Metals

etals are of prime importance to modern industrial society. The metals. available determine to a large extent the standard of living of any area and they are basic to modern war. Consequently it is not surprising that Germany's industrial and military pre-eminence in Europe was primarily founded on metals. Before World War I Germany led the world in metallurgy, and even at the start of World War II Germany was the leading producer of certain important metals such as magnesium and aluminum. Germany was second only to the United States in steel production. Her exports of finished machinery and consumer products made from metal were widely distributed and responsible to a large extent for the advanced stage of pre-war industrial civilization in Europe. Any decisions regarding the German metals industry must therefore not only have a profound effect on the German economy, but also upon the general level of European industrial civilization.

Much of the German capacity to produce metal products was created for the purpose of waging war. This condition is recognized in the Potsdam Agreement, which provides that "Production of metals... shall be rigidly controlled and restricted to Germany's approved post-war peacetime needs... Productive capacity not needed for permitted production shall be removed..." Up to 14 June, 1946, there had been 47 quadripartite Metals Sub-Committee meetings whose primary purpose was to set levels of production and select capacity to be removed and retained in accordance with the Potsdam Agreement. There have been numerous field surveys, in both the U. S. and other zones of Germany. As a result, a plan for the future German metal economy has now been established. Levels of annual consumption have been agreed upon as follow: Steel, 5,800,000 tons; copper, 140,000 tons; lead, 135,000 tons; zinc, 120,000 tons; nickel, 1,750 tons; tin, 8,000 tons; aluminum, 3,000 tons; and magnesium, 1,000 tons A reparations plan has been also agreed upon as follows:

This table demonstrates the scope of the action that has been taken in accordance with the Potsdam Agreement. Steel capacity is to be cut to one-fourth of existing capacity. Primary production of aluminum and magnesium is to be completely prohibited. Consumption of aluminum, previously one of the key metals in the German peace and war economy, is to be at about one-eighth of the level immediately prior to the war. Copper refining capacity is to be cut to about one-fourth of wartime levels. Zinc and lead, are to be treated less drastically, in view of their less dangerous nature. These reductions will constitute one of the world's major industrial readjustments, and will make Germany unable to fight a major war.

Steel Ignot Capacity 7.6%

When this plan is carried out, Germany, whose population is about 40% of that of the United States, will have a steel ingot capacity only 7.6% of that of the United States. For the basic major non-ferrous metals, most of the refining capacity that previously treated foreign ores, concentrates, and semi-refined metals is to be removed. When available supplies of scrap are exhausted, Germany will have to supplement its production of these critical metals either by imports of refined metal products. German mines have never been economical as compared with foreign properties and had to be heavily subsidized by the German Government. Therefore, imports which depend on recovering the necessary foreign exchange by exports, will become absolutely essential when present supplies of scrap metal are exhausted.

Very little of Germany's present capacity is in the U. S. zone. There is a limited amount of steel and non-ferrous fabricating and finishing capacity, an important amount of iron ore production and an insignificant amount of non

ferrous mineral production. Generally speaking, therefore, the U. S. zone is dependent on outside sources for metal, and stocks been the principal source of metals since the occupation. Almost all metal plants have been given permission to resume operations, but production today is only at about 15% total capacity. Monthly production has been as follows:

The major sources of supply of metals for the U. S. zone were formerly the British and Russian zones. Delivery of metal products during the first year of occupation from these zones has been almost negligible. Despite allocations of 95,000 tons of steel to 1 April, only 9,785 tons had been delivered. There has been almost no interzonal trade in other metal products.