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First, for convenience, I shall discuss briefly S. 4036, the minerals stabilization bill, and S. 3817, the exploration bill; then comment briefly on H. R. 13270, Congressman Miller's bill, which includes the Department's recommended program with respect to production bonuses, although it is not included in the list on which we were asked to testify this morning. Finally, I shall take up Congressman Engle's bill, H. R. 13280, which incorporates the major provisions of the three foregoing bills.

8. 4036-STABILIZATION PROGRAM

The Senate, as you know, has passed S. 4036, the stabilization program for copper, lead, zinc, fluorspar, and tungsten. I believe that this committee is aware that the bill as it has passed the Senate contains modifications in certain respects of the administration's original proposal. There were three changes of substance:

1. The stabilization prices and stabilization payments for lead, zinc, and fluorspar were increased.

2. Tungsten was added to those commodities for which limitedtonnage payments were provided.

3. Borrowing authority was substituted for direct appropriations as provided in the administration's proposal.

The Department of the Interior is of the view that the increased prices for lead, zinc, and fluorspar and the new tungsten provision contained in the Senate-paseds version are not required to meet the objectives of the stabilization program.

With respect to the substitution of borrowing authority for direct appropriations, Secretary Seaton has said that the Department would accept this modification of our original proposal should the Congress adopt the substitute language.

S. 3817_EXPLORATION

The Department supports S. 3817 as it was passed by the Senate and urges this committee to act favorably upon this important measure. S. 3817 would provide a successor agency to the Defense Minerals Exploration Administration which terminated on June 30 of this year. The Department is convinced that the provision of a continuing program of the type called for in S. 3817 will be of the utmost importance in maintaining a strong United States minerals position.

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H. R. 13270–PRODUCTION BONUSES

The Department last year made a proposal for payment of production bonuses for beryl, chromite, and columbium-tantalum. The recommended program is contained in H. R. 13270, introduced by Congressman Miller.

This bill is apparently not on the committee's calendar today, but it is an important part of the administration's overall minerals program. The production bonuses are designed to maintain a hard core of domestic production of the three commodities involved.

The program is not a support program in the usual sense of the word. It is rather a program undertaken to complement and supplement the research work undertaken by the Bureau of Mines and other

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agencies of the Government. We urge that the program incorporated in H. R. 13270 receive favorable action by this committee.

H. R. 13280

H. R. 13280, introduced by Congressman Engle, is an omnibus type bill incorporating, with some modifications, the exploration program contained in S. 3817 and the stabilization program for copper, lead, zinc, fluorspar, and tungsten contained in S. 4036. It includes the administration's proposed program of production bonuses for beryl and columbium-tantalum. H. R. 13280 contains as title II a new proposal for a special program for chromite and as title III a new proposal for a stabilization stockpile for minerals and metals.

In a letter supplied to the committee on July 15, the Department expressed its view with respect to the new proposal for chromite, and the proposal for a stabilization stockpile for chromite and potentially for other materials. We oppose the chromite program as proposed in H. R. 13280 and believe the most constructive approach to the problem posed by that commodity is contained in H. R. 13270.

Similarly, the Department is opposed to the establishment of a stabilization stockpile for mineral raw materials. The proposed stabilization stockpile would, in our opinion, be disruptive of the mineral markets; it would interpose the Government between producers and consumers and thereby materially change the pattern of mineral production, processing and use as we have known it in the United States.

Mr. Chairman, that completes my brief formal statement before the committee this morning.

I should like to point out that Mr. C. O. Mittendorf, Administrator of the Defense Minerals Exploration Administration, is available to answer any questions that you may have on exploration aspects of the measures you are considering.

Mr. Marling Ankeny, the Director of the Bureau of Mines, is available to answer any questions you may have on H. R. 9460 which would create a Coal Research and Development Commission.

Mr. William L. Shafer, minerals officer, Bureau of Land Management, is available to comment on S. 2039, to clarify requirements with respect to performance of labor imposed as a condition for holding mining claims.

I thank you, Mr. Chairman, for the privilege of reading that brief statement into the record, sir.

Mr. ROGERS. Thank you, Mr. Hardy, for that testimony.

