Office of the Historian

298. Memorandum From the Director of the Bureau of the Budget (Shultze) to the President’s Special Assistant for National Security Affairs (Bundy)1

Washington, November 11, 1965.

SUBJECT

  • Reducing strategic stockpile goals

A study prepared by the Budget Bureau in response to NSAM 3212 concludes:

1.
That special stockpile goals for post nuclear recovery not be established.
2.
That the assumptions underlying present non-nuclear war stockpile goals are unrealistic and produce far too high stockpile goals. Specifically, the following changes should be made:
a.
The assumed duration of a non-nuclear war should be reduced from 3 years to 2 years.
b.
The assumption that in such a war we would export freely throughout the entire world but import only from Canada and the Caribbean should be changed to one of free world-wide imports. This position is supported by the JCS.
c.
Assumptions on domestic consumption are too generous and should be made more restrictive.

(A draft version of the study is attached.3 A slightly revised draft, for circulation, will be available Friday morning.)4

There is at least one commodity held in the stockpile, copper, that it would be highly desirable to sell at the earliest opportunity on anti-inflationary grounds. (Mercury and platinum are other candidates for immediate sale.)

I suggest the following procedure:

1. I will talk to Governor Ellington about this approach.

2. You tell Secretary McNamara of our intention to lower the stockpile goals and that we intend to do this changing the assumed length of [Page 739] war and the import assumption. (The third dubious assumption, that on high domestic demand, probably isn’t worth taking the time to argue about.) An overall McNamara position might also be useful.

3. You circulate the attached BOB paper to the group mentioned in NSAM 321 and immediately call a meeting of the group in order to get agreement on a recommendation to the President on the change in stockpile assumptions and goals. Out of this meeting would come a new basic stockpile charter in the form of a NSAM which would replace NSAM 142 dated April 10, 1962.5

4. The major metals not now in excess which would become excess under the new objectives are:

(These are our own rough estimates)
Metal Amount Becoming Excess
copper 775 thous. tons—$560 million
mercury 172 thous. flasks—$118 million
platinum 362 thous. ounces—$36 million

5. All of the above materials are in the National Stockpile and would require congressional authorization for release.

6. Copper is particularly critical in view of recent price developments and the demand/supply situation.

I have talked to Califano and Fowler; they are both anxious that we proceed as rapidly as possible.

Charles L. Schultze 6
  1. Source: Johnson Library, National Security File, National Security Action Memoranda, NSAM 321, Review of Strategic Stockpile Materials, Box 6. Secret. The source text, which is marked “draft,” was an attachment to a November 11 memorandum from Shultze to Califano that recommended that a meeting be called of agencies involved in the stockpile study, in order to issue a new NSAM establishing new stockpile objectives. (Johnson Library, Confidential File, Oversize Attachments, 12/65, Box 161)↩
  2. Document 246.↩
  3. Not printed here; a copy from another file is printed as Document 299.↩
  4. No revised draft, dated November 12 (Friday), has been found.↩
  5. Text in Foreign Relations, 1961–1963, vol. IX, pp. 791–792.↩
  6. Printed from a copy that bears this typed signature.↩