In the executive department we put the power of the fixing of foreign policy. They deliberately separated the two powers. The 1934 Trade Agreements Act tied the two together so the Executive regulates the economy and regulates the tariffs exactly, and he fixes foreign policy and can trade one for the other.

That was prohibited in the Constitution, and then tied together again by the Congress of the United States.

Senator BIBLE. Thank you, Governor Russell.

Mr. REDWINE. Mr. Chairman, at this time I would like permission to insert in the record several statements and letters addressed to Senator Murray from western governors.

Senator BIBLE. Without objection, that will be done.

(The communications are as follows:)

STATEMENT BY GOV. STEVE MCNICHOLS, OF COLORADO, ON THE NEED FOR A
LONG-RANGE MINERALS POLICY

Gentlemen, I am privileged to have the opportunity to present for the consideration of your committee certain comments and suggestions relating to the need to establish a national long-range policy for the minerals industry. I regret that circumstances have prevented my appearing before you in person during your scheduled hearings on this vital and significant problem.

It is fortunate for the welfare of the Western States and for the mining industry that your committee is now directing its attention to the development of a long-range minerals policy for the Nation. Far more competent technical testimony than mine has recognized, I am sure, that lack of a firm and permanent minerals policy has proved to be a constant threat to the economy of the Western States, whose wealth is so considerably measured by natural resources. In addition to this major effect on our several local economies, our Nation now faces new challenges in our national security, which demand that we determine and accept a policy for minerals not only assuring this Nation but also our allies of a sound and conservative use and development program which will protect our resource supply for our security and our future.

The western governors have again and again recognized this problem. In their 1958 western governors' conference, following lengthy discussion, they resolved their recommendations as follows:

"Whereas in the last 20 years the United States has changed from almost complete self sufficiency in nonferrous metals to almost 50 percent dependence on foreign supplies; and

"Whereas in the same 20 years tariffs have been reduced both by actually reduction of rates and by internal inflation of the currency from 60 to 80 percent so that they are now almost universally below 10 percent ad valorem; and

"Whereas during that period mining costs have risen to 3 to 41⁄2 times the 1938 level while prices have risen only to 2 to 21⁄2 times 1938 prices; and

"Whereas the world mining industry has supplied all the metals and minerals for two wars and the United States Government stockpiles; and

"Whereas those stockpiles are now filled and the productive capacity which supplied metals and minerals for those stockpiles is no longer needed; and

"Whereas while much of this capacity was built in foreign countries with United States Government encouragement most of the portion which will have to close because of high costs lies within the United States; and

"Whereas foreign metals and minerals now enjoy about one-half of the United States market and unless adequate steps are taken they will take over much of the remaining one-half now supplied by domestic producers; and

"Whereas it is self-evident that domestic mining cannot long survive unless it is assured its fair share of the domestic market on a reasonably long-term basis; and

"Whereas the internal economic health of most of the Western States is heavily dependent on the dollars brought into those States by the export of metals and minerals and those few Western States not so directly dependent on the mineral industry and directly affected by the economic health of the adjoining States who are more dependent on the industries; and

"Whereas much of the tax income on which the Western State governments operate is derived directly or indirectly from the mineral industry; and

"Whereas it is day by day becoming more apparent that in the event of another national emergency, no appreciable amounts of any metal or mineral will be available from overseas sources and if the Eastern States are to have metals for the manufacture of munitions and essential civilian requirements they must come from the West and from Canada and Mexico; and

"Whereas should such an emergency result in the use of atomic weapons, the amounts of metals and minerals required for minimum reconstruction would be far beyond any currently available supply: Now, therefore, be it

"Resolved, That the maintenance of a healthy metal and mineral mining industry in the Western States is of the utmost economic importance to those States both for themselves and as major markets for eastern manufacturers, as well as being of the utmost importance to the national security and such a healthy industry may best be maintained by:

"1. Joint action by the administration and the Interior and Insular Affairs Committees of both Houses and the Congress in adopting and implementing a national minerals policy without delay; and by

"2. The Ways and Means Committee of the House of Representatives and the Senate Finance Committee taking all steps which may be needed to assure to the domestic mining industry at least one-half of the domestic market on the present proportion of the domestic market (whichever is higher) either by adequate tariffs, excise taxes, or quotas or allocation of import receipts or such combination as may be most suitable whenever an individual metal or mining industry has shown it can reach such levels. "More specifically, it is recommended

"As to lead, zinc, tungsten, and mercury, the Tariff Commission take early and favorable action.

