AN IMAGINATIVE GOVERNMENT PROGRAM IS NEEDED, BOTH TO END THE EXISTING SURPLUS OF ALUMINUM THROUGHOUT THE FREE WORLD, AND TO STEM THE PRESENT FLOW OF SURPLUS ALUMINUM TO THE UNITED STATES MARKET

A. OUR SURPLUS ALUMINUM CAN BE TURNED INTO A SOURCE OF STRENGTH FOR THE FREE WORLD

At the heart of the present situation is a great surplus of aluminum capacity and production in the aluminum producing countries of the free world. This has tended to result in a constant and increasing pressure of aluminum offered for import in the one most fully developed market for aluminum and aluminum products—the United States.

This surplus need not be viewed only as a problem, however; from another point of view it can be a great advantage of the free world, an important tool in the effort of the United States Government to help the less-developed areas of the world toward full participation in the modern industrial economy. United States per capita aluminum consumption is 21 pounds per year. Consumption in Western Europe and Canada is at the annual per capita rate of 6.2 pounds. For all the rest of the world, annual aluminum consumption is 0.7 pounds per capita,

The world's surplus aluminum should be channeled not to the United States, but to those areas where it is needed most. A clue to how this can be done may be found in our present surplus wheat program, which President Eisenhower recently described to the Canadian Parliament in the following terms: "Simply stated, our wheat disposal program has three aspects.

"In times of local famine or disaster we give wheat away. We have also bartered it for strategic materials. Finally, we sell wheat for local currency to countries which cannot afford to purchase commercially. In these cases our policy is to lend back to the government in question most of the proceeds for local economic development. Our intent is not to damage normal commercial markets and in this I think we have been generally successful."

A similar program for aluminum could have extraordinary and far-reaching effects. It would make available an additional primary industrial material in areas of the world where the lack of primary industrial materials has been the great obstacle to all industrial development, without requiring a heavy capital investment in building new facilities. An entire cycle of industrial development could be substantially shortened.

This is a program which might well appeal to our principal allies. Canada, for example, might collaborate with the United States in setting up an international agency dedicated to the wise use of the common aluminum surplus of these two countries, in such a way as to benefit rather than to injure the economies of the free world.

B. EMERGENCY ACTION OF IMPORTS IS NEEDED TO CHECK THE WEAKENING OF THE UNITED STATES INDUSTRY

The problem does not exist only in the long run. Immediate Government action is needed if foreign producers are not to obtain an inequitable share of the present depressed domestic market.

The advantage which foreign producers have in the United States market is twofold. Their costs are so much less because of wage differences as to give them an unreasonable competitive advantage. Not being a part of the United States economy or subject to its controls, they can in times of scarcity withhold their aluminum and sell it elsewhere or at premium prices, while funneling maximum supplies at low prices into the United States market in times of surplus.

To limit the great advantage which foreign producers have become of low wage costs, the aluminum industry believes that the present tariff is entirely inadequate. It recognizes, however, that in the present international situation legislation to increase tariffs might have unfortunate international repercussions, and may seem undesirable, however sound economically. If a tariff increase is not now feasible, however, other means must be found to normalize imports.

This requires the establishment of controls which will effectively limit the imports from foreign suppliers in times of surplus. Such imports should bear some reasonable relationship to imports which have been customarily made from the same suppliers in normal times and in times of scarcity. Controls could be

established in terms of absolute tonnages or in terms of percentages of past shipments made in a base period.

It is suggested that a reasonable approach would be to take in times of aluminum surplus the percentage of capacity at which the domestic industry is then operating as the standard. Each foreign producer should then be limited to the corresponding percentage of his actual sales in the United States market in the last previous year of full capacity operation (at this time 1955 would be the base year). Variations could be provided for in special instances where this formula seemed inappropriate.

Such controls might be imposed by legislation, but it is believed that they could first be sought through negotiation by the United States Government with foreign governments for a system of controls. Foreign producers are aware that their own governments are not prepared to permit increased imports of aluminum in times of surplus. They should accept the need for similar action by the United States.

C. ANTIDUMPING LEGISLATION

An advantageous field of study would be the possibility of enactment of antidumping legislation which would be as practical and as effective as the provisions of the current Canadian law. Under its law Canada has been able to give its manufacturers effective protection against foreign competition.

Finally. the entire problem of combating the Soviet economic offensive demands collaboration between Government and industry. It is recognized that preparation for a military war requires military leaders; it should be equally recognized that the participation of business is necessary in preparing to fight a war of trade.

