The Hollow Order
Rebuilding an International System That Works
THE strength of the United States in war, and its peacetime standard of living that is the envy of the world, are based on deposits of coal, iron and other minerals. Shortages that threatened serious repercussions on the battle front are a grim reminder of the tremendous extent to which modern armies depend on an ample supply of metals and mineral fuels. And the inconveniences resulting from fuel and gasoline rationing and from the wartime scarcity of radios, refrigerators, automobiles, communication facilities and mechanical household equipment emphasize our peacetime dependence on minerals. We have come to regard these machines and appliances -- all largely fabricated from minerals -- as essential to everyday life. The question of mineral resources, therefore, is fundamental to our economic and military security, and the maintenance of a sufficient supply, at reasonable costs, is a major consideration in the determination of national economic policies.
In the past the problem of mineral resources has not given the United States much concern. Imports were relatively small and readily available. The minerals that are basic to our industrial economy and most of the subsidiary ones have been obtained from domestic sources in ever-increasing quantities. This tremendous growth in mineral production has made possible our outstanding advance as an industrial nation. From 1880 to 1944 the value of the annual production of the mining industry increased 16-fold, from one-half billion to eight and one-half billion dollars. But the demands of this war overtaxed our capacity for production and forced us to increase imports greatly. We have at length perceived the inexorable truth that mineral deposits can be used up, and that they have in fact diminished in proportion to the speed with which we have developed our industrial strength. The extent to which our basic mineral position has been impaired by the tremendous depletion of the past 60 years is a highly significant question.
Opinion on the extent of this depletion differs widely. Some spokesmen maintain that the United States will soon be a "have-not" country in regard to minerals and that our position is precarious. Others dismiss such fears as ridiculous and hold that our resources are comparatively untouched. In an endeavor to get at the facts, the Department of the Interior through its Geological Survey and Bureau of Mines about a year ago undertook a broad appraisal of our mineral reserves.[i] The preliminary results of this survey indicate that neither of the foregoing viewpoints is correct. The mineral resources that are basic to our industrial economy are far from exhaustion, but depletion is well advanced in a number of important subsidiary minerals. Certainly it is clear that a policy of drift and a refusal to face the realities would be dangerous.
But before summarizing the results of the inquiry, it is important that some of the uncertainties involved in estimating mineral reserves should be pointed out. Evidence of the existence of mineral deposits varies in reliability. Many deposits are so thoroughly exposed by mine workings or drill holes that their size, shape, content and grade can be determined with accuracy. In the idiom of the mining profession these are classed as "measured" or "proved" reserves. Other deposits are incompletely developed so that estimates are computed partly on engineering data and partly on geological evidence; these are called "indicated" reserves. Still others are virtually undeveloped and quantitative estimates must be based largely on geological evidence; such deposits are known as "inferred" reserves. With the exception of petroleum and natural gas, for which only estimates of proved reserves are available, all three classes are included in the estimates used in this analysis. The interpretation of geological evidence involves individual judgment to a considerable extent and consequently introduces a degree of uncertainty into the estimates.
Mineral deposits are classified as "commercial" or "submarginal," but this grouping also lacks precision. Many of the factors involved, such as trends in technology, costs of production, prices of mineral products, and the future volume of production, can be estimated only in broad terms. In general, the phrase "commercial reserves" is used here to represent mineral resources available under present technologic practices and economic conditions, with prices equal to or moderately higher than good prewar prices. Estimation of submarginal resources, therefore, is highly speculative. Because of these uncertainties, calculations of commercial and submarginal reserves should not be regarded as setting fixed limits for future mineral yield, but rather as rough approximations of what may be expected. As such they provide a practical basis for the discussion of questions of mineral policy.
