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reflect itself with those three concerns, and their profits would grow tremendously as the price goes up. As you say, 1 cent increase in copper would mean $20,000,000 increase in cost.

And, since copper has three distinct stages, as most all metals have, from the ore stage to the milling stage, to the smelting stage, and since practically all the smelters and copper mills of consequence are controlled, or 80 percent of them, by these three concerns, the fixing of the price of the finished product is not going to remedy anything so far as the independent producer is concerned. But if you fix the price on the ore as distinguished from the finished product, you may immediately get a tremendous increase of ore production, which would be so great that the present facilities could not possibly handle it in milling and smelting.

Mr. NELSON. I would be glad to submit anything that you have on that, sir.

Mr. LEAVY. Why does not the Defense Plant Corporation in numerous places where there are ores run up to 12 percent build custom mills and custom smelters, and say to everybody, big and little, "Such a price you will get for your ore if it grades to a certain grade or a certain percent"?

Mr. NELSON. I do not know whether that is being done or not.
Mr. LEAVY. Could you answer that?

Mr. NELSON. I would be glad to look into it.

Mr. LEAVY. During the last 6 months the Bureau of Mines and the Geological Survey have told us that there are large deposits of tungsten within 150 or 200 miles of Grand Coulee in Idaho, and likewise large deposits of chromium. But the people who have them just cannot do anything with them, because they are not in the big producer-class and you people give them no encouragement. Mr. NELSON. I would be glad to look into that.

TIME REQUIRED TO BRING NEW COPPER MINES INTO PRODUCTION

Mr. COLLINS. Mr. Nelson, if these plants that you mentioned were constructed, how long would it take to bring them into operation? Mr. NELSON. I do not know, sir. That is all a part of the whole thing.

Mr. COLLINS. You can furnish a correct answer to that after you look into it?

Mr. NELSON. After I look into it; yes. I should say that you cannot do it in anything short of 18 months. That would be just a guess on my part.

Mr. COLLINS. And these people that are needing cooper would be denied it until approximately that time?

Mr. NELSON. Some of them will.

Mr. TARVER. Would you pardon an interruption? The Bureau of Mines advised us the other day that the additional copper production that is necessary might be brought in in from 12 to 18 months. Mr. NELSON. What I said was a mere guess.

Mr. COLLINS. I noticed that in Mrs. Roosevelt's column the day before yesterday screen manufacturers were complaining because they could not get copper.

Mr. NELSON. That is right.

Mr. COLLINS. And I know that the R. E. A. cooperatives are complaining.

Mr. NELSON. We will have to get along with steel wire during this emergency and not use copper for our screens.

SUPPLY OF COPPER SCRAP

Mr. COLLINS. Have you made any survey of scrap copper?

Mr. NELSON. Yes, sir; but the scrap is not coming back. Scrap is being hoarded.

Mr. COLLINS. I noticed in the Mercury in Memphis that at Jefferson Barracks, which is a pretty good-sized Army camp, they were selling

copper.

Mr. NELSON. Scrap copper?

Mr. COLLINS. I do not know.

Mr. NELSON. It must have been scrap.

Mr. COLLINS. It seems to me that instead of the Army selling it to private industry it ought to be reported to you so that you could allocate it.

Mr. NELSON. It would have to be. To whomever they sold it it must be allocated, except that that is sold on the bootleg market, and that has bothered me.

Mr. COLLINS. To what extent have you made a campaign for scrap copper to get an immediate supply?

Mr. NELSON. We are working now on a campaign for scrap copper. They are making experiments in several places with scrap copper.

However, the biggest use of scrap-and it is worrying me, and we have been talking about it a great deal, and we are trying to find out how we can use it-the scrap is not being returned. Of course, a large percent of the copper supply is scrap. Now, instead of being returned into the system by which it can be allocated, it is bypassed and being hoarded as scrap and sold as scrap at higher prices on the bootleg market. That is going on.

