000 ton s per y e a r .

A more recen t e stim a te p la c e s the t o t a l at 40.000 tons Ol a n n u a lly . The United S ta te s Bureau of Mines, how­ e v e r . has estim a ted 45.000 to 50.000 tons per year under normal c o n d itio n s with s u b s t a n t ia l in c r e a s e s during war. 23 vjuartg C r y sta ls E stim ates are again com plicated by th e f a c t th a t but a sm all p o r tio n of th e production o f quarts c r y s t a l s I s o f any r e a l s t r a t e g i c s i g n i f i c a n c e .

In the

p a s t , however. United S ta te s imports have been almost

19. 20. 21 . 22 .

War I n d u s tr ie s Board, American Industry in the War, p . 152. Bmeny, op. c i t . , p .? 5 . flI a t i n Arnerlca*s Hole in U.S. B efen se P roduction*, Pan American Hews, S jS. .Tune 19, 1941. S t a f f s o f 1XJ.S. G eological Survey and U.S. Bureau o f Mines, Report upon C ertain Inefficient S t r a t e g ic Mat e ri a l a .» p . 25.

36

e n t i r e l y o f th e s t r a t e g i c ty p e of c r y s t a l . ^ 3

U nited

State© import© o f quartz crystal© averaged 3 or 6 ton© 34 per year u n t i l about 1936. S in ce 1936, imports have r i s e n s h a r p ly .

In 1940, th e United S ta te s imported

from B r a s i l an a l l - t i m e high o f 73 to n s o f c r y s t a l s .

PS

quinine Requirements i n t h i s case can b e st be estim ated on th e b a s i s o f past consumption, inadequate though th at b a s is may b e.

United State© imports o f

cinchona bark from 1926 to 1930 averaged 2 ,3 5 7 ,0 0 0 pounds 2© a year* Imports d e c lin e d during the 1930#s but had r i s e n again almost to th a t average in 1939*

During the

1926-30 p erio d , imports of quinine su lp h ate t o t a le d 1 ,8 0 5 ,0 0 0 ounces per y e a r , and did not a g a in a t t a i n 27 that t o t a l even in 1939* In t h e 1926-30 p e r io d , our average imports o f other q u in in e , s a l t s , and a lk a lo id s from cinchona bark t o t a l e d 1 ,1 2 5 ,0 0 0 ounces, and reached a peak o f 2 ,6 25,000 ounces i n 1937, as 28 w e ll as a t t a i n i n g n early th a t t o ta l in 1939* War­ tim e needs presumably would be v a s t l y g r e a te r s in c e

23* 24* 25* 26* 27 . 28.

U .S . Bureau of Mines, Minerals Yearbook 1940,p . 1463. U .S. Bureau o f Mines, Mineral.©Yearbook 1939,p . 1395. U .S. Bureau of Mines, M inerals Yearbook 1941,p . 1422. U .S . Department of Gommer c e :""StSTi©iTSal’ a¥s t ra c t of th e U nited S ta te s 1940, p • 5W* ’ I b i d . , p.606* Boo, c i t *

37

g e n e r a l h e a lt h c o n d itio n s might rea so n a b ly he expected to slump somewhati and army needs would he d r a s t i c a l l y a c c e n tu a te d , Eubbev There are no adequate p recedents by which to e stim a te probable rubber requirements* s in c e mechanised warfare i s now waged on a new and v a s t l y enlarged s c a l e .

I t was estim ated in 1934* b efo r e t h i s

change i n th e technique o f war had become f u l l y apparent, th a t United S t a t e s rubber requirem ents would 29 be 600*000 ton s o f crude rubber per y e a r . The i n ­ adequacy of t h i s estim a te i s obvious when i t i s noted th a t only 100,000 ton s per year of t h i s 600,000 to n s was a llo c a t e d t o m ilit a r y u s e s .

Consumption s t a t i s t i c s

fu r n is h some o lu e as to probable requirem ents.

Crude

rubber im ports during the 1926-30 period averaged 521*160 ton s per y e a r .

The p o si^ io a o peak, p r io r t o

the recen t rubber boom caused by n a tio n a l d e fe n s e , was th e 669,519 ton© imported in 1937.

Kecent import

s t a t i s t i c s , however, in d ic a t e a d r a s t ic in c r e a s e . Imports f o r th e f i r s t quarter o f 1941 t o t a le d 247,929 t o n s , an in c r e a s e of 42% over t h e f i r s t q u a r ter o f 1940,

29* 30.

limeny* o&. c i t . * p . 135. U .S. Department of Commerce, S t a t i s t i c a l A b stract Of the United S ta te s 1940, p . 586^ 1

and 90$ above t h e f i r s t q uarter average o f th e p reced in g f i v e yea rs

While t h i s r i s e was no doubt due in part

t o a p p r e c ia b le in c r e a s e s in p r iv a te and government s t o c k s , much of i t must re p r esen t a c t u a l in c r e a s e i n demand.

Thus, i t seems q u ite l i k e l y th a t United S ta te s

consumption i s approaching th e 1 ,0 0 0 ,0 0 0 ton per year l e v e l in rubber consumption.

I t i s c o n ce iv a b le that

a c t u a l war-time requirem ents might even m a te r ia lly I n c r e a se th a t t o t a l . S ilk In view o f recent d r a s t ic a c t io n by the United S ta te s government, the ehanging te e h n iq u e s of in d u str y and warfare, and th e in c r e a s in g sea rch for s i l k s u b s t i t u t e s , i t i s hazardous t o e stim a te United S ta te s s i l k requ irem en ts.

During World War I , d i f f i c u l t

s i l k procurement problems confronted th e War I n d u s tr ie s Board.

Requirements of s i l k in co n n ectio n with

a v ia tio n were not then e x te n siv e but la rg e q u a n t it ie s were needed for c a r tr id g e c l o t h .

In 1934, an estim ate

was made that t h e United S ta te s would r e q u ire about 2 0 ,0 0 0 ,0 0 0 pounds o f s i l k per year for m ili t a r y purposes

31* 3 2.

U .S. Chamber o f Commerce, Our World Trade, January- jferoh, 1941, pp. 13^1?. War in d u S tr ie s Board, American In du stry in th e War, p p .2 41 -2 .

39

alone#

■Itl>. 146*7. loueny, op . c i t . , p . 90. *

_ ^

^ li» . |i i r i i » n

p i nih il *|i W ■" *»»■»*■»«■■©■*■

40

how ever, assumed s u b s t a n t ia l curtailm ent o f c i v i l i a n consumption.

A much mort r e c e n t e stim a te p la ces the 37 requirement at 80,000 tone per year* Ihe United S ta te s Bureau of Mines e s tim a te s a requirement o f 82|b000 tons of v ir g in t i n in normal y e a r s , plus a 30$ in c r e a s e f o r m il i t a r y purposes ( i n s p i t e o f World war I e x p e r ie n c e ), or a t o t a l o f 106,000 tons per year* Xun^sten th e War I n d u s tr ie s Board s tr u g g le d m ig h tily w ith tu n g sten procurement problems and attempted h erc u lea n measures to promote eeonony in u s e , im p ortation o f ore, and expansion of th e dom estic industry* 39 At th e end o f th e war, however, th e r e s t i l l e x is te d a v ery sev e r e shortage*

I t i s d i f f i c u l t t o estim a te th e

probable United s t a t e s requirem ents o f tungsten*

Both

economies of use and a changing te ch n o lo g y e n te r th e p ic tu r e markedly in th e case of t h i s m aterial*

Abrupt

in c r e a s e s in apparent consumption during th e past few years have been caused in part by th e c r e a t io n o f p r iv a te sto c k p i l e s of unknown proportions*

37* 38* 39*

In 1934,

*JUitIn America*a Hole in tJ• 3 * D efense P roduction*, Pan Arnericao Hews, 2 :3 , June 19, 1941* St& ffs o f ~ u 7 s T s e o lo g i c a l Survey and U.S. Bureau o f Mines, Heoort upon Gertain D e fic ie n t S t r a t e g ic Mat e r i a l s » p ♦30 ♦ r .- ™ ™ . War"1I n d u s tr ie s Board# American Indus t r y in t h e War, p*145*

41

i t was estim ated that 9,500 to n s of tu n g sten per 40 year would he r e q u ir e d . ihe u nited S ta te s Bureau o f M ines, b asin g i t s c a l c u l a t i o n s upon an assumed s t e e l output of 6 0 ,0 0 0 ,0 0 0 t o n s , e s tim a te s th a t 6 ,0 0 0 ,0 0 0 pounds o f m e ta l, or 6 ,3 0 0 sh ort to n s o f roughly 60$ c o n ce n tra tes w i l l be re q u ired . 41

40. 41.

Bmeny, qp. e l t . , p.79* s t a f f s o f U .S . G eo lo g ica l Survey and U.S. Bureau of Mines• Beport upon C erta in d e f i c i e n t s t r a t e g i c Hat e r i a l s , p . 31.*

42

Chapter IV

umrm sta tes 3:kj:lr-sotfi ci mc y ik thb strategic RAW.MATERIALS Antimony th e United S ta te s i s fa r from toeing s e l f s u f f i c i e n t In antimony, d e s p it e a p p r ecia b le secondary recovery and th e re cen t development of a t h r i v i n g sm e ltin g in d u str y i n Texas, C a lif o r n ia , and Idaho* In 1913, th e u n ite d S ta te s produced 22$ o f what i t con­ sumed o r, i n s h o r t , was ZZ% s e l f - s u f f i c i e n t * *

During

our p a r t ic ip a t io n in th e war, t h i s r a t i o d e c lin e d to 14$*

During th e 1920*s , t h e s e l f - s u f f i c i e n c y r a t io

r o s e during one year to 23$*

Although in two years

during the 1930-1940 decade the r a t i o r o se to 24$, i t had dropped to a low o f 9$ by 1937*

Over t h e 1913-37

p e r io d , th e average s e l f - s u f f i c i e n c y r a t io was tout 17$* Y ear-by-year p rod uction, consumption, and s e l f - s u f f i c i e n c y s t a t i s t i c s are given in Table 1 .

I t i s apparent th a t

th e United State® I s very dependent upon o u tsid e 3 source® fo r antimony* 1* 3*

HousJi i op * c.it . , p . 429. For d e s c r ip t io n s of United S ta te s reserve® , pro­ d u c tio n , and x>os®itoi l i t ie® , se e ; Roush, jya. ci t . , pp* 247,23d; U .S . Bureau of Mines, Mineral® Yearbook 1941, p p .711-13; Ufatlonal Resources 0o S i i t t e e , ^Mineral Re­ s e r v e s o f th e United S ta te s and i t s Capacity fo r ProS u o llo n , p p .3 1 -2 3 i S t a f f b of "The U.S. G eo lo g ica l Survey and U .S. Bureau o f Mines, Report upon C ertain jOefio.le.nt g t r a te g fo M a t e r ia ls , p p .3 1 -6 , 46.

43

fa b le l 2 U .S. PRODUCTION, CONSUMPTION, AND SHIP-SUFFICIENCY ANTIMONY (Thousands M etric Tons) Year

P roduction

X915 1914 X915 19X6 1917 X9X8 X919 1920 1921 1922 1923 1924 1925 1926 192? X928 X929 1930 1931 1932 19 33 X934 X935 1936 1937

2*6 2*8

4 ,9 5 .2 2 ,5 2 ,3

2*

1 0 ,5 9 ,8 12,0

1 .4 1*3

1 2 .7 18 .1 16*3 9 .9 13*9 1 4 ,6 1 5 .5

2.0

12,0

2 .5 2 .4 2 .4 2 .5 3 .1

1 0 ,7 1 4 ,4 1 7 ,6 1 5 .0 1 6 ,4 1 7 ,1

1.8 1,8

2,8

1*5 0 .9

1 .0

0.8

1 .5 1.0

1 .3 1*5

TOTaL

Consumption

Kf.S

Xbide, p.434.

10.0

9*2 4 ,1 5 .7 6 .3 7*5 1 3 .5 1 6 .2 309.6"

R atio (In Percentagea) 22

26 41 25 .14 14 18 13 10

9 17 23 17 14 17 19 16 15 9 24 14 24 13 10

9

VT

44

Chromium Production o f chromium i n th e United S t a t e s ha® been n e g l i g i b l e * and 8e l f ""sufficiency has been s li g h t *

In 1913* the United S t a t e s produced l e s s than

1 $ o f the chromium consumed*^

JUuring our p a r t i c i p a t i o n

i n th e war, t h i s r a t i o rose to 45$#

A fter th e war e f f o r t

was o v e r , d om estic p roduction la p se d in t o a prolonged p e r io d o f q u ie sc e n c e , and the s e l f - s u f f i c i e n c y r a t io l i n g e r e d w e ll below 1$,

Over th e p erio d from 1913 to

1937, the s e l f - s u f f i c i e n c y r a t i o has been about Year-by-ye&r p ro d u ctio n , consumption, and s e l f - s u f f i c i e n c y s t a t i s t i c s are g iven in Table 2.

The f a c t th a t United

S ta te s prod uction i s now in c r e a s in g i s o f no major im portance, f o r i n 1940 dom estic production was 2,662 6 lo n g ton s o f chrom ite. Hence, i t would appear th a t p o s s i b i l i t i e s o f s u f f i c i e n t expansion o f the dom estic in d u str y to make the U nited S ta te s s e l f - s u f f i c i e n t are 7 alm ost n i l .

4. 6. 7,

Roush, op. e i t . , p . 429. U.S. Bureau™? Mines, M inerals Yearbook 1941, p . 587* For d e s c r ip t i o n of U n i ' f s r e s e r v e s , “p ro d u ctio n , and p o s s i b i l i t i e s , see* Roush, op. p i t . , p p .117-20; U.S. Bureau o f Mines, Miner a lg yearbook 1941, p p .689-90; H&tional Resources Commi€"tee, MlEneraST^eserves o f the United S t a t e s and i fcs Capaclty f o r p rod u ctio n , pp. 4 $ - 3 | S t a f f s o f T l i e TJ• S r & e b io g ic a l survey and U .S. Bureau o f Mines, Report upon C ertain D e f ic ie n t S t r a t e g ic M a te r ia ls , PP«iO -1 1 •

45

Table 25 U .S. PRODUCTION* CONSUMPTION, AND SFLP-3UirFICIPNCY CHROMIUM (Thousands M etric Tons) Year

p rod uction

1915 1914 1915 1916 191? 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937

0*3 0*6

3*3 47*8 44 *0 8 3 .7 5*2 2*5 0 .3 0*4 0.2

0*3 0.1 0.1 0*2

0*7 0 .3 0.1

0 .3 0.2 0.8

TOTAL

5.

0 .4 0 .5 0 .3 2*4 1 95.4

I W 4 , , p*456*

Consumption 66.4 7 6 .3 8 2 .3 1 6 5 .8 1 1 7 .6 1 8 5 .5 68.8

1 5 8 .3 8 4 .3 9 2 .8 1 3 4 .8 1 2 1 .5 1 5 3 .6 220.0

226.6 222*3 324 .8 332.4 2 1 6 .6 9 1 .1 1 1 9 .6 1 9 6 .0 263.9 330.1 565.8 VF0T7ST

Ratio (In P ercen tages) 1 1

4 29 38 45 8 2 mm mm ** * «* mm * +■»

mm — • m -

4

46

Coconut ffh eli Char T h is country I s e n t i r e l y dependent upon lmQ p o r t s f o r I t s s u p p lie s o f whole coconu ts * vihlle coco­ n u ts can b© grown i n c e r t a i n s e m i- t r o p ic a l r e g io n s o f th e United. S t a t e s , n o ta b ly F lo r id a , th ey have n ot proved com mercially f e a s i b l e * 9 I t i s t r u e , o f c o u r se , th a t the United S t a t e s does import la r g e q u a n t i t i e s from Puerto R i c o ^ a s w e ll as small q u a n t i t i e s from oth er o u t­ l y i n g p o s s e ss io n s * Mangane a© a t p r e s e n t the United S ta te s I s s e l f s u f f i c i e n t only i n low-grade ore c o n ta in in g l e s s than 55$ manganese and u n s u ita b le fo r s t e e l production under p r e se n t tech n ology. 11

In ferrograd© o r e s , c o n ta in in g

35# manganese or o v e r , th e United s t a t e s i s f a r from s e lf-su ffic ie n t*

In 1913, the United S ta te s produced , 12 but 1# o f manganese requirem ents. During our p a r t i c i ­ p a tio n i n the war, t h i s r a t i o In crea sed to 36$*

8*

9.

10* 11* 12*

During

Smeny, op* c i t *, pp*186-8* For d e s c r ip t io n of a b o r tiv e attem pts In t h i s cou n try, sees Encyclopedia Americana, V ol*7, p p .1 9 0 -1 5 and fo r r ©q uisft© 'growing '1 c b n d itIo n s, se@j Snodgrass, op * c l t * , pp *12-13. InfraTT P* 67. U.S* Bureau o f Mines, M inerals Yearbook 1941, pp*569-76* Roush, op. c i t *, p . 429.

47

tlx© 1920* a, the r a t i o rose to 12$ during one y ea r . During th e 1930* s , the r a t i o r o s e to 11$ i n one y e a r , and ©kidded to 3$ in a n o th e r .

over th e 1913-1937 period*

th e average s e l f - s u f f i c i e n c y r a t i o was but 8 $ ,

Year-by-

year p ro d u ctio n , consumption, and s a l f - s u f f i c i e n c y s t a t i s t i c s a re found in Table 5*

During 1940, the U nited

S t a t e s produced 4 0 ,1 2 3 lo n g to n s c o n ta in in g 35$ or more manganese c o n te n t, but imports t o t a l e d 1 ,2 8 2 ,0 7 9 lo n g tons* 14 B arring new te c h n o lo g ie s which might enable abundant low -grade or© i n the U nited S ta te s to be t r e a t e d , p r o s p e c ts fo r s e l f - s u f f i c i e n c y i n high-grade manganese seem very s l i g h t in d eed . 1 *5 Manila Fiber The United s t a t e s has no dom estic prod uction o f t h i s m a te r ia l and i s com pletely dependent upon Imports from the P h ilip p in e I s la n d s and, to a very minor d e g r e e , from the N etherlands E ast In d ies and B atin America. Although I t I s p o s s ib le th a t m&niia f i b e r might be grown

14* 15*

U.S. Bureau o f Mines, M inerals Yearbook 1941, p . 568. For d e s c r ip t i o n o f U n ite H ^ ta te s r e s e r v e s , p rod u ctio n , and p o s s i b i l i t i e s , see* Boush, op. c i t . , p p .64-67; Army and Navy Munitions Board, Tiie s t r a t e g i c and C r i t i c a l M a t e r ia ls , p . 8 ; U .S. Bureau o f Mines, Minerala Yearbook 1941, pp*569-76; N ation al Resources Oatnmittee';n'¥ ih e r 'a l"W se r v e a o f th e United S ta te s and i t s Capacity fo r P rod u ction , p p .146-65; and S t a f f s o f 0* s'• Ueblogle&1 Survey~ahd U.S. Bureau o f Mines, Report upon C ertain D e f ic ie n t S t r a t e g i c Materi a l s , pp. 2 -V, 41-2 ’.

48

Table 313 0 .S* PRODUCTION, CONSUMPTION, AND SElfi’-suif’F i e r a c y

M&MOaHFSE (Thousands Metric Tons) Year

p roduction

1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937

4*1 2*7 9*8 32*0 131*5 310*8 55*8 95*9 13*7 13*6 32*0 57*4 9 9 ,9 4 7 .0 45*5 4 7 .6 6 1 .3

13*

68*1

TOTAL

39*9 1 8 .1 19*5 26*9 26*9 32 .6 40*9 1 2 3 3 .S

I b id . $ p *440*

Consumption 561 451 426 764 847 857 449 806 326 503 520 547 833 857 747 581 877 744 588 160 246 416 475 963 1066 I550 o f dom estic req u irem en ts *16

lu r in g United S ta te s

p a r t i c i p a t i o n in the war, t h i s r a t io r o s e to 118$. During the 1920*3, th e s e l f - s u f f i c i e n c y r a t i o r o se as high a s 61$*

During the 1930»©, I t rose as h ig h as 122%

and f e l l as low a s 32$.

The o v e r - a l l average, from 1913

through 1937, has been 63$.

Year-by-year p rod u ctio n ,

consumption, and s e l f - s u f f i c i e n c y s t a t i s t i c s are g iv en in Table 4 ,

Apparently dom estic production s in c e 1937

has been stim u la ted by r a p id ly r i s i n g p r i c e s .

In 1938,

the United S ta te s produced 88 $ o f the new mercury consumed i n the United S tates* *^

16. 17. 18 . 20*

In 1939, i t produced

f o r a d e s c r ip t io n o f attem pts to grow t h i s f i b e r i n F lo r id a , sees Encyclopedia Americana, 7 o l* 1 8 , pp . 216—7 . -— — —-----~ —---- ------U.S. T a r if f Commission, Report to th e P re sid en t on Q u ic k s ilv e r , Report Ho.92, p p .5 , 8 . Roush, opT~ c i t . , p*4P9-. U.S. Bureau o f Mines, Minerals yearbook 1940, p .6 6 0 ,

50

Tttble 419 0*8. mOWO-UOS, OOMSOMPflOM, AND SIILF-SUFFICIENCY W.EGOKY (Thousands Metric Tons) Year

Production

1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937

1516 1241 1557 2245 2712 2465 1606 1004 475 478 595 7 56

19 .

688

lOTiiL

573 846 1358 1800 1638 1897 959 735 1174 1321 1259 1255 321*74"

I b i d . , p . 442,

Consumption 1601 1749 1746 2003 2295 2738 1721 1951 1240 1725 1926 1728 2237 2512 2362 2465 2934 1821 1560 1238 2279 1949 1915 2614 2658 50967

Ratio (In Percentages) 95 71 90 112

118 90 93 51 38 28 37 44 31 22 36 55 61 90 122 77 70 60 69 48 47 63

51

B3%*

file In crea sed output was accompanied and la r g e ly

caused by astronom ic in c r e a s e s in mercury p r ic e s Recent r e p o r ts in d ic a t e th a t U nited S ta te s mercury pro* d u e tio n h a s been fu r th e r stim u la ted by n a tio n a l d efe n se and war demands*

In January, 1941, i t was claim ed th a t

th e U nited S ta te s was now producing enough mercury to meet i t s n e e d s, by v ir t u e o f In creased p rod u ction from 23 re-opened m arginal mines* a February, 1941, r e p o r t had I t th a t th e u n ite d S ta te s was m eeting a l l i t s own n^eds i 24 and su p p lyin g p art o f E ngland's requirem ents as w ell* “

During 1940, th e U nited S ta te s exported v a s t ly more 25 mercury than she imported*" T his s e l f * s u f f i c ie n c y J ls 'I p o s s ib le under th e impetus o f extrem ely h igh p r ic e s^ and w i l l probably be o f r a th e r lim it e d d u ra tio n a t any p r ic e 26 because o f la ck o f reserv es*

21 *

23* 24* 25* 26.

Loc* c it * I x H d *, pp* 662-3* I 11Mercury A p len ty *, B u sin ess Week, January 4 , 1941, p*20. s t o c k p i l e s Grow1*, BusTne'aF Weelc, February 8 , 1941, pp•50*1• U*S* Bureau o f M ines, M inerals yearbook 1941, p •652* For d e s c r ip tio n o f United S ta te s r e s e r v e s , p rod u ction , and p o s s i b i l i t i e s , see* Bmeny, 0£* c i t , , p*104-8? U .S . Bureau F oreign and Dom stic"com m erce, Trade Inform ation B u lle t in , 631, p . 1 2 ? Roush, op*~ c iT T, pp, 2&6-9G; B&tionaX~Resources Committee, Mineral Re­ se r v e s o f the U nited S ta te s and i t s Qap^lCy"f^r^Pro­ d u c tio n , pp *2 0 T -lI'P a n 0 5 7 s* Bureau o f f i n e s , M inerals Yearbook 1941, pp*656-62? S t a f f s o f U*S* G eo lo g ica l Burvey"^n^UTS* Bureau o f M ines, Report upon c e r ta in D e f ic ie n t s t r a t e g ic M a te r ia ls, pp*1216, 43,

52

The co m p lexity o f m ica makes I t v ery d i f f i c u l t to c a lc u la t e th© e x a c t e x te n t o f dependency upon fo r e ig n sou rces o f s t r a t e g ic m ica,

i t i s lik e ly * however, th at

w h ile th e U nited S ta te s i s la r g e ly s e l f - s u f f i c i e n t in scrap and uncut m ica, t h i s cou n try I s alm ost com p letely dependent in the s t r a t e g ic mica f i e l d , T h e U nited S ta te s im ports v i r t u a l l y a l l I t s mica s p l i t t i n g s from a b r o a d , T h i s n a tio n I s a ls o fo r c e d to Import about 75$ o f i t s sh e e t m ica.

In 1913* the U nited S ta te s was 43$ s e l f - s u f f i c i e n t in sh eet m ica. 30 During our p a r t i c i ­

p a tio n In World War I* t h i s r a t io could n ot be r a is e d above 37$,

The War In d u s tr ie s Board mad© no p a r tic u la r

attem pt to encourage the dom estic sh e e t mica In d u stry but 31 co n cen tra ted on encouraging Imports from In d ia , During th e 1920* s , th e s e l f - s u f f l e i e n c y r a t io r o se as h ig h a s 31$,

During the 1930*s* i t rose to 33$ b ut went as low

a s 15$*

The o v e r - a ll average o f s e l f - s u f f i c i e n c y during

the 1913-37 p erio d was 26$* or roughly o n e -fo u r th ,

Year-

b y-year production* consumption* and s e l f - s u f f i c i e n c y

27,

army and Havy M unitions Board, The s t r a t e g ic and C r it ic a l M a te r ia ls, p # ll* 26 • £ o c rr"c l i * * XtQC* c"i t , 30* housh* 0£ , c i t , * p*444, 3 1 , War I n d u s tr ie s Board* American In d u stry in the War, p p , 201 - 2 *

53

Table 5 32 U ,S , PRODUCTION* CONSUMPTION* aND SELF^SUFFICIENCT MICii

(Thousands pounds) Year

P rod u ction

19X3 19X4 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1926 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937

1701 557 554 866

1227 1644 1546 1683 742 1078 2063 1461 1794 2172 1512 1683 2035 1465 962 339 365 584 837 1319 1695 TOTit! “ S gffS S

32#

Roush* op, c i t , , p .444*

Consumption 3951 1917 2194 3277 4657 4394 4376 6183 2392 4528 7526 5921 5745 8350 4971 5787 8508 5747 2931 1572 2382 3486 4707 6756 10845 123686

R atio (In P ercen tages) 43 29 25 26 28 37 35 27 31 24 27 25 31 26 30 29 24 25 33 22

15 , c i t *, p,28* Roush, ojo* c i t *, p ,5 0 , U*B* Bureau o f M ines, M inerala Yearbook 1941, p»077* I n fr a , Table 24 , p, 112 .

69

M anila F ib er U nited S ta te s Im ports o f unmanufactured m anila f i b e r , In lo n g to n s , fo llo w :

1926-30 av era g e,

60,8 4 9 to n s ; 1931-35 a v erage, 34,972 to n s; 1936, 30,027 to n s; 1 9 3 7 , 4 3 ,7 0 2 to n s; 1938, 2 7,383 ton s} and 1939, 4 3 ,9 3 2 tons*

There have a ls o b een s u b s ta n tia l Imports

o f manufactured P h ilip p in e Isla n d cord age *100 In th e f i r s t quarter o f 1941, the U nited S ta te s imported 1 6,827 lo n g ton s o f m an!la f ib e r N early a l l o f th e se im ports o r ig in a te d in th e P h ilip p in e I s la n d s .

According to th e most a u th o r i­

t a t i v e world p rod uction s t a t i s t i c s , the P h ilip p in e s have an alm ost com plete monopoly o f th e p rod uction o f manlla pci fib e r * In 1939, th e U nited S ta te s Imported some 46,000 ton s o f m anlla f i b e r , and of t h i s t o t a l the P h ilip p in e s produced a l l but 720 ton s which came from the N etherlands East In d ie s and L a tin America,

In th a t y ea r , L atin

America produced but 103 to n s , or l e s s than 1% o f t o t a l

25* 26* 27. 28. 2 9.

U .S . Department o f Commerce, S ta ti s t i c a l A b stract o f th e United S ta te s 1940, p.BITS’. ~ I S id . , p7SffS7 “ U.S. Chamber o f Commerce, Our World Trade, January* March, 1941, p p .1 3 -1 7 . League o f N a t io n s , S t a t i s t i c a l Yearbook 1 9 3 9 -4 0 , p .124* McGowan, H .P ., “L atin America as a Source o f S tr a te g ic M a teria ls”, B u lle t in Pan American Union, 8 5 :1 0 3 , February, 1941“— --------------- "

70

Imports*

30

About 75% o f U nited S ta te s Imports o f m anlla

f i b e r o r ig in a t e in on© p ro v in ce, Davao in Southern Mindanao.^*

a few y e a r s ago, t h i s alm ost com plete

dependence upon the P h ilip p in e s seemed no cau se fo r alarm .

In r e c e n t y e a r s , w ith the u n s e ttle d s ta tu s o f

th e is la n d s and the menacing g e stu r e s o f Japan, i t I s co n c e iv a b le th a t shipm ents from th e P h ilip p in e s might be c u t o f f or a t l e a s t d r a s t ic a l l y curbed. Mercury Mercury Imports In to the United S ta te s , in gg f l a s k s o f 76 pounds a p ie c e , have been? 1926-30 avera g e, 1 7 ,0 3 9 f la s k s ; 1931-35 a v erage, 9 ,3 5 5 f la s k s ; 1936, 1 8 ,3 5 5 f l a s k s ; 1937, 18,921 f l a s k s ; 1938, 2,368 f l a s k s ; and 1 9 3 9 , 3,500 f l a s k s .

1940 consum ption, how-

e v e r , dropped sharply to 171 f l a s k s , or on ly about 6 to n s . These im ports In to the United S ta te s have o r ig in a te d p rim a rily In Spain and I t a l y , alth ough Mexico has o c c a s io n a lly produced la rg e q u a n t it ie s .

The l a t t e r

p roducer, however, has been d e c id e d ly e r r a tic *

In th e

p e r io d from 1923 through 1939, Spain and I t a l y le d a l l 3 0 . ' Apodoea, Joseph, *A g ricu ltu re In D efen se% F oreign A g r ic u ltu r e , V o l.5 , March, 1941, p*93. 31. Army and Navy M unitions Board, The s t r a t e g ic and C r it ic a l M a te r ia ls, p . 9 . 32. U.S. Department o f Commerce, S t a t i s t i c a l A b s t r a c t o f t h e U nited S t a t e s 1940, p . 60S. 33# U.S. Bureau o f Mine a, M inerals yearbo ok 1941, p . 662.

33

71 o th er U nited S ta te s s u p p lie r s In ev ery year*

54

In a l l

but two o f th e se year® Spain was th e Ho* 1 s u p p lie r , and In th ose two y ea r s I t a l y led*

In most o f the y ea rs

d uring t h i s p erio d Mexico was a r a th e r weak th ird *

In

1940, how ever, Mexico fu r n ish e d n e a r ly th r e e -fo u r th s o f im p o rts, w ith Spain a poor s e c o n d * ^ Mica A ttem pts have been made p r e v io u sly to estim a te the e x t e n t o f s t r a t e g ic mica im ports in to th e U nited S ta tes*

These e s tim a te s were based la r g e ly upon th e

fo llo w in g s t a t i s t i c s co v erin g c u t, s p l i t , and manu­ fa c tu r e d m ica, p o r tio n s o f which were s t r a t e g i c .

In the

1926-50 p erio d , Imports o f th e se ty p e s o f mica to ta le d 36 2 ,0 3 8 tons* Subsequent Imports o f cut or s p l i t mica have to ta le d * 1 9 3 1 -5 , 885 to n s; 1936, 2,763 to n s; 1937, 4 ,0 3 6 to n s; 1938, 1 ,011 ton s; and 1939, 1 ,3 8 2 tons# Imports o f mica manufacture d uring t h i s decade were: 1 9 3 1 -5 , 106 to n s; 1936, 91 ton s; 1937, 77 to n s; 1938, 105 to n s; and 1939, 172 tons*

In 1940, both th e tonnage and v a lu e o f mica im ports sharply In crea sed . 37

34. oo* 36* 37#

U .S. Bureau o f M ines, M inerals Yearbook 1941, p . 662* Housh, op* c i t *, p . 291* Ib id * , former c i t a t io n , p . 662* U .S. Department o f Commerce, S t a t i s t i c a l a b s tr a c t 2? t he U nited S t a t e s , 1940, pTTOTi U.S."Bureau ofHKneia, Mineral a Yearbook 1941, p*1358#

72

Of the'a© im p o rts, th e built: has been su p p lied 1$ 6 by In d ia , w ith a la r g e volume a ls o doming from M&dav.1 33 k g a sca r , Canada has a ls o been a s i g n i f ic a n t secondary source o f mica im p o rts, e s p e c ia l ly o f s p l i t t i n g s .

In

1940, In d ia r e ta in e d le a d e r sh ip in the supply o f most unmanufactured ty p es o f mica snd many manufactured ty p es, Th© c le a r e s t co n cep tio n o f th e so u rces o f s t r a t e g ic mica can be gained from Chart 2 , complex though I t may appear*

b iek el H lokel im ports can be d iv id e d in to ore and m a tte, n ic k e l o x id e , and n ic k e l and a llo y s in p ig s , etc* Only im ports o f ore and m etal w i l l be con sid ered here* Ore im ports have b e e m ^

1926-30 a v era g e, 9,354 to n s;

1931-5 a v era g e, 6 ,4 5 4 to n s; 1936, 12,697 to n s; 1937, 1 2 ,5 4 3 to n s; 1936, 7 ,2 9 0 to n s; and 1939, 14,217 tons* 42 1940 im ports ro se to 17,445 tons* Imports o f m etal 43 and a llo y s In p ig s , e t c * , have been; 1926-30 average, 21,034 to n s; 1931-35 a v era g e, 1 7,506 to n s; 1936, 40,129

38* 39, 41* 42* 43*

Roush, op* c i t * » p *361 • U*S* Bureau*©? M ines, M in e r a ls yearbook 1941, p .1364* II* S* Department o f Commerce, St a t i s t i c al"!£Fs t r a c t o f the U nited S ta te s 1940, p *6(35T~ 0*3* Bureau o f Mines, M inerals yearb ook 1941, p*600* Doc, c i t * "

40 Chart % SOURCES OF STRATEGIC MICA BY COUNTRIES-1038-SHORT TONS (X A CT QUANTITIES OT STRATEGIC MICA ST COUNTRIES CANNOT SE ASCERTAINED QUANTITIES SHOWN ARE ESTIMATES RELIEVED TO RE CLOSE, BUT VARY FROM YEAR TO YEAR

ioo% WORLD PRODUCTION BLOCKor BOOK MICA 9015 TONS

FILMS AND SPLITTINGS

SHEET

6013 TONS

TONS

INDIA 5 2 7 8 T M A D A G A SCA R 710 T

478 T

C A N A >A 2 3 T

110 T

IN D IA 1 0 5 5 T V

B R A Z IL 5 7 5 T

U N IT E D S T A T E S

A R G E N T IN E 257 T

AUSTRALIA 7 3 T. CANADA AST MADAGASCARS7T. PERU 27 T. RUMANIA 2ST. TANGANYIKA 2 4 T. RHOOCSIA 1ST. ■OLIVIA ST.

NORW AY AND SW EDEN 2 5 9 T

f1

ITALY 1 3 4 T

394 T

*90

ssuu

laiinui

STRATEGIC MICA NOM-STRATEGIC MICA

NOM-STRATEGtC B IS T

Army and i'Savy M unitions Board9 ^ tr a te y ie and C r it ic a l

raterlalSfl between

74

tons} 1937, 40,870 tons} 1938, 81,963 tons} and 1939, 49*654 tons*

d uring 1940, im ports r o se to 7 0 ,5 1 5 to n s .

44

During the f i r s t q uarter o f 1941, n ic k e l ranked 9th among U nited S ta te s im p orts, accou n tin g fo r 1*8% o f the 45 v a lu e o f a l l im ports* Im ports fo r t h i s quarter were 141% over th e f i r s t quarter average fo r the p a st f i v e years* N ick el im ports o r ig in a te alm ost e x c lu s iv e ly in Canada.

T his predominance i s to be ex p ected , s in c e

Canada alm ost co m p letely dom inates the world in d u stry and i s a d ja cen t to t h i s cou n try.

In 1940, n ea rly a l l o f

th e ore and m atte a s w e ll as a l l the oxid e came from Canada, o th er s u p p lie s b ein g o f n e g lig ib le im portance.

46

In th a t same y e a r , 99*6% o f the m e t a llic n ic k e l and a llo y s came from Canada*

These p ercen ta g es are rep re­

s e n ta tiv e o f th e overwhelming p o s it io n o f Canada as the p r in c ip a l and alm ost so le su p p lie r o f U nited S ta te s n ic k e l,

acco rd in g to a r e c e n t statem en t by th e

P re sid en t o f the I n te r n a tio n a l N ick el Co*, le a d in g Canadian n ic k e l s u p p lie r , Canada can con tin u e to meet a l l n ic k e l requirem ents o f th e empire pnd the U nited S tates* 47 a cco rd in g t o t h i s o f f i c i a l , e x is t i n g s h o r t a g e

44* 45* 46* 47*

U.S* Bureau o f M ines, M ineral yearbook 1941, p*606. U*S* Chamber o f Commer 1 5 .8 2 3 .2 ** 30.7 0.2 1 3 .0 2 7 .4 r»

«*•

0.6 0.2 0.8

-

-

-

c V* ' / "1 i

-

1 .7 0 .4 0 .4

World fo la l ■ W I I I W M Ij n l B llM m .

299 271 191 143 186 273 369 466 583 520 -

( 1 ) Imports In to tti© u n ited S tates*

6*

19539 s t a t i s t i c s are taken from League o f N a tio n s, S t a t i s t i c a l Yearbook 1958**39, p . 156 5 from 1930-39 s t a t i s t i c s are""^aken from 1959-40 e d it io n , p .1 5 4 .

97

f a b le 127 WESTERN HEMISPHERE EXPORTS OP CHROMITE TO

the:

UNITED STATES

(thousands o f I*ong Tone) Year

Cuba

1913 • 1914 mm 1915 1916 mm 1917 9 1918 1919 14 1920 1 1921 1 * 19 22 10 1923 8 1924 30 1926 3© 1926 1927 17 34 1928 63 1929 1930 41 1931 14 1932 24 1933 49 1934 48 1935 70 1936 1937 93 662 TOTiOi FERCENT 1 2 .7

7*

Canada

Guatemala

B r a z il

1 10 12

mm

-

mm

mm

m

mm

19

mm

mm

21

1 2

18

1

4 •

mm

9 8 8 1

•

-

6

0 .7

100.0

mm

m

m

mrn

m

-

mm

-

mm

m m mm

** •

«* mm

2

-

mm

Roush, op» c i t e , p . 181.

m m

mm

2.1

mm

•

1

"HRS----

•

mm

mm

mm

2 1

mm

m

mm

iu.„. l. i rrr0.2

100 66

m m mgo

rnm

mm

«*

65 75 76 116 78 150 82 90 129 118 150 215 B23 217 318 327 213 89 117 192 259 324 554 “ I , SSL

3

-

T o ta l World F.xp. to

98

expanded*

XX

Xn tlx© l a t t e r year* Cuba accounted fo r &%

o f t o t a l w orld output*

The d ep ressio n * w ith I t s low

p r ic e s * stru ck th e Cuban In du stry w ith great s e v e r ity and p ro d u ctio n v i r t u a l l y ceased in 1 9 3 2 ,12

The Cuban

in d u str y has s in c e r e v iv e d , however, and in 1937 i t accounted, fo r 7% o f th e t o t a l w orid ou tp u t.

13

P roduction

in 1938 t o t a le d 40*0X6 m etric tons* and in 1939* 67*061 m etric tons*

14.

A ll o f th e Cuban p rod u ction in th ese two

y e a r s went to the (Jnited S ta tes*

T otal Cuban production*

up to 1938* amounted to some 576*000 to n s .*5

a t th e

p r e se n t tim e th ere a re re p o r ts o f new a c t i v i t y and ex 16 p ansion in th e Cuban in du stry* and production may i n ­ cr ea se ra th er markedly*

I t has been a u t h o r it a t iv e ly

estim a ted th a t Cuban production can be in crea se d v er y s u b s ta n tia lly * 17 In a d d itio n to th e se d e p o sits o f low grade chromite* th er e a re huge Cuban d e p o s its o f chrom iferous Iron ore*

11* IE* 13* 14. 15. 16* 17*

T his ore co n ta in s from X% to 5$ chromium*

Housh* op* c i t ** p . 113* lea g u e o f N a tio n s, S t a t i s t i c a l Yearbook 1 9 3 9 -4 0 * p*154. Housh* ojd* c i t * * p . 113* U .S. B ureau'of M ines, M inerals Yearbook 1940* p*600* Housh* op* c i t * * p*115. M in er a l Traffie"N o tes* I 2 t 2 , June 20* 1941* 9* S . T arT fF ^ oSnl "sa i oh * L a tin America ajj a Source o f s t r a t e g ic and oth er E asentjaT H a F e r ia ls * ' p7457

99

pitta sm all p erc en ta g es o f n i c k e l T h e s e d e p o s it s are 19 s a id to co n ta in 8 , 000 , 000,000 ton s o f low -grade o r e . T his or© i s extrem ely d i f f i c u l t to t r e a t s u c c e s s fu lly * Canada has been an oth er ra th e r e r r a t ic producer* Chromite d e p o s its are known in se v e r a l o f th e p r o v in c e s , alth ou gh most o f th e p rod u ction i s cen tered in Quebec .^0 Canada was a minor producer d uring World War I , when i t produced 10 ;$ o f w orld o u tp u t, b u t soon a f t e r la p se d in to Q"J a p erio d o f q u iescen ce* There has been l i t t l e pro­ d u ctio n s in c e 1985, and indeed Canada has Imported chrome ore d uring most o f t h i s p e r io d . 28 S in ce 1934, however, th ere have been renewed s t ir r in g s in the in du stry* s c a le p rod u ction has been renewed,

new

Sm all-

d e p o s it s have been

d isc o v e r e d , and developm ent work i s p ro ceed in g . ^ Much o f t h i s r e c e n t a c t i v i t y has been about 100 m ile s north­ w est o f port Arthur in O n tario.

T his area i s rep o rted

to co n ta in about 4 ,0 0 0 ,0 0 0 ton s o f low -grade ch rom ite.

24

I f p r ic e s cou ld be m aintained a t h l $ i l e v e l s over a lon g

18. 19. 20. 21 . 22. 23*

V o sk u ll, op* c i t *, p . 207. h o c* c i t . Roush, op, p i t . , pp*112-113. h o c * c it * Moore, op. c i t . , p .142. Canada Bepartment o f M ines, The Canadian M ineral In d u stry In 1935, p*42; E n c y o lo p e a iX ^ C a n a d a ^r~ V o l.2 , p .3 1 . M ineral Trade Hot©a, 15*9, September 20, 1941.

100 enough p e r io d , Canada m ight a g a in become a minor producer* Bra a l l l a another w©at©rn Hemisphere pro-** ducer*

she p o s s e s s e s ra th e r e x t e n s iv e d e p o s it s , but OR

th e developm ent work ha© been v e r y lim ited *

Production

h a s occurred s p o r a d ic a lly throughout t h is e e n tiir y , as r e v e a le d by T ables 11 and 12 , a s w e ll as oth er sources* In 1940, B r a z il exported 4 ,5 7 2 m etric ton s o f ch rom ite, 89$ o f which was shipped to the U nited S t a t e s * ^

This

represent© an a p p recia b le in c r e a se over p rev io u s Bra­ z i l i a n p ro d u ctio n , alth ou gh output remains on a sm all sca le*

The g r e a t handicap faced by th e B r a z ilia n in d u stry

I s a sever© la c k o f in la n d tr a n sp o r ta tio n f a c i l i t i e s , which i s n ece ssa r y i f many o f the h ith e r to in a c c e s s ib le 28 d e p o s it s are to be e x p lo ite d * The c o s t o f g e t t in g ore from th e mine t o the s e a i s g r e a te r than the I n i t i a l c o s t 29 o f e x tr a c tin g the chrom ite* The Bureau o f Mines e s t i ­ m ates th a t, w ith Improved tech n o lo g y and tr a n s p o r t, p lu s

25* 26* 27* 28* 29*

Trueblood, Howard I * , ^Economic D e f e n s e o f t h e Am ericas”, F oreign p o lic y K ep orts, 1 6 s132, August 1 , 1940* £J*S* T a r iff Commission, T a r iff Inform ation S e r ie s 21, p*4S* M ineral Trade B o te s, A p ril 1 9 , 1941, p*2* Loo* c i t *, and e s p e c ia lly ftM lneral K esonrces, Pro­ d u c tio n and Trade o f B r a z il% F oreign Mineral s q u a r te r ly , 4 ®34**6, J u ly , 1941* M in e r a l T r a d e Ho t e a , 15 * 5 -9 , S e p te m b e r 20,1941*

101 fa v o r a b le p r i c e s , B r a a ll co u ld produce 100,000 to n s of ore per y e a r * ^ Guatemala i s an oth er producer o f some s l i g h t promise*

Although p rod u ction has been sm all and

e r r a t i c , Guatemala c o n ta in s h ig h grade ore r e s e r v e s o f 51 c o n sid e r a b le s i z e , P roduction reached 1 ,3 2 1 ton s in 1939, b u t slumped to 195 to n s in 1940, as sev e ra l im32 p o rta n t m ines suspended op eration * American c a p it a l i s in v e s te d in th e developm ent o f th e se p r o p e r tie s , but p o s s i b i l i t i e s fo r a s i g n if ic a n t emergence o f Guatemala seem r a th e r dubious* There are a ls o s ix or seven d e p o s its in Newfoundland i a lth ou gh l i t t l e corded*

production has been r e -

Recent re p o r ts have to ld o f new cla im s b ein g

stak ed out t h e r e , and i t is p o s s ib le th a t p rod uction on 34 a sm all s c a le i s under way* The government o f New­ foundland has been an xious t o d ev elo p chrom ite pro­ d u c tio n as p a rt o f i t s war e f f o r t .

Hence, Newfoundland

h as encouraged v i s i t i n g g e o lo g is t s to spend t h e ir

30. 31* 32. 33. 34*

U .S. Bureau o f M ines, M inerals yearbook 1941, p*60. Bmeny, op . c i t * , p . 6 8 . U .S. Bureau"©!* F oreign and Domestic Commerce, I n te r n a tio n a l R eference Source, V o l* l, N o .16; a l s o , M ineral Trade N o tes, 1 3 ;1 6 , November 2 0 , 1941. Roush,1,1op*' c l t *, p . 110* M ineral TraSe N o tes, 1 2 , June 20, 1941, p . 2.

102

summers in Newfoundl&nd# fh e r e are o th er W estern Hemisphere d e p o s it s , some o f which are e x p lo ite d sp o r a d ic a lly and on a v ery sm all sc a le *

‘These d e p o s it s are found In A rgen tin a,

Columbia, th e Dominican R ep u b lic, O reenland, and Mexico* SB

35* 36*

M ineral ffrade K otes, 1 3 8 2 ,J u ly 19, 1941* R o u s h jo p * o l t *, p*118*

103

Chapter VIII CGCQHUTS Although th e a c tu a l acreage now devoted to coconu ts in th e Western Hemisphere i s sm all compared to th a t o f non-heml sp h eric a r e a s , p o t e n t i a l i t i e s are enormous* a cco rd in g to a l a t e e s tim a te , o f th e roughly 6 , 000,000 aGres in th e world p la n te d in co c o n u ts, th e Western Hemisphere has but 1 60,000 acres*

1

T his t o t a l does not

In clu d e w ild or s e lf - p la n t e d coconut la n d , o f which L a tin America i s estim a ted t o have alm ost 1 ,0 0 0 ,0 0 0 acres*

2

Only about 10$ o f the coconuts grown in t h i s w ild a c r e a g e , however, are even h a r v e ste d . 3 Coconut p rod uction o f L atin America has been r e l a t i v e l y s t a t i c during the p ast few d eca d es, w hile world p rod uction has been In cre a sin g ra th er markedly .4 The coconut palm grows w ild and flo u r is h e s on b oth c o a s ta l p la in s o f Mexico, o f the C en tral American R ep u b lics, and a l l th e way south to Ecuador on the P a c if ic 3 and to c e n tr a l B r a z il on th e A tla n tic * In a d d itio n

1* 2*

3* 4* 5.

S n o d g r a s s , op* c i t * , p*27*

pan American Union, Coconuts in t h e A m e r ic a s , p . 9* W ilson, C h a rles, "Buy Hemisphere Products **, Harper 1a 1 8 5 s l5 2 , January, 1941* T annenbaum , Whither L atin America t , pn*162-3. Fan Amer 1 can UnionJ Coconuts in~The A m e r ic a s , p . 11.

104

to th e s e mainland a r e a s, many o f th e Is la n d s o f th e Caribbean are n a tu r a l producers o f c o c o n u ts.