"As to copper, lead, and zinc, the Congress approve pending industry legislation, and that the United States Tariff Commission approve applications for tariff relief now pending before that Commission.

"As to cobalt, tungsten, mercury, fluorspar, columbium (and possibly manganese) the House Ways and Means Committee approve legislation providing sufficient import control to maintain present domestic levels of production.

"As to antimony, chrome, asbestos (and possibly manganese), the House Ways and Means Committee to approve legislation allocating import receipts to maintain a minimum nucleus of production in these metals.

"As to thorium, the Atomic Energy Commission either to provide a purchase program or release it from Government control and cease the purchase of foreign monozite at the expense of closing domestic mines.

"As to uranium, the Atomic Energy Commission refrain from purchasing high-cost foreign production while limiting production domestically. We urge and request that immediate action be taken to provide adequate purchasing depots and milling facilities located sufficiently close to ore reserves and stockpiles in order that excessive transportation now paid by the Government and the producers may be obviated.

"As to gold and silver, grant to United States citizens the same right to own gold as granted to foreign governments and an increase in the depletion rate from 15 to 23 percent."

Certainly the effect on the economies of the 11 Western States in terms of their domestic employment problems has been material. Unemployment in the mining industry has doubled in Colorado between February 1957 and January 1958. In addition, in the short period between January 1958 and February 1958 unemployment again doubled, which can give you only a partial picture of the tremendous significance to our State's economy of the hit or miss minerals policy which seems to have characterized our national mineral and procurement and production program.

This tremendous economic impact on our local governments can perhaps be further spelled out in terms of Colorado's mining industry, which during the years 1947 to 1952 had an average of 153 lead, silver, and zinc mines in operation. Between 1953 and 1958 these declined to an average of 98 operating mines in Colorado. As of today, Colorado has only four major mining operations going in the State.

More specifically, employment in the mining industry has declined in Colorado from 767 in February of 1957 to 1,514 in January of 1958 to a present unemployment of 3,073 in February of 1958. (This is not total unemployed, but rather the distribution of weeks as compensated by industry for unemployment.)

In consideration of this total problem, it is clear that several possible solutions exist. For a considerable length of time a school of thought in the minerals industry has recommended the adoption of high protective tariffs to insure an offset against foreign low-cost labor competition. Such a protectionist philosophy is in direct opposition to the Congress' present consideration of the renewal of the reciprocal trade program. As a reciprocal to this possibility recommendations have been voiced for dropping the wage level in the domestic minerals below the standards of the rest of the domestic economy. This is clearly not only impossible, but only a device to permit an unrealistic competition of the domestic minerals industry with the foreign minerals industry.

A third argument has been to abandon the domestic minerals market to foreign producers, thereby closing down our domestic mining industry. On the basis of the present stockpiling philosophy and the resultant rates of mining, it has become clear that we have nearly closed the industry in spite of the stockpiling program.

The abandonment of the domestic mining market to foreign producers would seem to be a position advocated by free-trade theorists. And certainly while this philosophy would be runious to the economy of Colorado and to the economies of the 11 Western mining States, it would have a material and deleterious effect on the economy of the Nation as a whole. The rate of unemployment which is now indicated by the mining industry not only in Colorado, but throughout the Nation, makes it clear that it would be economically disastrous to abandon the domestic mining industry to its foreign competition. On the grounds of national security alone it is clear that our national safety depends to a very material degree on the maintenance of the sound use of its conservation program in the development of our resources and the establishment of a technique in a longrange carefully integrated minerals policy for maintaining that resource production program.

A solution which lies partly between the strong protectionist philosophy of the high tariff program and the free-trade philosophy which would abandon the domestic minerals industry appears in the quota system now in effect for the sugar industry.

