SURPLUS PROPERTY: Who’ll Buy?

Seven brine-stained Liberty ships steamed eastward across the Pacific toward the U.S. They were carrying home the same Army cargoes they had been taking to the Philippines; the Army decided it had enough there already. Last week, in mid-Pacific, the wireless sang out another order: turn west again and set a course for Shanghai.

The Army had decided that the cargoes were surplus. In a matter of hours the Office of the Foreign Liquidation Commissioner, which handles foreign surpluses, had sold the cargoes of wheat, construction materials and medical supplies to the United Nations Relief & Rehabilitation Administration for $3 million (80ff on the dollar).

This was one of the few bright spots in the dismal story of U.S. surpluses abroad. Out of the $555 million in surplus Army & Navy goods, ranging from mosquito netting to steamrollers and locomotives, FLC had sold only a microscopic $18 million in cash. UNRRA had been the best customer, because UNRRA could draw against the $150 million contribution which the U.S. has made in surplus to UNRRA. But in a desperately needy world there were few other buyers. Why? Yankee Trader. Chief trouble had been FLC’s notion that it should sell surpluses to foreign governments only for dollars. This policy flopped because foreign governments either 1) have no dollars at all, or 2) none to spare. Nor did the policy make sense to U.S. businessmen. For every dollar FLC drained off there would be one less dollar for foreign buyers to spend for U.S. exports. Thus the only sales’of any size to foreign governments have been $8 million of railroad equipment to the oil-rich Iranian Government, and 48,000 bales of cotton sold to Belgium for $5.4 million.

In sheer desperation, the Administration plans to go to Congress soon, dump the problem squarely in its lap, request the right to barter surplus goods abroad for new embassy sites, landing rights for civil aviation (which the U.S. has got free by reciprocal agreements) and scholarships in foreign universities for U.S. students.

Out-traded. Even these tricks would unload only a fraction of the supplies on hand. In Belgium, France and Germany the U.S. Army had $92.5 million of surplus locomotives alone. Nor would bartering solve the problem of what to do with goods deteriorating in out-of-the-way spots all over the world. Some of it would cost too much to move to possible markets.

As the only way of selling the rest, FLC hopes to induce foreign nations to borrow from the U.S., use the money to buy surpluses. So far, no nation has shown any signs of wanting such loans. Thanks to the inept Surplus Property Act of 1944, they are well aware that the U.S. is in no position to haggle. The act bans the shipment of goods back to the U.S. for resale, lest such goods compete with private industry. So the goods must stay where they are. Ironically, the U.S. cannot even ship home its steamrollers & bulldozers (see cut) rusting away on the British protectorate of Guadalcanal.

By simply sitting tight, foreign governments might be able to take over most of the surpluses for nothing.