Secretary KRUG. That is right. Only half has been availed of by the technique and know-how that we have as of this moment, and by the policies which are established in the Congress as of this moment.

I personally think that a considerably larger acreage can be made productive sometime with new techniques we will develop and perhaps with more liberal policies adopted in the Congress.

The CHAIRMAN. Congressman Murdock, have you concluded? Mr. MURDOCK. For the time being, Senator, yes. Thank you. The CHAIRMAN. Congressman White?

Mr. WHITE. Mr. Secretary, it is my information that your Department has undertaken a program of inventorying the mineral resources of the United States. Could you tell us something about that, what has been accomplished and what is in prospect?

Secretary KRUG. Yes. I was explaining a little earlier, Congressman White, that that is a continuous operation because as the needs of industry and agriculture change, the value of different components of the earth's crust change as well.

The work has been under way for a long time, but in my opinion we have only scratched the surface of it, and I think we should redouble our efforts to find out what is there. In terms of concrete achievements, there is a very voluminous report available now which was published, I think, as the part of some record of some committee investigating the matter a year ago, prepared by our Bureau of Mines and Geological Survey that brings up to date all the information we have on every one of the critical materials.

Mr. WHITE. As a result of that program some very notable discoveries have been made, haven't they?

Secretary KRUG. Yes; and I think more will be made; and that is why I think the program of mapping and geophysical work is so extremely important.

Mr. WHITE. We recognize the critical shortage of many metals that are needed for the protection of our country.

Secretary KRUG. Yes, indeed.

Mr. WHITE. And this program of making these inventories by the exploration of the Bureau of Mines, Department of Interior, is directed to correcting those deficiencies?

Secretary KRUG. It is, sir.

The CHAIRMAN. Congressman Crawford?

Mr. CRAWFORD. Mr. Secretary, your chart properly does not show TVA, but you dropped a remark with respect to the deposits of phosphate and the production of fertilizer on a commercial basis which interests me very much.

Does the scope of your presentation here, the over-all scope, involve the proposition of the Federal Treasury, for instance, financing great undertakings, using the TVA so as to bring about competitive operations financed by the Federal Government for the specific purpose of developing natural resources in different areas?

Do I make my question clear?

Secretary KRUG. It is clear, sir. My program does not include that. I do carry us beyond the stage where we have stopped heretofore.

I don't think it is enough to go through a small pilot plant and a laboratory. If you don't have industry developing uses for these marginal ores, I think the Government has to carry the process through to the point where it knows it has a workable process.

I think when you reach that point you won't have any trouble getting private capital to come in and do the job, but I think we have stopped too soon in many of these areas, and that in stopping too soon we have lost the benefits and value of much of our research work and much of our pilot-plant work.

I think the alumina from clay plants that were built in the war are a good example of the pilot-plant technique of getting alumina from inferior ores, which has been worked out for many years.

It looked satisfactory, but when it came to extending that to a commercial-sized operation, we found there all kinds of bugs in those plants; but they should be worked out; they are not being worked out now by anyone. The result is we are going on year by year using up our rich alumina and a tremendous area of the earth's crust in this country that could be made useful in producing aluminum is still just plain clay.

Mr. CRAWFORD. I raised that question because of the fact that the $15,000,000,000 RFC bill is before us and arguments are being made by Members of the Congress to the effect that funds, Federal funds, should be brought to their areas to develop natural resources, and I have heard some of those arguments, and I would have to come to the conclusion that they would be highly competitive operations of the Federal Government where one district is competing with another and where the story will be largely sold to the public on the ground that here is a natural resource that can be developed and should be developed, although it will compete with a similar operation by the Federal Government in some other area.

Thank you, Mr. Chairman.

The CHAIRMAN. The chairman is prompted to cite the Synthetic Fuels Act which was enacted several years ago as having a great direct bearing on the question just asked by Congressman Crawford.

Now that act, with the complete agreement of the Interior Department and the Executive, contains specific provision protecting private enterprise. The demonstration plants which the Bureau of Mines is authorized to establish under that law were precisely what that name implies; plants to demonstrate the feasibility of liquefying coal and extracting liquid fuel from oil shale.

