LETTER TO CHARLES WILL WRIGHT FROM ALLEN W.DULLES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R003900050046-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 12, 2016
• Document Release Date: February 1, 2002
• Sequence Number: 46
• Publication Date: May 3, 1958
• Content Type: LETTER

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3 MAY 1958
Mr. Owl"
Mow* you the va~a7ry~~~gaes for latter at 29
AVrU and
TOM Interest in talk bon" the U. S.
Chamber at oanow" is `ndes sommt ea!
I *Ijqw r Ivtng the good reowt an Ow avow.
Ones n, awy the*$ and kietsolywft?
Sirce"1y,
Slg le
All *u W. D U I I
O/DCI dd 2 YALY 58
Distribution:
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1 - Reading
a ... i yy': ~S ~w ~y
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Dear Mr. Dulles:
I was much interested in the article in this
morniifgs Washington Post quoting from your talk at the Chamber
of Commerce luncheon, I trust that your analysis and warnings as to
the Russian Economic Offensive will be given serious consideration
by Members of Congress and the American public.
The Public Relations Research Association recently publishel an
article I wrote on this subject and I am enclosing a copy. It was appr
approved by Mr. Sidney Sherwood before publication, Mr. Richard Nixon
was much interested in the copy he received.
A few years ago on my trips to Mexico I had the pleasure of knowing
your nephew Yr. J.W.F. Dulles, Chief Mining Engineer of the Compania
Metallurgica Penoles and discussing with him the mining problens3 in
Mexico and the proposed changes in the production and export tares on
metals and minerals. His opinion is highly regarded by the Government
officials in Mexico.
Kindest regards
Sincerely
The Honorable
Allen W. Dulles, Director
Central Intelligence Agency
Washington, D.C.
.....e.,
Charles Will Wright
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"REMEDYING THE PRESENT GRAVE SITUATION"
Proposals for Competing for our Metal
Requirements from Abroad --
by Dr. Charles Will Wright
Published as a public service, April 8, 1958, by Public Relations Research
Associates, Inc., Dupont Circle Building, Washington 6, D. C.
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PUBLIC RELATIONS RESEARCH ASSOCIATES, INC.
Dupont Circle-Building
Washington, D, C,
April 7, 1958
We asked Dr. Charles Will Wright, whom we consider to be the dean of
the worldts mining engineers, to evaluate for our organization the present sit-
uation facing the United States in the field of mineral production. There
seemed to be so much confusion regarding the Mutual Security Program, and
whether or not our country is dependent upon the stability of nations across
the seas, that we wanted his competent opinion on this matter.
After being educated at Freiberg, Germany, and the 11ichigan College
of Hines, Dr, Wright joined the U. S. Geological Survey in 1903 and for 6 years
was detailed to field work and mine reporting in southeastern Alaska. After 18
years operating experience as-manager of mines in Sardinia and northern Italy
he joined the Bureau of Mines, serving as Chief of the Pining Division from
1927 to 1935 and as Chief Foreign Tlineral Specialist attached to the State De-
partment from 1935 to 1942. During these years he reported on the mines and
mineral resources in most of the European countries including Russia and on the
principal mineral producing countries in Latin America. From 1942 to 1945 he
was Chief Technical Consultant, Metals and Minerals Branch, Board of Economic
Warfare. Early in 1945 he returned to the Bureau of Mines and under General
Clay was sent into Germany to report on the potash, copper, lead-zinc and iron
mines and the metallurgical plants west of the Elba before the Russian occupa-
tion of this area, Under the Allied Commission he then reported on the mining
districts in Sardinia, Sicily and in Greece. Since 1946 he has been consultant
to the Economic Cooperative Administration and to the Bureau of Mines. In re-
cent years he has been making mine examinations in Italy, Greece, "pain, Mexi-
co, Peru and on uranium mines in Utah for private interests, including Ventures
Ltd, and Westinghouse Electric International Co. During 1957 he has completed
a study of the mining codes, taxes, exchange controls, etc, in the Latin
American Republics for the Bureau of Mines and is now engaged in preparing
an extensive report on World Mineral Production for the Encyclopedia Americana.
