testimony we are actively studying means to bring in more capacity quickly and perhaps we might be able to contribute to your review in this connection. In any case you may be assured of our continued cooperation. Very truly yours, ALUMINUM LIMITED SALES, INC., Mr. HUBERT E. HOWARD, ALUMINUM COMPANY OF CANADA, LTD., Montreal, Quebec, Canada, August 21, 1950. Chairman, United States Munitions Board, Pentagon Building, Washington, D. C. DEAR SIR: At the suggestion of Major General Matejka, in whose office a meeting was held with our representatives on August 17, we write to confirm what was said at that time about the supply to the United States of aluminum produced in our Canadian smelters. We are at present producing at the yearly rate of 380,000 metric tons (of 2,204.6 pounds each), of which about 150,000 metric tons per annum is being shipped to our customers in the United States through our distributors, the Aluminum Import Corp., located at 530 Fifth Avenue, New York, N. Y. Since indicating to the Right Honorable C. D. Howe, Canadian Minister of Trade and Commerce, what we could do in the event of an emergency, we have progressed with our studies and believe that by arranging for the purchasing and borrowing of power from neighboring hydroelectric installations pending the bringing in of additional generating capacity of our own, but without the necessity of governmental power allocation, we can increase our production rate by 114,000 metric tons to a total of 494,000 metric tons per annum. It is estimated that the increased tonnage would come into production at the following rate: This program envisages an overall expenditure on our part of approximately $55 million, covering the construction of a 200,000 hydroelectric plant on the Peribonka River, the reactivation of certain idle World War II smelters, the creation of new smelting facilities, and other miscellaneous items necessary to insure adequate supplies of alumina and bauxite. The indicated production schedule is based on the assumption that there would be no delay in starting the engineering and construction program. This is necessary because of the winter weather conditions in the Saguenay Valley. For example, we would need to commence immediately with the construction of a new highway, some 15 miles in length, leading to the powerhouse site on the Peribonka. In the light of the foregoing and subject to early acceptance, we hereby offer 200,000 metric tons of our standard aluminum ingot of 99.5 percent guaranteed minimum purity under the following terms and conditions: Delivery: 1951, minimum 35,000 metric tons; 1952, minimum 65,000 metric tons; 1953, balance. Price: 16.5 cents United States currency per pound, f. o. b., Canadian smelter, with an allowance of actual freight to destination in the United States not exceeding 1 cent per pound. Terms: Net cash 30 days from date of invoice. Escalator provision: In view of the extended delivery and because of the uncertainty as to future costs of raw materials, labor, transport, etc., the sales price of 16.5 cents per pound shall be subject to adjustment in each quarter in relation to any increase or decrease in the seller's cost of production expressed in United States currency which may be certified by Messrs. Price Waterhouse & Co., the basic quarter being that ended on June 30, 1950; allowance shall only be made, however, for units of one-half cent per pound increase or decrease in the total production cost. Cancellation: The buyer shall have the right on 30 days' notice to cancel all or any part of the unshipped balance on payment to the seller of 5 cents United States currency per pound on the tonnage caneled. Yours very truly, ALUMINUM COMPANY OF CANADA, LTD., [Copy of telegram sent by F. W. Bruce] OCTOBER 2, 1950. Mr. A. J. WALSH, Commissioner, Emergency Procurement Service, Federal Supply Services Building, Washington, D. C. (U. S. A.): Confirming telephone conversation 2d October, we are willing since exchange situation reasonably clarified to hold open for acceptance until close of business October 12, 1950. Offer made September 21 covering 200,000 metric tons alumiALUMINUM COMPANY OF CANADA, LTD., FRASER W. BRUCE. num. FRASER W. BRUCE, [Copy of telegram sent by A. J. Walsh] OCTOBER 10, 1950. Aluminum Company of Canada, Ltd., Montreal, Canada: Appreciate extension granted your wire October 2 on your offer of August 21 and confirmed your letter September 21. Because of overall study of aluminum production picture which will not be completed by October 12 request extension your offer to October 31. A. J. WALSH, General Services Administration Emergency Procurement Service. [Copy of night letter sent by F. W. Bruce] OCTOBER 11, 1950. Mr. A. J. WALSH, Commissioner, Emergency Procurement Service, General Services Administration, Federal Supply Services Building, Washington, D. C. (U. S. A.): Reference your telegram October 6, we are willing to accede to your request extend offer 200,000 tons to October 31, provided, however, that delivery schedule is changed to read: "1951 minimum, 20,000 tons; 1952 minimum, 55,000 tons; balance prior March 31, 1954." In event you are interested in acquiring additional tonnages for subsequent delivery, we would appreciate opportunity