It is generally agreed that the areas of the United States which may contain minerals have been extensively explored and that most of the surface deposits, or deposits whose presence is indicated by evidence on the surface, have been located. Additions to the national reserve must therefore depend largely on the discovery of deep-seated deposits. Some experts believe that
noteworthy "blind" mineral deposits will be found by geophysical methods of prospecting; such methods are costly, however, and the risks involved are great. Discoveries of concealed resources will doubtless be made, but the outlook does not warrant the assumption that the reserves as now estimated will be enlarged greatly.
What, then, are the primary facts about our mineral resources? Figure I shows the degree to which the original commercial reserves of 25 important minerals were exhausted as of 1944. The significant features are the relatively slight exhaustion of coal, the mineral most essential to our industrial economy; the favorable position in regard to nitrogen, phosphate rock and potash, the minerals so necessary to maintain fertility of soil in our agricultural regions; the substantial proportion of our iron ore already consumed; the advanced depletion in petroleum and natural gas; and the seriously depleted state of most of our metalliferous resources. It should be noted that the percentages of original reserves of petroleum and natural gas remaining are unduly low because they are based solely on proved reserves
and therefore do not reflect unknown quantities of oil and gas that are available in indicated and inferred reserves.
In Figure 2, remaining commercial reserves of 33 minerals are expressed in terms of years' supply at the average annual rate of use from 1935 to 1939. The reader must be warned that these proportions are meant merely to suggest the quantity of reserves; they do not mean that production capable of meeting the prewar rate of use can be carried on for the full periods shown. As minerals become exhausted production tapers off; it does not go abruptly from full production to nothing. The point at which the United States ceases to be capable of self-sufficiency in these commodities will be reached long before the resource is exhausted.
As the chart indicates, reserves of nitrogen, magnesium and salt are so large that for practical purposes they may be considered inexhaustible. The enormous extent of our coal resources is clearly indicated by the 4,300 years' reserve; and commercial reserves of phosphate rock, molybdenum, anthracite, potash and iron ore all exceed a century's supply at the prewar rate of use. But of the remaining 24 minerals, we have a 25 to 100-year supply of only four, a five to 25-year supply of eight, and less than five years' supply of 12. To put the situation in somewhat different and harsher terms we might note that 35 years is only a little more than the usual interval between wars, and that we have less than a 35-year supply of 21 of the 33 minerals. In this group are the vital products petroleum, copper, lead and zinc.
Let us analyze in more detail the situation in regard to these principal industrial minerals. First come coal, iron and petroleum. Then the secondary groups -- copper, lead and zinc, and tin, antimony and mercury; and then the ferroalloys, the precious metals and the chemical raw materials. When we have examined the outlook for the supply of these we should be able to make some conclusions as to the policies that seem wise for the future.
The military power and the economic well-being of the United States are based on coal. Coal is essential in the production of steel, and coal and steel together are the sinews of industrial life. The principal coal-producing regions of the world lie in the United States, England, Russia, Japan and western Europe; and the reserve of the United States is the largest in the world. Even so, we are using it extravagantly. A large part of our anthracite is gone already. We also endure without concern a 30 to 40 percent loss in the process of mining coal, much of which could be avoided. We have none too much high-grade coking coal -- essential in steel manufacture -- yet we use it where other kinds would do; we have never really bothered to find out just how much of it we have. Liquid fuels can be made from coal, and we may have to draw on our reserves for this purpose; when we do, we shall use up our coal three times as fast. We are magnificently endowed with coal, and there will be no serious shortages for centuries. Nonetheless, prudence in the spending of this resource is the part of wisdom.
Our commercial reserves of iron ore are much less extensive, but are nonetheless great, and are equivalent to a 111-year supply at the prewar rate of use. Enormous quantities of submarginal ore could contribute an additional thousand-year supply, given the necessary technological improvement in methods of extracting and processing it. Approximately a third of the commercial reserves and more than 90 percent of the submarginal reserves are found in the Lake Superior district.
