National Archives notes: reading between the lines on quartz crystal trade, part 1
I did a short trip to the National Archives in College Park in December to do a small sprint of research in the collection of materials from the Metals Reserve Company. I’m only just getting to typing a lot of the notes from that trip, which means I’m also only just getting to sharing things found during it.
One collection of papers I knew I was curious about was correspondence between the MRC and Leonard J. Buck, MRC’s “Special Representative” in Brazil. As part of their global procurement operations, MRC established contracts with commodity brokers to have them essentially work exclusively for the federal government to acquire minerals for the war effort. Buck was the representative in Brazil, which meant that he and his team negotiated purchases and arranged import of minerals to the USA for the federal government. Buck’s correspondence at NARA is organized by commodity and then chronologically, so the work of post-archive reading has been to put all my notes on specific communications into a spreadsheet and sort them chronologically to get a more comprehensive picture of Buck’s activities overall.
There’s not a lot of material about Leonard Buck out in the public record. We know he was the son of a Bethlehem Steel vice president, he had a degree in mining engineering, and he eventually went into the minerals trade. His New York Times obituary from 1974 describes him as an “ore dealer” and horse breeder (he also had an award-winning cocker spaniel named “Champion Torohill Trader’). Today, there’s a public botanical garden in New Jersey named after him, which takes up most of the results from Googling him (the Wikipedia entry on this park is interesting because it describes him as a geologist?). The botanical garden might have originally been a private estate he maintained? This isn’t clear, or necessarily all that important for my immediate purposes. What’s important is that this guy was a central player in mineral procurement for the United States in one of the biggest mining countries in the world and we seem to know barely anything about him or about how he did that job.
The problem with trying to reconstruct how Buck did his job via written correspondence, of course, is that there are gaps. Letters sometimes refer to telephone conversations or cables or even absent letters, providing little context as to the substance of those prior communications. But there are some glimpses within Buck’s communications of a shrewd hustler. This letter from December 26, 1941 to MRC general counsel Harvey J. Gunderson is instructive insofar as it concerns Buck’s frustrations with his compensation:
I am in receipt of your letter of December 23rd in regard to the sale of Brazilian metals and carefully note your position that only one commission should be paid for the work involved in any single purchase, by which I presume you mean one commission to cover both purchase and sale of one or all of the products, if you so instruct.
When I offered my services as your Special Representative in Brazil, I told you that I thought 2% was a fair compensation and I still believe so. In the first place, I gave up considerable business in Brazil in order to be of assistance to you. As you know, I exported many of the minerals from Brazil which I am now buying for your account, while others in the same position as myself have continued to conduct their normal business and in some instances have earned as much on one or two transactions as I am being paid totally for the work I am endeavoring to carry out to the best of my ability for you.
This extent of complaining about lost wages makes it hard for me to believe that Buck got into this arrangement out of love of country or commitment to fighting fascists. At the same time, Buck understood he was in a strong bargaining position when it came to the urgency of the procurement work. Throughout the collection there are a number of letters from Buck to his contacts at MRC seeking their help “in view of the work we are endeavoring to do for you” in preventing one of Buck’s top employees from getting drafted, claiming that the employee’s absence “would seriously disrupt the business routine of my organization.” The employee, Ernest E. Hahn, received several deferments of military service, presumably because being good at managing a commodity broker’s finances was as valuable as killing Nazis. I digress. Back to the 1941 letter:
I have tried to buy the minimum I can—not the maximum—and have spent considerable time asking industry to take certain products directly rather than burden your account with excessive inventories. According to the agreement made with Brazil, I should purchase approximately $13,500,000 worth of goods as your agents over a six-month period, and as industry has been buying relatively small amounts, the purchases I have made equal less than half of our obligation. It therefore hardly seems fair to ask me on the one hand to keep purchases down to a minimum (which I am endeavoring my utmost to do) and at the same time reduce the commission per dollar value purchased, and also request me to give up any business that I may have been conducting with the country in question. Therefore, I think it is almost impossible for auditors to determine what is a fair contract.
