Mr. CRAIG. We found that for the 18 months, beginning in May, we would need approximately 4,000 tons of copper a month. Mr. LEAVY. In pounds that would be how much? Mr. CRAIG. 8,000,000 pounds. Mr. LEAVY. A very substantial increase over what you had in the preceding year. Mr. CRAIG. An increase of approximately 750,000 pounds per month. Mr. LEAVY. How much have you had on the average from the beginning of this fiscal year? Mr. CRAIG. We have only had-in July we had the highest month, and I believe we had about 52 million pounds for that month. For August we had 5,578,671 pounds. That was made up from the 4,500 tons, or 9,000,000 pounds per month allocated to R. E. A. projects by O. P. A. C. S. For September from the balance of the 9,000,000 pounds allocated for August and from export copper there was shipped a total of 4,982,941 pounds. For October there was, according to preliminary estimates, 3,795,945 pounds, made up totally, to the best of my information, from copper reserves by the supplier, and export copper. Mr. LEAVY. But no Ŏ. P. M. authorization? Mr. CRAIG. NO; this copper is all from shipment not authorized by O. P. M. Mr. SLATTERY. Judge, O. P. M. did not come into the picture until later. Mr. LEAVY. You gave us September. Mr. CRAIG. Yes. We have had a carry-over from August, the 9,000,000 pounds; the balance of that was export or reserve copper; I think there are some experts here from the O. P. M. who are best able to explain that term. In October we received, as I said before, 3,795,945 pounds. We have notice from one supplier Mr. LEAVY (interposing). All of that was export for October; none supplied by O. P. M.? Mr. CRAIG. Yes, sir; that was from export copper; none of it was made available by the O. P. M. For November we have had notice there will be some copper; an estimated 1,975,033 pounds of copper available; but beginning in December no more copper will be available from this export copper. As I say, that is a rather technical term and I would prefer that the experts from O. P. M. explain it. Mr. LEAVY. Those figures are approximately correct. In other words, for November you will only have about 15 to 20 percent of what you would need normally; that is, about 1,000,000 against 8,000,000. Mr. CRAIG. Yes. Mr. LEAVY. To meet your requirements. Mr. CRAIG. Yes. Mr. LEAVY. And for December there is no prospect of any from that source. Mr. CRAIG. That is right. Mr. LEAVY. Is there any prospect for any from any other source? Mr. CRAIG. Not unless O. P. M. allots some copper to these projects. OVER-ALL PRODUCTION OF COPPER Mr. SLATTERY. Judge Leavy, could I come back to the question of the over-all production of copper? Mr. LEAVY. Yes? Mr. SLATTERY. Which I started to outline a while ago. I think it is rather interesting that there is an article in Time by Hugh Johnson discussing this matter. Hugh Johnson expressed some surprise about these assumptions concerning shortage of copper. It seems to me that by such assumptions all of the R. E. A. financed systems are just being shut off from the possibility of new. copper. That is a rather interesting article by Hugh Johnson concerning the whole question of the world supply of copper; his contention seems to fit distinctly into the picture. Mr. LEAVY. Yes; but I doubt that matter could be solved by your agency or by this committee, although possibly some other agency might look into it. Mr. SLATTERY. When I went over to talk with the metals people about copper from Chile, it seemed to me that the main question was that they wanted to buy copper in order to keep the price in line. Everybody is dodging around the main issue here; it is pretty obvious now that what is wanted is to increase the price of copper. Mr. LEAVY. Do you mean to imply that there is a supply of copper which could be made available in the United States if the price were increased? Mr. SLATTERY. Based on the testimony of experts from the Bureau of Mines, in which it has been stated that there is copper in Mexico and copper mines shut down in New Mexico, and that there is a plenteous supply of copper and ore if we are willing to give the production of copper some consideration. Mr. LEAVY. That is a matter that may need some thought. Mr. LEAVY. But there are a great many matters entering into the picture. Mr. SLATTERY. I think that is one of the major factors. EFFECT OF COPPER SHORTAGE ON THE FINANCIAL SOUNDNESS OF RURAL ELECTRIFICATION ADMINISTRATION PROJECTS Mr. LEAVY. Just one other question, Mr. Chairman, and then I will conclude: If your program is curtailed to the extent you have indicated here, from around 8,000,000 pounds per month needed down to 1,000,000 pounds, or as you have indicated even less than that, what effect will that have upon the whole financial structure of these hundreds of cooperatives? Mr. SLATTERY. I think it would be very serious. Mr. LEAVY. In just what way? Mr. SLATTERY. I think that they would be unable to make normal extensions for inclusion of new consumers and build up their growth to the curve on which interest and amortization schedules are based; then they would not be able to meet their interest and principal pay ments; and generally I think it would demoralize them disastrously. That sort of a development is what all the utility companies have wanted for a long time; that the R. E. A. systems go into the red so the private industry can take them over. Mr. LEAVY. Do you think, Mr. Slattery, that some of them would actually become bankrupt? Mr. SLATTERY. Some of them very probably would. Mr. LEAVY. A substantial number? Mr. SLATTERY. Enough