In many

p o r tio n s o f t h i s v a s t a r e a , p la n ta tio n e f f o r t s have been e s ta b lis h e d w ith some su ccess*

These p la n ta t io n s , to*

g eth er w ith w ild coconut a r e a s , render v i r t u a l l y every n a tio n in C entral America, th e Caribbean r e g io n , and n orth ­ ern South America a coconut producer.

There are v a s t

areas which p o s s e s s a l l th e r e q u is it e q u a l it i e s o f tem perature, su n sh in e , m o istu r e , and s o il* Jamaica i s probably th e le a d in g coconut pro­ ducer in L atin America.

Exports of whole nuts have beem

1 9 3 8 ,7 3 3 ,4 1 5 ,3 7 9 n utaj and 1 9 3 9 ,8 3 1 ,4 0 6 ,1 3 7 n u ts .

T his

I s one o f th e few L a tin American producers th a t m ain tain s a ccu ra te record s a s to coconut p rod uction and export* Modern, s c i e n t i f i c , w e ll-d e v e lo p e d p la n ta tio n s account fo r a la r g e percen tage of th e Jamaican output*

Over a p eriod

o f y e a r s , co con u ts c o n s t it u t e one o f th e major exp orts o f Jamaica* T rinidad i s an oth er o f th e le a d in g p rod u cers, and as In th e e a se

o f

o f the U nited S t a t e s .

6*

Jam aica, one

o f

th e le a d in g su p p lie r s

Exports have been: 1938,^ 2 ,2 4 5 ,3 0 2

For a d e s c r ip tio n o f th e se c o n d itio n s sees I b id ., pp *6 -7 ; and Snodgrass, o£* c i t , , p p ,1 2 -1 3 . 7* B e a ls , C a rleto n , ffan A m e r i c a , p ,4 8 7 , 8 . South American Handlpook 1941, p . 4 2 , 9 , B e a ls , OP* c i t * , p ,fe§ *

105

nut3} and 1939,10 568,790 nuta.

These ex p o rts r e p r e se n t

hut a sm all f r a c t io n o f th e estim a ted 53 , 000,000 n u ts produced each year In T rin id a d .

The rem ainder are con­

sumed l o c a l l y or sto red fo r fu tu re exp orts*

The B r it is h

are em ploying s c i e n t i f i c methods h ere and a r e ap p lyin g ex p erien ce gained in t r o p ic a l la n d s o f th e East*

The

A g r ic u ltu r a l S o c ie ty o f T rinidad has r e c e n tly opened an experim ent s t a t i o n to improve th e coconut in d u stry in th e Caribbean*

12

In T rinidad and Tobago# coconuts u s u a lly

rank among the le a d in g e x p o r ts . Puerto H ico, fu n c tio n in g behind p r e f e r e n tia l t a r i f f treatm ent# i s a le a d in g producer and a ranking exp orter o f cocon u ts to the U nited S ta tes* wares13

T h e se ex p o rts

1937, 12,964,000 n u ts; 1938, 12,453,000 n u ts; and

1 959, 1 5 ,7 1 2 ,0 0 0 n u ts . B r it is h Honduras, w hich fe a tu r e s p la n ta tio n production# produces about 1 0 , 0 0 0 , 0 0 0 n u ts a y e a r , a la r g e p rop ortion o f w hich is consumed lo c a lly * In 1958, 14 exp orts were 4 ,7 7 9 ,2 4 0 n u ts . T his was about in l i n e

1^* 11* 12. 13. 14*

3outh American Handbook 1941, p .4 9 .

pan American Union, Coconuts in t he Ame r i ca s , p . 11. ¥i/Il son , C h arles, “Buy Semi sphere P roducts711, H a r p e r ^ , 182:152, January, 1941. U .S. Department o f Commerce, s t a t i s t i c a l A b stract o f the U nited S ta te s 1940, p . 619. S o u th A m e r ic a n Handbook 1939, p*261*

106

w ith th e ex p o r ts o f th e p reced in g two or th ree years#

S o il

and c lim a te are fa v o r a b le , l i t t l e lab or i s needed, and r iv e r s fu r n is h adequate transp ort# Dutch Guiana i s another producer#

The c o a s ta l

areas are p la n ted e x t e n s iv e ly , and in 1957 ex p o rts in c r e a se d a s p rod u ction reached th e t o t a l o f 5 ,3 1 2 ,0 0 0 15 nuts* F ig u res are n ot a v a ila b le fo r 1938, but in 1939 th ere was no record ed p ro d u ctio n **6 B r it is h Guiana produces about 1 7 ,6 0 0 ,0 0 0 n uts per y e a r , o f which about o n e -th ir d are consumed l o c a l l y and most o f th e remainder exported in th e form o f o i l and copra* 17 Exports o f n u ts , however, amounted to 1 ,9 6 8 ,6 6 5 in 1 9 3 7 ,18

T his t o t a l f e l l to 454,278 in 1938,

and to 318,175 in 1 9 3 9 .19 In B r a s i l , th e coconut palm grows over a steep ex ten d in g hundreds o f m ile s a lo n g th e c o a st and g r e a t r iv er s#

The c o a s t a l p la in I s reputed t o co n ta in u t le a s t

2 , 000,000 t r e e s , and i t

i s e stim a te d th a t t h i s area could

e a s i l y grow 2 0 0 ,0 0 0 ,0 0 0 tr e e s * ^

Some 5 0 ,0 0 0 ,0 0 0 n u ts are

gathered a n n u a lly , but as y e t n ea rly a l l o f th ese are consumed l o c a l l y . 21

3*5* 3*5* 17, 18* 19. 20* 21.

I b id * , p . 370. South American Handbook 1941, p*365* Ibid*”, p*243* South American Handbook 1939, p#247# SouEE AmffioaH Han3Eo5E I B g , p . 243. Fan Araerican Union, Coconuts in the A m ericas, p#12# h o c. c i t . —

107

Honduras grows cocon u ts on A tla n tic c o a s ta l la n d s and on c o a s t a l isla n d s# p o rted 1 0 ,8 0 4 ,1 6 8 n u t s # ^

in 1937, Honduras ex­

lh© Bay Isla n d s p rovid e most

o f t d ls p ro d u c tio n , much o f which comes to th e U nited S3 S ta te s# Ho r e a l a ttem p ts at s c i e n t i f i c c u lt iv a t io n have been made# In Panama, coconu ts are grown on th e sea c o a s t and on o u tly in g I s la n d s , 24 The n u ts are o f good q u a lity and b ear w ith in e ig h t years#

In 1938, ex p o rts were

5 ,2 1 2 ,3 0 0 n utaj and In 1 9 3 9 , 5 ,6 7 8 ,7 0 0 n u t s .25

While

much o f t h i s p rod u ction i s from w ild coconuts gathered by n a t iv e s , th ere are a ls o s e v e r a l p la n ta tio n s u t i l i z i n g s c i e n t i f i c m ethods. Nicaragua ex p o rts about 1 ,5 0 0 ,0 0 0 n uts per y e a r , most o f w hich grow w ild# 27 Large p la n ta tio n s have been e s ta b lis h e d in r e c e n t year s . * Guatemala produces sm ell q u a n t it ie s , most o f which are shipped to th e U nited S ta te s or are consumed \ n uts a year are l o c a l l y . 29 S ev era l hundred thousand produced even on t h is b a s i s , and were c a p ita l a v a ila b le th e c u lt iv a t io n o f n uts on a la r g e sc a le m ight foe 22#. 23# 25# 26# 27# 2@« 29#

South &merioan Handbook 1939, p#419, Fan A m e r i c a n Union* Coconuts in t h e A m e r i c a s , p p . 1 6 -1 7 . Sou-th American Handbook 1941, p . 467, Loc# c i t # A m erican Union, Coconuts In th e Am ericas, p . 13. I b id #, pp#14*16# Loc# c l t # I b i d ., p#14#

108

feasible.30 Th© coconut palm f lo u r is h e s throughout th e Dominican R epublic and H a it i, a lth ou gh l i t t l e a t t e n t io n i s d evoted to the crop*

I t i s l i k e l y th a t the form er

n a tio n a lo n e produces between 1 ,5 0 0 ,0 0 0 and 2 , 000,000 n u ts a y e a r .3*** Inhere i s some p rod u ction o f coconuts in Costa R ica , but no a ccu ra te f ig u r e s are a v a ila b le a s to y e a r ly p rod u ction or export# V enezuela has been in c r e a sin g i t s coconut crop , and i t i s claim ed th at c o a s ta l lan d s and g r e a t t r a c t s a lo n g the r i v e r s are em inently s u ita b le fo r p ro d u ctio n .33 Ecuador seems to have p o s s i b i l i t i e s as a coconut producer and e x p o r te r .

S u ita b le a r e a s e x i s t In

th e low lan d s and a lo n g the r iv e r s ,

a s y e t , however,

most o f th e crop i s consumed l o c a l l y and exp ort i s in i t s in fa n c y #34 Expansion o f the L a tin American coconut pro­ d u ctio n seems to depend la r g e ly upon th e fu rth er ex­ p ansion o f p la n ta tio n s*

fla n t& tio n e f f o r t s have a lrea d y

been undertaken in a number o f a r e a s.

30* 31. 32. 34.

The la r g e r

Loo, c i t . I H d .7 1 p .1 7 . jfeid # , p .16. ^outh American Handbook 1941, p . 869. ft'an Am©rlcan HnlonV C^conu€s in th e A m e r ic a s , p p . 1 8 -1 9 .

109

producers a re g e n e r a lly th o se which have d evelop ed p la n ta tio n s r a th e r than a tte m p tin g to in c r e a s e th e ' “V

c o l l e c t io n o f w ild nuts*

I t I s v u r tu a lly im p o ssib le to

estim a te probable c o s t s , p r o f i t s , or n ece ssa r y Invest** RL ment f o r p la n ta tio n s * la b o r la th e p r in c ip a l c o s t , p lu s land r e n t or purchase*

S ince th e se c o s t s vary markedly

in d if f e r e n t tr o p ic a l c o u n tr ie s , any estim a te o f c o s t s , p r o f i t s , or Investm ent has on ly lo c a l v a lu e .

E stim ates

made In B r a z il and o th er r e g io n s , however, in d ic a te th a t chances fo r p r o f it a b le Investm ent are e x c e lle n t . 36

35* 36*

Copeland, Edwin, The Coco "■But* p . x i l i , in trod u ction * Fan American Union, Coconuts"in th e Am ericas, p p .23-25*

110 Chapter IX M&ro&KESS

L a tin American n a tio n s have bean tout secondary producers o f manganesef fche.se c o u n tr ie s p ro v id in g from 2*3$ (1932) to 9*3$ (1929) o f world p rod u ction over the X 1929-38 period* Since n e a r ly th e e n tir e L a tin A m e r ic a n p rod u ction i s ex p o rted , th e p ercen tage o f world export shipped from t h i s area has v a ried from 4*3$ (1932) to 1 2 ,is# ( 1 9 3 8 ,) .8 L a tin A m e r ic a h a s been an Important source o f U nited S t a t e s imports*

In t h e p e r i o d 1929-40 L atin

American n a tio n s p rovid ed from 16*4$ (1936) to 37.9$ (1929) 3 in terms tooth o f q u a n tity and v a lu e . In 1940, L a tin America su p p lied 2 4 .1 $ o f U nited S ta te s manganese Im ports, In terms o f tonnage.

Because o f h ig h Cuban In v o ic e

v a lu e s , th e 1940 L atin American share In terms o f v a lu e was 27*9$^*

Although la r g e r q u a n titie s and a la r g e r

p rop ortion o f t o t a l Imports could d o u b tle ss be obtained from L a tin America, th e area cannot in th e near fu tu re s a t i s f y a l l U nited S ta te s req u irem en ts,

p o te n tia litie s ,

however, are enormous*

1. 2.

4*

U .S . T a r i f f Commission, L a t i n A m e r ic a as a Sour c e o f S t r a t e g i c and o t h e r E s s e n t i a l M a t e r i a l s , p . 91ld*, pp* 27-34. M ineral Trade M otes, 12*10, June 20, 1941* TJTs• T a r if f Commission, B atin Americ a as a Source o f S tr a te g ic and oth er E s se n tia J .T !a te r ia ls , p~*94. Roush, 0£* c i t *, p . 44. V o sk u ll, o£. c i t , , p .201. Loc* c i t * mn -—

20*

21. 22*

* m i

....

'

wnM ij* iiiii| h ii*iii I.

...... .. aiiii ■inwni.n il

tmmm.ummmt n

im .fcj.in m.-mi^l*

* *

116

manganese In d u str y .

In 1934, the trad© agreement

n e g o tia te d w ith th e U nited S ta te s co n ta in ed a s i g n i f i ­ can t r e d u c tio n on th e manganese d u t y * ^

The c e n t r a l da

B r a s il R ailroad h as attem pted to m inim ize tr a n sp o r ta tio n d i f f i c u l t i e s by In c r e a sin g th e a llo c a t io n o f tonnage p o sse sse d by manganese*

The new a llo c a t io n g iv e s Iron

and manganese to g e th e r o n e-q u a rter o f th e r a ilr o a d 1s 2,QG0f GQ0-ton c a p a c ity , and tw o -th ir d s o f t h i s 50 0 ,0 0 0 24ton t o t a l goes to manganese. I t i s claim ed th a t many major o b s ta c le s con­ fr o n t any attem pt to expand m a te r ia lly th e B razlll& h manganese in d u s tr y .

The most troublesom e o f th ese

d i f f i c u l t i e s I s d o u b tle ss th e la ck o f adequate tr a n sp o rta ­ t io n f a c i l i t i e s .

The r a ilr o a d s need track e x te n s io n s ,

a s w e ll a s r e p a ir s to e x i s t i n g roadbed, and new r o l l i n g s to c k .

OR

I t i s hoped In some q u arters th a t manganese

p r ic e r i s e s and th e p ro sp ect o f a la r g e share in th e U nited S ta te s market w i l l induce p r iv a te or governmental in vestm en t a lo n g th ese l i n e s . p o rt charges are exh orb it& n t,

23. 24* 25. 26.

I t I s a lso b e lie v e d th a t th a t mining laws are

I n fr a . , p. 253. Mlnex*&l Trade R o te s, 12, June 20, 1941, p . l l . *Tiie U .S . M a r k e tfo r B r a z ilia n E xports", Commercial A m e r i c a , 10*84, kebruary-March, 1941* BaTn, op. c i t . , p p .151-3*

more than f a i n t l y h o s t i l e to o u ts id e e n t e r p r is e ,

27

and

th a t th e export ta x , w h ile reduced from 1926 l e v e l s , i s s t i l l to o la rg e#

2©

The U nited S ta te s Bureau o f m ines

has e stim a te d , how ever, th a t i f r a i l f a c i l i t i e s and ocean sh ip p in g were a v a ila b le , SO# o f 1941 U nited S ta te s requirem ents cou ld be su p p lied by B r a z i l# ^ Cuba i s th e o th er major manganese producer in th e Western Hemisphere.

That n a tio n ranks second

during most y ea rs in volume o f shipm ents to th e United S t a t e s , but o fte n emerges f i r s t in v a lu e , sin c e Cuba en jo y s p r e f e r e n t ia l t a r i f f trea tm en t.

Because such

p r e f e r e n t ia l treatm ent i s extended to th e Cuban producers th ese producers r e c e iv e a h igh er n e t retu rn than do o th er 50 producers su b je c t t o th e t a r if f # d e p o s its e x i s t in a t l e a s t fou r p r o v in c e s. 31 Most o f th e s e are r a th e r low grade, p o s s e s s in g l e s s than 35# manganese, but th e sm all ir o n co n te n t and a s p e c ia l method o f reco v ery a llo w s 32 them to p a ss as ferrograde*

27# 28. 29# 30# 31# 32.

"Mineral R esou rces, P rod u ction , and Trade o f B r a z il” F oreign M inerals Q u arterly, 4 s 2 7 -3 4 , J u ly , 1941* Log, c i t ; a l s o ^ a l h ^ opX c i t #, p p .151-3# U.S* Bureau o f Mines, M inerals Yearbook 1941, p p .59U .S . T a r iff CommisalonT^^ S in ” A m e r i c a as“ a Source o f S tr a te g ic and oth er E ss e n tia l M a te r ia ls, p*MT Roush, e g . c i t #, p *4?H Emony, 0£ . c i t . , p . 54,

118 Cuba w&a lo n g a v ery minor s o u r c e , p r in c ip a lly b ecause no com m ercially f e a s i b l e method o f t r e a t in g th e or© b o d ies had been d ev ised *

In th e e a r ly 1930*s , however,

the Cuban Manganese C orporation, an American concern, began o p era tio n s*

T h is company d ev ised a new and su c c e ss33 f u l f l o t a t i o n method* S in ce th e In tr o d u c tio n o f the

new p r o c e s s , Cuba has r is e n r a p id ly among th e so u rces o f U nited S ta te s Imports and world prod ucers.

Fxports 34 to the U nited S ta te s In r e cen t yea rs have been: 1956, 57,864 to n si 1937, 1 22,937 to n s; and 1938, 131,423 tons*

The U nited S ta te s i s v i r t u a l l y the sol© customer o f the Cuban manganese in d u s tr y . 35 Because o f the e x te n s iv e development work and I n i t i a l m echanization undertaken by the Cuban Manganese C orporation, 1939 was i t s f i r s t p r o fita b le y ea r.

By

v ir tu e o f growing p r o f i t s , th e company has now been enabled to launch a program o f production exp an sion .

37

With th e se new f a c i l i t i e s , t h i s company alon e can produce 58 1 4 ,0 0 0 ton s o f 45$ to 54$ or© per month. While i t I s dubious whether Cuba, even w ith more track age and b ig g er

33* 54. 35* 36* 37* 38*

Cuban Manganese*, Time, 35s64, A p ril 1 , 1940. U .S . Bureau o f Mines, M inerals Yearbook 19 3 9 , p . 585. "The U .S. Market fo r B r a z ilia n B xports^, Commercial Fan A m e r i c a , 10J85, February-March, 1941. *More Cuban Manganese% B u sin ess Week, August 24, 1&40, pp. 46* c i i * ,""p*&6; South American handbook 1841, p •221. U .S .- Bureau o f F oreign and dom estic Commerce, Trade In form ation B u l l e t i n 685, p . 25* U iague~of N a tio n s, ~ t a t 1 s t l e a l Yearbook 19o9~40, p .164. U .S. Bureau o f F oreign and dom estic Commerce, Trade In fo rm ation B u lle t in 685, p . 24. EocT"c l i r

149

Other t r i v i a l o ccu rren ces are In the Dominican R ep u b lic, A rg en tin a , Honduras, Newfoundland, and Paraguay*

31.

I b i d . , p*S9# A ls o , pan American Union, Honduras, p .15

150

Chapter XIV QUARTZ CttYSTALS B r a z il en joys v i r t u a l l y a monopoly o f world p ro d u ctio n o f com m ercially u s e fu l quartz or rock c r y s ta ls # Madagascar I s a secondary producer but does n ot th rea ten B r a z ilia n supremacy# The b ulk o f the B r a z ilia n p rod u ction comes from th e th ree s t a t e s o f B ah ia, Minaes O eraes, and Ooyaz. Mining In th e se th re e s t a t e s I s very p r im itiv e , and th e d e p o s its are seldom plumbed to any co n sid era b le d ep th s. The Bahia and Minaes Greraes d e p o s its are more r e a d ily a c c e s s ib le than th o se o f Ooyaz* B r a z ilia n production o f quartz c r y s t a ls ranged from 200 to 550 to n s during th e few y ears p rio r to 1938#^

On th e average, o n ly about 10 tons o f t h i s t o t a l A has been p i e z o - e le c t r i c {or s t r a t e g ic ) c r y s t a l s . Since 1938, p rod u ction and exp ort o f B r a z ilia n quartz c r y s t a ls has in c r e a se d notably#

1# B• 3* 4#

in 1938, 747 tons were produced

U.S# Bureau o f M ines, Mineral s Yearbook 1940, p#1483* F ilh a , Garmara, "Hock C ry sta l D ep o sits in Goyazn, B u lle t in Pan Amer ic a n Onion, 7 1 :5 4 3 -4 , J u ly , 1937# U .S. Bureau o T T o relg n and Dom estic Commerce, F oreign Commerce Yearbook 1938, p . 217# Mac go wan, il.P # , "Latin AKierTca us a Source o f S tr a te g ic M a te r ia ls 11, B u lle t in Pan American Union, 8 5 :1 0 2 , February, 1940#" ~

151

and ex p o rted , and In 1939, 67B tons were produced and ex p o rted .^

In 1 9 4 0 , B r a z il exported about 1 ,0 0 0 to n s.^ The U nited S ta te s has r e c e iv e d but a sm all

p ercen ta g e o f th e s e c r y s t a l s , measured in terms o f ton n age, alth ou gh the v a lu e o f the c r y s t a ls shipped to th e United S ta te s has been d isp r o p o r tio n a te to t h e ir w e ig h t.

In

1935, Japan r e c e iv e d 73$ o f the c r y s t a l s , th e United Kingdom 13$, Germany 3 .5 $ , the U nited S ta te s 2%, the N etherlands *4$, and t r i v i a l amounts went to China, France, I t a l y , and Belgium.*^

Of th e 1939 ex p o rts t o t a lin g 678

to n s , Japan r e c e iv e d 383 to n s , th e United Kingdom 163 to n s , Germany 92 to n s , the United S ta te s 28 t o n s , 0 H olland 8 to n s, and o th ers 4 to n s . These s t a t i s t i c s do not r e v e a l j u s t what p rop ortion o f the s t r a t e g ic c r y s t a ls went to each n a tio n . Of th e normal production o f B r a z ilia n quartz c r y s t a l s , o n ly about 10 ton s are s t r a t e g i c .

Form erly, th e United

S ta te s imported most o f t h e s e 10 ton s as a m atter o f

5. 6* 7* 8,

"Mineral R esou rces, P rod u ction , and Trade o f B ra zil" , F oreign M inerals Q u arterly, 4 s 1 4 , J u ly , 1941, iKnigral Trade l^ t ^ s 5 1 5T25**6, September 20, 1941. 1 1 m ii»

i. m i J n S .W « I " * "

mmnwrnm****

■*

mm

i f l i m.

,... .h l m m

— i . »i«

,

153

R eserves are la r g e and th ere i s l i t t l e danger o f t h e ir ex h a u stio n w ith in th e n ex t few decades*1 " There are o th er fa c to r s# how ever, which may c r ip p le th e in d u stry*

I f Japanese buyers ceased purchasing th e

v a st q u a n titie s o f low -grade c r y s ta ls th a t keep the in d u stry going# I t would be d i f f i c u l t to persuade f r e e ­ la n c e p ro sp ecto r s to hunt m erely fo r h igh -grad e c r y s t a ls o f the p i e z o - e l e c t r i c ty p e .

Thus, Investm ent and

d ir e c t io n are badly needed in the B r a z ilia n quartz c r y s t a l In d u stry .

I t I s d i f f i c u l t to see from what quarters

tills in vestm ent and su p e r v isio n can come, In view o f the hazards and r e s t r i c t i o n s In v o lv e d . Some quartz c r y s t a ls are found in Colombia, but ap paren tly th ere has been no commercial production o f hi£ii-gr&de c r y s t a l s .

• 15.

Xf°c. c i t » South Ameri c a n Handbook 1941, p . 329.

154

Chapt er XV

q jn n i* L a tin America i s today a n e g lig ib le pro* duoer o f cinchona bark, th e raw m aterial fo r quinine* the L atin American sh are o f world prod uction in th e 1929^38 p eriod has ranged from 1*7% (1929) to 9*4% (1937)^*

L atin A m erica's p o rtio n o f world exp orts

ranged from 2% to 15*6% over th e same period *s $*rora 1929 to 1940, United S ta te s imjjorts of cinchona bark from L atin America c o n s titu te d l e s s than 3% o f t o t a l im ports*

As th e q uin ine content o f L atin

American bark i s co n sid era b ly lower than th a t of th e bark from th e Sutherland East I n d ie s , th e valu e o f L atin American exp orts i s p r o p o r tio n a te ly lower*

Based

on v a lu e , im ports in to th e U nited S ta te s from L atin America have averaged le s s than *5% o f th e t o t a l over th e 1929^40 period*^

Present cinchona output in L atin

America i s inadequate t o meet any s u b s t a n t ia l part of U nited S ta te s n eed s.

1.

U.3* T a r iff Commission, L atin -Amorica as o. Source o f S tr a te g ic and other E s W e n tia ls a te r ia l's , p .237• 2m lb iff ;T p ,2 3 5 * -------— ------— • l b i ff *, p • 24 0 • 4* Loc. c i t ■

155

Cinchona r e q u ir e s an a lt i t u d e o f from 2 ,5 0 0 to 9#000 f e e t above se a l e v e l , a tem perature ’without to o much v a r ia tio n from 60* E a r e n h e it, 100 to 200 in ch es o f r& in, and v o lc a n ic s o i l . 5

These r e q u is it e growing

c o n d itio n s o b v io u sly bar n e a r ly a l l o f th e Morth American n a tio n s a© p o s s ib le producers of q u in in e. There a r e , however# a number of South American r e g io n s where cinchona has been in d ig en o u s. The cinchona or q u in in e reg io n o f South America in ­ clu d es a reas in B o liv ia , Peru, Ecuador, Colombia, and V en ezuela.

6

This reg io n was growing cinchona

tr e e s in la r g e numbers when S ir Clements Markham was commissioned in 1859 by th e E n g lish government to con­ duct an e x p e d itio n in to th e w ild s of Peru, Ecuador, and B o liv ia for the purpose of c o lle c t in g seed s ana p la n ts to tran sm it to I n d i a .f In f a c t , th e s e South American c o u n tr ie s once provided most of th e lim ite d q u a n titie s of c in ­ chona bark consumed in th e w orld.

For a lo n g p erio d ,

Peru was th e only Qoraaercial sou rce of q u in in e , although demand was r a th e r s l i g h t duri ng most of

5.

6* 7.

B ncyolopedia Amerio.ana. V o l.25, p p .9 4 -5 . Also' U.3." 'T a r iff Comml's s i on, B atin Arne r lc a as a Source of S tr a te g ic and Qther E s s e n tia l M a te r ia ls , P •235« Pan American Union, Q.ulnine in South America, p .9 . Markham, C lem ents, T ravels in Peru and In d ia .

156

th a t era#

Cinchona h ark has lon g been termed ‘‘Peruvian

hark*1# and r e c e iv e d l i e name from t h e Countess of Olnchon#

Wife of th e V iceroy o f Peru# she was

r e p u te d ly cured by the hark and introduced i t in t o Europe#® Peruvian dominance was not d e stin e d to endure#

The h igh > riv e at which th e Peruvian hark was

s o ld le d to im providence in th e c o lle c t io n of th e product*

The t r e e s were f e l l e d in great numbers in

order to o b ta in th e bark# w h ile no measures were taken to r e p la n t* 9

In 1795# Humboldt reported th at 25,000

t r e e s had been th u s f e l l e d in th e p reced in g few years#*lo Markham, in h i s t r a v e ls in Peru during th e e a r ly 1860#s# was im pressed by th e inadequate co n serv a tio n and th e r e c k le s s use of f c r e s t r e s o u r c e s H e a ls o observed in h i s report th a t p r iv a te sp e c u la to r s were l e f t un­ curbed by the government and were h a ste n in g th e ru in o f th e Peruvian in d u stry*

Eor a time# ca ta stro p h e was

a verted by sen d in g ex p lo r in g p a r tie s in to new fo r e s t to a rea s to sea rch f o r tr e e s # Soon, however# th e r is in g p r ic e s and d r a s t i c a l l y in creased world demand fo r quinine encouraged attem p ts t o tr a n sp la n t seed s from

8* 9* * 11. 12.

Pan American Union# Q,uinine in South fosaeripa# p .6 . Xbidm# p •7• hOC* Cl,t . Markham# op *c i t #, p p .44~6. Pan American TTnTon# u u in ln e in South America, p . 7 •

167

South Amexi c a •

In 1869 th e E n g lish government

commissioned Markham t o c o l l e c t see d s in Peru and th e South American cinchona r e g io n .

He toured th e variou s

a rea s fo r many months and c o lle c t e d s e v e r a l v a r i e t i e s o f s e e d s and p la n tin g s .

At t h e tim e o f t h is exp ed ition *

b oth Peru and B o liv ia were e t i l l ex p o rtin g la rg e q u a n titie s o f b a rk .

Maridiam estim ated th a t th e t o t a l

amount shipped a n n u a lly from th e p o rts of th e West Coast of South America to ta le d over 2*000*000 p o u n d s .^ S ev era l y ea r s b e fo r e Markham*® tr a v e ls * th e N etherlands government had d isp a tch ed a p arty on a s im ila r m ission* This p a rty was commissioned in 1854 and toured th e area fo r s e v e r a l years# making some very shrewd p u r c h a se s* ^ The p la n tin g s and seed s were sen t to th e N etherlands East I n d ie s .

la v a and Sumatra p o ssessed th e r e q u is it e

growing co n d itio n s# and alth ough the ven tu re was not thoroughly p r o f it a b le fo r decades* th e Butch c o n tr o l o f q u in in e was e v e n tu a lly fir m ly e s ta b lis h e d .

Meanwhile#

th e Peruvian and oth er South American governments made few attem p ts to sto p t h i s sh ip p in g o f nursery stock s# fo r th e y were preoccupied w ith t h e i r m ineral in d u s t r ie s •

16. 14.

Markham# jap. c i t . > p p .5 ? 0 * l. Eat c l i f f , y .B .* “T ropic K t lle r ’S C o llier* ® , 106:22* 52# August 1 0 , 1940.

158

D e s p ite th e f a c t th a t cinchona tr e e s were not in d igen ou s t o th e East I n d ie s , In d ia , and C eylon, t h e ir tr e e s now seem t o t h r iv e b e tte r than th e ir Peruvian a n c e sto r s*

th ey y ie ld a s high as 10% q u in in e

s u lp h a te , w h ile the P eruvian y ie ld v a r ie s between 2 and 5;&.*5

The h ig h e st o f th e A s ia t ic y ie ld s have been

procured in th e N etherlands East In d ies* The o r ig in a l South American producers s t i l l produce and exp ort sm all q u a n titie s*

Trees have

become so sc a r c e through p ro d ig a l e x p lo it a t io n , however, t h a t t h e w i l d f o r e s t in d u stry i s

sc a le * 16

conducted on a 3m all

A r e c k le s s ty p e of e x p lo ita tio n i s said to

c o n tin u e . In P eru, prod uction on a sm all s c a le e x is t s in th e f o r e s t s near th e b ord er o f Ecuador**'* In 1936, ex p o rts were about 150,000 pounds; 18 and in 193?, p rod u ctio n alm ost c e a se d . 19

In 1939, production r o se

again t o about 153,000 p o u n d s .^

Peru i s now the

second la r g e s t producer in L atin America, but on ly t r i v i a l

15. 16. 17. *9* 20.

E ncyclopedia Ame r lo a n a , V o l.23, p p .94-5; Q u in in e from B r a a ilu, B uain es¥ Week, November 1 2, 1938, p .4 9 . Pan American U n io n , Q u in in e i n South A m erica, p . 14. South American Handbook 1941, pTBTST "death American Fandbook T 939, p . 517. South American ita'S’Fook Y94T, p . 513. Log ♦ |j s l t »

159 amounts have been shipped t o th e U nited S ta te s# In B o liv ia * p roduotion of cinchona hark i s on a co n sid e ra b ly la r g e r s c a l e , and th a t n a tio n has succeeded Colombia a® th e le a d in g B a tin American ex~ gi p o r te r . She s t i l l exp orts rou gh ly 2*000*000 pounds oo a year* U n til v ery r e c e n tly * at l e a s t , n ea rly a l l o f t h i s was absorbed by th e Butch q u in in e c o n t r o l.2^ Colombia was form erly th e p r in c ip a l ex» p o r tin g cou n try o f cinchona bark in B a tin America.

P4

A p la n ta tio n e s ta b lis h e d some t h i r t y years ago by a group o f German s e t t l e r s co n tin u es to prosper on a sm all sea le.^ ®

P roduction has con tin u ed , e r r a t ic a l l y 26 and on a sm a ll s c a l e , in Ecuador and V enezuela. The in d u stry i s a ls o sp read in g to oth er areas in B a tin America.

In recen t years Guatemala has

exported sm all but high**calibre shipm ents to th e United

21. 22* 23.

U .S. t a r i f f Commissi on* L atIn America a s a Source of Strateg&c and o th er D e e g n tia l Mat e r ia is . xj*£38* Sout!T"^sr 1 can Handbbok T9?9T?)T 154. So r em&'n7 cTa rk * ‘‘Our lo o no mi c Defense Bines**, Arnerlcan Mercury, 5 :8 5 , September, 1940* A lso U .S . t a r i f f Commission* B atin America as a Source o f S tr a te g ic and o th er E s s e n tia l M a te r ia ls.

P M m m m m p m n * .

24. 25* 26.

p .239 *

m < iw

i i lM f ti i*ihii

tm M ttM M M M .

m m tm m m m m rnm m m .

i ji

11

h .. ........

U .S . T a r iff Commission* B atin America as a Source of S tr a te g ie and other E s s e n tla l M a teria l? , p .238. Wi l s o n .C h a r l e a * ’**Buy~Hemisphere P rod u oT ?, H a rp er's? 1 8 2:153, January, 1941. U .S . Bureau o f fo r e ig n and D om estic Commerce, o p e c ia l Agents S e r ie s 208. p .222. A lso Dalton* V en ezu ela, p .275.

160

S ta te s*

Cinchona feark 1® a ls o feeing grown e x p e r i­

m en ta lly 4n Costa R ica and other a r e a s in C entral oft America* These t e n t urea are s t i l l on a very sm all s c a le • th e r e a re a ls o in d ic a t io n s th a t th e U nited s t a t e s government i s determ ined t o a id in th e d ev elo p ­ ment of th e hat in American q u in in e in d u s tr y .

A few

years ago, th e U nited S ta te s Department o f A g ric u ltu re p resen ted th e B r a s ilia n government w ith 1 ,0 0 0 young s e e d lin g s . 29 These have s in c e been p la n ted xn v a rio u s a re a s o f B r a z i l , in an attem pt t o determ ine whey th ey might p ro sp er. The U nited S ta te s Department of A g ric u ltu re has a l s o experim ented in Puerto Hie© as w ell a s in F lo rid a and C a l i f o r n i a .^

The Hayaguez, Puerto Rico*

Experiment S ta tio n has been t e s t i n g a number of s p in e s , and hopes to e s t a b l i s h a b a s is fo r spread of cinchona t r e e s in th e West I n d ie s , Central America, and South America. ^

27* 28. 29. • 31.

W ilson, C h a rles, *Buy Hemisphere P rod u cts’*, Harperf s., 1 8 2:153, January, 1941* fr u e b lo o d , Howard, ^Boonomlo D efen se o f th e Americas**, Foreign P o lic y Re p o r ts , 16:132, August 1 , 1940. Q u in in e from B r a z il” , Bu s in e ss Week, November 12, 1938* p . 49. l»oc • c l t ♦ v a lu a b le q u in in e T ree” , Hew York Times M agazine^ J u ly 20, 1941, p . 24*7™

161

tiie B r it is h have a ls o been con d u ctin g e x p e r i­ ments in Jamaica during th e past few year s , but th e s e have not y e t r e s u lte d in e x te n s iv e p r o d u c tio n .^ th e s u c c e s s of q u in in e p rod uction in A sia and the Far B ast has dem onstrated the f a c t th at i t i s d i f f i c u l t fo r a w ild , f o r e s t product to compete in world markets w ith th e same product s c i e n t i f i c a l l y produced on p la n ta tio n s*

th e p r ic e has been d riven

down so fa r th a t i t i s probable th a t the South American producer© might have been rep laced even i f co n serv a tio n had been p r a c tic e d in th o se a r e a s.

The

only s o lu tio n fo r L atin American q u in in e producers seems to be t h e esta b lish m en t of a p la n ta tio n system . I t i s claim ed th a t d e s p it e th e low*wage advantage p o sse sse d by the Far B a st, Latin American p la n ta tio n s can su cce ed ,

i t would be n ece ssa r y , of co u rse,

to use at le a s t t h e same c a r e , s c i e n t i f i c methods, and c a p ita l o u tla y s to d u p lic a te the r e s u l t .

I t i s true#

however, th a t cinchona t r e e s have been indigenous to L atin America arid presumably are adapted to th at 33 environm ent. Hence, la r g e - s c a le p la n ta tio n production o f th e se t r e e s in t h i s hem isphere should have c e r ta in

32* 33.

Uq,uinine from B razil*1# B u sin ess Week, November 12, 1938# p . 49. Pan American Union, a u in in e in South America, p . 17.

n a tu ra l advantages over prod uction in oth er a rea s o f the wo r id . As y e t , of c o u r se , th e dominance o f th e Far Bast rem ains unquestioned#

Higher p r ic e s over a

prolonged p erio d and in t e n s iv e investm ent in the L atin American in d u stry might In c r e a se production th e r e to important l e v e l s .

A ll th e n ecessary growth

co n d itio n s seem t o be p r e s e n t, alth ou gh t h e labor problem rem ains s e r io u s .

A tim e la g of s e r io u s pro­

p o rtio n s would d o u b tle ss e x i s t , however#. Any in t e n s iv e development o f q u in in e p rod uction in L atin America would, o f n e c e s s it y , have t o be on a lon g-ran ge b a s i s .

163

Chapter AVI RUBBER L a tin America ha a a n otab le p ast as a rubber-producing area and perhaps a p o t e n t ia l fu tu re* P resent p ro d u ctio n , however# i s on a very t r i v i a l b a s is ,

over th e 1929-38 p e r io d , hat in Americana

share in world export of crude rubber ranged from .9% (1932) to 2 .7 $ { 1 9 2 9 ) .1 World War 11 has d istu rb ed European markets fo r L atin American rubber and i t has stim u la ted demand fo r t h is product in the United S t a t e s .

The

peak percen tage of t o t a l im ports su p p lied by L atin America ovex* th e 1929-40 p erio d , hbwever, was 2% (1 9 2 9 ), th e low point b ein g . 6/» (1932}.^

In 1940, L a tin America su p p lied but .9 % of United S ta te s im p orts. 3 Should p r ic e s con tin ue to in c r e a se or i f oth er sou rces should be cut o f f , t h is p rop ortion might r i s e .

L atin

America cannot become a major s u p p lie r , however, u n le ss or u n t il p la n ta tio n s are e s ta b lis h e d . Any d is c u s s io n o f rubber production in th e Western Hemisphere must s t a r t w ith Braasil, for

1. 2.

U .S. T a r iff Commission, h a tin America as a. Source of St r a t e g ic and o th er S sse n tia T M a te r ia l's, p .369. I b id . , p . 372*

^*

h O C » cit

*

164

p ro d u ctio n o f crude rubber in th e Amazon re g io n h as been known fo r c e n t u r ie s ,

In d ian s in th e Upper Amazon

have long scraped from Hevea B r a s ilie n s i© tr e e s th e su b stan ce th a t oozed out when th e bark was c u t • 4 When heated* th e p a r t i c l e s o f t h i s su b stan ce stu c k to g e th e r and cou ld be used in th e production o f crude b a l l s and oth er p r im itiv e p ro d u cts.

E arly Spanish ex p lo rers

rep orted fin d in g such products in use* and brought some o f th e s e object© back to Europe. Although B r a z il dominated world i n d u c t i o n u n t il about 1910* the methods of e x tr a c tio n and market­ in g d id not change m a te r ia lly d uring th e lon g period p rio r to th a t d a te .

The rubber in d u stry remained a

" n a tiv e ” in du stry* alth ou gh w h ite men g e n e r a lly organized m arketing and e x p lo ite d th e laborers*

N a tiv es continued

to go in to th e ju n gle* lo c a t e th e tr e e s * ta p them* c o l l e c t th e sap* evaporate and p rocess it* and carry i t to th e n ea rest tr a d in g p o s t .

4.

ITatur&Xly, th e product

The fo llo w in g d e s c r ip tio n o f th e p r im itiv e nature o f the B r a z ilia n in du stry* and of i t s e a r ly h is t o r y a n d even tu al d e c lin e , i s sy n th esized from th e s e sosisees: Summers* 1.* “P o l i t i c a l C ontrol of Raw M aterials in Peace and War”* X n tern ation al C o n c ilia tio n , 226:54-60* January, 1927; Mo©oh, Louis *' “RuSber"I'iraTes o f th e Amazon” , L iv in g Age, 545:219, November* 1933* Lange* A lg o t, The Lower Amazon, chs.3* 4 , and 21; Lawrence, o,g. c i t .» p p .B -l8 j i i p p i n o o t t , iwini.iww;

2*53 • 62

257 94 232

1 0 ,7 7 2 ,1 0 2 2 ,6 1 8 ,2 5 0 512,797 6 2 9 ,246 1 1 ,4 3 1 189,130 72,428 215,367

22,100

1 5 ,0 2 0 ,7 6 1

3 .5 3

T otal Non-L.A.

402,345

4 1 0 ,4 3 6 ,2 5 0

9 6 .4 7

Grand T o ta l

424,445

4 2 5 ,4 5 7 ,0 0 0

>100*00

20

•££ «"> g inmi mh. w>

*12

• 15 * .0 4 .02

.0 5

Average, 1937-8 N ation

Long Tons

D o lla r s

p ercen t o f “j Talue u .5 7 1 Import i

.02 *02

22 10 2

1 ,6 0 6 ,7 7 7 703,272 73 ,1 6 7 45,177 32,957 4 ,9 8 3 4 ,0 1 5 311

7 ,8 7 3

2 ,4 7 0 ,6 4 9

1 .3 0

T otal Non-L.A.

498,411

1 8 6 ,7 4 8 ,0 8 2

9 8 .7 0

Grand T otal

506,284

1 8 9 ,2 1 8 ,7 3 1

100.00

B r a z il Mexico Feru Ecuador B o liv ia Colombia Nicaragua Other b .A .

4 ,5 0 5 2 ,6 4 5 365 208 116

T otal L.a*

22*

.8 5 .37 .0 4 m

**The U nited S ta te s Market fo r B r a s ilia n Export3 % Commercial Fan America, 1 0 j7 2 , Pebruary-March, 1941*

173

1935* 1*08 m etric to n s; 1936* 1*794 m etric to n s; and 1937* 1*444 m etric ton©*

a s in d ic a te d in Table 21*

Im ports from Ecuador have seldom been very s u b s t a n t ia l. B o liv ia has been a lo n g -tim e producer o f rubber* which i s th e nation*© most im portant f o r e s t £>4 product* I t I s d i f f i c u l t to determ ine i t s exact pro­ duction* fo r ex p o r ts are g e n e r a lly shipped v ia B r a z il, of* o« Peru* or Uruguay* The b e s t e stim a te s ares 1933* 1*832 m e tric to n s; 1934* 796 m etric to n s; and 1935* 752 m etric to n s .

As in d ic a te d by Table 21* im ports from

B o liv ia have been t r i v i a l . Colombia i s another sm all producer, w ith 27 s e v e r a l v a r i e t i e s o f rubber tr e e s and. shrubs* Colombian ou tp ut has beens^®

1933* 56 m etric to n s;

1934* 20 m etric to n s; 1935* 17 m etric to n s; and 1936* 171 m etric to n s . Peru has remained a minor producer, although OQ plagued by th e u su a l tran sp ort d i f f i c u l t i e s * The w ild rubber in du stry* once v i t a l to her economy, has

25* 26* 28. 29*

South American Handbook 1939* p*153* Loc* c i t * Fan American Union* Rubber , p*14* South American Handbook 39* p*333. Pan American tfnlon* “lu E b er, p*14* Rowe, L. * Early Effects""off the VI/ar upon th e F in an ce, Commerce * and In d u stry "*of Peru* pp. 3 5 -6 . ~

174

decayed to i n s i g n i f i c a n t p rop ortion s*

Peruvian ex p o rts

have b e e n sS® 1933* 95 m etric to n s; 1934* 66 m etric to n s; 1935, 426 m etric to n s;a n d 1936, 729 m etric tons* '•

P rod u ction on an e r r a t ic and s m a ll-s c a le

b a s i s has occurred i n

s e v e r a l o t h e r L a tin A m e r ic a n n ation s*

Mexico produced sm all q u a n t it ie s o f rubber o th er than guayule in th e e a r ly y ea rs o f t h i s cen tu ry . 31 B r it is h Guiana has co n ta in ed some rubber p r o p e r t ie s , and d e s p it e la b o r sh o r ta g e s and the South American l e a f d is e a s e produced sm all q u a n titie s during w orld War I . 32 A ll ex p o r ts have now c e a s e d , alth ou gh i t i s s t i l l p la n ted on some 1600 acres*

Nicaragua has produced some w ild rubber, alth ou gh th e in d u stry i s d iso r g a n iz e d . 34 Honduras has f o r e s t s teem ing w ith w ild rlibber t r e e s , but t h e y are not w e ll cared fo r or e x t e n s iv e ly e x p lo it e d . 3S B r it is h Honduras has attem pted s e v e r a l p la n ta tio n v e n tu r e s, but th e se attem p ts have been abandoned a s they proved o b v io u sly u n e c o n o m ic .^

30. 31. 32. 33. 34. 35. 36.

Exports have lo n g sin c e c e a se d .

Pan American Union, Rubber, p . 14. Knock, K ., M exico, p.236V Hodway, James, Guiana, p .265; The R esources o f the Empire S e r ie s , Rubber, Tea, and Cacao, p .106. South American Handbook i&~41, p • 2 ? 3 ~ D o m v llle -F if ©, C h a rles, Guatemala and th e S ta te s o f C entral America, p p .24 5 -6 . xbidV,'~"pVWbV The R esources o f th e Empire S e r ie s , Rubber, Tea, and Cacao, p .106#

175

V enezuela h a s been a sp orad ic p rod ucer, w ith e x tr a c tio n and m arketing the r e s p o n s i b i li t y o f I n d iv id u a l p r o sp e c t57 ors. T rin id ad produced rubber on a very sm all s c a le d u rin g th e 1910-50 p e r io d , b u t i t never became a th r iv in g in du stry**^

Panama has a ls o produced t r i f l i n g

amounts o f w ild rubber* Some m ention should be made o f Mexican guayule*

Table 22 in d ic a t e s th e e x te n t o f U nited S ta te s

im ports from Mexico o f guayule rubber, from 1910 to 1957# These e x p o r ts to th e United S ta te s re p r esen t th e bulk o f th e Mexican p ro d u ction and n e a r ly a l l o f i t s exp orts o f guayule#

As i s apparent from the t a b l e , th ese im ports

have ranged up to over 8,000 tons* In 1910, guayule fu rn ish ed 20$ o f U nited S ta te s Im ports o f crude r u b b e r * ^

inuring th e rubber

shortage o f the 1920 f s , guayule was shipped at a r a te o f over 5 ,0 0 0 to n s a year*

part o f t h i s p rod u ction came 42 from w ild gu ayu le, and p ort from new p la n tin g s* Most

o f th e guayule p rod uction o f M exico, w ild and p la n te d ,

57* 58* 39* 41* 42*

D a lto n , Leonard, V enezuela, pp*249-50* The R esources o f th e Empire S e r ie s , Rubber, Tea, and Cacao, p *106. South American Handbook 1941, p . 468* Arnerlean Rubber a t Last"THElterary D ig e st 110:26, September 1 1 , 1931* W h ittle s e y , op * c i t *, p# 1 0 *

Table g240 UNITED STaTBS IMP OKI’S OF OUAYULE ROBBER (In Shoi't Tons) Import

Y ear 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1924 1925 1926 1927

1928 1929 1930 1934

1935 1936 1937

* *# • #* »*» *** *#*

5 , 335 8 ,6 3 0 6,417 2 ,4 3 6 1 ,1 3 7 2 ,4 8 3 1 ,2 6 8 2 ,4 2 6

••* •• * ••• *• * *• • • ** «« • * ** ••* • ** • ** * *• *• • ••# * «# •••

1 ,6 0 2 849 65 142 1 ,6 1 8 4*235 4 ,8 2 2 5,622 3 ,4 4 6 1 ,4 2 8 1 ,2 2 8 446 514 1 ,377 3,014

***

*• • * *•

688

U*5* Bureau o f F oreign and Domestic Commerce, Trade prom otion S e r ie s 181, p*48*

177

I s c o n tr o lle d by U nited S ta te s c a p i t a l # ^

Although

th e 1940 p ro d u ction was on a sm all s c a l e , and e x p o r ts Jt

M

to th e U nited S ta te s were but 4,07G t o n s ,

th e Mexican

guayule in d u str y could no doubt be expanded*

Whll» U.S* T a r iff Commission, The F oreign Trade o f L a tin America, Part I I I * , V o l.2, p*40* 44* U*S* Bur e au ForeIgn and Domestic Commerce, I n te r n a tio n a l R eference S e r v ic e , V o l* l, N o.5 5 , p* 6 * 45* For d e s c r ip t io n s o f th e s e attem p ts sees B e a la , C a rleto n , Fan America, p . 475; L ip p in c o tt, o £ . c iT ;ri>*'42i*-

178

on th© p a rt o f to e p la n t e r s , and s p e c u la tiv e f in a n c ia l methods*

Encroachments o f the South to e r le a n l e a f

d is e a s e e v e n tu a lly ended th e attem pts in Dutch Guiana and Trinidad*

In any e v e n t, th ese haphazard s m a ll-s c a le

attem p ts c a s t l i t t l e l i g h t on th e f e a s i b i l i t y o f la r g e p la n ta tio n s in L atin America. S everal in v e s t ig a t io n s in to t h i s q u e stio n have been made, in a d d itio n to a c tu a l attem p ts to found, major p la n ta t io n s .

