We will bring this out tomorrow with Mr. Walsh, when he is here. Go ahead; I just wanted you to know that on this committee that you are dealing with there are some people who know something about mining. Mr. ROLLE. I have known that, of course. Senator MALONE. We know that there has been no policy adopted in 21 years to secure minerals in this Nation. You cannot save anything because you do not know where it is. No mining organization in its right mind will have over 2 or 3 years reserves, because they cannot afford to. But if they are guaranteed a price for a period of that 10 or 15 or 20 years ahead by a policy adopted by Congress, under which a certain return can be reasonably counted upon, and local producers guaranteed that their competition will be limited to local people, then they will go right back to work. For example, in the case of tungsten in normal times, producer's in this Nation have to compete with Burma, where they pay 40 cents a day, or somewhere else where the wage rate is $1.50 a day, and where we actually in many instances pay more here for unemployment insurance, industrial insurance and social security than they are paying in wages. With this sort of a situation you find the larger domestic mining companies taking their machinery along with their superintendents and going over there and work that labor. Then you are out of the mining busines. You are out of it now in case you do not know it. It is just a question of whether you want to buy anything from domestic sources or not. You have been in there, and have kept the mining business shut down. Perhaps you did not even know it. I doubt you did. Mr. ROLLE. I was under the impression, Senator-I do not know what you consider a high standard of mine production-that back in 1917 and 1948 when this job was getting under way, the domestic mine production was at a pretty high level. Senator MALONE. How was it? You were paying everybody's expenses. You were not only paying to open up the mine, but you were paying almost everything connected with it. I was here then. I am familiar with the War Production Board. I was special consultant to the Military Affairs Committee during the Second War. In other words, you have a premium price plan one time, and then you go into something else, but you have the prospector and the producer dangling on the hook. So any time you want to drop him, you cut the string. They have been broke twice now. So from now on you are going to be their partner. Mr. ROLLE. I wanted to point out that we had the desire to at least work in that direction through the letting of long-term contractsSenator MALONE. What do you call a long-term contract? Mr. ROLLE. Three to 5 years. Senator MALONE. You cannot open up a mine in 3 to 5 years. That is something of course you are not supposed to know if you are not in it. It takes from 3 to 5 years to make an exploration in a mining area, and to build a mill and get into production and then you are broke. You have no market. Mr. ROLLE. Excuse me. My reference was to a period of 3 or 5 years of production. Senator MALONE. You cannot get in production in that time. Senator MALONE. Where is your contract on that basis? I have never heard of one. Mr. ROLLE. There have been some which have been run for delivery periods of that time. Senator MALONE. Let us take it from there. I want you to remember what I am telling you and check it with other people. You can check it with the chief, who determines who is going into the mining business. You put the finger on somebody who is the best talker. You do not find the right men. The man is not out there working to get into it under a principle. He knows you have to put the finger on him. I have watched this for 21 years. If the color of his hair or eyes are not right you do not put the finger on him. I know for example you put $90 million into a copper prospect in Arizona and it may pan out all right, and I hope it does, and I know in Wisconsin you have done something else. But you put the finger on it. The fellows were not out there looking for it. Mr. ROLLE. The question of selecting the most likely prospect, and that sort of thing is one which we do not pretend to know much about. Senator MALONE. Of course you do not, and the fellows who pretend to do not, so that ends it. Mr. ROLLE. I can only go through half of that. Senator MALONE. You go right ahead. This is terrible as you gathered from listening to Mr. Walsh. In the first place the man who knows these things you cannot hire him for a Government salary unless it is like the chief now who wants to do a job. He is out there already doing it. You are taking him out of business by the very policies you adopt. I do not suppose there are ten men in Washington that even know it. At least I have not heard of it so far. ahead. Go Mr. ROLLE. I think we had reached the end of the general story. Would you give me some guidance as to what sort of thing you would like to know? Senator MALONE. How do you determine the amount of your stockpile? Who determines that for you, or how do you determine the amount that you want to get into the stockpile? You never have gotten that amount in. Mr. ROLLE. We have in quite a few things. Senator MALONE. On very few. Mr. ROLLE. The determination officially was made by the Munitions Board and the Secretary of Interior jointly as called for under the act. The mechanism was this: Acting through groups comprised of our own people, those from Interior, Commerce, and other agencies of the Government who had the necessary backgrounds, there would be prepared the best estimate of the needs for a given material for the prosecution of an all-out war. Senator MALONE. For how long? Mr. ROLLE. The planning period we have used through this in the past has been 5 years. Senator MALONE. How long has that been the period? Mr. ROLLE. That has consistently been our war-planning period. This is not to be confused with the 5-year target of completing the stockpile. It is the period which it is assumed the war will cover after it starts, if it starts. That has been the planning period ever since the program began. Senator MALONE. You have been on this setup for 7 years. Mr. ROLLE. If I may go on, the period that the war was assumed to last was 5 years. Senator MALONE. You are supposed to complete the stockpile in 5 years. Mr. ROLLE. Yes, sir. But in only 1 or 2 extreme cases was the stockpile objective equal to a 5-year mobilization requirement for the material. The estimate of the requirement to support military production and the necessary industrial backup and minimum civilian use was racked up. Senator MALONE. That is not the question. The objective was to complete the manganese stockpile in 5 years, and as far as anyone can see, you have no immediate prospect of completing it. Mr. ROLLE. The stockpile objective for manganese was never a full 5-year supply. Senator MALONE. I am talking about the supply you were supposed to have. Mr. ROLLE. I see your point. Senator MALONE. That is the only point there is. In other words, you have not anywhere approached your objective. Mr. ROLLE. That is right. Senator MALONE. Why? Mr. ROLLE. The inventory now is close to 60 percent