Foreign Affairs: 100 Years
The Future of History
Can Liberal Democracy Survive the Decline of the Middle Class?
THE statisticians had defeated Germany months before she invaded Poland. With batteries of adding machines they had proved that she was suffering from serious deficiencies in critical foodstuffs and in practically all of the raw materials necessary for the conduct of modern warfare. Their calculations showed that with respect to fats, oils, wool, cotton, hides, petroleum, iron, copper and other metals, the Reich was bound to be at a great disadvantage vis-à-vis the French and British as long as the latter could keep open the lines of sea communication. The conclusion seemed obvious -- "Germany Can't Win." The more cautious of the commentators introduced qualifications as to the length of the war and the tightness of the British and French blockade. They also made a third qualification as to the character of the struggle -- whether it was to be a war of attrition or a war of movement. But since the invasion of Norway in April, there is no longer any doubt on this score. It is a war of movement -- a war in which fuel, lubricants and metals are being consumed on a scale never before seen.
Germany's rapid and smashing successes, first in Poland, then in Norway, and finally in the Low Countries, have forced us to reconsider our earlier conclusions, and to ask whether undue weight was not assigned to the raw material factor in deciding the outcome of the struggle. In this article I shall attempt a partial reappraisal in only a limited field, that of metals, especially the non-ferrous metals and ferro-alloys. I shall attempt to show where Germany's metal problem is most acute, and then review the various solutions which have been tried -- stock piling, recovery of wastes, substitutions, and the shifting of imports so as to find holes in the Allied blockade. Under the last heading, I shall consider the policy of the United States, in particular with respect to "moral embargoes."
The reader must be warned at once not to expect me to demonstrate in mathematical terms Germany's chances of victory or defeat in this "battle of the metals." Even with accurate and complete statistics concerning the imports, exports and production of ores and metals, such a demonstration would be difficult. Actually, it is impossible, for in Germany, and to a less extent in Italy and Japan, there has occurred a statistical blackout which prevents quantitative conclusions about the trade in metals. Neither Germany nor Italy has issued any foreign trade statistics since August 1939. As early as July 1937 Japan discontinued publishing detailed import data on metals.
Since the days when knighthood was in flower, steel has been the indispensable metal of warfare, both for defense and offense. Each new development in military technique only emphasizes the necessity for steel in great quantities and, what is equally important, of special qualities. Armor plate and projectiles require steels with great power of resisting shock; airplane and tank engines require light steels of great tensile strength. The manufacture of munitions requires special tool steels, capable of effective operation at high speeds. These various qualities, the metallurgists have discovered, may be developed by alloying steel with one or several of a group of rare metals. Their names -- molybdenum, tungsten, chromium, vanadium -- are meaningless to the layman, but ring in the ears of experts with a familiar clangor. Everyone knows that nickel plating prevents rust, but few are aware of the importance of nickel steels in the manufacture of gun carriages and other heavy equipment. Manganese has a double use both as a ferro-alloy and as a deoxidizing agent in the manufacture of steel. For the latter purpose it cannot be replaced by any other metal.
Non-ferrous metals -- aluminum, antimony, copper, lead, magnesium, tin and zinc -- constitute a second group whose importance in warfare has been greatly emphasized by recent technological developments. Electrical apparatus, the radio and sound detection devices, as well as the radiators of airplanes, tractors and tanks demand large amounts of copper. The all-metal airplane is the outstanding new device in this war. In an average plane of 8,300 pounds net weight, metals are used as follows: aluminum, 5,120 pounds; iron and steel, 1,680 pounds; copper, 360 pounds; other metals (nickel, chromium, molybdenum, magnesium, tin) from 60 to 70 pounds each; and, in addition, small quantities of lead and zinc. Applying these figures to Germany's estimated production of 24,000 planes annually we get the following metal requirements for her airplane industry alone:
|Nickel, chromium, molybdenum, tin, magnesium|
|and other metals||4,400|
Germany's poverty in metal-bearing ores is well known. By and large her domestic ores have supplied only one-fourth to one-third of her requirements for iron and steel, and one-seventh of her copper.[i] Of bauxite, antimony, tin and the critical ferro-alloys (molybdenum, tungsten, chrome, nickel), domestic production was either negligible or non-existent. Only in the production of lead, zinc and magnesium did Germany approach self-sufficiency. The high state of efficient productivity attained by the German metal industries has been due to the use of ores and metals in various stages of concentration, brought from all over the world to German smelters, refineries and steel plants.
