the world, of critical materials both in peace and wartime on going concern domestic industries; therefore, I am going to ask you this general question: Are you prepared to tell us today what is the policy of the Department of the Interior in the development of strategic and critical minerals and materials under your jurisdiction?

STATEMENTS OF HON. DOUGLAS MCKAY, SECRETARY OF THE INTERIOR, AND HON. FELIX E. WORMSER, ASSISTANT SECRETARY OF THE INTERIOR, WASHINGTON, D. C.

Secretary MCKAY. Senator, in the first place, I had a little plane trouble last night, and I did not get too much sleep, so I come here unprepared. I want to make the general statement I appreciate the kind words you said about the career people in the Department, the engineers, and also Mr. Wormser. I share that opinion. As a matter of fact, I am told that the Department of Reclamation is the largest employer of engineers in the world. I think we have some of the very best engineers any place in Reclamation, in the mining department, and also some of the best scientists.

Senator MALONE. I agree with you. I might say right at that point, one of your scientists-Dr. Wortman, who has worked for the Department many, many years-testified at the 2-day hearing at Henderson about 3 weeks ago. He gets credit by the engineering fraternity for perfecting the metal titanium. It is a tremendous thing. I would like very much to see him recognized in your Department some way or another.

Secretary MCKAY. Write me a note so I will not forget that.
Senator MALONE. They are really doing a fine job.

Secretary MCKAY. They are doing a fine job. I am not a mining man, but we have some people that are in the Department that are very good. I want to say this, that the whole Department of Interior stands ready to cooperate with an committee in the Congress or with other executive departments in Washington, because we have many problems and many of them are mutual. Áll of our facilities and people are available in any way you want to use them, and you may call on them as you choose. So we will cooperate in every way possible.

Another thing, I think I better introduce Mr. Wormser, because he is the fellow who has the answers better than I. I might add Felix Wormser graduated from Columbia University in 1916. His first job was a mucker, in Baker, Oreg. That is back when gold was worth mining. He got $75 a month.

Senator MALONE. You know, Mr. money, and money represented gold.

Secretary, gold represented

Secretary McKAY. I would say so. Felix got $75 a month. So all these 37 years he spent in the mining business. He is a trustee of Columbia University. He is recognized in the profession of mining engineers, and in the industry as a man of integrity and ability. He has appeared at many, many meetings over the United States. He has written papers. He has a very brilliant record in business. I think we are particularly fortunate to have a man of his ability from private enterprise to serve as Assistant Secretary in the Department of Interior. I am very happy him to you, and let hira

answer the questions. He probably knows the answers better than I do.

Senator MALONE. We are glad to see you, Mr. Assistant Secretary Wormser. I might say before you leave that we are excusing you today from making any extensive statement, but we hope that on your return from the west coast you can appear before the committee again. Secretary MCKAY. I will be glad to.

Senator MALONE. While we are discussing the engineering profession, you have an Under Secretary, Mr. Tudor, whom I regard as one of the outstanding engineers on the Pacific coast. I am very glad and very happy to see the policy changed of putting administrators in engineering jobs. Of course, you have an administrative job, Secretary McKay.

Secretary MCKAY. That is right. I am not an engineer.

Senator MALONE. I might ask you, Mr. Secretary, before we start with Mr. Wormser, are you familiar in general with the present plight of the domestic mining industry?

Secretary MCKAY. Yes, sir; particularly lead and zinc.

Senator MALONE. I think many other industries such as tungsten, mercury, manganese, and others that we will go into in greater detail with your people, are in practically the same condition and for the same reason. We have developed in our hearings here with the Defense Materials Procurement Agency, which has now been transferred to the Emergency Procurement Service-same personnel, generally speaking several things that were not conducive to good business in the judgment, at least, of the chairman of the committee. First, perhaps, was that the stockpile created through acquisition of minerals by EPS, the Defense Materials Procurement Agency, ECA, MSA, and FOA-I still intend to introduce my bill to make it a penitentiary offense to refer to any agency by its initials-can be manipulated to break a market in the United States through an Executive order. The executive orders authorizing transfers from the stockpile have been made a part of the record.