Under such a quota system, it is possible to assign a degree of economic significance to each segment and facet of the minerals industry and to produce to attain and maintain that level of production and that level of stockpiling of

resources.

In establishing such a philosophy of quotas for the minerals industry, the committee should not overlook the necessity for the adoption of a widespread investigation program in the field of research. The history of the aluminum industry offers an excellent example of the effect of competent research upon the position of a single segment of the minerals industry in finding new expanded uses for this metal which have created new and expanded markets.

The entire history of mining and milling in the United States has been a history of great economic peaks and valleys which have, in turn, been related to fantastically expensive emergency crash programs dictated by either shifts in the total domestic economy and more frequently by the requirements of a nation at war. Perhaps this has been better expressed in the 1954 report of the President's Cabinet Committee on Minerals Policy which states in part "Successful mining usually requires long-range planning and substantial investment. Today's mines are the result of exploration, development, and risk-taking over a period of many years. Exploration for mineral deposits often requires substantial venture capital. Much of it a total loss. Mines of the future must be planned today, not a decade hence."

Perhaps in conclusion I can do no more than to quote this significant statement on minerals policy by the President's Cabinet Committee of 1954. It is clear that in times of war a tremendous national effort has been devoted to the crash development of new sources and required needs in the minerals program. How much more intelligent, how much more closely related to a sound national security program would be a policy requiring a continuous inquiry into sources of mineral deposits and techniques for minerals extraction.

I wish to thank the committee for this opportunity to present a statement before it.

Hon. JAMES E. MURRAY,

STATE OF MINNESOTA,
St. Paul, April 11, 1958.

Chairman, Subcommittee on Minerals, Materials, and Fuels, Committee on Interior and Insular Affairs, Senate Office Building, Washington, D. C. DEAR SENATOR MURRAY: As undoubtedly you and members of your subcommittee realize, the State of Minnesota now affords our country a unique opportunity to prove in the field of manganese that our steel industry may at least become somewhat independent of foreign imports of manganese. For many years, our Government has sought to develop a method of extracting manganese from low-grade domestic ores. Countless millions of dollars have been spent in this field.

Manganese Chemicals Corp., a Minnesota corporation, with a plant located at Riverton, Minn., on the Cuyuna Range, has now proved, on a production basis, that the virtually limitless low-grade Cuyuna Range manganese ores can be utilized in competition with foreign ores. The present plant is small in terms of capacity to supply the steel industry. If a large plant were built, it appears that manganese for our steel industry can be produced from Minnesota's lowgrade ores at a price competitive, at current prices, with foreign ores.

I urge that Congress do everything possible to assist the development of a manganese industry in Minnesota. Such congressional support at this time will establish without question justification of our Government's long-standing domestic manganese program, relieve our steel industry of critical dependence on foreign ores, and do much to alleviate serious unemployment in northern Minnesota.

Manganese Chemicals Corp. has submitted to you a letter dated April 8, 1958, and has attached to that letter a proposal currently under consideration by the Office of Defense Mobilization. I ask that this letter of mine, together with the letter from Manganese Chemicals Corp. and its current proposal to the Office of Defense Mobilization, be made a part of the record of hearings now being conducted before your subcommittee.

Sincerely yours,

ORVILLE L. FREEMAN, Governor.

Hon. JAMES MURRAY,

UTAH MINING ASSOCIATION,

Salt Lake City, Utah, March 26, 1958.

Chairman, Senate Interior and Insular Affairs Committee,

Senate Office Building, Washington, D. C.

SENATOR MURRAY: I regret that it is not possible for me to attend the hearings on long-range mineral policy being conducted by your committee. However, acceptance of this statement, on conditions prevailing in the mining industry for the record of those hearings, would be greatly appreciated.

Between excessive imports, drastically lowered import duties, depressed prices, greatly increased costs and an almost complete lack of national mineral policy to maintain an adequate mobilization base, the mineral industry has for a number of years past suffered a series of reverses. Those reverses, through attrition, have eliminated some phases of the industry, have pushed others to the brink of survival and have at this date included in a distress category the entire nonferrous portion of domestic mining.