Buck was not really “endeavoring his utmost” to keep purchases down to a minimum; a month later internal MRC correspondence notes that Brazilian mica dealers complaining about Buck overpaying for the product, and there’s a fair amount of letters tersely reminding Buck to actually clear his purchases first with the government. The final audit of the MRC also found that Buck was overpaid in the tens of thousands of dollars.
As regards the sales commission for selling any of these products, my desire was to secure specialists or use the specialists we already have in our employ to dispose of the various products in order that the maximim value be received from sales. Quartz Crystal is a glaring example of where appreciable amounts of money may be saved with the proper sales effort on the non-usable material.
This is actually a pretty good point, and relevant to my specific research, so let’s talk about it. Quartz crystals were needed to make oscillators for military radios, and both the silicon dioxide purity and the visible facing/symmetry of the original quartz determined whether crystals could be used for oscillators. Most of the quartz mined in Brazil didn’t actually reach the radio standard, and after the war the U.S. military had lots of unused crystal inventory that had to find other uses (One of those uses may have been fused quartz, used to make the kind of crucibles used in, surprise surprise, high purity silicon ingot manufacture). Buck’s being kind of a baby in this letter about not being paid enough but he’s not wrong.
As I see the situation, it is a question of what is a fair compensation based on percentage commission on the dollar value of the amount of materials purchased. If it is to be based on costs, it would appear that I am to be penalized for efficiency, which I do not believe is your intention.
Again, this is just really funny because in the end Buck a) got overpaid and b) one of the consequences of the government just blanket buying quartz crystal not knowing for sure its quality was that they drove up the price of lower-grade quartz! Efficiency, sure.
The conclusion of this letter is really my favorite part, though—check out the “nice war would be a shame if somebody didn’t win it” energy:
Until I hear further from you, I will do nothing about the sales of the various products, but may I take the liberty of personally reminding you that Western Electric is in need of Quartz Crystal and the matter of sale to them should be decided at your earliest convenience.
Oh dear, he’d really like to get Western Electric those crystals but the government being a big meanie and not paying him fairly for doing such a good (??) job really is getting in the way! Poor Leonard.
I have way more material from this collection to annotate that further articulates Buck’s general vibe which may or may not end up turning into other blog posts. Realizing how long this one quickly became, I’ll end here and return to the tedium of annotation and organizing.
Why Computer Rock History is so uniquely annoying and hard (and why I want to work on it anyway)
Riffing on my previous research questions post, I wanted to lay out some of the method and limits to taking on the topic of early electronics supply chains in the postwar 20th century United States.
Why I think this is interesting
So in general, it seems to be broadly understood by capital-H history that the United States poured a lot of resources into a) communications technology and b) mineral procurement during the war. Makes sense. With one very legible exception, that minerals procurement isn’t understood to have served or supported communications technology.
This seems unlikely for a couple of reasons:
- the aforementioned legible exception that we’ll get into later
- the extraordinary emphasis on materials science and solid-state physics in early electronics history would require a steady supply of materials, i.e. metals and minerals prepared for lab conditions
- some of the major technical breakthroughs of the period used metals that simply aren’t mined in the United States, like tantalum—not to mention metals that were in commonplace use but aren’t mined in the United States, like tin
Today, the mineralogical/geological materiality of digital devices is a readily-accessed and understood talking point: the Democratic Republic of the Congo is practically synonymous with cobalt and tantalum even to people who don’t pay a ton of attention to this stuff. But the mineral basis of computers before, say, the early 2000s is pretty poorly documented. This seems like an important gap to fill in computer history!
On a more woo-woo theory-ish I Am Literally In A Geography Program note: I think a lot about the relationship of what nerds like me call space-time annihilation—a phrase used starting around the late 19th century to talk about what communications technologies like the telegraph and radio did. Space-time annihilation is really powerful, and very useful if you’re trying to do an imperialism and/or a capitalism (they often tend to go hand in hand). And because I’m a hopelessly provincial American and I grew up in Silicon Valley, I think a lot about the contradictions of the liberatory rhetoric often applied to these technologies and the coercive violence they often enable (while, let’s be fair, also being used sometimes as liberatory tools—containing multitudes, etc.).