(By later order of the Chair, the letter of July 15, 1958, from the Department of the Interior follows:)

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY,

Washington, D. C., July 15, 1958. Hon. CLAIR ENGLE, Chairman, House Interior and Insular Affairs Committee,

House of Representatives, Washington, D. C. DEAR MR. ENGLE: In the course of hearings before the House Interior and Insular Affairs Committee on July 3, you requested that this Department review the proposals with respect to chromite and the stabilization stockpile as contained in H. R. 13280. The Department has completed its review and the information requested is as follows:

Title II-Chromite.The Department opposes the special chromite program proposed in title II for the following reasons:

The program would interpose the Government between the producers and the market. It would require the Government to purchase substantial production from domestic sources and make its own arrangements for resale. Only in time of emergency, such as World War II, has the Government entered this deeply into the minerals business. At that time, through the Metals Reserve Corporation, the Government was actively engaged in purchase for resale of metals and minerals. The metals reserve program was justified only by the then prevailing emergency.

The program, in addition to placing the Government between prospective producers and consumers of chromium alloys, would not go to the root of the chromite problem in this country. There is no dearth of processing facilities in the United States for production of chromium alloys. In point of fact, at the present time, with the low rate of steel production, there is a substantial surplus capacity of chrome-alloy producing facilities in this country and in the free world. The program, if enacted, would provide an artificial stimulus to the development of new industrial capacity for production of chrome alloys and in all likelihood a substantial share of such added capacity would, in the long term, be uneconomic. Because of the stake of the Government, brought about by its involvement, the program could potentially lead to a long-term program of support of facilities which would have little hope of survival under commercial conditions.

The Department of the Interior's concern for the chromite segment of the domestic mining industry does not run to chromite processing facilities. In our view the first step to bring about the commercialization of domestic chrome mining is to provide a climate whereby domestic producers of chrome on their own initiative can establish commercial relationships with the domestic consuming industries. In our opinion, this first and compelling need is met by the administration's proposal for production incentive payments for chromite. We are convinced that the institution of the proposed program for chrome alloy purchases at this time is premature and could not contribute to the solution of the long-term problems surrounding domestic production of chromite.

Title Ill-Stabilization stockpile.—The Department opposes the establishment of a stabilization stockpile for mineral commodities. This proposal would place the Federal Government into the business of buying and selling minerals and metals and would materially change the pattern of commercial minerals production, processing, and use in the United States as we have known it. As contained in H. R. 13280 the stabilization stockpile would at this time be applicable only to chromite, but its general nature suggests strongly that other commodities might be added from time to time, particularly during times of low demand for mineral raw materials. In time, this could eliminate almost entirely the day-to-day market for raw materials as a factor in production. Sincerely yours,

ROYCE A. HARDY, Assistant Secretary. Mr. ROGERS. I might say at this point that it presently appears we will not reach the Coal Research and Development Commission bill today, and the chances are that we will not reach S. 2039 today. If those gentlemen desire to stay, we will be glad to have them, but I would not want to hold them here unnecessarily.

Are there any questions by the gentleman from California?

Mr. ENGLE. Has there been any position by the administration on the borrowing authority other than that expressed by Interior? That is, has Budget or any other agency expressed views so that you can say that the position taken by the Interior is supported by the fiscal agencies downtown?

Mr. Hardy. So far as I know, Mr. Engle, there has been no administration position other than that testimony given by Secretary Seaton.

Mr. ENGLE. Thank you very much.
Mr. Rogers. The Chair recognizes the gentleman from Nebraska.

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Dr. MILLER. I have one question, Mr. Hardy.

The bill I introduced, H. R. 13270, does have a chromite provision in it for the payment of $35 per long dry ton, as is shown on page 2, line 18, of that bill.

Yet in your letter to the commitee on July 15 you suggested that title II of the chromite bill, H. R. 13280, Mr. Engle's bill, be stricken from the bill and not considered. And I believe Mr. Engle asked it be stricken from the bill.

I have not had time to examine the two sections. How do they differ from each other?

Mr. HARDY. Dr. Miller, they are totally dissimilar. The chromite provision in H. R. 13270 provides for a production bonus. Now, the chromite provision in Mr. Engle's bill was for a chromite purchase, I believe, sir.

Dr. MÍLLER. For stockpile purposes?
Mr. HARDY. That is right, Mr. Miller.

Dr. MILLER. And H. R. 13270, which I introduced, does not have a stabilizing and stockpiling purchase, unless you interpret the paying of $35 a long ton or other prices for minerals as a stockpiling proposition. What do you do with the minerals you buy?