to worry us. OUTLOOK FOR COPPER ALLOTMENTS FOR PROJECTS IN NONDEFENSE AREAS Mr. TERRY. Mr. Slattery, you spoke awhile ago about the private utilities stocking up on a large supply of copper. The R. E. A. does not have the same opportunity to do that which the private utilities have? Mr. SLATTERY. Frankly, we have to live from hand to mouth. R. E. A. cannot purchase or own copper; our borrowers can do that only when R. E. A. provides the money; R. E. A. provides the money only for specific projects, and actually passes it over by monthly installments only after construction begins. It is worth having in mind that with few exceptions contractors purchase and own the materials until lines are constructed and accepted. Mr. TERRY. Yes. Now, you turned in here a list awhile ago of A, B, C, D cooperatives that are in need of copper, and you also spoke about a letter which was sent to O. P. M., which included those that come within the defense-area projects, and that as a result of requests made, those that come within defense areas are really the only ones that are likely to get any consideration at all, and that is because of their being defense projects. Mr. SLATTERY. That is right. Mr. TERRY. All of those on this list which come within the category generally as furnishing assistance in the furnishing of food, as a part of the defense program, would get little consideration. Mr. SLATTERY. That is right; if they are within recognized defense areas. But there is no prospect of consideration for those not in defense areas, yet contributing to increase of production of critical defense foods. Judge, I would like permission to submit some of the correspondence we have had, out of the Government records, which I think would clear this up to some extent. Mr. TARVER. We will be very glad to have all of the information you can supply us. Mr. SLATTERY. I refer to some correspondence which we have had back and forth on this matter. (The correspondence referred to follows:) Mr. E. R. STETTINIUS, Jr. Director, Priorities Division, Office of Production Management, Washington, D. C. JUNE 5, 1941. DEAR MR. STETTINIUS: In my letter of May 22, relative to the desirability of taking steps to assure the producers of farm machinery and equipment of an adequate supply of metals and other materials required for the manufacture of critical farm machinery, I stated that this Department is interested in the effect of the priorities system on the food-producing industry generally and will desire to submit comments from time to time on the priority problems arising in connection therewith. Current experience reveals that Rural Electrification Administration, an agency of the Department directly related to the production of essential foods and contributing substantially to the defense program, is being progressively restricted in its activities by actual shortage of materials, by hesitancy of contractors to bid on the construction of systems because of their unfavorable experience with materials procurement, and by increasing prices of bids submitted because of contractors' desires to insure against contingencies arising out of shortage of materials. Without consideration of the generally accepted fact that the almost complete electrification of rural areas in the major European countries has been in consequence of recognition of the importance of widespread availability of electricity as a tool of "total war" or "total defense," and was of a planned program of preparation for war or defense, consumption of the program of the Congress expressed in the Rural Electrification Act of 1936 is called for at the present moment by specific defense problems of the United States and will be more strongly called for as preparedness activities become more widespread and intensified. 1. Already there has developed a serious shortage of farm labor in the principal sections producing dairy and poultry products, pork, and vegetables, all of which are needed in increased quantities to meet domestic and lease-lend requirements. The movement of workers from rural areas to urban defense industries is accelerating. For this reason there is a growing demand for labor-saving equipment, much of it requiring electricity as the source of power, such as milking machines and brooders; and pumps, ensilage cutters, and other power equip ment heretofore using gasoline or oil as a fuel. Provision of electricity for the operation of such labor-saving equipment will diminish the effect of labor shortage in two important respects; it will promote increase of the production of critical foods required by the lease-lend arrangement, and it will promote more nearly normal production of these and other agricultural products for the domestic market to meet the national nutrition program and maintain the health of our civil population. The extent of the labor shortage which may be compensated for largely by the use of electricity is explained more fully in Enclosure No. I. 2. Irrespective of its importance as a labor-saving device, electricity in the form of heat and cold as well as of power is an essential technical factor in the processing of those forms of food of which there is a serious shortage and of which increased production is imperative. Electric hatching and brooding produce a larger output of poultry per unit of effort and of expense; poultry, milk, cheese, and similar items are processed, handled, and marketed with less wasetage if electricity is available; the crop of pigs is larger in electrically heated brooding pens; the preparation