The great direct-shipping ores of the Mesabi Range of Minnesota are nearly exhausted. At the 1944 rate of production the open-pit mines would last only 11 years more. This is our best ore, since the deposits can be mined cheaply and the ore used without prior treatment in smelting pig iron. And the ease with which production in the open-pit mines can be expanded to meet an emergency demand has made them an invaluable national asset. The alternatives with which we shall soon be faced are the utilization of lower-grade ores -- which means building large plants in which to treat them -- or dependence upon imports. The former would be costly, but the latter would be dangerous in time of war. American engineers doubtless will solve the problem of developing the low-grade ores.
This paper attempts only to summarize the outstanding elements of the complex petroleum problem. The American Petroleum Institute estimates that proved reserves are approximately 20 billion barrels -- about a 12-year supply at the 1944 rate of extraction. The demand is mounting and there is much concern about the declining rate of new discoveries. Most experts expect that more oil will be discovered: Wallace E. Pratt ventures an estimate that the ultimate yield will be at least 100 billion barrels -- in other words, about 70 billion barrels more than we have so far consumed and the equivalent of about a 40-year supply.
If future discoveries fail to remedy the situation we must either import petroleum or make it from certain raw materials. To import it, from the Caribbean area or elsewhere, would be the least expensive procedure, though obviously an unsatisfactory solution from the point of view of national security in time of war. A combination of the two policies seems advisable. We shall probably begin to import at least a moderate amount of petroleum in the near future, and at the same time we should attempt to expand our domestic production by the secondary recovery of petroleum from depleted oil fields and the production of synthetic liquid fuels from natural gas, tar sands, oil shale and coal. In the aggregate these resources represent an enormous reserve, but the cost of the secondary or synthetic products would be considerably higher than present costs of gasoline and other fuels produced from crude petroleum. Some proved oil fields should be set aside as a national reserve, and we should establish at least the nucleus of a synthetic fuel industry which could be expanded to meet our national needs in an emergency. Congress has already authorized the Bureau of Mines to set up large demonstration plants.
Self-sufficiency in the important secondary minerals copper, lead and zinc ended with the war. Despite the payment of substantial government subsidies, production of lead and zinc declined in 1943 and 1944, and production of copper fell off in 1944. Fortunately, we were able to obtain all three from abroad. Depletion of reserves was the primary cause of the shortages, though there were various contributing factors. We can be self-sufficient in copper for a few years after the war: estimates of commercial reserves indicate that the present rate of copper production can be maintained for about ten years if reasonably good prices prevail. Production of lead and zinc may be expected to fall substantially below prewar levels within a few years, with increased dependence on foreign sources an inevitable consequence. Submarginal reserves of these metals do not appear to be large, even if future developments make them commercially available.
Our position in tin, antimony and mercury is still less secure. The United States has no commercial reserve of tin and an inconsequential submarginal reserve; it is entirely dependent on foreign sources of supply and is destined to remain so. Antimony, used chiefly in electric storage batteries, in anti-friction alloys and for flame-proofing textiles, is available only in small quantities and there is little hope of improving the size of our reserve. Domestic production of mercury reached a peak as far back as 1877, and it is estimated that only 3 percent of the original commercial reserve remains. Submarginal reserves even at prices four to five times higher than normal are estimated at less than a 15-year supply at the prewar rate of consumption. This unique metal has many war uses -- in pharmaceuticals, explosives, anti-fouling paint for ship bottoms, electrical apparatus, industrial control instruments, and dry cell batteries for flashlights and signal equipment.
The ferroalloying minerals impart hardness, strength, resistance to corrosion and other special characteristics to iron. They are, therefore, extremely important in this age of steel. The United States is deficient in manganese, chromium, nickel, tungsten and vanadium, but has a large export surplus and extensive commercial and submarginal reserves of molybdenum. Figure 2 indicates that commercial reserves of the first five metals are extremely small in terms of annual requirements. Submarginal reserves of manganese and vanadium are estimated to exceed a 200-year supply, and afford a measure of safety against shortages of these strategic materials in future emergencies; their development may even eventually provide a basis for peacetime industries. There is little hope of an improved position in regard to reserves of tungsten. Commercial reserves of chromite and nickel are virtually nonexistent; submarginal resources of the three metals are small.