But satisfactory as such trade may have proved in peacetime, it harbored grave dangers for a war economy. Both the geographical distribution of the ores and the nature of the political control over them were unfavorable to Germany. Most of the great metal-producing areas were overseas, and many of the best deposits were within the British or French Empires. As soon as war broke out, the copper ores of Chile and Rhodesia, the nickel of Canada and New Caledonia, the manganese of Brazil and India, the tin of China and Bolivia became for all practical purposes unavailable to Germany. Those metals which are available in Europe -- with the exception of iron, bauxite, magnesite, manganese, zinc and lead -- are either inferior in quality or available to Germany only in insufficient quantities.
Germany, of course, did not go into the war unaware of her weakness in metals. For years her economists and metallurgists have given much study to plans for strengthening this vulnerable sector in her war economy. The most direct way for Germany to obtain metals was to invade neighboring nations which produce them, or which had accumulated stocks. However, viewed from this angle, the annexation of Austria and the occupation of Czechoslovakia did not yield large results, for like Germany they were themselves industrial states and hence large consumers of metals.[ii] The acquisition of these two countries added some 3,000,000 or 4,000,000 tons to Germany's annual supply of iron ore, and small contributions of mercury, antimony and copper. Austria's abundant supply of magnesite was an important gain for the Reich's production of magnesium.
The Polish adventure contributed zinc, making Germany practically self-sufficient in this metal. Denmark has no metals. Norway has been an exporter of many of the metals which Germany must have if she is to win this war: aluminum, copper, nickel and various of those rare metals, such as chrome and molybdenum, which are so important in adding hardness and temper to steel. But the Norwegian metallurgical industry was based principally on hydroelectric power resources which it used to refine foreign ores: bauxite, copper, nickel and other ferroalloys. By acquiring the Norwegian molybdenum mines, Germany got a strategical resource which may prove of substantial aid in carrying on the war. The annual output of the mines, 1,000,000 pounds (metal content), will afford several months' supply of an alloy desperately needed for high-speed steels and for those requiring great tensile strength.
The occupation of The Netherlands and Belgium resulted in the addition of badly needed supplies of tin. Tin ores from the Dutch East Indies were smelted at Arnhem, only ten miles from the German frontier. Fearing that the product might fall into German hands, either through trade or by force, the British from the opening of the war imposed a strict limitation on the imports of tin ore or metal into The Netherlands. Nevertheless, in spite of these precautions, the Germans may have succeeded in seizing 2,000 or 3,000 tons of tin supplies when they invaded Holland. (German consumption runs perhaps to 13,000 tons annually.) Germany's greatest gain in metals came from the occupation of the Grand Duchy of Luxembourg. This tiny state in 1937 produced 7,700,000 tons of iron ore, an amount equal to more than one-third of Germany's annual imports in recent years. This Luxembourg ore, combined with imports that can be expected from Sweden, will go far to satisfy Germany's needs.
Europe as a whole is poor in metals, particularly in the rarer ferro-alloys. Thus a limit is put to the solution of the problem by force of arms, unless and until Germany can wrest the control of the seas from the British Navy.
On the home front, Germany's metal deficiencies may be solved, more or less completely (1) by a fuller exploitation of scanty and neglected ore reserves; (2) by the accumulation of stock piles; (3) by restrictions on the consumption of metals for all non-military purposes; (4) by the exploitation of the reserves in the hands of consumers in the form of metal objects and scrap; (5) by the development of new alloys and new technical processes, making possible the substitution of metals which are abundant in Germany, or available from neighboring countries, for those which are scarce.
The policy of making the most of Germany's scanty ore deposits has found its most spectacular application in the exploitation of low-grade iron ores in the Brunswick region. By working low-grade ores at great expense, domestic production was raised from 8.4 million tons in 1936 to 13.6 million tons in 1938. (Germany's present import needs are estimated at over 20 million tons a year.) As for copper, though the Reich's domestic production was increased somewhat during the same years, it was still dependent upon foreign supplies for 85 percent of its total consumption. Gains were also made in lead and zinc mining. There are no other deposits of metal-bearing ores of importance in Germany, and consequently this policy can aid but little in solving her metals problem.