discuss possibility our developing large low-cost hydroelectric project on which considerable preliminary work has been done, and which could be brought into operation during 1954, thus enabling us offer minimum 250,000 tons for delivery during 1954 and like quantity during 1955. You will appreciate that projected hydroelectric plant in area remote from present industrial activity would represent important overall addition to North American potential electric energy. ALUMINUM COMPANY OF CANADA, LTD., Mr. S. W. ANDERSON, ALUMINUM COMPANY OF CANADA, LTD., Deputy Defense Production Administrator for Aluminum, Washington, D. C., U. S. A. DEAR MR. ANDERSON: We have given careful study to your request for an offer under which we would undertake to progressively increase our shipments to the United States up to a level of 300,000 tons per year. Subject to approval by our board of directors, and conditional on our being able to make satisfactory arrangements for financing the necessary plant expansion and to obtain such approval, if any, as may be required from the United States Director of Price Stabilization, we submit the following offer: (1) During the 8 years 1952 to 1959, inclusive, we shall offer for sale to United States consumers not less than 1,850,000 tons (of 2,000 pounds each) of aluminum ingots for delivery as follows: 86,000 tons in 1952; 94,000 tons in 1953; 170,000 tons in 1954; and 300,000 tons per year 1955 to 1959, inclusive. (2) In the event our actual sales to United States consumers during each of the years 1955 to 1959, inclusive, should be less than the minimum tonnage to be offered by us, the Government shall purchase from us the tonnage differental, provided (a) that in no event shall the Government be obligated to purchase more than 180,000 tons during any single year, and (b) that the Government's obligation to purchase during any year may be canceled in whole or in part by payment of a 5 cents per pound cancellation charge. (3) Our offering price to United States consumers, under (1) above, and our sales price to the Government, under (2) above, shall not exceed the United States market price prevailing on date of shipment, provided, however, that we shall have the right (a) in case of an increase in United States import duty, to increase our price accordingly, and (b) in case of delivery point f. o. b. destination, to charge the buyer freight in excess of 1 cent per pound; and further provided that should the United States market price be fixed at an uneconomic level by Government decree we shall have the right to increase our price to a level basis calculated to yield us not more than the average per pound profit realized by us on our United States sales during the calendar year 1951-a principle that, in effect, we understand has already been established in existing Government contracts with American aluminum producers. Because of the time factor involved in making financial arrangements and planning construction, our offer, subject to the limitations above described, is open to acceptance within 1 month from date. We have given consideration to your expressed interest in a call upon additional capacity that we might develop in the future. We question the feasibility of attempting at this time to outline the terms of such a call, but we can assure you of our willingness to enter into negotiations with you when the occasion arises, and we believe that a mutually satisfactory arrangement could then be made. Yours very truly, ALUMINUM COMPANY OF CANADA, LTD., ALUMINUM COMPANY OF CANADA, LTD., Mr. S. W. ANDERSON, Deputy Administrator for Aluminum, Washington 25, D. C. DEAR MR. ANDERSON: With reference to our offer of February 19, 1952, extended as of March 19, 1952, for a period of 30 days and which has expired, it is our understanding that you now wish to receive a proposal from us which would reduce both the tonnage of aluminum to be underwritten by the United States Government and the period of the underwriting proposed in our letter of February 19. Subject to approval by our board of directors and conditional on our being able to obtain such authorization, if any, as may be required from the United States Director of Price Stabilization, we submit the following offer: (1) During the 7 years 1952 to 1958, inclusive, we shall offer for sale to the United States consumers not less than 1,110,000 tons (of 2,000 pounds each) of aluminum ingot for delivery as follows: 80,000 tons in 1952: 90,000 tons in 1953; 140,000 tons in 1954; and 200,000 tons per year 1955 to 1958, inclusive. (2) In the event our actual sales to the United States consumers during each of the years 1954 to 1958, inclusive, should be less than the minimum tonnage to be offered by us, the Government shall, to the extent requested by us, purchase the tonnage differential, provided (a) that in no event shall the Government be obligated to purchase more than 50,000 tons during 1954 or more than 100,000 tons during each of the years 1955 to 1958, inclusive, and (b) that the Government's obligation to purchase during any year may be canceled in whole or in part by payment of 5 cents per pound cancellation charges. (3) Our offering price to United States consumers, under (1) above, and our sales