My personal feeling is-in fact, I know the record makes it clearthat what has been accomplished has been a stimulus to some of the private companies. The oil companies, for example, have become much more interested in developing oil shale and producing liquid fuel from coal than they would have been if that law had not been enacted, and I assume that the same principle upon which the Synthetic Fuels Act was based is the principle upon which the Interior Department is now acting.

Secretary KRUG. That is right, sir.

I want to make perfectly clear that in certain areas I think an additional step might be necessary. I do not consider it as Govern

ment competition with private enterprise.

As the chairman knows, in this field of synthetic fuels I feel that we have reached a point where we need a commercial-sized plant. If industry isn't able to do it under the ordinary ground rules of expansion of private enterprise, I think you will need incentive of whatever proportion is required to do it, because we found out in the last war that until you do get a commercial-sized plant, you don't know just

how good your process is and you don't know just how it is going to work and you don't know how to rapidly expand the process when you need production.

I don't look upon that as being competition with private enterprise. The CHAIRMAN. You were formerly Chairman of the War Production Board.

Secretary KRUG. Yes, sir.

The CHAIRMAN. Then you are perfectly familiar with the fact that during the war it was the Government that had to expand the industrial plants of this country to attain the production capacity that was necessary to win the war.

Secretary KRUG. That is right.

The CHAIRMAN. It was Government money through the Defense Plant Corporation, a subsidiary of the RFC, that built untold numbers of industrial plants throughout the country, even in the steel industry.

The fighting stopped. The Congress passed the War Assets bill, sought to throw safeguards around the disposal of these plants so that competitive industry might secure them. Unfortunately, the result has been that most of these plants have been acquired by concentrated industry at a fraction of the cost to the people for their construction, and now that we are facing the extreme necessity of increasing production, it is commonly stated that there is a dearth of risk capital to expand the facilities which we need for the peace effort just as much as we needed the facilities to prosecute the war.

Senator Butler, do you have any questions?

Mr. CRAWFORD. Mr. Chairman, may I ask a question of you to clear this point in my mind?

If I understood you correctly, you agree with my own views that the pilot work in connection with fuel oil has demonstrated that commercial production on the part of private investors is practical and feasible?

The CHAIRMAN. It is desirable and I think it is practical, but whether it is feasible is another question. That depends, in my opinion, on the degree to which private capital can find an avenue for expenditure without danger from monopolistic enterprise, if I may open up another subject.

Mr. CRAWFORD. That was the next question I was going to raise. Could we put in this record here an expression to the effect that we feel that it is practical and feasible, based on these experiments that have been carried on through the pilot plants built by the Federal Government, that chemicals, oil, and coal could, if they desired, proceed to put their money into commercial plants and finish this job?

The CHAIRMAN. Well, speaking for myself, I may say, Congressman, that during the last Congress when the tax bill was under consideration I offered two amendments to that bill which were not accepted, but which were designed to create a stimulus for the investment of private capital in enterprises of this kind, particularly the development of synthetic fuel.

One of these amendments would have provided a depletion allowance for the extraction of oil from oil shale and from coal, and the other would have provided what was called accelerated depreciation during the war, so that those who invested money in such plants could write off the construction in 5 years instead of in 20 years.

I think that that is an indication of the desirability of bringing about the investment of private capital, but if we don't find the way of making such investment feasible, then we are going to be face to face with the problem whether we shall try to drift along without the products that we need, or whether we shall pursue another method, namely, perhaps, to have Government build such plants and then perhaps to lease them to private operators.

From my point of view, I am inclined to believe that one of the essentials, the prime essential, is to get the production.

Mr. CRAWFORD. I am sorry your amendments weren't accepted. I am very much in favor of them. Thank you, sir.

The CHAIRMAN. Senator Butler, have you any questions?

Senator BUTLER. I would like to ask this direct question of the Secretary: In the distribution of hydroelectric power that is being created, that will be created with the further development of the program, with which I am very sympathetic, is it the plan of the Department to have that distributed on what they call the postage-stamp rate, to the ultimate user. I am speaking of the REA, the customer out on the farm.