He has the title of Commendatore della Corona d'Italia, Legion of Honor of the
American Institute of Mining Engineers and Honorary Member of the Cosmos Club.
He is a life member of the Geological Society of America, Senior Member of the
Society of Economic Geologists, and a member of the Mining & Metallurgical
Society of America and the Mining Club of New York.
We are so impressed with the document Dr. Wright has given us that,
with his permission to use it as we see fit, we are making it available for
general discussion purposes, We believe that every thoughtful American should
have this information available to help him determine the facts before making
up his mind in regard to the Mutual Security Program.
Robert W. Miller,
Secretary
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REMEDYING THE PRESENT GRAVE SITUATION _=
Proposals for Competing for our Metal
Requirements from Abroad
Thirty years ago our industrialists were not worrying much about metal
supplies and our surpluses were being exported. But we are a rapidly crowing
and productive nation which has increased its population from 120 to 1?0 million
during this period and has added many luxuries to our living standards - much
more than any other nation. Can we continue at this rapid and rather wasteful
pace or must we be satisfied with a more conservative way of life?
The United States has seriously depleted its mineral resources during the
two world wars and is becoming more and more dependent upon foreign sources for
many of the metals needed to maintain its industrial and military power. Thus
far we have been able to secure the essential minerals and metals from foreigr
sources at favorable market prices. Barring war and embargoes we still hope to
do so. But other nations are awakening to the benefits of industrialization
and are building plants to make better use of their mineral resources and ex-
panding their manufacturing facilities. Their demands on the world's diminishing
mineral supply will intensify and the United States, the world's largest con-
sumer of metals, may soon find it difficult to acquire the imports needed to
meet the demands of its increasing population.
Many of our industrialists are too complacent and believe that, as in the
past, the producer of the products we need will continue to export them to the
United States, their principal market, in order to obtain our dollars,
The United States has to import almost all of its ferroalloy minerals -
namely manganese ore, chromite, nickel and cobalt - and over one-half of its
non-ferrous metals - antimony, bauxite, lead, zinc and mercury - the domestic
production of which was notably lower in 1956 than in 1944. This siuuation in
our metal deficiencies is much worse than is generally believed and one of the
objectives of this article is to present the facts and to suggest ways to meeU,
the situation.
Statistical data supplied by the U. S. Bureau of Mines for some of the
minerals and metals in which we were deficient in 1956 are given in the
attached table.
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Our Competitors
Russian missions and agents from its industrial firms are sprealing ou'!.
in the Free World nations offering to supply technicians, machinery and equip-
ment and to make loans at 2 1/2% interest for new industrial plants or for oi:i-
arilling exploration projects, particularly in Latin American countries, ir_
exchange for their raw material pr& cts. They also have their geologists anti
engineers in most of the mineral producing countries reporting on the important
mineral deposits and on local conditions. Thus when they may wish to acquire
certain products or to deprive us of our sources of supply they will have the
basic information they need.
Also the agents of Japanese and German manufacturing firms are running
rings around us in selling machinery, chemicals, optical instruments, textiles,
automobiles, also sewing machines and other household articles in Latin America
by giving long term credits, prompt deliveries and better service. Competition
by such a system is making it difficult for American mining companies to acquire
properties and American manufacturing firms to sell their products in these
countries and elsewhere abroad.
Our Foreign Aid Welfare Program
Appropriations for Mutual Security for the fiscal year of 1957-58 amounted
to about 33.9 billion. Of this approximately one third was earmarkec for
welfare work and the balance for military purposes. The International Coopera-
tive Administration is in charge of this fund, and employs several thousand
Foreign Service Officers abroad among which are agromonists, animal husband-
mandry experts, construction engineers, labor advisors, legal and financial
advisors, hospital administrators, doctors, nurses, public health of"icers,
educators for elemental schools, vocational and physical training, social wel-
fare, etc. The aid they have given in cooperation with the government offic.-ials
industrialists and educators particularly in Libia and other backwarl countries
has been a big help in combatting the influence and false propaganda of the
Communists against the United States.
