now serve on the Central group. This group has two principal functions: to service, although not to supervise, the work of the individual commodity committees and to issue invitations for new committees as the need is shown.

To date, seven standing committees have been formed. They are virtually autonomous bodies, free to consider any aspect of the problem of world shortages in the commodities concerned. They have no sanctions, however, and are empowered only to make recommendations to governments. No government has delegated to a committee authority to decide for it how much of the commodity it must make available or show how much it shall be permitted to consume. It is the function of the committees to examine all possibilities for a better balancing of supply and demand, and it is their responsibility to devise solutions that will be acceptable to enough of the important producers and consumers of the commodity to achieve the necessary results. They are not specifically concerned with problems of price, but indirectly, through restoring order to world markets, they may be expected to make a considerable contribution to the stabilization of prices.

Membership in each committee is limited to those countries which have a substantial producing or consuming interest in the commodities concerned. In all, 27 countries are now directly represented upon one or more committees. The table shows the country participation on the committees and the Central Group as of June 20, 1951. For most commodities covered by the IMC, member countries together account for between 80 and 90 percent of production and consumption in the free world.

One of the purposes of the IMC would be nullified, however, if the opportunity to participate in the work of the committees and share in the benefits were extended only to member countries. Therefore, each committee has taken steps to protect the interests of nonmember governments in the free world. Questionnaires are circulated to these nonmember countries, just as they are to members, and the opportunity is extended to them to appear before the committees if they wish to explain their needs orally. Where allocation systems are drawn up, supplies for both nonmember and member governments will be 39888-54-pt. 4-74

provided on an equitable basis. The weekly reports on the progress of IMC are drafted with the information needs of nonmember governments specifically in mind and the Central Group has recently recommended that periodic restricted reports be prepared for nonmember governments. Much of the data with which the IMC deals would, if publicly revealed, have an important impact on commodity markets. Therefore, until action is ready to be taken, much information regarding the work of IMC must be held on a confidential basis.

THE COMMODITY COMMITTEES

The seven committees now operating are: Copper, zince and lead, sulfur, cotton and cotton linters, tungsten-molybdenum, manganese-nickel-cobalt, wool, pulp and paper.

Behind each of these committees is a story of acute shortages jeopardizing essential civilian industries or defense preparations. Each commodity covered is basic to our world today. Each is needed by countries around the world but produced in adequate quantity by comparatively few of them.

Copper, zinc, and lead are the basic nonferrous metals, used in one form or another in almost every segment of an industrial economy. Rearmament adds a further heavy demand for these materials. Ammunition requires brass, for instance, and brass cannot be made without copper and zinc. The United States has a large domestic production but must still import one-third of its requirements. Most of the other industrialized countries also import much of their copper, lead, and zinc. For a country like Chile, which is a major source of these imports, copper mining and trade are the very foundations of the economy. Manganese, nickel, cobalt, tungsten, and molybdenum are all steel-alloying materials required to make such products as tool steel and armor plate and are thus essential to the two main aspects of the mobilization program: The retooling of industry for defense production and the manufacture of armament items. Manganese, in fact, is required for the manufacture of even the ordinary grades of steel which are needed for everything from zippers and nails to ships. The concentration of world resources in a few locations, often far removed from the points of consumption, is well illustrated by several of these metals. The United States, which accounts for one-half to three-fourths of the world's consumption of these materials, has to import all or a large part of its supplies of each, excepting molybdenum. The free world's manganese comes from India, South Africa, and Brazil; its cobalt from the Belgian Congo; its nickel from Canada and New Caledonia. The major source of tungsten has been China; new sources in such widely separated places as Portugal, Peru, Thailand, and Australia must be opened up. Of the world's resources of molybdenum, on the other hand, the United States controls close to 95 percent. Here, where we are self-sufficient, we have a responsibility for supplying others.

