Mr. MATTHIESSEN. The same check to every applicant

Mr. LEAVY (interposing). I am not talking about the applicant; I am talking about those who have inventories and who take advantage of the situation.

Mr. MATTHIESSEN. Yes.

Mr. LEAVY. The same check ought to exist.

Mr. MATTHEISSEN. And should be controlled.
Mr. LEAVY. It should be controlled.

Mr. MATTHIESSEN. Yes.

ADEQUACY OF COPPER RESERVES

Mr. LEAVY. Now, this may be out of your field, but I want to ask that question anyway, Mr. Chairman.

The shortage of these metals that you are speaking of is not necessarily a shortage due to raw materials in continental United States. Mr. MATTHIESSEN. No; they exist in enormous quantities.

Mr. LEAVY. We have ample copper reserves in the continental United States to supply our needs for years and years to come, have we not? Mr. MATTHIESSEN. That is a little out of my field, Mr. Leavy, but I understand that is true. But most of that is in such low-grade ore that it is not economical to operate them at the present time.

Mr. LEAVY. But in a period of great emergency the economy factor is a secondary factor, is it not?

Mr. MATTHIESSEN. Correct.

Mr. LEAVY. And unless we overcome this shortage, from the facts that we have given to us, even for the balance of the year, it is going

to be worse; and a year from now, unless some steps are taken to get

additional copper, of course, even the defense program is going to fall down. Is that not true?

Mr. MATTHIESSEN. That would be true if increased production does not come or some substitutes are not found.

POSSIBILITY OF REOPENING IDLE MINES

Mr. LEAVY. The point I am trying to make clear is this, that we have plenty of copper ore.

Mr. MATTHIESSEN. Plenty.

Mr. LEAVY. And we have in the United States a number of mines now that are lying idle that during the last war were in operation, because at that time the price was made sufficiently attractive to avoid shifting to imports, so that we could have production in the United States.

I am wondering if there is not a feeling on the part of the three major companies produced in part by this emergency, that perhaps a situation will arise where the possibility of copper production will be so much greater than it was before the emergency that the whole price structure may fall.

Mr. MATTHIESSEN. I could not answer that, Mr. Congressman.

Mr. LEAVY. What has O. P. M. done, working with Defense Plant Corporation, toward making it attractive to the small owner of a copper-producing property to produce ore to take to the mill for grinding and to the smelter for smelting?

Mr. MATTHIESSEN. We have done everything within our power to increase production.

There are some additional facilities going in at the moment at Phelps-Dodge, and in that area at the present time, whereby highcost producers can go to Metals Reserve and make their own negotiations to sell at a higher price.

ERECTION OF INDEPENDENT SMELTERS

Mr. LEAVY. Mr. Matthiessen, while you say you are not an expert in this particular field

Mr. MATTHIESSEN. Right.

Mr. LEAVY. You have learned this, that with Phelps-Dodge, Anaconda, and Kennecott controlling practically 80 percent of the output of copper and likewise controlling about an equal amount or more of the raw material, the ore, the copper ore, immediately when an independent operator comes in, he has to come in competition with these fellows that own this large body of ore, he is forced to sell it to their smelter, and they put it through their smelter.

What I am trying to get at is this: What has been done or what is planned to be done to erect for independent companies smelters, irrespective of cost-because that cannot be the controlling factor in times like this-that will offer a market to the independent ore producer, where he can go to his own mill and an independent smelter and have his ore treated, independent of the three major concerns that now control the situation. Has anything been done along that line?

Mr. MATTHIESSEN. There have been several projects started for independents. One of them is in Arizona not far from Wickenburg. Mr. LEAVY. It is their mill, of course.

Mr. MATTHIESSEN. It increases the capacity of a mill that is there. Mr. LEAVY. It belongs to one of the major companies.

Mr. MATTHIESSEN. That will be a custom mill.

Mr. LEAVY. An independent mill.

Mr. MATTHIESSEN. It is an independent; the Bagdad Copper Co. Mr. LEAVY. Not in any way connected with the three major companies.

Mr. MATTHIEssen. No.

Mr. LEAVY. There is a smelter also.

Mr. MATTHIESSEN. It is an electrolytic plant.