These in v e s t ig a t io n s and th e ir

r e s u l t s w i l l f i r s t toe d e sc r ib e d . In 1925, r e p r e s e n ta tiv e s o f th e Uhited S ta te s Department o f A g ricu ltu re v i s i t e d the Amazon r e g io n . In th e re p o r t d e sc r ib in g t h is e x p e d itio n , 46 i t ivas recommended th a t more econom ical p r o c e sse s b© employed, the South American l e a f d is e a s e be checked, and lo c a tio n s fo r p o s s ib le p la n ta tio n s be ex p lo red .

This was a t e n t a t iv e

and p relim in a ry r e p o r t, and l i t t l e o f a d e f i n i t i v e nature was d isc o v e r e d . During th e ea rly 1920’ s , Congress provided the Department o f Commerce w ith funds to undertake an I n v e s tig a tio n o f p o te n tia l producing a rea s in th e A m ericas, a s w e ll as elsew h e re.

T his was p art o f an

e f f o r t to render th e United s t a t e s l e s s v u ln era b le In ca se o f fu tu r e r e s t r i c t i o n plans toy the world rubber

46*

9*3. Department o f A g r ic u ltu r e , 'Department B u lle t in K o.1422.

179

c a r te l.

The conclusion® th a t were reached by Department

o f Commerce o b serv ers concerning p o s s i b i l i t i e s in th e Amazon r e g io n are o f great In te r e s t*

Mot on ly were th e se

c o n c lu sio n s reached a f t e r I n te n s iv e in v e s tig a tio n * but they have fu rn ish e d th e b a s is fo r many more re cen t a n a ly s e s .

The major c o n c lu sio n s f o l l o w .4^

C onditions

In B r a z il and th e Amazon area are fa v o ra b le f o r the development o f rubber p la n ta t io n s .

The c o s t o f land i s

low* s o i l I s good in c e r ta in a r e a s , th ere are few de­ s t r u c t iv e g r a s s e s , the r e g io n i s c lo s e to th e u n ited S t a t e s , and reason ab ly adequate r iv e r tr a n sp o r ta tio n f a c i l i t i e s e x is t*

T ran sp ortation d i f f i c u l t i e s In the

more remote a r e a s , not d i r e c t ly con n ected w ith th© Amazon system , m ight be a p r o h ib itiv e handicap to th© development o f th e s e o u tly in g r e g io n s ,

in a d d itio n to

th© South American l e a f d is e a s e , I t appears th a t the g r e a te s t handicap I s the la c k o f an abundant lab or supply* The workers ai*e equal In q u a lity to any t r o p ic a l w orkers, b ein g ra th er e a s i l y managed and comparing favo ra b ly w ith A s ia t ic la b o r .

Th© p r in c ip a l d i f f i c u l t y i s g e t t in g

enough men to work th© p la n t a t io n s .

T his d i f f i c u l t y

m ight be overcome by r e c r u itin g tae n a tiv e lab or a v a ila b le

47.

U .S. Bureau o f Foreign and Domestic Commerce, Trade promotion S e r ie s 83.

180

In th e r e g io n and encouraging im m igration.

T his

im m igration m ight come from th e West In d ie s or I t m ight come from A s ia .

Th© l a t t e r sou rce i s p refera b le* alth ough

th e r e m ight be d om estic resentm ent a g a in st an A s ia tic in flu x . At rou gh ly th© same tim e th a t t h is rath er fa v o r a b le r e p o r t o f p o s s i b i l i t i e s In the Amazon r e g io n was maae, another thorough in v e s t ig a t io n was b ein g con­ d ucted by th e Department o f Commerce.

T his i n v e s t i ­

g a tio n covered rubber producing p o s s i b i l i t i e s elsew here in L a tin America. 4ft

More s p e c if i c a l ly * I t covered the

p o s s i b i l i t i e s o f d ev elo p in g p la n ta tio n s in s M exico, B r it is h Honduras* C osta Hiea* Guatemala* Honduras, N icaragua, panama* San S alvador, Colombia, Ecuador* B r it is h Guiana, Dutch Guiana* French Guiana* V enezuela, Cuba, Dominican R ep u b lic, H a iti* Jamaica, puerto Rico* T rinidad and Tobago* and th e V irgin I s la n d s .

4y

The

rep o rt thus covered alm ost every co n ceiv a b le prod uction area n orth o f th e equator and a few a reas south o f i t . The two in v e s t ig a t io n s to g e th e r covered alm ost every co n c e iv a b le p la n ta tio n rubber area in t h i s hem isphere.

48. 49*

tf.S . Bureau o f Foreign and Domestic Commerce* Trade Promotion S e r ie s 40. This"*report co v ers p o s s i b i l i t i e s in th e se areas and a ls o c o n ta in s th e most com plete ta b le s o f p rod u ction up to th a t d a te . These ta b le s cover 14 n a tio n s*

18X

Th© r e p o r t o f th© e x p e d itio n was th a t p h y s ic a l c o n d itio n s fa v o r a b le to rubber c u lt i v a t i o n are p resen t In over 6 , 000*000 a c r e s in t h i s v a st region* Twelve n a tio n s in t h i s group po 8 J?e&s extrem ely fa v o r a b le c lim a tic co n d itio n s#

Land c o s t s are lo w ,

the r e g io n i s r e a d ily a c c e s s ib le to th e U nited S t a t e s , and a number o f f a c t o r s tend to favor the developm ent o f th e region*

These in c lu d e not o n ly the cheap land and

ready a c c e s s i b i l i t y , but a ls o the s o i l in c e r ta in a r e a s, th e la c k o f d e s tr u c t iv e s g r a s s e s to combat, and th e low c o s t o f c le a r in g th e Jungle# lab or c o s t s , e x i s t s .

Only one major o b s t a c le ,

Mot on ly are wages in th e r e g io n

n o ta b ly h ig h er than in A sia , but i t would be very d i f f i c u l t to o b ta in th e r e q u is it e number o f la b o r e r s . I t i s probable th a t some 30,000 workers could be r e ­ c r u ite d throughout the e n tir e area.

Labor s u p p lie s

a v a ila b le fo r the b u ild in g o f the panama Canal and de­ t a i l e d in v e n to r ie s o f su rp lu s la b o r in each area tend to confirm t h i s f i g u r e ,

im m igration laws and l o c a l

p r e ju d ic e s , however, might bar th e movement o f many o f th ese la b o r e r s .

O rien ta l la b o r , d e s p ite obvious ob­

j e c t io n s , would seem to b© the so lu tio n # On th e w hole, ,p t h i s rep o rt was |r y fa v o ra b le to the esta b lish m en t o f a p la n ta tio n area in t h i s v a s t r e g io n .

le g

In the p a s t few y ea rs the I n t e r e s t o f th e U n ited S ta te s government In p la n ta tio n p o s s i b i l i t i e s has been renewed*

The Bureau o f p la n t in d u str y , in th e

U nited s t a t e s Department o f A g r ic u ltu r e , d isp a tch ed a number o f h ig h ly tr a in e d , w e ll equipped f i e l d p a r t ie s d uring 1940 and 1 9 4 1 * ^

These f i e l d p a r t ie s c r i s s ­

c r o s s d L a tin America, coverin g a v a s t tr ia n g u la r area rea ch in g from Vera Cruz, M exico, to Rio de J a n eiro , and to Peru.

These to u rin g groups have been su rveyin g

. p o s s i b i l i t i e s fo r oth er exp erim en tal lo c a t io n s , as w e ll a s working on the development o f h ig h -y ie ld in g s tr a in s 51 r e s is t a n t to the South American l e a f d is e a s e . As a r e s u lt o f th e se su rv ey s, tw elve agreements p rovid in g fo r fu r th e r re sea rch have been en tered in to between th e 52 U nited S ta te s and tw elve L atin amerlcan R ep u b lics. A g r ic u ltu r a l experim ent s ta tio n s have been s e t up In a number o f c o u n tr ie s under the j o i n t sponsorship o f th e U nited s t a t e s and the r e s p e c tiv e government.

50. 51. SB.

B r a z il

Brondes, E*W** **Rubber on th e Rebound — East to nesx , A g ricu ltu re in the A m ericas, l s l - 1 1 , A p r il, 1941. T his c o n ta in s tiie' b e s t d e s c r ip tio n of. the p r o je c t and i t s accomplishments* “Survey o f Rubber-Producing p o s s i b i l i t i e s in T ropical American C o u n tries1*, B u lle t in Pan American Un io n , 743725-8, O ctober, 1940. * 'wH a itl Leads the Way on Rubber**, Pan America n Hews, 2 :3 -4 , J u ly 3 , 1941.

183

h a s p u t up $ 1 7 5 ,UGQ fo r th e esta b lish m en t o f a b ig r e se a r c h la b o r a to r y *55

M exico, Peru, H a it i, and se v e r a l

o th er n a tio n s have a ls o s e t up experim ent s t a t io n s ,

lthe

two P eruvian n u r s e r ie s p la n to p la n t 1 ,0 0 0 ,0 0 0 rubber tr e e s during 1941*

& more ta n g ib le r e s u lt I s the

lau n ch in g o f a p r o je c t in H a it i .54

Plans have been

com pleted to p la n t from 5 0 ,0 0 0 to 60,000 t r e e s in the R epublic o f H a i t i ,

ih e r e w i l l be an am bitious program

o f a g r ic u ltu r a l developm ents vdth the h elp o f United 5t u t e s funds ana te c h n ic ia n s*

Although rubber i s th©

major item in v o lv e d , o th er p rod ucts - - n o ta b ly bananas — are in clu d ed in the p r o je c t*

I t i s expected th at rubber

w i l l be grown m o stly on sm all h o ld in g s on the is la n d . Although no e la b o r a te form al, r e p o r ts have been is s u e d as to th e r e s u l t s o f t h i s r e c e n t a c t i v i t y , c e r ta in su g g e stio n s have been made on the b a s is o f th© observa­ t io n s thus fa r made.

I t has been s ta te d th a t h ig h -

y ie ld in g , d lse a se ^ r e sisfc a n t p la n ts are b ein g developed th a t w i l l la r g e ly o f f s e t th© disad van tage o f h ig h lab or c o s t s *55

53* 64* 55*

I t i s fu rth er claim ed th a t Hevea rubber can

R a t c l i f f , J .D ., "Bringing Rubber Home% C o llie r > s , 108134 - 5 , October 1 8 , 1941* Lqc. c i t *; ”0*3*, H a iti P lans Rubber Products,** F oreign A g r ic u ltu r e , 5s 11, JTune, 1941. Survey oxTFubber-Producing p o s s i b i l i t i e s in Tropifcal A m e r ic a n C ou n tries" , B u lle t in pan American (J n io n , 74J7&S-S.

184

to© produced in L a tin America on a p la n ta tio n b a s ic fo r h a l f o f wh&t s y n th e tic or guayule would c o st on a la r g e « 56 s c a le b a sis# An in t e r e s t in g su g g e stio n has a ls o been made th a t more u se can toe made o f th e h a p le ss C a s t i ll a t r e e , growing in th e c o ld e r , d r ie r c lim a te s on th e f r in g e s o f the tr o p ic s#

In 1907, th er e was more C a s t illa

acreage in Mexico than th ere was rubber acreage in K7 Malaya.*" i t h a s been d isc o v ere d th a t Hevea methods cannot be used w ith C a s t illa trees#

But I t has been

su g g ested th a t C a s t illa p la n ta tio n s might op erate s u c c e s s f u lly as combined lum bering and p la n ta tio n projects.**®

T his would r e q u ir e a la r g e a cr ea g e, but i t

has th e advantage th a t th e C a s t illa tr ee has n ot been su b je c t to th e South American l e a f d is e a s e .

The most

in t e r e s t in g o f the o b serv a tio n s based upon t h i s survey I s a statem en t toy K.H. Bressman#

He a sse r te d th a t U nited

S ta te s requ irem en ts, some 700,000 to n s In 1941, could e v e n tu a lly be produced even In one o f the s m a lle s t o f the 59 tr o p ic a l r e p u b lic s , such a s Ecuador or Costa Rica# The la r g e s t a c tu a l p la n ta tio n s have been e s ta b ­ lis h e d toy Ford and Goodyear#

In 1927, Henry Ford

56. 87.

Loe. p i t . H o lt, E v e r e tt, "Importance o f Rubber to th e New World", B u lle t in Fan Americ an Union, 7 4 :4 9 9 , J u ly , 1940# 58. Loc. c i t . 5 9 . . U . 8 . Department o f A g r ic u ltu r e , Bresrman, F.M#, Inter-Ame r ic a n C o-operation in A gricu ltu re# .w ^ a tg iillin nil 1

I

. . n.l

IBS

obtained, a .co n cessio n .from th© B r a z ilia n government# T his c o n c e ssio n co n ta in ed some 2 ,5 0 0 ,0 0 0 a cr es o f land#® I t i s lo c a te d In the paz*t o f th e Tapajos p la te a u from which Wickham* in 1878, smuggled the seed s to England# I t a ls o co v ers the area recommended, by the Department o f Commerce as th e most fa v o r a b le region#

Ford de­

v elop ed th e p la n ta tio n In u n h u rried , m eth o d ica l, and thorough fa sh io n # year#

one thousand a c r e s were p la n ted eaoh

The ju n g le was cleared*

sh ip p in g l i n e was organized*

Towns were cr ea ted .

A

A r e f r ig e r a t io n p la n t,

h o s p i t a l , and hundreds o f homes were b u ilt*

A fle e t of

sh ip s came from the Gre- t Lakes b rin gin g su p p lie s and c o n str u c tio n m a te ria ls* Ford was ab le to g e t a v er y fa v o r a b le con­ c e s s io n from th e B r a z ilia n s t a t e and fe d e r a l govern­ m ents, which were very an xious to have the p la n ta tio n rubber in d u stry grow.

Ho ta x e s were to be a sse sse d

a g a in st the p la n ta tio n lo r f i f t y y e a r s , alth ough a f t e r tw elve yea rs o f o p e r a tio n , 14$ o f th e p r o f it s were to go to th e government* 00 #

The fo llo w in g d e s c r ip tio n o f th e estab lish m en t o f th e Ford p la n ta tio n s was sy n th e siz e d from th e fo llo w in g : Lawrence, op * c i t *, p n .6 5 -6 ; "Ersatz and home-Grown", Time, 35770, June 1 7 , 3*940$ Tom linson, Edward, ^Jungle Gold", Col&er *a , 9 8 120 p lu s , December 1 2, 1936$ H o llr i e g o ! , A r n o ld , "Ford In B r a z il" , L ivin g Age, 342:££3, May, 1932; "Henry Ford", O utlook, 147:227, October 2 6, 1927; H old rid ge, Desmond, A Matlve Returns to the Amazon", L iv in g Age, 360:157, A p r il, 1941; .1 1 son , Charles Morrow, "Hr# Ford in th© ju n g le " , H arp er's, 183:1BO8 8 , J u ly , 1941.

186

A number o f c o s t ly m ista k es were made*

The

o r ig in a l area c o n s is te d p r in c ip a lly o f s te e p t e r r a c e s , and an a d d itio n a l area o f 704*000 a cres had to be ob­ tained,

T his new p la n ta t io n , named B e lte r r a , was r e ­

c e iv e d in exchange f o r an e q u iv a le n t acreage o f th e o r ig in a l p la n ta tio n *

The o r ig in a l p la n ta tio n was

a c c e s s ib le o n ly during c e r ta in tim es o f th e y ea r, th© r iv e r n ot b ein g n a v ig a b le d uring low water*

An attem pt

was made to employ United S ta te s methods o f s c i e n t i f i c management w ith th© n a tiv e la b o r e r s , which ended in an amusing but e n lig h te n in g sit-d ow n str ik e *

The South

American l e a f d is e a s e has a ls o appeared, d e s p ite r e p o r ts o f Department o f Commerce e x p e r ts th a t t h i s d is e a s e was n ot to be p a r tic u la r ly feared*!

**©bor sh o rta g es have

a ls o m a teria lized * The in vestm en t to d a te i s rep o rted a t about § 8 , 000 , 0 0 0 * which I s sa id to be h ard ly equal to a y e a r 's tr o p ic a l Investm ent o f the U nited F r u it Company o f Boston*

F ord lan d ia, th© bx*iglnal p la n ta tio n , has

become the experim ental farm and supplementary p lan ­ ta tio n *

B e lte r r a , the new p la n ta tio n , i s a t p resen t the

r e a l h ea rt o f th© e n te rp rise*

In June, 1941, th ere were

3 , 000,000 growing t r e e s on th e two p la n ta tio n s , o f

61.

W ilson, C harles Morrow, T?Mr* Ford in th e jungle**, H arper*s, 183s184, J u ly , 1941*

187

which about 2 ,0 0 0 ,0 0 0 were budded w ith Malayan s to c k ,62 These budded tr e e s w i l l b eg in to be p ro d u ctiv e about 1943,

I t i s estim a ted th at th e 1941 ou tp u t may be as

h ig h a s 600 tons* and th at th e output may r i s e to betw een 6 ,0 0 0 and 7 ,5 0 0 to n s w ith in about seven y e a r s , Some 1 6 ,0 0 0 a cr es are now p la n te d , th r e e -fo u r th s o f t h i s acreage b ein g a t B e lte r r a ,64

I t i s rep orted th a t

th e fe d e r a l government o f B r a s il i s d eep ly I n te r e s te d In t h i s p la n ta tio n attem pt and I s stu d y in g p ro p o sa ls f o r encouraglr^im m igration In order to a l l e v i a t e lab or sh o r ta g e s, She Goodyear I n t e r e s t s have a ls o undertaken p la n ta tio n a ttem p ts, alth ough th e se e f f o r t s have n ot been on a s la r g e a s c a le as has th© Ford v en tu re, Goodyear has a tw enty-year co n ce ssio n In P&n&xna, co v erin g an a rea o f 1 ,0 0 0 a c r e s , A t t e m p t s are b ein g made to d ev elo p a h ig g i-y ie ld in g t r e e adaptable to Panama and r e s is t a n t t o th e ravages o f th e South American l e a f d is e a s e .

Only 250 a cr es o f t h is c o n c e ssio n Is p la n t­

ed but th© remainder may be p la n ted and c u ltiv a te d in the near fu tu r e .

62, 65. '64* 65* 66,

The 1954 co n tr a c t w ith th e government

I b id , , p ,1 8 6 , I b id , , p ,1 8 7 • h o c, c it * H oid rld ge, Desmond, !Ia M ative R e tu r n s t o the Amazon*', L iv in g Jig©, 560*157, A p r il, 1941% a ls o In fra,C h ap ter 40. pan American Union, Rubber, n ,2 1 .

o f panama estim a ted th© companyf s t o t a l in vestm ent th e r e a t $ 1 ,0 0 0 ,0 0 0 ,

Imports and e x p o r ts o f seeds and

t r e e s are exempt from d u t ie s , and the p rop erty o f th e company i s exempt from a l l forms o f t a x e s ,

in retu rn

th e company a g r e e s to m ain tain a pay r o l l r a t io o f 76$ Panamanians,

I t a ls o guarantees to d e liv e r a number o f

seed s and t r e e s y e a r ly to the governm ent, which in turn w i l l d is t r ib u t e them among n a tiv e farm ers, Goodyear sig n ed a sim ila r c o n tr a c t w ith th e B7 Costa Bican government In 1936, As In Panama, h o ld in g s are about 1 ,0 0 0 acres*

C ontract terms are very sim ila r

to those betw een Goodyear and the Republic o f Panama, I t i s planned th a t i f experim ents now b ein g conducted prove s u c c e s s f u l, fu r th e r developm ents on th e la rg e t r a c t s a v a ila b le In both c o u n tr ie s w i l l f o llo w .

The

Costa itiican p la n ta tio n was e s ta b lis h e d in th e cen ter of a re g io n lo n g a f f l i c t e d w ith the South American l e a f d is e a s e .

The company took over an o ld e s t a t e which had

been p la n ted and g iv e n up, some 3,600 t r e e s o f the o r ig in a l 3 6 ,0 0 0 remaining# s in c e th ese 3 ,6 0 0 tr e e s were presumably Immune from l e a f d is e a s e , th e y were crossb red w ith h ig h -y ie ld in g t r e e s o f th e Far p a s t .

The company

a ls o hopes to encourage the e sta b lish m en t o f a la rg e number o f sm a ll, fa m ily -s iz e d tr a c ts *

189

Chapter XVII SILK C lim a tic c o n d itio n s r e q u is it e f o r th e growth o f w h ite mulberry tr e e s e x i s t over a v a s t area exten d in g from the Mason-DIxon l i n e In th e u n ited S ta te s to n orth ern A rg en tin a ,1

D esp ite t h i s fa c t* fou r c e n tu r ie s

o f a ttem p ts to In trod u ce s e r ic u ltu r e in to th e Western Hemisphere have n ot produced a th r iv in g raw s i l k in ­ d u str y ,

C o r te s, in 1 522, imported silkworms and

mulberry t r e e s in to ttNew Spain*, which was to become Q M exico, T his v en tu re f a i l e d to l a s t out th e cen tu ry , and subsequent a ttem p ts have fared but l i t t l e b e t t e r . At p resen t th ere i s no raw s i l k exp orted from the Western Hemisphere, and s e r ic u ltu r e i s p r a c tic e d only on a l o c a l i s e d and s m a ll-s c a le b a s i s .

In tro d u ctio n

o f a major s i l k In d u stry would r e q u ire an unprecedented degree o f s u b s id iz a tio n and a s s is t a n c e , u n le ss mechani­ z a tio n could be in tro d u ced , B r a z il has probably made more p rogress toward development o f a s i l k In d u stry than has any oth er n a tio n in t h i s hemisphere*

1,

2,

As lo n g ago a s 1860, 100,000

Bressman, E a r l, *0an america Produce S ilk ? ” , a g r ic u ltu r e in the Am ericas, 1 * 1 , November, 1941.

T § M 7 ,~ 2 7 — -------------------

190

m ulberry t r e e s were planted, and th r iv in g i n B r a z il.^ I t I© s a id th a t m ulberry tr e e s grow r a p id ly , the c lim a te i s f a v o r a b le , l i t t l e c a p it a l i s r e q u ir e d , because o f sm all b u lk few I n te r n a l tr a n sp o rt problems are in v o lv e d , and ocean tr a n s p o r ta tio n to th e B hited S ta te s i s n ot o o s t l y .4 In 1929, when th e B r a z ilia n in d u stry was s t i l l In i t s in fa n c y , over a thousand B r a z ilia n c o f f e e 5 fazen d as were experim enting w ith or producing s i l k . Today, s e r ic u lt u r e I s w id ely d is t r ib u te d over c o f f e e fazen d as and sm a ll h o ld in g s In two s ta te s *

£*

Five yea rs

ago, B r a z ilia n s e r ic u lt u r e seemed to have a b r ig h t fu tu re*

P roduction had in c r e a se d y e a r ly , output o f cocoons b ein gs 7 1927-30 a v era g e, 17© m etric to n s;

1931-35 average, 561 to n s; and. 1936, 600 tons*

In 1937,

however, low p r ic e s caused prod uction t o siump to 393 o to n s , t h i s d e c lin e co n tin u in g through 1938* la r g e I n t e r e s t s w ithdrew , some t r e e s were removed, and f o r about two y ea rs no new p la n tin g took p la c e . 3. 4*

In th e

B r o c k e tt, e g . c i t *, p .49* "Latin American Experiments In S ilk C ulture", B u lle t in pan Ameri c a n Union, 62s1 7 8 -8 5 , F ebruary,1925* 5. ws i l k p roau cti^ n R r*T atIh tm ex'ican, Journal o f Geography, 2 8 :2 7 9 -8 5 , O ctober, 1929* 6 * South American Handbook 1941, p . 214* 7 . Bressman, E a rl, Can America produce S llk ? f>, A g r ic u ltu r e in th e Am ericas, 1 : 4 , November, 1941. S . Loo. uc i t *

191

p a s t two y e a r s , how ever, the B r a z ilia n In d u stry has ex p erien ced a p a r t ia l r e v iv a l,

in 1959, B r a z ilia n o u t­

put retu rn ed t o about 700 to n s , and In 1940, prod uction remained on about th a t l e v e l C o n t i n u e d h igh p r ic e s and the c u rta ilm e n t o f A s ia t ic shipm ents o f s i l k should cause th e B r a z ilia n in d u stry to d evelop r a p id ly d uring th e n ex t few y e a r s . Even In 1 939, how ever, the B r a z ilia n s i l k output was b ut *1$ o f Japan*a p ro d u ctio n , and the d om estic In du stry su p p lied b ut 3$ o f B r a z ilia n raw s i l k r e q u ir e ments*

The B r a z ilia n In d u stry I s q u ite o b v io u sly many

y ea rs away from assuming exp ortin g s t a t u r e . The fe d e r a l and s t a t e governments o f B r a z il have ex e r te d every e f f o r t to encourage th e p rod uction o f raw s i l k ,

B r a z il l a anxious to o f f s e t th© top -h eavy

predominance o f c o f f e e in her economy, and she would l ik e to u t i l i z e s i l k e x p o r ts as a means o f g a in in g fo r e ig n exchange,

The governments have attem pted to encourage

B r a z ilia n c o f f e e p la n ta tio n s to grow mulberry t r e e s and silkworms a s a s id e l l n e ; ^

To encourage th e spread o f

t h i s p r a c t ic e , f e d e r a l and s ta te a g e n c ie s have jo in e d

9, 11.

XiQO, c i t , I b id , , pp,4 - 5 , * S llk Production in L atin America”, jou rn al o f Geography, 288279-85, O ctober, 1929,

19?:

w ith p r iv a te a s s o c ia t io n s in h e a v ily s u b s id iz in g raw s i l k p ro d u c tio n .

12

Although th e in te r n a l tr a n sp o rt problem i s m inim ized by th e sm a ll bulk in v o lv e d , the B r a z ilia n s i l k in d u stry i s con fron ted by the u su al sev ere lab or sh o r t­ ages*

The l o c a l in d u stry has ex p erien ced co n sid era b le

d i f f i c u l t y com peting w ith A s ia t ic producers paying lower w ages, s in c e the p rod uction o f raw s i l k rem ains e s s e n t i a l l y a handwork in d u stry*

The n e c e s s it y o f

prolonged s u b s id iz a tio n o f the In d u stry a t t e s t s the h ig h la b o r c o s t s o f B r a z ilia n s e r ic u lt u r e .

The B r a z ilia n

governments have attem pted to overcome t h i s lfb o r problem by u t i l i z i n g s e v e r a l m ethods.

B r a z il has encouraged

p rod uction o f s i l k by la b o r e r s a ls o employed in the c o ffe e fazendas* and c h ild r e n * ^

She has encouraged, employment o f women She h as a ls o encouraged, a t l e a s t u n t il

r e c e n t ly , the im m igration o f I t a l i a n , Spanish, and Japanese workers f a m ilia r w ith s i l k c u lt u r e * ^

E ffo r ts

have a ls o been made to in trod u ce m echanical d e v ic e s in order to m inim ize the h ig h la b o r c o s t s .

These e f f o r t s

to p e r f e c t ^ r e e lin g 11 and o th er machines have th u s fa r

12* lb* 14.

*The S ilk In d u stry in B razil*1, B u lle t in P&n iuaerlcan Union, 67*857-77, BovdBEeFTT^d^T*" "Latin American Experiments in S ilk Culture % B u lle t in Fan American Union, 62*178-85, F ebruary,19&5* South AmerTcgh~nahdbdok 1959, p . 2X9.

3,93

been f r u i t l e s s . ^

S m a ll-s c a le attem p ts a t s e r ic u lt u r e have a ls o been l&unced in s e v e r a l oth er L atin American n a tio n s . In Cuba, 2 00,000 m ulberry tr e e s were im ported from th e P h ilip p in e s in 1842.^6

Although th ese t r e e s were

p la n te d on a Cuban e s t a t e , s e r ic u lt u r e d id not d evelop during th a t ce n tu r y .

In 1928, Cuba launched another

p r o je c t d esig n ed to e s t a b lis h th e In d u stry .

This scheme

was n ot c a r r ie d through, and in t e r e s t in s e r ic u ltu r e la g g ed u n t i l the raid-19301s*

At th a t tim e , the N ation al

M in istry o f A g r ic u ltu r e began to conduct experim ents. Many Cuban econ om ists b e lie v e th a t a t l e a s t a 100% p r ic e r i s e i s needed b efo re th e is la n d cou ld d evelop s e r ic u ltu r e on an economic b a s i s . C hile has mad© sp orad ic attem p ts to d evelop s e r ic u lt u r e , under th e sp on sorsh ip o f th e Commission o f Minor I n d u s tr ie s o f the N a tio n a l Board o f a g r ic u ltu r a l E xports .***17 Most o f th e se e f f o r t s , however, have not proceeded beyond the b lu e p r in t s ta g e ,

in 1939, th e

C h ilean government com missioned a s e r i c u l t u r a l i s t to go to Europe and A sia and study*

There have been no p u b lish ed

r e p o r ts r e l a t i v e t o th e r e s u l t s o f t h is su rvey.

15.

U .S . D e p a r tm e n t o f A g r i c u l t u r e , B r e s s m a n , E a r l , I n t e r - A m e r ic a n Co-o p era tio n in A g r ic u ltu r e .

16.

Brossman, EarX,~'*rCan America produce S ilk ? 11, A g ricu ltu re i n th e Americaa, I s 4, November, 1941. h o c. c i t .

17.

194

The government o f A rgentina has a ls o s t r iv e n to encourage dom estic s e r ic u lt u r e .

In A ugust, 1956, the

Argentines N a tio n a l Board o f E ducation undertook a stren u ou s campaign to promote s i l k c u ltu r e In th e northern p ro v in ces* 10

a

prime m otive was th e d e s ir e to cut down

th e n a tio n 1s annual s i l k b i l l o f about 2 0 ,0 0 0 ,0 0 0 p e s o s . T eachers in th e primary so h o o ls were urged to inform stu d en ts o f th e m an ifold p o s s i b i l i t i e s o f s e r ic u lt u r e . The N a tio n a l M in istry o f A g ricu ltu re jo in e d in t h i s attem pt ana p la n ted a number o f w hite mulberry t r e e s throughout the north ern a r e a .

There have been no r e p o r ts ,

however, con cern in g th e r e la t iv e su cce ss o f t h i s v en tu re . Apparently th ere heve been few ta n g ib le r e s u l t s . Colombia ex p erien ced a b r ie f tts i l k boom** e a r ly In th e 1800*s , when a group o f C a th o lic p r ie s t s Imported t r e e s from th e P h ilip p in e s , silkworms from Spain, and t r ie d to launch the Industry near Bog&td.

19

I n te r e s t in the p r o je c t had about d ied out by 1845, alth ough a g it a t io n fo r s e r ic u ltu r e i s now being revived * Some mulberry tr e e s are s t i l l growing in Colombia,

It

I s b e lie v e d th a t c lim a tic c o n d itio n s f a c i l i t a t e a co n sta n t QQ ra th er than, sea so n a l p ro d u ctio n .

18. 19. 20.

h oc* c i t . hoc. c l't. South A m e r ic a n Handbook 1941, p . 326.

195

A number o f o th er l e a s e x te n s iv e e f f o r t s toward e s t a b lis h in g s e r ic u lt u r e h&ve been launched* Costa Elea* In 1926, attem pted to encourage s e r i ­ c u ltu r e by exem pting d o m e s tic a lly produced s i l k from th e 21 exp ort d uty. T his move, however, had no a s c e r ta in a b le r e s u lt s *

In V en ezu ela, a s i l k company h as been

org a n ized and 150*000 mulberry t r e e s -p la n te d .* 46 The s t a t e o f Chihuahua, M exico, p la n ted a grove o f mulberry t r e e s In 1930, but th e l o f t y p r o sp e c ts o f th e new O'* in d u stry were soon dimmed* Panama has w itn essed c o n sid e ra b le developm ent work, 94^ and s h o r t - liv e d v en tu res have been launched In Honduras, N icaragua, and o th er C entral iuaeric&n n ation s* ^ A lt hough Ecuador has not y e t launched s e r ic u lt u r e , the r e q u is it e d ry , cool clim a te a t a h igh a lt it u d e i s s a id to e x i s t . T h e low wage s c a le o f farm la b o r In Ecuador i s s a id to be a fa c to r which might f a c i l i t a t e the growth o f th e raw s i l k in d u str y .

21.

Bressman, K a rl , “Can A m e r i c a Produce S ilk?® , A g ric u ltu re in th e A m ericas, I i 4 , November, 1941.

22.

l e a l - s — oE T ’cljE , 7 p , M

23* 24. 25* 26*

7 ~

Bressman, K arl, ®Can America Produce S ilk ? ”,

Agriculture in the A m e r ic a s , lx 4 , November, 1941*

*•L atin AJjierlean"Experiments in S ilk cu ltu re® . B u lle t in Pan American Union, 62*178-85, February,1925* h oc. clfc. ; a l so s ilk ' pro Sue t io n in L a tin America®, Journal o f geography, 28x279-85, O ctober, 1929. ^Sorld^s B ilk situ a tio n ® , S cien ce NX, 38x540, November 30, 1940,

196

Chapter W i l l T in L a tin America has ranked behind th e Far E ast a s a producer o f tin *

Over th e 1929-58 period#

L a tin America has su p p lied from 13*1$ o f w orld pro­ d u c tio n (1937) to 2 4 .1 % (1 9 2 9 )*1 S in ce the U nited S ta te s t i n sm e lte r s were shut down about 1923# subsequent U nited S ta te s im ports have been c o n fin e d to m e t a llic tin *

Because L a tin

am erlca ha® a ls o lock ed a sm eltin g in d u str y , her ex p o rts have been in the form of ore and c o n c e n tr a te s. Thus# u n t i l a f t e r the outbreak o f World War I I , the U nited S ta te s r e c e iv e d alm ost no t i n from L atin -timerica*

The v e r y sm all im ports o f o r e , however# were

co n fin ed to so u rces from t h i s hem isphere.

A fter

September# 1937# United S ta te s im ports o f ore In creased sharply.*^

in t h i s new upsurge o f or© im p orts, L atin

American c o u n tr ie s , p r in c ip a lly B o liv ia , have accounted fp r %bout 97$ o f th e t o t a l , s

ore im ports# however,

s t i l l rank in v a lu e w e ll below Im ports o f m e ta l.

1. 2* 3.

U.S. T a r iff Commission# L a tin America a® a Source o f S tr a te g ic and Other E seenT iaT*lE ^erial's, p .iS U . lF ld T ;~ ;T o T . Lo c . o 11 .

The maximum annual ex p o rts o f B o liv ia - dominant L a tin American producer — in r e c e n t y ea r s has Been th e 4 6 ,3 0 0 to n s o f 1929*

T his would b© inadequate

to supply a l l U nited S ta te s requirem ents*

p rod uction

In a l l L a tin American c o u n tr ie s in 1958 amounted to 50*700 sh o rt tons* w h ile U nited S ta te s im ports in 1939 4 were 7 8 ,5 0 0 sh o rt to n sj and in 1940, 139,800 tons* I t h as been estim a ted by th e B.S* T a r if f Commission th a t should L a tin American ore be sm elted in the u n ited S t a t e s , from o n e -th ir d to o n e -h a lf o f p rese n t United S ta te s requirem ents would be ob tain ed in t h is hem isphere*5 B o liv ia has been th e wozald * s second or th ir d ranking t i n producer sine© th e esta b lish m en t o f the B o liv ia n in d u stry about 1906*

In a l l b u t a few o f th e

y ea rs s in c e th a t d a te , B o liv ia has assumed second p la ce among world producers* P roduction has remained f a i r l y co n sta n t fo r se v e r a l y ea rs a t about 25,000 to 30,000 to n s, alth ough World War I I I s ca u sin g a m ild boom in the B o liv ia n Industry*

Table 23, g iv in g 1913-37 production

I b id *, p *160* 5* Loc» c i t * 6 P Boush, oj>* c i t *, p.176*

198

T a b le 2 5 7

BOLIVIAN AND WORLD PRODUCTION OF TIN (Thousands lo n g to n s ) Y ear

B o liv ia

1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937

2 6 .3

2 2 .0 2 1 .5

2 1 .0

2 7 .6 2 9 .1 2 8 .7 2 7 .8 1 8 .8 3 1 .8 2 9 .8 3 1 .6 3 2 .6 2 9 ,6 3 5 .8 4 0 .3 4 6 .3 3 8 .1 3 0 .7

2 0 .6 1 4 .7

2 0 ,6

TOTAL PERCENT

7.

I b id # , p#174#

2 7 .2 2 4 .1 2 5 ,0 w r #ff”

2 0 .0

W orld 1 3 3 .4 1 2 3 .9 1 2 6 .8 1 2 5 .1 1 2 9 .8 1 2 3 .2 1 2 3 .5

1 2 2 .0 1 1 3 .5 1 3 2 .2 1 2 9 .0 1 4 0 .0 1 4 5 .8 1 4 3 .6 1 5 8 .4 1 7 6 .0 1 9 2 .0 1 7 5 .1 1 4 9 .7 9 8 .9 9 0 .7 1 1 5 .8 1 4 7 .0 1 8 0 .4 2 0 8 .4 3 ,5 0 3 .3

1 0 0 ,0

199

s t a t i s t i c s and th© world* r e v e a ls th e s t a t u s o f B o liv ia a s a t i n producer,

Note th a t over th e e n t ir e period*

B o liv ia has produced alm ost e x a c tly 20$ o f th e world output*

In 1958* B o liv ia produced 56*657 ton s o f t in

co n ce n tra tes* which con tain ed 25*895 to n s o f m etal*6 In th e f i r s t h a lf o f 1940* B o liv ia exp orted 28*241 ton s on t i n co n ce n tra tes* presumably w ith about th e same p ro p o rtio n o f m etal content#®

P roduction during 1941

was b e lie v e d to be a t a 3600*3700 ton per month le v e l*

10

As m ight be expected* most o f th e se B o liv ia n shipm ents have been d e s tin e d fo r th e n a tio n s w ith th r iv in g t i n sm e ltin g in d u s tr ie s*

n ea rly a l l o f the

B o liv ia n t i n c o n c e n tr a te s have been sm elted in the United Kingdom*

Of th e 56*657 to n s o f c o n c e n tr a te s shipped In

1938* th e U n ited Kingdom r e c e iv e d 42*072 to n s; Belgium 1 1 ,8 7 5 to n s; th e N etherlands 2*644 to n s; th e u n ited S ta te s 24 to n s; and Germany 22 tons*

11

Of th e 28*241

ton s o f co n ce n tra tes exp orted In th e f i r s t h a lf o f 1940* 26*268 went to th e United Kingdom and 1 ,9 7 3 to the U nited States#'**2

8* 10* 11. 12*

With r e c e n t agreem ents in f o r c e , I t i s

^Mineral R esou rces, production#, and Trade o f B o liv ia * 1* F oreign M inerals Q u a rterly * 2*5* October* 1939* M ineral '^rad'e' N otea* 12517-8* A p ril 19* 1941# M ineral Trade N o tes, 13*11* Ju ly 19* 1941* **M ineral R esou rces, production* and Trade o f Bolivia*** F oreign M inerals Q u a rterly , 2*5* O ctober, 1939* M ineral Trade N oteg#12*17"-8j A p ril 19* 1941#

to be expected, th a t th e share o f the U nited s t a t e s w i l l in c r e a s e markedly*

The U nited S ta te s has con­

tr a c te d fo r 1 8 ,0 0 0 to n s o f t i n co n c e n tr a te s during each o f the n ex t f i v e y e a r s . ^

T his accoun ts fo r l e s s than

h a l f o f B o liv ia n s p r e se n t c a p a c ity and c o n s is t s la r g e ly o f low -grade o r e s .

Most o f th e P atino t i n w i l l co n tin u e

to go to th e U nited Kingdom fo r sm e ltin g , s in c e t h i s output i s bound to England fo r th e n ext te n y e a r s. The tin -m in in g in d u str y i s p iv o t a l in th e economy and fo r e ig n tra d e o f B o liv ia .

During World War I

t i n ex p o r ts c o n s t itu te d alm ost 70$ o f B o liv ia n ex p o rts in terms o f v a lu e . 15 By 1959, t h is p ercen tage had in crea se d u n t i l t i n accoun ted fo r roughly 85$ o f B o liv ia n exports.^*6 The in d u str y i s la r g e ly in th e hands o f B o liv ia n i n t e r e s t s , n otab ly P atin o and h is a s s o c ia t e s . Minor B r i t i s h , U nited S t a t e s , German, S w i s s , and French i n t e r e s t s are a ls o re p r e se n te d . 17 B o liv ia n p rod uction has been s e v e r e ly handi­ capped by a number o f f a c t o r s .

13. 14. 15. 16. 17.

On© o f th e se has been

U .S . Bureau o f M ines, M inerals Yearbook 1941, p . 670. ho c ■ c i t . U .S . Bureau o f F oreign and Dom estic Commerce, S p e c ia l iigenta S e r ie s 208, p . 222» **Mine r a l He sour c e &, p ro d u ctio n , and Trade o f B o liv ia F oreign M inerals Q u arterly, 2*4, O ctober, 1939. Koush, 0£ . c i t . , p .197; In fr a , p .g o i.

th e q u a lity o f th e o r e , whicn h&s supposedly req u ired m ixture w ith h ig h er-g ru d e ore in order to be sm elted . Another d i f f i c u l t y i s a s e r io u s lab or sh o rta g e, which became r e a l l y a cu te d u rin g and s h o r tly a f t e r the war 18 w ith Paraguay. S t i l l another o b s ta c le I s the la c k o f f u e l , which h es la r g e ly p reven ted B o liv ia from e s t a b l i s h ­ in g a d om estic sm eltin g In d u stry .

T ran sp ortation

d e f i c i e n c i e s , d e s p ite r e c e n t e x te n sio n o f railw ay l i n e s , rem ain a v e x in g problem.**®

C onsiderable lo a d in g

and u n lo a d in g , sh ip p in g and tr a n s-sh ip p in g i s re q u ired , which ren d ers ta k in g t i n to the co a st p o r ts a very c o s t ly and te d io u s p r o c e s s.

In f a c t , e stim a te s In d ic a te

th a t tr a n sp o r tin g th e ore to th e c o e s t c o n s t it u t e s by 91 fa r th e major item in th e f i n a l c o s t o f B o liv ia n t i n . * There have been a number o f e f f o r t s to co u n tera ct th ese o b s t a c le s ,

p rio r to 1929, rudimentary

tech n iq u es were employed, s in c e th e b e s t ores were s t i l l to be e x tr a c te d ,

18. 19. 20 .

21.

s in c e th a t tim e, the p atin o e n te r p r is e s

^ B o l i v i a ’ s P rod u ctive P o s s i b i l i t i e s ” , Commercial Pan America, 9 * 1 2 -3 , January, 1940. &oush, op. c i t . , p . 177j J o n es, lm .. T T n fie lds o f the ^ o r ld , p p .328-9. h oc, c i t . , l a t t e r ciTTaTTon; aTso™ pan American Union, a B**ief Talk about T in, and “M ineral R esou rces, p rod uction and'"Wade o f B o liv ia ”, F o reig n M inerals q u a r te r ly , 2* 2 5 -6 , O ctober, 1939. W h itb e c k , R .H ., Economic Geography o f S o u th A m e r ic a , p p * 1 5 2 -3 $ '

202

and o th e r s have attem p ted Improvements i n tech n o lo g y th a t would cu t c o s t s and enable e x p lo it a t io n o f v a s t d e p o s its o f low -grade o r e . 2*

T his developm ent, how­

e v e r , h as y e t to permeate th e e n t ir e in d u str y .

The

B o liv ia n in d u str y has been allow ed to run down because o f the p rolon ged d e p r e ssio n and a number o f oth er f a c t o r s . I t needs m aintenance, new machinery and te c h n iq u e s, more lab or and more c a p i t a l . In the l a s t a n a ly s is , th e fu tu re seal© of B o liv ia n p ro d u ctio n and her a b i l i t y to meet United S ta te s requirem ents depends la r g e ly upon th e e x te n t and c a lib r e o f re serv es*

High p r ic e s , fa v o ra b le t a r i f f

treatm ent or even s u b s id ie s could overcome many handi­ ca p s, b u t th e se in c e n tiv e s would be o f l i t t l e a v a il I f the ore I s b ein g exhausted* There seems to be l i t t l e a u th o r ita tiv e informa­ t io n on th e e x te n t o f th e se B o liv ia n ore r e s e r v e s .

Only

th e la r g e r and w e ll- e s t a b lis h e d companies have developed ore r e s e r v e s to co v er extended fu tu r e workings; th e remainder work on a hand-to-m outh b a s is . 22*

’’B o liv ia n s P rod u ctive P o s s i b i l i t i e s ' * , Commercial pan America, 9 512, January, 1940* For“ ariaIyses o f B o liv ia n c o s t s , sees HVhltbeck, op* c i t *, po* 152-3; ^Mineral R esou rces, p ro d u ctio n , and Trade o f B o liv ia 1*, F oreign M inerals ^ n a r te r ly , 2 :2 4 , O ctober, 1939; House o f R ep re sen ta tiv e & Committee on Foreign A f f a ir s , Subcommittee R eport, Tin in v e s t i g a t i o n , pp*466-89*

23*

Hence,

Roush, op* c i t . , p *170.

203

l i t t l e 1 ® known about th e e x te n t o f B o liv ia n re serv es# A few estim a tes* however* have been hazard ed , most o f th e s e b ein g ra th e r vague#

One estim a te i s th a t v i s i b l e

r e serv es* proved as w e ll a s p o t e n t i a l , a ssu re an average p rod u ction o f more than 40,000 m etric to n s o f fin© m etal per year fo r wa lo n g tim e w#24

Even t h i s e s tim a te , how*

e v e r , i s c a r e f u lly q u a lifie d #

Another estim a te s t a t e s

th a t a llo w in g y e a r ly p rod u ction o f 25,000 ton s o f m e ta l, 25 known r e s e r v e s w i l l l a s t ten years# T h is estim a te makes no attem pt to c a lc u la te probable or p o s s ib le re serv es#

Probably th e most d e f i n i t e , alth ough n ot

n e c e s s a r ily the most accu rate e s tim a te , p la c e s r e s e r v e s , 26 known and p ro b a b le, a t some 500,000 tons# C on siderab le disagreem ent e x i s t s among e x p e r ts a s to the fu tu r e o f B o liv ia n production#

I t I s g e n e r a lly

adm itted th a t th e b e t t e r grade ore d e p o s its are b ein g p® g ra d u a lly exhausted* Some b e l i e v e , however* th at B o liv ia n d e p o s its have the advantage o f b ein g p rim arily lo d e d ep o sits#

Hence, i t la s a id , they are a p t to

o u t l a s t th o se o f the Malay S tates* the Motherlands E ast I n d ie s , Thailand.* and o th er A s ia t ic producers*

24# 25* 26# 27. 28*

uB o liv ia * s p rod u ctive p o s s i b i l i t i e s ”, Commercial Pan America, 9 s i 3, January, 1940. If* 3# Bureau o f M ines, M inerals Yearbook 1940, p*696* wM ineral R esou rces, p rod u ction , 'and' ' rade"~of’ B o l iv i a 1, F oreign M inerals Q u arterly* 2 s 28, O ctober, 1939. fiB o lIv Ia *s p rod u ctive P o s s i b i l i t i e s ”, Commercial pan A m e r ic a , 9«12, January, 1940. ? o s k u ll, op# c i t . , p . 253; J o n e s, op. c i t . , p reface#

204

Tin h a s been lik e n e d to g o ld , In th a t In both c a s e s r e lia n c e has been p laced upon lod e d e p o s its as a l l u v i a l d e p o s its have been g r a d u a lly exhausted*

29

Those who f e e l th a t B o liv ia la to p la y a major r d le i n fu tu r e world p rod uction a ls o p o in t to c e r ta in tren d s i n th e p rod u ction and consumption o f t i n . I t I s claim ed th a t world s u p p lie s have been g ra d u a lly d im in ish in g , p r ic e s have been r i s i n g r a p id ly , and ev en tu a l cu rta ilm en t of u se I s I n e v it a b le .

I t is

argued, th e r e fo r e , th a t alth ough B olivia*® b e s t ore may b© g ra d u a lly ex h a u sted , even a con stan t p rod u ctive l e v e l would g iv e her an in c r e a s in g share in world p rod u ction . This co n sta n t p ro d u ctiv e l e v e l i s l i k e l y , fo r new d i s ­ c o v e r ie s seem about to o f f s e t exh au stion of p r e v io u sly e x p lo ite d r e s e r v e s . s i Hot a l l c lo s e o b serv ers agree w ith t h i s rath er o p t im is t ic p ic tu r e .

These d is s e n t e r s p o in t to

the h ig h -c o s t s ta tu s o f th e B o liv ia n In d u stry , as w e ll as to the f a c t th a t p rod u ction from the a l l u v i a l d e p o s its o f the East has con tin u ed on a h igh l e v e l .

It Is

a s s e r te d th a t i f i t were n ot fo r her membership In the I n te r n a tio n a l t i n c a r t e l , B o liv ia cou ld n ot rem ain a

29# 30. 31.