Mr. ROGERS. All further information filed by the Aluminum Company of America will be included in the file, without objection.

At the request of the chairman of the full committee, a statement concerning the history of domestic chrome will be inserted in the record at this point.

(The statement referred to follows:)

STATEMENT OF DOROTHEA REDDY MORONEY, KLAMATH RIVER CHROME CO., YREKA, CALIF.

World War I-1918

HISTORY OF DOMESTIC CHROME

At the start of the war, though desperately needed, chrome was little known in the West. Samples were distributed to western prospectors, they responded to their Government's appeal, and chrome prospects were discovered which later became mines. There was no Government-purchase program; the mines sold direct to users-Electro-Met (Union Carbide), its subsidiary, California Chrome Co., and others.

A few months before the war ended, boats with cheap Russian chrome landed on the east coast and the prospectors found their contracts with the users broken. A War Minerals Relief Commission was established to pay the "proven net losses" of those who had "proof" they mined in direct answer to a Government appeal. One of the Commission's rules was a claim could not be inherited. Over the years many of the original claimants died. Later this ruling was corrected by legislation, and some of the more fortunate heirs received 50 to 75 percent of their net losses, but by that time the expense of collection took 50 percent of the partial awards. The Commission was abruptly abolished in 1941 when someone pointed to it as proof that chrome existed in this country.

World War II-1942

Chrome was again desperately needed and Metals Reserve Company was established to buy. Having been once stung on Government promises and contracts canceled by the chrome users, the chrome miners were adamant until Metals Reserve Company established purchase depots at Yreka, Calif., and Grants Pass., Oreg., which paid on delivery.

This program was far from wholehearted on the Government's part. Buying periods were announced in the middle of summer or the dead of winter, always at the last minute, effectively cutting the miners' planned operating time in half because of the 6-month winters.

Nevertheless, the chrome prospects of the First World War became the shipping mines of the Second, and the known tonnage in the United States increased. National stockpile-GSA purchase program—1951

In 1951 it was decided the country should have a 5-year stockpile of strategic minerals. The United States uses approximately 1,800,000 tons of chrome a year. Presumably, the "secret" stockpile 5-year goal should have been 9 million tons.

After many skirmishes with the "have-nots," a purchase depot was established at Grants Pass, Oreg., to buy 200,000 tons of domestic chrome. Seventy percent of the deliveries have been made from California at a $10 to $20 truck-haul penalty, whereas only 20 percent of the purchases came from Oregon; yet the depot was put in Oregon. (Ten percent came from Alaska and other sources.) The 200,000 tons ($20 million) allocated the domestic shippers was approximately only 24 percent of the 5-year proposed purchase program. The balance, 974 percent, was allocated to foreign producers.

The western chrome mines filled this 200,000 tons at a grade 7 points higher than predicted by those granting the 24-percent pittance.

Recently the Government ruled a 3-year supply would be sufficient in an atomic war. The 5-year stockpile plans were scrapped, and in May of this year the General Services Administration depot closed, thereby closing the California and Oregon chrome mines and mills. Presumably, the stockpile 3-year goal should be 5,400,000 tons.

As a result of even this microscopic purchase order, the Nation's known chrome reserves have been increased for a third time.

The present-1958

The California and Oregon chrome producers feel they are the victims of the ignorance of the Departments allocating the total 3-year purchase program. Had the domestic shippers been given a larger share, they could have filled it. Many of the mines and mills have yet to recover their investments.

Funds

No DPA funds were granted for California and Oregon chrome purchases. The total of $20 million came from Public Law 520.

No DMEA funds were spent for California and Oregon chrome producers. All exploration has been at the expense of the individual chrome miner.

Not one dime of Government money of any kind other than the exact purchase price of the delivered chrome itself was made available to the California and Oregon chrome shippers.

Yet this local industry has twice saved the Nation in time of war-and unaided-opened 518 mines.

The Nation received a free development program.

Accomplishments

At a cost to the Government of only the delivered price of the ore we learn a total of 518 mines shipped chrome as follows:

This was truly a small mines development program. The Nation's known tonnage has greatly increased as a result of this direct purchase program.

At the start of the program it was not known whether 1 percent of our chrome needs could be produced domestically. A $20 million purchase program has proved us capable of producing 5 percent of the Nation's needs. Granted a second $20 million purchase program, that figure could easily raise to 10 percent. A small cost for its safety factor value to the Nation.