Also, the records and testimony showed that we had given $200 million to England alone to purchase copper, zinc, and lead. The lead and zinc acquired by England with this money, was used to break the lead and zinc markets in this country early this year.

So we think there is some room for improvement. We think that the people of this country are entitled to know these things. They are entitled to know how their domestic industry was treated.

One statement I would like to reserve until later in the hearing, but I know you are axious to get away-you have many things to do before you start on your other trip-is this, for 20 years a bill of goods has been sold to the people of the United States of America that we must secure these materials from the sweatshop-labor countries so that the consumers may benefit. The testimony was very clear. We have probably 150 contracts for foreign minerals and materials. It developed that 77 percent of the material in the stockpile, has been purchased from foreign sources. In no event was there ever a foreign contract price brought to my attention which was lower than the domestic price. I think I can say it was generally above. The foreign producers use their low-cost labor and take what the traffic will bear here. So the consumers do not benefit.

I am certain, Mr. Secretary you would not approve of such an arrangement and when you come back before the committee, I know you will be ready then to go into more detail at that time.

Secretary McKAY. Senator, I believe part of that was brought about by the time after Korea started in June of 1950. They went out in desperation to get some contracts for material and some of these contracts were written on the then market price. They took a contract to buy so much at a certain price. The price went down and they are still buying at the higher producer prices than domestic producers are getting. ODM has changed that procedure. I sit in on ODM meetings, and I know the policy has been changed so that in the future any contracts they make will be at the market price rather than a floor under it.

Senator MALONE. The point I make is that I am not objecting to making contracts, but if you make contracts for foreign materials at the domestic market price, the argument that the consumer benefits is killed forever; is it not?

Secretary MCKAY. That is right.

Senator MALONE. Then the fact that we did not have a going concern mining industry producing these so-called strategic minerals and materials made it necessary to make these foreign contracts during a war.

Secretary MCKAY. That is right.

Senator MALONE. Then you would not agree that the best stockpile this country can acquire is a going concern mining industry!

Secretary MCKAY. Yes; it is very essential that the mining industry be sound and strong, and financially able to carry on.

Senator MALONE. It also developed during these hearings that many of our domestic mines are closing down now because of the influx of lead, zinc, and other metals into the United States through dumping by foreign countries, the lead and zinc is running out of their ears. Many of these mines will never open again except through terrific additional expense, because of flooding and the mining methods employed when prices decrease. For example, in mining as the price goes down, as it has for zinc, lead, tungsten, mercury, and others, in order to keep the mine open the higher-grade ore is selected and sent to the mill and a tremendous amount of lower-grade ore, which would have been taken out if the price were higher, is left in the mine. That is never recovered because it is too expensive to go back and get it. The mines that are flooded will never be reopened. So it is lost forever to the people of the United States.

I would merely say to you, Mr. Secretary, that the evidence up to date shows that the domestic mining industry is in a very unhappy state. The policy of past administrations has been to develop foreign sources, and to shut down the domestic mining industry. You are familiar with that.

Secretary MCKAY. That was before my time. Since I have sat on ODM it certainly has not been the policy, Senator.

Senator MALONE. When did you start?

Secretary MCKAY. When I came here. Of course, there was a new organization, and very few people on there that had any experience. George Humphrey, of course, knows the mining business, and he is a member. I believe they are correcting that situation.

It

Senator MALONE. It would be your policy, then, to try to establish a going concern mining industry in the United States of America. Secretary MCKAY. Yes. That is very essential. As a matter of fact, many people overlook the mining business as such. They look upon it as a small business. It is really a tremendous business. is essential to our industrial America, both the mining of minerals and coal. Of course, all the energy things, whether it be natural gas, hydro, coal, or oil, or atomic energy, if and when it is available, those things are drastically important to this country. None of these things we have to mine whether they are oil, lead, or zinc, are any good in the ground. Somebody has to get them out. You have to have a

going concern.

Senator MALONE. You are aware, Mr. Secretary, that the fallacy in the idea of saving our own minerals in peacetime and securing them from some other source is that it requires 3 to 5 years to prospect and open a mine after you find the mineral. What you are really doing when you prospect and open a mine during a war is preparing for the next war instead of the current one.