Sulfur has been perhaps the most troubling shortage for the largest number of countries in the current period. The uses of sulfur and its derivatives are legion. To cite a few diverse examples, the production of newsprint, rayon, phosphate fertilizers, aviation gasoline, DDT, and even such an everyday item as jello is dependent upon sulfur. There are a number of materials from which sulfur can be obtained but consumers are often not equipped to use anything but native sulfur. The United States is virtually the world's only source of native sulfur. Its product is shipped in normal times to virtually every country in the world that has any degree of industrial development.

Little need be said on the uses of cotton, wool, pulp, and paper. The sources of these commodities for deficient countries are again few and scattered. The United States supplies almost half of the cotton in world trade. The second large exporter is Egypt, which can supply extra long staple cotton which the United States itself must import. American cotton finds its way directly or indirectly to nearly every country. The bulk of raw cotton exports are to the mills of Wesern Europe (particularly the United Kingdom) and of Japan, but the textiles produced there are exported to markets around the world. The United States, in addition, ships substantial quantities of raw cotton to various countries in Latin America and the Far East. For wool, Australia, Argentina, New Zealand, South Africa, and Uruguay are the world's principal exporters. The United States is the world's fourth largest producer but is still a deficit area, dependent upon imports for more than two-thirds of its supplies of apparel wool and all its carpet wool. Canada, Sweden, Finland, Norway, and Austria are the exporters to the free world of pulp, paper, and newsprint. The Soviet bloc is another rich source, but one upon which the free world cannot depend in the present period. It is in part because Western European mills no longer receive

their usual supplies of pulpwood and woodpulp from Eastern Europe that a shortage of pulp and paper products has developed.

There may be surprise that tin and rubber are not among the commodities dealt with by the IMC, since both are world-trade items currently in short supply. Procedures for international consultation on these two commodities were already in use, however, at the time of the formation of the IMC and it was felt that there was no advantage in abandoning the approach already agreed upon.

In the 4-month period during which the IMC committees have operated, a large amount of time has necessarily been devoted to two fundamental tasks, organization and the assembly of facts concerning supplies and requirements of member and nonmember countries. For only a few commodities were there existing statistics that covered any large part of the field, even on a historical basis. Therefore, questionnaires have had to be distributed to determine production and consumption requirements, past, present, and projected for the future.

Concurrently with their study of the probable supply requirements relationship, the committees have been looking into possibilities of increasing production and conserving supplies. Generally, subcommittees have been formed to deal with these problems. The two committees which deal with steel-alloying materials have a joint subcommittee of experts to study means of reducing requirements for these materials through improvements in metallurgical practices, changes in specifications, and increased use of substitutes and waste materials. The Sulfur Committee, within 2 months, made initial recommendations to governments on measures for increasing and conserving supplies of sulfur-bearing materials.

It is already clear that in many cases the deficit will be too large to be covered by increased production and by conservation. A need for some system of international allocation in these cases is indicated. Several committees are well advanced in the development of plans for a system of distribution that will fulfill the purposes of the IMC and be acceptable to interested governments. They have identified, as problems that must be dealt with or considered before agreement can be reached on a method of allocation, such factors as the principles of treating stockpile requirements, definitions of defense requirements, relative priorities of various types of civilian requirements, and the possible impact of allocations upon normal trading procedures and price mechanisms.

When the Pulp and Paper Committee was formed, a newsprint shortage threatened to limit the ability of the free world's press to defend its institutions against the onslaught of Cominform and aggressor propaganda. As a first order of business, therefore, the committee created a Subcommittee on Emergency Supplies of Newsprint to investigate and provide relief to these countries. As a stopgap measure in cases which could not wait until plans for a general system of allocation are completed, the subcommittee has recommended and the full committee has approved two emergency allocations: 3,000 tons to France for urgent needs connected with the recent election campaign, and 9,550 tons to Greece, India, Malaya, Singapore, Pakistan, the Philippines, and Yugoslavia, countries which normally have no domestic newsprint production, and which were found to be in a desperately difficult position. These allocations reveal vividly, if in miniature, what useful work the IMC can do.