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These Foreign Service officers, however, should do more to encourage
private enterprise and to help build up trade with the United States so that
we will get more material return from the vast expenditures being made in these
countries. The tendency of any foreign aid through foreign government agencies
is to encourage socialism rather than independence through free enterprise.
The Russians also have their Foreign Aid Program and are sending per-
sonnel into the Free World countries who speak the local languages and are
employing natives who may have been trained in Russia to carry on their activi-
ties in the trade offensive and their anti American propaganda. By do doinz
they hope eventually to get a foothold for political control of the countries in
which they operate.
U. S. Financial Aid to Foreign Industrial Projects
Progressive nations depend upon several factors - technological compe-
tence, industrial enterprise and available capital and labor. As already men-
tioned the underdeveloped countries are awakening to these facts and are asking
our government and other nations for technical and financial aid to carry out
new industrial projects, and for us not to respond to the calls would be tragic.
Financial aid amounting to several hundred million dollars has been
loaned to industrial projects abroad during the past several years by the
U. S. Export - Import Bank. The Eximbank, as it is popularly known, has one
billion dollars in capital stock all owned by the U. S. Treasury, and authority
from Congress to borrow 4 billion more from the Treasury. These projects include
power plants, steel works, railways, dock facilities and many other industrial
installations. With few exceptions the equipment for these projects was pur-
chased in the United States.
Let us take as an example the $67,500,000 loan to the Industria e
Commeroio de Minerios S.A. for the development of the Amapa Manganese deposit
in Brazil undertaken by the Bethlehem Steel Co. This company acquired a 49%
interest in these deposits while the owners retained 51%. This loan not onl,.r
reduced the investment risk by this company but gave it indirect protection.
The United States Steel Corp. is developing the Urucum manganese deposits in
Brazil also on a 49/51% basis.
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Because of the tendency toward nationalism it is becoming more difficult
in many countries for our mining companies to acquire, as in the past, full
:;ontrol of the properties they may wish to develop. It would therefore be
advisable in acquiring properties to follow the example of the Bethlehem and
U. S. Steel companies in Brazil and be willing to accept a minority interest in
mining ventures abroad. Contracts with the local mine owners on such a basis
jould permit the owner to retain the major interest and he would be the com-
pany's representative in negotiations with the local government. Such an
arrangement would encourage the local banks and financial interests to partii:i-
pate in the venture and when the details of the project are prepared the com-
pany could request an Eximbank loan for a large part of the equipment needed and
related engineering services from the United States. The contract would stipu-
late that the major portion of the minerals produced be exported to the United
States. The advantages of such cooperative agreements are that they free the
American investor from attack by local politicians, there could be no question
of American imperialism and they would go a long way towards improvement of our
political relations with the nations involved.
Thanks to the credits ,ximbank has extended in the past we are now ;Jetting
large tonnages of manganese ore from Brazil, copper and iron ore from Peru
Iranium from Africa, etc., etc. Thus Euximbank is helping to build up industries
in these backward countries and thereby aiding these countries to increase their
living standards.
Proposals to Combat the Communistic Economic Offensive
At the San Francisco Conference last October which was attended by repre-
sentatives of 69 nations, Vice President Richard Nixon stated that we must be
prepared for an all-out Communistic economic offensive. He proposed channeling
mare government aid through private enterprise to encourage private investment
abroad, and the cutting of taxes on income earned abroad. Herman Alds, a
German banker suggested that the Free World nations would be most grateful to
the United States if it would take the lead in establishing an International
Court to decide on measures to be taken against expropriations or other viola-
tions of the investment code.
