Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 2

S/S–NSC files, lot 63 D 351, NSC 171 Series

No. 260
Memorandum by the Director of the Office of Defense Mobilization (Flemming) to the National Security Council¹

confidential

Washington, February 4, 1954.

At a meeting attended by representatives of the Departments of State, Defense, Treasury, Interior, Commerce, the Foreign Operations Administration, the Office of Defense Mobilization, and the Reconstruction Finance Corporation, it was agreed that the following recommendations should be made with reference to the handling and distribution of the United States surplus tin supply (including the amount to be purchased from Indonesia) and with reference to United States non-participation in the proposed International Tin Agreement:²

1. That the United States pursue its present policy with respect to the 40,000 tons of tin now held by the RFC in excess of stockpile objectives: work up the ores on hand; recommend legislation that would authorize closing down, disposing of, or dismantling the Texas City Tin Smelter by June 30, 1954; and hold the excess stock in insulation, apart from the regular stockpile.

2. That the regular channels through which tin is purchased be authorized to make an offer to purchase the 20,000 tons of tin contracted for with Indonesia in the third year, at a price that will fairly reflect market prices at the time of delivery—i.e., on a monthly average over the 12 months.³

3. That the 20,000 tons so purchased be stored in insulation with the 40,000 tons referred to above, making a total of 60,000 tons, and that assurances be made that withdrawals therefrom shall be maiteme only at the direction of the President, as in the case of regular stockpile materials.

4. That the United States not participate in any negotiations for an International Tin Agreement with other countries or in any arrangement which might be construed as having cartel implications or characteristics; that the United States take no formal position with respect to what the other nations do—as to whether negotiation of an agreement among themselves is either good or bad—on the ground that we will have made such a contribution to stability of the international tin market by the handling of our own tin stocks that there is no obligation on our part to participate in any arrangements the other nations may negotiate; provided that the Department of State and the Foreign Operations Administration may informally encourage the other nations to proceed with the implementation of the Tin Agreement among themselves and thus, in the case of producer nations, to place appropriate limits on their own production in order to bring it into line with world market conditions.

Arthur S. Flemming

1. This memorandum was considered and approved by the NSC at its 183d meeting on Feb. 4, as amended in the light of the discussion at the meeting (NSC Action No. 1030). The text was then forwarded to the NSC for implementation by the appropriate agencies under cover of a note from Gleason indicating that it had been approved by the President on Feb. 6. (S/S–NSC files, lot 63 D 351, NSC 171 Series)
2. On Mar. 4, the Department of State announced the intention of the United States not to sign the International Tin Agreement drawn up at Geneva in December 1953; see Department of State Bulletin, Mar. 15, 1954, p. 393.
3. On Mar. 12, the RFC and the Government of Indonesia reached an agreement providing for the delivery of 18–20 thousand tons of tin metal and tin concentrate for the year beginning Mar. 1, with the price to be based on New York market averages at the time of delivery. (856D.2544/3–1144; 3–1844)