I also unfortunately at a formative age heard that Angela Davis quote about how “radical simply means grasping things at the root.” Reaching past layers of software abstraction that go into electronics and looking at the coercive violence involved in the physical stuff of it—mineral and petrochemical stuff, it’s important to note—is something I think is important because it conveys the scale and scope of the coercive violence of space-time annihilation. I think of this as similar to making an exploded diagram of a complex tool: when you “take apart” the production process of the telegraph cable or the crystal radio or the integrated circuit, its parts actually spread across the whole planet. We’re literally annihilating geological time here, baby, and that’s basically always been necessary for Doing A Space-Time Annihilation.
Why it’s difficult to research this
Gaps in history don’t exist just because people don’t care about them: they exist because historians rely on records, and the records for historical supply chains are kind of shit. Even companies that have publicly accessible archives don’t tend to keep purchase orders for like, where they got copper wire from let alone where that vendor got the copper from. Materials sourcing is generally not a well-studied or documented aspect of the history of materials science. One of the first patents for making silicon crystals in 1941 names two chemical company vendors of high purity quartz sand, but good luck finding out anything about where those companies were buying materials from! Maybe they were using quartz sand from France, maybe from North Carolina, maybe Brazil, who knows? (Would you believe that lab equipment and chemical vendors are not deeply studied industries, ha ha ha.)
With communication technologies in particular, this is also difficult because most of the metals used for communications technology had multiple applications and electronics made up a relatively small sliver of it. Tungsten and tantalum were also used in steel alloys, mica was used as an insulator in like plane windows, tin was used in fucking everything. Certainly some of those materials acquired through World War II procurement efforts were going into labs, but when looking at big-picture estimates tech is probably somewhere in the tiny “other” section of the bar chart.
Finally, when it comes to the one Huge Exception I mentioned earlier, even that particular material starts to get hard to trace once you get into the postwar period. During World War II, the United States government basically built a massive Brazilian quartz crystal supply chain from scratch for the sake of making radios (space-time annihilation, see??). There’s some decent scholarship out there on this effort, but the main result of the government’s massive effort to import Brazilian quartz crystals for radios was the development of synthetic quartz, which led to a huge drop in imports. Brazilian quartz was still often used in the making of synthetic quartz as basically the seed crystal and there are some threads to pull on this one, but in general it’s just extremely hard to follow this stuff and even the big exception isn’t totally an exception.
So how do I think I’m going to pull this off
Honestly, I don’t actually know if I will. But here’s my current plan of attack:
- Picking a few definitely-needed-for-electronics metals/minerals to focus my attention on. Quartz crystal is obviously here, mica and tungsten are likely other candidates; tantalum wasn’t actually considered a “critical mineral” until after the war but that in and of itself might be work looking further into. I kind of want to include tin partly because of some important labor history that overlaps with tin mining but it might be too far afield; similar thoughts with copper.
- Another “probably shouldn’t, but thought about it” material to include is petrochemical industry—there’s some pretty good scholarship on how the war accelerated chemical advances in the United States (mostly be seizing and stealing German IP), but connecting it to telecommunications in particular gets into the annoying small-sliver-of-market problem mentioned above.
- Archival USGS cross-referencing: Historical Mineral Commodity Summaries are honestly pretty hit-or-miss in terms of how much they provide hard numbers on consumption and imports for certain materials, but they do sometimes have names of companies (which can be helpful for looking into, say, who was doing business with the Metals Reserve Company at that time).
- National Archives research: there’s a lot of records about World War II and postwar minerals procurement, and within those there’s contracts and correspondence. Big needle in a haystack time.
- There aren’t a lot of corporate archives that I expect will have insight into what I’m looking for (again, seems like most of the electronics manufacturers were ordering from chemical companies, not smelters or the state), but there are some decent oral history interviews that can fill in some gaps here maybe.