completed, I believe. I do not recall whether Mr. Walsh quoted a later figure. Senator MALONE. You lack 40 percent? Mr. ROLLE. That is right. Senator MALONE. The transfers show that you had considerable transferred to you. Mr. ROLLE. That is right. Senator MALONE. You have not purchased very much. Mr. ROLLE. That is true. Senator MALONE. Why? Mr. ROLLE. I do not believe there is any time when we did not have funds available and allocated for the purchase of manganese. The only thing that has ever held up manganese procurement has been the amount of manganese available to purchase. Keeping this in mind, however, that the type of long-range contract you speak of, in which you might give a man 3 to 5 years to open up a property, and then guarantee him a market for 5 years further. Senator MALONE. I do not understand you have ever let anything like that. Mr. ROLLE. That is right. I say that type of contract, if applied to all of these minerals, would have involved Government obligations for such quantities of material that we never had the funds to do it. Senator MALONE. That is true. I want you to have this stick in your mind. You will always be in that condition until you have a principle laid down so these men will know what they are doing for years ahead. That must be done by Congress. You will never be in any better shape than you are now with the principle you are fol lowing. That ought to be obvious to almost anyone after you have been in it as long as you have. Mr. ROLLE. The really long-range development contractSenator MALONE. I am not talking about a long-range contract. am talking about a principle or policy laid down by Congress. has nothing to do with contracts. Then you would not need a con tract. It Mr. ROLLE. I do not think a contractor would go out and produce on the basis of a stated principle. Senator MALONE. If you took the profit out of the sweatshop labor, he would go right out. But he could not compete with the 40cent-a-day man in India. Mr. ROLLE. You are talking in terms of protective tariff rather than a long-range price guaranty. It Senator MALONE. No matter what you want to call it, the Constitution calls it a duty and makes it a responsibility of Congress. says Congress must regulate foreign commerce and regulate the duties, imposts, and excises. Is not that what it says? Mr. ROLLE. Yes; that is right. Senator MALONE. As long as we did that, we would not have had to go through this rigamarole. It has been transferred over to the State Department making what they call trade agreements, which are not really trade agreements but agreements to lower tariffs. Then if you will go into this a little further, which we intend to do officially-we have already done it unofficially over the last 4 or 5 years-you will find in 90 percent of the cases where they agreed to lower the tariffs on some particular piece of goods that they then create a special value for their money in that field, raising the value of their money in terms of the dollar, and in effect put a tariff on their money. So you do not get the trade. That is right. You know it. Mr. ROLLE. That is right. I recall well-I do not remember the year, I think it was about 1948-when the tariff on manganese was cut in half. The quoted price in India went up by just about the amount of the tariff cut. Senator MALONE. I know there is a theory in Government that it cheapens the product here to the consumer by writing the tariff off. You have just given the answer to that. The price is always raised. Like scotch whisky, when the pound was devalued, they raised the price of scotch whisky because there was no competition. That is exactly what they do on every other product. Maybe you are gaining some idea of what I mean by a principle. Mr. ROLLE. I understand now what you referred to in your congressional principle, that is, tariff protection, rather than the Government guaranteeing a price over a long period. Senator MALONE. You do not guarantee the price. Mr. ROLLE. No. Obviously a tariff protection to a degree does give the mining industry a guaranty. Senator MALONE. It guarantees them one thing, and that is he only competes with his own kind, in other words, his own wages and his own market. Mr. ROLLE. That is right. Senator MALONE. All right. What are your considerations dan you are determining the size of the stockpile and what you a to pay? Let us take your political considerations. What is handed down to you in that regard? Mr. ROLLE. Having set up what we expect to be the requirement for material in time of war, a war of 5 years, we would then arrive at an estimate of what we would expect the supply to be to go against that requirement. The first stage of that was to forget all about war conditions and get the basic information as to how much manganese can India produce and how much can the United States produce, how much can Brazil produce. Senator MALONE. What do you base production on as to how much they can produce? Mr. ROLLE. Generally it has been based on previous production. In the event that any particular developments of substantial size were known of, and which were reasonably assured of coming into being, those would be included. Then from that gross estimate of supply adjustments would be made based on the guidance we were given principally by the Joint Chiefs of Staff on the strategic premises. Senator MALONE. What did they say? Mr. ROLLE. What they said of course covers a very substantial amount of detail. (Discussion off the record.) Senator MALONE. On the record. Mr. ROLLE. Obviously, the scope of a future war and what parts of the world it is going to be fought in. Senator MALONE. Do we still believe we can keep it where the Russians want to start it, and hit them easy enough not to make them mad? Mr. ROLLE. No. I do not know what was in the background of their thinking. Senator MALONE. If they get too mad, we will cut out another nation we cannot reach, is that right? Mr. ROLLE. I was trying to illustrate the fact that it is something short of a science to estimate what parts of the world you are going to have access to in another war. Senator MALONE. As to whether you can keep a war in one nation or another, I would say that is quite a science. Mr. ROLLE. Knowing what you are going to be able to do is a certain amount of crystal gazing. Senator MALONE. I think that is what it has been. Mr. ROLLE. The supplies that would be potentially available would be written off to the degree that the sources were assumed not to be accessible or to the degree that the information available from the intelligence agencies and the State Department and so forth would indicate that there was a likelihood of noncooperation and risk as to whether we would get from a country under war conditions what they could really give us if they wanted to. (Security data deleted.) Senator MALONE. I am anxious to close this up and start on another witness. Would you mind furnishing for the committee a review of your factor method, and how much manganese you think you need in the stockpile, and how much you are going to get from India and these various places and how long you think this stockpile will last in case of an all-out war? |