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Mr. GARY. The expenditures in this instance are not appropriations from the Treasury but rather a limitation upon the use of corporate funds for administrative expenses.

Mr. Symington, we are very glad to have you with us this morning. I personally am delighted that you have taken over the management of the Reconstruction Finance Corporation, and I have been pleased with your actions since you have assumed the duties of Administrator. The organization has been severely criticized for some of its activities during the last year, and I hope and believe you will give it the fair and impartial and, at the same time, the vigorous administration that is necessary to restore it to public confidence.

Mr. SYMINGTON. Thank you, Mr. Chairman.

Mr. GARY. Do you have a general statement?

Mr. SYMINGTON. Yes, I have a statement, sir. I would like to read it, if it meets with your approval.

Mr. GARY. We shall be glad to hear from you at this time.

GENERAL STATEMENT

Mr. SYMINGTON. It is a pleasure to appear before this subcommittee. Although this is an appropriations hearing, I believe your interest extends beyond the consideration of this budget. I will, therefore, comment briefly on the policies of the RFC.

Recent hearings conducted have raised questions concerning the administration of the RFC. Steps are being taken to eliminate the causes for such questioning.

I am convinced that 99.9 percent of the RFC organization are honest, conscientious, and capable Americans. These people are determined that the RFC will again be known throughout the land as an example of honesty and integrity in Government.

The affairs of the RFC are being placed on a modern business basis. Adequate publicity is being given all transactions. Information about every authorized loan is now being made available for public scrutiny.

ISSUANCE OF LOAN POLICY

A statement has been issued to all RFC agencies, defining the loan policy that should be followed. This policy provides a uniform basis for the exercise of business judgment on the part of the agency managers. It furnishes the criteria for the types of loans RFC should make, as well as for those types which should not be made.

The managers of the 32 field offices recently convened with us here. in Washington. These managers felt such a policy directive was advisable. It is attached to this statement.

RFC loan policies will conform to the anti-inflation policies of the Government. Every loan must be in the public interest.

The present activities of the RFC fall into two major groups. has to do with the lending of money, the other with the purchase and production of certain strategic materials. I will discuss the latter first.

SYNTHETIC RUBBER PROGRAM

RFC has jurisdiction over the production of synthetic rubber; also the refining and smelting of tin and the production of abaca. During the last year the requirements for these materials have greatly expanded, this as a result of the current mobilization program now being superimposed on an already full economy.

Under the authority of the Rubber Act of 1948, as extended by Public Law 575, RFC has expanded its operations in the synthetic rubber producing facilities owned by the Government.

The above law specifies that synthetic rubber production facilities shall be maintained at an annual rated capacity of not less than 600,000 tons of general-purpose rubber, and not less than 65,000 tons of specialpurpose rubber.

As a result of two outstanding reports on rubber by the Preparedness Subcommittee of the Senate Armed Forces Committee, the production of synthetic rubber was rapidly increased.

The recommendation of this committee proved wise, because already the above statutory capacity has proved insufficient. Already synthetic rubber at the rate of 950,000 tons is being programed for the fiscal year 1952. To accomplish this goal, 11 additional facilities have been placed in production; 28 are now operating.

Without subsidy, the RFC is now selling synthetic rubber, at no loss, for less than half the world price of natural rubber.

It is estimated that 65 percent of the rubber now being used in American production is synthetic rubber.

Farmer, worker and businessman all travel to work on rubber; and use it daily in countless other ways. The importance, therefore, of this RFC synthetic rubber program cannot be overemphasized.

May I insert in the record at this point a statement which shows: (1) the increasing production of synthetic rubber; and (2) the favorable price relationship of synthetic against natural rubber.

Mr. GARY. It may be inserted in the record at this point.

85541-51-pt. 2- -5

(The statement referred to is as follows:)

Synthetic rubber production and rubber prices, fiscal years 1950–52

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NOTE.-Fiscal year 1952 objective: 840,000 long tons per year; fiscal year 1953 objective: 950,000 long tons per year.