A second $20 million GSA program could have the following benefits:

1. Raise the industry to a point where it could be depended upon to produce 10 percent of the Nation's needs.

2. Exert a small but depressing influence on the price of imports.

3. Continue to increase the number of known domestic deposits.

4. Give needed employment in the United States.

5. Keep active the chrome mining and milling know-how which took so many years to assemble.

6. Give tax revenue which imports do not.

7. California and Oregon chrome mines are accessible in case of war. Some of thể "cheap" imports of 8 years ago, after receiving grants of money, machinery, railroads costing lives and boats-have yet to be delivered to this country.

8. By adding to the stockpile, keep the fixed stockpile from falling below its 3-year supply aim. (Consumption increases yearly.)

The General Services Administration chrome program

This is one program which operated without abuses. There were no orestealing scandals, no sudden fortunes made. It was truly what Congress intended a small man's mining and milling program, with the resulting additional tonnage discovered being a happy dividend to the Nation.

To duplicate this program would double its benefits to the Nation. Many small miners built roads to open their prospects, spent money in development work to prove them mines-only to ship 100 to 500 tons before the program ended. A second program would give these miners a chance to recoup their road and exploration funds and a chance to use their hard-gained experience to make a reasonable profit on their courage and production.

California and Oregon chrome compared to other programs

The open market price of tungsten is $13. The subsidy price requested is $38. Tungsten producers ask approximately triple open market. The open market price of chrome is $55. The crome producers ask $110 base price only double open market. (California and Oregon chrome shipments averaged $96.) The tungsten producers have flooded their stockpile quota and saturated their industry market for the next few years. They have been aided by large grants of Government development money and Government loans. They are capable of producing 100 percent of the country's consumption.

Montana chrome was given a 10-year program, $1,815,000 in equipment, and a $950,000 loan at 4 percent. No deliveries were required for the first 2 years. California and Oregon were threatened with cancellation for not having filled half their program in their first 1-year period. Montana ships a grade 9 points lower than the rejection point on California and Oregon chrome for a price of over $4 per ton higher than the Grants Pass scale.

The California and Oregon chrome producers, 90 percent of them having shipped less than 500 tons before the 24 percent of the Nation's stockpile allotted to them was filled, find that while their backs were turned the balance of their Nation's stockpile-974 percent-was filled with imports (cheap?) and farm trade ores. Small miners shipping less than 500 tons cannot afford lobbyists, legal staffs, engineers, metallurgists, or financial advisers to keep them informed. They just dig. They read the Montgomery Ward catalog-not the Wall Street Journal.

Chrome consumption

Normal chrome consumption in this country increases steadily. Though the present stockpile may be judged complete for a 3-year period, an additional 10 percent per year from expanding domestic sources would be justified to take up the slack between increased consumption and the stagnant stockpile. A 3-year supply at this time is not a 3-year supply a year from now.

A General Service Administration 200,000-ton purchase program of domestic chrome could keep the stockpile from falling below its aim.

Recommendations

We feel, in view of the above facts, that the California and Oregon domestic chrome industry, still in its infancy, because of its hard-earned, self-developed increase from 1 to 5 percent of the Nation's yearly needs should be given a second $20 million program to be administered for a 3-year period by General Services Administration-in the hope of becoming a dependable source of 10 percent of the national chrome consumption.

The Honorable Secretary of Interior himself, in his statement of July 3, recognizes the desirability of supplemental stockpiling for copper-a mineral capable of flooding its own market.

The problem of chrome is unique in the list of strategic minerals. It deserves the chance to increase as a safety factor for the country under a setup which has proved itself successful.

A guaranteed program of 3 years would be more than the California and Oregon chrome producers have ever had. Two years, with extensions hinging on renewal clauses, have been their longest single period.

General Services Administration stockpiling is the only answer.

Mr. ROGERS. Let the Chair make this notation: The chairman of this subcommittee, the chairman of the full committee, and, I am sure, all members of the subcommittee and many members of the full committee, have received numerous communications in the form of letters, telegrams, and telephone calls all in regard to this legislation. Without objection, these telegrams and other communications that have been received will not be placed in the record but will be made available in the file.

Without objection, these communications will be put in the file and any member desiring to place any further telegrams received in the file may have that material included there, and it will be given to the

clerk of the committee.

There being no further witnesses, I think that the business of this subcommittee can be handled with greater dispatch if we went into executive session.

Without objection, the subcommittee will go into executive session at this time.

Thereupon, at 11:05 a. m., the subcommittee went into executive session and subsequently reported to the full committee with amendments S. 4036.)