Mr. LEAVY. That will tend to reduce the shortage substantially? Mr. MATTHIESSEN. No; because these small mines produce only a small quantity of copper; and although it is a sizeable amount to them, in the aggregate it really is not so very much. I do not think I am at liberty to disclose our private confidential figures but I can assure you that in the aggregate it does not amount to a great deal; it is nothing like the increase that comes from the major copper companies.

Mr. LEAVY. But why would it not be practical and tend to relieve the situation in the offing within the next year or 18 months, to make the largest use of the program of building large custom plants, not controlled, nor operated nor constructed by the three major concerns, to do the milling and to do the smelting?

Mr. MATTHIESSEN. The price structure comes in, as it will be high priced copper.

Mr. LEAVY. Yes.

Mr. MATTHIESSEN. Because it will be low-grade ore.

Mr. LEAVY. But even so it would begin to meet the severest needs. Mr. MATTHIESSEN. Quite true, but how would that copper be sold? Mr. LEAVY. Well I am assuming from all the testimony we have here that there will be an eager group of buyers standing on the sidelines waiting to take the first copper that comes on the market.

Mr. MATTHIESSON. There is a ceiling price on copper as you know.

CONCERNING POSSIBLE INFLUENCE OF LARGE COMPANIES TO CHECK PRODUCTION IN OTHER MINES

Mr. LEAVY. You are not at all of the opinion, Mr. Matthiessen that some of these major producers of metals, like the Aluminum Co. of America in aluminum, Dow Chemical Co. in magnesium, and the three copper companies in copper as exerting any influence whatever, nor or they showing any interest whatever in seeing production checked for the next 2 or 3 years?

Mr. MATTIESSEN. From what I have seen they have cooperated in every way to increase the production.

Mr. LEAVY. The Aluminum Co. is cooperating but they maintain a pretty good price level.

Mr. MATTHIESSEN. I can only speak for the copper companies; from what I have seen they have done everything within their power. Mr. LEAVY. You do not have anything to do with other metals? Mr. MATTHIESSEN. No; no aluminum, and no steel; they are in the other section of the materials division.

EFFORTS TO FIND SUBSTITUTES FOR COPPER IN SHELL MAKING

Mr. LEAVY. You do not have suggestions to make to this committee that would in any way remedy the extremely serious problem that confronts the country as a result of the shortage of copper, particularly, let us say, as it relates to R. E. A.?

Mr. MATTHIESSEN. Certainly developments could take place in cartridge brass that would relieve the situation; and that is being worked on very intensely at this time. If that is successful there will be relief in copper.

Mr. LEAVY. That is, using some sort of substitute for brass in the making of shell?

Mr. MATTHIESSEN. Yes.

Mr. LEAVY. But up to the present they are satisfied there is no satisfactory substitute?

Mr. MATTHIESEN. They are not satisfied with it; they are working very intensely on it.

Mr. LEAVY. Can you tell us whether or not there has been an actual reduction in the amount of virgin copper produced, say within the last 90 days?

Mr. MATTHIESSEN. It would be very slight, if any. As I say, it varies from month to month. The production is not the same for everv month. It will be up 1 month and down a little the next.

66481-41 --9

REASON FOR LOWERED PRODUCTION OF COPPER IN RECENT MONTHS

Mr. TARVER. In that connection, Mr. Matthiessen, Mr. Miller, of the Bureau of Mines, furnished the committee some statistics the other day, showing, as I recall, the maximum production of copper was in April and May, running about 89,000 tons; whereas the production has now dropped down to 82,000 tons, if I recall the amount correctly. Can you explain why the production of copper increased as the figures show, for the months of April and May, and what accounts for the decrease, the very considerable decrease in production of copper in the United States since that time?

Mr. MATTHIESSEN. The production of copper in April and May were considerably over any of the other months for reasons that I do not know, except possibly they may have encountered a particularly rich vein or pocket around that time. What is being produced now is about the average of what we would expect.

Mr. TARVER. It is considerably less than the production in April and May.

Mr. MATTHIESSEN. In those 2 months.

Mr. TARVER. Is there, in your judgment, any considerations which would appeal to Anaconda Copper Co., let us say, to import copper from its holdings in South America for sale in this country rather than to produce copper from its own mines in this country?

Mr. MATTHIESSEN. I think they are importing all the copper they possibly can from South America.

Mr. TARVER. But I am asking you whether or not, in your opinion, there are any considerations which would appeal to them to import copper from their holdings in South America rather than produce it from their mines here?

Mr. MATTHIESSEN. No; I do not know of any reason, and there has been no indication of that.