The point is not to find the smoking gun receipt tracing one ton of high purity quartz from a Brazilian mine to Fairchild Semiconductor; it’s fiendishly hard to do that kind of tracing today when people actually care about and keep those records. But I think if I can find evidence that electronics applications mattered to the feds and number on imports/consumption, that’s at least a gesture at something. Or I just focus my attentions on quartz or something.
I have too many research questions
I’ve had a lot of fun reading different papers the last two weeks to start shaping my general interest in the concept of the “critical mineral” into a thesis, but I am starting to approach an impasse. The questions I’m interested in and their answers increasingly don’t feel like they’ll fit in one 10,000 word document. For the sake of sending an email to my advisor later and getting some sense of direction, here are some of the directions I could potentially take this research.
“Critical minerals”: The First 5,000 Years
(David Graeber and I were not close, but what few interactions we had during Occupy Wall Street were genuinely formative and his approach to academia has been a touchstone for my own kicking-and-screaming stumble into it. Hopefully this framing will be understood as homage and not sloppy methodological ripoff.)
Returning to the question I mentioned in the writeup of Graulau’s work—how are ‘critical minerals’ fundamentally different from the way governments thought about or framed minerals before?—I’m starting to suspect they’re not that different, really. Minerals are and kind of always have been weird commodities within the larger state-market dynamic compared to materials more obviously associated with survival like agriculture or shelter or water.
Most historical examples of mining at scale are assumed to be imperialist projects because 1) how would you otherwise convince anyone to do it, mining at scale is shitty work and why would you fuck up some land you could grow food on and 2) a lot of early mining at scale produced coins, which more or less have value because a sovereign says so. Over time geologic assessment of territory became an important part of defining a nation’s sovereignty—this is where we start to see surveying and state/military geologists become a thing. Technological developments expand the parameters of what states need, which expand the parameters of mineral needs, which expands the list of minerals to be hoarded beyond coinage.
There’s of course a lot of other stuff that happens between Charlemagne declaring that everyone needs to use the silver denier and the United States Army-Navy Munitions Board making a list of strategic and critical materials, but both in essence are sovereigns making declarations about important rocks and those declarations have significant effects on power, people, and ecologies.
Figuring out and articulating the “other stuff” would be the project here, and from there maybe getting to more utopian questions (because it would not be an homage to Graeber without utopian questions!!). I don’t think it’s possible to make a general theory or political economy of mining, but looking at how rocks have shaped and been shaped by changes to political economy is maybe interesting.
This topic is also driven by a more fundamental interest in the ways people interface with rocks—people are weird about rocks, and they generally get left out of the “more-than-human” interspecies dynamics discourse but the relationships people have to rocks are no less intense than any other thing in nature.
This one is more likely a dissertation than a thesis, I think? Figuring out which chunk of it can become a thesis I can write in a few months is maybe the move here.
A labor history approach to the actual patient-zero moment of “critical minerals” rhetoric becoming a thing and being implemented
The TLDR version of critical minerals history that you’ll generally find in academic literature goes like this: World War I and its aftermath made the complexity and fragility of industrial supply chains more legible. This got countries like the U.S. and the U.K. to prioritize procurement and stockpiling. There’s a bunch of weird rhetoric written in this era about “have and have-not” nations and the whims of geology and basically how rich countries should “help” cash-poor but mineral-rich countries with best utilizing their resources. World War II is a period of extremely aggressive American government funding of essentially the expansion of the private mining industry into other countries. (Again, very The State-centric framing. You’d hardly know there were commodity markets or mining executives.)
My first historiography tiff with this framing is that the interwar period (and the Second World War) was a time of tremendous labor unrest in so-called “have” nations, particularly among mine workers. The United States was home to multiple Mine Wars and events at mines deemed “massacres”! (For those who mostly know the incidents relative to coal mining: it wasnot just coal mines!) Granted: in most of these wars the miners lost. But (my other tiff) this was also a period where radical politics around nationalism and expropriation were actually being enacted in other parts of the world. You’re telling me that the same federal government sending the U.S. Army to quell worker rebellions was only looking at mineral security from some high-level trade perspective and the Red Scare wasn’t factored in?