The outlook for the light metals varies. Ocean water and underground brines are used in the United States to make magnesium, and the supply is of course unlimited. Aluminum, however, is made commercially only from high-grade bauxite; domestic reserves of this are very small and we shall no doubt have to depend on foreign sources. The United States has more than a 100-year supply of low-grade bauxite, but aluminum could not be produced at competitive prices from this material under normal conditions. Aluminum can also be made from clays and other minerals which are available in large quantities in the United States, but, again, not competitively.
Commercial reserves of gold and silver at present prices are relatively small and a decline in production from prewar levels may be expected. Submarginal resources which could be utilized at considerably higher prices offer hope only for moderate improvement in the reserve position. A substantial part of the commercial reserves of these precious metals is in ores valued chiefly for their copper, lead and zinc content; about 15 percent of the peacetime production of gold and 60 percent of silver are obtained as by-products from these ores. The future output will depend to a considerable extent on the rates at which the base metals are produced. The United States produces only a small part of the platinum it uses, and even this output will probably decline within a few years.
We need not be concerned about the supply of chemical raw materials. Air and water are inexhaustible sources of nitrogen, hydrogen, oxygen and a variety of rare gases that have important specialized uses. Air, water and coal provide the major elements required in the new and rapidly growing industries engaged in the production of synthetic plastics, rubber, textiles and allied products. The fertilizer requirements of the nation are satisfactorily provided for by our large resources of nitrogen, phosphorus and potash. Air and cheap power give us an abundant supply of synthetic nitrates, and our commercial reserves of phosphate rock and potash are substantial; the submarginal deposits of these minerals also are very large. Sulfur and salt are major chemical raw materials, and the nation has abundant supplies of both. Fluorspar and barite have important war uses and are available in quantities sufficient for several decades. Fluorspar is used in the manufacture of chemicals and glass and as a flux in the smelting of steel. Barite, a heavy mineral, is used chiefly to weight oil well drilling muds so as to prevent blowouts of oil and gas.
In concluding this résumé of our mineral resources, deficiencies in several nonmetallic minerals should be mentioned. Long fiber asbestos has highly strategic uses because of its extreme resistance to heat; it is used in textiles for automobile brake-bands and clutch facings, and high pressure gaskets employed in steam machinery and power plants. Domestic resources of this vital material are very small. Although quartz is a very common mineral, the variety of pure clear crystal that can be used in radio and telephones is rare; commercial reserves in the United States are virtually nonexistent. Without suitable supplies of quartz crystal, modern military and civilian communications would be seriously handicapped. Industrial diamonds are the hardest of the natural abrasive minerals and are thus indispensable for high-speed precision cutting and grinding operations; the United States has inconsequential commercial and submarginal reserves. High quality flake graphite, used in the manufacture of heat and corrosion resistant crucibles and retorts for the metallurgical industries, has not been found in the United States. We have fairly large reserves of noncommercial off-grade flake graphite that could be drawn upon in an emergency, but its use would be costly and the products made from it inferior.
We may summarize briefly the significance of the foregoing facts and trends. Figure 3 shows the relation of production to consumption for 33 important industrial minerals in the United States during the five-year period 1935-1939. This is the record of the nation that enjoyed greater self-sufficiency in minerals than any other important industrial country, yet it reveals several major deficiencies. Because of the irreplaceable nature of mineral resources, a gradual trend from a "have" to a "have-not" position is an inescapable consequence of industrial development. Some of our "blue-chip" mineral resources are critically depleted and our position will shift even more in the "have-not" direction after the war.