Thus the free world has begun to deal with the shortage problems of important raw materials on a multilateral international basis. Obviously, however, there are additional commodities which are in short supply, and problems also arise in the production and distribution of finished goods. Some of these issues can be settled effectively by bilateral negotiation or agreement, particularly in cases where only 1 or 2 countries are involved in both the importing and exporting sides; some of them can be solved by the adoption of a uniform and comprehensive policy by the country which is the major or sole exporter. In the field of manufactured goods, priorities and schedules are important. These goods cannot be treated effectively by allocation methods alone, and they are not susceptible to much multilateral treatment, because of the variety of types and the marketing procedures normally in use.

UNITED STATES FOREIGN ALLOCATIONS POLICY

In the course of the past several months the United States has been gathering experience in these matters, and has been developing a general policy on the allocation of goods to other countries. The policy expresses the United States attitude toward the international negotiations in the IMC, as well as covering cases in which the United States acts unilaterally. It was issued by Charles E.

Wilson, Director of Defense Mobilization, on May 29, 1951, as guidance to all agencies operating under the defense mobilization program. The text follows: "The President, in his message to Congress on May 24, 1951, outlined our basic policy to strengthen the free nations of the world.

"In carrying out that policy, the following specific guides to the allocation of resources which are to be devoted by the United States to foreign needs should be followed:

"(1) When there are competing requirements of similar high essentiality in terms of the overall objective, allocations policy should attempt to satisfy such requirements according to the degree to which they will contribute to the following results:

"(a) Military production of the free world, and direct support for the expansion or improvement thereof;

"(b) Promotion of increased supplies of all materials essential to strengthening the free world, and in particular the production and acquisition of those materials required for the current mobilization effort of the United States (including military reserves and immediately necessary additions to stockpiles), and for similar mobilization efforts of nations actively associated with the United States in the defense of the free world;

"(c) Maintenance and necessary expansion of essential services and production facilities, and maintenance of minimum essential civilian consumption requirements in the free nations and in areas which they control;

"(d) Direct progress toward reduced future dependence upon military and economic assistance from the United States;

"(e) Lessened dependence of the free nations upon supplies from areas or countries within the Soviet bloc;

"(f) Prevention of political deterioration in nations or areas essential to the combined strength of the free world.

"(2) Allocations by the United States form part of a wider give-and-take among the free nations. Among the countries sharing in such allocations the principles of self-help, mutual aid, and similarly effective application of internal polices governng the allocation and use of scarce materials should prevail.

"After requirements of high essentiality have been met, the intercountry allocation of remaining supplies by the United States (including allocation to American domestic consumers) should take into account the effects upon the respective civilian economies of the broad contribution of each area or country toward common defense, in direct military production or in increased political and economic strength, including the common aim of controlling inflation of world prices. Individual countries differ widely in their ability to make such contributions; the objective should be to bring about an equitable distribution of the resulting burdens and sacrifices. This objective clearly excludes any mechanical formula, or any mere leveling down to a uniform standard of lowered consumption.

"The foregoing principle is admittedly difficult to apply, since standards of consumption in different areas of the world are determined by a complexity of factors, such as normal levels of real incomes, customs, cultures, and climate. But its application is of high importance for the attainment of the overall objective of economic strength and morale in the free countries.

"(3) The establishment of adequate export quotas from the United States for materials and commodities under export control will not meet the criteria outlined above, if foreign purchasers cannot place orders or secure delivery, because United States suppliers prefer to satisfy their domestic customers. Commercial channels of trade should normally be used, but exports should be assured by priorities and/or directives to producers whenever necessary. When such assistance to exports is thus given, care should be exercised that corresponding assistance for domestic orders of similar essentiality is extended, if necessary.

“(4) Corresponding allocation objectives and policies on the part of other free countries should be promoted by the United States by all practicable means; agreement on and implementation of such policies on the part of other countries is especially important to the development of adequate supplies of the materials. facilities, or services of which they control substantial portions of the total available world supply.

"(5) Allocations of available supplies for abroad shall be administered in conformity with statutory and executive policy designed to prevent shipment or transshipment to the Soviet bloc of war-potential materials and products."