(This also seems like an important detail to the frequent tension of critical mineral policy between an increased international trade approach and shoring up domestic production. Sure, the US government preferred importing certain minerals from South America because they just had more; but mines in South America also weren’t organized the way that US mines were by that point.)
As a research topic: this would entail cataloging mining labor conflicts in the United States and in regions where the U.S. had critical mineral interests, and looking for archival records on how those events informed minerals policy at home and abroad. The Catavi Massacre in Bolivia is a pretty obvious key event to look at here but I’ve found some materials on incidents in other parts of South America and in Africa. I like this framing because 1) it’s nice to emphasize incidents of workers fighting back in history rather than making the whole story about how imperialists did an imperialism and 2) in the nascent high-level political economy of minerals described in the previous research topic idea, mining as a radicalizing force that produces organized workers is a persistent thorn in the side of both capital and the state. Like even if mining at scale necessarily requires imperialism and/or coercive violence, such conditions effectively produce rebellion and organization.
U.S. critical minerals policy setting the stage for postwar technological developments
This is both more contained and more difficult a topic to research, but it bridges interests in the gaps of computer history and the gaps of mineral stuff. I have spent a few years trying to figure out where the high purity quartz used to make DuPont’s first semiconductor grade silicon ignots (used by Fairchild and I think TI) came from, and Brazil (which was the primary source for electronic/radio grade quartz) is still maybe the top possibility. Proving this is hard in the absence of corporate archive access but even if the silicon wafers can’t be sourced, loads of other specialized minerals in the postwar era relevant to electronics manufacture suddenly had a lot of robust sourcing options—mica, nickel, tantalum, tungsten. The idea here is to get a better sense of the sources for the niche minerals developed during World War II and try to follow the trajectories of those companies? DuPont’s archives apparently aren’t an option but there’s some Computer History Museum records that might have leads and some stuff at the Hagley I need to schedule time to look at.
This is more about expanding the geography of computer history and situating that history within mining political economy, so it’s less theory-heavy but again, as a highly niche pocket of business history it’s probably the hardest to prove.
Mining has always been expensive and weird
One of the questions that I want to answer with this thesis is how (or really, whether) the political category of “critical minerals” differs from prior resource policies by governments/nation-states. The phrasing “critical mineral” is a modern phenomenon situated in the interwar years of the 20th century, but is making a list of Important Rocks and stockpiling tungsten an inherently modern phenomenon? Did medieval kings have Important Rock lists?1(#fn1)
These questions led me to reading about the economics of medieval mining. My hypothesis is the category of “critical minerals” can’t be understood solely in terms of changes in the nation-state. It also emerges amidst changes in the market—commodity trading and futures are a 19th century phenomenon that seem kind of important to thinking about “critical minerals”, but are pretty absent from critical mineral history literatureWhy not, I guess(#fn2) So how did mining work before capitalism—or maybe more relevant to my question, how did mining become capitalist?
Probably the most interesting papers found in my search for a better grasp of pre-capitalist mining were by Jeannette Graulau, who situates her history of silver mining in feudal Europe3(#fn3) in a critique of dominant Marxist analyses of the transition from feudalism to capitalism. (The main thing to know here is basically, Marx and a lot of people who’ve built on his ideas kind of oversimplified the dynamics of feudal mining, focusing more on agriculture for better or worse.)
One part of her argument comes from the fact that mining produced a novel property relation: the mining claim. Mining claims did not have the same strictures of vassalage seen in agrarian contracts and they typically were not claims for tenancy–while agrarian peasants might live on the land they farmed, miners might live in a “free mining city” (a title granted to communities of miners by lords). Miners still had to pay rents and some percentage of profits from ore to lords but they certainly had more spatial mobility than farmers.