Before the war the United States had an export surplus of nine of the 33 minerals for which data are shown. Comparison of available reserves with probable postwar domestic requirements suggests that we can continue to export all but two of the nine
for some time. Within a decade we shall be in a net import position for petroleum and copper. No change in the status of natural gas is expected, as that commodity does not enter world trade to any appreciable extent. We can improve our position in iron ore, barite, nitrogen, potash, and possibly fluorspar if we wish to. We shall, however, be more dependent on foreign sources of zinc, lead, cadmium, mercury, bauxite, vanadium, tungsten, platinum and block mica in the near future. Supplies of the remaining commodities are now chiefly imported and will continue to be obtained abroad. Submarginal resources of bauxite, manganese, vanadium, flake graphite, chromite, nickel and mercury could be utilized to give us self-sufficiency under emergency conditions and at high prices. And we have relatively large submarginal reserves of manganese, vanadium and off-grade bauxite and other materials from which aluminum can be made. The outlook is not threatening to national security provided we use necessary foresight, and provided the doctrine of equal access to raw materials enunciated in the Atlantic Charter is made effective.
A word about the much-discussed question of substitutes is perhaps in order. World shortages of minerals are not imminent, and as long as world trade remains reasonably free, minerals will be available to United States consumers at competitive prices even if domestic resources fail. For this reason, and because it is more difficult to find satisfactory substitutes than is popularly supposed, replacements of minerals by substitute products are not expected. Eventually, when world resources become inadequate to meet demand, prices will rise and the incentive for substitution will increase. Science and invention may be depended upon to provide adequate substitutes when mineral supplies are exhausted, but these developments will come slowly.
Hydroelectric power and solar heat can be used in place of mineral fuels, but only limited quantities of the former are available at acceptable costs and the latter is still far from a reality. The possible substitution of coal and other minerals for petroleum as a source of liquid fuels has been mentioned above. Metals compete with each other to some extent, but each has unique properties that make it superior for specialized uses. Substitution of aluminum and magnesium for other metals has progressed and probably will increase, but these light metals have been used chiefly in new products such as aircraft, to which their unusual properties are especially adaptable. Much has been said of the possible substitution of aluminum for steel in automobiles, but a contrary view holds that the alloy steel airplane will perhaps be developed before the aluminum automobile. Plastics provide substitutes for some mineral products, but as yet offer no likelihood of being put to major use; their ultimate significance as replacements for minerals probably will be small. The potential effect of substitutes on the mineral position of the United States may be regarded as of minor importance. Nevertheless, research designed to substitute the more abundant and replaceable materials for scarce and irreplaceable minerals at reasonable costs should be encouraged in the interest of conservation and as protection against shortages in a national emergency.
What changes in national policy seem advisable in the light of our decreasing supply of minerals? The question may be examined under four main headings: conservation, national defense, maintenance of peacetime supplies, and tariffs.
The extreme proposal sometimes made that mineral production should be stopped in order to conserve the resource in the ground for future emergencies or for posterity does not merit serious consideration. The waste of minerals, capital losses and social problems involved in such a program make the cost too great. But we need conservation policies keyed to the prudent use of irreplaceable resources. Americans like to praise conservation as a principle but dislike to pay the costs of putting it into practice. In particular, we must concentrate on the prevention of waste; the search for improved methods of mining and manufacturing that will reduce both waste and costs should be encouraged. The tremendous wastage in coal mining has already been mentioned; even larger losses are suffered in the extraction of petroleum, and there is room for improvement in the mining and processing of metals. Technical progress and the scrap metal industry are the greatest forces of conservation today, and the further development of both should be stimulated. A knotty aspect of the problem of conservation is that increasing labor costs and mounting taxation -- inevitable accompaniments of social progress -- prevent the mining of marginal ores and are thus anti-conservational. Solutions for this conflict of objectives lie beyond the scope of this paper. Coöperation between government and industry can, at any rate, do much to remove most of the damaging waste of our mineral resources. Conservation also requires elimination of cutthroat competition, stabilization of prices and production, and the prevention of frivolous uses of strategic minerals.