Stock piling -- the accumulation in peacetime of reserves to be used when war cuts off supplies from abroad -- is a policy more feasible for metals than for other raw materials. Metals can be stored without deterioration and with relatively little expense for warehousing. It is common knowledge that stock piling has been carried on vigorously in Germany since 1933. Since stock piles constitute an important military secret, no exact estimates are possible. But some idea of the extent to which metals were accumulated, either in public ownership or in the hands of traders, is given by the trend of imports as shown in the following table. When interpreting the figures, allowance must, however, be made for the great armament program of the years 1933-1938 which increased metal consumption considerably.
|GERMANY'S RETAINED IMPORTS OF CERTAIN METALS AND ORES (expressed as percentages of 1929 imports a)|
|Aluminum, crude and refined||(b)||55||410||108||62||316|
|Copper ore and matte||54||75||92||111||128||151|
|a Imports in 1929 were as follows (in metric tons): aluminum, crude and refined -- 3,704; bauxite -- 386,856; chrome ore -- 41,393; copper ingots -- 162,794; copper ore and matte -- 429,673; manganese ore -- 388,867; nickel -- 2,391; nickel ore -- 13,818; tin, crude -- 12,458.
b Exports exceeded imports by 2,571 metric tons in 1933.
Stock piling is a costly policy which may put severe strain on a nation's economy. For example, if Germany were to store up one year's consumption of tin and copper, she would have to spend about $50,000,000. If traders and producers can be persuaded to hold large stocks, the cost to the national treasury can be reduced; but in any case, stock piling imposes an added burden on the country's economy and the added cost of holding inventories constitutes a form of taxation.
Through the use of "priority orders" the German Government has diverted metals from civilian (non-essential) production to the munitions industries. Since March 1934 all consumption of metals and all trade in ores and semi-finished products has been strictly controlled. The tin which was used in collapsible tubes for tooth paste and in tin cans for preserving fruits, meats, etc., is now used in solder for airplane radiators. Aluminum and copper, nickel and chromium which formerly went into household utensils and builders' hardware, are now destined for airplane bodies and engines and other military equipment. The empty shelves of retail dealers are evidence of the extent to which the transfer has already proceeded. In peacetime a considerable volume of metals was stored by Germans in their coin purses and trousers pockets. But a few months ago this small change of copper, aluminum and bronze, was replaced by coins of zinc. As early as January 1940, a general prohibition was applied against the use of aluminum for civilian purposes; instead, substitutes of zinc, steel and synthetic resins were suggested. The restriction of both civilian consumption and the export of metal products has freed important quantities for munitions. The use of iron and steel in building and in highway construction has been curtailed. So great is the economy possible in this direction that the total German consumption of iron ore, for example, may show no increase during the war; it may even decline. During the First World War the German output of steel dropped by 30 percent.
In peacetime, metals are not really "consumed," as are gasoline, lubricants and textile materials. Only part of the new metal production each year serves to replace what was used up the year before; the remainder is added to a great circulating metallic fund which can be drawn upon heavily in wartime. Naturally, there are wide variations in the extent to which various metals may be recovered and re-used; some, which are now critical for Germany, cannot be recovered at all. Most of the manganese used in steel manufacture disappears in the process. Recovery of other alloys -- tungsten, molybdenum, nickel and chromium -- is not commercially feasible. But at the other end of the scale are iron and steel which are regularly reclaimed. In the United States about 65 percent of our annual production of iron and steel eventually finds its way back to the blast furnaces in the form of scrap. Scrap lead, copper and aluminum used each year is approximately equal to the primary production.
Under war conditions, however, the recirculation of all metals is obstructed. The thousands of tons of steel and copper in sunken warships can be recovered, if ever, only after years of peace. The steel used in gun emplacements, pill boxes and tank traps will not soon be available for civilian uses. The metal in bombs and shells will for the most part never be recovered. But behind the lines, the collection of scrap metals proceeds busily. In Germany, between 1914 and 1918, kitchens were swept clear of their shining pewter and brass. Churches were stripped of their copper roofing; iron railings and fences, bronze statuary and church bells were hauled off to be melted down for munitions. Now again, under the war economy which has existed in Germany since 1933, the recovery of scrap metals has been developed into a fine art. In the collection of household wastes, all discarded objects of metal, collapsible tubes and tin foil are sedulously retrieved. Recently a campaign was instituted to persuade Germans to make a voluntary contribution of all articles of copper, bronze, brass, tin, lead and nickel which are not "vitally needed."