Secretary KRUG. No; we don't feel you can fix one rate for the whole country. We do feel that in a given region-take the Northwest as an example that we can fix one wholesale rate for a certain class of customers for the whole area. but the retail rate to the ultimate user will depend upon the costs and the efficiency of the particular organization that distributed that power, and you will have one REA cooperative, perhaps, doing a little better job than another or in serving an area that is easier to serve than another, so the rates to the ultimate consumer will vary slightly.

The CHAIRMAN. May I interrupt, and go off the record.

(Discussion off the record.)

Senator BUTLER. I think my question then to the Secretary should be modified a little to get the answer that I hope I will get. The wholesale rate over the western area then would be a uniform rate? Secretary KRUG. Yes; not over the entire area but within a watershed, for example, the Missouri Valley, say, would have one wholesale rate. The Columbia would have another and perhaps ultimately the Colorado another because of the difference in costs of producing power in those various areas.

You would have a slightly different rate as between them, but within the area we would try to give the benefits of the same wholesale rate to every cooperative and to every municipality within that

area.

Senator BUTLER. Mr. Chairman, I had a whole list of questions listed here. I think it would take the rest of the day to get the answers from the Secretary, so I am going to forget them for the moment, but I would like to stress one point.

The Secretary has spoken at length on our mineral resources, including oil, gas, coal, and such products as we can make synthetically from shale and coal to take the place of fuel that we are using

now.

Coming from a State that doesn't mine any coal or any other minerals to speak of-it has a little oil-our principal source of income is the surface that is farmed. We think there that it is everlasting. We intend to adopt a program that will make it everlasting.

Now I admit that this is a problem that doesn't affect only the Department of the Interior, but perhaps more directly the Department of Agriculture in the adoption of an over-all program by the Government that will encourage the use of industrial alcohol made from surplus grains in the manufacture of rubber, synthetic fuel, and many other uses to which it can be put.

It would go a long way toward the solution of our surplus problem that may face us some day when we stop exporting so liberally to foreign countries that are in dire need of our crops at this time, and I would like to know from the Secretary if it is the Department's policy to work in harmony with a program of that kind with the Department of Agriculture.

Secretary KRUG. It certainly is. As you probably know, Senator Butler, under the synthetic fuels bill, the responsibility is lodged in the Department of Agriculture to work with our renewable resources in getting liquid fuels.

Senator BUTLER. We all admit that the supply of coal may last hundreds or thousands of years. It is generally admitted that oil won't last that long, and I think that we should conserve our supply in the ground to make as much use of the product that is manufactured and grown annually that is inexhaustible, such as we have in the synthetic plants.

The CHAIRMAN. Congressman D'Ewart.

Mr. D'EWART. I wonder if you didn't give the committee the wrong impression on the remarks of the rates. You said one rate within a basin. It is really a series of rates within that basin, one rate for firm power, one rate for dumping

Secretary KRUG. I meant rates for the same kind of power. I am glad you brought that up. We have a rate structure which provides a special rate for irrigation pumping, a rate for surplus power, a rate for firm power, for cooperatives in municipalities, frequently special industrial rates that take into account their peculiar operation; but if you are a co-op in North Dakota or South Dakota or Nebraska or Kansas, and you are reached by our transmission lines, you would get the same wholesale rate regardless of what State you lived in. The CHAIRMAN. Senator Cordon.

Senator CORDON. Mr. Chairman, it is 12 o'clock. I have several questions I would like to ask the Secretary. I understand Senator Butler has some more.

It occurs to me if we are going to have an opportunity to go into these matters, the Secretary should return for further questioning next week.

The CHAIRMAN. That is the understanding, I should say.

Senator CORDON. May I just ask one question of the Secretary, because he may want to look into his records a little bit before he answers it.

Mr. Secretary, you made the statement, which I quote:

We are using up our saw timber at twice the rate it now grows.

I hope that either you or someone from the Department will amplify that statement.

My information is to the contrary, and in any statement which you make I hope that you will go into these two propositions, that in the national forests at the present time there is not enough cutting of