From the mining claim followed the mining share, distributed by the mining corporation—associations of people (possibly free miners?) with the financial capital to pay for the fixed capital of mining and smelting technologies without which mining couldn’t happen. This is an important detail, I think: while farming is absolutely very hard work, it is technically possible to grow stuff without highly advanced tools. This is often not true for synthesizing pure ore from mineral deposits! Smelting is a whole complicated thing, and not necessarily a thing a feudal lord knew much about or had money to finance. Enter the mine corporation and their shares, which Graulau writes “to the extent that shares represent surpluses, they are the best evidence that capital took over the process of transforming feudal land into mining land.” The landlord may have owned the land on which the mine operates, but shareholders technically owned the mine, and the landlord ended up in the position of protecting the mine corporation’s property rights to preserve the profits they get from contracting the mining claim. Anyone who’s familiar with the concept of mineral rights today recognizes what’s happening here.
As mentioned in the footnotes, since Graulau’s specific example of silver mining is somewhat complicated by its relationship to coinage there are aspects of this that don’t fully apply: namely, the transformations she describes emerge in part from a silver mining boom starting in the tenth century.4(#fn4) It’s not clear whether iron miners or mercury miners had the same level of agency or whether those mines lent themselves to the securitization seen with silver mine shares. But I still think Graulau’s research is relevant. One, it illustrates an important relationship between extraction and securitization. Two, it indicates that property relations in mining under capitalism are super-old and have been super-weird for a long time.
One part of answering this question has to do with what distinction we want to make between mining to produce coinage and mining to produce commodities; I am still thinking about this question a lot but it’s probably a separate blog post but I’m setting it aside for now. ↩︎
Another historical event of the interwar era that seems sort of important but only really gets like a paragraph in the big commonly cited critical mineral histories: nationalization and expropriation of mines! Seems like that would be a pretty big deal! ↩︎
Silver, of course, is a fraught example relative to the modern critical mineral insofar as we’re back to the distinction between coinage metals and “industrial” metals; I think some of Graulau’s observations still generalize. ↩︎
Could we go so far as to say Charlemagne made silver a “critical mineral”? Kind of maybe, but this comparison still feels wobbly to me. ↩︎
Bibliography Notes: Oral History, Paul Nitze
We created the O’okiep mine in Namibia and a lot of other things, the Titan Mine in Peru, and God knows what other mines.
Paul Nitze had a long and impressive career working for the federal government which he recounted at length for the 1975 interview. For the purposes of my research interests we’re just focusing on the sections of this oral history interview where he talks about working on strategic mineral supply chains during World War II. Nitze began working in the Roosevelt White House in the 1940s on U.S.-Latin America policy, but during the war became increasingly involved in procurement of critical minerals from Latin America (his official title was “Chief, Metals and Minerals Branch” for the Board of Economic Welfare).
For reasons that the oral history doesn’t get into (but oh dear reader, those reasons are spicy political history gossip) FDR had put his vice president, Henry Wallace, in charge of the Bureau of Economic Warfare. Nitze had zero background in minerals procurement and apparently learned that this had become his responsibility through an article in the New York Times about an executive order signed by FDR in June 1942. At the suggestion of then-MRC president G. Temple Bridgman, Nitze set about building up a team on the BEW side of mining engineers, geologists, and contract experts. Somewhat hilariously, he then complains that “the problem was that the most conservative people in the world are mining engineers and geologists”–a consequence, Nitze muses, of their fastidious and precise tendencies (look, in the 1940s being a Republican didn’t mean being allergic to science, I guess). In any case, Nitze’s New Deal Democrat boss Wallce didn’t love that he staffed up the BEW with mostly Republicans, but the Democrat he could find with mining expertise quit a few weeks into running the operation.
A detail of this interview that I need to look into:
Now Wallace himself, as I say, was very much interested in our taking the lead toward the left and he insisted that in all these contracts we negotiate what was called the “labor clause.” We wouldn’t enter into a contract with anybody unless they would commit themselves to engage in fair labor practices which, of course, was absolutely revolting to many of the people we were buying these things from, as interference in their internal affairs.