So I am glad to hear you say that the mining industry is tremendously important to the economic structure of this country.

Secretary MCKAY. That is right.

Senator MALONE. Then it is doubly important to have these materials available through a going concern mining industry in the United States and adjacent countries when a war begins. If we are dependent upon nations far removed across oceans where it would be impossible to keep the lines of transportation open, it is a national defense problem, too, is it not?

Secretary MCKAY. That is right.

Senator MALONE. I am certainly glad, Mr. Secretary, that you and Mr. Humphrey and others are on this board now so that the economic structure of this country is now taken into consideration.

Secretary MCKAY. Yes, sir.

Senator MALONE. You do not consider it necessary to become dependent on foreign countries for the materials without which we cannot fight?

Secretary MCKAY. We do not want to become dependent on them, but in times of emergency we have to get some outside help from some of these countries for the materials that we are short of.

Senator MALONE. The testimony so far shows conclusively that your policies, if carried out, will result in our become self-sufficient in the United States, and in the Western Hemisphere, in many of these materials.

Secretary MCKAY. Yes, that is very important.

Senator MALONE. Would it be your policy to emphasize the importance of dealing with nations adjacent to us in the Western Hemisphere.

Secretary MCKAY. Yes. PAD has done the same thing on oil as you know in Venezuela. And there are opportunities in the Western Hemisphere to much better advantage in a war on some of these other minerals.

Senator MALONE. Many believe that the Western Hemisphere can be made self-sufficient in the production of strategic and critical minerals and materials which are necessary in time of war, if a 1-, 2-, 3-, or even a 5-year program is developed in the Western Hemisphere.

That would not interfere with the peacetime trade with all the nations of the world on a fair-trade basis, but the availibility of these materials at the start of a war would be assured. That is what you have in mind?

Secretary MCKAY. Yes, sir.

Senator MALONE. We thank you very kindly, Mr. Secretary, for coming here, even though your plane was late.

Secretary MCKAY. I am glad to come, sir. I say again, our Department is ready to assist you, but there are some people who know more about it than I do, especially Felix.

STATEMENT OF FELIX EDGAR WORMSER, ASSISTANT SECRETARY FOR MINERAL RESOURCES OF THE DEPARTMENT OF INTERIOR Senator MALONE. Mr. Wormser, will you identify yourself for the record? I think the Secretary did a pretty fair job already.

Mr. WORMSER. Senator, my name is Felix Edgar Wormser. I am Assistant Secretary for Mineral Resources of the Department of Interior.

Senator MALONE. You have heard the Secretary's brief statement and testimony that he believes we should become as self-sufficient as possible in the United States and the Western Hemisphere in the materials without which we cannot fight a war, and how important he believes the industry is to the economic structure of this Nation. I am familiar, of course, with your record over the years, and I was very glad to see you appointed Assistant Secretary of the Interior. Mr. WORMSER. Thank you, sir.

Senator MALONE. Would you like to make a general statement for the committee coverng the subject we are studying in detail?

Mr. WORMSER. I have no prepared statement, Senator; I am here to offer the services of the entire Department to facilitate the work of your committee. In fact, in the audience right now are quite a few of the Department's experts in the event that any of your questioning of me leads to requests for assistance on certain points with which I am not familiar.

By and large, the Department is very solicitous about the mining industry, and its desire is to further the orderly conservation and use of our still great mineral resources. I think the Secretary's statement along a similar vein is one which I wholeheartedly support.

I will be delighted to answer any questions you may have, Senator, if it is in my capacity to do so.

Senator MALONE. I would like to ask you the conditions under which the mining industry in the United States can be made a going concern industry, as the Secretary has testified it should be, and which it is not at the present time. In general, what is the matter with the policy that has been pursued in relation to the mining industry?

We are talking about the mining industry today because we have you here and you are in charge of the Bureau of Mines of the Department of the Interior. We have been working with many of your engineers. We intend to cover other industries, like the wool industry and other industries that are necessities in the national defense and the economic structure of this country.