The CHAIRMAN. Just a minute. Now, let's see. How many hearings did you have outside of your special committee on getting rid of this stockpile? Any?

Senator SYMINGTON. Yes; we have had hearings.

The CHAIRMAN. I am sorry to say that I have not had the benefit of those hearings.

Senator SYMINGTON. We have had them.

The CHAIRMAN. How much did your special committee spend? Senator SYMINGTON. I was made chairman of the Stockpile Subcommittee in 1955 and asked that all papers not detrimental to the security of the United States be declassified before we ran any hearings. That was refused me by the head of OEP at that time. Then, when a new head of the OEP came in, we asked again that the papers be declassified, and again were refused.

When another man came in, we asked and it was refused again. We had hearings at that time, heard many complaints about the stockpile. When the first head of the OEP in the Kennedy administration came in, we again asked they be declassified; but were refused again. So we never held any hearings until there was declassification at the order of the late President Kennedy.

When there was declassification, we then held a special hearing which cost about $125,000, to investigate 10 years of stockpile effort. Since that time, and before that time, we were selling heavily out of the stockpile. We had no staff of any kind, except the regular staff of the Armed Services Committee. All matters except the special investigation into the stockpile, made at the President's request, have been handled by the Armed Services Committee in the past, and in our opinion can be handled by the Armed Services Committee in the future, without the addition of a single person.

I thank the Chair.

The CHAIRMAN. You have mentioned the question of declassification. And Senator Douglas wondered why we didn't have a lot of hearings. And I told him we couldn't get the information.

Let me put in a letter of December 10, 1958, from the Office of the Director of Civilian Defense Mobilization:

DEAR SENATOR ROBERTSON: As a followup to my letter of August 29, 1958, in response to yours of August 22, I am now writing to inform you of the results of our considerations with respect to declassification of data on the strategic stockpile. Following a thorough review by my staff with the advice of other agencies, I have concluded that only those data pertaining to inventories not creditable or not likely to be creditable to official stockpile objectives may be declassified at this time and made public.

In other words, he would give us something of no value, but would not give us any other information. So we couldn't get to first base. What is the use of having a hearing on the stockpile and have him get up there and take the fifth amendment, or words to that effect?

So you didn't have any real investigation until you could get a Democratic order making the information available. We couldn't get it out of the Republican administration. Isn't that true?

Senator SYMINGTON. Yes; nor did we have any staff.

The CHAIRMAN. But then when you got a declassification, you got a $125,000 staff to make the investigation. That is the point. Now I yield to the Senator from Utah.

36-073-164– 3

Senator BENNETT. Mr. Chairman, I have been listening to this discussion carefully and with interest. I assume this meeting is fundamentally to discuss the question of the relative jurisdiction of the two committees the Armed Services and the Banking and Currency Committees. We are meeting because we feel that our jurisdiction has been or may be affected.

I have had a memorandum prepared on this subject which I would like to have inserted in the record at this point.

The CHAIRMAN. Without objection, so ordered. (The memorandum follows :)

MEMORANDUM COMPARING S. 2272 AND THE DEFENSE PRODUCTION ACT

Some of the authorities which would be granted to the President in S. 2272 for the management of the proposed materials reserve inventory are very similar to powers set forth in the Defense Production Act of 1950, as amended, which have been exercised in the management of the Defense Production Act inventory. For instance, section 7(b)(2) of S. 2272 provides for: "transfer to the national stockpile without charge or reimbursement any materials in the materials reserve inventory which are required to meet the stockpile objectives for such materials. ***"

Section 303 (f) of the Defense Production Act of 1950, as amended, provides that: "Notwithstanding any other provisions of law to the contrary, metals, minerals, and materials acquired pursuant to the provisions of this section which, in the judgment of the President, are excess to the needs of programs under this act, shall be transferred to the national stockpile established pursuant to the act of June 7, 1939, as amended (50 U.S.C. 98-98h), when the President deems such action to be in the public interest."

Section 7(b) (7) provides that: "The President shall direct the Administrator of General Services with respect to the materials reserve inventory to * * * provide for the storage, security, and maintenance of materials in such inventory. **

Section 303 (d) of the Defense Production Act of 1950, as amended, provides that: "The procurement power granted to the President by this section shall include the power to transport and store and have processed and refined any materials procured under this section."

Provisions of section 8 of S. 2272 which pertain to the discovery and development of domestic sources of strategic and critical materials and the development of substitutes for such materials are very similar to sections 303 (a) (2) and 303 (g) of the Defense Production Act of 1950, as amended, providing for, respectively, "the encouragement of exploration, development, and mining of critical and strategic minerals and metals ***" and "the development of substitutes for such strategic and critical materials."