The resources of the stock piles and the junk piles are supplemented by the skill of German metallurgists, modern alchemists who, if they cannot actually transmute metals, have found ingenious ways of substituting one for another. Each metal has peculiar qualities which fit it preëminently for certain uses. Tin is malleable; nickel and chrome resist corrosion; copper is distinguished for high thermal and electrical conductivity, magnesium and aluminum for their low specific gravity, the ferro-alloys for the qualities of hardness, temper and tensile strength which they add to steel. But the lines of division between the metals are not hard and fast; substitution is possible and in peacetime continually takes place in response to price variations. In wartime Germany, the metal famine produced by the blockade has given great impetus to the substitution of zinc, aluminum and magnesium -- metals which are abundant in Germany or accessible from non-blockaded areas -- for those which are no longer obtainable. In the latter category is tin (mined in Bolivia, China and the Dutch East Indies). Until recently tin was regarded as indispensable for soldering the joints of airplane and automobile radiators and for non-friction bearings. It is reported that in new solders, zinc has been substituted for tin and that plastics (synthetic resins) are used for bearings even where great pressures are encountered. The tin can, the ubiquitous symbol of modern life, accounts in peacetime for a very large proportion of tin consumption -- in the United States for about 45 percent. Wherever possible, Germany is substituting cardboard or paper containers. Experimentally, aluminum is being plated on steel as a substitute for tinplate where a non-corrosive metal container is required.
Probably the most important changes which have taken place are the substitution of aluminum for copper, and of alloys of aluminum and magnesium for nickel steel and chrome steel. Germany's rapid gain in aluminum production from 19,000 tons in 1932 (the 1929 figure was 33,000) to 168,000 in 1938, gave her world leadership. Bauxite, it is true, must be imported, but this can be obtained from Italy, Greece, Hungary and Jugoslavia. In the electrical industry the substitution of aluminum for copper seems to have begun in Germany during the First World War, when aluminum conductors were introduced in large rotating apparatus, windings and in some transformers. Although this development was checked when cheap copper was again available, it has now been resumed. The Germans have recently applied aluminum to transmission lines, busbars, trolley wires and cables to a much greater extent than in this country.
Both German and American electrical engineers, however, are skeptical of Germany's ability to overcome her copper shortage by these shifts. They point out that her increased aluminum production requires a large consumption of electrical energy. Dr. C. F. von Siemens recently called attention to the vast expansion in Germany's war demand for products of the electrical industry. "Please remember," he warned the Siemens stockholders, "that radio telegraphy was then  in its infancy and did not yet command great respect, whereas radio telephony was still an unborn offspring of the electrical industry. Today every airplane contains a small but highly complicated electric plant. Not only in the armed forces, but also in the industries working for them, the use of electric power has been greatly multiplied."[iii] Furthermore, the German Ersatzwirtschaft has imposed a great additional burden on the electrical industry. According to Dr. Siemens:
We used to buy copper as ingots from foreign countries or in the form of unrefined copper; we then refined it by electric methods into electrolytic copper, which required 300 kwh. per ton. Today, copper is replaced by aluminum to a large extent. However, in order to produce a ton of aluminum, 20,000 kwh. are required or, in terms of equivalent electric conductivity, 10,000 kwh. are required for replacing one ton of copper.
The new synthetic products are not, as some American isolationists have implied, made out of nothing. They require large additional amounts of electrical energy, which means large amounts of metals in electrical installations. To quote Dr. Siemens again:
Natural rubber requires no mechanical energy for its production, mechanical power being used only for its refinement. Its synthetic substitute "Buna," the discovery of which dates back to pre-World-War days, requires 25,000 to 30,000 kwh. per ton for its production. In order to obtain benzine from crude oil, 12 kwh. are required per ton. The production of synthetic benzine from coal, however, requires 3,000 kwh. Many more instances might be cited of increased use of electrical energy that has been due to our efforts to become as independent of foreign countries as possible.
