The Fat Cousin

The scandalous U.S. farm hoard has a fat and sloppy cousin in the stockpiling program, which has gorged itself with $8.7 billion worth of war-emergency materials. This is more than twice as much as the Pentagon believes the U.S. needs for a three-year war. An investigation of stockpiling by a Senate Armed Services subcommittee has indicated that efforts to cut the surplus were blocked by Government agencies, pressure from industry, and downright inefficiency. Last week the subcommittee was told a tale, involving both the Eisenhower and Kennedy Administrations, of four metals:

> LEAD AND ZINC are low-priority items (90% of U.S. needs are supplied from the U.S. and adjacent Canada and Mexico) that reached their stockpile objective in 1954. Yet the Eisenhower Administration ordered the Government to purchase an additional 760,000 tons at prices above the market--which cost some $200 million--and made the purchases without the customary competitive bidding. The purpose of the purchases, testified Felix E. Wormser, former Assistant Secretary of the Interior for Mineral Resources, was not to hoard critical and scarce materials--the goal of the stockpiling program--but to shore up production and prices in the troubled minerals industry. Wormser, who came to the Government from his job as vice president of St. Joseph Lead Co. (40% of U.S. lead production) and later returned to it, testified that he wanted to bring better days to the lead and zinc industry, personally suggested the above-market purchase prices. To justify the additional purchases, the Government periodically revised the metals' stockpile objective upward. Result: under objectives since revised, the Government surplus of lead is 384%, of zinc 788%.

>ALUMINUM. Until recently, seven Government agencies had veto power over any plans to dispose of surplus items--and they frequently used that power. Between 1958 and 1961, the General Services Administration, which oversees the stockpile, made three requests to sell small lots of sub-specification aluminum. Though the aluminum industry was selling millions of dollars worth of the metal to the Government every year, and thereby adding to the surplus, it complained that it would be "unfair for the Government to put this aluminum on the market." Heeding the objections, the Office of Civil and Defense Mobilization prevented the sale.

>TUNGSTEN. Even after President Kennedy said in January that he was "astonished" at the huge stockpiles and triggered an investigation, federal bureaucracy blocked an eminently sensible sale of tungsten. In March, three electric companies--Westinghouse, General Electric and Sylvania*#151;were ready to buy 5,000,000 lbs. of tungsten from the stockpile at market prices to use in making lamps to fill a Government contract. But the Interior Department vetoed the sale on the ground that it would curtail demand. Result: one of the companies had to buy its tungsten abroad, thus adding to the balance-of-payments deficit. Though the stockpile objective for tungsten is 50 million Ibs., the Government is now stuck with more than three times that amount.

Since the first of the year, the Administration has moved to ease the stockpile burden. It set up a Cabinet-level committee to review the program, last April eliminated the veto held by five Government departments. The Administration has drawn up a long-range disposal plan that it hopes will lead to sales of more than small, odd-lot quantities. Last fortnight it announced plans for disposing of $600-$800 million worth of stockpile materials each year--about eight times the present disposal rate. But legislation will be necessary to put the plan into effect--and a lot of people who are fond of the fat cousin may fight to prevent him from becoming too lean.

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