Dependence on supplies of raw materials from overseas poses a serious problem of national defense. To meet it, Congress has at various times authorized the accumulation of stockpiles of strategic materials. While a good start has been made, action to date is inadequate. The stockpiling program should be greatly expanded and implemented at the earliest possible date. Since the primary objective of stockpiles is to increase our reserves, they should be accumulated from foreign sources. But it is difficult to determine the raw material requirements of a future emergency, and our security in strategic minerals cannot rest entirely on stockpiles. Our marginal and submarginal resources provide a second line of defense. Exploration for new deposits and appraisal of known resources should be carried on vigorously, methods for processing these materials should be perfected, and plans made for emergency production. Search for emergency substitutes should also be stimulated; as we have suggested, it is not unreasonable to expect that such a program might lead to the development of new peacetime industries.
Maintenance of peacetime supplies is no less essential than provision for emergencies. The government can perform constructive services that foster the flow of raw materials from domestic and foreign sources. In the domestic field it should assume some of the risk involved in the search for new mineral deposits. Recent experience indicates that prospecting and exploration are reaching marginal limits, and it is becoming more difficult to justify the expenditure of private funds for these purposes. Through a systematic geological and exploration program the Government can provide basic data for mineral producers and can at the same time develop a reliable inventory of the nation's mineral resources that will be helpful in planning for the future. Basic technological research should also be carried on by the Government in an effort to reduce costs, improve recoveries, and develop new and cheaper methods of bringing marginal resources into commercial production. All these activities provide a form of insurance against future shortages, and their cost to the public is fully justified. It is also entirely proper for the Government to assist American capital in obtaining minerals from abroad, through fact-finding services and through efforts to see that our enterprises receive fair treatment.
The mineral industry as a whole is not highly protected by tariffs. However, consumers have been forced to pay considerable premiums to maintain some marginal industries, and there has been little compensating benefit, either in the promotion of national self-sufficiency in strategic materials or of employment. Where the size of reserves indicates that there is little hope of expansion in such industries the tariff should be removed. If the subsidy is to be continued, it should be paid directly by the Government, and the consumer given the benefit of a world price.
In another group of minerals, including copper, lead and zinc, a large measure of self-sufficiency has been maintained for many years with moderate tariff protection. But as we have noted, dwindling reserves will cause a decline in the production of lead and zinc in the near future, and in copper in about a decade. Import duties on lead and zinc already have been reduced under the Reciprocal Trade Agreements. Before further cuts are made consideration should be given to the social and economic consequences they entail. Because costs are higher in the United States, the tariffs for these commodities have been highly effective and additional reductions would result in heavy unemployment in the producing districts and depression in the neighboring regions. Mining is usually the only occupation in such regions, and severe problems of stranded population could be expected; there would also be waste of resources and large capital losses. To cushion the effects of unemployment and to avoid the other losses, a fixed long-range tariff reduction program designed to coincide as closely as possible with the exhaustion of resources should be adopted. Because of the uncertainties of the immediate postwar years and the peculiar circumstances that pertain to mining -- wasting assets and isolated one-industry communities -- prewar tariffs on minerals in which the nation is now largely self-sufficient should be guaranteed for at least five years. Following that period there should be a regular progression to free trade, according to a predetermined schedule. Under such a program mineral producers could plan their operations more effectively than they can amid present tariff uncertainties.
The mineral resources of the United States, deficient as they are in some respects and seriously depleted in others, are still outstandingly great and assure a sound basis for an industrial economy for many decades. Nevertheless, we shall increasingly depend on foreign sources for some minerals, particularly metals and petroleum, unless large discoveries prove that present estimates of reserves are in error. Such discoveries are believed to be possible but not probable. National policies should be based on these facts and probabilities.
[i] The estimates of reserves offered in this paper were made by colleagues of the author in the United States Geological Survey and the Bureau of Mines. The author can take credit only for the interpretation of the estimates.