The recent boom in magnesium production in Germany was made possible by new metallurgical processes and by the availability of large supplies of Austrian magnesite. Alloyed with aluminum, magnesium is used in place of steel in manufacturing airplanes and motorized transport vehicles. The resultant reduction in dead-weight makes possible certain economies in fuel consumption. Germany now ranks first in the production of magnesium, with an estimated 1938 output of 12,000 tons. Here again, however, the electric power industry is subjected to increasing strain, for the power requirements per ton of magnesium are almost as great as for aluminum.
Within the field of the ferro-alloys, substitutions have also been worked out. Tungsten can be replaced at least partially by molybdenum. But over 90 percent of the world's molybdenum is produced in the United States, and the American supply, for reasons to be discussed later, is not available. Germany's metallurgical skill cannot remedy the deficiency in ferro-alloys, since there are no domestic sources of supply of any of the metals in this group, and none of them is easily accessible in necessary quantities from unblockaded countries. Consequently, the replacement of one by another does nothing to relieve scarcity.
Finally, let us consider Germany's ability to satisfy her metal needs by importing, either through shifting to new sources of supply in countries not affected by the blockade, or by evading the blockade with circuitous imports via friendly countries.
Imports involve payment of some sort, in goods, in blocked marks or in gold and foreign exchange. It is beyond our scope to discuss in detail Germany's ability to continue to export during the war, either from the factories in the old Germany or from those in the occupied territories. Two points of weakness, however, are obvious: (1) the Allied blockade cuts off many raw materials such as cotton, wool and hides which are necessary for the export industries; and (2) the demands of the war economy absorb labor, materials and transportation facilities. Blocked marks are probably as useful as goods in dealing with the small neutrals of southeastern Europe, all of whom are intimidated by the fear of invasion. Japan and Russia are in a different category. In trading with them, any deficit in the accounts must be balanced by gold or foreign exchange. When the war began, Germany's supplies of valuta were supposed to have been very meager and her gold reserves practically non-existent. A year ago the bank vaults in Oslo, Copenhagen, Brussels and Amsterdam held gold worth hundreds of millions of dollars; but when the German invaders arrived, they were empty. The gold had been shipped to New York and London.
Assuming, however, that in one way or another Germany can pay, what imports are physically available to her? A glance at the map shows that a vast area is accessible to Germany in Russia and southeastern Europe. Italy is just another have-not nation. It can supply mercury and bauxite from its own rich deposits, but with respect to iron ore, copper and all other metals, it competes with Germany for the supplies most easily available, i.e., in the Balkans. The vast area of the Soviet Union has not much to offer in the way of metals. To supply the needs of its own industries it has to import copper, lead, tin, nickel, tungsten, molybdenum, antimony -- the very metals which the Nazis want. Only manganese is exported from Russia in substantial quantities. Five hundred thousand tons of this metal are supposed to have been guaranteed to Germany under the terms of the Russian-German trade agreement of September 1939. Assuming a metal content of only 35 percent, this amount of ore would be sufficient for a steel production of 25,000,000 tons. (The output of Germany, Austria, Czechoslovakia and Poland in 1937 was 24,000,000.) Although the Russian manganese deposits lie at a distance of over 1,000 miles from the German steel works, transportation difficulties will probably not be insuperable.[iv]
Germany has long regarded southeastern Europe as a German economic dependency where raw materials can be exchanged for their industrial products. In this direction transportation facilities, both by rail and water (the Danube touches the borders of all the Balkan countries except Greece), are better developed than towards Russia. The region has deposits of certain minerals which Germany greatly needs: bauxite, copper, manganese, chromite, lead, antimony. But these resources have not as yet been exploited on a scale adequate to supply her deficiencies. Even if all the bauxite exportable from Hungary and Jugoslavia went to German aluminum works, it would hardly fill the gap left by the failure of supplies from France and the Netherlands East Indies. Similarly, the total output of Jugoslavia's copper mines and smelters would not replace what Germany has been importing from either Chile or Rhodesia.