BENEFITS OF RUBBER RESEARCH

Mr. SYMINGTON. Synthetic rubber would not have reached this advanced state of usefulness without research. The RFC synthetic rubber research program, carried on in conjunction with many rubber manufacturers, has resulted in outstanding developments.

Included in this technical progress is the program of oil extended rubber, a development that will increase the total supply of rubber with much less use of those components formerly necessary to produce the synthetic material.

Another development is cold synthetic rubber, a product that has proven superior to natural rubber in many applications.

Already it has been demonstrated that cold synthetic rubber for tread stock on tires has 20 to 30 percent better wearing qualities than natural rubber.

Improvements in the manufacture of synthetic rubber latex using the cold rubber process have resulted in a product now generally recognized to be as good or better than natural latex for the majority of

uses.

Further research in this field is continuing, in order to secure superior products.

The significance of this program, to an America literally transported on millions of tons of rubber annually, is very great; because until the RFC synthetic rubber program became a reality, nearly all rubber was controlled by either foreign governments, or foreign corporations set up by private interests with the approval of their gov

ernments.

TIN PROGRAM

Another strategic material in the RFC program is tin.

Unlike natural rubber, tin has no substitute except those our research laboratories are working hard to create. This country relies entirely on foreign sources for that tin necessary to produce tin plate, bearing babbits, solder, and the many other industrial uses.

During the last war, when the major sources of tin, Malaya and Indonesia, were cut off, the RFC built a smelter at Texas City, Tex., to process low- and high-grade tin ores from South America.

This smelter has been in continuous operation since 1941. It is now producing many thousands of tons of tin metal a year, about 50 percent of our current industrial consumption.

Several months ago, another classic Government report from this same Senate committee was released on tin. This report showed in convincing fashion how disastrous to the American taxpayer was the operation of this foreign cartel in the current rising demand tin market caused by mobilizing an already full economy.

The purchase of tin by the United States Government has now ceased until such time as reasonably fair prices can be obtained from these foreign suppliers.

RISE IN TIN PRICE

Immediately after the outbreak of the Korean War last June, the New York price of tin rose steadily, from 7834 cents a pound to $1.83 last January. At that time domestic prices were frozen.

Mr. Chairman, may I say something off the record there?

Mr. GARY. Yes.

(Discussion off the record.)

Mr. SYMINGTON. Foreign markets continued to rise, however, the Singapore price reaching $1.93 on February 14.

The above Senate report, coupled with changed Government buying policies, resulted in a sharp decline in tin prices to $1.34; but supported by the cartels, the price worked back up to over $1.50.

This time, however, America was determined to cease buying at these exorbitant prices. As a result, the world tin price began to really fall. As of last Monday, it was $1.06. Since then it has worked back to $1.18.

The current RFC sales price is $1.06. We still have a large paper profit in tin.

May I insert in the record at this point two statements which show the monthly and weekly average tin prices?

Mr. GARY. They may be inserted at this point in the record.

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Mr. SYMINGTON. The availability of RFC stocks, plus the production of the Texas City smelter, have both proven a valuable asset in the struggle for a fair tin price to the American producer and conReductions already obtained under the above program will result in saving of many millions to the American taxpayer. If this recommended policy is continued, within the next 2 years the savings will run into hundreds of millions of dollars.

What the foreign tin interests of the world should realize is that, unless they approach this whole problem realistically; to wit, a fair profit only, they are ultimately ruining their greatest market, because in addition to further curtailment of nonessential uses, American laboratories, faced with these exorbitant prices, are working hard for adequate substitutes.

Based on the present price and amount of production of synthetic rubber, the natural-rubber people could tell the tin cartel a lot about what may happen to their largest market if the United States is forced to continue to face exorbitant prices.

The total amount involved in this RFC tin-rubber program is expected to run around $700,000,000 in the fiscal year 1952.

Aside, therefore, from its more generally understood lending function, RFC has a significant role in the field of critical materials, a field in which both during and after World War II it has had a record of outstanding success.

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