defense objectives above listed would then prove additional benefits to be secured by the Government's defense program at no real cost to the Government. Both Governor Freeman and Senator Thye have stressed that time is very much of the essence. Delay in a decision by the Office of Defense Mobilization will be tantamount to a decision that all of the above defense factors are to be disregarded, and that there is, in fact, no justification for either the past or present Government programs in the field of domestic manganese. Action predicated first upon your policy decision must be taken prior to July 1, 1958. Because the Governor of the State of Minnesota, our Senators, and Congressman Blatnik have, from the outset, followed this matter closely, and because we have, of course, over the past 3 years worked closely with other governmental departments which furnished information to the Pettibone committee, we are sending copies of this proposal to those listed on appendix B for information purposes only. Again, we wish to thank you for your early and serious consideration of the specific proposal submitted in view of the magnitude of the consequences which must inevitably follow from your decision. Very truly yours, APPENDIX A CHARLES S. BELLOWS. (Excerpts from testimony by the Bureau of Mines at hearings before a subcommittee of the Committee of Appropriations, House of Representatives, as to the Department of the Interior and related agencies appropriations for 1959) (b) Manganese, $827,000.-The estimate for this subactivity for 1959 is $827,000 the same as the subtotal. The items deducted in arriving at the subtotal for the 1959 estimates are indicated under the heading "Proposed changes in program" appearing on page 48. SCOPE OF PROGRAM Because of its essential use in the production of virtually all steel, manganese is fundamental to the economic and strategic strength of the United States. Domestic production of manganese ore, stimulated by premium Government prices, is only about 15 percent of consumption, and hence the Nation is dependent upon imports for the great part of its needs as it has been traditionally. In view of this state of affairs, all types of scientific and engineering techniques available to the Bureau of Mines are brought to bear on developing from the country's large submarginal resources some measure of peacetime self-sufficiency and all possible self-sufficiency for time of emergency. MANGANESE Progress is being made toward eventual large-scale utilization of the Nation's large low-grade and off-grade manganese resources, which must be brought into production if freedom from dangerous dependence upon foreign sources of supply is to be reduced to a more tolerable level. The Bureau's manganese program, which is directed toward achievement of this objective, will include examination, cataloging, and appraisal of the various domestic deposits in order that the metallurgical research can be pursued with knowledge of definite tonnages of raw material of known physical and chemical characteristics; mining reserch to increase the tonnages available for low-cost mining; studies of ore dressing, pyrometallurgical, hydrometallurgical, and electrometallurgical recovery processes; engineering evaluation of the different processes with respect to the various large deposits; investigation of the possibilities for conservation of manganese through improvements in utilization processes and techniques; basic metallurgical research; dissemination of technical and statistical information. This manganese program is a long-term approach to a difficult problem of prime importance to steel production. A number of metallurgical processes have been determined to be technically feasible for recovery of manganese from large low-grade or off-grade domestic sources of potential supply. One has been in small-scale commercial operation for 3 years. All require additional research to improve the processes by lowering costs, raising recoveries, improving products, or by adaptation to other products, and by applying the processes to lower grade or more refractory portions of the reserve potential. For its implementation, this program requires the services of a great variety of highly qualified professional and technical personnel. APPENDIX B Hon. Orville L. Freeman, Governor, State of Minnesota. Mr. R. A. Heddleston, Deputy Commissioner, General Services Administration, Mr. W. Parker Worrell, United States Signal Corps Supply Agency, Philadelphia. Mr. Charles Holman, Defense Department, United States Signal Corps, Washington, D. C. Re minerals program hearing. Hon. JAMES S. MURRAY, TWIN SISTERS MAGNESIUM & CHROME CORP., Seattle, Wash., March 26, 1958. Chairman of the Senate Interior and Insular Affairs Committee, Washington, D. C. MY DEAR MR. MURRAY: The courageous stand by your committee on insisting that the administration, through its Department of Interior, and the respective House and Senate committees, take immediate steps to correct the serious condition in the western mining industry, is commendable. During 1957 I supplied your office with much data on the need of the chrome mining industry of a suitable market in order to survive and vigorously protested the long range minerals program by the Department of the Interior as being most inadequate. Investigations show that individual miners cannot sell an occasional car of chrome, or a portion of a car, to eastern buyers and there is no continued market for chrome ore on the west coast. I strongly urge enactment of legislation that would provide for a 6- to 10-year purchasing program for chromite ore by the Government at prices comparable to the existing domestic chrome purchasing program at Grants Pass, Oreg., which is nearly complete and will shortly expire. The Government purchasing chrome ore under present Grants Pass policies and pooling these shipments can guarantee to industry in the East a quantity of two to three thousand tons of ore per month which should be marketable by the Government to industry. The difference between the price that the Government would pay for the purchase of the ore to the local miner, and the price the Government would receive from industry, would constitute a subsidy or the cost to the Government of sustaining a chrome mining industry and the development and exploration for new chromite deposits. Programs should be firm for a period of years rather than on a 2-year