Some way has to be found to prevent that, because normally we get some 30 percent of our supply coming from scrap, from industry, and other places. That comes back into the system and goes on. That is an important part of our supply of copper. Today it is much smaller than that.

DOLLAR-A-YEAR MEN

Mr. COLLINS. A great deal has been said about the dollar-a-year men on O. P. M. and other agencies, and I must say to you that I have always been prejudiced against dollar-a-year men. I would like you to tell this committee if these dollar-a-year men are in policy-forming positions.

Mr. NELSON. With respect to Supply, Priorities, and Allocations Board, the policy is decided by the persons in S. P. A. B. S. P. A. B. is made up of the Secretary of the Navy, the Secretary of War, the Price Administrator, Mr. Leon Henderson, the Vice President as chairman, Mr. Knudsen, Mr. Hillman, and Mr. Harry Hopkins. There is not a dollar-a-year man among those unless Mr. Knudsen and Mr. Hillman are. I do not know about them. They are the ones that

set the policy. They set the policy on supplies, priorities, and allocations.

Mr. COLLINS. That is all.

Mr. TARVER. I wish to make an observation which represents my own viewpoint. I am not presuming to speak for anyone else.

I feel that those dealing with the defense program, including S. P. A. B., yourself, the Office of Production Management, and others, they are, on the whole, doing a magnificent job. In saying that I do not wish to be understood as saying that, in my opinion, there are not ample grounds for constructive criticism with regard to many features of the work that is being carried on.

I do not think that all criticism is constructive. But I do think that in the hasty setting up of these numerous agencies, and in the hasty outlining of plans of the operation, it would be expecting the impossible to anticipate that no errors would have been made either in the formulation of policies or in the administration of policies or in the selection of instrumentalities to administer policies.

RURAL ELECTRIFICATION ADMINISTRATION'S PLACE IN DEFENSE FROGRAM

It seems to me that these hearings have, if they have done nothing else, focused attention upon what I regard as three fundamental questions, questions involving the determination of policy, which are to be considered by S. P. A. B. so far as the needs of the country for copper and insofar as the needs of the R. E. A. for copper are concerned. First, there is the question of where R. E. A. fits into the nationaldefense program, the necessity for the construction of additional R. E. A. lines for the purpose of facilitating the food program which is being urged, the increased production of food as a matter of necessity, and facilities for utilizing small industries in manufacturing goods that are important to the national-defense program. That, as I understand it, is one of the questions which is now receiving attention and with regard to which they are expecting to make a decision on next Tuesday.

SIGNIFICANCE OF DROP IN COPPER PRODUCTION

Second, there is involved the question of increasing the copper production. The evidence before the committee has indicated that notwithstanding the efforts which it has been testified have been made to increase the copper production, there has been not an increase but a diminution in the production of copper during recent months; that is, that the peaks reached in April and May of 1941 have not been reached in any month since that time; that during some months there has been a very substantial reduction in production below those figures.

The committee has not been able to satisfy itself up to the present moment as to the reasons for that reduction and the reasons for failure to increase production.

Whether those reasons involve the question of monopolistic control of copper production in the country by the three companies which apparently control 80 percent of the production-the Anaconda Copper Co., the Kennecott Co., and the Phelps-Dodge Co.-for purposes of their own, or whether it involves the question of labor and of trying to expand the 40-hour week and secure the putting on of more shifts

rather than the one shift, which is now, it seems, engaged in most of the mines in the production of cooper, and whether there is involved the question of the furnishing of Government-owned and operated plants for the processing of copper ores from the billions of tons of resources of copper ores which appear to be available, or whether the solution of the question of increased copper production lies in some other direction-these are all questions which, it seems to me, and I believe that I speak for the rest of the committee in this particular at least, should receive the careful and immediate attention of S. P. A. B. as the policy-forming authority.

Mr. NELSON. I shall be glad to do so if you will give me a copy of your report.

