should be armed with the power to tell the American people how much copper, lead, or zinc, or any other material they should use.

Senator MALONE. They should consume or produce.

Mr. WORMSER. Either way.

Senator MALONE. Would you tell us for the benefit of the record how this International Trade Organization and International Materials Conference were presumed to operate!

Mr. WORMSER. The International Materials Conference was organized shortly after the Korean incident.

Senator MALONE. Is that how we refer to Korea now, "the incident"! Mr. WORMSER. I will be glad to use whatever language you suggest. Senator MALONE. I often wonder whether it was a police action or an incident or World War III.

Mr. WORMSER. I would like to know just how to classify it.
Senator MALONE. And whether it is ended now or not.

Mr. WoRMSER. That is another factor involved.

The international group was organized right here in Washington. Senator MALONE. By the State Department, was it not?

Mr. WORMSER. I believe the State Department dealing with these international activities.

Senator MALONE. To take the place of the proposed International Trade Organization, which, of course, was refused confirmation by Congress. That organization originated back in Geneva and Torquay, and other international conferences.

Mr. WORMSER. They all had an interrelationship.

Senator MALONE. They all meant to do the same thing. So when all this happened, the International Materials Conference was created by the State Department. The International Trade Organization, or its successor, the International Materials Conference, how were they pre-umed to operate?

Mr. WORMSER. As I understand it, the International Materials Conference split up into various commodity committees, having on each committee representatives from the countries having an interest in the supply problems, and they met periodically and decided how much of each metal or mineral the United States and the other participating countries were to be allocated. It was a voluntary operation. They depended upon the various countries involved to arrange for the actual cor summation of their particular part of the agreement.

Senator MALONE. The International Trade Organization, if it had been approved by the Congress, and its successor, the International Materials Conference, were to operate on the theory that the representatives of member nations, some 54 or 3 nations in the Internatonal Trade Organization, and about 12 or more in the International Materials Conference, would meet often, and at least once each year, to decide how much production there would be in the world of a particular material, what the consumption would normally be, and dec.de how much each country would be allowed to produce and consume. Was that the method to be used by these international bodies? Mr. WORMSER. I think their intention was directed largely to how much each country would be allocated. I think at that time there was a shortage, so they were not so much concerned with the actual production problems as they were with the actual use of the materials, Senator MALONE. There has been no shortage of world production in peacetime as far as we know. There have been shortages in war.

Mr. WORMSER. Yes; that is right.

Senator MALONE. Was not the idea, which was conceived at Geneva, to determine who should produce these materials, when you come right down to it?

Mr. WORMSER. I am not so certain about that, sir. My interest in it was directed to the fact that they were using this arrangement to tell us in this country how much various scarce materials we were supposed to use.

Senator MALONE. At least, you did not and do not agree that any arrangement like the International Trade Organization or the International Materials Conference which would operate as a worldwide cartel system to fix the prices and the consumption of any materials is a good thing?

Mr. WORMSER. I am very much opposed to it. I am for a free market.

Senator MALONE. You are for a free market with free competition in our country with the protection of our standard of living.

Mr. WORMSER. That is essentially what I am talking about.
Senator MALONE. Wage standard of living.

Mr. WORMSER. Yes, sir.

Senator MALONE. I think that nails it down. In other words, we have a school of thought which favors free international competition and our participation in it regardless of the wages paid in any other country. To that you are opposed.

Mr. WORMSER. I have no quarrel with international competition. Senator MALONE. I am talking now about free international competition with us as a part of it, with no subsidies, quotas, or tariffs. Are you in favor of that?

Mr. WORMSER. Again, Senator, it is not quite clear in my mind as to your distinction.

Senator MALONE. I will clear it for you. We gave several million. dollars to companies in Morocco to produce lead and zinc. Are you in favor of that lead and zinc, produced by low wages, coming into this country in free competition with the production of lead and zine in the United States?

Mr. WORMSER. I would not be in favor of that right now, but under the stress of an emergency of war, there might have been different

reasons.