S. 2272 provides in subsection 7(d) that any sale of materials from the proposed materials reserve inventory, "shall be made with due regard for protecting (1) the United States against avoidable loss, (2) producers, processors, and consumers against avoidable disruption of their usual markets.

It is stipulated in subsection 303 (a) of the Defense Production Act of 1950, as amended, that "minerals and metals (purchased under this subsection) shall not be sold at less than *** the current domestic market price. * * *" Consequently, S. 2272 would establish a disposal price criterion for materials procured under the authority of the Defense Production Act different from the standard stipulated in that act to govern disposal transactions.

The projected abolition of the Defense Production Act inventory and the granting of the new authorities for the management of the proposed successor materials reserve inventory raise the very critical question of whether the respective provisions of S. 2272 actually supersede or in effect repeal the corresponding sections of the Defense Production Act of 1950, as amended.

Senator BENNETT. Now, as I listen to the discussion and read some of the material that has been passed along, it seems to me the question really goes to something that has not been put in the right focus. The responsibility of the Banking and Currency Committee is for the

health of the Nation's economy, basically, including prices, production, and stabilization of the economy.

I am sorry Senator Douglas has gone, because he is chairman of a subcommittee of this committee, called the Committee on Production and Stabilization, and six of us who are here today are members of that subcommittee.

Now I am glad that you would put all of the stockpiles together. I think that is sound. But I think if you want to look at the basic problem of fundamental jurisdiction, the responsibility of the Armed Services Committee is to determine what is needed in the stockpile for national defense purposes. And the fundamental responsibility of our committee should be with respect to the reserve stockpile, and we, and not you, should have the responsibility for handling the disposal, because that was certainly our responsibility, for example, with respect to synthetic rubber plants the Government operated during the war.

I think we are also responsible for that part of the bill which affects the financial relations with the Treasury. The Treasury is our problem. So I would say that if this bill were amended to provide that the Banking and Currency Committee and not the Armed Services Committee-would have the responsibility for disposal of materials not needed for defense, which is ours, as well as the opportunity to review and have the responsibility for the decision regarding the cancellation of notes to the Treasury, that that should resolve this disagreement.

Now you may say "Well, look, we have the biggest stockpile in defense." I don't think that is vital, because you are taking a stockpile that was under our responsibility away from us. Let's split the responsibility where it belongs. The Armed Services Committee is responsible to provide stockpiles needed for defense. And I think we are responsible to dispose of the material that is not needed for defense. And I think that would resolve the difficulty of jurisdiction.

Now if that were done, I think we might have to have some hearings about the question of price and about the question of whether it is going to be done on a limited congressional veto basis, rather than a positive basis. I am sure it is obvious to the Senator from Missouri, as it probably is to the members of this committee, that the people who produce this material in the United States-production and stabilization is part of our problem-are very much disturbed by that language in the bill which would give the executive the power to dispose of this material below the domestic market price.

Now I know the Senator from Missouri says it is hard to find a domestic price. I think it is much harder to find a world price, because you have got so many more factors involved in it.

So I would suggest, Mr. Chairman, that if we want to really preserve the jurisdiction of this committee, that we ask for those amendments and then we could support the bill. Because I really believe that the right of disposal which affects both production and stabilization is our jurisdiction; certainly the Armed Services Committee is not concerned fundamentally with the disposal of material. They are concerned with the defense of the United States.

(Senator Bennett submitted the following letter and enclosure for inclusion in the record:)

AMERICAN MINING CONGRESS,

July 22, 1964.

Hon. WALLACE BENNETT,
U.S. Senate,
Washington, D.C.

DEAR SENATOR: You have advised us that the Banking and Currency Committee has scheduled for Friday, July 24, consideration of certain aspects of Calendar No. 970 (S. 2272), the Materials Reserve and Stockpile Act of 1964. This letter is in response to your request for our views on this legislation. We believe that S. 2272 in its present form will be harmful in that it would cause serious disruptions to the normal markets for mineral commodities now in the Government stockpiles and adversely affect both metal producers and consumers. Provisions of the bill which we consider objectionable are as follows:

(1) The bill would eliminate the requirement of congressional approval prior to stockpile disposal action. Under the terms of the bill as presently written, the executive branch would simply propose a disposal program and specific action by Congress would thereafter be required to block the planned disposal.

(2) The bill would permit sales from the stockpile at less than current domestic market prices.

(3) S. 2272 would authorize upgrading of stockpiled materials, with payment for such upgrading to be permitted in materials other than those being upgraded.

(4) The bill would permit direct and indirect Government use of stockpile surpluses.

The second, third, and fourth objectionable features above listed become even more dangerous when combined with the first feature, the elimination of prior affirmative congressional approval.