DESIRABILITY OF POLICY-MAKING STAFFS PAID ENTIRELY BY THE GOVERNMENT

Mr. TARVER. As to the question of the employment in the power section of O. P. M. of principally those who are connected with power companies in the making of decisions affecting the granting of priorities to R. E. A. cooperatives, private utilities, and others in the matter of desired uses for copper, and to a comparable degree the employment in the copper section of men who are in the employ of the large copper companies, and who, it might seem, probably would use their authority in the event of close decisions on facts in favor of those who had been and now in emergency periods are the principal customers of these copper companies and may probably continue to be their principal customers after the period of the emergency is over.

That is, I think there is among my colleague-and I certain entertain it myself a feeling that these gentlemen who make decisions on the facts with regard to these priority applications for the use of copper, even though a policy has been formed by S. P. A. B. which they are supposed to carry out, pass oftentimes upon issues of fact and may be influenced, without realizing themselves perhaps that they are being influenced, by their connections with the power companies and in the copper section by their connections with these great copper companies. And it has seemed to some of us at least that these men who make decisions should be men who are in the employ of the Government of the United States and receiving their compensation from the Government of the United States.

We realize that they must be afforded men who have technical knowledge to assist in reaching their conclusions. Such men might be procured from the power companies and the copper companies, even upon the basis upon which they are now being procured. But there seems to be no reason why men who have the responsibility of making the final decisions should not be men who owe allegiance only to the Government and receive their pay only from the Government.

We have heard from the head of the Rural Electrification Administration, Mr. Slattery, and from the chairman of the Federal Power Commission, Doctor Ölds, that there are criticisms of the handling of priority applications of the R. E. A. cooperatives; and they have not hesitated to express opinions to the effect that through the handling of these matters of priority by men who are aligned with the public utilities of the country and the private power companies, the R. E. A. cooperatives are being gradually strangled, and that unless some

change is effected in that policy, they will ultimately be out of the picture.

Complaints of that kind from such high quarters are such complaints as ought to have the sympathetic consideration of S. P. A. B.

I was surprised to note in your statement awhile ago that the opinions of the R. E. A. and the Federal Power Commission have apparently not been sought by S. P. A. B. in the determination of policy matters which had come before it and are now before it affecting this question.

You did state that you had a statement from Mr. Slattery about a number of projects which are in a state of incompletion.

Mr. NELSON. We have a lot of facts.

Mr. TARVER. But that is a minor detail in the consideration of the whole problem.

Now, certainly this question of who handles these priority applications, who is charged with the responsibility for making the final decision with regard to them-that is a question of policy, and S. P. A. B. ought to pass upon the question of whether or not such matters are to be handled with authority by men who are now in the employ of the private power companies of the country and as far as copper is concerned in the employ of the three great copper companies or some of their subsidiaries, which control 80 percent of the copper production of the United States.

It is criticism that could be removed by the employment of competent men who owe responsibility only to the Government and whose compensation is paid by the Government to make these decisions. And it seems to me that that is a matter which should have immediate consideration by S. P. A. B.

I have said this simply by way of expressing my own views and not with any intention of speaking for the committee. I will repeat, however, that my views along these lines are shared by at least many of my colleagues.

I hope that those are matters which may be considered by S. P. A. B. at its meeting on Tuesday.

Mr. NELSON. I shall be very glad, sir, if you will give me a transcript of this, to see that each member of S. P. A. B. gets it.

May I comment? I think that your first two points are fine, and I am delighted. I think that we should have constructive criticism from everybody.

But I think that in your statement on the third point there is a very unfair indictment of men who have come down here in the interest of this country, who have made sacrifices to come down here and serve in the interest of the country, where every attempt has been made to see that everybody is fair.

Now, may I just explain one thing in connection with priorities in order that it shall be clear?

Mr. TARVER. Yes.

RESPONSIBILITY FOR PRIORITIES DECISIONS

Mr. NELSON. I take the final responsibility for any priorities decision. The power that proceeds from the O. P. M. is invested in me by order No. 3 of the O. P. M.

I have, just because I feel that there might be criticism, set up a clearance committee, which passes on these things before they come

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