The Bars Go Up

Last week the U. S. Government formally acknowledged that when a world goes to war, foreign trade becomes a weapon of national policy--two-edged. On both the import and export front, materials vital to U. S. defense were removed from the shrinking belt of free trade.

Imports. Last year Congress told the U. S. Treasury it could start laying in a stock pile of strategic war materials, appropriated a mere $10,000,000 for the project. Hence the Government stock piles last week were mere mounds. Particularly inadequate were its stores of two materials whose immediate supply depends on the Far East: rubber (30,000 tons; U. S. 1939 consumption nearly 600,000 tons) and tin (6,124 tons; U. S. normal peacetime consumption 82,000 tons).

To build up these stock piles, RFC formed two $5,000,000 corporations last week: Rubber Reserve Co. (half of whose capital will be put up by the rubber makers) and Metals Reserve Co. To the former it planned to lend $65,000,000 to buy 150,000 tons of rubber; to the latter $100,000,000 to acquire 75,000 tons of tin and other strategic metals. London reacted promptly to the new demand, the international tin cartel upped its export quota from 100 to 130% of standard (or at the rate of 271,661 tons a year), a new high; the rubber cartel from 80 to 85% (1,131,160 tons a year).

Exports. Next day President Roosevelt took another step to conserve war materials. By proclamation he forbade export of unlicensed munitions, materials and machinery needed for U. S. national defense, appointed Lieut. Colonel Russell L. Maxwell Administrator of Export Control to license all such exports, decide what may be shipped and where. Maxwell-controlled war goods:

Basic Materials: Aluminum, antimony, asbestos, chromium, cotton linters, flax, graphite, hides, industrial diamonds, manganese, magnesium, manila fibre, mercury, mica, molybdenum, optical glass, platinum group metals, quartz crystals, quinine, rubber, silk, tin, toluol (coal-tar derivative used in TNT), tungsten, vanadium, wool.

Chemicals: Ammonia and ammonium compounds, chlorine, dimethylaniline (for explosives), diphenylamine (for smokeless powder), nitric acid, nitrates, nitrocellulose, soda lime, sodium acetate, strontium chemicals (for explosives), sulfuric acid.

Products: Aircraft parts, equipment and accessories, armor plate, non-shatterable or bulletproof glass, optically clear plastics, optical elements for fire control, aircraft instruments, etc.

Machine Tools: Metalworking machinery for melting, casting, pressing, cutting, grinding or welding.

Arms, ammunition and implements of war.

Conspicuously absent from the list was scrap iron, important war material, of which the U. S. has plenty for its present needs. Chief sufferer from a scrap embargo would be Japan, who gets around 60% of her supply from the U. S. As it was, Japan had plenty to holler about because, with Russia, she has been the main foreign buyer of U. S. machine tools.

U. S. exporters had plenty to holler about too. Given only three days to comply with the new rules, fill out license applications, they asked that at least goods now in transit to foreign buyers be allowed to go through. Fumed the Wall Street Journal: ". . . The peremptory manner in which this action was taken, with practically no advance notice to the export trades, was a perfect illustration of how not to do it."

For the U. S. Government, the law, though belated, was an effective weapon. Because it was not an embargo, merely a licensing arrangement, it gave the U. S. power to bring pressure on any one foreign government by refusing to give it needed war materials. Moreover, it gave the State Department an accurate check on what vital materials were being shipped to whom on what terms. U. S. moral embargoes now have a set of teeth.

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