Kouah, qp» c i t , » p # 1 7 l. B lp p ln c o it, op . c i t . , p p .204-7. Jones, op. e f t . , p p .32 3 -4 .

205

major w orld p rod u cer• ^

Xt das been observed th a t

B o liv ia n s o r ig in a l quota was based upon 1929, which was bar peak p ro d u ctiv e year#°^

$hil© quotas have s in c e

been r e v is e d from tim e to tim e , i t i s argued th a t most o f th e s e r e v is io n s have b een based in p art upon an in ­ f l a t e d foundation* re sp e c t*

Table 24 i s e n lig h te n in g in t h is

I t I n d ic a te s tho c a r t e l quotas given to B o liv ia

from 1931 through 1939 and shows th a t in few y e a r s d id B o liv ia even meet her quota# I t i s apparent th a t esta b lish m en t o f th e B o liv ia n in d u stry on a major and independent b a s is depends upon esta b lish m en t o f sm eltin g in t h i s hemisphere# Lack o f such f a c i l i t i e s would a ls o le a v e the U nited S ta te s In th e same v u ln e ra b le s t r a t e g ic p o s it io n as a t present# S ev era l minor e f f o r t s to sm elt ore in B o liv ia have been launched*

The most ela b o ra te o f th e s e attem pts

was launched in 1917, under wafc~tim© impetus#

Pro­

d u c tio n o f m e t a llic t i n was 108 ton s in 1920, 60 ton s 36 in 1921, 200 to n s In 1922, and none in 1923# The B o liv ia n t i n sm eltin g in d u str y , on a s m a ll-s c a le b a s is .

32# 33# 35# 36#

If#3# B u r e a u o f Mines, M i n e r a l s Y e a r b o o k 1940, p #694• "B olivia* s p rod uctive P o s s i b i l i t i e s ^ , Commercial pan A m e r ic a , 9 127-8# jo n e s , op# c i t # , p#29« I b id * , p#25.

206

Table 8434 BOLIVIAN AND WOULD TIN C £00Tab AND PRODUCTION P erio d

B o liv ia

World T otal

25,380 25,518 19,267 2 0,683 14,687 .14,725

97,742 98,717 80,909 7 7 ,8 8 3 64,056 66,641

20,988 20,634 2 7 ,3 1 3 24,880 39,516 24,074

96,054 95,838 118,715 116,306 176,079 155,818

49,394 25,024 21,917 25,371 34,944 27,185

812,689 179,740 113,837 119,358 1 6 0,803 153,312

1 s t Agreement (Mr,* 1931~ ~ ^ T f e e 7 7 1 § 3 3 ) -----1931 •» 1932 w 1933 • -

quota p ro d u ction quota p ro d u ction quota p ro d u ction

2nd Agreement (1934* 1935, 1936) ^ 1934 * 1935 1936 * •

quota p ro d u ction quota p rod u ction quota p rod u ction

3rd Agreement (1 9 3 7 , 1938, 1939, 1940, 1941) 1937 • 1938 • 1939 * -

34.

quota p rod u ction quota p rod u ction quota p rod u ction

1940 Commodities Yearbook, p ,8 1 8 ,

207

sim ply cou ld not; compete w ith the p o s t —w&r sm elters o f th e Phi ted Kingdom*

Ther© have been s e v e r a l other

a b o r tiv e a ttem p ts d uring t h i s c e n tu r y , but non© o f 37 them have had much su ccess* While th e se e f f o r t s may have dem onstrated th e te c h n ic a l f e a s i b i l i t y o f sm eltin g B o liv ia n t i n w ith o u t adm ixture, th ey were n ot com m ercially 58 sound* la c k o f f u e l and c a p i t a l , as w e ll as severe c o m p e titio n , t h r o t t le d most o f th ese ventures*

A re c e n t

p r o j e c t , u t i l i s i n g l a t e te c h n o lo g ie s , remains dormant 39 because o f la c k o f c a p i t a l . P rosp ects o f the e s t a b lis h in g o f a la r g e - s c a le B o liv ia n sm eltin g in d u stry seem rem ote, n ot only because o f economic reason s but a ls o because o f th e P a tin o in t e r e s t i n fo r e ig n sm e lte r s. A lth ou ^ i m ining o f t i n or© in th e United S ta te s la on a t r i v i a l b a s is , th er e i s co n sid era b le lik e lih o o d th a t a dom estic sm eltin g In d u stry cou ld be e s ta b lis h e d h e r e .

There would b© obvious s t r a t e g ic

advantages in such a p rocedure, a s w e ll as the economy o f e lim in a tin g th e p rese n t c o s t ly p r a c tic e o f sh ip p in g B o liv ia n ore to th e U nited Kingdom and thence to th e

37.

38. 39.

^Mineral R esou rces, P rod u ction , and fr a d e o f B o liv ia ”, F oreign M inerals q u a r te r ly , 25 2 2 -4 , O ctober, 1939; a l ©6 , M ay™ ,"'"Elizabeth, i n t e r n a t i o n a l Tin c a r t e l ” , I n t e r n a t i o n a l Control I n th e K o n - F e r r o n s M e t a l s , pp*292-4* hoc* c i t . ^EBaeraT R esou rces, P rod u ction , and Trade o f B o l iv i a ”, F oreign M inerals q u a r te r ly , 2 s2 2 -4 , O ctober, 1959; a l s o , *Bo l i v l a »s p rod uctive p o s s i b i l i t i e s ”, Commercial Pan America, 9 s 1 4 , January, 1940.

U n ited S ta tes#

The sa v in g s in ocean tr a n sp o rt a lo n e ,

w h ile n ot a major p o r tio n o f the t o t a l c o s t , would be s u b s t a n t ia l* ^

ih e r e are c e r ta in te c h n ic a l and

econom ic d i f f i c u l t i e s , however, which have h ith e r to t h r o t t le d a ttem p ts a t U nited S ta te s sm eltin g* The f i r s t s e r io u s attem pt a t e s t a b lis h in g d om estic sm eltin g was i n 1903.

A sm elter w ith a c a p a c ity

o f 50 to n s a day was e s t a b lis h e d .4*

This p la n t never

went in to o p e r a tio n , how ever, b ecau se I t cou ld not o b ta in the Malayan or© on which i t s tech n ology was b a sed . The S t r a it s government imposed an extrem ely heavy export AO duty on a l l t i n c o n c e n tr a te s snipped from Malaya* T his duty was so severe th a t I t made p r o f it a b le o p era tio n o f th e new sm elter Im p o ssib le. The second phase o f attem p ts to s e t up dom estic sm elters was from 1916 to 1924*

plagued by

a se r io u s t i n procurement problem, the war in d u s tr ie s Board encouraged the estab lish m en t o f a th r iv in g sm eltin g In d u str y .45

During the war years e ig h t p la n ts

were in o p e r a tio n , most o f them u s in g B o liv ia n ore* The p r in c ip a l producers were th e American Sm elting and R efin in g Company, w ith sm e lte r s a t Perth Amboy, R©w

40* 41. 42* 43.

^Mineral R esou rces, p rod u ction , and Trade o f B o liv ia ” F oreign M inerals q u a r te r ly , 2%24, O ctober, 1939. Roush, op . e l t *, p . 183. J o n es, op. olfr. , p . 28* War I n d u s tr ie s B o a r d , A m e rica n Industry in Joe War, p . 146*

209

J e r s e y , and a j o i n t v en tu re by the R a tio n a l head Company and th e W illia m s, H a r v e y Company, w ith sm elters a t Jamaica Bay, Hew York *44

louring th e e i $ i t yea rs In

which th ese sm e lte r s o p era ted , some 68,000 ton s o f t i n were produced*4 ® Time was req u ired to g et th e sm elters g oin g and th e peak p rod u ction o f 1 8 ,7 6 1 to n s was n ot u n t i l 19 2Q*4 ® p rod uction then ta p er ed o f f during th e n ex t few years*

Only on© p la n t remained in o p e r a tio n ,

and th a t sm elter was on a r e s t r i c t e d b a sis* 4 7

In 1924,

t h e U n ite d , s t a t e s I n d u s t r y w as s h u t dow n c o m p le t e ly *

& hile th e in d u str y cou ld op erate p r o fita b ly during th e war, I t cou ld n ot compete when E n glish sm elters cu t the 48 p r ic e o f sm e ltin g B o liv ia n t i n in h a lf* I t i s claim ed th a t th e se sm elters d id succeed in producing a c a lib r e o f m e t a llic t i n equal to th a t produced in England or Malaya*4^ From 1924 to 1940, l i t t l e was accom plished in th e d ir e c t io n o f r e - e s t a b lis h in g a sm eltin g Industry here* In 1 9 5 5 , th e Vulcan D etin n in g Company, o f Hew J e r se y , claim ed In I t s annual re p o r t th a t I t could s u c c e s s f u lly sm elt th e B o liv ia n o res w ith ou t m ixing in h ig h grade

44* 45. 46. 47. 48. 49*

J o n es, op* c i t *, p*28* Koush, op* cTE* , p*185* J o n es, op* c i t * , p . 28* I b id *, p . 28. Hay, E liz a b e th , wI n te r n a tio n a l Tin c a r t e l % I n te r n a tio n a l C ontrol In th e Mon- Ferrous M etals, pp* 28 8 -9 2 . Roush, o £ . c i t . , p . 169.

210 CA

o r e s from o th e r areas*

In the m iddle and l a t e 1930*8#

s e v e r a l American firm s conducted sm e ltin g experim ents* Among th e s e were Phelps Podge, American M eta ls, American S m eltin g and R e fin in g , and R ation al head. I n te n s iv e i n t e r e s t was fo cu sed upon t h is p r o je c t w ith th e outbreak o f World War II and th e r e a li z a t io n o f U nited S ta te s v u ln e r a b ilit y In r e la t io n to t i n su p p lie s*

While a House o f R ep re sen ta tiv es

com mittee r e p o r t in 1935 had recommended esta b lish m en t o f such a sm e ltin g I n d u s tr y ,5* no a c tio n had been taken upon i t * As m entioned p r e v io u s ly , th e U nited S ta te s conducted prolonged n e g o tia tio n s w ith B o liv ia con cern in g the r e q u is it e im ports o f ore*

These n e g o tia tio n s r e ­

s u lte d In a c o n tr a c t p ro v id in g U nited S ta te s im ports o f s u f f i c i e n t B o liv ia n t i n or© and co n ce n tra tes to provide 18,000 to n s a year fo r f i v e years*

I t was then n ecessa ry

to make arrangem ents fo r th e d om estic sm elterin® o f th e B o liv ia n ore* A fter prolonged n e g o tia tio n and stu d y, the U nited S ta te s government has co n tra cted w itn a Dutch fir m , N*V* B i l l i t o n M aatschappij, to e s t a b lis h sm elters

50* 51*

Vulcan D etin n ln g Go*, 1835 Annual R eport* House o f R e p r e se n ta tiv e s, Committee on F oreign A ffa ir s R eport, Tin I n v e s t ig a t io n * pp*29-38*

211 go

In th e © cited S ta tes*

The c o n tr a c t was w ith Tin

P r o c e ssin g Go*, o f New York, which I s a su b sid ia r y o f th e Dutch corp oration #

The new sm elter i s fcu be

e s ta b lis h e d a t Texas C ity , T exas, th e Gulf area b ein g recommended by the Amy and Navy M unitions Board and by th e N atural Resources Planning Board#

The new p la n t

w i l l have an annual c a p a c ity o f 50,000 ton s o f concen­ t r a t e s and can produce 18,000 to n s o f f in e tin * d u c tio n i s ex p ected In 1942#

Pro­

The p la n t i s to be owned by

a su b sid ia r y o f the R eco n stru ctio n Finance C orporation, alth ough I t w i l l be managed by the B i l l i t o n group*

The

c o n tr a c t a llo w s the Government Corporation to take over th e p la n t or change th e management*

The Dutch firm was

g iv e n the co n tr a c t becau se i t supposedly had su perior knowledge o f tlx© tech n ology needed to t r e a t low grade ores#

The awarding o f the sm elter co n tr a ct to t h i s firm

h a s caused c o n sid e r a b le com plaint in some quarters*

It

I s claim ed th a t t h i s i s but a w ar-tim e, emergency s o lu t io n , and cannot r e s u l t In the esta b lish m en t o f an 53 independent American sm e ltin g in d u str y . Some m ention should be made o f o th e r , minor Western Hemisphere t i n producers*

52* 53#

Mexico produces

The fo llo w in g d e s c r ip tio n o f t h i s arrangement i s taken from* U*S. Bureau o f M ines, Mineral s Yearbook 1941, p#S71* 1iru 7 s, Tin Goes Dutch*5, B u sin ess Week, March 8 , 19 4 1 , p p .61-2*

212

sm all amounts o f t i n each y e a r , txavlng s c a tte r e d do54 p o s it s * Tin m ining has been conducted on a sm all s c a le s in c e th e A ztec period*

Over a lon g p erio d the

maximum p rod u ction has been about 40 tons per year* Much o f th e ore i s sm elted l o c a l l y in crude b l a s t fu rn a ce s mad© o f clay* ch arcoal b ein g u t i l i z e d to g en era te h eat and as a red u cin g agent*

The Impure

m e ta l, c o n ta in in g 90$ to 96$ t i n , i s g e n e r a lly so ld la c A lly * fth ile Mexican production has not exceeded 55 000 lo n g ton s o f m etal through 1940, i t i s lik e ly 56 th a t t h i s co u ld be m a te r ia lly in creased* The i n ­ d u stry i s la r g e ly m argin al, as many la r g e in v e s to r s have d isc o v e r e d to t h e ir sorrow . Tim i s a ls o found in sm all q u a n titie s in 5*7 A rgen tin a, although u n t il re c e n t years production h a s been alm o st n il#

Much o f t h i s r e c e n t production

comes from p la c e r d e p o s it s , although sm all amounts come 5g from v e in s o f t i n - s i l v e r o r e . A h ig h -c o s t t i n sm elter 54. 55. 56. 57# 58.

This d e s c r ip tio n i s from Jon es, op* c i t * , p p .509-10. E l l i o t t , 1m ., e t a l , In to m a t io n a l Contr o l o f NonFerrous M etals, p • , S t a t i s t i c a l y e a r b o o k 1959-1940, p .152. M ineral Trade 1K otos, X&Ti9-£iT May 20, 1941. Jo n es, opT cT t. , p . 550} a ls o South American Handbook 1939, p .112. "froducH'on, and Trad© o f A rgentina" , F oreign M inerals Q u arterly, 3 s 2 0 -5 , J u ly , 1940#

op era tog a t Bueno® a ir e a *

This sm elter i s la r g e ly

e s ta b lis h e d in order to meet d om estic requirem ents o f 59 about 1*100 tons* T his p la n t may be fo r c e d to Import i t s o re from B o liv ia , alth ou gh th e A rgentine d e p o s it s should h o ld ou t fo r a t l e a s t f i v e years a t th e p resen t » ^ 60 l e v e l o f op eration * Uh© ex h a u stio n o f d e p o sits w ill be h a ste n e d , o f c o u r s e , by con tin u ed expansion o f the exp ort Industry* In 193©, 1 ,4 9 0 ton s o f ore were exported from 61 Argentina* Of t h i s t o t a l , 664 ton s went to th e United Kingdom, 440 to n s to th e N eth erlan d s, 174 tons? to th e United S t a t e s , 155 ton s to B elgium , and 57 ton s to Germany#

Of the A rgentine in g o t export o f 692 ton s in

1938, th e U nited s t a t e s r e c e iv e d 570 to n s , B r a s il 61 tom s, Belgium 19 to n s , th e United Kingdom 18 to n s , and o th ers 23 t o n s * ^

In th e f i r s t quarter o f 1940, A rgentina

exported 27 ton s o f in g o t s , o f which th© United S ta te s took 15 to n s; 1 ,4 4 1 tons o f s l l v e r ~ t l n co n c e n tr a te , o f which th e U nited S ta te s r e c e iv e d 802 ton s and th© United Kingdom 638 to n s; and t i n r e s id u e s o f 111 to n s ,

59* 60. 61*

^Mineral R esou rces, p rod u ction , and Trade o f Argentina**, F oreign M inerals Q uarterly, 3s7 , J u ly , 1940* hoc* c i t * U,S* t a r i f f Commission, B a tin America a s a Source o f S tr a te g ic and Other E s s e n tia l M a te r ia ls, p *15i.

214

o f will ch. t h e . tfcilted Jiingdom took 81*®^ Some developm ent work has been o ccu rrin g in Honduras s in c e lo r ld mar I *64

D ep o sits were d isc o v ere d

in 1923 In p la c e r form and t i n ha© r e c e n t ly been d i s ­ covered in lo d e form as w ell*

This area i s con sid ered

q u ite p rom isin g as a minor source* C h ile and Peru exp ort la r g e q u a n titie s o f co n c e n tr a te s mined in B o liv ia , but C h ile a c t u a lly 05 produces none and Peru v e fy l i t t l e * There a re no im portant d e p o s it s or mines in Peru, but th er e i s a sm all ou tp u t reco v ered as a by-product from smoke d u st 66 67 a t a sm elter* 1937 p rod uction was 175 m etric to n s , w h ile 1938 ou tp ut was b u t 105 tons*

68

V&tlle improved

tra n sp o rt m ight expand Peruvian p ro d u ctio n , i t i s un­ l i k e l y th a t she cou ld ever become an im portant producer* There a re no known commercial d e p o s its in Canada, but o c c a s io n a l occu rren ces o f th e ore are 69 rep orted in v a rio u s provin ces* The most l i k e l y de­ p o s it s are in northw estern Canada*

64 • 65. 66* 67* 68*

69*

There are re c e n t

M in e r a l T ra d e n o t e s , 12*33, A p r i l 1 9 , 1941* J o n e s , 0 £# c i t * , p p *309-10• I b id *, p*3307~ M i n e r a l R e s o u r c e s , P r o d u c t i o n , and T ra d e o f F e r u w, F o r e i g n M in e r a l© Q u a r t e r l y , 3*41, J a n u a r y , 1940. p an A m e r i c a n " u n i o n , P e r u , p . 20* ”M in e r a l R e s o u r c e s , P r o d u c tio n , an d T rad e o f P e r u ” , F o r e i g n M inerals Q u a r te r ly , 3*5, January, 1940*

Moore, op* c i t , , p*151*

215

r e p o r ts th a t new claim s are b ein g sta k ed in Canada*

7o

in f a c t , i t i s r e p o r ted th a t Canada began producing t i n on a sem i-ooim rierelal b a s is during 1 9 4 1 , A new p ro cess i s b ein g em ployed, and i t i s f e l t th a t p o t e n t ia l pro­ d u c tio n may meet X0% o f Canada’ s normal requirem ents* D ep o sits in the I s l e o f F in es are b ein g e x p lo ite d com m ercially a t p r e s e n t, alth ou gh on a very sm all s e a l© .7 ^ S c a tte r e d d e p o s it s are rep o r ted in B r a z il, 73 and i t i s claim ed th a t I n te n s iv e e x p lo r a tio n might r e v e a l r e s e r v e s in Paraguay. 7 4

70* Mineral Trade K a tes, 1 8 :1 5 , June 2 0 , 1941* M ineral Trs5e lo ¥ e ¥ , 13*16-1$, August 8 0,1941. 7 2 . M ineral Trade M otes, 12*15, June 20, 1941* 73* South American Handbook 1941, p*222* 74* ^ M i n e r a l "R esou rces, P r e d u c t i o n , a n d T r a d © o f Uruguay and Paraguay11, Foreign Mineral a Q u arterly, 3*37, O ctober, 1940.

216

Chapter xix ttoosten

L a tin America h as never been dominant In th e w o rld 1s tu n g sten in d u str y .

The area h a s , however,

produced from 7 .3 $ (1937) to 1 1 .9 $ (1938) o f world o u t­ p u t, over th e 1929-38 p e r io d .1

L atin America*s share in

world tu n g sten exp orts was s im ila r , ranging from 7 . 1 $ 2

(1937) to 1 1 .5 $ (1 9 2 9 ), over th e same p e r io d . " P rior to 1939, th e L atin American c o u n tr ie s were n ot im portant sou rces o f United. S ta te s im p orts, the peak b e in g 1 0 .7 $ o f tonnage In 1929.^

In 1939, they

provided 3 8 .1 $ o f t o t a l im ports and In 1940, 4 4 .7 $ 4 (both f ig u r e s on a q u a n tity b a s i s ) . The u se o f th e L atin American producers has accompanied and p a r a lle le d th e d e c lin e o f China as an exp orter o f tu n g ste n . T o ta l ex p o rts from L a tin American n a tio n s in 1938 were n e a r ly a s g re a t as United S ta te s Imports from 5 a l l sou rces In the p erio d September-August 1939-40, and p rod u ction lias presumably in c r e a se d s in c e th at y e a r . I t would appear, th e r e fo r e , th a t should the n e c e s s it y

1. 2. 3. 4. 5.

U .S. T a r if f Commission, L atin America as a Source o f s t r a t e g ic and oth er Ks sen t I a 1 Mate r i al*s, ™717T. Tbia. , p .172. I b i d . , p .174. Loc. c l t . Ibid. » p. 177.

217

a r i s e , L a tin American sou rces co u ld meet a t l e a s t a l l e s s e n t i a l m ilit a r y requirem ents o f tine U nited S t a t e s , Table 25 in d ic a t e s th e i d e n t i t y and p ro p o rtio n ­ a te im portance o f th e variou s Western Hemisphere p ro­ d ucers o f tungsten*

The ta b le r e v e a ls th a t B o liv ia i s

th e le a d in g producer in t h i s hem isphere, w ith A rgentina ranking second* Producing but 21 tons in 1 9 1 0 ,^ B o liv i a ’ s tu n g sten in d u str y exp erien ced a m ild boom during -a r id War X*

Luring th e war y e a r s , tu n g sten ranked second

among a l l B o liv ia n ex p o rts in terms o f value*

8

About

75$ o f th e se w ar-tim e shipments went to th e United S t a t e s , 15$ to the United Kingdom, and 10$ to France*^ B o liv ia produced over 4,£OQ m etric tons* 10

Xn 1917,

A fter th e

war, a t e r r i f i c slump p aralyzed the B o liv ia n tu n gsten in du stry*

T his r e s u lte d in an alm ost com plete sh u t­

down from 1922 through 1924*

In the l a t e 1930*s and

e a r ly 1940’ s , however, B o l iv i a ’ s production has been in c r e a s in g markedly and she seems to be re g a in in g

o rld

War I h e ig h t s .

7* 8. 9* 10*

Wall©, op * c i t *, p p .351*2* U .S . Bureau o f F oreign and Domestic Commerce, S p e c ia l Agents S e r ie s 208, p . 222* ^Mineral Resource®, P rod u ction , and Trade of B olivia*1, F oreign M inerals Q uarterly, 2 s 3 0 -9 , O ctober, 1959. EousH/ op. o l t *, p.i& 3.

218

T able 256 WESTEKN HBaUSPHEHE PKOBUCTIOH OF TONGS'IEK OKB (M etric Tons) Year

Mexico

1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939

7 16

6*

w»

48 33 34 20

46 71

Argen­ tin a B o liv ia B r a s il 39 59 12

4 -

238 376 457 528 738 **

977 532 246 411 143 476 817 1,044 1 ,0 8 1 1 ,5 1 8 2,011

C h ile

Peru

•» •

-

«.

-

•

-

-

«*

m

8

*

4 3 11

1

-

34 24 18 102

m

**

159

-

4

World fbtaX 9 ,3 3 8 8,392 7 ,468 4 ,0 4 5 6,840 10,409 12,924 14,666 22,315 21,327 -

1929 s t a t i s t i c s are taken from leagu e o f n a tio n s , S t a t i s t i c a l Yearbook 1938*59, p .157; 1930-39 s t a t i s t i c s are taken from tb© 1939—40 e d it io n , p*155.

819

In 1938, she exp orted 8,888 ton s o f concen­ t r a t e s , or 1 ,3 1 8 ton s m etal c o n t e n t .3**

Of t h i s t o t a l o f

8,616 to n s , Belgium r e c e iv e d 1 ,7 3 0 (presumably fo r tr a n s ­ shipment to Germany), th e U nited Kingdom 359 to n s , th e U nited S ta te s 51 to n s , th e N etherlands 168 to n s , and S w itzerlan d 789 to n s .

Over the 1989-38 p e r io d , the U nited

S ta te s share o f B o liv ia n tu n gsten ex p o rts ranged from an abnormal peak o f 8 0 ,9 # (1989) to a low o f 2 .1 $ In 1 9 3 8 ,* g

With th e outbreak o f world War I I , th e Im­

portan ce o f th e United S ta te s as a market fo r B o liv ia n tu n g sten has m a te r ia lly in c r e a se d .

In th e l a s t s i x

months o f 1940, B o liv ia exported 2,267 to n s.* ^

Of t h i s

t o t a l , th e U nited S ta te s r e c e iv e d 1 ,5 6 0 to n s , Japan 521, and th e U nited Kingdom 186 tons*

S in ce th e U nited S ta te s

has guaranteed to purchase B o liv ia , s e n tir e ex p o rta b le output fo r th e n ex t th ree years a t a s t ip u la t e d p r ic e , 14 I t i s apparent th a t th e cu rren t dominance of th e United S ta te s w i l l con tin u e at l e a s t u n t il th e e x p ir a tio n of the agreem ent.

T his c o n tr a c t i s guaranteed by the B o liv ia n

government on b e h a lf o f l o c a l p r o d u c e r s ,^ 11* 12. 13. 14. 15.

Most o f t h i s

‘"Mineral R esou rces, p rod u ction , and Trade o f B o liv ia ”, F oreign M inerals Quarte r l y , 2*9, October, 1939. U.S. TariTf “Coiranis s io n , L atin America as a Source o f s t r a t e g ic and oth er E s s e n tia l M aterials," p .173. M ineral T ra d e^ lo tes, 125167 A p ril 1 9 ,T 9 ¥ l . M ineral Trade N otes, 12*17, June 20, 1941. WU .S. ib Pure has© Bo 11 v ia n T ungsten”, B u ll e tin Pan American Union, 75*433, J u ly , 1941.

220

tu n g sten im ported from B o liv ia under th e agreement was to be r e le a s e d to th e U nited S ta te s p u b lic and in du stry* Most o f th ese exp orts have been w olfram ite# from a number o f s c a tte r e d d e p o sits*

This ore I s found

near t i n d e p o s its # and i s o fte n d isc o v e r e d in co n ju n ctio n 16 w ith quartz# bismuth# s ilv e r # t i n , and copper* Mining methods are ra th e r p r im itiv e , and i t i s estim a ted th a t 50$ o f B o liv ia n tu n g sten i s mined and m ille d by hand* 1*7 B o liv ia i s reputed t o have enormous p o t e n t i a l i t i e s a s a tu n g sten producer# h aving la r g e developed re« 3R se r v e s and much la r g e r p o t e n t ia l r e se r v e s* The l a t t e r would become a v a ila b le # o f course# on ly w ith adequate development work and s u f f i c i e n t c a p ita l*

The in d u stry i s

a t p resen t handicapped by tran sp ort d i f f i c u l t i e s , in ade­ quate c a p ita l# p r im itiv e techniques# and sev ere mining l e g i s l a t i o n and ta x e s .

With th e se o b s ta c le s removed#

i t i s q u ite p o s s ib le th a t B o liv ia alon e could meet a t 19 l e a s t 50$ o f U nited S ta te s tu n gsten req u irem en ts. A rgentina i s another# l e s s s ig n if ic a n t pro­ ducer*

She has ranked second to B o liv ia among Western

Hemisphere producers#

16* 3^* IB* 19*

Tungsten production th r iv e d in

Walie# op* p i t *, p p ,351*2# M ineral TracLeHotes# 12*18# A p ril 19# 1941* ^Mineral R esou rces, P rod u ction , and Trade of B o liv ia * , F oreign M inerals Q uarterly# 2*30-39# October# 1939* I B i S * p7§Sj a ls o 7 Truefciood, Howard* '’Economic D efense o f th e Americas1*# F oreign P o lic y R ep orts* 16*137# -August 1# 1940*

281

th e y e a r s p r io r to World War I*

to e A rgentine tu n g sten

ou tp ut was th ir d in the world from 1906 through 1909, r i s i n g to 1 ,0 8 5 to n s in th e l a t t e r year,^®

to© In d u stry

In crea sed p ro d u ctio n throughout th e m iddle and l a t e 1 9 3 0 1a , and by 1938 h e r ex p o rts were 1 ,0 3 9 m etric t o n s # ^ Of t h i s t o t a l , th e U nited Kingdom r e c e iv e d 345 to n s . Prance 264 to n s , Belgium 157 to n s , Sweden 139 to n s , Germany 138 to n s , and C zech oslovak ia 5 to n s ,

over much o f the 1929-

38 p e r io d , th e U nited S ta te s r e c e iv e d no shipments from A r g e n t in a ,^

In 1939, A rgentina produced 1,187 t o n s ,83

a la r g e r p ro p ortion o f which was d e stin e d fo r the United S ta te s .

In th e l a s t quarter o f 1940, ex p o rts In creased

to 1 ,4 1 4 to n s , o f which 1 ,1 3 4 to n s went to th e United 24 S t a t e s , 275 to n s to Japan, and 5 to n s to o th e r s . to© U nited S ta te s r e c e iv e d a l l th e A rgentine shipm ents ea rly in 1 9 4 1 .535 to e A rgentine in d u stry i s based upon a number Sc,^5

o f s m a ll, more or l e s s m arginal m ines. '

These p r o p e r tie s

are la r g e ly operated by lo c a l farm ers, who work on a

21. 22* 23. 25, 26*

"Mineral R esou rces, p rod u ction , and Trade o f Argen­ tin a " , F oreign M inerals Q u arterly, 3s7 , J u ly , 1940. U .S. T a r iff Commi s s i oh, I7atlK^bne>r I c a as a Source o f S tr a te g ic and o th er E s s e n tia l Raw Maf;erT a T s~ pTIT2, "M ineral R esources, ProcIueFio’n arid trade o f Argen­ tin a " , F oreign M inerals Quarte r ly , 3 t7 , J u ly , 1940. M ineral Trade R otes , 1 8 s337~*Apri 1 19, 1941, X bia. , ~p.18 # ?rM ineral R esou rces, p rod u ction , and Trade o f Argen­ tin a " , F oreign M inerals Q u arterly, 3 s2 5 -5 0 , J u ly , 1940.

222

p ie c e w o r k b a s is w ith a n e g l i g ib l e investm ent in volved* A rgen tin a seems a r e l a t i v e l y prom ising f i e l d fo r fu tu r e tu n g sten expansion* Peru has many d e p o s its b ut most o f them are alm ost in a c c e s s ib le *

Thes© d e p o s its are a ls o sm all and 27 e r r a t ic i n occurrence* The r e s e r v e s are rep o rted to go e o n ta ln from X% to 2% tungsten* There are a ls o concen­ t r a t e s o f gold and s ilv e r *

The in d u stry was a c t iv e during

World War I and i s b eg in n in g to s t i r once more,

Peru

reached her peak p rod uction o f 245 ton s in 1918, and 29 ceased p rod uction e n t i r e ly i n 1922* In 1934, th e Peruvian in d u str y produced 7 to n s, r i s i n g to 104 ton s in 1936, and th en d e c lin in g b r i e f l y ,^0

In 1938 she exp orted 159 ton s o f o r e , or 102 ton s m etal content* 31 Of t h i s amount, 89 to n s went to Sweden, 15 tons to Germany, 6 ton s to th e United Kingdom, and 49 ton s to a h o s t o f

o th ers*

Peru m ight become an Important minor source i f

she could Improve m ining methods and extend tra n sp o rt fa c ilitie s *

27. 28* 29* 30* 31*

There i s a ls o an ap p recia b le export ta x

"Mineral R esou rces, p ro d u ctio n , and Trade o f Peru", F oreign M inerals Q u arterly, 3*40, January, 1940* U'*^* Bureau o f fo r e ig n and Dom estic Commerce, Trade Inform ation B u lle t in 643, p .14* U .S. Bureau oSf^Worelgn and Dom estic Commerce, Trade promotion S e r ie s 25, p . 168. U*S* Bureau o f F oreign and Domestic Commerce, F oreign Commerce Yearbook 1938, p . 275. *Miner a l tie sour c e S f i r oduc t i o n , and Trade of Peru", F oreign M inerals Q u arterly* 8 38 , January, 1940*

2 23

on o r e , which r i s e s w ith th e p r ic e on o r e .S^ As I n d ic a te d by Table 2 5 , Mexico h as been a minor and r a th e r e r r a t ic producer* in a t l e a s t two areas but l i t t l e o f the r e s e r v e s ,55

D e p o sits are found

I s known as to th e s i z e

In 1913*1937 p e r io d , Mexico produced

l e a s than l $ o f th e w orld*s o u tp u t* ^

In 1940, exp orts

to th e U nited S ta te s had r i s e n to 114 to n s , C h ile i s an oth er very minor producer, as r e v e a le d in Table 25*

Recent p rod u ction has been s l i g h t ,

even under the im petus o f h igh p r ic e s#

The ex ten t o f

*3£|S

C hilean r e s e r v e s i s n ot known, Canada I s another t r i v i a l producer, although o n ly n e g l i g ib l e amounts o f tu n gsten have been mined*

The

m etal occurs In a number o f p la c e s and has been mined o c c a s io n a lly i n three p ro v in ces* 5,7

Tungsten g e n e r a lly

occu rs in v e i n s , alth ough i t i s a ls o found In p la cer form in th e Yukon,

Over th e 1913-37 p e r io d , Canada p ro­

duced much l e s s than X% o f world o u t p u t * A s fa r as can be a s c e r ta in e d , th ere i s no sig n o f an awakening.

32. 33. 34, 35, 36* 37. 30.

I b id *, p *40* *07s7 Bureau o f F oreign and D om estic Commerce, Trade Inform ation B u lle t in 643, p ,1 4 . Roush, o£* c l t *, pTTWl U.S. Bureau o f F oreign and Dom estic Commerce, I n te r n a tio n a l R eference S e r v ic e , V ol. 1 , N o.55, p#6. U ,S, Bureau o f M ines, M inerals Yearbook 1959, p . 635* Moore, 0 £ . c l t . , p . 146* Roush, 0£* c l t * , p . 147.

224

B r a z il l a a very sm all producer*

A few to n s

were produced in 1 9 1 0 ,39 and again in 1937 and 1938* Sm all, s c a tte r e d d e p o s its are found In a t l e a s t two jO A

s ta te s *

A c o n ce n tra tin g p la n t has been e r e c te d on th e

I s l e o f P in e s , and t h i s m i ll i s in c r e a s in g i t s c u r r e n tly 41 lim it e d cap acity* A laska and Greenland are very remote p o s s i b i l i t i e s * ^

I t i s p o s s ib le th a t I n te n s iv e

e x p lo r a tio n m ight r e v e a l tu n g sten in Paraguay*

39*

40* 41*

42* 43*

U*s* Bureau o f F oreign and Domestic Commerce, Trade Inform ation B u lle t in 643, p*14* ^Mineral R esou rces, p rod u ction , and Trade o f B r a z il % F oreign M inerals Q uarterly, 4 * 3 6 -7 , J u ly , 1941; South AmerlcarTISand-teoole 1941, p*222* M ineral Trade H otes, 1 2*T77June 20, 1941* d*S* Bureau o f F oreign and Domestic Commerce, Trade Inform ation B u lle t in 643, p*18* 1TH H era l He source s ~ p r o ^ o t l o n , and Trad© o f Uruguay and Paraguay”, F oreign M inerals q u a r te r ly , 3*37, O ctober, 1940*

223

PART I I I EFFECT CPOH THE ECONOMY OF THE UNITED STATES

•

226

Gimp t e r XX EFFECT mOU OTWBD STATES FOREIGN ECONOMIC POLICY P resen t U nited S ta te s T a r iff Rate® on S tr a te g ic Haw M aterial® irintlm ony

L argely because th ere i s an e s t a b lis h e d a n ti* mony sm eltin g In d u stry in the U nited S t a t e s , the T a r iff Act o f 1930 p la c e d antimony ore on th e fr e e 11 St.*** There was a duty o f

per pound u n t i l 1913,^ b u t s in c e

th a t time th e duty h as been removed in order to encourage sm elting* In order to encourage fu r th e r th e dom estic sm eltin g o f antim ony, th ere I s a duty o f on antimony a s r e g u lu s or m e ta l.

'* 4

per pound

T his duty on th e

m etal re p la ce d the duty on ore when th e l a t t e r was abandoned.4 A n tim o n y , e i t h e r a s o r e o r m e t a l , h a s n o t b e e n i n v o l v e d In a n y c o n c e s s i o n s g r a n t e d u n d e r the R e c i p r o c a l Trad© A g r e e m e n ts program *

1* 2* 3* 4*

7 1 s t C ongress, S ta t u t e s a t Large, V o l.46, p a rt 1 , p . 673* Kdush, op. c l t .V pp. 7 1 s t C ongress, S ta tu te s a t Large, V o l.4 6, p a rt 1 , p . ©26* Roush, op* c i t *, p p .268*9.

Chromium Chrom ite, or chrome o r e , was p la c e d on th e f r e e l i s t under th e T a r if f Act o f 1 9 3 0 ,5

I t has been

on th e f r e e l i s t s in c e 1894, alth ou gh th e r e was a 15$ ad valorem duty p r io r t o th a t date*

There have been a

number o f d u t ie s imposed on chromium m e ta l, chrome b r ic k , and oth er chromium products**7

Most o f th e se

remain in fo rce* The R ecip ro ca l Trad© Agreement p act sign ed w ith th e U nited Kingdom in 1939 bound chrom ite on th e fr e e lis t * ®

Another p a c t, sig n e d w ith Turkey In 1939, 9 a ls o made th e same c o n c e ssio n . In a d d itio n to th e s e

c o n c e ssio n s regard in g th e o r e , agreem ents hsve been made con cern in g th e m e ta l4

In a 1935 agreement w ith

Sweden and In th e 1939 p a ct w ith the U nited Kingdom, to e duty on chrome or chromium m etal was sla sh e d from 30$ to 25$*^°

For an In d ic a tio n o f the p rop ortion o f

U nited S ta te s im ports o f ore and m etal coming from th e sig n a to ry n a tio n s , see Table 27* 5*

11

U.S. T a r if f Commission, U.S. Imports and Trade agreem ent C on cession s, Vol* V lX l/' p.2(5T 6 . Roush, op * c it T 7 pp»X24*5» 7* h o c, c l t * 8* u"*S. f a r i f f Commission, U .S. Imports and Trade Agreement C o n cession s, VoTIVIII, p*2tTT~ 8* Loc* c i t * 1 0 . | § J d . , V o l. I l l , p*8. 11* » Pf)V25^,256.

228 Coconut S h e lls tinder the T a r iff Act o f 1930, th e duty on co con u ts in th e s h e l l was ,5jrf per nut*^a

This does

n o t a p p ly , o f c o u r s e , to th e s u b s ta n tia l im ports o f co co n u ts from P uerto K ico, which en joys an im portant p r e f e r e n t ia l p o s itio n * In a p a ct sign ed w ith th e United Kingdom In 1939, th e rat© on coconuts in the s h e l l was reduced to • 25/J per nut*^s

S in ce t h i s tra d e agreement Included

such B r it is h c o lo n ie s and p o s s e s s io n s a s Jam aica, T rinidad and Tobago, and B r it is h Honduras, i t i s apparent th a t i t Included some o f th e p r in c ip a l United S ta te s su p p liers*

The p rop ortion o f U nited S ta te s

coconut im ports coming from th ese and o th er p o ss e s s io n s 14 o f th e sig n a to r y n a tio n i s rev ea led by Table 27*

I t h a s been argued th a t th e o u tsta n d in g manganese event from 1919 to 1942 was th e 1 / per pound t a r i f f r a te on manganese le v ie d under the T a r iff Act o f 1922*^

As in d ic a te d by Table 26, t h i s in c r e a se in

alm ost doubled th e t o t a l p r ic e o f manganese*

12* 13* 14* 15*

T his

U*S* T a r iff Commission, U*S* Imports and Trade Agreement C o n cession s, Vol*V, p,97* t o e , c iT T : I n fr a * , p# ^55 . sla T S o f U.S* G eo lo g ica l survey and 0.S* Bureau o f M ines, Report upon C ertain D e f ic ie n t S tr a te g ic M a te r ia ls, p,5* w « W1|I» h hi w

»

pm ^-nw wini i

f< n * ii» T | inn I III m i-------------------------

'!■! 111r i

~i

'i

■—*-i—

229

liable 26

16

MaHOANESE ORE P R I C E S I N T H E UNITED STATE!

(C ents Per U n it) Year

KVe. Quoted, P rice

Duty

1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 19 34 1935 1936 1937

29*57 4 1 .3 0 3 9 .00 4 2 ,1 6 39.00 39.00 37*66 31,50 27,48 24.66 21 .26 1 7 ,0 0 2 3 .42 2 5.00 26.60 44 . 28

22.4:0 22.40 22.40 22*40 22 *40 22*40 2 2 .4 0 22.40 22.40 22*40 22.40 22.40 22.40 22.40 11*20 1 1 .2 0

T otal p r ic e 31 o00 ^^) 63*70 61*40 64*56 6 1 .4 0 61.40 60*06 5 3 .9 0 49.88 47*06 4 3 .6 6 4 1 .4 0 4 5 .8 2 4 7 .4 0 37.70 55*48

(1 ) The 1922 TarITT a c t d id n o t e f f e c t the bulk o f the 1922 Im ports.

16.

Kousii* pp. c l t * , p . 59

230

t a r i f f rat© a ffo r d e d very s u b s t a n t ia l p r o te c tio n to &h© s tr u g g lin g d om estic in d u stry*

The r a te e s ta b lis h e d

in 1922 wag con tin ued in fo r c e under the T a r iff h ot o f 1 9 3 0 ,17 T his r a te has been sla sh e d in c o n c e ssio n s in co rp o ra ted in Trade Agreement pacts*

In a tr e a ty

w ith B r a z il in 1936* th e duty on both 10^-35^ ore and 35$+ or© was cu t from 1ft per pound} m e t a llic c o n te n t,to mbp per pound m e t a llic content* IB These co n cessio n s* o f course* were w id ely g e n e r a liz e d under the p o lic y o f u n c o n d itio n a l m ost~favored~n& tlon treatm ent*

T his

g e n e r a liz a tio n i s In d ica ted in Table 2 6 , which r e v e a ls the e f f e c t o f th e s la s h upon the p r ic e o f manganese* A tra d e agreement w ith Gan&da In 1936, and again in 1959, embodied a s la s h in th e ra te on f e r r o manganese

T his cu t was from 1 7 /0 $

1$ per pound*

per pound to

For the p rop ortion o f U nited S ta te s ore

and ferrom anganese im ports o r ig in a tin g in th ese t;

sig n a to r y n a tio n s , see Table 27**

B r ie f m ention should be made o f the s p e c ia l treatm ent accorded Cuban manganese*

17. 1®* 19.

A trade p a ct w ith

U .S . T a r iff Commission, U .S. Imports and Trade Agreement C o n cessio n s, Vol.XIX# pp• 5-T7~ h o c* c l t . IETa*7"p*4.

E3fra« * P-257*

231

Cuba in 1934 co n tin u ed In f o r c e many o f the p r o v is io n s o f th e Commercial Convention o f 1902.

In t h i s 1902

tr ea ty * Cuban mangancsse ore was granted f r e e en tr y in to th e U nited S ta tes* ^

This p r o v is io n was m aintained by

th e 1934 t r e a t y , and co n tin u es to d a t e .

Since th e duty

on manganese c o n s t it u t e s a la r g e p rop ortion o f th e t o t a l p r ic e o f th e p roduct, t h i s d u t y f r e e treatm ent a llo w s th e Cuban producers a higgler n e t retu rn than producers i n o th er n a tio n s r e c e iv e .

In 1937, fo r

example, th e valu e per lon g ton o f Im ports o f Cuban im ports was $ 3 8 .7 7 , w h ile ths»t from a l l oth er c o u n tr ie s was $21.19j and in 1949, i t was $ 4 7 .6 6 , as compared w ith $27.30 fo r th a t from a l l o th er c o u n tr ie s .

22

T his ad­

v a n ta g e, even more than p roxim ity and new tech n iq u es o f tr e a tin g th e low -grade Cuban o r e , have made i t p o s s ib le fo r Cuba to export in c r e a s in g q u a n titie s o f manganese to t h i s co u n try . Manila F ib er The duty on m anila cordage has been 2ji per pound. ^

21. 22 . 23.

S in ce n e a r ly a l l o f the m anlla f ib e r and cordage

0 .S . T a r iff Commission, F oreign Trade o f L a tin am erica. Part I I I , V o l .l , p .& 57. U.S. T a r if f Commission, L a tin America as a Source o f s t r a t e g i c and Other B s s e n tia l Mat erT&I s , ‘p784T 71a t ''Corigreaa, JS ta tu te s a t L a r g e VolT46, P art l,p .6 4 4 .

a c t u a lly im ported has o r ig in a te d in the P h ilip p in e s , t h i s duty i s more or l e s s nominal* While no c o n c e ssio n s under the H ecip rocal Trade agreem ents Program have d ir e c t ly a f f e c t e d m anila f i b e r , one p act d id i n d ir e c t ly a f f e c t Imports o f th e product*

The M otherlands East I n d ie s , producing a

n e g lig ib le amount o f manila f i b e r and cordage, r e c e iv e d the b e n e f it o f th e 1936 p a ct w ith the H etherlands.

T his

co n ce ssio n cu t th e duty on cords and tw in es from 40$ to

M ercu ry

The duty on mercury h as been r a is e d in rough p ro p o rtio n to the d e c r e a sin g grade o f dom estic ores* Thus, the dom estic In d u stry has r e ceiv ed In c r e a sin g ly s u b s ta n tia l p ro te ctio n *

The r a te during th e 1909-13

p erio d was 7 / per pound; during the 1913-22 p e r io d , 10$; and from 1922 to 1930, 2 5 / per pound.

It re-

mained a t 2 5 / per pound under the T a r if f Act o f 1930.

26

Ho c o n c e ssio n s in v o lv in g mercury have been in corp orated in any o f the Trad© Agreement p a c ts .

24. 25* 26.

U.S. T a r iff Commission, U .S . Imports and Trade agreement C o n cessio n s, VoTT VTT"pp •’37^357 Roush, 0£ . c l t *, p . 298. 7 1 s t C ongress, S ta tu te s a t L arge, V o l.46, p art 1 , p .644«

235

Mica A s tr u g g lin g and h lg h ~ o o st d om estic mica in d u stry h a s r e c e iv e d c o n sid e r a b le t a r i f f p r o te c tio n . In b oth th e T a r iff Act o f 1922 and th© T a r iff a c t o f 1930, r a t e s were in crea se d In most ca se s and many new c l a s s i f i c a t i o n s were added#

pn»

In th e case o f manu-

fa c tu r e d m ica, r a t e s vary betw een B0% and 45%, w ith most o f th e d u t ie s h overin g around 40%#

I t would be

f r u i t l e s s to d e s c r ib e th e e x a c t duty on each mica subty p e, s in c e the t a r i f f c l a s s i f i c a t i o n and th e s t r a t e g ic c l a s s i f i c a t i o n are n ot p a r a lle l# While c o n c e ssio n s were made concerning th ree typ es o f mica in the 1939 p a ct w ith Canada,

two o f

the c o n c e ssio n s in vo.lved n o n - s tr a te g ic m ica.

In th e

oth er c o n c e s sio n , in v o lv in g untrimmed p h lo g o p ite m ica, n o r e a ll y sweeping t a r i f f red u ctio n i s In v o lv e d .

C anada

and Madagascar a re about th e on ly major producers o f P h lo g o p ite , or ?t upon Dom estic s t r a t e g ic M aterial In d u str ie s Any a p p recia b le red u ctio n In t a r i f f r a t e s on im ports o f s t r a t e g ic m a te r ia ls would mean a corresponding red u ctio n In p r o te c tio n afford ed dom estic p rod ucers. Hence, encouragement o f Western Hemisphere p rod uction through t a r i f f re d u ctio n s In v o lv e s the problem o f whether th e r e s u lt in g im petus would be w orthw hile enough to cou n terbalan ce d im in ish ed dom estic production* I h is I s an extrem ely d i f f i c u l t q u estio n to answer, and i t s a n a ly s is in v o lv e s many fa c to r s *

some o f

th ese elem en ts w i l l be a t l e a s t b r i e f l y examined In th is ch a p ter.

I f encouragement o f dom estic production and

expansion o f p rod uction In th e remainder o f th© hemisphere are in h e r e n tly c o n tr a d ic to r y programs, I t i s w e ll th a t t h is be understood a t th e v ery o u t s e t .

Only then can

i n t e l l i g e n t a n a ly s is and, u ltim a te ly , i n t e l l i g e n t p o lic y , fo llo w . In the case o f many m a te r ia ls t h is p o te n tia l c o n f l i c t o f I n t e r e s t does n ot a r i s e .

While there i s a

th r iv in g dom estic sm eltin g Industry in antimony and one may be e s ta b lis h e d In t i n , 1 th ere 13 no ap p recia b le 1.

For such p o s s i b i l i t i e s # aupra, Ch.IB.

