Statement by the President Upon Establishing the Defense Materials Procurement Agency.

I HAVE today signed an Executive order establishing the Defense Materials Procurement Agency and making further arrangements for the handling of loans to stimulate defense production.

The Defense Materials Procurement Agency is being established pursuant to the policy announced in my statement of August 1, 1951. This new agency will have centralized responsibility for procuring strategic and critical materials at home and abroad. The agency will also have responsibility for the Government's efforts to stimulate increased production of these materials, using the powers available under Title III of the Defense Production Act of 1950, as amended.

Under the Executive order signed today, the Defense Materials Procurement Agency will be responsible for the following specific tasks:

(1) Purchase and make commitments to purchase metals, minerals, and other materials for Government use or resale under section 303 of the Defense Production Act of 1950, as amended. This involves no change in the Department of Agriculture's present authority to purchase food.

(2) Encourage the exploration, development, and mining of critical and strategic minerals and metals under section 303 of the act. It is expected that the DMPA will redelegate to the Department of the Interior responsibility for the domestic phase of exploration for metals and minerals.

(3) Make any subsidy payments under section 303(c) of the act which may be necessary to maintain essential production.

(4) Serve as a guaranteeing agency in connection with the financing of production and deliveries or services under Government contracts in accordance with section 301 of the act.

(5) Install additional equipment, facilities, processes, and improvements in Government-owned and private plants, factories, and facilities.

Assignment of these tasks to the new agency represents a consolidation of certain functions previously performed by a number of other agencies, particularly the General Services Administration and the Defense Minerals Administration in the Department of Interior. Arrangements are now being completed for delegation to the new agency of certain other functions not transferred by this order, including the minerals and metals procurement program of the Economic Cooperation Administration.

The new agency will be subject to direction, control, and coordination by the Director of Defense Mobilization. It will operate within the framework of program objectives approved by the Defense Production Administrator.

The Defense Materials Procurement Agency will be headed by Mr. Jess Larson, now Administrator of General Services.

The Executive order signed today also redefines arrangements for loans of Government funds under section 302 of the Defense Production Act of 1950. These are loans to private business enterprises for the expansion of capacity, the development of technological processes, and the production of essential materials, including the exploration, development, and mining of strategic and critical metals and minerals.

The order provides that such loans will be handled through the Export-Import Bank of Washington, when the funds are to be used for expansion, development, or production in foreign countries. This includes loans to domestic borrowers for use abroad. These loans will be made by the Bank only upon a certificate of essentiality made by the Secretary of Agriculture in the case of food and by the Defense Production Administrator in all other cases, and will be made only in the event that private funds and the regular funds of the Export-Import Bank are unavailable for the loan involved. The terms and conditions of the loans will be determined by the Bank.

All loans for domestic use under section 302 will continue to be handled by the Reconstruction Finance Corporation. The order provides that the Reconstruction Finance Corporation will determine the terms and conditions of these loans, instead of having the determination made by the various production agencies as has occurred in the past. Certificates of essentiality from the Defense Production Administrator or the Secretary of Agriculture, as appropriate, will be required in cases where these loans are for the expansion of capacity. These certificates will no longer be necessary for loans involving working capital only, but the Reconstruction Finance Corporation will be required to check in advance with the procurement agencies concerned, as to the need for any working capital loan.

Loans by the Reconstruction Finance Corporation under section 302 of the Defense Production Act will continue to be restricted to those instances where neither private funds nor the regular funds of the RFC are available for the purpose.