piecemeal basis in order to give chrome mining companies an opportunity to build roads into remote areas, construct concentrating mills and get their mining properties into actual production on a sustaining and economical basis. The increased cost in labor, materials, taxes, etc., since the establishment of the Grants Pass chrome purchasing prices, should more than offset any socalled incentive price that was in mind when the Grants Pass program was inaugurated. How the money is obtained, whether by appropriation or by establishing a tax on the chrome that is imported and used in the United States, is a matter for Congress to decide. A tax on the chrome imported and used would be paid indirectly by the people to purchase products containing chrome. The appropriation method would result in all persons subject to tax paying the same amount of tax, the same as we are now doing to support foreign aid, which is encouraging foreign countries to produce and ship chrome and other ores and metals to the United States for our domestic consumption. 27255-58-pt. 1——27 Provisions should be made in the act to provide that the Government can enter into a contract with various mining firms to supply to the Government certain quantities of ore each month over a period of years. This would permit the small miner to secure financing for his mining and milling equipment and plant facilities required for the mining of his claims. Similar contract provisions between Government and industry would permit the Government to guarantee to industry a continuity of supply of chrome ore over a period of years. This same type of philosophy could apply to other minerals for which the Government is nearly 100 percent dependent on foreign supply at present. I do not propose to speak for any commodity other than chrome, with which I am familiar. Respectfully submitted, Hon. JAMES E. MURRAY, A. L. ATHERTON, Executive Vice President. INTERNATIONAL CHEMICAL WORKERS UNION, Akron, Ohio, April 8, 1958. Chairman, Subcommittee on Minerals, Materials, and Fuels, Interior and Insular Affairs Committee, United States Senate, Washington, D. C. DEAR SENATOR: On behalf of the International Chemical Workers Union. I should like to submit the enclosed statement to your committee which suggests a program to aid our domestic minerals industry. I would greatly appreciate it if you and your committee would give consideration to this program which outlines the position of our international union and which I believe meets the needs of the industry which employs a significant segment of our membership. With kindest regards, I remain, Very sincerely yours, WALTER L. MITCHELL, President. STATEMENT BY THE INTERNATIONAL CHEMICAL WORKERS UNION REGARDING THE MINERALS INDUSTRY IN THE UNITED STATES The minerals industry in the United States is experiencing serious problems which endanger the jobs of thousands of workers and the survival of many establishments. The number of unemployed in the industry has increased sharply. Several mines have closed; additional shutdowns are threatened. Although some of the troubles are related to the present difficulties in our economy. in the main the difficulties in the minerals industry are caused by factors that cannot be controlled solely in the United States. The market for minerals is primarily an international one and the price of many minerals is influenced by fluctuations on the international market. Roughly, the factors behind the difficulties peculiar to the domestic minerals industry can be summed up as follows: 1. Erratic movement of prices: 2. Big mines are low-cost producers; small mines are high-cost producers; 3. Although the United States is an export nation for some minerals, many strategic minerals must be imported; 4. Many ore bodies in the United States are poorer in metal content than foreign ore bodies. A few giant, low-cost companies may benefit from tariffs and quotas in the form of increased profits. For the small, high-cost mines, however, such programs provide hardly any relief at all. It would appear, therefore, that tariffs and quotas do not solve the problems. A new solution, tailor-made to the peculiar problems of the minerals industry, is needed. This requires Federal legislation. The international Chemical Workers Union suggests that a minerals industry agency be established that would be charged with the following responsibilities: 1. To establish an "economic price" for minerals based on the following standards: Domestic production costs; Historic price of minerals: Prices of substitute materials; Defense and other domestic needs for minerals. 2. To establish a direct subsidy to producers whenever the selling price is below the "economic price.” This subsidy should apply only to a limited, fixed tonnage of any mine, prorating the percentage of average production of each mine to United States needs and requirements. No subsidy should be applied to any tonnage produced during a strike by a duly recognized labor organization. 3. To establish a buffer stockpile of domestic minerals. The Agency will buy the minerals when the market price is below the "economic price." It will sell when the market price is above the "economic price." As a general rule, purchases for the stockpile will increase as prices decline. The Agency will not purchase more than 20 percent of any mine's output in any year. Appropriate restrictions should be set up to prohibit the use of the stockpile in any manner to affect adversely any strike being conducted by a duly recognized labor organization. 4. To establish a readjustment program. In the event any mine is forced to close, inducements should be offered to new industries to locate in the area. If necessary, full assistance should be given displaced workers for the purpose of relocating in other areas. Such assistance should include— Special unemployment benefits; Spec al assistance in find.ng other jobs in another area; Special retraining programs for displaced workers to acquire new skills. 