240

dom estic p rod u ction o f e it h e r antimony ore or t i n ore* D om estic p ro d u ctio n o f chromium, co co n u ts, m anila f i b e r , n ic k e l, quarta c r y s t a l s , q u in in e , rubber, and s i l k i s a ls o e it h e r n i l or n e g lig ib le *

In none o f th e se c a se s

i s th ere a dom estic in d u stry o f s u f f i c i e n t p rop ortion s to demand or to req u ire p ro te ctio n *

T his f a c t i s m irrored

by th© f a c t th a t most o f th ese m a te r ia ls are now on the fr e e l i s t * The e f f e c t o f t a r i f f red u ctio n s on s t r a t e g ic m a te r ia ls upon d om estic p rod uction must be sq uarely faced In the c a se o f th e o th er s t r a t e g ic p ro d u cts.

The c o n f l i c t

i s obvious in manganese, mercury, m ica, and tu n g sten .

In

each o f th ese c a s e s , th er e Is enough o f a dom estic In ­ dustry to demand encouragement and a g it a t e fo r t a r i f f p ro te ctio n *

In each o f th e se c a s e s , dom estic r e s e r v e s ,

though e x t e n s iv e , are ad m itted ly low grade and marginal*

2

Perhaps th e most Important In sta n ce of t h is c o n f l i c t I s found in th e c a se o f manganese*

i h l l e the

dom estic In d u stry h as never b een ab le to supply more than q f r a c t io n o f United S ta te s req u irem en ts, i t con tin u es to e x is t on a f a i r l y e x te n siv e s c a le .

I f te c h n o lo g ie s

capable o f tr e a tin g low grade o r e s , such a s th o se found In South Dakota, a re d evelop ed , th e dom estic Industry m ight be d r a s t i c a l l y expanded*

8*

Supra, Ch*4.

In any e v e n t, the

241

d o m e stic f o r

m anganese

In d u s try

as I

p r o te c tio n ,

s

has a g it a t e d

In d ic a te d

in

c o n s ta n tly

Table 2 6 ,3 the

t a r i f f on manganese ore has n ea rly doubled th e t o t a l p r ic e o f th e ore*

Y et, as I s apparent from an examina­

t io n o f th e manganese s e l f - s u f f i c i e n c y r a t io , t h i s in ­ cr ea sed le v y has n ot enabled the dom estic in d u stry to f i l l U nited s t a t e s requirem ents#4

t h i s a g it a t io n has

been n o ta b le , n ot on ly during h ea rin g s on a l l r e cen t t a r i f f m easures, but even on oth er occasion s#

Thus, when

the s t r a t e g i c m a te r ia l s to c k p ile l e g i s l a t i o n came b efore C ongress, a number o f Congressmen from manganese pro­ ducing s t a t e s claim ed th a t expansion o f the dom estic in d u stry should b© p la ced b efo re a l l oth er co n sid era tio n s#

5

S ev era l coursps are open concerning the t a r i f f on manganese*

The t a r i f f co u ld be In creased in an attem pt

to in c r e a s e the s e l f - s u f f i c i e n c y o f th e United s t a t e s in t h i s v i t a l m in era l.

T his would render u n n ecessary,

i t i s argu©d, attem p ts to d evelop p rod u ction elsew here in t h i s hem isphere.

Such r a t e in c r e a s e s would no doubt

in c r e a se dom estic p rod uction a t l e a s t tem p orarily, but t h is would be accom plished a t th e c o s t o f accen tu ated 6 d e p le tio n o f lim ite d d om estic r e s e r v e s . The b e s t o f

4. 5. 6.

Supra. , p*22p. Supra, , p . 229. See th e extended d eb ates in 76th C ongress, 1 s t sessi& u , C on gression al Kecord, V o l.8 4 , P arts 3 ,4 , and 5 . Eoush, op* c i t # , pp.60-3*

242

th e s e r e s e r v e s would presumably soon be gone, le a v in g th e d om estic In d u stry Incapable o f markedly in c r e a s in g p ro d u ctio n d uring fu tu r e p erio d s o f emergency* la g In v o lv ed would a ls o become much longer*

The tim e

Such t a r i f f

in c r e a s e s would a ls o e f f e c t i v e l y n u l l i f y e f f o r t s a t in c r e a s in g p ro d u ctio n elsew here In th e hemisphere*

Its

e f f e c t s upon commercial and d ip lo m a tic r e la t io n s in g en era l would probably b© rath er adverse* The t a r i f f on manganese cou ld be m aintained a t p r e se n t l e v e l s , a llo w in g the con tin u ed g e n e r a liz a tio n o f the manganese co n c e ssio n con tain ed In th e B r a z ilia n p a c t.

I t I s argued th a t such a p o lic y might a t l e a s t

m ain tain th e in d u str y on a la r g e enough sc a le to meet emergency needs w ith ou t a prolonged tim e lag*

This would

I n v o lv e , o f c o u r se , th e con tin ued gradual d e p le tio n of dom estic re serv es*

I t would a lso mean th a t encouragement

o f manganese p rod uction In Cuba, B r a z il, and elsew here In t h is hem isphere would have to be accom plished through oth er means*

I t has been argued th a t th e p resen t t a r i f f

rat© on manganese, reduced though i t has been, s t i l l p la c e s an a r t i f i c i a l premium upon p rod u ction and h asten s 7 exh au stion o f dom estic manganese reserves* This c o u r se , i t I s cla im ed , would mean even tu al com plete dependence upon im ports o f ore#

7*

F u rn ess, J.W*, ^ T ariffs and E xh au stib le R esou rces5*, M ineral Economics, p .199.

24 3

A th ir d p o s s i b i l i t y would b© the a b o lit io n o f th© t a r i f f rat© on manganese o r e , a llo w in g the dom estic In d u stry to ahiffc fo r i t s e l f *

T his p o lic y would probably

be In accord w ith economic p r in c ip le s o f com parative advantage, but I t m ight In v o lv e grave rep ercu ssio n s*

It

has been thoroughly dem onstrated th a t th© d om estic manganese In du stry cannot lo n g su rv iv e w ithout p ro te ctio n * I f the t a r i f f i s abandoned, th e dom estic Industry would presumably la p se In to q u ie sc e n se , and I t s equipment and p r o p e r tie s would II© i d le and d e p r e c ia tin g .

This would

mean th a t i f im port sou rces o f a l l v a r i e t i e s should be c u r t a ile d , the d om estic in d u stry would be In no p o s it io n to respond r a p id ly to the n eed .

I t s r e s e r v e s would be

I n t a c t , but i t s o p era tin g equipment and p erson n el would be d e fic ie n t * I t i s co n ce iv a b le th a t the most ex p ed ien t course would be to s c a le th e manganese t a r i f f so th a t a minimum amount o f th e Inadequate dom estic r e se r v e s would be s a c r if ic e d , w ith ou t a llo w in g the in d u stry to shut down c o m p letely .

I t must be ad m itted , o f co u rse ,

th a t d eterm in ation o f th e lo c a t io n o f such a t h e o r e t ic a lly j u s t i f i a b l e p o in t might be a m atter o f enormous p r a c t ic a l d iffic u lty *

hot o n ly are th e r e te c h n ic a l q u estio n s

in v o lv in g the e x a c t e f f e c t o f a given r a te upon ou tp u t, but th ere i s a ls o co n sid era b le u n c e r ta in ty a s to what

244

fu tu r e requ irem en ts w i l l be*

T his means th a t i t i s

d i f f i c u l t to know j u s t what p ro p o rtio n o f dom estic r e s e r v e s should to© safeguarded* k h ile perhaps manganese i l l u s t r a t e s the nature o f th© problem b e t t e r than any other s t r a t e g ic m a te r ia l, s im ila r q u e stio n s a r is e In s e v e r a l o th er ca3©s.

There

has a ls o been co n sid e r a b le a g it a t io n fo r p r o te c tio n o f th© dom estic mercury Industry*

This in d u stry h as demon­

s tr a te d th a t i t can supply U nited s t a t e s needs during p erio d s o f i n f la t e d p r ic e s , alth ou gh th e r e i s no assurance th a t t h i s output cou ld be m aintained i n d e f i n i t e ly *

Because o f t h i s a b i l i t y to expand production a t

l e a s t tem p o ra rily , dom estic producers have urged th a t in c r e a se d t a r i f f p r o te c tio n be a fford ed the in du stry* This p o lic y , States

It

h as been cla im ed , would render the United

so n ea rly s e l f - s u f f i c i e n t th a t d i f f i c u l t programs

o f hem ispheric expansion need n ot be considered* A s

o b se r v e d in t h e p r e v io u s c h a p te r , th e

d u ty on m ercu ry h a s b e e n I n c r e a s e d a s th e d o m e s tic in d u s tr y h a s b een f o r c e d to u t i l i z e p resen t t a r if f r a te , lo f t y

as i t

is ,

lo w e r g r a d e o r e * is

The

p r o b a b ly n o t

a d e q u a te to m a in ta in d o m e s tic p r o d u c tio n e x c e p t u n d er th e I m p e tu s o f v e r y h i g h p r i c e s * on m ercu ry h a s b een r a i s e d ,

E a ch t im e t h e t a r i f f r a t e th e d o m e s t i c i n d u s t r y h a s

245

b e n e f lt t e d tem porarily#

In ©very I n s ta n c e , how ever,

tiie temporary Impetus g iv en the In d u stry by th e In creased p r o te c tio n has soon worn o f f * 9

S ig n if ic a n t ly enough,

the p e r io d during which th e In d u stry has f e l t th e in flu e n c e o f th e in c r e a s e h as been p r o g r e s s iv e ly sh o r te r . The same b a s ic problem i s in v o lv e d h ere as in the c a se o f manganese#

A pparently even th e p r e se n t

h ig h r a te I s not s u f f i c i e n t to m aintain l a s t i n g s e l f s u f f ic ie n c y in m ercury, alth ough th a t c o n d itio n i s o c c a s io n a lly a tta in e d when h ig h p r ic e s occu r.

Y et,

although th e u n ite d s t a t e s co n tin u es to depend la r g e ly upon o u ts id e so u r c e s, dom estic mercury ores are b ein g d e p le te d r a th e r ra p id ly #

On th e one hand, i t appears

th a t r e s e r v e s are b ein g exhausted and oth er hem ispheric producers d isco u ra g ed , w ithout a t t a in in g a p p reciab le independence in mercury.

Complete abandonment o f the

t a r i f f , however, would mean shutdown, d e p r e c ia tio n , and a m a te r ia l tim e la g i f e x p lo it a t io n o f dom estic r e se r v e s ever came to be d e sp e r a te ly needed*

I t would a ls o b rin g

in crea se d v u ln e r a b ilit y to a world c a r t e l th a t has p r a c tic e d m o n o p o listic p r ic e p o l i c i e s on more than one 10 o cca sio n in th e pa at* Th© exact p o in t a t which, th© t a r i f f r a t e , i f any, should be f ix e d I s extrem ely d i f f i c u l t to determine*

9, I°*

Much depends upon probable

F u rn ess, J .t # 0g>* e f t . , pp. 188-202. I n f r a . , PP•461,4613.

246

fu tu r e req u irem en ts, and upon th e e x te n t to which pro­ d u c tio n elsew h ere in the hem isphere i s d esired * The str u g g lin g dom estic s h e e t mica in d u stry has a ls o sought and o b ta in ed s u b s ta n tia l t a r i f f pro­ te c tio n *

As in d ic a te d in the p reviou s en a p ter , t a r i f f

r a te s have been r a is e d from time to time u n t il they are now r e l a t i v e l y high*

in th e c a se o f m ica, the problem

in v o lv e d i s somewhat d if f e r e n t than in the manganese and mercury In sta n ces*

I t i s not p rim a rily a m atter o f lim ite d

and r a p id ly d e p le tin g dom estic r e s e r v e s , sine© th ere are enormous q u a n titie s o f mica in th e United s ta te s *

The

d i f f i c u l t y co n fr o n tin g th e dom estic b lock mica in d u stry I s th a t p rod u ction o f sh eet and s p l i t t i n g s i s a handlab or job*

S in ce th e United s t a t e s i s a high-w age n a tio n ,

co m p etition with other w orld producers I s very d i f f i c u l t . I t i s apparent th a t u n le ss m ech anisation can be In tr o ­ duced In to th e In d u stry , th e p resen t t a r i f f r a te amounts to a su b sid y o f an uneconomic industry*

I t I s c o n c e iv a b le ,

o f c o u r se , th a t such a su bsid y might be j u s t i f i a b l e on s t r a t e g ic grounds*

The v ery lim ite d output o f dom estic

b lo ck mica a tta in e d through t h is d u ty, however, renders such a j u s t i f i c a t i o n dubious* As lo n g as t h is b a s ic economic problem rem ains, the tax*iff r a te on mica i s a su bsid y d esign ed to o f f s e t the wage d if f e r e n t ia l*

I f t h is su b sid y cou ld b u ild

247

d om estic o a p c ity to th e p o in t where i t could meet emergency demands, i t might serve as a w ise p recaution* a s y e t , th e dom estic in d u stry has not ach ieved such a capacity.

11

If* the dom estic in d u stry cannot meet

emergency demands, a prolonged p eriod o f Deace-time pro­ tection w i l l n ot have co n tr ib u ted to n a tio n a l d e fe n s e .

Xn th e in te r im , o th e r p o s s ib le producers elsew here in th e hem isphere f in d a g r e a t market v i r t u a l l y c lo s e d to them* fh e one rem aining q u e stio n con cern in g th e t a r i f f on b lo ck mica i s whether i t ten d s to encourage m echanization o f th e in d u str y .

I t i s argued th e t as

lon g as the in d u stry i s kept a liv e even on a su b sid ized b a s is , i t w i l l seek to in tro d u ce new te c h n o lo g ie s . E v e n tu a lly , i t I s claim ed , t h is search m ight le a d to m echanical p ro ce sse s which would render th e d om estic In­ d ustry p r o f it a b le .

I f so , a t a r i f f duty might foe worth­

w h ile sim ply as a stim u lus to in v e n tio n .

I t seems

rather u n lik e ly , however, th a t such would be th e c a s e . I t can be observed w ith a t l e a s t equal p l a u s i b i l i t y th a t a t a r i f f sim ply f a c i l i t a t e s the continuance of e x is t in g te c h n iq u e s.

I f the rat© were removed or

low ered , th© in c e n tiv e to d e v is e machine tech n iq u es might be in c r e a se d .

I t i s d i f f i c u l t to fin d j u s t where

the tr u th l i e s in t h i s m a tter, sin c e few d e f i n i t i v e 11.

Supra. , p p .5 2 -5 4 .

248

s t u d ie s on -toe r e l a t i o n betw een t a r i f f s and in v e n tio n have b een made* The tu n g sten in d u str y p r e se n ts roughly the same problem as manganese and m ica.

There e x i s t s a

more or l e s s m arginal d om estic In d u str y , cap ab le o f co n sid e r a b le expansion a t th e c o s t o f d e p le tio n o f reserves.

4 s in d ic a te d In th e p reviou s ch a p ter, t a r i f f

r a te s on tu n g sten have been stepped up w ith each new a ct.

Y e t, th e se new, h igh er r a te s have m erely main­

ta in ed dom estic output on a b a s is fa r sh ort o f d om estic s e l f - s u f f ic i e n c y .* ^

S u r p r isin g ly enough, th e average

output under the in crea se d r a t e s has been l e s s than th a t under th e lo w er, 10$ r a te p r e v a ilin g between 1909 and 1913. i s Part o f t h i s d iffe r e n c e r e p r e se n ts a gen eral in c r e a s e in th e c o s t o f p rod u ction .

Part o f

t h i s r i s e In c o s t s can a ls o be a ttr ib u te d to th e f a c t th a t Viorld war I expansion o f output v ir t u a l ly clean ed out the o r e s th a t cou ld be produced a t moderate c o s t , le a v in g o n ly h ig h -c o s t o p era tio n s fo r post-w ar exploitation****4 I t has been q u estio n ed whether i t i s w is e , econ om ically or s t r a t e g i c a l l y , to s tim u la te a r t i f i c i a l l y a m ineral In d u stry a t th e c o s t o f h igh er p r ic e s and

12. 13. 14.

Supra, p p .59-61. H'ousH, op . c l t * , p .156* Loc. c i i T

249

e v e n tu a l ex h a u stio n o f r e se r v e s#

This q u e stio n I s

p a r t ic u la r ly p e r tin e n t In th e ca se o f tu n g ste n , fo r a p p a ren tly th e b e tte r -g r a d e ores have been d ep leted a t a d is c o n c e r t in g ly rap id rate#

A gain, however, th©

p e n a lt ie s in v o lv e d in the abandonment o f p r o te c tio n and the r e s u lt a n t shutdown and d e p r e c ia tio n o f th e in d u stry are evid en t*

The dom estic tu n g sten In d u stry , however,

i s on such a p reca rio u s f o o t in g th a t I t s a b i l i t y to meet fu tu r e needs even w ith p r e se n t r e s e r v e s i s open to s e r io u s q u e s tio n .

Under such c o n d itio n s the t a r i f f

becomes a su b sid y o f dubious f e a s i b i l i t y and wisdom. The problem o f whether t a r i f f r a t e s should be reduced and d om estic in d u s tr ie s d ep rived o f p r o te c tio n in v o lv e s s t i l l o th er v a r ia b le s .

I t In v o lv es the q u e stio n

o f ho?/ r e li a b l e and economic oth er '.©stern Hemisphere so u rces might tu rn out to h e .

T his seems to he a m atter

th a t could, be determ ined o n ly through ex p e r ie n c e .

It Is

probably tru e th a t under p r e v a ilin g c o n d itio n s , reso u rces o f m ercury, m ica, and tu n g sten elsew h ere in th e hemisphere are m argin al.

As such, th ey are su b je c t to th e same

a n a ly s is d ir e c te d a t d om estic production*

I t I s argued

w ith c o n sid e r a b le p l a u s i b i l i t y th a t I t la unw ise sim ply to r e p la c e a subsidy o f dom estic in d u stry w ith a su bsid y o f hem ispheric Industry*

I t i s p o s s ib le ,

how ever, th a t Improved tr a n sp o r ta tio n f a c i l i t i e s ,

250

more l i b e r a l m ining l e g i s l a t i o n , in c r e a se d c a p i t a l , and Im m igration might render some o f th e s e producers economic# I f s o , th© i s s u e 1 b n o t m erely a c h o ic e between two s e t s o f uneconomic and m arginal prod ucers.

These a r e q u e stio n s

th a t cannot w ell be answered on any a b s tr a c t, academic b a s is . I t should n ot be fo r g o tte n , in c id e n t a lly , th a t t a r i f f s are n ot m erely o f dom estic concern*

A

t a r i f f d esig n ed to p r o te c t a dom estic In d u stry may a ls o have r e p e r c u ssio n s I n te r n a tio n a lly *

A ccentuated d om estic

p rod u ction I s accom plished at h ig h e r c o s t s to consumers, but I t a ls o means freq u en t u se o f I n fe r io r grades w hich, w ithout p r o t e c tio n , would n ot be used in p referen ce to fo r e ig n su p p lies*

To some e x t e n t , th e r e fo r e , such

t a r i f f s tend to I n te r f e r e w ith th© normal flow o f m in erals from th e e f f i c i e n t , lo w -c o st su p p lie r s to th© g rea t m arkets.

I t has been su g g ested , o f c o u r se , th a t in

a ctu a l p r a c tic e such t a r i f f r a t e s do more to r a is e c o s t than to reduce imports*^®

During normal p e r io d s, a t

l e a s t , the d om estic in d u str y sim ply cannot fu r n ish th e r e q u is it e q u a n titie s o f th e m a te r ia ls ,

n e v e r th e le s s ,

t a r i f f s d esig n ed to p r o te c t d om estic in d u s tr ie s do have some In flu e n c e upon th e flow and volume o f imports* Whether t a r i f f treatm ent d esign ed to encourage production

15*

h e i t h , op * © i t . , p p .103-4.

251

elsew h ere in the hem isphere would have s im ila r e f f e c t s depends upon a number o f v a r ia b le s*

'These In clud e th e

n atu re o f th e trea tm en t and a ls o whether t h is pro­ d u c tio n turned ou t to be economic*

262

Chapter XXII EFFECT UPON UNITED STATES FOKEIGN ECONOMIC POLICY ( Continued} E ffe c t upon Mo3t«»Favored~NatIon Treatment One o f th e most s i g n i f ic a n t q u e stio n s In th e developm ent o f w estern Hemisphere so u rces o f s t r a t e g ic m a te r ia ls i s concerned w ith th e e f f e c t t h i s p o lic y would have upon our I n te r p r e ta tio n o f the m o st-fa v o red -n a tio n clause#

I t I s Im portant to know whether such a p ro cess

would be c o n s is te n t w ith u n c o n d itio n a l m ost-favored n a tio n treatm en t, or whether i t would tend to encourage the c o n d itio n a l in te r p r e ta tio n # Up to th e p r e s e n t, o f co u rse , t a r i f f r a te s on s t r a t e g ic m a te r ia ls have b een , a t l e a s t n om in ally, on the b a s is o f u n c o n d itio n a l m o st-fa v o red -n a tio n tr e a t­ ment.

The T a r iff Act o f 1930 a p p lie s , in th eo r y , to a l l

n a tio n s .

The K ecip rocai Trade Agreements Frogram,

under which a s u b s ta n tia l number o f c o n c e ssio n s in v o lv in g s t r a t e g ic m a te r ia ls has been mad©, i s a ls o founded on © quality o f trea tm en t. Most o f th e tra d e p acts n egotiated, under t h i s program have been w ith n a tio n s In th e Western Hemisphere, Most o f th e mo.re im portant n a tio n s In t h is hemisphere

1,

S ayre, F r a n c is, The Way Forward, p ,1 7 6 .

have n e g o tia te d such agreements*

B o liv ia , Peru,

A rg en tin a , C h ile , and Uruguay have been con sp icu ou s 2 e x c e p tio n s , alth ough In O ctober, 1941, a p act w ith A rgentina was n eg o tia te d * i s rep o rted to be imminent.

An agreement w ith Uruguay Thus, th e oth er n a tio n s

o f t h i s hem isphere are ra th e r c l o s e l y in v o lv e d In th e cu rren t U nited S ta te s p o lic y o f © q u ality o f treatm ent* The p o l i c i e s o f th e s e o th er n a tio n s , however, are not n e c e s s a r ily founded on th a t b a sis* 3 C oncessions In v o lv in g s t r a t e g ic m a te r ia ls have been in co rp o ra ted in a number o f trade pacts*

These

c o n c e ssio n s in v o lv e d one or more v a r i e t i e s o f chromium, co c o n u ts, manganese, m ica, n ic k e l, q u in in e , xnabber, and tin *

A ll o f th e s e c o n c e ssio n s ware g e n e r a liz e d to

other n a tio n s a ls o ex ten d in g © quality o f treatm ent to the United S ta tes*

The c r it e r io n o f r e c ip r o c a l e q u a lity o f

trea tm en t, i n c id e n t a lly , has been a p p lied in very le n ie n t fash ion * ¥vestern Hemisphere n a tio n s have been s ig n a t o r ie s to s e v e r a l o f th e p a cts co n ta in in g such con cession s* B r a z il r e c e iv e d c o n c e ssio n s on two grad es o f manganese o r e | Canada on ferrom anganese, th ree typ es of m ica, and th ree forms o f n ic k e ls and Ecuador on cinchona bark*

52* 3*

U .S . T a r iff Commission, 1940 Annual K eport, pp*15*14* I n fr a * , Ch*34*

25:4

33a© p a c t w ith th© U nited Kingdom extended a ls o to th© v a rio u s B r it is h c o lo n ie s and p o s s e s s io n s ,

This agree­

ment encompassed such s t r a t e g ic m a te r ia ls as co c o n u ts, chrome o re and m etal* rubber, and tin * Table 27 i s In clu d ed in order to in d ic a t e th© n a tu r e , e x t e n t , and magnitude o f co n c e ssio n s in ­ v o lv in g s t r a t e g ic m a te r ia ls n e g o tia te d under the H eclp rocal Trade Agreements Program*

S t a t i s t i c s con­

cern in g th e p ro p o rtio n of im ports o f each commodity o r ig in a tin g in th e sig n a to ry n a tio n or n a tio n s are o f e s p e c ia l in t e r e s t *

These f ig u r e s do n ot in d ic a te the

f u l l e x te n t to which th e t a r i f f c o n c e ssio n s have in ­ flu e n c e d tr a d e , fo r th ey cannot r e v e a l the e x te n t o f g e n e r a liz a tio n *

They do, however, r e v e a l to what ex te n t

th© c h ie f su p p lie r form ula has been follow ed *

In a t

l e a s t two c a se s th ey a lso in d ic a t e th© recen t tendency toward g ra n tin g extrem ely narrow and s p e c if ic c o n c e s sio n s. A v i t a l q u estio n has been r a is e d concerning the e f f e c t o f fu r th e r expansion o f Western Hemisphere s t r a t e g ic m a te ria l production upon t h is u n c o n d itio n a l raost-favored-natelon trea tm en t.

How can th e se n a tio n s

b© g iv en s p e c ia l encouragement as lo n g as th e U nited S ta te s g iv e s e q u a lity o f treatm ent and g e n e r a liz e s co n ce ssio n s?

256

Table 2? RSCIi'ROCAX TRADE AGRBBMEHT COBOBSSIONS OH STRATBOIC RAW J/IAXHRIALS Coconuts Tar oAct BVf Bat es

Hat e o F Year $ u t/

1930 4 # per U oK .l~l- & pea? 39.

1931 1933 1934 1937 1938 1939

S o u lv . AdvaJ. %

29 35 31 18

U .S. im ports fo r Cons. irom m t t f B ) S igna­ t o r ie s 59,352(000 *8) 1,010 34.914 786 6 2,158 992 47.522 773 36,748 525 23,038 329

Chrome Ore f&3?.A c t. Hat e o f K .l . A.& Duty T Sates.. ™'

Year

1930 Pree 0 *K ,1 -1 - (Bound) 39. 5-5» (Bound) 39.

1931 1933 1934 1937 1938 1939

4. 5.

Bauir.

AuVal•

I

4

615 508 681 463 332 216

j-

U .S . Imports for Cons. tyuantity Value Prom M) S iin a t o r le s 103(0001) 3* 315 51chromie.v.l *426 83 oxide 2*273 247 c t . 7*325 164 4,855 117 3,408

U .S . T a r iff Commission, 0 , 3 . Imports and Trade Agreement C o n cessio n s. V ol.V , p . 97. I b id . . V o l. V I I I , p . 2 0 .

496 495 698 4,050 2 ,2 5 9 1,327

356

Table 27, € o n t. r ic x r r o c a l tr a d e M m m m m cojsbsssxohs OH STRATEGIC RAW If&TBRIALS or Chromium M etal fa r* Act JLiifi o? tS ?>tiflk.w AX Duty *1 •X

Jm x

*

M SI

1930 Sweden 8 3 -3 5 . U.K.L-X39*

30# 25# 25#

1931 1933 1934 1937 1938 1939

6

E auly• U .S . Imports ?or Sons. From AdVal. a u a tttily M m tSS&feJ Signa­ i t o r ie s •» 30 29^ "(l)

27

-ates

1930 Neth. 2 -1 -3 6 (4)

B ate of Duty

t m v n B aulv. U .S. Imports fo r Cons. AdVaX. Q uantity Value From M ’ ( W e ) VA *».»t o r ie s

Free (Bound)

1931 1933 1934 1937 1938 1939

1,499(000 1 ,6 3 9 02!.) 4,611 1 ,340 977 1,086

498 558 688 677 515 579

450 541 666 520 390 506

^Syi'b C on ^ 0 sionB were a ls o made In th e 1936 agreement w ith the N etherlands on quihine a lk a lo id , other s a l t s and d eriv a tiv e© o f q u in in e , and variou s other a l l i e d products* A ll were hound on th e f r e e l i s t .

14*

ID id . i V Q itY llif p«15i Ife1 d • t p . 8 7 .

*6*

l h i d . , pp.87*8.

261

t a b le 37, Cent* RECIPROCAL TKAOB A tm m w m COBCBSSIOHS OB STRATSOIC RAW MATERIALS Rubber, Unmto,, Ml lit; o f , or l>atex far.'A ct I7T.A.& m lm

R ate o f S u fy

Year

1930 U .K .l1*39

fr e e (Bound)

1931 1933 1934 1937 1938 1939

17

A auiv. U .S. Im ports for Cone. AdVal. auant i t y Value from (M cxfsj Signa­ & t o r ie s 10,415(000 884 2 4 ,8 3 0 l b .) 1,834 29,359 3,643 51,934 10,214 4,168 26,754 54,976 9,261

309 1 ,0 6 8 2 ,1 0 2 3 ,9 8 0 1,763 3 ,6 7 9

Crude Rubber (B atu ral )*** f a r . Act Hat e o f R •j. .A« * c i t *, p*77. ^Mineral R esou rces, p ro d u ctio n , and Trad© o f B o l iv ia 1*, F oreign M in erals Q u arterly, 2 * 2 9 -3 0 , O ctober, 1939* t in k le r , o £ . c i t . , p*T7* Roush, ££* o l t *, p p .1 5 7 -9 . B a in , op* c i t T , p*345. h o c. o l t * W M M m M M W aM d M M M

«h*1, 640 , 000 *000 1*441,000,000 1 ,0 7 5 ,0 0 0 ,0 0 0 1 ,0 3 5 ,0 0 0 ,0 0 0 4 8 0 ,0 0 0 ,0 0 0 390,000,000 269,000,000 1 9 0 ,0 0 0 ,0 0 0 5 5 ,0 0 0 ,0 0 0 1 1 6 ,0 0 0 ,0 0 0 | 6 , 691,000,000

U .S . Bureau o f F oreign and. Domestic Commerce, Economic S e r ie s 1 , pp*18~2&*

317

e x a c t ex ten t or tries e I n d ir e c t r e p e r c u s sio n s cannot b© m easured, no fu r th e r a n a ly s is o f th e se p o s s i b i l i t i e s w i l l be attem p ted , ”£wo ty p es o f U nited S ta te s fo r e ig n investm ent would b© d i r e c t l y e f f e c t e d , th e f i r s t b ein g m ining and s m e ltin g .

T his was th e fo u r th ran k in g ca teg o ry in 1936,

a g g reg a tin g # 1 ,0 3 5 ,0 0 0 ,0 0 0 or about 16$ o f t o t a l d ir e c t In vestm ents abroad.

Gold and s i l v e r accounted fo r about

o n e - f i f t h o f th e Investm ent in t h i s f i e l d , the I n d u s tr ia l m eta ls — such a s cop p er, n ic k e l, t i n , ir o n , le a d mangan e s e , e t c * , — a g g reg a tin g about tw o -th ird s* 3 The remainder was in v e s te d In n o n -m e ta llic m in e r a ls, such a s c o a l, gypsum, and a sb esto s* Of th e # 1 ,0 3 6 ,0 0 0 ,0 0 0 in v e s te d in mining and s m e ltin g , T ables 33 and 34 in d ic a t e th a t #708,194,000 was in v e s te d i n L a tin America and # 2 3 8 ,8 3 8 ,0 0 0 In Canada*

The n a tio n s o f th e Western Hemisphere thus

account fo r over 90$ o f the in vestm ent in m ining and sm eltin g*

U nited S ta te s c a p i t a l , in tu rn , I s dominant

in th e m ining and sm eltin g I n d u s tr ie s o f th e hem isphere. In South America, th e bulk of th e m ineral reso u rces i s owned by U nited S ta te s I n te r e s ts *

Most o f th e remainder

i s c o n tr o lle d by dom estic c a p it a l, a sm all p rop ortion

I,

U*S, Bureau o f F oreign and Domestic Commerce, Economic S e r ie s 1 , p*21.

318 T able 334 UNITED STATES DIRECT INVESTMENT IN LaTIN AMERICA 1936 (000* b U .S . D o lla r s ) Country

M anufacturing No# v a lu e " ' J* ll1" " 1 Ml H w U

D is tr ib u tio n No* value

I. ■ . I W i— iM F W l* — m i I » ■■ *>J H IM

a g r ic u ltu r e No. Value ,» *

*H »I

West I n d ie s Cuba .Dominican R ep u b lic H a iti Others (2 ) TOTAL (3)

26 (1 )

27| 114 u>

ill 29

37 (1) (1) (1)

IT"

15,157 (1 ) (1) (1 ) £ £ ,4 3 $

51 264,566 32,929 5 (1 ) (1) (1) 61 f4

C entral America and' Mexico Costa Hiea Guatemala Honduras Nicaragua Panama Salvador Mexico TOTAL (3 )

(1) (2) (3)

4*

( 1)

(1 )

( 1)

a) a)

( 1) (1 )

5

a)

(1 )

( 1)

832

(1) ( 1) ( 1) ( 1) ( 1)

(1) (1) ( 1) (1 ) (1)

mm

33

35

”

8 ,3 0 4

5,660

41 3T

10^811

17

1 7,217

w nE W

Included in M iscellan eou s* Bahamas, Bermuda, Jam aica, N etherlands West I n d ie s , French West I n d ie s , Trinidad* The column t o t a l s in c lu d e no* and valu e fo r item s in fo o tn o te ( 1 ) , which item s are n ot Included In t o t a l s fo r M iscellaneous*

U.S* Bureau o f Foreign and Dom estic Commerce, Economic S e r ie s I , p*12.

319

Table 3 3 , Cont. OTITED STATES DIRECT INVESTMENT IN LATIN AMERICA 1936 (000*8 U*S. D o lla r s) Country

Manufa c tu r in g D is tr ib u tio n fo> Value T o ! W Iu iT

A g ric u ltu re "fET.— f a l u j

South America A rgentina B o liv ia B r a z il C h ile Colombia Ecuador Guianas Paraguay Peru Uruguay Venezuela TOTaL (3)

39 mm

30 11 6 (!)

«•»

(3)

M ft

5 0 ,1 8 3 4 ,6 9 4 616 (i)

36 (1 ) 25 14 12 (1 )

28,357 (1) 1 5 , 612 12,056 2 ,4 5 8 (1) mm

(i) (i) 7 ,6 4 3 (3J (1 ) &6 3.53, 61 (i) (i) 4

TOTAL L*A.0)163

(1) (2)

8 4 ,2 4 5

191,789

«

6 10 5 112

8 ,6 6 4 2,876 833 WTgW^

204

99,996

«■» * (i)

mm

(i)

«i*

mm

(i> (i)

(i) (i)

mm

(i) (i)

(i) (i)

y “" 23,278 mm

96

440,449

Included In M iscellan eou s* Bahamas, Bermuda, Jam aica, N etherlands ' e3 t I n d ie s , French w est I n d ie s , Trinidad* The column t o t a l s Include no* and valu e f o r item s In fo o tn o te ( 1 ) , w hich Item s are not in clu d ed in t o t a ls fo r M isce lla n eo u s,

320

f a b le 3 3 , Cont# UNITED STATES DIRECT

IN V ffiT M E M f

IN

L A TIN

AMERICA

1936

(OOO*s U .3 . D ollara) Country

Mining , Smel t in g No# Value

P u b lic U t i l i t i e s Petroleum &_ 15 7" Value No* Value

West I n d ie s Cuba Dominican R epublic H a iti Others (2 )

total (3)

7 * (1 ) (1 )

14 f 740 (1 ) (1 )

8 (1) (1) 9

6,078 (1) (1 ) 20,534

19 4 3 5

314,797 4 ,5 7 2 3,576 726

mm

mm

(i) U)

(1 ) (1 ) (1 ) (1 ) (1 ) (1 ) 6 9 ,0 3 9 'TO/N3S

(1)

(i) (i)

(1 ) (1 ) (1 ) (1 )

(1 ) (1 ) (1 ) (1 ) (1 ) (1 ) 1 4 7 ,8 0 4 3 3 6 ,0 3 7

ifr i§7f§g mr m^m mr ussjmi

C entral America and Mexico Costa R ica Guatemala Honduras Nicaragua Panama Salvador Mexico TOTAL ( 3 )

(1) (2) (3)

•> m

50

mm mm

3 1 3 ,3 7 3 £ 1 5 ,4 8 5

(l) (1 ) 33

IT"

(1 ) (1 ) (1 ) (1 ) (1 ) 24

4l~

Included In M iscellan eou s* Bahamas, Bermuda, Jam aica, N etherlands West I n d ie s , French West I n d ie s , T rin id ad , The column t o t a l s in c lu d e no* and value fo r item s In fo o tn o te ( 1 ) , which item s are not Included in t o t a l s fo r M isce lla n eo u s.

T a b l . 3 3 , Cont.

UNITED STATES DIRECT INVESTMENT IN LATIN AMERICA 1936 (000*a U .S . D o lla r s ) Country

M ining,Sm elting No* Value

■

Fi « h *«»*i*..W i » * * i»»ii w ii»»wU{i

pi iTHff

P u b lic U t i l i t i e s Petroleum & T ransform ation WoT Value No* Value mm ■

~1T“

I it"

- ~ .r -r m A

■

- r m ii.in i.iii

ifir

South America A rgentina B o liv ia B r a s il C hile Colombia Ecuador Guianas Paraguay Peru Uruguay Venezuela TOTAL (3)

(1 ) (1) (1) (1) (1) (1) 9 382,815 (1) (1 ) mm w* (1 ) (i) mm ««• 6 47,197 ** (i) ill s i r 475,376

TOTAL L.A* (3 ) 87

(1) (2) (3)

708,194

(1) (1) 4 (1 )

11 (1) (1) -

(1) (1) 32,678 (1) 58,577 U) (1) • (1) (1) 174,430

(!) (1) 26 55 5 3 5 ,5 5 ? 117

452,561

12 155,496 (1 ) (1) 9 84,411 7 9,728 11 12 30,536 (1) (1) (1 ) (1) * 1 0 ,0 3 3 5 (1) (1) 5 10,869 37V,41’r 65 137

937,125

Included in M isce lla n eo u s. Bahamas, Bermuda, Jamaica, N etherlands west I n d ie s , French w est I n d ie s , Trinidad* The column t o t a l s in clu d e no* and valu e fo r item s in fo o tn o te ( 1 ) , which item s are n ot Included in t o t a l s fo r M iscellan eou s*

im~

322

Table 33, Cont* UNITED STATES DIRECT INVESTMENT IN LATIN AMERICA 1936 (000* b U .S . D o lla r s ) Country

M iscella n eo u s No * Value

T otal NoI Value

West I n d ie s Cuba Dominican R epublic H a iti Others (2 ) total (3 )

25 6 9 15 36~

23,800 3,204 6 ,0 9 5 1 5 .2 4 1 '2W7S5!

29

666,264 40,705 9 ,6 7 1 36.501

W S

7537T S I

7 12 11 5 20 6 17

13,286 49 ,5 5 5 36,425 4,466 26,688 17,164 12,917

7 17 11 5 20 5 215

13,286 50,387 36,425 4,466 26,688 17,164 479.465

173 IS 12

C entral America anci Mexico Costa R ica Guatemala Honduras Nicaragua Panama Salvador Mexico TOTAL (3) (1) (2) (3)

Term W85

TSSTTiST

Included In M iscellaneous* Bahamas. Bermuda, Jam aica, N etherlands West I n d ie s , French w est I n d ie s , Trinidad* The column t o t a l s in c lu d e no* and valu e fo r item s in fo o tn o te ( 1 ) , which item s are n ot in clu d ed in t o t a l s fo r M iscellaneous*

323

Table 33, Concl* UNITED STATES DIRECT INVESTMENT IN LATIN AMERICA 1936 (OOOt® u.S# D o lla r s) Country

M iscella n eo u s Sen VaTue**"

T o ta l No7 Value

Soutb America Argentina B o liv ia B r a s il C hile Colombia Ecuador Guianaa Paraguay Peru Uruguay Venezuela TOTAL (3)

19 8 13

,80*170 106 348,268 18,337 8 18 ,3 3 7 81 194,345 11,461 9 ,4 4 3 53 483,736 9 1 5 ,3 8 2 50 107,549 9 9 4,941 4 ,9 4 1 7 7,5 0 1 7 ,501 7 5 ,0 7 7 5,077 3 3 9 96,052 26 30,158 13,917 5 19 3 ,3 9 8 40 186,266 134 42~ n p w c r 102 17465798!

TOTAL L sA ,(3)107

(1) (2) (3)

56,887

9 1 1 2 ,8 4 7 ,0 0 1

Included in M isce lla n eo u s. Bahamas, Bermuda, Jam aica, N etherlands West I n d ie s , French West I n d ie s , Trinidad* The column t o t a l s in c lu d e no# and valu e fo r item s in fo o tn o te (1 )# which item s are n o t in clu d ed in t o t a l s fo r M iscellaneous#

32 4

T a b le 3 4 5 UNITED STAFFS DIRECT INV^STM*NT IN CANAD* AND NEWFOUNDLAND 1956

(000 U.S. D o lla r s ) Canada ManufacturIng D is tr ib u tio n a g r ic u ltu r e Paper and Pulp Petroleum P, 0. & 1'ransp. Insurance Mining & Sm elting M iscella n eo u s TOTAL Mewfoundland am m t o t a l

5.

Ibid.. . p p .6 -8 .

No, Xterns

Value

816 285 12 31 24 78 234 100 115 1 ,6 9 5

530,098 78,547 10,360 268,897 108,138 519,928 119,746 238,838 61,641 1 ,9 3 6 ,1 ^ 3

7

15,448

1 ,7 0 2

1 ,9 5 1 ,6 4 1

325

by B r i t i s h groups, and s t i l l sm aller sh a res by Dutch and Frenoh in v e s t o r s * 5 I f I t be assumed th a t in vestm en ts In manga­ n e s e , t in , quartz c r y s t a l s , end o th er s t r a t e g ic m a te r ia ls might a g g reg a te § 1 0 0 ,0 0 0 ,0 0 0 , t o t a l in vestm en ts in the m ining and sm e ltin g o f th e Western Hemisphere would be in crea se d by n e a r ly 1Q$*

The s iz a b le investm ent th a t

might be req u ired by a U nited S ta te s t i n sm eltin g in d u stry would, o f co u rse , be c l a s s i f i e d under dom estic ra th e r than fo r e ig n in vestm ents* a n a ly z in g the n a tio n s o f the hem isphere in d i­ v id u a lly , i t would appear th a t the la r g e s t in c r e a se s in mining and sm eltin g in vestm en ts would probably b© in C u ba, B r a z il, and B o liv ia *

In 1936, a s r e v e a le d by Table 35, m ining and sm eltin g e n te r p r is e s In Cuba had in vestm en ts o f $14#7QG,OGO*

T liis was 2*1$ o f m ining in vestm ent in L atin

am erlca, and c o n s t itu te d 2»k,% o f t o t a l U nited S ta te s d ir e c t Investm ent In th e I s la n d .

I t i s q u ite p o s s ib le

th a t in vestm ent i n Cuban manganese and chrome might double or t r i p l e the s i z e o f the m ining and sm eltin g in vestm en t. This would n o t, o f co u rse, d r a s t i c a l l y a lt e r the p rop ortion o f t o t a l U nited S ta te s in vestm en ts In Cuba a ttr ib u ta b le to m ining and sm eltin g . 6*

B ain ,

op

* c l t . , pp*340-7*

326

In 1 9 5 6 , United. S ta te s in v estm en ts In B r a z ilia n m ining and sm e ltin g were n ot ite m iz e d s e p a r a te ly .

It is

th e r e fo r e im p o ssib le to determ ine th e ex a c t r a t io o f th e se in v estm en ts to t o t a l U nited S ta te s mining Investm ents In L atin Am erica, or even to t o t a l U nited S ta te s d ir e c t in ­ vestm en ts 1In B r a z il,

'fable 33 does r e v e a l, however, th a t

the t o t a l v a lu e o f a l l In vestm ents l i s t e d under the M iscella n eo u s ca teg o ry I s but $ 1 1 ,4 6 1 ,0 0 0 co n tr a sted to a t o t a l o f $ 7 0 8 ,1 9 4 ,0 0 0 U nited s t a t e s mining Investm ent in L atin America and $ 1 9 4 ,3 45,000 U nited S ta te s d ir e c t in ­ vestm ent in B r a z il*

S ince t h is M iscellan eou s category

In clu d es many f i e l d s , i t i s apparent that our mining and sm eltin g in v estm en ts in B r a z il are r e la t iv e ly sm a ll. While the g r e a t in vestm ent p o s s i b i l i t i e s i n B r a z il are In ru b ber, th ere are r a th e r marked o u t le t s In manganese and quartz c r y s t a l s , w ith l e s s e r p o s s i b i l i t i e s In chrome and o th er m a teria ls*

I t i s p o s s ib le th a t

marked expansion o f the B r a z ilia n manganese In d u stry , p lu s some a c t i v i t y in th e se oth er in d u s t r ie s , might m u ltip ly the U nited S ta tes* B r a z ilia n m ining Investm ents two or th r e e fo ld .

fh e s e in vestm en ts would s t i l l be ra th er

s m a ll-s c a le In c o n tr a st to t o t a l m ining in vestm ents in L a tin America and a l l U nited S ta te s investm ent in B r a z il. In 1936, U nited S ta te s d ir e c t In vestm ents In B o liv ia n mining and sm eltin g were not item ized se p a r a te ly .

Hence I t i s im p o ssib le to determ ine th e ex a ct r e la t io n ­ sh ip betw een th e se In vestm ents and t o t a l u n ite d S ta te s m ining and sm e ltin g in v estm en ts in L a tin America, as w e ll as t o t a l U nited s t a t e s d ir e c t In vestm ents In B o liv ia , a l l U nited S ta te s d ir e c t In vestm ents in B o liv ia in 1936 aggregated some # 1 8 ,3 3 7 ,0 0 0 , accord in g to fa b le 33.

It

I s known th a t most o f t h is Investm ent was in m ining. There was a ls o s u b s ta n tia l United S ta te s investm ent in concerns c o n tr o lle d by oth er n a tio n s , and hence n ot in ­ cluded as d ir e c t in v estm en ts* 7 S u b sta n tia l in vestm en ts by the United S ta te s in B o liv ia n t i n p r o p e r t ie s , w ith l e s s e r o u tla y s in antim ony, tu n g ste n , q u in in e , and perhaps rubber, might double our d ir e c t Investm ent in B o liv ia *

The augmented

t o t a l would c o n s t it u t e a much la r g e r p rop ortion o f t o t a l U nited S ta te s m ining and sm eltin g Investm ents in L atin America*

I t would a ls o mean th a t B o liv ia might become

an im portant minor o u t le t fo r United s t a t e s fo r e ig n In vestm ent. The o th er major category o f U nited S ta te s d ir e c t investm ent abroad th a t would be a f f e c t e d by d evelop ­ ment o f s t r a t e g ic m a te r ia ls In t i l l s hemisphere would be a g r ic u lt u r e .

T o ta l United S ta te s d ir e c t in vestm en ts in

t h i s sphere aggregate $ 4 8 0 ,0 0 0 ,0 0 0 , co n tr a sted to the 7*

Supra. , pp. 285-287.

328

$>$$91,000,000 t o t a l U nited S ta te s d ir e c t in vestm en ts abroad i n 1936* Table 34*

T his r e la t iv e p o s it io n i s in d ic a te d in

While t h is in vestm en t i s s iz a b le , i t c o n s t i­

t u t e s but 7 .2 $ o f t o t a l United S ta te s fo r e ig n d ir e c t Investm ent i n 1936. S in ce f i v e o f the s t r a t e g ic m a te r ia ls co c o n u ts, m anlla f i b e r , q u in in e , rubber, and s i l k — f a l l w ith in th e a g r ic u ltu r e c a te g o r y , in vestm en ts in th e s e m a te r ia ls m ight m a te r ia lly in c r e a se the a b so lu te and r e l a t i v e s ig n if ic a n c e o f a g r ic u lt u r a l in v estm e n ts. I t I s q u ite p o s s ib le th a t a f u l l y e s t a b lis h e d , la r g e - s c a le L a tin American rubber p la n ta tio n in d u stry would absorb an Investm ent o f a t l e a s t $ 1 0 0 ,0 0 0 ,0 0 0 . T hrivin g co co n u t, m anlla f i b e r , and q u in in e p la n ta tio n s would demand la r g e a d d itio n a l sums*

Assuming th a t t o t a l

investm ent i n th ese fo u r m a te r ia ls might aggregate $20 0 ,0 0 0 ,0 0 0 t h i s would in c r e a s e 'United S ta te s a g r ic u ltu r a l in vestm en ts abroad by about 42$.

T his e v e n tu a lity would

lik e w is e in c r e a se a g r i c u l t u r e s slaare o f t o t a l I n v e s t­ ments abroad to 1 0 .1 $ .

This c a lc u la t io n I s based under

a number o f r a th e r a r b itr a r y assum ptions and I s m erely an attem pt to in d ic a te th e g en era l e f f e c t o f such I n v e s t­ ments upon th e com p osition of United S ta te s d ir e c t in vestm ent abroad.

529

T his In crea se in a g r ic u lt u r a l in vestm en ts would probably a f f e c t B r a z il more sh arp ly than any o th er n a tio n , la r g e ly because o f h er p o s it io n as a p o t e n t ia l major rubber producer.