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To carry out this proposal we should follow the Russian procedure and
send more geologists and mining engineers to work with the local government
mining bureaus and mining interests in the preparation of reports on properxies
requiring financial and technical aid which may interest our mining and industrial
firms. These specialists should include representatives of our mining companies
the Bureau of Mines and the Geological Survey. Arrangements should be made to
place these specialists on the I.C.A. payroll in place of some of the Foreign
Service officers in less important occupations. This work should be started
as soon as possible as the impact of present Russian activities in the field of
mining may seriously impair the ability of our industries to obtain their needed
mineral imports sooner than we realize.
The Bximbank is ready to consider loans for projects which will bring
important foreign mineral deposits into production. Preference will be given
to ventures which are to be under American managerial and technical staffs,
regardless of whether they have the controlling interest. The Eximbank board
of directors would only approve loans to projects where the return of invested
capital is fairly well assured, thus giving added protection to the American
investor. The local banks and private investors in the country involved would
be urged to participate in the enterprise.
Mining and metallurgical projects to be undertaken by American private
investors and supported by loans from the Eximbank and local banks will not
be in much danger of confiscation or monetary restrictions and the risk to the
American investor is thus greatly reduced.
The Eximbank differs from the International Bank for Reconstruction and
Development, the World Bank as it is usually called, in that the latter is
owned by 62 member nations and makes only government guaranteed loans while the
more liberal International Finance Corporation, a branch of the World Bank,
supported by 16 nations, makes loans and participates in projects abroad without
government guarantees. The Eximbank thus far has made more profit and spent
less on its loans than these international banks. It is one U. S. Government
agency that makes money for the Treasury as losses from bad loans are about nil.
The Eximbank works closely with private capital and the local commercial banks,
Its objective is to help the Free World countries to earn dollars by producing
goods,
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The 14.A. has recently set aside 3300 million for loans to private enter-
prise projects abroad. Requests for financial aid to private and some State.
projects amounting to a billion dollars have already been presented to I.C.A.
to be financed by loans from this fund. Lets hope that some of it may be re-
served for important mining projects. If such loans are as carefully selected
and supervised as those of the Eximbank it will be a real credit to our korPign
Aid Program.
Helping the Free World nations to attain economic stability and growth
under the free enterprise system will have a great deal to do with the ovtccme
of the present competition for mineral products and trade by the Soviet Union.
Also countries wavering toward being neutral may be brought into line with the
Western Powers if we cooperate with them in their industrial plans which are
vital to their future welfare.
Much of the information on the mineral resources abroad is in the filei
of the Bureau of Mines and the Geological Survey and we are being supplied with
additional information by their representatives and our Mineral Attaches and
other Foreign Service officers in the State Department and the I.C.A. But thus
far our private mining companies and financial firms have done little to take
advantage of this available information because of the risk involved and lack
of protection to American investors abroad. It is up to our government as well
as those of the foreign countries to allay the fears of the American investor
and see that he is given the necessary protection against confiscation and
monetary restrictions.
It is also important to increase our propaganda efforts through news
papers, radio and T.V. to draw attention to what our government is doing, and
ready to do, to cooperate with the Free World nations in their industrial ex-
pansion under the Free Enterprise system. They should be advised as to the
character of the nation offering aid and be warned against accepting offers
of aid from Russia which may lead to the domination of their economic welfare
by the Communists,
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The need for adequate attention to the problem of metals in short supply
is decidedly as important as the conquest of outer space. Our immediate re-
action must be to offer a counter offensive as proposed by Vice President Nixon
and as outlined above in the Trade War of the Soviet Union. We should follow
the advice of Civil War General Nathan Bedford Forrest and "get thar fust with
the mostest men."
The result of this economic war was clearly presented by Party Boss
Nikita Khrushchev in Moscow on November 28 who stated "We declare wer upon The
United States in the peaceful field of trade and will outstrip the United States
in the production of all commodities." To the Kremlin rulers the United States
is their ultimate enemy and the only barrier to the their world domination.
If we can offer the Free World nations a well protected and financed
system by which their peoples can participate in the development of their
mineral resources and in the establishment of metal industries to make them
less dependent upon imports, such a free enterprise system would be more we,icome
than anything the Russians might offer. Their mineral exports to the United
States would also supply them with the needed dollars for more trade with
the United States.