A brief recounting of present conditions in Utah will serve to illustrate need of an effective national mineral policy if this situation is to be corrected.

The Salt Lake tungsten refinery, built in 1953 to treat tungsten ore mined in the Mountain States area, closed January 15, 1958, for lack of domestic ore. Some 100 employees were dismissed, and investors in the capital equipment were left high and dry in regard to return of their investment. Your committee has reviewed in great detail the bungling of the domestic tungsten program and the favor shown foreign producers, and there is therefore no need for me to indulge in a recount of those facts and conditions.

Fluorspar operators in Utah produced 18,000 tons of metallurgical grade in 1950, but were forced down to 10,582 tons in 1956 because of excessive imports of foreign fluorspar, principally from northern Mexico. A small measure of relief through stockpiling boosted production to 13,000 tons in 1957.

Copper production has been reduced by 21 percent since late in 1957, and some 1,400 men have been laid off at the mine, mills, smelter and refinery and the workweek cut to 5 days. A surplus of copper supplies, with foreign copper abundantly available at coastal points at 2 cents, more or less, discount over domestic prices, has stimulated this condition.

Lead and zinc is now being produced by only two company-managed operations. Two other companies have turned their mines over to lessees. The other operators of former years have closed their mines under the attrition of long time adverse economics. The Tooele Smelter, of the International Smelting & Refining Co., closed its lead smelter January 1958 and continues to run only its slag fuming plant on cold slag from the slag dump.

Some 3,100 men were employed in Utah lead-zinc mining in 1948 and we have just over 1,000 working at present. Some 23 mines reported production to the State tax commission in 1949, whereas but 4 are operating today.

In 1949 Utah mills and smelters produced 49,208 tons of lead and zinc metal from ore shipped to them by out-of-State independent mines. In 1955 ore from out-of-State independent mines yielded only 6,928 tons of lead and zinc. Cold statistics, but eloquent evidence of the demise of the small independent miner in Mountain State areas served by Utah mills and smelters, i. e., portions of California, Arizona, Nevada, Idaho, Montana, and Colorado.

Mining, since early in the State's history, has held a major role in Utah's economy.

Assessed valuation of mining property constitutes 27.5 percent of total property assessed valuation. That tax base is being reduced drastically by production curtailments and by depressed prices for the metals produced.

In 1950, 70 percent of the railroad revenue freight originating or terminating in Utah was collected on freight from or to the mines. The estimated loss to the railroads on lead-zinc metal shipments alone was $991,000, comparing 1949 with 1955.

One feature of the mining problem not commonly appreciated is that prices of metals fluctuate in response to supply and demand-and not, as in the case of many other major industries, in response to costs. Autos and steel are prime examples of the latter. The supply-and-demand control of metal prices is determined-not on a domestic basis-but on a free-world-wide basis. Domestic costs, composed largely of labor, are higher across the board than foreign costs. The degree of cost difference varies from one phase of the industry to another, but the basic difference remains.

Without import controls, through adequate duties and/or quotas which compensate for differences of cost in domestic and foreign production, the industry will continue to lose important portions of its productive capacity each time a surplus of free-world-wide supply exists.

Under existing free-world-wide import control regulations and practices, the United States market is the only one which permits a substantial inflow of materials in excess of the needs of the individual nations. Hence United States mine operators, labor, and related community business bear the first and fullest effects of surplus production and will continue to do so until import controls are established to affect a realistic relationship between domestic prices for metals and domestic costs of production.

In brief, under present import control provisions, domestic mines in periods of surplus could only be competitive through lowering the standard of living of all labor, directly or indirectly involved, to the levels of the competing countries. A drastically impractical step. The practical alternative, if a healthy domestic mining industry is to be maintained, is sound import control provisions as part of a national mineral policy. We respectfully urge the support of your committee for such measures.

Yours very truly,

MILES P. ROMNEY, Manager.

Senator BIBLE. And now, with the indulgence of the other Nevada witnesses and I am sure they do not mind-Delegate Bartlett, we are very happy to hear from you at this time.