But even were the Balkan supplies adequate, Germany can obtain them only in part. Italy also is dependent on metals from this region, and will demand her share. Moreover, British and French capitalists, who own some of the most productive mines in Jugoslavia, object to their metals being used to aid the German war machine. The Germans with characteristic forethought in October 1939 arranged a barter agreement with Jugoslavia by which they were to secure copper, lead, zinc, manganese and chromium. When the French and British companies refused to make deliveries, the Jugoslav Government was in a tight spot. It wanted to placate the Germans, its best customers, but it also preferred free exchange which the Allies offered instead of blocked marks. It therefore nationalized the mines. The state also took over control of both exports and production, asserting its right in the face of diplomatic protests to supply Germany with amounts of metals equal to those supplied before the outbreak of war. These quantities, as has already been pointed out, fall far short of what Germany needs. Later, however, it was reported that the Allies had won their original contention, i.e., that none of the ores taken from British or French-owned mines was to be sent to Germany. As regards chromite (the ore from which chromium is derived) the Allies were forehanded. Under an agreement made in December 1939, Turkey will put all her chromite export at their disposition.
Italy and Russia, although not able to supply Germany from their own mines, are in a position to aid that country by bringing in metals through the backdoor. The Allied blockade of Germany has never been completely effective and leaks of various sorts have developed. Particularly valuable metals, such as tungsten and industrial diamonds, it is said, have been carried by a Swiss air service operating from Lisbon across Spain and Italy. Control of contraband traffic by air seems to be a problem which the British Ministry of Economic Warfare has not yet solved. The problem arises also with respect to trans-Atlantic plane service from the United States to Portugal. But air traffic can have but limited dimensions. The real loopholes of the blockade as far as metals is concerned have been through Russia and Italy.
As one after another of the North European states was invaded, the importance of German trade with Italy increased; it afforded practically the only means of access to the Atlantic. Since all ships bound for Italian ports had to pass Gibraltar or Suez, it might have seemed an easy task to enforce contraband control. But politically the problem was not so simple; Italy's neutrality was so precarious that the Allies did not apply their controls rigorously against her. Nevertheless, the rise in Italian copper imports from the United States during 1939 and early 1940 aroused Allied suspicions. Some cargoes were stopped; others allowed to proceed. The Italian Government is said to have refused to give the Allies guarantees that imported metals would not be reëxported.
In the Pacific, the blockade was practically non-existent during the early months of the war. One of its earliest applications there affected tungsten exports from China. According to a Sino-German agreement signed in 1935, the Chinese Government was to exchange tungsten for airplanes and other munitions. With the outbreak of the war in Europe, this agreement lapsed owing to Germany's inability to make deliveries. A similar agreement with Russia is now in force, but in this case the Chinese are unable to carry out their part of the bargain owing to English and French control over exports through the ports of Burma and Indo-China. Much tungsten, however, is smuggled into Hong Kong where it is purchased by the Japanese. Considerable shipments of this tungsten are thought to have been made to Vladivostok and thence transshipped to Germany. For Vladivostok is another backdoor through which copper and tin, and perhaps other metals, may be reaching Germany. Russia, which had bought no refined copper in the United States during the first ten months of 1939, suddenly came into the market and took 122,700,000 pounds in five months. Most of this metal was shipped from our Pacific ports with only occasional interference by British warships. Beginning in April a more rigorous policy seems to have been adopted, notwithstanding the Russian claim that her ships, being state-owned, were not subject to contraband controls.
The American Government has aided Allied warships in stopping the backdoor metal trade with Germany. Since early in October 1939 our State Department has been applying voluntary or "moral" embargoes which have resulted in limiting our exports of several important metals. Soon after the war broke out, a marked increase was noted in our reëxports of certain metals which we do not produce in the United States. Among these were tin and antimony, commodities considered to be strategic for defense purposes. Tin shipments, which had averaged 47,126 pounds in the first seven months of 1939, rose to 161,000 in September. In order to put a check to this unusual trade, President Roosevelt on September 26, 1939, warned Americans not to sell to foreign purchasers any domestic stocks of tin, manganese, chrome ore or rubber. To do so, he maintained, would be an unpatriotic act and contrary to the Government's policy of accumulating stock piles for emergency use. This warning proved ineffective. The Army and Navy Munitions Board therefore issued a statement (October 11, 1939) calling attention to the attempts of foreign purchasers to obtain supplies of strategic materials "imported into this country by private interests for use by American industry." "From the standpoint of national defense," the statement continued, "it is perhaps imprudent to ship out of the country those materials which can be replaced only by imports . . . "
Long-established, responsible firms undoubtedly heeded these warnings; but the lure of large profits to be made on a quick turnover of capital drew new firms into the business, and reëxports still continued, as is indicated in the following table. In a second
|REEXPORTS OF TIN FROM THE UNITED STATES|
|(in thousands of pounds)|
|Total||To Russia||To Sweden||To Canada||Countries|
statement issued January 19, 1940, the Board called attention to the greatly increased exports of pig tin from this country to Europe as "a matter of much concern." It condemned those who continued to engage in export activities detrimental both to the nation's industrial economy and to its national defense. Finally, it warned that should appeals to voluntary coöperation prove ineffective, "other means" would be found.