The interviewer doesn’t follow up to ask how anyone working for the federal government could have enforced these stipulations from Washington, or even made sure they were being followed. One thing I’m hoping to find in looking at copies of the contracts issued by the Metals Reserve Company is whether this so-called labor clause actually mad it in. Nitze makes it sound like it did, but it’s possible (honestly, I expect) that some revisions took place between whatever version of the contracts he put together and what finally got signed.
Assuming it is true, though, it’s also an interesting detail to include in critiques of U.S. minerals policy as colonial project. In his personal diaries, Wallace apparently expressed a desire for the U.S. to support South American industrialization. Later in the oral history, Nitze says that Wallace believed “it was not only industrialization that he was interested in, it was liberalization of what he considered to be an illiberal society, which is the way it was.” A lot of countries in South America did have dictator governments and racist social structures having already been colonized by Spain and Portugal centuries before, so I can see Wallace’s intentions here. But as is probably very obvious, the kind of liberalization that comes from getting a (usually north American or European) company to do fair labor clauses for their (often indigenous or very poor) south American workers in a mine producing value primarily for the American military is pretty far from liberation (some dumb pun in there–liberalization being what happens when shooting for liberation but you end up taking an L?? Needs work).
(Another compelling detail of this interview is it’s one of the first items related to strategic minerals I’ve found that mentions the Catavi massacre by name (Wallace, apparently, was very involved in causing a domestic kerfuffle about it).)
Nitze stayed with the BEW through its transition to being the Foreign Economic Administration, a political shift that partly had to do with embarrassing Henry Wallace I guess? Nitze recounts an incredibly petty conflict between him and FEA director Leo Crowley that culminated in thousands of truckloads and hundreds of ships carrying ore to the United States stuck at the border because of unsigned contracts–a contract resolved, apparently, through someone’s strategic leak of a memo about the conflict to the St. Louis Post-Dispatch (I am still trying to find this article; if anyone has a newspapers.com account and can do me a solid that would be amazing).
Although Nitze is careful to say that the wasn’t aware of any corruption or “venality” in the BEW, he does tell an anecdote about Bolivia tin baron Mauricio Hochschild maybe trying to bribe him? It’s a little vague. Later (mind you, after telling stories about his insane petty bosses and weird shortages and stuff) he notes:
Your basic question was whether these things could have been better organized; that wasn’t my impression. My impression was that we did a goddamned good job; everybody did an excellent job.
Anyway. A final interesting thread from this interview, the last minerals-related topic in the document, is one about “a group of people, I think it was in North Carolina” apparently upset at some point in the war that their mica deposits were not being developed and the BEW was buying minerals from Brazil and India instead. A staffer of then-sentator Harry S. Truman had apparently been giving BEW/MRC a hard time about this (Nitze claims the mica deposits were “for the birds”). I’m pretty sure this mica mine in North Carolina isn’t the Spruce Pine mines that would later become a major source of high purity quartz because it seems like mica and feldspar were mined from Spruce Pine for the war effort, but I’m curious where this “group of people” actually lived.
Bibliography Notes: Audit of the Metals Reserve Company (1948)
This document, itself a volume of a broader audit of MRC’s parent company the Reconstruction Finance Corporation, was submitted to the U.S. House of Representatives on November 26, 1948 by the office of the U.S. Comptroller General. While this seems like a routine audit document, I’ve struggled to find any other audits of the MRC–the “final report” of the RFC published in 1957 only cites statistics from this 1948 audit.
This is maybe a little unusual given the final sentence of the audit summary: “Because of the qualifications presented in the summary beginning on the first page of this volume, we are unable to express the opinion that the financial statements accompanying this report present fairly the financial position of Metals Reserve Company at June 30, 1945, or the results of its operations for the period ended on that date.” The 72 preceding pages detail MRC’s activities through World War II–or more accurately, the gaps and uncertainties in MRC’s own disarrayed records of its activities.
Working backward from that extraordinarily restrained concluding sentence: what did our auditor glean from the documents available? What are the aforementioned qualifications? Maybe let’s start by just explaining what MRC was actually chartered to do.