of feed for meat-producing animals is promopted by the use of electrical apparatus. We have promised warring democracies aid in the form of certain essential foods as well as in the form of military supplies. The very foods of which there is serious shortage, and of which increased production is essential to all-out aid to democracies fighting for our safety, are generally those in which electricity is an important technical aid in production. Enclosure No. II presents further details concerning the importance of electricity in the production of protein foods. In addition to its importance in meeting labor shortage on our farms and in the production of critical agricultural products, electricity widely available thoroughout rural areas has proved to be, because of its flexibility and transportability, also of immediate importance in nonagricultural defense activities located in rural areas. 1. During the past 12 months Rural Electrification Administration financed systems have been called on to serve nearly a score of military camps, bases, forts, depots, dumps, and housing projects; several mercury, vanadium and other enterprises producing essential raw materials; and a large number of airports, landing fields, air beacons, radio beams; and many lesser loads related directly to the defense program. Service of this character is explained more fully in enclosure No. III. 2. In consequence of the location of some military camps in rural areas of sparse population and l'mited agricultural productivity, critical collateral problems have developed; adequacy in the surrounding areas of private "service" enterprises, of housing, and of the production and temporary preservation of milk, vegetables and other perishable fresh foods for the military personnel. Nearby Rural Electrification Administration financed systems have been called on to meet the power, light, and refrigeration needs of these collateral activities as well as the needs of the camps themselves. These matters are presented more in detail in enclosure No. 1V. 3. Availability of electricity in rural areas is meeting a demand for this type of power by numerous decentralized small enterprises. The spontaneous increase in demand by such enterprises on Rural Electrification Administration financed systems, as is set forth in enclosure No. V, reveals a heretofore suppressed demand for electric power among many kinds of small units throughout rural areas. This increased demand by small enterprises for power on Rural Electrification Administration financed systems during the year ending January 1, 1941, represented a 20-percent increase in types of industries and commercial loads; a 53 percent increase in total number of services; and an 86 percent increase in total connected kva transformer capacity. During the 5 months since the latest survey was made the demand for service by small enterprises using motors of not less than 5 kilowatt capacity has increased at the rate of 2,000 kilowatt per month. If and when an all-out defense and aid program calls for distribution of the production of military material among innumerable small units of the type to which reference is here made, the widespread availability of electricity in rural areas will be a determining factor. 4. Enclosures No. III and No. V also call attention particularly to the fact that among the small decentralized industries now being served by Rural Electrification Administration systems is a number producing extremely important raw materials having direct military significance and of which there is a scarcity. Mercury is an illustration. The cinnabar mines of Arkansas are marginal mines, closed under normal economic conditions because not profitable. Military requirements made it necessary recently to bring these mines back into maximum production, and increase of the price of mercury made it profitable provided relatively cheap power were available. The construction of a tie-in line from a neighboring Rural Electrification Administration financed system solved the problem of availability of power at low cost. It is recognized, of course, that military requirements must be given first priority on critical materials, and that this means curtailment of supplies of many civilian goods; but in view of the military and quasi-military importance of widespread availability of electricity throughout rural areas, it appears highly desirable that steps be taken at once to assure an adequate supply of the materials essential for the extension of electric service in rural areas as provided for by congressional appropriations. The estimated material requirements for the construction and maintenance of Rural Electrification Administration financed systems, for which priorities are hereby requested, are in summary as follows: These requirements are set forth in detail in enclosure No. VI. Control of such priorities could be provided through affidavits of suppliers and manufacturers, who are so limited in number that control would not present a complicated problem; and these affidavits could be readily checked, if any circumstance made it desirable, by Rural Electrification Administration records of materials required for construction and maintenance on specific systems and by an established routine of auditing by Rural Electrification Administration of contractors' vouchers on which advances of funds are conditioned. I am sending a letter similar to this to Mr. Leon Henderson, Administrator of Office of Price Administration and Civilian Supply. Very truly yours, CLAUDE R. WICKARD, Secretary. |