Even this veiled threat seems to have fallen on deaf ears. Traders were informed by their lawyers that the Board had no legal authority to prohibit exports. The interruption of normal trade routes had made New York overnight the center of a flourishing entrepôt trade in metals. A sudden demand for tungsten on the part of Japanese buyers swept the New York market clear of that metal. In December and January Russia purchased in the United States 2,000 tons of tin, nearly all of which represented imports from British smelters in the Straits Settlements. At once an angry protest arose in the English Parliament; it was claimed that the tin had been supplied to American buyers on condition that it should not be reëxported. No threat was made that the rationing of raw materials which had been applied to other neutrals might be extended to the United States. Nevertheless, the desire to avoid this contingency, as well as our growing disposition to coöperate with the Allies may have affected American export policy.
A second type of moral embargo was launched by President Roosevelt's statement of December 2, 1939. He expressed the hope that American manufacturers and exporters of airplanes, aëronautical equipment and materials essential to airplane manufacture would not encourage unprovoked bombing of civilian populations by exporting such goods to nations obviously guilty of these acts. Supplementing this statement, the Department of State addressed letters to producers of two metals used in airplane manufacture, molybdenum and aluminum, inviting their attention to the President's request.
The molybdenum embargo centered interest on one of the newer ferro-alloys, a substitute for tungsten, of which the United States produces over 90 percent of the world's supply. Exports, which for the first six months of 1939 averaged 1,700,000 pounds monthly (ore and concentrates), shot up at the outbreak of war to 6,600,000 pounds. In the last quarter of 1939 they were: October, 8,447,000 pounds; November, 4,071,000 pounds; December, 6,181,000 pounds. Increased shipments went principally to the United Kingdom, Japan and to the U.S.S.R. The Soviet Union alone took five million pounds of American molybdenum in October 1939.
Neither the President nor the Department of State mentioned by name the countries to which they wished the embargo to be applied. But American firms took it for granted that Russia and Japan were taboo and stopped shipments to those countries, except for contracts already made. The resulting shrinkage in our exports is shown in the following table:
|MOLYBDENUM EXPORTS FROM THE UNITED STATES|
|(in thousands of pounds of ores and concentrates)|
|Total||To U.S.S.R.||To Japan||To Italy||Countries|
These export statistics are misleading in one respect: they appear to indicate that the embargo was not immediately effective. Export figures, however, are compiled from shippers' declarations, and in this case there may have been a considerable lag between sales and shipments.
The bits of scattered information which are available regarding Germany's deficiencies in metals and her attempts to remedy them cannot, as I warned the reader at the outset, be added up to prove either defeat or victory for the Nazi armies. The outcome of the present war will be determined by a great complex of factors, economic and psychological as well as military; but in the final result Germany's lack of an adequate and easily accessible supply of metals will not have played an insignificant rôle. The necessity of using inferior ores and less effective processes, and of importing metals from distant countries by circuitous routes, all add to the strain which the war imposes on German economy.
One final reflection may be in order. Europe as a whole is poor in metals. If the aim of Hitler and his associates is to create a great, self-sufficient empire, their aggression must be carried beyond the limits of the European continent. That is something which Americans must take into account in shaping their defense policies.
[i] These estimates, which are based on statistics for the period 1936-1937, probably underestimate the importance of domestic supplies. Imports in these years were abnormally large, owing to the policy of accumulating reserves.
[ii] Czechoslovakia's iron ore production was not sufficient to supply its own iron and steel industries.
[iii] Quoted from Die Boersenzeitung, March 20, 1940.
[iv] See Professor Hopper's discussion of this subject in his article "How Much Can and Will Russia Aid Germany?" in FOREIGN AFFAIRS, January 1940.