5. To work toward the establishment of an international commodity agreement between exporting and importing countries, based upon the following principles: Establishment of a worldwide minimum and maximum price; Establishment of an international buffer stockpile; Authority to buy for and sell from such stockpile as the worldwide price fluctuates between the minimum and maximum prices: Agreement to curtail exports when buffer stockpiles reach a predetermined level. STATEMENT BY CHARLES F. WILLIS, CONSULTANT, ARIZONA COPPER TARIFF BOARD, ON THE ADMINISTRATION'S PROPOSAL FOR A SUBSIDY PROGRAM FOR DOMESTIC COPPER, LEAD, ZINC, FLUORSPAR, AND TUNGSTEN On April 28, 1958, Interior Secretary Fred A. Seaton-presumably with the approval of the administration-presented to the Senate Subcommittee on Longrange Mineral Program, a proposal for payment of a Government subsidy on production of domestic copper, lead, zinc, fluorspar, and tungsten. These payments would be for a limited amount each year for a 5-year period and the amount of the payments would be the difference between the price received by the producer and the so-called suggested stabilization price. The recommendations as to stabilization price and maximum yearly quantity were as follows: It is evident that the annual limitation was set at approximately the average domestic production of the respective metals during the period of 1951 to 1956, inclusive. In other words, it was recommended that on these particular metals and minerals the Federal Government would pay a subsidy for a quantity not in excess of the average production for the 1951-56 period. In the first place, the stabilization prices proposed are entirely too low to permit of the domestic mining industry doing business in the face of present-day wages and other costs. Copper, it is believed, should be not less than 30 cents per pound, lead should be not less than 18 cents per pound, and zinc should be not less than 15 cents per pound. However, such a program, even with the suggested stabilization prices, would not be acceptable to the mining industry. The mining industry, as well as the taxpaying public, would be opposed to any subsidy program. There is no logical reason, for instance, why the taxpayers should pay a subsidy for copper production in order to keep down the price of the manufactured goods into which copper enters and gives the manufacturers a cest of raw material less than the actual cost. The users of copper products should pay the value of that which they use and it should not be a subsidy from the taxpayers. Furthermore, if a subsidy program was enacted, and thereby set up as a Government policy, there are a hundred or more other metals or minerals which could justifiably ask the Federal Government to likewise set them up on a subsidy program. They would have just as strong an argument and the extent to which the subsidy program would expand, would be limited to the pressure which could be put upon the Federal Government and Congress by the producing groups. It would make an entirely inequitable situation and would be highly socialistic. It is not necessarily sound economics when "the wheel that squeaks the loudest gets the grease." Secretary Seaton, in presenting his proposal to the Senate subcommittee made the statement that in the first year the program for these 5 metals and minerals would cost the Federal Government $161,090,000. As a statement to minimize the cost of this program, Secretary Seaton said: "The total annual stabilization payments from then on should diminish as production responds to demand and as our economy resumes its long-term health and vigor." This statement is merely wishful thinking and there is no evidence whatsoever as yet to indicate that we are at the bottom of the slump or that the economy of the country has started a turn upward. There is much talk about the prosperous future that is ahead of us, but nothing to show that we are actually traveling in that direction. There is no justification for the statement that even though the first year's cost would be $161,090,000 it would be less in future years and, if there was further recession, it might be considerably more. The greatest weakness, however, of the Seaton proposal, is its absolute lack of stability and definite promise that, if enacted, it would be carried out. It would require annual appropriations to provide the funds for carrying it out and there is nothing to assure that future Congresses would make the necessary appropriations and that those who had in good faith set up their production programs would not be left "holding the sack." We have an excellent example of the potential hazards of such a program in Public Law No. 733, which was enacted by Congress and approved by the President on July 19, 1956. This law provided for a Government purchasing program for tungsten, asbestos, fluorspar, and columbium-tantalum-bearing ores for a period from the enactment of the law to its termination date, December 31, 1958. Congress appropriated funds for the immediate period following the enactment of this legislation but, when additional funds were sought from the next Congress, there were all kinds of difficulties, uncertainties, and complications, with bitter fights between the House and Senate committees, and with a result that only portions of the proposed program were adequately financed and the Congress denied, unequivocally, any appropriations for a portion of the program. Tremendous pressure was put upon the Congress by both the administration and the metal producers involved, with an organized effort coming from Members of Congress who were from the States concerned, but to little or no avail. Those who had set up in good faith to provide the metals and minerals to be purchased had kept on producing, feeling assured that the Government would purchase their products at prices specified by law, and then they found that in the absence of appropriations they were out on a limb and have no method for the recovery of that which they had expended in good faith. Any program which would depend upon appropriations being made annually by Congress would, in the face of what recently happened in the case of Public Law 733, be considered unstable and not conducive, by those who might supply the needed strategic minerals, to taking the chance that the funds would be forthcoming to compensate them. Every possible pressure was put upon Congress by the administration to carry out their contract with the producers as authorized by Public Law 733. There is no assurance that, if the proposal of Secretary Seaton be accepted by the present Congress, the next Congress would be willing to appropriate funds to carry on. The mining industry requires large capital expenditures to do business successfully in a country of high costs and in competition with low-wage-paying coun |