I t would a ls o a f f e c t C entral

America and th e West I n d ie s , sin c e th e se r e g io n s are p o t e n t ia l producers o f m anlla f i b e r , co c o n u ts, and rubber. I t would probably a ls o touch v ariou s South American n a tio n s , n o ta b ly Colombia, V enezuela, the G uianas, Ecuador, Peru, and B o liv ia ,

Inasmuch as most o f th ese n a tio n s d id

not ite m iz e U nited S ta te s a g r ic u ltu r a l Investm ents s e p a r a te ly , th e r e i s no way o f p la c in g th ese o u tla y s In p e r s p e c tiv e .

S in ce t o t a l s are given fo r r e g io n s , how**

ev e r, some i n s i g h t can be gained by a n a ly zin g a g r ic u ltu r a l in v estm en ts by th e se broader a rea s. Table 35 in d ic a t e s th at a g r ic u ltu r a l in v e s t ­ ments in th e West In d ie s amounted to # 3 0 9 ,5 7 4 ,0 0 0 .

This

was 7 0 .2 $ o f U nited S ta te s a g r ic u ltu r a l in vestm ent in L a tin America, or 41$ o f United S ta te s investm ent in th e I s la n d s . In G entral America and M exico, according to Table 33, a g r ic u ltu r a l In vestm ents amounted to # 6 7 ,5 9 7 ,0 0 0 . T his was 1 6 .3 $ o f our a g r ic u ltu r a l in vestm en ts in L atin America, as w e ll as 1 0 .8 $ o f United S ta te s d ir e c t in vestm en t in the a re a .

330

In South America, a g r ic u lt u r a l in vestm en ts a g g regated h u t # 2 3 ,2 7 8 ,0 0 0 , as in d ic a te d by Table 33. T his was b u t 6 .2 $ o f a g r ic u ltu r a l Investm ent in L a tin America,' and 1 ,5 $ o f t o t a l u n ite d S ta te s d ir e c t in v e s t ­ ment sou th o f the KIo Grande* I t i s apparent th a t # 2 0 0 ,0 0 0 ,0 0 0 in new a g r i­ c u ltu r a l Investm ent could d r a s t ic a ll y a l t e r t h i s p ictu re* Much o f th e new Investm ent would be ce n tered in B r a z il and o th er South American area s where U nited S ta te s a g r i­ c u ltu r a l in vestm ent i s now r e l a t i v e l y s m a ll.

331

Chapter XXVIII EFFECT TOOK OT1TFD STATES FOREIGN INVESTMENT (Concluded) E ffe c t upon zsg Export-Xmport Bank A c t i v i t i e s xa sg g sssm t J E E s s s a r x s a c w s r i g g a c w B a r

SSSSSSSSSSSSSS iS B ffliffiraJU .

In exam ining th e e f f e c t o f developm ent o f Western Hemisphere s t r a t e g ic in d u s tr ie s upon U n ited S ta te s fo r e ig n in v estm e n t, governm ental a c t i v i t i e s cannot b© Ignored*

P u b lic Investm ent might co n c e iv a b ly b© employed

to improve tr a n sp o rt f a c i l i t i e s , lo o se n exchange r e s t r i c t i o n s , and o th er w ise render p r iv a te in vestm ent more f e a s ib le * Since moat lo a n s extended by th e U nited S ta te s government to L a tin America have thus fa r been through th e E xportImport Bank, th e a c tu a l and p o te n tia l a c t i v i t i e s o f t h is agency m erit a n a ly sis * U n til 1 9 4 0 , the loans

made by the Bank which

In volved L a tin America were p rim a rily d esign ed to encourage the export o f heavy goods* 1 These lo a n s were to a id in r e lie v in g unemployment i n the heavy goods In d u s tr ie s o f the U nited S t a t e s , as w e ll as to enable U nited S ta te s ex p o rters to meet fo r e ig n co m p etitio n In hem ispheric markets*

While lo a n s o f t h i s type may c o n tr ib u te to th e

improvement o f L a tin American tr a n s p o r ta tio n f a c i l i t i e s

1,

nExport-Im port Bank Loans to L a tin America11, F oreign P o lic y R ep o rts, 17*85, June 1 5 , 1941*

332

to d th u s encourage e x p lo it a t io n o f s t r a t e g ic m a te ria ls# th ey d i r e c t l y f a c i l i t a t e developm ent of th ese I n d u s t r ie s . 4*

In* 1 9 3 8 , th e f i r s t evid en ce o f a v a r ia t io n i n the fa m ilia r p a tte r n appeared,

A $5,QGO,QOO c r e d it was

extended to H a iti fo r the c o n s tr u c tio n of p u b lic w o rk s.2 f h l s new p o lic y was soon bulwarked by th e passage o f an a c t In Septem ber, 1940, which in c r e a se d the Bankf s len d in g power to ^ 7 0 0 ,0 0 0 ,0 0 0 , o f which L a tin America was a l l o t t e d # 5 0 0 ,0 0 0 ,0 0 0 .3 In a l e t t e r to th e House Banking and Currency Committee, in which he urged th e passage o f t h i s a c t , Mr* J esse Jones c it e d rea son s fo r such an I n c r e a s e .4

He

argued th a t i t would enable th e bank t o continue fin a n c in g exp orts to L a tin Am erica, to a s s i s t L a tin America in m eeting th e economic c r i s i s o cca sio n ed by World Tar I I , to a id th e se n a tio n s In in c r e a sin g p rod u ction of th in g s we Import b u t do n ot produce, and to accen tu ate L a tin American in d u s t r i a l i z a t io n .

A ll four purposes are

d i r e c t ly or I n d ir e c tly r e la te d t o th e development o f s t r a t e g ic in d u s tr ie s * Under th e terms o f t h i s a c t , th e Export-Im port Bank may have up to $ 5 0 0 ,0 0 0 ,0 0 0 o u tsta n d in g lo a n s to

2# 3# 4*

L ee. o i t . 7 6 th C ongress, P u b lic Ho*792* 7 6 th C ongress, 3rd S e s s io n , H earings B efore Committee on Banking and Currency on H.K .10212, Superseded by H*11.10361*

L a tin America*

0

These lo a n s can he extended to Western

Hemisphere governm ents, c e n tr a l b ank s, or o th e r a c c e p ta b le banking I n s t it u t io n s *

The purpose o f such lo a n s was to

a s s i s t In th e developm ent o f r e s o u r c e s , th e s t a b i l i z a t i o n o f the econom ies, and th e ord erly m arketing o f the p rod u cts o f th e c o u n tr ie s o f th e w estern Hemisphere* The lo a n s made to L a tin America thus fa r can be grouped in t o seven c a te g o r ie s* ^

Two o f t h e s e , th e

coin age lo a n s to Cuba and the lo a n s to th e I n te r n a tio n a l Telephone and T elegrarh Company fo r development o f L a tin American p r o p e r t ie s , are n ot of Immediate In te r e st*

The

oth er c a t e g o r ie s , however, are a t l e a s t in d ir e c t ly r e la t e d to th e developm ent o f s t r a t e g ic m a teria ls*

These In clu d e;

F i r s t , c r e d it s fo r th e purpose o f m eeting season ab le or emergency sh o rta g es o f exchange*

Second, c r e d it s In

co n n ectio n w ith b lock ed commercial b a la n ces In B r a z il. T hird, road b u ild in g and p u b lic works lo a n s to the sm aller and l e s s w e ll-d e v e lo p e d L a tin American co u n tries*

F ourth,

tr a n sp o r ta tio n equipment lo a n s, c o n s is t in g p r in c ip a lly o f a s s is ta n c e to U nited S ta te s ex p o rters o f ra ilw a y equipment* F i f t h , in d u s t r ia l development lo a n s to B r a z il and C h ile . The f i r s t fo u r o f th e s e f i v e c a te g o r ie s a r e , in whole or in p a r t, emergency loan s*

The f i f t h has ob viou s lo n g -

range I m p lic a tio n s . 6. 6.

76th C ongress, P u b lic Ho.792* ^Export-Import Bank L oans to L a tin America % F oreign P o lic y R ep orts, 17*84, June 1 5 , 1941*

Because o f th e b r i e f p erio d In which the new f a c i l i t i e s o f th e Bank have been a v a ila b le , lo a n s o f th e s e ty p es have been r a th e r modest*

Table 35 in d ic a t e s th e ex­

te n t o f th e s e lo a n s and commitments, as o f March 31, 1941. I t I s u n fo rtu n a te th a t the ta b le d oes not break down th ese lo a n s and commitments in to v a r io u s c a te g o r ie s* Most o f th e commitments, i f n ot i t s lo a n s , h&ve been advanced to m ain tain th e valua o f L a tin American cu rren cies*

T his ta sk has been d i f f i c u l t , sin c e the

t e r r i f i c economic m aladjustm ents caused by the war have s e r io u s ly d is lo c a t e d th e monetary and exchange system s o f many o f th ese n a tio n s*

These c r e d it s are o s t e n s ib ly to

be used to purchase U nited o t a t e s g o o d s, but th ey are a c t u a lly d esig n ed to a s s i s t in r e s to r in g the balance o f payments o f th ese n a tio n s . C ountries which have r e c e iv e d e it h e r a c tu a l lo a n s or commitments fo r t h is p urpose, and th e amounts exten ded, in clu d es^

A rg en tin a , $ 6 0 ,0 0 0 ,0 0 0 ; B r a z il,

$ 2 5 ,0 0 0 ,0 0 0 ; C h ile , $ 5 ,0 0 0 ,0 0 0 ;

C o lo m b ia ,

$ 1 0 ,0 0 0 ,0 0 0 ;

Costa R ic a , $ 1 ,0 0 0 ,0 0 0 ; N icaragua, $500,000; Paraguay, $500,000; Peru, $ 1 0 ,0 0 0 ,0 0 0 ; and Uruguay, $ 7 ,5 0 0 ,0 0 0 . The c r e d it s to B r a z il, Costa R ica , N icaragua, and Paraguay are o f a r e v o lv in g ch a ra c ter.

8* 9*

The lo a n to Cuba o f

”E xport-Im port Bank Loans to L a tin America” , P o lic y R ep o rts, 1 7 s8 4 , June 1 5 , 1941. I b id * , p . 85.

535

Table 367 EXTOhT-IMPOKT RaNK LOaNS ELATING TO LATIN (USTfuUCa December 31, 1935 * March 31, 1941 (OOO*® 0*S , D o lla r s ) Country o f Borrower

March 31, 1941 Commitments to Make A M ltlo h a l Loans

March 31, 1941 Loans Out stan d in g

Da t i n America A rgentina B r a z il C h ile Colombia Costa Kiea Cuba Dominican Republic Ecuador H a iti Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela TOIAL (16 c o u n tr ie s )

^•

62,420 5 1 ,3 9 2 14,637 2,100

5,539 1 5 ,3 0 0 3,275 1,150 1,610

105 13,545 3,926 7 ,6 7 8 61 25 30 3,890 121

2,875 3,300 2,405

1 ,6 2 5 1 ,1 4 0 1 ,4 8 5

10,000

7 ,5 0 0 3,417 1 8 6 ,9 2 ^

183 337SL5"

ffcdgr&l R eserve B u lle t in (W ashington), May, 1941, p# 386*

Table 35, Concl* EXPGE1VIMPQHT BANK LQAN3 RFLATINO TO LATIN AMERICA (Beeember 31, 1935 - March 31, 1941} (000*8 U.S* D o lla r s ) Country o f Borrower L a tin America A r g e n t in a

B r a z il C h ile Colombia Costa Rica Cuba Dominican R epublic Ecuador H a iti Mexico Nicaragua panama Paraguay Peru Uruguay Venezuela TOTal (16 c o u n tr ie s)

Loans O utstanding a t End o f ; 1940

1939

105 13,621 2,8 9 0 5,825 4

1 6 ,3 9 5 486 38

15 3 , 455 130 1 ,0 8 0 965 1 ,2 0 6

1 ,9 0 6 136 60

130 2 9 ,4 0 1 “

19 ,1 3 4

1937 A rgentina B r a z il C h ile Colombia Costa Rica Cuba Dominican R epublic Ecuador H a iti Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela TOTAL (16 c o u n tr ie s)

1 ,3 2 0

1938 925 630 1 ,4 9 3 165 472

*»

125 12

1936

376ST 1935

508 28 1 ,0 6 4

4,0 6 2

890

73

50

24 2,234

17673

4 ,1 1 2

337

#£5*000*000 on May 6 f 1941* cannot be c l a s s i f i e d a s an exchange lo a n s in c e th e money I s a llo c a t e d to s p e c i f i c p r o je c ts. P rio r to th e new le n d in g a u th o r ity o f th e bank* c r e d it s had to b© u t i l i z e d e x c lu s iv e ly fo r the purchase o f U nited S ta te s p rod u cts.

S in ce then* more

freedom has been granted L a tin American borrowers as to 10 th e d is p o s a l o f p ro ceed s. R eports from L a tin America e a r ly in 1941 in d ic a te d th a t c r e d it c o n d itio n s had m a te r ia lly im11* T his marked improvement wag a ttr ib u te d in part proved.**1 to in crea se d purchases by th e U nited S ta te s o f m a te r ia ls needed fo r d efen se* but la r g e ly to Export-Im port Bank lo a n s o f the exchange type# Two commitments* t o t a l in g n ea rly $47*000*000* were extended to B r a z il i n order to f a c i l i t a t e payment o f th e b lock ed b a la n c es o f American ex p o rters in B r a z il.* These had been fr o z e n because o f Ipck of exchange.

Only a

p a rt o f th ese e x te n siv e commitments have a c t u a lly been lo a n ed . The Bxport-Xmport Bank has a ls o loan ed la r g e sums fo r road b u ild in g and p u b lic works. 10. 11. 12*

T o ta l commitments

Loo. c i t . '^Credit in L a tin America1** B u sin ess Week* January 25, 1941* p . 55. ^Export-Import Bank Loans to L a tin America”, F oreign P o lic y R ep o rts, 17*85*6, June 1 5 , 1941.

f a l l i n g w ith in t h i s c l a s s i f i c a t i o n amounted to $ 2 3 ,0 0 0 ,0 0 0 a s o f December 31, 1 9 4 0 , and. had be©n exten ded to sev en c o u n tr ie s # 15

These in clu d ed C osta R ic a , the Dominican

R ep u b lic, Ecuador, H a it i , Hioar&gua, Panama, and Paraguay#

Of t h i s sum, # 1 5 ,0 0 0 ,0 0 0 was fo r road b u ild in g ,

o f which # 1 0 ,0 0 0 ,0 0 0 was fo r th e pan-am erlcan Highway# The rem aining # 8 ,0 0 0 ,0 0 0 i s s c a tte r e d among such p r o je c ts as ro a d s, bridge® , p o rt d evelopm ents, ir r ig a t i o n works, and water system s*

F urther lo a n s o f t h i s gen eral ty p e

are imminent, sin c e th e Pan American Highway i s ap p aren tly co n sid ered a d efen se p ro ject* A r e c e n t development th a t might f a l l w ith in t h i s g en era l ca teg o ry i s lo a n s fo r n a tio n a l d efen se purposes*

In th e summer o f 1941, n e g o tia tio n s ware under

way w ith th e government o f Colombia concerning e x te n sio n o f new c r e d it s # 1^

Sums have n ot been d is c lo s e d , but

amounts m entioned in Bogota range between #35,0 0 0 ,0 0 0 and # 4 0 ,0 0 0 ,0 0 0 , w ith as much a s # 2 8 ,5 0 0 ,0 0 0 a p p lied to n a tio n a l d efen se# The Bank ha® a ls o f a c i l i t a t e d th e exoort o f ra ilw a y s u p p lie s , s h ip s , and oth er heavy tr a n sp o r ta tio n equipment to B r a z il* 15

Sm aller lo a n s and commitments

have in v o lv e d sim ila r shipments to C h ile , M exico, 3,3* 14. 15*

I b id * , p*86* ”Lo&n N e g o tia tio n s w ith Colombia % Pan American Hew®, 2 s1 1 , J u ly 3 , 1941. ”ihtport- Xmport Bank Loans to L atin America”, F oreign p o lic y R ep orts, 1 7s8 6 -7 , June 1 5 , 1941.

A rg en tin a , Costa H iea, and Ecuador*

The B r a z ilia n c r e d i t s

n e g o tia te d s in c e March, 1 9 4 0 , are an outgrowth o f th e March, 1939, agreem ent between th e Bank and th e B r a z ilia n government*

By t h i s u n d erstan d in g, th e Bank agreed to

exten d c r e d it s which would a s s i s t In im proving B r a z il's tr a n s p o r ta tio n f a c i l i t i e s and th e developm ent o f i t s p ro d u ctiv e c a p a c ity # 16 a new and very s ig n if ic a n t a c t i v i t y o f th e Bank I s r e f l e c t e d In th e lo a n s to B r a z il and C h ile f o r the purpose o f a c c e n tu a tin g I n d u s tr ia liz a tio n *

More

s p e c i f i c a l l y , th e se lo a n s have been fo r the purchase o f machinery and equipment needed In in d u stry*

On September

26, 1940, th e Export-Im port Bank made a #20,0 0 0 ,0 0 0 commitment to B r a z il# 1*^ Proceeds were to b© used to acq u ire s t e e l - m i l l equipment in th e United. S t a t e s , and th e lo a n was to encourage a th r iv in g B r a s ilia n s t e e l in d u str y . The c r e d it a ls o provided an Impetus t o th e development o f the B r a z ilia n manganese industry*

R ailroad s extended

to th e iro n d e p o s its must a ls o reach to the manganese d e p o sits*

I n c id e n t a lly , w h ile th e Export-Im port Bank i s

ad eq u ately p r o te c te d and can In flu e n c e the management o f the e n te r p r is e u n t i l the lo a n I s r e p a id , a ctu a l ownership

16* 17*

U#S* Department o f S t a t e , P ress R elease No*84, March 9 , 1939# ”Export-Im port Bank Loans to L a tin America”, F o re ig n P o lic y Re p o r ts , 1 7 *87-8, June 1 5 , 1941.

340

o f th e new equipment i s B r a z ilia n .

The o f f i c e o f Pro­

d u c tio n Management gran ted B r a z il a p r io r it y on s t e e l needed, fo r t i l l s p r o j e c t , so c o n str u c tio n l a con tin uin g*

18

A lo a n d as a ls o been made to C h ile , to f a c i l i t a t e the growth o f g en era l in d u s t r i a l i z a t io n th e r e . I t i s apparent th a t w h ile many o f the Bank* b a c t i v i t i e s are o f an emergency n a tu re, lo a n s such as the in d u s t r ia l developm ent c r e d it s extended to B r a z il and C h ile are o f a d i f f e r e n t ty p e .

Although fche Bank*s manage­

ment have been r a th e r c a u tio u s , i t i s l i k e l y th a t t h i s type o f lo a n w i l l in c r e a se in r e la t iv e s ig n ific a n c e *

If

s o , developm ent o f s t r a t e g ic I n d u s tr ie s In t h i s hem isphere might o f f e r an im portant o u t le t fo r la r g e Bank lo a n s . T his developm ent was e x p l i c i t l y m entioned in J e sse Jones* l e t t e r to th e C on gression al com m ittee, as w e ll as In the .act o f September, 1©4G, a d if fe r e n c e o f op in ion e x i s t s a s to j u s t how f a r th e Bank should go in d ev elo p in g s t r a t e g ic and oth er I n d u s tr ie s .

I t h a s been claim ed th a t the emergency

measures o f the Bank should be handed over to the S t a b il i z a tlo n Fund and re p la ce d by lon g-ran ge development lo a n s . 19

18. 19.

^Latln am erlean Trade w ith U .S . Growsw, Newsweek, I d s 54, J u ly , 1©41. 11Export-Im port Bank Loans to L atin A m erica1*, F oreign P o lic y d ep o rts, 17*92, June 1 5 , 1941.

341

Thus* tile Bank could, become a c a r e f u lly r e g u la te d c a p it a l market fo r Latin. American co u n tries* p rovid in g them w ith th e f in a n c ia l f a c i l i t i e s needed to d evelop s t r a t e g ic and o th er r e s o u r c e s .

Mordecal E z e k ie l has

I n d ic a te d h i s o p in io n th a t the new Export-Im port Bank funds w i l l en a b le u s to promote new In du stry and trad e on terms th a t w i l l g iv e th e borrowers a chance to su cceed . W illiam &. C u lb ertson , a lo n g -tim e a u th o r ity on fo r e ig n trade and in v estm en t, ta k es I ssu e w ith t h is con cep t o f the fu tu re fu n c tio n o f the Bank* 21

In h i s

o p in io n , th e Bank should not undertake to fin a n c e L a tin American e n te r p r is e s which p r iv a te c a p it a l f in d s i t Im p ossib le to undertake because o f e x c e s s iv e r is k .

Such

investm ent would su b je c t th e American taxp ayer*s money to an undue hazard.

He a ls o su g g e sts government fin a n c in g

o f e n te r p r is e in L atin America would not be n ecessary i f th e U nited S ta te s government p rop erly p r o te c te d p r iv a te Investm ent abroad.

Such p r o te c tio n , p lu s assu ran ces o f

L a tin American s t a b i l i t y and p r o te c tio n o f p r iv a te i n ­ v estm en ts, are the p r e r e q u is ite s o f e x te n siv e p r iv a te

20m 21.

E z e k ie l, M ordecal, "Economic R e la tio n s Between th e Am ericas", I n te r n a tio n a l C o n c ilia tio n , No*367s93, February, 1941• C u lb ertson , Wm., "Recent Developments in Economic R e la tio n s W ithin th e Am ericas", Economic R e la tio n s w ith L a tin Ameri c a , p p .10-11*

342

Investm ent in th e hemisphere*

In h is opinion# th e Bank

should m erely co n tin u e to supplement American banking and p r iv a te e n te r p r ise * For p o s s ib le p a r t ia l replacem ent o f th e E xportIraport Bank by th e proposed Inter ■

2 8 .8 1 4 ,1 2 8 .9 20.0 7 .3

28*4 1 5 .5 27 .9 ; 0 .4 7 .8

2 5 .2 1 6 .0 3 0 .3

2 5 .9

31.0 .8 5 0 .3 1 7 .6 .2

27 ,0 .4 5 1 .2 2 1 .1 .3

2 8 .0 .4 4 9 ,7 2 1 .6 .2

30.0

22.1 6,4

J.S. Imports? North America South America Europe A sia A frica

.6

5 6 .7 1 6 ,7 *2

.6

49 *4 1 9 .7 .3

32.7 .7 4 8 .0 18.7 ,3

3 62

Table 428 SHAKE OF EACH COMMODITY CLASis IN TH!7. EXPORTS AMD IMPORTS OF THE UHITED STATES, BY COMTINFMTS (In P ercen ta g es) North America U .S . E xports: Crude M a teria ls F o o d stu ffs Semi-Manuf ac tur© s F in ish ed Goods

1926- 193130 av. 35 av.

1936

1937

1938

1939

1 5 .0 1 8 .3 x 5 .8 5 3 .0

2 1 .4 1 2 .4 1 4 .9 5 1 .3

20. 6 9 .7 14 . 2 55*5

1 7 .9 1 0 .4 1 5 .5 5 6 .2

1 6 .3 1 6 .7 1 3 .7 5 3 .2

1 6 .7 1 0 .8 1 5 .4 5 7 .1

1 9 .2 3 6 .9 1 9 .6 2 4 .3

1 2 .8 38.8 1 8 .8 2 9 .6

1 1 .8 4 9 .4 1 8 .5 2 0 .5

1 2 .3 44 .1 2 0 .9 22 .7

1 4 .0 39.5 2 0 .3 26.2

1 4 .0 37.5 2 3 .4 2 5 .1

1936

1957

1938

1939

U .S . Import s : Crude M a teria ls F o o d stu ffs Seml-Manufac tu r e a F in ish e d Goods

South America U .S. E xports: Crude M a teria ls F o o d stu ffs Semi-M anufactures F in ish e d Goods

1926- 193130 a v . 35 av. 1 .6 8 .3 1 4 .8 7 5 .3

2 .4 7 .7 1 5 .7 7 4 .2

2 .4 3 .7 1 3 .8 8 0 .1

2 .3 4 .1 1 4 .3 7 9 .3

2 .4 4 .3 1 1 .7 8 1 .6

3 .2 5 .0 1 6 .4 7 5 .0

3 1 .3 5 2 .5 1 5 .5 .9

26.9 61.1 1 0 .6 1 .4

3 5 ,0 5 4 .0 1 0 .4 .7

3 4 .0 5 2 .6 1 2 .8 .6

3 0 .3 5 5 .5 13 .4 .9

3 6 .9 4 8 .1 1 4 .0 1 .0

U .S. Im ports: Crude M a teria ls F o o d stu ffs Semi-M anufactures F in ish e d Goods

2#

Loc* e it *

363

Table 4 2 , C oncl. SHARE OF E*CH COMMODITY CLASS IN THF EXPORTS AND IMPORTS OF TEE UNITED S M B S , BY CONTINENTS (In P ercen ta g es) Europe U .S. E xportsi Crude M a teria ls F o o d stu ffs Semi-Manufac tu re s F in ish e d Goods

1926- 193130 a v . 35 av.

1936

* T I mm> ........ ..

1937

1938

1939

3 5 ,0 20*0 14*4 3 0 .5

37*3 1 7 .1 1 4 .2 31.4

39 .1 1 1 .3 1 7 .2 32.4

33*0 1 1 .7 2 1 .5 3 3 .7

26.4 20.9 1 7 .5 35 .2

21 .8 1 4 .3 20 .9 42.9

21*2 1 0 .6 26.© 4 1 .3

I B .5 1 5 .5 27.4 38.6

1 9 .8 1 8 .7 2 8 .3 33 .2

1 8 .0 1 8 .4 3 0 .1 3 3 .4

15 .9 2 0 .2 27.6 3 6 .3

1 5 .2 1 8 .4 31 .8 34.6

1936

1937

1938

1939

U .S . Im ports: Crude M a teria ls F o o d stu ffs Semi-Manuf ac tu re s F in ish e d Goods

Other C on tin en ts U .S. E xports: Crude M a teria ls F o o d stu ffs Semi-Manufacture s F in ish ed Goods

1926- 193130 air. 35 a v. 24*2 7 .2 14 *3 54*0

3 7 .3 5 .6 1 5 .2 4 2 .0

2 8 .3 3 .4 20 .0 48*4

1 8 .3 3*1 29.7 48*8

1 9 .6 3 .5 21 .5 5 5 .3

1 7 .0 4 .4 2 5 .5 5 3 .1

66* 6 10*1 11*5 1 1 .B

5 2 .2 2 0 .4 1 3 .7 1 3 .7

5 2 .3 1 6 .0 1 8 .5 1 3 .2

5 5 .4 1 4 .6 1 8 .2 1 1 .8

5 2 .2 1 8 .4 1 5 .4 1 4 .0

5 7 .5 1 6 .0 15.1 1 1 .4

0.S* Im ports: Crude M a teria ls F o o d stu ffs Semi-Manufac tu r ©s F in ish ed Goods

364

l e s s e r e x t e n t , f in is h e d m anufactures*

C on versely,

South America and L a tin America in g en er a l have) been heavy purch asers o f U nited S ta te s sem im a n u fa ctu res and f in is h e d m anufactures.

They have purchased very lim ite d

q u a n t it ie s o f crude m a te r ia ls and f o o d s t u f f s , s in c e L a tin America ex p o rts th e s e ty p es o f p ro d u cts. T ables 43 and 44 fu r n ish a s t i l l more d e t a ile d p ic tu r e o f th e com p osition o f L atin American and Canadian import and exp ort tr a d e .

These t a b le s in d ic a te c le a r ly

th a t th e n a tio n s o f t h i s hem isphere have b u i l t th e ir fo r e ig n trade upon a b a s is o f exchanging raw m a te r ia ls fo r m anufactures*

An a n a ly s is o f the trade o f in d iv id u a l

n a tio n s confirm s t h i s im p r e ssio n .5 The L a tin American n a tio n s have been e s p e c ia lly heavy p urchasers o f a l l ty p e s o f heavy and l i g h t manu* fa c tu r e s produced in th e U n ited S t a t e s .

These im ports o f

U nited S ta te s m anufactures in clu d e autom otive and a g r i­ c u ltu r a l equipment, e l e c t r i c a l good s, t e x t i l e s , f u e l s , lu b r ic a n t s , and machine to o la * a s h i f t in U nited S ta te s im ports o f s t r a t e g ic raw m a te r ia ls would thus produce a n o ta b le change

5, 6*

See* Pan American Union, American Natio n S e r ie s , which in c lu d e s n e a r ly a l l th e r e p u b lic s oT L atin America. ^Commercial Interdependence o f th e Am ericas", Commercial Pan America, 9*237, A ugust, 1940.

365

Table 4 3 3 COMPOSITION OF THE IMPORT TfUlDE OB’ TH' LARGER AMERICAN COUNTRIES

Import®, a® a p ercen tage o f t o t a l im p o rts, o f Haw M a teria ls

Country o f O rigin

United S ta te s Canada A rgentina B o liv ia B r a s il C hile Colombia Cuba Ecuador Mexico Paraguay Peru Uruguay Venezuela

3#

M anufactures

a g r lc u ltu r a l o th er Haw than fo o d ­ fo o d ­ Mineral® s t u f f s s t u f f s 6 .2 1 6 .5 5 .1 8 .4 5*7 7 ,8 .2 6*5 .6 3 .9 2 .0 a .i -

26*1 1 0 .6 5 .9 1 4 .9 1 1 .8 7 .9 4 .1 6 .8 1 2 .4 5 ,2 3 .7 4 ,9 1 ,3

1 3 .7 7 .2 8. 6 7 .2 1 2 ,6 3 .0 1 .5 3 .5 3 .1 -

5 .2 9 .7 4 ,7 .7

Pro­ c e sse d Semi­ Other manu­ manu­ fo o d s t u f f 3 fa c tu r e s facture 14 .6 8 .2 1 ,1 1 1 .4 5 .2 8 ,7 2*0 2 2 .3 1 0 .2 3 .2 1 9 .5 7 .6 9 .5 8 ,7

21.1 21 ,5 3 1 .5 1 6 ,3 1 6 ,4 2 7 ,4 1 3 .6 2 2 .4 38,7 21.1 1 6 .7 20.8 2 4 ,3 4 3 .6

U .8 . T a r if f Commission, The F oreign Trade o f I#atin America, p a rt I I , S e c tio n s 1 -1 0 , 1 7 ,~TSu ~ ~

1 8 .3 36.0 4 7 .8 4 1 .8 4 8 .3 4 5 .2 7 8 .6 3 8 .5 35 ,0 66 .6 58 .6 5 6 .2 4 8 .5 4 5 .7

366

Table 44 COMPOSITION

4

OF THE EXPORT TRADE OF THE LARGER

AMERICAN 00UMTKIS8

Exports i as a percen tage o f t o t a l e x p o r ts , o f Haw M ateriala A g r ic u ltu r a l o th er Raw than o f Ori&In food** fo o d ­ M inerals s t u f f s s t u f f s U nited S ta te s 5 ,9 16*0 3 .2 Canada 23*2 2 4 ,0 1 4 .2 Argentina *7 4 9 .3 3 1 .9 B o liv ia 1 ,4 95* 7a 4 .6 B ra a il 1*8 5 2 .2 36 ,4 C h ile 7 ,6 80*5® 8*4 Colombia 1 9 ,2 5 7 .7 ° 3*9 Cuba 59*9 3*9 1 1 .1 Ecuador 13* 4 4 9 ,4 1 8 .8 6 9 ,1 7 .5 7 ,2 Mexico • Paraguay 5 7 ,8 ,3 .6 Peru 3 0 .4 2 8 ,2 Uruguay 3 ,7 5 .4 6 3 ,3 Venezuela 6 .1 8 4 ,7 ,9

M anufactures

Country

a b e d e * g b **

4*

Pro** c e sse d SemiOther fo o d manu­ manu­ s t u f f s fa ctu res* facture; 5 .4 1 3 ,1 15*3 6 .5 2 .5 m 2 3 .9 .9 .3 1 7 .7 8 .7 2 0 .1 W P-

2 0 .5 1 7 ,5 1 .7 .3 2 .6

4 9 .0 8 ,0 1 .1 .5 .5

18. 9a 1 .2 11 *7 1 5 . 0X 2 4 ,2 3 2 ,1 ® 7 .5 ,

8 .3

.3 5 .8 ®

.9 —

Gold and s i l v e r sim ply worked 1 1 .7 $ . Crude or sim ply worked, In clu d es c o f f e e ground, Platinum and g o ld , T a q u illa h a ts — 5 .5 $ . Petroleum d e r iv a t iv e s , M etals and M inerals «— 30,2$* petroleum d e r iv a t iv e s and gold c o in and b a r s, In clu d es In some c a se s p a r tly p rocessed m ineral products*

X>oc, c i t *

367

In th e co m p o sitio n o f U nited s t a t e s e x p o r ts.

E xporters o f

aem l-f& b rleated and f in is h e d m anufactures would presumably have an expanded market, w h ile producers o f raw m a te r ia ls might be co n fro n ted w ith c u r t a ile d m arkets.

Even i f t h i s

d iv e r s io n f a c i l i t a t e d the development o f h em isp heric In­ d u s t r ia liz a t io n * I t I s u n lik e ly th a t the U nited S ta te s ex p o rters o f raw m a te r ia ls and f o o d s t u f f s would d evelop a market e q u iv a le n t to th a t which th ey have d evelop ed In Europe,

PART IV EFFECT UPON THE ECONOMIES OF THE OTHER WESTERN HEMISPHERE NATIONS

369

Chapter XXXIX EFFECT UPON THE FOREIGN ECONOMIC POLICY OF THE OTHER ViESTERS HEMISPHERE MATIOSS

VVeatern Hemisphere Export Taxes op S tr a te g ic Raw M a te r ia ls

soar TiCTsMsaaat *j«s£jurjx zswsw zsssxssasssssss^^m

Sources o f ta x revenue In many L a tin American s t a t e s have been sca rce and a number o f th e se n a tio n s have come to depend upon customs d u tie s*

I t i s claim ed

th a t th e fo llo w in g Western Hemisphere n a tio n s depend upon such d u t ie s fo r a t l e a s t 50$ o f t h e ir revenues*** M exico, N icaragua, Paraguay, El S alvador, Costa R ica , Guatemala, V enezuela, A rgen tin a, Colombia, and H a it i.

It

I s fu rth er claim ed th a t the fe d e r a l government of B r a z il r e c e iv e s about 50$ o f I t s revenue from Import d u t ie s , w h ile the B r a z ilia n s t a t e s r e c e iv e alm ost th a t h ig h a p rep o r tio n o f t h e ir revenue from exp ort d u t ie s . 2 In th e customs system s o f many L atin American s t a t e s , ex p o rt d u t ie s have p layed an extrem ely im portant rd le*

These c o u n t r ie s , b ein g dependent upon ex p o rts o f

raw m a te r ia ls and im ports o f n ecessa ry m anufactures, have p referred ta x in g ex p o rts ra th er than imports*

Rather

ela b o ra te system s o f exp ort ta x a tio n have been e s t a b lis h e d .

1* 2*

Tannebaum, F . , Whither L atin America? , p . 4 7 . Loc# o i t .

370

Many o f th e s e system s in c lu d e d u t ie s on a h o st o f ite m s , in c lu d in g s t r a t e g ic raw m a teria ls* The B r a z ilia n exp ort ta x d uring th© 1920f s was probably a fa c to r In p la c in g th e lo c a l manganese In d u stry a t a m a te ria l d isad van tage In w orld m arkets.

In

1926, fo r in s t a n c e , the fe d e r a l ex p o rt ta x , p lu s s t a t e exp ort t a x e s , amounted to about $ 6 .0 0 per ton *s

T his

s t i f f l e v y , c o n tr a stin g w ith th e &0f( per ton export tax ex a cted by th e Gold C oast and th© 6pl to 10^ r o y a lt ie s p a id the government o f In d ia , mad© I t in c r e a s in g ly d i f f i c u l t f o r th e B r a z ilia n producers to com pete.^

During

th e l a t e 1920*s , from 1927 to 1932, the B r a z ilia n s t a t e s producing th e bulk o f th e manganese m a te r ia lly in crea se d 5 th© export d u ty . T his p o lic y caused sporadic shutdowns, which In tu rn g ra d u a lly caused a tempering o f th e se sever© export taxes* B r a z il Imposed, in September, 1941, a g en era l ta x on Imports and e x p o r ts, the proceeds b ein g used f o r Q

th e merchant m arine.

3. ^* 5. 6,

T his tax i s based on w eig h t.

B ain, ©£. c l t *, p p.151-3* Loo. c i t * F u rn ess, J.W ., ^ T a r iffs and E xhau stib le R esou rces”, M ineral Econom ics, p . 196. ^ T ariff and Trad© C o n tro ls0, F oreign Commerce Weekly, 5*12, October I S , 1 9 4 i.

371

Quarts cr y sta l© are s u b je c t to a sm all ta x when exp orted from th e B r a z ilia n s t a t e in which p roduced.7 T h is ta x d i f f e r s i n v a r io u s s t a t e s and i s based on o f f i c i a l p r ic e s ag f ix e d fo r tax purposes by th e fe d e r a l govern­ ment*

R e c e n tly , the l a t t e r government has imposed i t s

own exp ort tu x , i n a d d itio n to a requirem ent fo r export lic e n s e .®

When the U nited S t a t e s , in 1941, was granted

a v ir t u a l monopoly o f b r a z il* s exporabl© su p p lie s o f quartz c r y s t a l s , i t was agreed th a t a 10$ ad valorem ta x should be l e v i e d upon th e shippers*^ B o liv ia has lo n g le v ie d a la rg e number o f exp ort ta x e s o f v a rio u s ty p es and, d egrees o f se v e r ity * A 1939 e stim a te o f B o liv ia n t i n mining c o s t s i s i l l u s t r a t i v e o f t h is fa c t* 10 assumed p r ic e o f

These e stim a te s were based upon an

230 per ton o f 60$ c o n c e n tr a te s.

exp ort ta x would be about

The

1 0 , th e h e ig h t o f t h i s ta x

v a ry in g w ith the grade o f th e ore and the p r ic e o f t i n on world m arkets.

Xn a d d itio n to th e export ta x , th er e

would be a p r o f i t s tax o f from

6 to

under d if f e r e n t circum stances*

There i s a ls o a tax o f

from

7* 8. 9. 10,

40 to

7 , a ls o varyin g

44 o f fo r e ig n d r a fts a t the c e n tr a l bank o f

U .S . T a r iff Commission, L atin America as a Source o f S tr a te g ic and o th er E s s e n tia l M a te r ia ls, p*140l I b id . , p . 1 4 1 . Mineral Trade N o te s, 1 3 s2 5 -6 , September 20, 1941. ^Mineral'""Hesource s , P rod u ction , and Trade o f Bolivia®*, F oreign M inerals Q u arterly, 2 s2 4 , O ctober, 1939*

372

B o liv ia ,

Theae ta x e s , added to g e th e r , form a v ery

a p p r e c ia b le p o r tio n o f th© t o t a l c o a ts o f from to

185

241 per ton# Bxport t a x e s , as w a ll a s soma o f th ese oth er

a l l i e d t a x e s , a ls o ap ply to c e r t a in o f th e o th er s t r a t e g ic m a te r ia ls produced In B o liv ia #

The exp ort ta x on antim ony,

however, was reduced in September, 1 9 3 9 * ^

T his tax i s

a ls o arranged on a s l id in g s c a le , based on the m e ta llic co n ten t o f the ore and the p r ic e o f th e m etel*

12

In M exico, an e n t ir e ly new system of exp ort ta x e s was in trod u ced on September 1 , 1959#

Under the

new system , some 225 products were su b je c t to th e export levy#

Antimony was one o f th e products made l i a b l e to

t h i s ta x .

acco rd in g to an au gu st 9 , 1938, d e c r e e , an

a d d itio n a l 12% ad valorem duty was a p p lie d when p r ic e s o f th e exp orted com m odities exceed a s t ip u la t e d p rice* Antimony was a t f i r s t su b jecte d to th is 12# le v y , in a d d itio n to th© b a s ic export ta x .

a f t e r an In ten se

p erio d o f a g i t a t i o n , however, th e 12% ta x was removed In 1939 on a l l antimony ore c o n ta in in g l e s s than 25# o f th© m e ta l.

11#

U#S. T a r iff Commission, h a tin A m e r i c a as a Source o f s t r a t e g ic and Other ( s s e n t i a l M a te r ia ls, p . 22* ......

12#

L o c T ~~'c I S #

13#

1775• T a r iff Commission, F oreign Trade o f L atin Am erica, Fart IX, S ectio n ~17 (MexicoT, p*36#

375

In Peru* th ere I s an e la b o r a te system or exp ort d u tie s*

A minimum export ta x i s le v ie d In moat c a se s

when th e p r ic e o f th e exported product r i s e s above a s t ip u la t e d p o i n t . T h e r e are such exp ort d u t ie s upon tu n g sten and. cinchona bark. In Panama * exp ort d u tie s are le v ie d on both manganese ore and rubber* in a d d itio n to the la r g e number o f o th er ex p o rts s u b je c t to ta x a tio n ,* ^

Systems

o f ex p o rt ta x a tio n a ls o e x i s t In such producers o f is 1*7 s t r a t e g ic m a te r ia ls as C hile* Ecuador* and Venezuela* 18 but th er e i s no Inform ation a v a ila b le as

to whether s t r a t e g ic m a te r ia ls are ta x e d .

14, 15* 16. 17* 18,

I b id , , S e c tio n 8 (Peru)* p*12. I b id . * S e c tio n 16 (Panama)* p p .1 1 -1 4 , L eith* Q£, e l t », p p .9 4 -8 , U .S . T a r if f Commission* F oreign Trade o f L atin America* P art II* 3ection ^ 6 fFcuadorT* rT. 9 . L e ith , o£ , c l t . * pp,94-8«

374

Chapter XXXIII EFFECT UPON THE FOREIGN ECONOMIC POLICY OF THE OTHER WESTERN HEMISPHERE NATIONS (C ontinued) E f fe c t upon IVestern Hemisphere Export Taxes I t seems p la u s ib le th a t expansion o f th e s tr a ­ t e g ic m a te r ia l in d u s t r ie s would le a d to a red u ctio n In Western Hemisphere ex p o rt d u t ie s . T his i s p a r t ic u la r ly l i k e l y I f the enlargem ent o f th ese in d u s t r ie s were accom plished through the encourage­ ment o f th e U nited S t a t e s ,

I f th ere I s e x te n siv e p r iv a te

Investm ent by United S ta te s in t e r e s t s # or I f th e U nited S ta te s government le n d s money or g ra n ts a p r e f e r e n tia l t a r i f f p o s itio n # I t I s probable th a t th is country co u ld e x e r t p r e ssu r e a g a in s t th ese taxes*

Continuance or en-

largem ent o f exp ort d u t ie s on s t r a t e g ic m a te r ia ls might le a d the U nited S ta te s to the p a ra d o x ica l s it u a t io n o f exten d in g s u b s id ie s on one hand and paying la r g e export ta x e s on th e o th e r .

I t might be argued th a t th ese ta x e s

In th em selves c o n s t it u t e a s o r t o f su b sid y , and m ight con­ tr ib u te to th© developm ent o f the in d u str ie s*

I t i s tru e

th a t th e p roceed s go in to th e g en era l tr e a s u r ie s and may co n tr ib u te somewhat to f i s c a l s t a b i l i t y .

This type o f

ta x a tio n may w e ll le a d to d is t r e s s in g s it u a t io n s such as

375

th a t fa c e d by Oh.ll© when her n i t r a t e In d u stry fa ced t e r r i f i c co m p e titio n on world markets*

C h ile knew i t

was n e c e ssa r y to remove th© ex p o rt ta x i f th e in d u stry were to su rvive# but to do so meant s h a tte r in g th© fo u n d a tio n o f th e C hilean ta x stru ctu re*^

Thus# I f exp ort

ta x e s are s u b s id ie s to th e s t r a t e g ic In d u str ie s# th ey are probably very i n e f f e c t i v e and hazardous ones* I t i s true t h a t t h is p ressu re on th© p art o f the U nited S ta te s a g a in st export ta x e s on th e s t r a t e g ic m a te r ia ls m ight d im in ish I f p rod u ction were p laced on an economic b a s is #

This sta g e may n ever even tu ate in some

o f th e W estern hem isphere s t r a t e g ic in d u s tr ie s# and th ere i s apt to be a len g th y tr a n s ltio n a r y p eriod In the c a s e o f oth ers#

In any © vent, th e hem ispheric n a tio n s could

probably n o t a ffo r d to le v y s t i f f exp ort d u t ie s on most o f th o se I n d u s tr ie s which became fir m ly e s ta b lis h e d .

It

h a s been a s s e r t e d th a t exp ort ta x e s are borne by th e consumer o n ly when th ey are le v ie d on a m a te r ia l under m o n o p o listic c o n tr o l or w ith marked co m p etitiv e advantage* Where fo r e ig n co m p e titio n remains# th e p r ic e cannot be r a is e d and th e burden f a l l s on th e producer*

1* 2#

I t appears

duro# G uillerm o, A## "Th© Ke**organlzat!on o f th e C hilean t i t r a t e Industry"# B u lle t in pan American Union# 6 5 :5 1 5 , May, 1931* E e lth , op * c i t *# pp*106^7#

376

th a t th e o n ly way in which most o f th© hem ispheric s t r a t e g i c m a te r ia l producers could g a in such a marked C om p etitive p o s it io n would be to have an assu red U nited S ta te s market*

T his return® to th e assum ption th a t th©

U nited S ta te s would be in a p o s it io n to p reven t th e im p o sitio n o f exp ort ta x e s on a sever© b a sis*

It is

presumed th a t in th e case o f I n d u str ie s r e q u ir in g ex­ te n s iv e trea tm en t, a t le ^ s t equal t a r i f f treatm ent and a ssu red m arkets, the lik e lih o o d o f d r a s tic exp ort ta x e s I s remote* I t i s claim ed t h a t in n e a r ly ©very ca se where export ta x e s p la in ly in flu e n c e d exp orts a d v e r s e ly , they 3 were m o d ified in order to p reserve fo r e ig n m arkets. Another I n c e n tiv e toward reducing th e se ta x e s has been the d e s ir e to p reserv e d om estic employment on a h ig h le v e l* I t I s a ls o tru e th a t a g it a t io n a g a in st exp ort t a r i f f s has been p e r s is t e n t In a l l s e c tio n s o f th e world even in r e c e n t years#

Such d u tie s have le d in some c a se s

to th© search fo r new so u rces o f su p p ly, and has le d to I n te r n a tio n a l p ressu re a g a in st ex h o rb ita n t d u tie s on e s s e n t i a l m a t e r ia ls .4

Often th is p ressu re has n o t been

e f f e c t i v e , but in the case o f Western Hemisphere s t r a t e g ic in d u s t r ie s I t I s apt to be ra th er p otent#

3. 4.

I b i d . , p . 107* IB Id * , p*157.

577

file cu rta ilm e n t o f exp ort ta x e s on th ese p rod ucts d oes n o t n e c e s s a r ily mean th a t the n a tio n s in v o lv e d a re d ep riv ed o f a l l revenue from th e s e new in ­ d u s tr ie s *

I t i s prohahie th a t rea so n a b le p rop erty,

p r o f i t s , and income ta x e s could he le v ie d w ith ou t under­ m ining th e i n d u s t r ie s .

Indeed, th ose o p era tin g th e new

in d u s tr ie s would presumably be w i l l i n g to c o n tr ib u te f a i r ta x e s i f o n ly to assu re p o l i t i c a l , sound, and economic s ta b ility .