price to the Government, under (2) above, shall not exceed the United States market price prevailing on date of shipment, provided however that we shall have the right (a) in case of an increase in United States import duty, to increase our price accordingly, and (b) in case of delivery point f. o. b. destination, to charge the buyer freight in excess of 1 cent per pound; and further provided that should the United States market price be fixed at an uneconomic level by Government decree we shall have the right to increase our price to a basis calculated to yield us not more than the average per pound profit realized by us on our United States sales during the calendar year 1951a principle that, in effect, we understand has already been established in existing Government contracts with American aluminum producers. Our offer, subject to the limitations above described, is open to acceptance within 1 month from date. As in our earlier offer it is understood that we are always prepared to discuss with you the terms and conditions under which you could obtain a call on the output of smelting capacity which might be developed by us in the future. Yours very truly, R. E. POWELL, President. MEMORANDUM REGARDING ALUMINUM LIMITED SALES, INC.'S CERTIFICATE CONTRACTS Certificate contracts provide for the purchase of a fixed number of certificates (in approximately equal monthly amounts.) Each certificate, which is negotiable, represents 100 short tons of aluminum ingot available for immediate shipment. Should a customer not wish delivery of the full amount of metal contracted for, he may take the balance in the form of certificates which are issued to him upon payment of 50 percent of the market value of the metal represented therein. The customer receives interest on this downpayment at 3 percent per annum; the full amount of metal represented by the certificates is produced and stockpiled awaiting the surrender of the certificates. When the customer decides to surrender his certificates he pays up the balance between his downpayment and the average market price of the month preceding the surrender. At the present time, over half of our customers who have certificate contracts are in the small business category (i. e., employ less than 500). Certificate contracts unlike conventional purchase contracts enable the purchaser to defer delivery of metal contracted for while only prepaying 50 percent of the price. In other words, in periods of slack demand they allow him to maintain an inventory position at a minimum cost, whereas in peak periods he gets metal normally due him at that time plus metal delivery of which he had deferred. Alsales, on the other hand, believes certificate contracts have two advantages to the seller. Firstly, they are attractive to customers and potential customers, and secondly, they serve to level out production which, because of the nature of the aluminum business, is desirable from the manufacturer's point of view. Current primary aluminum ingot and pig prices in producing countries 1 Prices are f. o. b. smelter except for (1), (2), (3), (4) where a transportation allowance is included. 2 Changes not shown in tabulation dated May 4, 1955. 3 Averaged. Employment data on nonintegrated customers of Aluminium Limited Sales, Inc., The definition covering this category is, "An employee who is directly engaged in the working or transformation of aluminum from one form to another." (In the case of companies exclusively engaged in aluminum fabrication, total company employment figures have been used.) 2 Of these 46 companies, 18 employ less than 1,000 people. Of this total, 3 customers employ 950,000 people. DOLLIN CORP. Irvington, N. J., May 25, 1955. The HOUSE SMALL BUSINESS SUBCOMMITTEE, House of Representatives, Washington, D. C. GENTLEMEN: The recent testimony of Richard S. Reynolds before the House Small Business Subcommittee has attracted our attention and interest. We are a die-casting manufacturer using aluminum as a principal raw material. We are a small business with about 500 employees. According to our information, the House Small Business Subcommittee is investigating a performance of Reynolds Metal Co. and Kaiser Aluminum & Chemical Sales Co. dealing with firms of our type. We are a customer of both and in these first 6 months of 1955, they have refused to accept orders and consistently fallen down on promises made. We are willing to place the following facts in evidence before your subcommittee. In early 1954, we were solicited by Reynolds as a customer for their A2312 aluminum alloy and A2393 aluminum alloy. We began purchasing from them at that time and in late 1954 and early 1955, our average purchases per month were over 125,000 pounds. Since February 10 of this year, Reynolds has delivered to us a total of 250,000 pounds of aluminum. However, 100,000 pounds of these deliveries were shipped on a conversion deal whereby we payed approximately 4 cents over the base price. We have no deliveries promised now before June 10 so that in the period from February through June 10, a total of 4 months, our average deliveries per month have been about 63,000 pounds and 23,000 pounds of these deliveries have been on "conversion deals" which have not been considered |