CAB129-52 — Page 177

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15. Fertilisers (£3.9 million) revert to private trade on 1st July next. No licences have yet been issued to private importers, but the buying season opens shortly. Of the programme for other chemicals" less than half (£7:1 million) is controlled. Allowing for £2 million on molasses which is fully committed, only about £3 5 million of this programme is uncommitted. Of the very wide range of "other industrial materials" slightly more than half (£28 7 million) of the pro- gramme is controlled, and about £18 million is estimated to be uncommitted.

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16. In non-ferrous metals, although purchases are nearly all committed, there are possibilities of increasing foreign exchange earnings by resale, either of metal or in semi-manufactured form. For the second half of 1952, the possible benefit to the balance of payments may be of the order of £5 million. The aluminium supply position will not permit much expansion of sales in semi-manufactured form in the second half of 1952, but expansion should be possible in the first half of 1953 at the expense of stock-building.

17. Ministry of Supply: Steel, &c. Before the latest United States steel strike, it was estimated that we should be able to import 1,200,000 tons in the second half. If the strike is brought quickly to an end, this may still be possible. 766,000 tons are committed. The saving, if no more commitments were made in respect of the second half of 1952 but commitments continued for the first half of 1953, would be £32 million. The effect would be to restrict steel consumption in the first half of 1953 (supposing exports of steel to be at their present level) to an annual rate of about 15 million tons. The level of consumption of steel ingots in 1951 was 15 million tons, but finished steel consumption was maintained at a rate equivalent to 15.4 million tons by running down steel work in progress. No further drawing down of stocks can be expected. Consequently, if no more commitments were made in the second half of 1952, steel consumption in the first half of 1953 would be held down to a level of about 2 per cent. above 1951, but this would be appreciably less than the expected demand in 1953.

18. Board of Trade: materials. Most of these consist of imports of fur skins which are predominantly for re-export after processing in the United Kingdom. The other big item is plastic materials, particulars of which are included in paragraph 15.

19. Machinery.-The control on imports from the dollar area has just been tightened considerably but the benefit will probably not be felt before 1953. About 60 per cent. of these imports consist of replacement and assembly parts. Imports from Europe, which equally cost gold, are nearly all uncontrolled. It would be possible at severe administrative cost to bring all imports from Europe under control. This would probably yield very little saving in the second half of 1952, unless United Kingdom buyers were forced to cancel their contracts. The amount involved in these purchases is substantial (£40-45 million a year) but there would be a danger of retaliation against our exports to Europe. On the other hand, if imports from Europe remain uncontrolled, the Ministry of Supply expects that the volume will continue to increase so long as supplies from home sources are limited. This may well lead to a decreased concentration on export markets by United Kingdom manufacturers of certain types of machinery.

20. Board of Trade: manufactures.-Almost all the controlled imports of manufactured goods (including textiles) are already committed by published quotas. The textile imports are virtually all controlled; only about one-third of our imports. of other manufactured goods from Europe are uncontrolled (about £10 million a year), and this consists of a large range of very small items, the control of which would present formidable administrative difficulties without much saving.

21. Tobacco. Although the purchase from this year's American crop is not formally committed, the trade has been fully informed and so have the Americans. The cuts made in January and March have been so drastic (reducing the purchase to one-quarter of last year's) that no further cut is practicable. The more important question is whether it would be possible to step up the rate of substitution of Commonwealth tobacco; the proportion of United States tobacco in home-made cigarettes has been reduced from 77 per cent. in 1948 to 56 per cent. now, and it is planned to reduce this further to 50 per cent. by early 1954; the Board of Trade and the Treasury consider that the risks to the Revenue in increasing the rate of substitution would outweigh the marginal dollar saving involved a goat a

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