Whether classified as surplus or as part of the quantities required by present objectives, we regard the stockpiles as an investment in our country's future. About 90 percent of the value of the stockpiles is in minerals and metals-each of which is an exhaustible natural reserve. As the world population continues to grow and the standards of living rise, most of these materials will become increasingly scarce.

We believe Congress should retain its present power to affirmatively approve all Government agency proposals to sell materials from the stockpiles. Such congressional approval assures that all factors bearing on the national interest are weighed before disposal is undertaken.

Please let us know if we may be of further assistance to you in your consideration of this legislation.

Sincerely yours,

J. ALLEN OVERTON, Jr.,
Executive Vice President.

CONGRESSIONAL CONTROL OVER STOCKPILE DISPOSALS

Why should Congress retain control over disposal of materials from the national stockpiles?

When stockpile legislation was originally enacted, it was widely recognized that the stockpiles could constitute a serious threat to the industries producing strategic materials unless adequate assurance was given that these materials would be disposed of only under specific circumstances. The most important such circumstance, from the standpoint of the producing industries, was the prior approval of the U.S. Congress.

Now, however, a change in procedure is suggested in order to accelerate disposal of so-called stockpile surpluses. About half of the present stockpile is now classified as surplus in relation to present objectives.

The validity of this definition of surplus is open to question in view of the frequency with which stockpile objectives have been changed. As an example, we cite the case of one of the rarer metals-palladium. Based on the thencurrent objective there was a substantial surplus in 1963. A portion of this surplus was sold that year at the then prevailing market price. In 1964, the objective for palladium was greatly increased; instead of a surplus there is now

a sizable stockpile deficit. To meet this deficit the Government is faced with buying palladium at the current price-which is substantially higher than the 1963 price.

The American Mining Congress, consequently, is not prepared to accept the proposition that the disposal of the so-called surpluses should be made easier or automatic. We believe, as former President Eisenhower said in 1963, that these stockpile materials are assets-not liabilities. He strongly recommended that Members of Congress should not permit anyone to dispose of any quantities of the stockpile until the Members of Congress "have assured themselves, after listening to competent testimony, that this disposal can proceed without any injury to the national security. The Congress should never relinquish its right to pass on executive branch proposals to sell the material in the stockpiles."

The legislation presently under consideration by the U.S. Senate would not require any hearings on disposals by the Congress. The administration would simply propose a disposal program and it would require specific action by the Congress to block the disposal. This is a very different matter from requiring specific approval by the Congress for disposals.

The requirement of congressional approval assures that all factors bearing on the national interest are weighed before a decision is made to dispose. If this requirement were eliminated, some of the national interest factors could be disregarded or given insufficient weight in decisions left to administrative action. Precipitate administrative action could cause serious disruptions to the normal market for stockpile commodities, forcing cutbacks in production. This would lead to unemployment and reduced tax revenues as a result of decreased personal and corporate income. On the other hand, retaining the requirement of congressional approval would give the industry time to present to Congress its case for avoiding disruption. In this way, Congress would have an opportunity to erect safeguards around any disposal designed to minimize disruption of the normal market.

Furthermore, Congress has amply demonstrated its ability to act promptly in this area when required, as most specifically evidenced by its recent actions with regard to the approval of disposal bills relating to zinc, lead, tin, and molybdenum.

Whether classified as surplus or as part of the quantities required by present objectives, we regard the stockpiles as an investment in our country's future. About 90 percent of the value of the stockpiles is in minerals and metals-each of which is an exhaustible natural reserve. As the world population continues to grow and as standards of living rise, most of these materials will become increasingly scarce.

For this reason we believe very strongly in affirmative action by the Congress before any disposal plan is carried out.

This is equally true whether the materials are to be sold in the open market for cash or whether they are to be used for other purposes such as direct consumption by Government agencies, deliveries to Government contractors for conversion into end products, as grants under the foreign program or as payment for the upgrading of stockpile materials.

Experience in the last 2 years has shown that Congress is ready and willing to provide the necessary approval for suitable disposal programs. Procedures have been worked out for meaningful consultation with industry prior to the submission of legislation to the Congress. Consequently, we believe a useful pattern has been established that can effectively be followed in the future.

Congress should retain control over disposals from the national stockpile. The CHAIRMAN. When we were getting cooperation on disposal, we were consulted about our views and that was peculiarly true of aluminum, when we were urging disposal and urging the curtailment of buying in excess of what we thought was a proper construction of the contract.

So the Senator from Utah has brought up this issue. According to my amendment, if it would have been acceptable, we still would have had some voice in consulting with those who are going to make the disposal, tell them we thought they ought to get rid of it, that they ought to try to take some action on it. We get a notice every time they make a sale from the Defense Production Act inventory,