378

Chapter XXXIV EFFECT BPOK THE FOREIGN ECONOMIC POLICY OF THE OTHER WESTERN HEMISPHERE NATIONS (Continued) E ffe o t upon Western Hemisphere Ta r i f f s and N on -T ariff C on trols T a r iffs have been In cre a sin g In h e ig h t and scope In many W estern Hemisphere n a tio n s during the 1930*s*

On© f a c t o r ca u sin g in c r e a sin g t a r i f f p r o te c tio n

was th e w orld d e p r e ssio n and I t s r e s u lta n t cu rtailm en t o f markets#^

Another f a c t o r was th e growing I n d u s t r ia l i­

s a tio n i n many n a tio n s o f th© hemisphere**3 Thus, th e t a r i f f system s o f many L a tin American n a tio n s were s h if t e d from a revenue to a p r o te c tiv e b a sis*

In a

number o f n a tio n s t a r i f f r a t e s were imposed on new pro­ d u c ts, r a is e d to new l e v e l s , or both*

An a n a ly s is o f

in d iv id u a l n a tio n s c le a r ly r e v e a ls t h i s marked growth 5 o f r e s t r i c t i v e , p r o te c tiv e t a r if f s *

1* 2* 3*

E s e k le l, M ordeeai, ^Economic R e la tio n s Between th e Am ericas*, I n te r n a tio n a l C o n c ilia tio n , No*367:121, February, lMT* ”* F oreign P o lic y A s s o c ia tio n , The Oood N eighbors, p*83. See* U#B* T a r if f Cemail s a lo n , o r e lg n Tradj~oF~Latin America, P art I I , S e c tio n s 1-20* These s e c tio n s con­ t a in th e most com plete cu rren t d e s c r ip tio n o f L atin American trade p o lic y a v a ila b le *

379

Accompanying t h is growth In t a r i f f h a r r ie r s h as been a marked s h i f t toward c o n d itio n a l m ost-fairored* n a tio n treatm ent*

In many c a s e s th is h as been an o u t­

growth o f th e system s o f exchange c o n t r o l, which have proved so burdensome a s to le a d to c le a r in g agreements*

4

A good many n a tio n s have paid l i p - s e r v i c e t o e q u a lit y o f trea tm en t, b u t few appear t o p r a c tic e i t *

Many n a tio n s

gran t q u a lif ie d u n c o n d itio n a l trea tm en t, w ith e q u a lity o f treatm en t .dependent upon the s t a t e o f tra d e b alances* A la r g e number o f o u tr ig h t b a rte r agreements have a ls o been n e g o tia te d In r e c e n t years*

Many o th e r s p e c ia l

agreem ents c o n ta in p r o v isio n s r e la t in g to q u otas, commodity t r a n s f e r s , and c le a r in g agreements*

A few n a tio n s have

b oth u n c o n d itio n a l and c o n d itio n a l agreem ents o u tsta n d in g , alth ough the r e c o n c ilia t io n o f th e s e two p o l i c i e s i s a d m itted ly d i f f i c u l t * A number o f L a tin American n a tio n s have adopted some form of exchange co n tro l*

Some o f th e se

are very r i g i d and e la b o r a te , w h ile o th ers are more nominal than a ctu al*

4* 5*

G en era lly , however, exchange c o n tr o l in

E& ekiel, Mordeoai, "Economic R ela tio n s Between th e Am ericas”, I n te r n a tio n a l C o n c ilia tio n , Mo*367s1 2 2 -5 , February, iM l* humorous examples o f such p o l i c i e s are found in U*S* T a r iff Commission, F oreign Trade o f L a tin America, P art XI, S e c tio n s 1 -2 0 . "These " sectio n s a ls o p rovid ed much o f th e d a ta f o r the o th er d e s c r ip tio n o f m ostfa v o r e d -n a tio n p o lic y *

380

L a tin .America i s d e c id e d ly r e s t r i c t iv e *

C ountries which

have adopted some form o f exchange co n tr o l# (w ith th e y ea r o f i n i t i a l adoption in p a r e n th e sis)# are:® A rgen tin a (1 9 3 0 ), B o liv ia (1 9 3 1 ), B r a z il (1 9 3 1 ), C hile (1931)* Colombia (1 9 3 1 ), Costa B lea (1 9 3 2 ), Cuba (1 9 3 9 ), Ecuador (1 9 3 2 ), Honduras (1 9 3 4 ), Paraguay (1 9 3 2 ), Uruguay (1 9 3 1 ), and V enezuela (1 9 3 6 ).

Many o f th ese

sy stem s, n o ta b ly the c o n tr o l e s ta b lis h e d by B o liv ia , have o cc a sio n ed co n sid era b le f r i c t i o n .

In th e B o liv ia n

c a s e , exchange co n tr o l has been p a r t ic u la r ly r e s t r i c t i v e and elaborate**^

T his scheme has b een caused by th e

sharp economic c r i s i s occasion ed by the lo s s o f European m arkets and th e sever© shortage o f sh ip p in g. One o f th e few I n d ic a tio n s o f a cu rren t move­ ment away from exchange c o n tr o l has been A r g e n t i n a ' s announcement in mid-summer o f 1941 th a t sue would r e la x exchange c o n tr o ls and resume v i r t u a l l y u n r e s tr ic te d fo r e ig n tr a d e . ft

6* 7* 8*

I b id . , Supplement, p p .1 4 -4 2 . ^ B o liv ia * s Currency problems % Pan American Mews, 2 :9 -1 0 , J u ly 3, 1941. ^Hemisphere Gain” , B u sin ess Vveek, June 14, 1941, p p .7 7 -8 . For a d e s c r ip tio n of~Trends in L atin American exchange c o n tr o l, see: “The L a tin American Exchange s i t u a t i o n ”, Fo reig n Commerce we e k ly , I>:96-6+, October 1 9 , 1940; a n d ^ P rior Exchange Perm its System E sta b lish e d in A rgentina” , B u lle t in Pan American Union, 7 5 :6 7 2 , Hovember, 1941.

381

p r e d ic tio n of" the e f f e c t w hich developm ent o f s t r a t e g ic I n d u s tr ie s throughout th e hem isphere would have upon th ese t a r i f f and n o n - t a r if f c o n tr o ls i s very d iffic u lt*

Much depends upon th e typ e o f w orld economy

which w i l l emerge a f t e r World war II*

I t i s u n lik e ly

th a t any such program c o u ld take up the sla c k caused by a p rolon ged c u rta ilm e n t of fo r e ig n markets*

As lon g as

th e s e markets a re not r e p la c e d , economic chaos w i l l con­ tin u e to p r e v a il and h ig h t a r i f f s , exchange c o n t r o l, b a r te r agreem en ts, and sim ila r p o l i c i e s w i l l continue* I f any s o r t o f world trade on a ln rg e s c a le d oes become e s ta b lis h e d a f t e r t h i s w ar, th en th e p ressu re cau sing much o f t h is r e s t r i c t i o n w i l l be minimized* Other f a c to r s In d ic a te th a t a development o f s t r a t e g ic in d u s tr ie s should tend to reduce th e fo rce o f exchange c o n tr o l and curb the more sev e re r e s t r ic t io n s * Much o f the d i f f i c u l t y has been th at th ese n a tio n s have n ot p o sse sse d s u f f i c i e n t fo r e ig n exchange,

E stablishm ent

o f new I n d u s t r ie s , w ith accompanying heavy Investm ent, should go fa r to reduce th&t d i f f i c u l t y ,

Furthermore,

th e U nited S ta te s would be In a p o s it io n to n e g o tia te fo r gradual d im in u tion o f th e se r e s t r ic t io n s * I t h as been claim ed th a t much of t h i s r e s t r i c t ­ i v e , c o n d itio n a l p o lic y has been occa sio n ed by the developm ent o f I n d u s tr ia liz a tio n *

The q u estio n o f whether

38 2

or n o t developm ent o f s t r a t e g i c in d u s t r ie s fu r th e r s or r e ta r d s such i n d u s t r ia liz a t io n w i l l be d isc u sse d in another p o r tio n o f th e study*9

To th e e x te n t th a t t h i s

developm ent sta n d s in the way o f suer in d u s tr ia liz a tio n * i t ^ould presumably be con fronted with, r e s t r i c t i o n s . I t i s not so c e r t a in th a t enlarged s t r a t e g ic I n d u s tr ie s would mean a s u b s t a n t ia l r e tu rn to u n c o n d itio n a lm o st-fa v o red n a tio n treatm ent by Western Hemisphere n ation s* as

d is c u s s e d elsew here* 10 th ere I s some p o s s i b i l i t y th at

t h is development would in c r e a se th e u se o f p r e f e r e n t ia l treatm ent by the United S ta tes* which might mean th a t p r e f e r e n t ia l treatm en t would be accorded by W estern Hemisphere n a tio n s In r e tu r n .

S urely the use o f quotas

and commodity agreem ents by both th e U nited S ta te s and th e o th er n a tio n s does n ot in d ic a te a f u l l d ev o tio n to e q u a lity o f trea tm en t,

as

in the case o f U nited S ta te s

fo r e ig n economic p o lic y * much depends upon w hether th ese new I n d u s tr ie s become economic and a b le to compete w ith ou t s p e c ia l agreem ents w ith th© United S ta te s .

9. 10*

I n f r a ** C h .3 9 . S u p r a .* p p . 2 5 2 - 2 6 7

383

Chapter XXXV EFFECT GPON THE FOHEIGH ECONOMIC POLICY OP THF OTHER EESTEEN HEmSPHEHE HATTONS (Concluded) E ffe c t upon Pan-American F in a n c ia l I n te g r a tio n A lthough r e s t r i c t i o n s have dominated the f o r e ig n p o l i c i e s o f most Western Hemisphere n a tio n s in th e p a st d ecad e, th er e have bt^en r e c e n t in d ic a t io n s of in crea se d c o -o p e r a tio n w ith in th e hemisphere*

It is

q u ite p o s s ib le th a t th e e x te n siv e development o f s t r a t e g ic in d u s t r ie s w i l l a ccen tu a te t h i s in te g r a t io n , p a r t ic u la r ly in th e realm o f banking and fin ance* The f i r s t Pan-American C onference, In 1890, went on reco rd a s fa v o r in g ev en tu a l esta b lish m en t o f an V I n te r n a tio n a l American Bank* With th e ex c ep tio n o f on© o c c a sio n in 1902, no fu r th e r m ention o f th e p r o je c t was mad© u n t il 1933* In September, 1939, a r e s o lu t io n of th e Panama Conference cr ea ted th e Inter*American F in a n c ia l and Economic A dvisory Committee*

1.

T his committee f i r s t met

V illa s e n o r , Eduardo, **The Inter-A m erican Bank P ro sp ects and Bangers% F oreign A f f a ir s , 205164-5, O ctober, 1941*

384

in W ashington in November, 1939#^

I t s fu n c tio n s , as s e t

out in th e r e s o lu t io n , were numerous and s i g n i f ic a n t . The com m ittee v.as to d e a l with h em isp h eric tr a d e , custom s r e g u la tio n s , monetary s t a b i l i t y , fo r e ig n exchange, the e sta b lish m e n t o f new I n d u s t r ie s , the n e g o tia tio n o f commercial t r e a t i e s , and the a b o lit io n o f o b s ta c le s to th e f r e e movement o f c a p i t a l ,

The most Important s in g le

o b je c t o f th e com m ittee, however, was th© c r e a tio n o f p la n s fo r an Inter-A m erican Bank,

The committee spent

much o f I t s time In d r a ftin g t h i s p r o je c t. At l a t e s t a cco u n t, t h i s p r o je c t was s t i l l on paper, although 9 n a tio n s signed th e convention when I t was f i r s t broached in 1940*

Further B atin American as

w e ll a s C on gression al r a t i f i c a t i o n s are needed b efo re the agency can a c t u a lly be s e t up*

While t h i s p r o je c t

was dormant fox* over a year a f t e r I t was launched, th ere 4 have been r e c e n t in d ic a t io n s of r e v iv a l . The d r a ft con ven tion has been turnea over to th e ap propriate sen a te

2* 3, 4*

C u lb ertson , W illiam 3 *, ”Recent Developments In Economic R e la tio n s w ith in the Americas**, Economic R e la tio n s w ith L atin ame r ic a , pr ,1 - 3 . CJulbertsonj W illiam SV#'" ^Economic Defense o f th e A m e r i c a s ” , t o n a l s o f th e American Academy, 211 1189, Sep t ember, 1§40 * ”I n t er - Amer 1 c an Bank Project*1, Pan American News, 2*6, June 5 , 1941*

385

com mittee*

3

Sine© the U nited S ta te s i s the me jo r power1

in volved * r a t i f i c a t i o n by th e sen a te would probably le a d to th© r a t i f i c a t i o n s o f most o f th e o th er n a tio n s . Only -argentlna and o th er South American n a tio n s o r ie n te d away from th e U n ited S ta te s are apt t o balk a t the c r e a tio n o f such an in s t it u t io n * T h is bank might* i f i t became an a c t u a l i t y , w e ll tak e over many o f th e fu n c tio n s o f th e U nited S ta te s Bxport-Im port Bank*

I t would p o sse s s e x te n s iv e pow ers,

a s d e sc r ib e d in th e d r a ft co n v en tio n , b ein g empowered t o i f a c i l i t a t e in vestm ent in th e hem isphere; a s s i s t in s t a b i l i z i n g c u r r e n c ie s; In crea se hem ispheric tr a d e ; encourage resea rch in th e tech n o lo g y o f a g r ic u ltu r e , in ­ d u str y , p u b lic u t i l i t i e s , m in in g, and commerce; and c o n tr ib u te expert a d v ice on p u b lic fin a n c e , exchan ge, money, and banking*

O bviously such an agency would have

ample pow ers, i f n o t n e c e s s a r ily ample r e so u r c e s, to f a c i l i t a t e m a te r ia lly development o f s t r a t e g ic m a teria l p rod uction in t h i s hem isphere. The Bank would be ch artered in th e United S ta te s and would be empowered to make lo n g - , medium-,

5,

For th e d r a ft co n v etio n , th© b i l l subm itted to C ongress, the l e t t e r s o f su b m ission , and statem en ts by s e v e r a l U nited S ta te s government o f f i c i a l s , s e e t U.S. S en ate, 77th C ongress, 1 s t S e ssio n , B earings b efo re Sub­ com m ittee o f Committee on Foreign R e la tio n s , in Exec. K, 7 6 th 0 o n g r e a s , 3rd"S e s s io n .

and sh o rt-term loans*

I t would a l s o be allow ed to

engage In ne a r l y &n o th er banking a c t i v i t i e s .

It

would have a c a p it a l o f # 1 0 0 ,0 0 0 ,0 0 0 with 1 ,0 0 0 sh ares ou tstan d in g*

Bach n a tio n would su b scrib e fo r a minimum

number o f s h a r e s , determ ined in r e la t io n to th e d o lla r v a lu e o f the t o t a l fo r e ig n trade of each American r e p u b lic in 1938*^

T his b a s is o f a llo c a t io n in d ic a te s

th a t such n a tio n s as tile United S t a t e s , A rgen tin a, and B r a z il would assume a s i g n if ic a n t share o f th e fin a n c in g burden* I t I s tru e th a t t h is p r o je c t i s s t i l l v e r y much on paper.

The mere f a c t th a t I t has been launched

and s e r io u s ly co n sid e red , however, I s ra th er s ig n if ic a n t * Taken to g e th e r w ith oth er I n d ic a tio n s o f hem ispheric in t e g r a t io n I t assumes added Importance, I t I s p o s s ib le th a t developm ent o f s t r a t e g ic m a te r ia la would render tn e lon g-term estab lish m en t and o p era tio n o f such a bank more f e a s i b l e .

While th e

avowed purpose o f the bank I s to promote development o f new in d u s t r ie s and work toward lon g-ran ge o b j e c t iv e s , i t i s q u ite probable th a t much of the r e a l Impetus behind I t i s the cu rren t world s it u a t io n .

I f th e post-w ar world

r e tu r n s to w orld trade on a la r g e s c a l e , much o f th e in c e n t iv e fo r Western Eemlsphere in te g r a t io n may be lo s t *

6*

For a d e s c r ip tio n o f th e s p e c if ic a llo c a t io n o f sh a r e s, s e e l o c * c i t *

387

I f s t r a t e g i c in d u s t r ie s were e sta b lish e d , on a la r g e s c a l e , how ever, such in t e g r a t io n and i t s a g e n c ie s m ight have a rea so n fo r being*

T his a s sunns, o f c o u r se , that d ev elo p ­

ment o f th e s e in d u s t r ie s I s I t s e l f a lon g-ran ge p r o p o s itio n and would n o t be dropped a s soon a s th© emergency ended.

388

Chapter XXXVI EFFECT TOOK FOREIGN TRADE OF OTHER WESTERN HEMISPHERE RATIONS P resen t P o s it io n o f S tr a te g ic Ma t e r i a l s * * * * * * ' ... M-fBinir-1— -lin n

jiruli

i rrr r

rumum

'^ " I'W W

ww » » > lt.ii w>uiw4^ e o f th e Imports en te r in g Canada.

The U nited Kingdom appears to be the o n ly oth er

major source o f Canadian im p orts.

On th e oth er hand,

the U nited S ta te s absorbs roughly 35# o f Canadian ex p o rts alth o u g h th e U nited Kingdom g e n e r a lly r e c e iv e s at l e a s t 40#, th e p o s it io n o f the United S ta te s in the Canadian export market i s a v ery im portant one.

I f fo r e ig n

trade i s an adequate critex*ion , Canada i s econ om ically bound to the U nited s t a t e s . Table 48 I s e n lig h te n in g as fa r a s L atin iuaerlea i s concerned.

I t I s apparent th at n e a r ly every

one o f the n a tio n s in C entral America and the West In d ie s I s o r ie n te d toward the United S t a t e s .

It

i l l be noted

th a t In 1938, M exico, Guatemala, Pi Salvador, Honduras, N icaragua, panama, and. Cuba a l l exp orted more than h a lf o f t h e ir exp orted goods to th e United S ta te s .

Even

Costa H lca , the Dominican K epubllc, and H a it i, which d id n ot send such a predominant p rop ortion o f t h e ir ex p o rts

403

Table 473 SHAKE OF THE UNITED STATES IN THE TOTaL IMPORTS AND EXPORTS OF CANADA (In P ercen tages) Imports 1954

1935

1936

1937

U nited S t a t e s 5 7 .1 U nited Kingdom 22 .1 Other B r i t i s h Empire 8*5 Japan 0 .9

6 6 .3 2 1 .3 1 0 .4 0 .7

5 8 .2 1 9 .2 1 0 .5 0 .7

6 0 ,6 1 8 .2 11,1 0 .7

1934

1935

1936

1937

U nited S ta te s 3 3 .5 4 1 .8 U nited Kingdom Other B r i t i s h Empire 9 .9 2 .6 Japan

3 5 .2 4 2 .4 1 0 .4 2 .1

3 5 .2 4 2 .4 9 .1 2 ,1

35.7 4 0 .6 1 0 .5 2 .6

Country

Exports Country

5*

U .S . Department o f Commerce, Foreign Commerce Yearbook 1938, p . 174.

404

Table 484 SHaRE op th e UNITED STATES IN THE TOTaL im ports and exports op each op the L atin am trioan r e p u b lic s (In p e rc en ta g es) Exports to th e Uni te d S ta te s Percent o f t o t a l exp orts Average 1928*30

1957

1958

62*7 46*8 1 9 .8 7 4 ,8 31*5 2 8 .2 9 5 .3 7 3 .5 2 2 ,9 8 .3

5 6 .2 6 4 .2 60.7 8 8 .8 5 5 .4 4 5 .1 9 1 .0 8 0 .7 3 2 .2 2 7 .9

67*4 6 9 .5 6 1 .7 8 6 .5 6 7 .3 45 .6 8 1 .2 7 5 .9 32.1 4 2 .8

9 .2 1 1 .1 3 2 .4 3 4 .3 7 7 .9 4 2 .2 0 .2 3 2 .5 9 .9 2 6 .0

1 2 .8 7 .3 36*3 2 8 .5 64 .1 3 3 .2 7 .8 2 2 .2 1 4 .1 1 3 .7

8 .5 4 .6 54 , 3 1 5 .7 5 8 .2 3 7 .5 1 2 .2 2 6 .8 4 .0 13*3

L a tin R ep u b lics in North America Mexico Guatemala SI Salvador Honduras Nicaragua Costa Rica Panama Cuba Dominican R epublic H a iti South American R ep u b lics A rgentina B o liv ia B r a z il C h ile Colombia Ecuador Paraguay Peru Uruguay Venezuela

4,

“Commercial Interdependence o f the A m e r ic a s ” , Commercial Fan A m e r ic a , 9 s 2 5 8 * 9 , A u g u s t , 1 9 4 0 .

405

T a b l e 4 8 , C o n e l*

SHARE OF THE UNITED STATES IN THE TOTAL IMPORTS a N D EXPORTS OF EaCH OF THE L/TIN aMERICAN RrpUBLICS (In p erc en ta g es) Imports from th e U nited S ta te s P ercen t o f t o t a l Imports

L a tin R ep u b lics In North America Mexico Guatemala El Salvador Honduras Nicaragua Costa Rica Panama Cuba Dominican Republic H a iti

Average 1928*50

1937

1938

68*3 56*6 51*5 7 7 .2 62*4 49*2 6 5 .5 58*9 59*3 72*1

6 2 .2 4 5 .5 40*4 5 8 .0 54*2 4 2 .5 5 2 .0 68.6 5 2 .3 51*0

57 .7 4 4 .7 46.7 6 2 .0 59*7 49 .1 5 7 .4 7 0 .9 5 3 .5 5 4 .3

2 3 .9 30.7 2 7 .3 3 2 .2 45 *2 4 1 .8 1 6 .8 4 1 .1 28.9 5 4 .7

1 6 .1 27 .7 23 .1 29 .1 4 8 ,4 3 9 .6 7 .6 35.5 1 3 .6 52.8

1 7 .4 2 5 .5 2 4 .2 27.8 5 1 .2 3 4 .6 9 .6 3 4 .3 1 1 .8 56 .5

South American R ep u b lics Argentina B o liv ia B r a z il C h ile Colombia Ecuador Paraguay Peru Uruguay Venezuela

406

to th e U nited S t a t e s , sh ip p ed between on e-th ird , and oneh a l f to t h i s n a tio n in each case*

Roughly the same

prom inent r d le I s p la y ed by the U nited S ta te s in th e im port trad e o f th ese n a tio n s , a lth o u g h U nited S ta te s dominance I s c le a r ly n o t a s marked a s in th e case o f e x p o r ts.

N e v e r th e le s s , the United S ta te s fu rn ish e d more

than h a lf o f th e im ports o f M exico, Honduras, N icaragua, panama, Cuba, th e Dominican R ep u b lic, and H aiti*

In

th e c a se o f Guatemala, El Salvador, and C osta R ica, th e p ro p o rtio n s ranged j u s t below th a t p ro p o rtio n . About th e same economic d ir e c t io n I s found in th e ca se o f Colombia, in South Am erica.

In 1938, th a t

country ex p o rted and Imported more than h a l f o f i t s t o t a l s to and from th e U nited S t a t e s .

Elsewhere in South

America, how ever, economic t i e s to the U nited S ta te s are fa r weaker. Along the northern and w estern c o a s ts o f th e South American c o n tin e n t, the U nited S ta te s I s very im portant a lth ou gh n o t dom inant.

In f a c t , In most o f

th e se n a tio n s the p ro p o rtio n a te share o f trade assumed by th e U nited S ta te s has dropped sh arp ly s in c e the 1928-30 p e r io d .

In 1938, the United S ta te s absorbed between one-

fo u r th and o n e -h a lf o f the ex p o rts o f B r a s il, Ecuador, and fe r u .

In th a t same y e a r , the U nited S ta te s took over

o n e -te n th o f the ex p o rts o f C h ile and V enezuela, d e s p ite

407

i t s r e l a t i v e l y sharp d e c lin e a s a market fo r th e se n ation s* The share o f th e U nited S ta te s in th e Import tr a d e o f th e r e g io n was much larger*

In the n a tio n s named above,

th e U nited s t a t e s fu rn ish ed a t l e a s t one—quarter o f the im ports in n e a r ly ev ery c a s e .

In th e In sta n ce o f V en ezuela,

she fu r n ish e d over h a lf* The sh a rp est l i n e o f dem arcation, however, i s between the c o u n tr ie s m entioned th u s f a r and th e rem aining n a tio n s o f South America.

The l a t t e r n a tio n s in clu d e

B o liv ia , Paraguay, Uruguay, and A rgen tin a.

These c o u n tr ie s

are q u ite d e f i n i t e l y o r ie n te d toward Europe ra th er than toward th e United S t a t e s .

In th e ca se o f the l a s t two

n a tio n s in p a r t ic u la r , com m odities which are co m p e titiv e w ith th o se produced in t h i s country fu r n is h th e bulk o f th e export trade* The U nited S ta te s absorbed l e s s than onetw e n tie th o f B o liv ia n ex p o rts in 1938 and fu rn ish e d but o n e-fo u rth o f B o liv ia n im p o r ts.5

In 1938, the United

S ta te s purchased s l i g h t l y more than o n e-te n th o f th e im p orts.

In th e ca se o f Uruguay, in 1938, the U nited

S ta te s absorbed l e a s than one—tw e n tie th o f th e exp orts and fu rn ish ed but a l i t t l e over o n e -te n th o f the im p orts.

5.

For a ra th er com plete d e s c r ip tio n o f the o r ie n ta tio n o f B o liv ia , se e t ^ B ollvi& ts Productive P o s s i b i l i t i e s 1*, Commercial fa n America, 9 1 1 0 -1 1 , January, 1940.

408

In the ca se o f A rg en tin a, th e o r ie n t a t io n away from th e U n ited S ta te s and toward Europe i s alm ost e q u a lly marked.^

In 1958, the United S ta te s r e c e iv e d le a s

than o n e -te n th o f th e exp orts o f A rgentina and provid ed l e s s than o n e - f i f t h o f th e Imports*

T his s it u a t io n

assumes p a r tic u la r s ig n if ic a n c e b ecause A rgentina Is one o f th e g r e a t tr a d in g n a tio n s o f th e Western Hemisphere# For a grap h ic p o rtr a y a l o f the d ir e c t io n o f A rgentina»s fo r e ig n tr a d e , Table 49 i s Included*

6*

For d e t a ile d d e s c r ip tio n s o f th e o r ie n ta t io n o f A rg en tin a , aeej r,The U*S* Market fo r A rgentine Exports*1, Commercial Fan America, 9 , MovemberDecember, 1946; and P h elp s,'V ern on L o v e ll, The I n te r n a tio n a l Economic P o s it 5.on o f A rgentin a*

409

Table 49 AKGBNTIME BXFOxtTB BY MAJQK COMMODITIES TO THK WORLD AND TO THE UNITED STATES Averagej 1957*1938 (In M illio n s o f P eso s) Commodity

E xports to th e World

Corn 389*5 Wheat 399*5 F la x seed 228*2 C h ille d b e e f 168*6 Wool 1 62,5 Bovine h id e s 105*2 Canned meats 3 9.4 ^ e b ra ch o e x tr a c t 37*3 Frozen mutton 34.9 51, 0 Frozen b e e f Oats 2 3 ,7 B arley 19*8 Sheep and lamb sk in s 14*7 Other 271.4 com m odities TOTAL r,8 B S .7

Exports to th e U nited S ta te s

P ercen t o f to ta l < U nited

3 4 .0 1 1*2 7 5 .0

8 .7 0 .4 32.9

3 0 .8 17*7 1 0 .1 7 .1 •

1 9 .0 16*8 25 .6 1 9 .0 -

• ***

m 3 .1

21.1

22*7 206.7

1 0 .2 1 1 .1

Sources anuario d e l Oomereio E xterior* 1938*

7*

trThe 0*3* Market fo r A rgentine Exports*1, Comme r c M l Pan America * 9 s 295, November-December, 194TT*

410

Chapter XXXVIIX EFFECT UPON FOREIGN TRADE

OF

OTHER

western hemisphere nations

(Concluded) E f f e c t upon th e O r ie n ta tio n o f Other Western Hemisphere N ations An attem pt w i l l be made in t h i s chapter to determ ine th e approximate e f f e c t th a t development of s t r a t e g ic I n d u s tr ie s in t h i s hem isphere would have upon th e o r ie n t a t io n o f the v a r io u s n ation s*

T his i s an

extrem ely d i f f i c u l t ta s k , sin ce there are many v a r ia b le s involved*

The ex a ct e x te n t o f such developm ent i s not

p r e d ic ta b le , and the degree to which the U nited sta t.e s would dominate the market fo r th e s e products I s u n c e r ta in . There are a ls o a number o f extraneous f a c t o r s which might co u n tera ct any e f f e c t t h i s p ro cess o f development might have upon h em isp h eric o r ie n ta tio n *

N e v e r th e le s s , th e

n atu re o f t h i s e f f e c t can be r o u ^ ily sk etch ed . a t th e very o u t s e t , the a n a ly st I s plagued by th e f a c t th a t some o f the in d u s tr ie s p o t e n t ia lly most im portant are apt to be lo c a te d In se v e r a l d i f f e r e n t n a tio n s .

T h is I s tru e In th e case o f c o c o n u ts, m anila

f i b e r , q u in in e , and, to a l e s s e r e x t e n t , rubber and s i l k . Hence, the f i r s t th ree o f th ese products w i l l be l e f t out

411

o f most c a lc u la t io n s .

In any e v e n t , the area s in which

th ese p rod u cts would be grown — the West I n d ie s , C entral Am erica, and th e n orth ern and n orth w estern p o r tio n s o f South America — are a lrea d y la r g e ly o r ie n te d toward th e U nited S t a t e s .

In th e case o f rubber and s i l k , i t

w i l l be assumed th a t much o f the prod uction would ce n ter In B r a a ll. For th e purpose o f a n a ly s is , some a r b itr a r y assum ptions must be made.

I t I s assumed th a t th e United

S t a t e s , h avin g in v e s te d c a p it a l and opened m arkets, would be the dominant market fo r th e s t r a t e g ic m a teria ls* I t i s fu r th e r assumed th a t th e u n ited S ta te s would absorb as h igh a p ercen tage o f i t s s t r a t e g ic im ports from th is hem isphere a s th e production o f the hem ispheric n a tio n s renders f e a s i b l e .

For th e purpose o f making crude e s t i ­

m ates, i t 3.3 assumed th a t trad e t o t a l s o f the v a rio u s n a tio n s rem ain about a s th ey were in 1937.

T his i s chosen

a s the base year fo r c a lc u la t io n because I t was the peak year In the p erio d between th e depth o f the d e p r e ssio n and World war II*

I t was chosen in p referen ce to such years

as 1929 or 1926 b ecause i t I s more r e c e n t and hence r e f l e c t s t

some tren d s th a t have appeared s in c e the 1 9 2 0 's . I t I s probable th a t a number o f n a tio n s in t h i s hem isphere would f e e l the e f f e c t o f development o f s t r a t e g ic in d u s t r ie s .

T his co n clu sio n a p p lie s n ot only

412

to th o se nation® producing th© p r e v io u sly m entioned p r o d u c ts, h ut to oth er c o u n tr ie s as w ell#

Canada, M exico,

C en tral Am erica, some a r e a s in th e West I n d ie s , Ecuador, P eru, and C h ile would d o u b tle ss f e e l some tremors# A n a ly sis o f th e e f f e c t upon th e fo r e ig n tra d e of th e se n a tio n s w i l l n o t he attem pted, fo r a v a r ie t y o f reasons# In some c a s e s , th e e f f e c t would b© r e l a t iv e ly t r i v i a l , e it h e r because th e s t r a t e g i c in d u s tr ie s would have a sm all export v a lu e or because th e t o t a l ex p o rts are so la r g e . In o th er I n s ta n c e s , th e ex te n t o f developm ent o f the s t r a t e g ic I n d u s tr ie s I s so concerned w ith a h o s t o f un­ known f a c t o r s th a t e s tim a te s would be o f m erely academic in te r e s t* I t appears th a t th re e n a tio n s would be most a f f e c t e d by t h i s developm ent, th e f i r s t o f th ese b ein g B r a z il.

I t I s to be n oted th a t B r a z il has n ot been

eco n o m ica lly bound to the U nited s t a t e s , a t l e a s t i n peace­ tim e y e a r s.

In 1938, B r a z il shipped 34*3% o f her exp orts

to th e U nited S ta te s and imported 24*2% o f t o t a l im ports from t h is country*

Hence, marked expansion o f s t r a t e g ic

m a te r ia l ex p o rts might w e ll have an e f f e c t upon th e o r ie n ta t io n o f B ra zil* A lth o u g h p ro d u c e r c h ro m e ,

o f

B r a z il

m anganese,

c o c o n u ts ,

and

has

q u a rtz o th e r

p o te n tia litie s c r y s ta ls ,

r a e te r ia is ,

as

a

ru b b e r,

s ilk ,

the

f ir s t

o n ly

413

fo u r o f th e s e p rod u cts w i l l be Included In the fo llo w in g estim a tes*

Xt i s assumed th a t th ese in d u s tr ie s e v e n tu a lly

expand to th e p o in t where B r a z il c o u ld supply o n e -h a lf o f U nited S ta te s im ports o f manganese and rubber, on equarter o f U nited s t a t e s s i l k im p orts, and a l l o f her quartz c r y s t a l im ports* On th e b a s is o f 1937 United S ta te s import s t a t i s t i c s * 1 B r a z ilia n s a le s o f th e se fo u r m a te r ia ls would amount to $6*441,000 (m anganese), $144*133*000 (r u b b er), $ 3 0 ,2 2 0 ,0 0 0 ( s i l k ) , and $62,000 (quartz c r y s t a l s ) , or a t o t a l o f $ 1 8 1 ,8 5 6 ,0 0 0 ,

In th a t same

y e a r , B r a z i l 1s exp orts to th e world o f rubber, manganese, and quartz c r y s t a ls aggregated about $7 , 000 , 00 0 , 2 S u b tra ctin g t h i s l a t t e r t o t a l from th e p o te n tia l exp orts estim a ted above, i t I s found t h a t th e n e t g a in to B r a z il would be about $175,000,000 a year* F o llo w in g the assum ption th a t the United S ta te s would absorb n ea rly a l l o f th e se e x p o r ts, a rough c a lc u la t io n o f th e e f f e c t upon B r a z ilia n o r ie n ta t io n can be made*

Adding Hie n e t in crea se to th e 1937 3 B r a z ilia n exp ort t o t a l o f $ 3 4 7 ,5 8 4 ,0 0 0 , th e augmented

3.*

2,

3*

Bupra, , p* 544. , _T j* D.S* l a r i f f Commission, F oreign Fraae o f L atin A m e r i c a , Fart I I , S e c tio n 3 (Bra¥iTJ7 p p ,3 5 -6 . Loc* c lt *

414

B r a z ilia n ex p o rts would t o t a l $ 5 2 2 ,5 8 4 ,0 0 0 .

On th e

oth er handf th e n e t In crea se would toe added to the p r e se n t share or th e U nited s ta te s *

T his share* minus

v a lu e o f 1937 manganese* q uartz c r y s t a l , and rubber sh ip m ents ,4 was some $ 1 2 2 ,0 0 0 ,0 0 0 .5

Thus, th e U nited

S ta te s would absorb B r a z ilia n ex p o rts valu ed a t about $ 2 9 7 ,0 0 0 ,0 0 0 , ou t o f an augmented t o t a l o f about $523,000,000*

T his would toe 56 .8 $ o f B r a z ilia n e x p o r ts,

In stea d o f th e 3 6 .3 $ taken toy th e U nited s t a t e s in 1937. Assuming th a t th e U nited s t a t e s would absorb much o f th e o u tp u t, i t i s e v id e n t th a t la r g e - s c a le expansion o f th e s e B r a z ilia n in d u s t r ie s would be a p o ten t f a c to r in the stre n g th e n in g o f th e economic t i e s betw een B r a z il and th e U nited S ta tes* a

second n a tio n whose o r ie n ta tio n might to©

markedly e f f e c t e d would toe B o liv ia *

I t I s to toe r e ­

c a lle d th a t B o liv ia i s d e f i n i t e l y n ot sla n te d econ om ically toward th e U nited S tates*

In both 1937 and 1938, B o liv ia

sen t tout a sm all f r a c t io n o f her exp orts to the United S ta te s and r e c e iv e d tout about on e-q u arter o f h er im ports from th is co u n try. A lthough B o liv ia has p o t e n t i a l i t i e s as a producer o f t i n , antimony, tu n g sten , rubber, and q u in in e, 4* 5.

U .S . T a r iff Commission, L atin A m e r i c a a s a Source o f S tr a te g ic and Other Has e n t j a l Ma t e r 1 a l s , pp . UW,'''' 39 ,' and 3*^2 1 I b i d . , p . 46*

415

o n ly th e f i r s t th re e o f th e s e products w i l l be in clu d ed in th e fo llo w in g c a lc u la tio n s *

I t i s assumed th a t

B o liv ia cou ld supply o n e -h a lf o f U nited s t a t e s r e q u ir e ­ ments o f t i n , antim ony, and tu n g ste n .6

S in ce U nited

S ta te s t i n im ports in 1937 were o f m e t a llic t i n , 1937 im port s t a t i s t i c s cannot be used in t a c t in a n a ly zin g p o t e n t ia l o re Imports from B o liv ia .

I t w i l l be fu r th e r

assumed th a t ore Imports would have tw o -th ir d s the v a lu e o f sm elted t i n . On th e b a s is o f 1937 U nited S ta te s Import s t a t i s t i c s , 7 B o liv ia n s a le s would amount to $ 3 4 ,4 5 7 ,0 0 0 ( t i n o r e ) , # 1 ,0 5 2 ,0 0 0 (an tim on y), and $ 1 ,6 9 7 ,0 0 0 (tu n g s te n ).

These exp orts would aggregate about

$ 3 7 ,2 0 6 ,0 0 0 .

In 1937, B o liv ia n ex p o rts to the world o f

t i n o r e , antim ony, and tu n g sten amounted to about # 3 3 , 0 0 0 , 000 .**

Thus, th e s h i f t in tra d e would be p rim a rily

a d iv e r s io n r a th e r than an in c r e a s e , c o n tr a s tin g sh arp ly w ith B r a z il. T h is d iv e r s io n and sm all n e t in c r e a se would mean an a d d itio n o f a t l e a s t # 3 0 ,000,000 to th e U nited

6 .

7*

8.

U .S . T a r iff Commission, L atin A m e r i c a a s a source o f S t r a t e g i c a n d o th er Base n t i a l l a t ' e rTaIs , p p .160, 2 9 , 177. S u p ra ,, p . 544 U .S . T a r iff Commission, F oreign Trade o f L atin A m e ric a , Part XI, Se c 11 on"2(BoXiviaJ7 p. 10T ~~

416

S ta te s Im ports from B o liv ia , a llo w in g fo r 1937 Imports o f t i n o r e , antim ony, and tungstt n.^

On th e b a s is o f

1937 s t a t i s t i c s , t h i s would mean t o t a l United S ta te s Imports from B o liv ia o f $ 3 3 ,3 1 3 ,0 0 0 .

A ctual U nited

S ta te s Imports from B o liv ia in 1937 were but $ 3 ,3 1 3 ,0 0 0 , or 7 ,3 $ o f t o t a l B o liv ia n e x p o r t s .^ ex p o rts In 1937 were $ 4 5 ,4 7 9 ,0 0 0 .

T otal B o liv ia n

Adding th e $ 4 ,2 0 6 ,0 0 0

o f new e x p o r ts o f t i n o r e , antim ony, and tu n g sten , the augmented t o t a l would be $ 4 9 ,6 8 5 ,0 0 0 .

S in ce the U nited

S ta te s would absorb $ 3 3 ,3 1 3 ,0 0 0 o f t h i s t o t a l , th e U nited S ta te s share in B o liv ia n exp orts would now be 6 5 .2 $ . Thus, t h i s s h i f t

w o u ld

ten d to

o r ie n t

B o liv ia

d i r e c t ly

toward th e U nited S t a t e s . The th ir d n a tio n whose fo r e ig n trade might be m a te r ia lly in flu e n c e d by t h is development BTould be Cuba, a lrea d y str o n g ly o r ie n te d toward th e United S ta te s.

In r e c e n t y ea rs n ea rly th r e e -fo u r th s o f h er

ex p o rts have gone to th e U nited S ta te s , and about the same pro} o r t lo n o f her im ports have o r ig in a te d in t h i s co u n try .

T h is s it u a t io n i s In sharp c o n tr a st to b oth

B r a z il and B o liv ia , e s p e c ia lly th e l a t t e r .

9* 10.

U .S. T a r if f Commission, L atin America as a. Source o f S tr a te g ic and o th er E s s e n tia l M a te r ia ls, p p .15 5 , 26, 17 4 . U .S . T a r if f Commission, F oreign Trad© o f L atin America, Part I I , S e c tio n ’^ (B olT viaJ, p . 20*1

417

I t i s assumed th a t Cuba cou ld p rovid e o n eh a l f o f U nited S ta te s manganese im port requirem ents* These im ports amounted to $12*882*000 in 1957* so Cubans share would be $6*441*000*

11

In 1957* a c tu a l Cuban

manganese ex p o r ts to th e world amounted to # 2 ,3 9 0 * 0 0 0 .^ a lm o st a l l o f th ese exports* $2,18 6 * 0 0 0 , to b© exact* went to th e U nited S ta tes*

13

S u b tractin g a c tu a l 1937

manganese ex p o rts from p o t e n t ia l exp orts* th ere would be a n e t in c r e a s e o f some $4*255*000.

A ll o f t h i s n et

In c r e a se would be d e s tin e d f o r th e United S ta tes*

T his

would mean th a t th e share o f th e U nited s t a t e s In Cuban exp ort trade would be in crea se d from 80*7$^4 to 8 1 .1 $ . Thus* th e developm ent o f th e Cuban manganese in d u stry to th e s e new l e v e l s would have v i r t u a l l y no e f f e c t upon th e a lrea d y dominant p o s it io n o f the United S ta te s in Cuban fo r e ig n tr a d e .

This same o b serv a tio n would apply to

any c o n ce iv a b le exp an sion o f the Cuban chrom ite in d u str y . I t i s worth b r i e f m ention th a t n ot one o f th e o th er th ree L a tin American n a tio n s o r ie n te d away from th e U nited S ta te s would be m a te r ia lly In flu e n c e d .

11. 12. 13. 14*

Supra. * p .

Mineral

344.

U.S. T a r i f f C o m m iss io n , F o r e i g n Trade o f L at i n iim e r ic a * p a r t II* S e c t i o n 18 vCuHa J*, pp. 5 7 - 8 7 “ uf.s. f a r i f f C o m m iss io n , L a t i n A m e r i c a as a S o u r c e o f s t r a t e g i c and o t h e r E s s e n t i a l M a t e r i a l s * p . 9 5 .

ITTS * T a r i f f Comml s s i on * Forerfgn~Traci o f 'T a t i n iim erica* p a r t I I , S e c t i o ^ l 8 ( TJuba)~7~p• 4 1 *

418

r e s o u r c e s o f any v a r ie t y are p i t i f u l l y la c k in g In Paraguay* Uruguay, and A rgen tin a, and su p p lie s o f s t r a t e g ic m in era ls are n e g l i g i b l e .

I f a l l the p o t e n t i a l i ­

t i e s o f s t r a t e g i c m a te r ia l p rod u ction in A rgentina were e x p lo it e d , l e s s than 1 % o f t o t a l ex p o rts would be a f f e c t e d . I t would appear, m oreover, thac the resou rces o f Paraguay and Uruguay are n otab ly sm aller than those o f A rg en tin a ,

Thus, I t appears th a t developm ent o f s t r a t e g ic

m a te r ia ls cou ld n o t m a te r ia lly a lt e r th e fundam ental o r ie n t a t io n o f th e se th ree s i g n if ic a n t n a tio n s .

419

Chapter XXXIX EFFECT OPOH THE DOMESTIC ECONOMIES OF OTHER WESTERN HEMISPHERE NATIONS E ffe c t upon I n d u s t r ia liz a t io n I t I s apparent th at changes In th e fo r e ig n p o lic y and tra d e o f o th er Western Hemisphere n a tio n s w i l l have r e p e r c u ssio n s upon t h e ir d om estic econom ies.

Many

o f th e se I n te r n a l e f f e c t s would be marked but very d i f f i ­ c u lt to m easure.

These Include* changes In the c a p it a l

m arket, new so u rces o f ta x reven ue, a lte r e d p u b lic c r e d it , and v a r ia t io n s In th e s c a l e and standard o f l i v i n g .

There

are a few r e p e r c u s s io n s , however, which are ta n g ib le and n o ta b le enough to warrant c a r e fu l a n a ly s is . Perhaps the most im portant o f th e dom estic r e p e r c u ssio n s o f th e se changes in fo r e ig n p o lic y and trade i s th e e f f e c t upon i n d u s t r ia liz a t io n .

There are abundant

I n d ic a tio n s th a t in d u s t r ia liz a t io n throughout L atin Am erica, a s w e ll as In Canada, i s growing v ery markedly. 1 In some c a s e s , as In C h ile , t h i s p ro cess has been a ccen tu a ted by a c o lla p s e o f raw m a te ria l export in d u s t r ie s .

1.

For a cco u n ts o f t h i s p r o c e ss, s e e 5 Wythe, George, "The New In d u s tr ia lism in L a tin America1*, Journal Pol i t i c a l Economy* 45*207-28, A p r il, 1937; a l s o , IzelETal, MordecalV Bconomlc R e la tio n s Between th e A m ericas1, In te r n a tlo n a l C o n c ilia tio n , N o .367*100, 1 0 4 -1 0 , February, 1941.

420

In o tiie r a , i t hag been d r a s t i c a l l y in c r e a se d by th e p o st-w a r surge o f n a tio n a lism th a t swept through much of* th e hemisphere*

In la r g e party however, growing

i n d u s t r i a l i s a t i o n appears to be sim ply d eep -ro o ted as an economic trend*

Like m a n ife s ta tio n s have appeared i n

many o th e r p r e v io u s ly undeveloped a r e a s o f the w orld, such a s R u ssia , Japan, and India* To th e e x te n t th a t i n d u s t r ia liz a t io n i s m erely a m a n ife s ta tio n o f a n a t i o n a l i s t i c d e s ir e to be s e l f s u f f i c i e n t , the development o f s t r a t e g ic In d u s tr ie s would probably be counter t o in d u s tr ia liz a tio n *

^ h ile

some o f th e se s t r a t e g ic m a te r ia ls m ight be consumed l o c a l l y , most o f them would probably move in I n te r n a tio n a l trade* Furthermore, the Investm ent o f c a p it a l and t a r i f f n egot i a t i o n s th a t would probably accompany such exp an sion would n ot c o n tr ib u te to a p o lic y o f s e lf - s u f f ic ie n c y * I t i s very d u b iou s, however, whether th e I n d u s t r ia liz a t io n o f th e o th er n a tio n s o f the hem isphere n e c e s s a r ily In v o lv e s s e l f - s u f f ic i e n c y *

-aside from th e

sheer im p o s s ib ilit y o f t h i s g o a l, in some ca se s, and th e ex h o rb ita n t c o s t I t would e n t a il in o th e r s, perhaps th e surge o f s e l f - s u f f i c i e n c y i s but a temporary phenomenon* I t I s c e r ta in th a t I n d u s t r ia liz a t io n does n o t n e c e s s a r ily in v o lv e s e l f - s u f f ic i e n c y *

Indeed, th e g r e a t in d u s t r ia l

c o n c e n tr a tio n s o f the world have been b u i l t and m aintained

421

through e x t e n s iv e fo r e ig n trade*

I t i s d o u b tfu l whether

modern in d u str y and te c h n o lo g ie s cou ld ever have been c r e a te d on a fo u n d a tio n o f s e lf - s u f f ic ie n c y *

It is

q u ite c o n c e iv a b le th a t th e o th er n a tio n s o f t h i s hemi­ sphere can in d u s t r i a l i z e w ith ou t n e c e s s a r ily withdrawing In to th e m se lv e s. I t h a s been argued th a t th e e x p o rta tio n o f s t r a t e g ic raw m a te r ia ls would s t r ip th e se n o tio n s o f the n e c e ssa r y products fo r a th r iv in g Industry*

T his

may w e ll be tru e In th e c a s e s where r e so u r c e s are very lim it e d .

Where r e se r v e s arc la r g e enough t i n t e x te n siv e

e x p lo it a t io n would n ot r e s u l t in ra p id d e p le t io n , t h is p o s it io n l o s e s much o f I t s cogency*

In the case o f the

f i v e non-m ineral p rod u cts, o f co u rse, I t s c a r c e ly a p p lie s a t a ll*

I t I s u n lik e ly th a t any o f th e hem ispheric in ­

d u s t r ia l esta b lish m en ts w i l l soon b e la rg e enough to absorb th e e n t ir e hem isp heric output o f s t r a t e g ic m a te r ia ls .

Most o f them are p rim a rily req u ired by la r g e -

s c a le , h ig h ly s p e c ia liz e d In d u stry ,

se v e r a l are required

o n ly by n a tio n s j ^ s s e s s ln g a la rg e s t e e l industry* I t i s tru e th a t th e r e are a t l e a s t two Iron and s t e e l in d u s tr ie s a lread y e s ta b lis h e d In L atin America* The la r g e r o f th e s e i s the B r a z ilia n s t e e l In d u stry . T his In d u stry i s favored by th e e x is te n c e o f huge d e p o s its o f Ir o n , a s w ell a s very la r g e r e serv es o f low -grade co a l

422

i n Southern B r a z il* ^

Although t h i s in d u str y may expand*

i t now r e q u ir e s a maximum o f 8*000 tone o f manganese per year*^

T his t o t a l la but a sm all f r a c t io n o f th e

y e a r ly output o f the p resen t* modest**scale B r a s ilia n manganese in d u stry *

I f the s t e e l In du stry o f B r a s il should

be expanded t e n - f o l d , I t cou ld not absorb more than a s u b s ta n tia l f r a c t io n o f even the or©sent B r a z ilia n manga­ n ese o u tp u t,

While co n ceiv a b ly th e r e might some day be

a c o n f l i c t betw een B r a s ilia n and fo r e ig n demands for B r a z ilia n manganese, fchrt e v e n tu a lity now seems rem ote. In th e meantime, the e x is te n c e o f a th r iv in g lo c a l manganese In d u stry should prove b e n e f ic ia l to the lo c a l s t e e l In d u stry , Elsewhere in L atin Am erica, few o f the b a s ic r e q u is it e s o f a th r iv in g s t e e l in d u str y e x i s t ,

A rgentina

has a s m a ll-s c a le iro n and s t e e l in d u str y , which s p e c ia liz e s in ornamental ir o n work,^ a s a s t e e l producer*

C hile Is a remote p o s s i b i l i t y

D e sp ite th ese th ree a c tu a l or

p o t e n t ia l s t e e l p roducers, L atin American in d u s t r ia liz a t io n I s n o t apt to r e q u ire la r g e q u a n titie s o f th e s e s p e c ia liz e d raw m a te r ia ls .

2* 3.