ABILITY OF SAVANNAH ELECTRIC & POWER CO. TO BUILD SPITE LINES AND PREEMPT FIELD AGAINST RURAL ELECTRIFICATION ADMINISTRATION

Mr. TARVER. I want to quote from a letter written under date of November 22, 1941, by the Planters Electric Membership Corporation, of Millen, Ga., to Dr. Robert B. Craig, Deputy Administrator of the Rural Electrification Administration, and at the same time. insert the entire letter in the record. He states:

On September 19 of this year, we had Messrs. D. G. Burns and W. E. Blackwell, of Clyo, Ga.; O. L. Williams, of Egypt, Ga.; and A. L. Trowell, of Oliver, Ga., to come before our Board, relative to certain extensions that had been mapped for Effingham County, Ga. They represented 34 members, and 26 prospective members, for a total line of 174 miles. They stated to us definitely and positively that the Savannah Electric & Power Co. had made overtures with them and promised to build immediately into the territory that we have already mapped, and which is now pending an appropriation from your good offices.

It has been my observation as well as information that the Savannah Electric & Power Co. is extending its rural lines in Effingham County, and have practically met the lines that we have projected in that county.

(The letter is printed in the record in full as follows:)

Dr. ROBERT B. CRAIG,

THE PLANTERS ELECTRIC MEMBERSHIP CORPORATION,
Millen, Ga., November 22, 1941.

Deputy Administrator, Rural Electrification Administration,

Longfellow Building, Washington, D. C.

DEAR DR. CRAIG: Our cooperative is being seriously embarrassed because we cannot get any definite word from your office as to when our D project will be made an allocation of funds, and given permission to proceed with its development.

Our D application has been in the process of being made up for over a 12month period, and during February of this year was submitted to Washington with supporting maps, etc.

We had little expectation of an appropriation prior to July 1, and up until that date, our people have been very patient, but now they are in a restless attitude and some of our competitors are causing them to grow even more restless by promising to make immediate extensions to their premises before we can do so.

On September 19 of this year, we had Messrs. D. G. Burns and W. E. Blackwell, of Clyo, Ga.; O. L. Williams, of Egypt, Ga.; and A. L. Trowell, of Oliver, Ga.; to come before our board relative to certain extensions that had been mapped for Effingham County, Ga. They represented 34 members and 36 prospective members for a total line of 174 miles. They stated to us definitely and positively that the Savannah Electric & Power Co. had made overtures with them and promised to build immediately into the territory that we have already mapped, and which is now pending an appropriation from your good offices.

It has been my observation as well as information, that the Savannah Electric & Power Co. is extending its rural lines in Effingham County, and have practically met the lines that we have projected in that county.

In the Farm Security development at Rogers, Ga., we are being threatened by the Georgia Power Co., that they will build into this territory immediately, if our members who have already signed up for a line could get relieved of their present contract with us and sign a contract with them. There seems to be no indication of any unethical dealings on this project. I am convinced that they will not build into the territory unless our people get out of their present contracts with our cooperative; however, they are causing our members unrest and dissatisfaction because of the slowness in getting our project under way. Up until some 40 days ago, we have been getting a slight trickle of needed materials for emergencies, and maintenance of our lines. Since that time, we have been unable to get any hardware for pole-line construction, or copper wire as conductors. We have a standing order with several distributors to ship us as much, as often, and to do the best that they can at all times by our cooperative.

Trust that you will be able to give us some definite information at once, as to when some action can be taken on our pending application. Until such time, we are asking our members to be patient, despite the threats from our competitors, and the natural uneasiness of this age. Again thanking you, I am

Yours very truly,

WALTER HARRISON, President.

Mr. TARVER. I did not anticipate, Mr. Matthiessen, that you would have presently the information available regarding these two charges, but they are, in substance, that the Savannah Electric & Power Co. has no difficulty in securing copper, and has proposed to build spite lines where the R. E. A. cooperatives have jurisdiction, and the R. E. A. is unable to procure copper for the building of those lines which they have already projected. The committee would be interested in knowing how the Savannah Electric & Power Co. in one instance is able to get copper for the building of these extensions where the R. E. A. has projected them, and the R. E. A. cannot get copper, and whether it has priority ratings to procure copper, and we would like the same information regarding the activities of the Georgia Power Co. to which reference is made in the last paragraph I read.