Senator MALONE. I am not talking about the emergency of war. We do not have a war now.

Mr. WORMSER. Right now I am not in favor of it, sir.

Senator MALONE. It may be that one of our troubles is that we have had a set of officials for 20 years, and maybe we have them now who think they can manipulate this thing in time of peace and war and have Executive orders running the whole business. Are you in favor of that!

Mr. WORMSER. I am not in favor of that.

Senator MALONE. I think that clears it up. There was a very enticing phrase used for all these manipulations once each year under the International Trade Organization and its successor, the International Materials Conference, at which times the amount of production and the amount of consumption for each nation would be computed. I believe this phrase was "Entitlements for Consumption." Mr. WORMSER. Yes, sir.

Senator MALONE. Are you familiar with that phrase?
Mr. WORMSER. Yes, sir.

Senator MALONE. What does it mean?

Mr. WORMSER. I think that was an expression coined to express the viewpoint of the International Materials Conference, namely, that various participating countries were entitled to just so much copper, let us say, or so much nickel or whatever they happened to be allocated. Senator MALONE. Regardless of whether they participated in the production, and regardless of whether they were important in the world economic structure

Mr. WORMSER. And regardless perhaps whether they had money to pay for it.

Senator MALONE. They were entitled to so much consumption.
Mr. WORMSER. That is right.

Senator MALONE. Entitlements for consumption, I have been intrigued by that expression.

Mr. WORMSER. So was I, sir.

Senator MALONE. Did not that occur in the Paley report?

Mr. WORMSER. I do not believe it did. I think it was confined to the IMC.

Senator MALONE. Did this plan during one of our very important periods cause an artificial shortage of lead and zinc in this country? Mr. WORMSER. It did not apply to lead. It never had a lead committee. But they did have a copper committee and, as I recall, it did cause a serious shortage in copper.

Senator MALONE. Did they have a zinc committee?

Mr. WORMSER. I believe they did have a zinc committee. It has gone out of business, and my memory is a little hazy.

Senator MALONE. This International Materials Conference is still in being. It may be active on the surface in only 1 or 2 minerals, but the organization is still there, and the personnel who created it are still there. That might be of interest to you.

Mr. WORMSER. Very much so.

Senator MALONE. We would have had them here before now, except that an important witness has been in Europe. We hope he will

return soon.

Are you familiar in general with the Bell report?

Mr. WORMSER. Broadly speaking, sir, yes.

Senator MALONE. Is it along the same lines as the Paley report? Mr. WORMSER. I think the Bell report dealt with the problem of foreign trade, whereas the Paley report was a mineral report, and I do not think, Senator, you could compare them directly.

Senator MALONE. Did they not both indicate that we must, in the language of one of the famous Secretaries of the Interior, "save our supply of minerals and purchase from foreign nations"? Did they not both leave that impression?

Mr. WORMSER. I think they did, sir, come to think of it.

Senator MALONE. They had one common interest. If you want to condense the five-volume Paley report to one page, you could just say we are running out of these materials, and have very few of them, and must purchase them from foreign nations. Wasn't that the Paley report indication all the way through?

Mr. WORMSER. Perhaps that would be a words or so.

way to get it in 15

Senator MALONE. They took five volumes to say the same thing. Mr. WORMSER. They called attention to the growing scarcity of certain minerals and metals.

Senator MALONE. That brings up a very important point-the growing scarcity. Under the policy adopted for the last 20 years of continually encouraging inflation, which, according to your testimony, has lowered the effect of any duty

Mr. WORMSER. Any specific duty.

Senator MALONE. And it was specific for most of the minerals. Through inflation the duty was lowered anywhere from 50 to 65 percent.

Mr. WORMSER. Considering the entire gamut of all the metals and minerals.

Senator MALONE. Take zinc and lead. If the inflation was 2 to 1, you just about cut the fixed duty in two.

Mr. WORMSER. That is correct, if you are looking at it that way. Senator MALONE. I am starting that way. Then they did actually

cut it in two.