Mr. HARDY. We do not buy them in that bill, Mr. Miller. We pay a production bonus when those three commodities are sold in commercial channels.

Dr. MILLER. I take from your remarks that the provisions of H. R. 13270 would be approved by your Department. I believe, in fact, it was sent up by your Department.

Mr. HARDY. Yes, Mr. Miller, that was our recommended program covering those three commodities.

Dr. MILLER. Thank you.
Mr. ROGERS. The gentleman from Colorado, Mr. Aspinall.
Mr. ASPINALL. No questions.
Mr. ROGERS. The gentleman from Pennsylvania, Mr. Saylor.

Mr. SAYLOR. I would like to have you, Mr. Hardy, tell this committee, and Members of Congress who are not members of this committee, how the Department of the Interior can come in here and ask for this kind of a program with regard to minerals, and when somebody from the Agriculture Department suggests the same kind of a bill they say that is terrible, and they call it a Brannan plan, and they say horrible things about it.

Is there something sacred about minerals that places them in a different category than anything else? Or does not the Department of the Interior know what the Department of Agriculture is doing?

Mr. HARDY. Mr. Saylor, we feel that it is very important for this country to maintain a production of these various minerals that we have covered in our stabilization plan and at the same time to carry on exploration, consolidating our position of reserves for these materials, because we feel very strongly that in the coming years there will be great demand for these metals.

We are faced with a situation in which we may well lose much of the productive capacity of these materials, and the purpose of our stabilization plan is to alleviate that situation in the minerals area.

Mr. SAYLOR. Now, a few weeks ago Congress had up before it a bill with regard to reciprocal trade, and the administration position at that time was that we should not worry about anything in the domestic

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field; we had to throw that all out the window, and we had to worry about world trade and what was going to happen to our international relations.

Now this week you are up here before us telling us that you are now concerned with the local folks. If you are now concerned with the local folks, you might have taken that position with regard to reciprocal trade a few weeks ago and helped us with providing a few tariff walls or a quota system that might have taken care of the situation.

We have that bill over before the Senate now, and some Members of the Senate have taken the position that they are probably going to argue along that line. At least, that has been suggested by the Finance Committee of the Senate.

How can you come up here before this committee, representing the administration, and have these two opposite views? Or are not we supposed to remember from one week to another?

Mr. HARDY. Mr. Saylor, I am of the opinion that the administration has always been concerned with the domestic producers as well as the friends we have abroad. I think that is evidenced by this mineral stabilization program which was introduced on April 28. I think that shows the administration certainly is concerned with domestic industry.

Mr. SAYLOR. You think your answer is responsive
Mr. Hardy. I have tried to make it be, Mr. Saylor.

Mr. SAYLOR. Well, read it tomorrow. I do not think it is very responsive. Now, you say you are opposed to a stockpile of raw materials

. That appears on page 4. You are opposed to the establishment of a stabilization stockpile for mineral raw materials. Is that right?

Mr. Hardy. That is right, sir. Mr. SAYLOR. Now, why? Mr. HARDY. If I may, Mr. Saylor, I would like to read you from a letter addressed to Mr. Engle, chairman of this committee, on title III of that bill, H. R. 13280. [Reading:]

Title III-Stabilization Stockpile: The Department opposes the establishment of a stabilization stockpile for mineral commodities. This proposal would place the Federal Government into the business of buying and selling minerals and metals, and would materially change the pattern of commercial minerals production, processing, and use in the United States as we have known it. As contained in H. R. 13280, the stabilization stockpile would at this time be applicable only to chromite, but its general nature suggests strongly that other commodities might be added from time to time, particularly during times of low demand for mineral raw materials. In time, this could eliminate almost entirely the dayto-day market for raw materials as a factor in production.

Mr. SAYLOR. Not too long ago, you came up here and suggested that we have a stockpile program. You bought various minerals and put them in a stockpile and called it a defense stockpile. What is the difference between that type of buying and the type that would be suggested in the stockpiling, so that maybe the poor taxpayer would have a chance of getting something out of this?

Mr. HARDY. Mr. Saylor, the stockpile buying for the strategic and critical stockpile was based upon defense justification, and that material is held in abeyance in stockpiles for times of emergency. I believe that is quite a difference from the proposed stabilization stock

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