- Procurement and disposal/stockpiling of strategic and critical minerals
- Payment of subsidies to mineral producers
- Salvage and scrap metal recovery programs
- Redistribution of surplus aircraft materials and parts
For the purposes of my research interests, I’m mostly interested in the audit’s assessment of the first two activities. Much of the audit summary covers MRC’s subsidy function and what the auditor describes as “indirect subsidies.” In 1942, MRC was authorized by Congress to pay subsidies to producers of critical minerals to spur production–basically, if the rate that the government was authorized to pay for materials (as dictated by the Office of Price Administration) was deemed too low to compensate for production costs, MRC could cover whatever difference would make production profitable. While MRC provided totals for their various “premium payments” and subsidizing of certain mining developments, our intrepid auditor has some misgivings about the official tabulation because of other activities that, while not counted as subsidies, provided the same benefits as subsidies. This would include selling metals at a loss to manufacturers (the difference being effectively a “subsidy” to the original seller to MRC, who would have been paid less selling directly to the manufacturer), keeping refinieries open at a financial loss for seemingly non-crucial materials, and buying vanadium ore from companies only to process it in government-operated plants and then resell it to the same companies at a loss.
Mostly, some of these actions seem to be a problem because these actions were often taken at the behest of government agencies who would have otherwise had to receive Congressional approval for making various purchases who could then avoid oversight by running it through RFC/MRC, which basically had a direct line to the U.S. Treasury. Then again, Congress received reports on MRC’s activities and didn’t really make a stink about it. The audit concludes with an acknowledgment that none of this bad accounting was technically illegal so much as untoward.
“Technically legal but untoward” is honestly the vibe of most of the audit’s findings–there’s a lot of subtext to be found in some of the more oblique shade thrown in the audit. Among my favorites:
- “In some cases, as a direct result [of MRC’s purely administrative role receiving instruction from other agencies], the Corporation became involved in arrangements which appeared to us to be at best unbusinesslike.” (There is no further elaboration on what this means.)
- “It is apparent from our review of [board] minutes that no considered deliberation could have been given to many of the matters, and, in many cases, the actions taken were perfunctory.” TLDR: the MRC board rubber-stamped most decisions.
- “A limited review of the records of claims receivable maintained in the treasurer’s office indicated to us that the total of claims, as recorded…was not a reliable figure.” We didn’t even look at all of your records, but those were bad enough that we don’t trust your numbers.
- “We encountered difficulty in our review of accounts receivable records because of the Corporations failure to keep complete, consistently arranged files of supporting data, properly indexed and cross-referenced, and in readily accessible order; and because the Corporation made extensive use of complex entries and extraordinary adjusting entries, we found the tracing of individual sales invoices and collections through the records to ultimate disposition to be a costly and time-consuming procedure. These difficulties must have been a serious handicap in day-to-day bookkeeping activity, and they must also have added heavily to administrative expenses and to the hazards of loss attributable to faulty control over assets and operations.”
- “The auditors did not attempt to audit the Colonial Mica Corporation [a subsidiary agent of MRC which uh, was investigated by the Department of Justice?], primarily, it is believed, because of the confusion, the discrepancies, and the incompleteness which characterized the records of such transactions.”
- On the overpayment of a contractor by some $80,000: “So far as we know, no steps had been taken by the Corporation to investigate this possibility, despite the fact that certain refunds received from the agent indicate his awareness of some overpayments.”
With those last two, it seems pretty likely to me that having really messy books for international minerals trade and mine development is a pretty convenient way to hide the bribes and/or kickbacks that might have been involved in getting certain mining projects to even happen or various contractor “agents” skimming off the top–but, of course, the audit doesn’t really say that.
This was extremely helpful to read in preparation for reviewing the MRC archives: while the receipts may still be interesting to go through, at least I know to expect that those receipts may not entirely add up. It also helps me think about which questions I can meaningfully answer through these archives–probably not a complete accounting of operations or a comprehensive supply chain analysis!