Pan American Union, B r a z il, p . 22, W illia m s, Frank , ‘^Economic D iv e r s if 1 c a tio n in L a tin America”, Annals American Academy, 211*14#-54, September, 1940*

4*

S o u t h American H a n d b o o k 1 9 4 1 , p * 1 1 6 .

42 3

Thu& f a r , on© o f th e major o b s ta c le s to th e developm ent o f s t r a t e g i c raw m a te r ia ls In t h i s hem isphere h a s been th e la c k o f a p p recia b le lo c a l demand*

jr

Thus,

sm a ll-sca l© in d u s tr ie s have been fo r c e d t o compete on th e world market w ith l a r g e - s c a l e , lo w -c o s t , su b sid iz e d nonh em isp h eric p rod u cers.

Many o f the str u g g lin g Western

Hemisphere Indu strie® m ight w e ll have emerged a s economic producers I f th ey could have been p a r t ia ll y su sta in e d by l o c a l demand. Hence, I t Is co n c e iv a b le th a t development o f s t r a t e g ic m a te r ia ls and i n d u s t r ia liz a t io n may be thoroughly co m p a tib le.

In f a c t , an I n flu x o f p r iv a te or governm ental

c a p i t a l , fo llo w e d by purchases o f th e s e m a te r ia ls by the U nited S ta te s or o th er n a tio n s , would open up new b lo c s o f p urch asin g power,

w ith t h i s purchasing power, th e o th er

raw m a te r ia ls , s e m i-fa b r lc a te d , and fa b r ic a te d good.® e s s e n t i a l fo r fu r th e r in d u s t r ia liz a t io n might be im ported, -antimony m ight be exchanged, In e f f e c t , fo r r a ilr o a d equipment and machine t o o l s . accen tu a ted in d u s tr ia liz a tio n *

5.

B ain , op* c i t . W M IM p)

T his cou ld f a c i l i t a t e an

424

C h a p te r XL EFFECT UPON THE DOMESTIC ECONOMIES OF OTHER

WESTERN HEMISPHERE NATIONS ( C o n t in u e d )

E f f e c t upon Im m igration a

sev e re shortage o f lab or co n tin u e s to be

a major o b s ta c le to th e production o f s tr a te g ic m a te r ia ls i n t h i s hemisphere*

This problem has been p o in ted out

in v a r io u s p o r tio n s o f th e preceding a n a ly sis o f th e v a r io u s s t r a t e g ic in d u s t r ie s , and was s tr e s s e d In the r e fe r e n c e s to rubber p la n ta tio n s In B r a z il and elsew here 1

In L a tin America. T his la b o r sh ortage has plagued many oth er in d u s t r ie s and s e v e r a l n ation s*

In B o liv ia , lab or

d e f i c i e n c i e s have been © s p e c ia lly a cu te s in c e th e b r i^ f but sharp war w ith Paraguay*

T his B o liv ia n shortage may

lin g e r even a f t e r th e t i n Industry I s mechanized* 2

In

P eru, a prolonged shortage o f common and s k il l e d l^bor h as been alm ost a s great a handicap as the n r o v e r b ia l g tr a n s p o r ta tio n d i f f i c u l t i e s * A s im ila r s it u a t io n e x i s t s in moat o f the o th er n a tio n s o f the hem isphere.

3** 2. 3*

Supra*, pp. 178-188• HM ineral R esou rces, P rod u ction , and Trade o f B o liv ia ” , F oreign M inerals Q u arterly, 2 s62, O ctober, 1939. '^Mlner^l R esou rces, P rod u ction , and Trade o f Peru”, F oreign M inerals q u a r te r ly , 3 s51*3, January, 1940*

425

These la b o r sh o rta g es r e f l e c t th e f a c t t h a t , d e s p it e v a s t a rea s and enormous n a tu ra l r e s o u r c e s , most o f th e n a tio n s o f t h i s hem isphere a re s p a r s e ly s e ttle d # T h is lim it e d p o p u la tio n , p lu s th e f a c t th a t p op u lation in c r e a se in many a r e a s i s b egin n in g to ta p e r o f f , minim ize th e lik e lih o o d th a t la b o r sh o rta g es can be a ll e v ia t e d through n a tu r a l in c r e a s e .

The p o p u la tio n o f L atin

America h as in c r e a se d 227$ during the p a st cen tu ry , but 4 much o f th e in c r e a se occurred b efo r e 1900. Table 50 r e v e a ls th e sparse p o p u la tio n o f the o th er n a tio n s o f t h i s hem isphere. I t has been su g g ested th a t la b o r sh o rta g es can be m inim ized by more thorough u t i l i z a t i o n o f n a tiv e labor* Recruitm ent o f la b o r from th e West In d ie s and oth er r e g io n s w ith sm all lab or su r p lu se s has a ls o been urged. One o f th e Department o f Commerce e x p e d itio n s se n t out during th e m id-1920 *s to ex p lo re rubber p la n ta tio n p o s s i b i l i t i e s in C entral America su g g ested th a t t h i s cou rse m ight be f e a s i b l e .0

A U nited S ta te s Department

o f A g ricu ltu re econom ist has a ls o su g g ested th a t lab or might be drawn from th e numbers r e le a s e d by th e d ep ressio n

4. 6.

M oll, A r i s t i d e s , “D isea se and P op u lation in L atin america% p a rt IX, B u lle t in Pan am^rlean Union, 7 5 s5 5 7 -4 1 , September, 1941. U .S . Bureau o f F oreign and Dom estic Commerce, Trade Promotion S e r ie s 4 0.

426

Tab!® 50® POPULATION OP THE WESTERN HEMISPHERE M illio n s “

North America U nited S ta te s Mexico Canada

132

19 11

T otal

~Tg|

South America B r a z il A rgentina Colombia Peru C h ile V enezuela B o liv ia Ecuador Uruguay Paraguay E n g lish , French, and Dutch Guianas T o ta l

43 13 9

7 5.0

3 .4 3*3 3 .0 2*8 1*0

0 .5 9lTu

C en tral America and w est In d ie s Cuba Guatemala H a iti Puerto Hico El Salvador Dominican R epublic Honduras Nicaragua Costa Rica Panama B r it is h West In d ie s Other European p o s s e s s io n s T o ta l 5.

4*4 3 .0 2 .7 1 .8 1*7 1*6 1*0 1*0 0 .6 0 .5 2 .2 0*7 ST72

These are the l a t e s t cen su s fig u r e s or e stim a te s fo r each co u n try . Sees U .S . Bureau o f Foreign and Dom estic Commerce, F oreign commerce Year­ book 1938, and E zek ie lM o r d e c a i" , ’"Economic^ R e la tio n s between th e Am ericas”, In te r n a tio n a l C o n c ilia tio n , N o.567s9 5 , February, 1941. *

427

In th e B r a z ilia n c o f f e e and c o tto n in d u str ie s* ^

P o s s i­

b i l i t i e s alon g such l i n e s are# however# s t r i c t l y lim ite d * While th e new in d u s t r ie s m ight be a b le to d ra in o f f c o n sid e r a b le la b o r in t h i s fash ion # e v e n tu a lly t h is p r o c e ss would m erely c r e a te la b o r sh o rta g es in areas where none had p r e v io u sly e x iste d * Xt i s co n c e iv a b le th a t developm ent o f s tr a ­ t e g ic m in era ls and o th er m a te r ia ls might a ccen tu a te im m igration in to th e Western Hemisphere.

Such im m igration

has a lrea d y been p a r t ic u la r ly heavy in th e ca se o f B r a z il and A rgentina# w ith l e s s e r numbers f i l t e r i n g in to oth er n a tio n s* In B ra zil# over 4 # G 0 Q # 0G G immigrants have Q en tered s in c e 1 886. Some 1#150,000 o f th e se were P ortugese# w ith 1#373,000 I t a lia n s a ls o im m igrating. Most o f th e P ortu gese en tered d uring the e a r ly and m iddle p o r tio n s o f th e 19th ce n tu r y , w ith th e I t a lia n s en te r in g in la r g e numbers a f t e r the in f lu x o f Portugese hed tapered o f f * Q In th e p o st-1 8 8 6 period# th ere have a ls o been 578.000 immigrant from Spain , 200,000 from Germany, 133.000 from Russia# 90,000 from A u str ia , 60,000 from 7*

U*S* Department o f A g r ic u ltu r e , Apodoca, Joseph, A g r ic u ltu r a l Readjustm ents in R e la tio n to P op u lation j May 1 6 , 1941* South A m e r i c a n Handbook 1941, p p .2 2 5 -6 . U .S . T a r iff Commission, F oreign Trade o f B atin A m e r i c a , part IX, S ectio n 3 ( B r a z i l J p p . 2 -4 .”^ .joaJEBWi—lu/lni-iifH ifi'u rii r * *' ' i —

8.

9.

«iwii »imwhmhiimJ I mi.

h i■■■■ «..«

i m ■■

.■

■ ■

■■miniumimt

428

J a p a n , and sm a ller numbers from oth er n a tio n s .* ^ C o n d itio n s In B r a z il seem p a r t ic u la r ly s u it a b le fo r

Immigrants from South, C en tr a l, and E ast Europe, r a th e r th a n from West Europe or North America.

A rgentina has a ls o a ttr a c te d la r g e numbers o f Im m igrants.

In th e 50-year p erio d from 1880 to 1930,

A rgentine im m igration in clu d ed 8 ,2 5 0 ,0 0 0 I t a l i a n s , 1 ,5 0 0 ,0 0 0 S p an iard s, 210,000 French, 53,000 B r it is h , and 6 ,0 0 0 North Americans.

11

A fte r World War I , th e

p ro p o rtio n o f im m igration coming from I t a l y and Spain d im in ish ed , and the P o le s and oth er groups en tered in la r g e number s .

Over th e 1857; Russian and P o lis h , 7 .6 $ | German, 3.8$J and a l l o th e r n a t i o n a l i t i e s , 1 3 .5 $ .

During th e 1921-29 p e r io d , im m igration t o t a le d

848,251 n e t , or 94,2 5 0 p er ye&r#*^

A rgentina has lo n g

fa v o red im m igration, alth ou gh in re cen t y e a r s laws have

South American Handbook 1941, p p .2 2 5 -6 . W in d e r , op. c i t .^ " p . 2l>. 12* U .S. T a r iff Commission, F oreign Trade o f L atin , America, Part I I , S e c tio n 1""(Argen £ I na77 pp. 5-4 • 13* E stev a ren a , C a r lo s, “E th n ic a l Com position o f th e P o p u la tio n o f A rgen tin a”, B u lle t in o f Pan American Union, 7 5 s626, November, lW€Tl 14* U .S. T a r if f Commission, F oreign Trade o f L atin America, Pa*t I I , Section" T ‘ {ArgentlnaTT p p .3 -4 . 11 *

429

b een m o d ified in order to improve the typ e o f Immigrant and to a v o id u n n ecessary unemployment*

In both 1957

and 1938, over 25>000 im migrants per year en tered , but in 1959 t h i s I n flu x slumped to 4,671*

16

Most o f th e s e

r e c e n t im m igrants have been F o ie s , I t a l i a n s , Germans, and Spaniards*

I t i s s t i l l very d i f f i c u l t fo r immigrants

to acq u ire sm all h o ld in g s o f la n d , alth ou gh e f f o r t s have been made to Improve c o n d itio n s in th a t d ir e c tio n * 1 7 Moderate im m igration In to oth er areas has a ls o occurred*

In M exico, over th e 1880-1930 p e r io d ,

im m igration In clu d ed 5 0 ,000 S pan iard s, 29,000 Morth id aerlean s, 5 ,0 0 0 French, 5,0 0 0 E n g lish , and 4 ,0 0 0 Germans* 18 The annual I n flu x has b een r e l a t i v e l y s l i g h t , and I t has fe a tu r e d d i v e r s i f ie d n a t io n a lit y groups* 1 938, .there were but 1 60,000 fo r e ig n r e sid e n ts*

In

19

Im migration in to Cuba has been m oderate, although th a t is la n d has absorbed the major p o r tio n o f th e immigrat lo n coming to th e West I n d ie s ,

20

Immigration in l a t e

y e a r s has been limn.ted by d ecrees p r o h ib itin g the sea so n a l

15* 16* 17. 18. 19* 20*

South American Handbook 19 4 1 , p*120* I b i d ., p • 121 • IHId*, p p .1 2 1 -2 . W inkler, op* c i t *, p*25* U .S. T a r if f Commission, F oreign Trade o f L atin iim erica, p art I I , Sectlo'n l7 (MexicoT, p p . 3 - 4 . I b i d * S e c t i o n 18 (Cuba), p p *2-3.

450

e n tr y o f la b o r e r s from Jam aica, H a it i, and oth er West In d ie s a r e a s . Im m ig ra tio n in t o C h ile has n o t been la r g e i n

r e c e n t decades#

From 1980 to 1929, a n e t o f only

4G#0GG im m igrants, or about 4 ,0 0 0 per y e a r , en tered th e 21 n ation* ' Most o f th e s e p eop le were Germans* The C hilean government has s e t a s id e some a g r ic u ltu r a l i f nd in th e sou th ern p a rt o f th e country fo r immigrants* Germans, F rench, I t a l i a n s , Span iard s, S w iss, and o th er s e t t l e r s have p a r t i a l l y c o lo n iz e d th e se tr a c ts * Im m igration h as been very l i g h t In B o liv ia , on© o f th e n a tio n s w hich would be most e f f e c t e d by developm ent o f s t r a t e g ic m a te r ia l production#

There has

been no r e c e n t Im m igration from Europe, and o n ly on ee ig h th o f th e p o p u la tio n i s o f European d e sc e n t. Im m igration In to o th er p arts o f h a tln A m e r ic a has a ls o been very s l i g h t * ^

No a n a ly s is need be made o f

Canada, s in c e no la b o r sh ortages y e t e x i s t in th e n ic k e l m ining and sm eltin g Industry* I t has been observed th a t th e wake o f world War I I m ight b rin g m illio n s o f em igrants from Europe to the Western Hemisphere*

21. 22. 23.

I t has been estim a ted th a t

I b i d . , S e c tio n 4 { © h ile ), p p .2*3* 3 > i5 », S e c tio n 2 ( B o liv ia ) , p . 2. See th e o th er s e c tio n s o f t h i s p art I I s e r i e s .

431

from 1 0 , 0 0 0 #000 to 20 , 000,000 m ight be Im p elled to m ig ra te toy p ost-w ar m a la d ju stm en ts# ^ o f c o u r se , i s m erely a guess#

Any such e s tim a te ,

Y et, i f la r g e - s c a le mi­

g r a tio n d o es d e v e lo p , i t Is c o n c e iv a b le th a t many o f th e se m illio n s m ight come to L a tin Am erica.

T his l i k e l i ­

hood i s e s p e c ia l l y n o ta b le i f r e s t r i c t i v e p o lic ie s co n tin u e to be a p p lie d toy th e U nited S ta tes* I f s t r a t e g ic m a te r ia l In d u s tr ie s became e s ta b lis h e d on an e x te n siv e b a s is In t h i s hem isphere, I t I s p o s s ib le th a t a c o n sid e r a b le p art o f t h is Immigration m ight be absorbed*

T his p o s s i b i l i t y i s p a r tic u la r ly

apparent In such in d u s tr ie s a s rubber, t i n , manila f i b e r , s i l k , , q u in in e , and manganese#

B r a z il, B o liv ia , Cubs,

C h ile , Colombia, Ecuador, Peru, V enezuela, and o th er n a tio n s m ight co n ceiv a b ly employ immigrants to d evelop h ith e r to u n e x p lo ite d n a tu ra l r ic h e s# 2 5 A rep o rt is s u e d a few yea rs ago by the In te r ­ n a tio n a l Labor O ffic e makes th e f l a t statem ent th a t B r a z il must encourage im m igration from Europe i f i t wants to d evelop i t s n a tu ra l re so u r c e s rap id ly#

26

This re p o r t

observed th a t B r a z il cou ld choose between Immigration and

24, 25* 26.

b arren, George 0 , , "The P rospect fo r New S e t t l e r s 51, Survey Graphic, 30s167, March, 1941# Loo* c i t * International Labor O f f ic e , M aurette, Fernand, Some Soci a l A sp ects o f P resen t and Future E co n o m ic Levelopm ent 3~ in BrazTl»

432

rapid, developm ent, on th e one hand, and n a tu ra l In cre a se ot p o p u la tio n and gradual e x p lc it a t io n or r e so u r c e s on th e o th er hand.

I n c id e n t a lly , th e f e a s i b i l i t y o f th e

l a t t e r c h o ic e i s somewhat lim it e d by the f a c t th at n a tu ra l In cre a se i s n o t s w e llin g the p o p u la tio n a t p rev io u s r a t e s . Vdiile p ro sp ects fo r fu r th e r im m igration In to B r a z il and A rgentina seem rather b r ig h t, lik e lih o o d o f a la r g e - s c a le in f lu x In to o th er p a r ts of L a tin America seems more remote*

In many s e c t io n s , th e sem i-feu d a l

lan d h o ld in g system and s o c ia l o r g a n iz a tio n co n tin u es to o b str u c t Im m igration.

07

as

p r e v io u sly ob served , attem p ts

to overcome t h is d i f f i c u l t y arc b ein g mede in C hile and A rg en tin a ,

*vny s u b s ta n tia l m o d ific a tio n o f the land

h o ld in g system o f L a tin America, however, would c o n s t it u t e a major s o c i a l re v o lu tio n * Severe z * e str ic tio n s a g a in st im m igration have been mushrooming*

For a lo n g p e r io d , L atin American

c o u n tr ie s were ra th er fa v o r a b ly d isp o sed toward immigra­ tio n .

In most c a s e s , r e s t r i c t i o n s had been e s ta b lis h e d 28 m erely to bar m a n ife s tly u n d esira b le elem en ts. In

87.

88.

Tannenbaum, 0£ . c i t . , p p .8 -1 1 ; a lso Wythe, George, nI n d u s t r ia liz a t io n in L atin America and i t s F ffe e t upon Trade R e la tio n s* , Economic R ela tio n s w ith L a tin Ame r ic a , p . 55* U n E le r , 0£ . c l t . , pp. 2 4 -5 .

433

1929* I t was a s s e r t e d th a t more m illio n s o f im m igrants would he welcomed in L atin America#*^

Bince the world

d ep ressio n # however# t h i s h o s p i t a l i t y toward immigrants h a s cooled #

The growth o f n a tio n a lism and th e In cre a sin g

concern about dom estic unemployment have been p oten t f a c t o r s in t h i s growing movement o f r e s t r ic t io n #

The

p r e d ic t io n has b een made th a t L atin American n a tio n s w i l l h e n c e fo r th fo llo w a t l e a s t a s e l e c t iv e p o lic y as regard s 30 Immigration* A B r a z ilia n d ecree o f March 1 9 , 1941, s t i f f e n e d im m igration r e s t r i c t i o n s in a s e l e c t i v e d ir e c t io n .^ an oth er handicap in many a rea s i s th a t la rg e a rea s o f f e r t i l e lands no longer remain u n exp loited * The e x is te n c e o f th ese v ir g in a r e a s once provided a s a fe t y v a lv e fo r th e f o u d a lis t ie land h o ld in g system . These f a c t o r s tend t o modify any tendency to make exaggerated p r e d ic tio n s concerning th e e f f e c t o f developm ent o f s t r a t e g ic in d u s tr ie s upon im m igration.

In

B r a z il# however* developm ent o f th e se in d u s tr ie s can d e f i n i t e l y be con sid ered an im petus to im m igration.

In

o th er n a tio n s# i t remains on in c e n tiv e but would probably be somewhat minim ized by oth er f a c t o r s . 29* 30* 31*

Loc. c l t . Wythe* George* 11I n d u s t r ia liz a t io n in L atin Am erica and I t s E ffe c t upon Trade R e la tio n s "# Economic R e la tio n s w ith L atin America* p . 53* '^B razilian ImmigrutTon r e s t r i c t i o n 1** B u lle t in Pan Amerlc&n CJnion* 75#434, July* 1941.

454

Chapter XLI EFFECT UPON THE DOMESTIC ECONOMIES OF OTHER w ester n h e m is p h e r e n a t i o n s

(Continued) FITect upon Mining; L e g is la t io n and Taxes I t h a s been su ggested th a t I n te n s iv e d ev elo p ­ ment o f s t r a t e g ic I n d u s tr ie s by fo r e ig n c a p it a l would soon run a fo u l o f f a i n t l y or openly h o s t i l e government r e g u la tio n .

To support t h i s o b se r v a tio n , th e mining

l e g i s l a t i o n and ta x e s o f s e v e r a l Western Hemisphere n a tio n s are c i t e d . The g en er a l tren d In L atin America has been summarized In th e statem ent th a t n e a r ly every n a tio n i s now a ttem p tin g to tig h te n h er h o ld upon n a tu ra l r e s o u r c e s . T his i s a r e s u l t o f th e upsurge o f n a tio n a lism and as a d e fe n s iv e r e a c tio n a g a in st what has seemed e x p lo it a t io n by U nited S ta te s and European c a p i t a l .

One observer

o f L a tin America haa claim ed th a t the, average L atin American f e e l s t h a t fo r e ig n e n te r p r is e s have remained a l i e n , th a t th ey le a v e l i t t l e behind but wages and t a x e s , th a t th ey fa v o r fo r e ig n la b o r , and th a t th ey sometimes attem pt to in flu e n c e dom estic p o l i t i c s . 1. 2m

2

Whether th ese

L e it h , op. c i t «, p .56. M e c h & m , J . L loyd, ttL atIn America’ s R eaction to F oreign In v estm en ts’*, Economic R e la tio n s w ith L atin America, pp. 37-8*

4$5

ch a rg es &r© always tru e or n ot I s a moot p o in t.

If

la r g e numbers o f L a tin Americans th in k th a t they are t r u e , th a t f a c t a lo n e i s o f great im portance. T h is p ro cess o f n a t io n a liz a t io n has appeared in many n a t io n s .

In Canada, th e government has ex erted

c o n sid e r a b le p ressu re i n th a t d ir e c t io n .

Governmental

In flu e n c e upon th e I n te r n a tio n a l H ick el Company, r e s u lt in g in th e e sta b lish m e n t o f sm e lte r s in Canada, has a lrea d y been d e sc r ib e d .

•at

T his move was sim ply p art o f a broader

e f f o r t to fo r c e r e f in in g o f o re s w ith in Canada In order 4 to g a in c o n tr o l over th e d e s t in a t io n o f e x o o r ts . In-* d ir e c t in flu e n c e on m in eral development has been e x e r ­ c is e d through th e railw ays* whica have had m ineral i n t e r e s t s and fu r n is h o u t l e t s fo r th e mines.®

Canada ap p aren tly

i s an xiou s to abandon i t s former p o s it io n as a fe e d e r fo r th e in d u s tr ie s o f th e United s t a t e s , Great B r it a in , and Europe. In B ra zil* the new m ining code i s s a id to v i r t u a l l y p reclu d e fo r e ig n ownership o f m ines and in ­ d u s t r ia l p la n t s .6

T his new law , more than f a i n t l y h o s t i l e

to fo r e ig n e n te r p r is e , rep la ced rath er l i b e r a l m ining 3.

4.

5. 6*

Supra. , pp. 144-145. L e ith , op. c i t . , p p .8 8 -9 , Loo, c i t . H 7FMTneraT R esou rces, P rod u ction , and Trade o f B razil*1, F oreign M inerals Q u arterly, 4 s6 4 , J u ly , 1941.

436

laws*

Under th e new co d e, a l l r ig h t s In m in era ls depend 7 on a u th o r iz a tio n from th e fe d e r a l government* p r iv a te

ownership o f mines a lrea d y e s ta b lis h e d i s reco g n ized o n ly under s t ip u la t e d co n d itio n s* alth ou gh fe d e r a l eon~ c e s s io n s may be o b ta in ed fo r d ev elo p in g newly found d e p o sits*

Only B r a z ilia n in d iv id u a ls or B r a z ilia n firm s

may engage in the working o f m ineral p r o p e r tie s w ith in th e country*

This r e s t r i c t i o n , o f c o u r se , can be

p a r t i a l l y circum vented by o rg a n izin g B r a z ilia n su b sid ia r y co r p o r a tio n s * I t i s s a id th a t w h ile t h i s code nom inally opens up dom estic r e so u r ces to B r a z ilia n c a p i t a l, lo c a l Q in v e s to r s h e s i t a t e to plunge* T his h e s it a t io n i s la r g e ly a ttr ib u te d to a d e f i c i e n t supply o f m ining en gin eers and te c h n ic ia n s and to com plete dependence upon fo r e ig n m arkets.

Many B r a z ilia n s urge th a t i f th e se m ining laws

were mad© somewhat l e s s h o s t i l e to fo r e ig n Investm ent, U nited S ta te s c a p it a l might be ab le to e x p lo it In d u s tr ie s 9 th a t o th erw ise would remain dormant* The B r a z ilia n quartz c r y s t a l In d u stry i s con fronted by sta g n a tio n u n le s s th e code i s rela x ed and new in vestm en t becomes f e a s i b l e .-**0 7. 8* 9* 10 •

fan American Union, B r a z il, p*23* "Mineral R esou rces, p rod u ction , and Trade o f B r a z il" , F oreign M inerals q u a r te r ly , 4 s4*7, J u ly , 1941. Loc. c i t * I b id * , p *67•

In B o liv ia , the new m ining l e g i s l a t i o n o f 1939 a ls o r e f l e c t s a n a t i o n a l i s t i c d r i f t .1'1 T his l e g i s ­ l a t i o n a ls o in d ic a t e s r a th e r pronounced a n t i - e a p i t a l l s t l e ten d en cies*

These m easures have a ls o been complemented

w ith an i n t r i c a t e assortm en t o f m ineral ta x e s o f s e v e r a l v a r i e t i e s , q u o ta s, and exchange c o n tr o l.

These r e ­

s t r i c t i o n s have mushroomed u n t il th ey seem to p reclu d e any heavy fo r e ig n Investm ent In B o liv ia n mines or tr a n s­ it p o r ta tlo n . I t has a ls o been observed th a t many sm all m ining e sta b lish m e n ts flo u n d er fo r the la c k o f r e q u is it e te c h n ic a l and f in a n c ia l a s s is t a n c e by th e government. 13 T h is d e f ic ie n c y would presumably prove more damaging to l o c a l than t o la r g e - s c a le fo r e ig n Investm ent* In Peru, another p o t e n t ia l producer o f s t r a t e g ic raw m a t e r ia ls , m ining l e g i s l a t i o n i s r a th e r fa v o r a b le toward f o r e ig n in vestm ent*1^

The m in erals l e g a l l y b elon g

to th e s t a t e , but e x te n siv e c o n c e ssio n s are s t i l l gran ted . The government o f Peru, which h as lon g been a m in era lproducing n a tio n , i s s a id to under stand th e problems o f the m ining Industry*

Companies e s ta b lis h e d abroad are

s u b je c t to a 1% ta x on p r o f it s earned In Peru, which i s s u r e ly n ot extrem e. 11. 12.

13. 14.

"Mineral R esou rces, P rod u ction , and Trade o f B o liv ia " , F oreign Minerah Q u arterly, 2*63-5, O ctober, 1939. h o c, c i t . Ifrid . , p p .66-7* "Mineral R esou rces, p ro d u ctio n , and Trade o f Peru", g o re lg n M inerals Q u arterly, 3 s5 7 -9 , January, 1940.

438

file m ineral l e g i s l a t i o n o f A rgentina r e f l e c t s apathy r a th e r than h o s t i l i t y toward fo r e ig n m ining co n cern s, s in c e p ro sp ectin g p erm its are o b ta in a b le and r e s t r i c t i o n s are not e x c e s s i v e * T h e government has no f a c i l i t i e s fo r stu d y in g or© treatm ent methods or a id in g m ining esta b lish m en ts*

T his in d iffe r e n c e on th e p a rt of

A rgentina i s probably a ttr ib u ta b le to th e n e g lig ib le im portance o f the dom estic mining in d u str y ,

I t may a ls o

be due In p a rt to the f a c t th a t l o c a l c a p ita l o p era tes most o f th e e x i s t i n g m ining p r o p e r tie s , C h ile does n ot impose p a r t ic u la r ly sev ere r e ­ s t r i c t i o n s a g a in st fo r e ig n c a p i t a l , sine© fo r e ig n in v e s t ­ ment h as been a bulwark o f her economy*

C h ile does

i n s i s t , however, th a t 85$ o f t o t a l wages and s a la r ie s be p aid to C h ilea n s. 16

Rather sever© ta x e s are a lso im­

posed on m ining p r o f i t s , e s p e c ia lly th ose which are n ot d is t r ib u t e d In C h ile . While m ining l e g i s l a t i o n in th e Western Hemi­ sphere h as m a n ifested a rather u n fr ie n d ly a t t it u d e toward fo r e ig n c a p i t a l , th ere are s lig h t In d ic a tio n s th a t a r e ­ v e r s a l o f t h i s tren d may be Impending.

15,

rtM ineral R esou rces, p rod u ction , a n d T r a d e of A r g e n ­ w, Fore i g n M i n e r a l s Q u a r t e r l y , 3 * 5 1 -2 , J u ly , 1940, "Mineral R esou rces, production^ and Trade of C h ile % F oreign M inerals Q u arterly, 3*723, A p r il, 1940. tin a

16,

As mentioned

439

previouslyt th e decree e s t a b lis h in g l o f t y ad valorem exp ort ta x e s In Mexico h as been p a r t i a l l y m o d ified .

1W

In Cuba, th e M in ister o f a g r ic u ltu r e has been c o n sid e r in g r e v is io n o f th e b a s ic m ining la w ,18

This r e v is io n would

encourage w ider e x p lo it a t io n and investm ent*

I t would

a ls o p ro v id e fo r more e x te n siv e te c h n ic a l s e r v ic e s ,

There

h a s a ls o been co n sta n t a g it a t io n a g a in st th e new B o liv ia n and B r a z ilia n co d es, and certain p o rtio n s o f the former have become a dead l e t t e r . Two r e c e n t j u d ic ia l d e c is io n s a ls o In d ic a te a p o s s ib le d im in u tion o f h o s t i l i t y , 1® The Supreme Court o f Colombia r e c e n tly ru led th a t the M in ister o f In d u s tr ie s had proceeded I l l e g a l l y in o a c e llln g th e co n ce ssio n o f a fo r e ig n m ining company*

T his c o n c e s sio n , i t was r u le d ,

cou ld o n ly be c a n c e lle d through reg u la r cou rt a c t io n . In another c a s e , th e Supreme Court o f A rgentina ru led th a t debt s e r v ic e on c e r ta in bonds h eld by fo r e ig n e r s c o n s tit u te d a p rio r l i e n .

These r u lin g s are n ot in ­

t r i n s i c a l l y Im portant, but th ey may co n ceiv a b ly be s i g n i f ic a n t p orten ts*

17* IB , 19,

Supra. , pp. 372. „ M ineral Trade fto tea , 1 3 x 3 3 -4 , Ju ly 1 9 , 1941, P h elp s, Xh1 7 7 Economic d e la tio n s w ith L atin iuaerica, p„28.

440

M ention should be made o f p ast c o n f is c a t io n o f p r o p e r tie s by c e r t a in L a tin American n a tio n s .

Fear

o f e x p r o p r ia tio n has been a p oten t f a c t o r In d isc o u r a g in g p r iv a te in v e s t o r s con tem p latin g th e L atin American f i e l d . The most fa m ilia r exam ple, o f c o u r se , i s th e a c tio n o f the Mexican government in n a t io n a liz in g o i l p r o p e r tie s . A nother, l e s s f a m ilia r , case was th e ex p ro p ria tio n o f th e Standard. O il ( N. J. ) p r o p e r tie s in B o liv ia . p r o p e r tie s were valu ed a t some # 1 7 ,0 0 0 ,0 0 0 .

These

The f a c t

th a t the o i l company has not y e t been in d em n ified was one o f th e stum bling b lo c k s in the t i n n e g o tia tio n s w ith th e B o liv ia n government.

There hf ve been s e v e r a l o th er

c a se s o f o u tr ig h t ex p ro p ria tio n sin c e World war I* Causes o f s e iz u r e have in clu d ed ; the surge o f n a tio n a lism , a g e n e r a lly s o c i a l i s t i c p o lic y , resentm ent a g a in st fo r e ig n e x p lo it a t io n , and economic d i s t r e s s so a cu te th a t con­ f i s c a t i o n seemed a l a s t d esp era te a lt e r n a t iv e .

Not a l l

th e s e f a c to r s apply in each c a s e , o f c o u r se . I t I s very d i f f i c u l t to determ ine what e f f e c t fu r th e r U nited S ta te s Investm ent in s t r a t e g ic m a te r ia ls might have upon th ese laws and r e s t r ic t io n s *

In many

c a s e s , the r e s u lt in g in vestm ent would s c a r c e ly b© s u f f i c i e n t to r e lie v e th e u n d erly in g economic d is t r e s s

2 0 m ^ B olivian Tungsten, Patino TIn% Time, 37 :7 2 , June 2 , 1941.

441

w hich has f a c i l i t a t e d , so much o f t h i s le g is la t io n *

I t Is

a ls o l i k e l y th a t i f the upsurge o f n a tio n a lism In t h i s hem isphere c o n tin u e s , developm ent o f th e s e new in d u s tr ie s would probably n o t be p o ten t enough t o co u n ter a ct t h i s d r if t *

Xt I s tr u e , o f c o u r se , th a t as th e oth er n a tio n s

o f th e hem isphere have l 03 t former m arkets during World War I I , U nited S ta te s has been p laced in a stro n g er b a rg a in in g p o s it io n .

Much o f t h i s le v e r a g e may w e ll

d isa p p e a r , however, a t the end o f the c o n f l i c t .

In any

e v e n t, th e U nited s t a t e s could probably g a in c e r ta in con* c e s s io n s In re tu r n f o r t a r i f f c u ts and Bxport-Im port Bank a s s is ta n c e * I t must be n o ted , however, th at the United S ta te s government has re p e a ted ly I n s is t e d in r e c e n t y e a r s th a t i t w i l l ask f o r no s p e c ia l favors*

I t Is

b e lie v e d th a t t h i s p o lic y o f ask in g fo r no p r iv ile g e s w i l l gu aran tee to th e o th er n a tio n s o f t h i s hemisphere th a t U nited s t a t e s I n t e r e s t s w i l l not be g u ilt y o f fla g r a n t e x p lo ita tio n * a t th e f i r s t m eeting o f th e In ter-am erican F in a n c ia l and a d v iso r y Committee on November 15, A s s is ta n t s e c r e ta r y o f s t a t e Sumner W elles spoke concern­ in g the U nited S ta te s a t t it u d e s toward p riv a te in vestm en ts abroad.

He a s s e r te d th a t th e c i t i z e n o f one Western

Hemisphere n a tio n , I n v e stin g h i s money In a n o th er,

442

r e c o g n i z e s th a t h i s b u s in e ss and in vestm en t a re

to the law s o i th a t cou n try.

21

su b ject

He h a s , however, the

r ig h t to exp ect th a t he w i l l r e c e iv e j u s t i c e under th ose law s and in accordance w ith th e g e n e r a lly accep ted p r in c ip le s o f in te r n a tio n a l law . The U nited S ta te s has n e g o tia te d a number o f t r e a t i e s , e s p e c ia l l y w ith L atin American n a tio n s , which s t ip u la t e th a t the U nited s t a t e s w i l l not in t e r ­ vene d ip lo m a tic a lly or oth erw ise In the in t e r io r or ext e r io r a f f a i r s o f any oth er cou n try. T'his statem en t by W elles and th e se t r e a t i e s have caused c o n sid e r a b le alarm in th e U nited S t a t e s . I t has been claim ed th a t th e government has gone to o f a r in i t s a n x iety to avoid a sk in g fo r undue p r i v i le g e s .

23

The U n ited S ta te s has a c t u a lly , accord in g to some, abandoned i t s duty to p r o te c t p rop erty o f U nited S ta te s c i t i z e n s , wherever th a t p rop erty may be lo c a te d .

T his

le a d s to fu r th e r r e s t r i c t i o n s and even to ex p ro p ria tio n by th e o th e r n a tio n s o f the hem isphere.

21, 22. 23*

Those h o ld in g

C u lb ertson , Wm., ^Recent Developments in Economic R e la tio n s w ith in th e Am ericas”, Economic R ela tio n s w ith L a tin America, p . 2. I b id . ; 'J o n es, ~STester L loyd, nCurrent P o s itio n o f D ir e c t Investm ents in th e Caribbean11, pp. 1 7 -1 9 . Lq c . e f t . ;

a l s o Ib id * s

C u lb e r ts o n ,

Wm.,

MR e c e n t

Developm ents in Economic R e la tio n s w ith in the Americas” , p p .9 -1 1 ; P h elp s, D.M., "The Current P o s itio n o f D ir e c t Investm ents In &outh Amer3.cart, p p .20-22; d is c u s s io n , p p .2 6 -3 1 .

443

t h i s view were somewhat cheered hy S ecr eta ry Buljt^s statem en t to the e f f e c t th a t the Mexican ex p ro p ria tio n 24

developm ents are o f grave concern to u s , J

24.

hoc* c i t . , l a s t c i t a t io n above.

44 4

Chapter XL1I EFFECT UPOH THE DOMESTIC ECONOMIES OF OTHER WESTERN HEMISPHERE NATIONS (Continued) E f f e c t upon T ra n sp o rta tio n F a c i l i t i e s As ob served In p reced in g p o r tio n s o f t h i s stu d y , tr a n s p o r ta tio n d e f i c i e n c i e s p lague many n a tio n s th a t p o s s e s s raw m a te r ia l r e so u r c e s.

S in ce th ese n a tio n s

have been cu t o f f from each oth er by m ountains, swamps, ju n g le s , or d e s e r t s , r iv e r s and the ocean have a ffo r d e d the p r in c ip a l means o f tr a n sp o r t.

Europe has o fte n

seemed n earer than have th e a d ja cen t n a tio n s or even o th er p a r ts o f th e same cou n try.

In th e case o f many

p ro d u c ts, th e c o s t o f tr a n sp o r tin g the m a te ria l to th e c o a s t has been g r e a te r than th e ocean sh ip p in g c o s t s In v o lv ed . A fa m ilia r example i s B o liv ia n t i n . 1 A number o f s t r a t e g ic m a te r ia ls have n ot been f u l l y e x p lo ite d because o f th ese d i f f i c u l t i e s . T his i s tr u e n ot o n ly o f B o liv ia n t i n , but a ls o o f product® in many o f th e other w estern Hemisphere n a tio n s . Peru has been a lo n g s u ffe r e r from inadequate tr a n s­ p o r ta tio n f a c i l i t i e s , t h i s d e f ic ie n c y ren d erin g la r g e s c a le developm ent o f antimony and t i n r e so u r c e s

1*

Supra. »

P*

44 5

im p o ssib le*

F u ll e x p lo it a t io n o f B o liv ia n antim ony,

tu n g ste n , rubber, and. cinchona bark has a ls o been pre­ clu d ed by Inadequate tran sp ort#

The B r a z ilia n manganese,

rubber, chrome, and quartz c r y s t a l in d u s t r ie s have been s im ila r ly handicapped*

This o b s ta c le has been g r e a te s t

in th e c a se o f manganese, s in c e In th e case o f th e oth er p ro d u c ts, r iv e r tr a n sp o r t or sm all bulk have m inim ized th e d if f i c u l t y *

In a r g e n tin e , th e lim it e d m ineral r e ­

so u rces ar© la r g e ly lo c a te d In the mountainous w estern area o f th e n a tio n , I s o la te d and fa r from the c o a s t s . Most o f th e s e c a s e s have been I n c id e n t a lly d isc u ss e d In p rev io u s p o r tio n s o f th e study* These tr a n s p o r ta tio n d i f f i c u l t i e s have per­ s i s t e d i n s p it e o f enormous Investm ents i n r a ilr o a d s and o th er tr a n s p o r ta tio n f a c i l i t i e s *

While United S ta te s and

B r it is h in vestm en t s t a t i s t i c s do not draw a c le a r l i n e o f dem arcation between tr a n sp o r ta tio n and oth er p u b lic u t i l i t y In vestm en t, i t I s known th a t enormous sums have been In v ested In th e tr a n sp o r ta tio n system s o f t h i s hem isphere.^

The reasons why such a la r g e p o r tio n o f th e

hem isphere s t i l l p o s s e s s e s inadequate tr a n sp o r ta tio n are

2.

For B r it is h in v estm en ts in tr a n sp o r ta tio n and p u b lic u t i l i t y p r o p e r tie s in t h is hem isphere, s e e : W inkler, op. c l t . , p . 283; Brady, A*, Canada, p p .229-30; and SoutlTTmerlcan Handbook 1941.

446

n o t d i f f i c u l t to d isco v er* topography*

C h ief among th e se f a c t o r s i s

Mountains# d e s e r ts # Jungles# swamps# and

o th e r ty p e s o f d i f f i c u l t te r r a in have rendered c o n s tr u c tio n o f r a ilr o a d s and highways b oth d i f f i c u l t and extrem ely c o s tly ,

These d i f f i c u l t i e s have been e s p e c ia lly n o ta b le

in in la n d areas# s in c e r a ilr o a d and highway f a c i l i t i e s alon g th e c o a s ts have been f a i r l y adequate* I t i s p o s s ib le th a t marked development of s t r a t e g i c raw m a te r ia ls m ight r e s u l t in an Improvement o f ra ilw a y and highway system s*

This I s p a r tic u la r ly

true in the ca se o f th o se products w ith both b ulk and v a lu e , such a s rubber, manganese# tin# and sim ila r m a te ria ls*

I f th e se in d u s tr ie s could to© sc a le d up to the

p o in t where la r g e q u a n titie s o f f r e i g h t would be a ssu red , r a ilr o a d s and highways m ight be b u ilt*

In B r a z il# where

r a i l f a c i l i t i e s are w o e fu lly Inadequate# t h i s p o s s i b i l i t y I s w e ll recogn ized *

While f a c i l i t i e s are adequate to

handle e x i s t i n g t r a f f ic # new trackage i s needed*s

This

a d d itio n a l track age I s needed to tap I n te r io r areas* E x ten siv e e x p lo it a t io n o f th e se r e g io n s cannot be under­ ta k e n u n t i l tr a n sp o r ta tio n f a c i l i t i e s are provided*

On

th e o th er hand, the p r o f it a b le o p era tio n o f new ra ilw a y s

3,

Bloom, Paul# ftThe Railways o f B r a z il % F oreign Commerce Weekly# 2*351, March# 1941,

44?

w i l l r e s u l t o n ly a f t e r developm ent o f th e s e areas w i l l have become s u f f i c i e n t t o provide n ece ssa r y t r a f f i c * In many in sta n c e s* m ines or p la n ta t io n s m ight c o n s tr u c t highways or o th e r tra n sp o rt f a c i l i t i e s le a d in g to t h e ir p r o p e r t ie s .4 There a re in d ic a t io n s th a t such, an In c e n tiv e to tr a n s p o r ta tio n improvement i s alread y a t work.

The

U nited S ta te s Bxport-Im port Bank lo a n to B r a z il fo r th e purpose o f e s t a b lis h in g a s t e e l in d u stry has a l^ o le d to th e e x te n sio n o f r a ilr o a d s in to the iro n and mrnga5 n ese a r e a s . I t i s a lg a tru e th a t the C entral de B r a s il Hallway has increased. I t s a llo c a t i o n o f c a p a c ity to manganese* a llo w in g the m ineral 17^ o f t o t a l c a p a c ity . \lihile t h i s a c t io n r e p r e se n ts no la s t in g s o lu t io n o f the tr a n s p o r ta tio n problem in th a t s e c t io n o f B r a z il, I t d oes in d ic a te th a t the needs o f th e manganese in d u stry are r e c o g n iz e d .

The U nited S ta te s Bureau o f Mines has

claim ed th a t I f th e B r a z ilia n government Improves t h is ra ilw a y and perhaps b u ild s highways* Minas Geraes a lo n e cou ld produce 50*000 ton s o f manganese per month* 7

4* 5. 6. 7.

Supra.*

p. 2.26-

S u p r a . * pp. 339-340.

Supra. * p » H 6 . 11Mineral Resources* Production* and Trade o f B r a z il” * f o r e ig n M inerals Q u arterly* 4 s9 4 , J u ly , 1941.

448

There are o th er cu rren t I n d ic a tio n s o f improved B r a z ilia n r a ilr o a d and highway f a c i l i t i e s .

It is re­

p o rted th a t tr a n s p o r ta tio n improvement in th e Amazon r e g io n i s b ein g accen tu ated through e x te n s iv e government encouragem ent.

The l a s t lin k in a tr a n s c o n tin e n ta l

r a ilw a y from S an tos, B r a z il to iir ic a , C h ile , i s a ls o Q b ein g com pleted. T his development w i l l enable manganese o re from Matto Grosso to reach A tla n tic p o r ts more r e a d ily and a t low er c o s t .

T his r a ilr o a d a ls o c o n s t i ­

t u t e s a new rou te In to th e B o liv ia n t i n producing area and should enable t i n to be brought to A tla n tic p o r ts . These developm ents have r e s u lte d in a marked e x te n sio n o f th e B r a z ilia n market fo r railw ay equipment.

10

S t ir r in g s are a ls o ev id en t In oth er p o r tio n s o f L atin America.

T h is a c t i v i t y I s p a r tic u la r ly n o ta b le

ca se o f highway c o n s tr u c tio n and a ir tr a n s p o r ta tio n .

11

T his dual development has been r a th e r sp ecta c u la r in th e ca se o f Peru, whose tr a n sp o r ta tio n d i f f i c u l t i e s have

8.

^Greater B r a z iln, B u sin ess Week, January 25, 1941, p p .5 4 -6 . 9 . h o c, c i t . 1 0 . Long, W. Rodney, ''Railway equipment Markets in B r a z il”, F oreign Commerce Weekly, 2 s1 3 5 -7 , January 2 5 ,1 9 4 1 . 11*, Sees D e sc r ip tio n o f in d iv id u a l tr a n s p o r ta tio n sy s­ tems in South American Handbook 1941; E z e k ie l, M ordecai, ^ E co n o m icK elatIon sb etw een th e Am ericas”, I n te r n a tlo n a l C o n c ilia tio n , N o.367s1 3 5 -6 , February, "1941; and TJ.S. Bureau o f F oreign and Domestic Commerce, I n te r n a tio n a l R eference s c r i e s , V o l. 1 , n o .62.

44 9

been m ost acute*

R ailroad c o n str u c tio n In Peru has been

abandoned s in c e 1929, but highw ays, a e r ia l ropew ays, and s i r f r e i g h t l i n e s have r e c e n tly p en etra ted h ith e r to in a c c e s s ib le reg io n s#

12

The Export-Im port Bank hws played a prominent ry H.TT. 10561, v ashlngtoifrjr GoverrSiinF p H n H H g ^ fI c e 7 T 9 4 C u ----77th Congress* H earings b e fo r e a Subcommittee on F oreign R e la t io n s * 0*3* S en a te, 1 s t S ession # on Execu t i v e K* 76th C o n jress, 3rd S e s s io n * HTa 2b n ven tion foFTihe E sta b lish m en t' o f an Inter-Am er 1 can Bank), Washington* Government P r in tin g O f f ic e , May 5 -6 , 1941* Other documents Canadian Department o f M ines, Mines Branch, The Canadian M ineral In d u stry In 1955, Ottawa, 1936* * * * * * The N ick el Indust r y , by A.F* Coleman, Ottawa, Gov or nmenF £FInFfng~13ur e au * 1913* I n te r n a tio n a l Labor O ffic e , Some S o c ia l A spects o f P resen t and Future Beonomic PevFlopiments in B r a z il, S e r ie s B*, No*25” by F er n a n d T a u r ette, Geneva , 1937* Pan American Union, American Nation Series^, (A s e r ie s o f pam phlets d © scrib in g each"’o f'th e ~ T a tin American r e p u b lic s ) , W ashington, 1935-40. • * * * , A S t a t i s t i c a l Accoun t o f the Foreign Trade o f L a tin America beTore an T *during th e "Vhrl"d War, 1915- 19X8* W ashington, 1939* • • • • # Commodities o f Commerce Seri e s No*10, (A B r ie f Talk about Tin), WasixingtohX~T935• * * * • * Commodities o f Commerce S e r ie s No*15, (Rubber), Washington'7 19 3§ * • • ♦ • # Commodities o f Commerce S e r ie s n o .22, (Coconuts in th e AmerI ea s )~,~Wash in g to n , 1955*" # Commodities o f Commerce S e r ie s N o. 2 4 , (q u in in e in South America )T VVusFilngXbn, 29 o l •

. . . .

League o f N a tio n s, I n te r n a tio n a l Trade g t a t i s t i e s , 1937, Geneva, 1938. * * * * * Raw M a teria ls and F o o d s tu ffs , Geneva, 1939.

490

« • • « # S t a t i s t i c a l Yearbook, 1958- 1959, Geneva, 1939* * t * * i S t a t i s t i c a l Yearbook, 1959-1940, Geneva, 1940*

M iscella n eo u s pamphlets

■ M M M N M a M P m IMtaII11.«■■ M *W t* ' '■ IIIWWMnviMnW

—n —

““

■■ ■*—a-

Newsweek R eports on H at!onal D efen se, 1941* G.S, Chamber o f Commerce, Qur world T rade, January-ivlarch, 1941. Vulcan D otin n in g Company, 1935 Annual R eport.