Mr. WORMSER. It was 21% basis on lead originally.

Senator MALONE. The State Department in one of their agreements lowered it 50 percent.

Mr. WORMSER. That is right.

Senator MALONE. Would you say that policy adopted for the last 20 years would slowly encourage the scarcity about which they complained?

Mr. WORMSER. It certainly did nothing to help it.

Senator MALONE. I should say you are in the business. I think you could go a little stronger than that one way or another. If you continually make it unprofitable to mine these minerals in this country, production in this country is bound to decrease. What is the price of zinc and lead now?

Mr. WORMSER. The price of lead is 132, New York.

Senator MALONE. Zinc?

Mr. WORMSER. Zinc is 10 cents, East St. Louis.

Senator MALONE. Can you profitably continue your mining operations at those prices?

Mr. WORMSER. I am sure there are very few companies making any money on those prices.

Senator MALONE. I think all you have to do is watch the newspapers in the last 6 months and you will notice that the mines are slowly closing. The wet mines will not open. You agree with that? Mr. WORMSER. Definitely.

Senator MALONE. Then if for 20 years, now for 21, we have a policy of making our own production unprofitable, would not it gradually emphasize and bring about the very shortage of the domestic production about which they complain?

Mr. WORMSER. There is no shortage currently, sir. There is no complaint currently of any shortage that I know. Perhaps what you are trying to develop, Senator, if I may be so bold as to help you out, is the fact that our production has gone down decisively in both lead

and zinc.

Senator MALONE. I was not talking about international production. Mr. WORMSER. I am talking about domestic production.

Senator MALONE. So I was all right with my question. Naturally you can have all the world production you want of the 74 materials, but I am asking you if the policy for the last 20 years has not been conducive to cutting domestic production?

Mr. WORMSER. I believe it has, sir.

Senator MALONE. You are not in the sheep business and nobody in his right mind would put $2 in the domestic sheep business at the present time, but the production of wool in this country has been cut in half just as in lead. There is no difference in the policy. But the policy of the administration for 20 years has been to encourage foreign production and to cut domestic production. That is, they may give lipservice to domestic production. The effect of what has been done to lead and zinc is the same as what they have done to wool. The elimination of any duty or tariff on wool and allowing cheap labor goods to come in had the effect of making the cost of wool $2.50 a sheep unit in Australia and $8.50 here. That may be compared to the importation of lead and zinc from 40-cents-a-day labor countries and our labor costs of $15 a day. If you have 20 years of that policy, will you not finally arrive at the result they predicted in the beginning, that we are short?

Mr. WORMSER. That is a logical assumption.

Senator MALONE. You agree with that assumption?
Mr. WORMSER. I agree with that.

Senator MALONE. You already testified that you are against using stockpiles, as you referred to it, as buffer stock. Under that method when it is the judgment of a bureau official or combination of bureau officials and the governments of foreign nations that the price of material should be lower, some of our stockpile would be released.

Mr. WORMSER. I am against that.

Senator MALONE. You knew that our own stockpile at the moment is susceptible to that manipulation?

Mr. WORMSER. I believe the law stipulates that it can only be utilized under an Executive order or congressional order.

Senator MALONE. Executive order.

Mr. WORMSER. Does not it stipulate under emergency conditons?
Senator MALONE. Who is to judge?

Mr. WORMSER. I think it is pretty well locked up according to the statutes.

Senator MALONE. The testimony did not show that. The President of the United States can write a letter tomorrow morning releasing any of the stockpile. It was testified before this committee that such a letter was written about tungsten. You are familiar with the fact that the Government in its stockpiling does not pay a tariff or import fee or duty. You understand that.

Mr. WORMSER. Yes.

Senator MALONE. On this tungsten a letter was written and the tungsten was transferred from the stockpile to private industry. Another Government official set a ceiling price of $65 a unit, and to sell it at that price they could not include the tariff. Therefore, the

39888-53-pt. 1——3