/sl Charles Will Wright
Charles Will Wright
former Foreign Mineral Specialist
U, S. Bureau of Mines,
Washington, D. C.
February 25, 1958
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U.S. Mine Production, Consumption, % of Production for Consumption and
Imports for Industrial Consumption for 1956.
il, f r o m
Production Consumption % Production Imports East Hemis.West Jemis.
Ferrous metals
Iron ore in 97,849 125,171 78 30,431 8 92
1000 l.tons
Manganese ore 345 2,264 15 2,219 69 31
1000 1. tons
Chromite 162 1,847 9 2,175 98 2
1000 1. tons
Nickel 7,292 127,578 5.7 154,292 9 91
short tons
Cobalt 1,757 4,781 37 9,497 92 8
so tons
Non-ferrous metals
Bauxite 1,743 7,751 23 5,670 1 99
1000 l,tons
Copper 1,106 1,367 80 559 20 80
1000 s, tons
Lead 353 839 42 482 44 56
1000 s, tons
Zinc 542 1,284 44 708 17 83
1000 s, tons
Antimony 1,910 12,097 15 6,572 27 73
so tons
Moroury 24,177 54x143 45 47,316 75 35
flasks
T i n 8 60;470 0 79,278 88- t2
s, tons
Principal sources of Imports.
Iron ore: Canada and Venezuela
Manganese ore: Ghana, Un of South Africa, Brazil and Cuba.
Chromite: Turkey, S. Rhodesia, New Caledonia, Un of S. Africa, Philippines.
Nickel: Canada and Cuba.
Cobalt: Belgian Congo
Bauxite: Surinam, Indonesia, Jamacia.
Copper: Chile, Canada, Mexico, Peru, Rhodesia.
Lead: Mexico, Peru, Canada, Australia and Yugoslavia.
Zinc: Canada, Mexico, Belgian Congo,
Antimony: Bolivia, Mexico.
Mercury: Italy, Spain and Mexico.
T i n: Malaya, Netherlands, Bolivia and United Kingdom.
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COMPANIA MINERA DE PENOLES, S. A. L I C32-1
APARTADO POSTAL fl MA AMOROS OTE. 419
FEMME AwtUS iut.v ro MAN AGf M);NT
IAVO'R OL 01M91w W CON IV1AC1OM A
Dear. Dr. Wright:
Thank you o ; ..: ra osa' is
" ~ :~_. .._.. t.a+~t n'nt 1 V writt+E
P
WFU!ej
958-
f r sending me a copy. Q f our' ante res
COTC" IL $!i`iwi waaiu. as ?.. .... > - i .:.,~ ,.
'is` particaiarly important in view of N.kita Cbevls flies t
the United Cates in'tte` ifu'l lie 1( of
on of Nar` upon
~ '?_;yCOSpe ~.n JUL =461 aciy `.a,. .~..... - +.:..
o ad i
the , I'segent ra" ' Situat ion" I have 1ea~rn wucii from t oad i
e.. a
# ' .r'.r..f. . 1 (iM[s r t an t
T 'vent Nixie $~ ids b enco rat
es
Great .interest. wehopethat ou. a. .:17--d helrxful an.1,
realm ,in Washington. These developsaett; of the mir?i
e ~ Q MCI j'~ ~ . , A4 ~. 4 w v --K- - - - . .~.j.. ~y U but f+aletha sus iw$ ?andoIh imaginedef
's hip V,,
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had-an`' imPrt"ant influence on what u '~,?Y ng t t m
t f towin= w
`ali"t ~ttiat''cS;p tal has gone avroa-d a X IL
A At
(;o ettt ?14 persuade U.S. capital ton $ ~p * ();We rn M- at
i. y ?o
)4u Ch that Vice r
T must add 'that` it does not make too ?u t t ~z the S.
,r . a~ and th< U
With kindjjs~ regards?
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1,7- ;1 f-4~
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