Mr. MATTHIESSEN. That I cannot answer at the moment. Of course, there would be no allocations. There is a big difference between an allocation and a preference-rating certificate. Mr. TERRY. You would not give a preference-rating certificate unless in that certificate it showed for what it was intended? Mr. MATTHIESSEN. No. Mr. TERRY. And it would show whether it was for a nondefense item or a defense item, of course? Mr. MATTHIESSEN. Yes, sir. Mr. TERRY. Who determines the policy and says whether this certificate or this request is for a defense item or a nondefense item? Mr. MATTHIESSEN. That is set forth in the application, and they tell exactly what it is for. Mr. TERRY. Does that go to Mr. Krug? Mr. MATTHIESSEN. Yes; it goes to Mr. Krug and the copper branch, both. Mr. TERRY. Does that go to you? Mr. MATTHIESSEN. No, sir. Mr. TERRY. You have nothing to do with that? Mr. MATTHIESSEN. No, sir. Mr. LEAVY. I have just one more question. What do you do when you have a conflict of interests in granting priority? For instance, I am going to give you just an imaginary example: When the R. E. A. has an opportunity to serve a defense agency, a cantonment, an air base, or something of that kind, and a private utility company also has an opportunity to serve them, assuming that the situation were equal on both sides and they both make an application for copper and other materials so that they can build, what do you do then? Mr. MATTHIESSEN. The power branch would have to answer that, Mr. Congressman, because that is where the decision would be first made, and it would be a recommendation. We have no power in the Material Division to issue ratings. That is purely a Priorities Division function. Mr. LEAVY. Have there ever been instances of that kind brought to your attention, Mr. Matthiessen? Mr. MATTHIESSEN. No; I have never seen any. There may be some that I do not know of, but I have never seen a case like that. Mr. LEAVY. That is all. PRIORITY RATINGS FOR FARMERS BASED ON FOOD PRODUCTION Mr. TERRY. Do you know whether any consideration is given in establishing priorities for agricultural lines for cooperatives, where the farmers for whose benefits the lines are to be erected are taking part in the production of food, the program which the Government and the Department of Agriculture have asked them to engage in? Does that give them any priority, do you know? Mr. MATTHIESSEN. That would give them a "B" rating. Mr. TERRY. A "B" rating? Mr. MATTHIESSEN. Yes, sir; according to the pattern that has been set up. Mr. TERRY. Do you know of any instances where certificates or priorities have been given to cooperatives, based on the proposition that they are engaged in the defense program by the increased production of food; do you know of any instance of that kind? Mr. MATTHIESSEN. No; I do not know of any instance on that basis unless it were to complete a project that needed just a little copper to bring it into production. Mr. TERRY. And you said awhile ago as to those that are under construction that you are going to see that they are completed? Mr. MATTHIESSEN. No, sir; we are working on that plan. If I said that, I made a misstatement, because we are working on a plan that we hope will bring about some arrangement that will furnish the necessary copper to complete them. That has not yet been sanctioned. Mr. TERRY. That is just a question of your hope, that something of that sort can be worked out? Mr. MATTHIESSEN. Yes, sir; that is definitely right. Mr. TERRY. And at the present time there is nothing to show that cooperatives have been given these things to complete those now under construction? Mr. MATTHIESSEN. No, sir. Mr. TERRY. You say nothing has been done up to the present time? Mr. MATTHIESSEN. No; nothing has been done up to the present time, except in isolated cases. Mr. TERRY. And you hope something will be worked out? Mr. MATTHIESSEN. Yes; we hope something will be worked out, and we are working on that. STEPS TO INCREASE IMPORTATIONS OF COPPER Mr. TERRY. Do you know whether or not any steps have been taken to increase the imports of copper to this country from South America? Mr. MATTHIESSEN. Yes; but we are limited there by the available shipping bottoms. Mr. TERRY. But there is an increase in foreign production delivered to this country? Mr. MATTHIESSEN. Delivered to this country? Mr. TERRY. Yes. Mr. MATTHIESSEN. Yes, because it was not many months ago that there was no copper, practically, coming in for domestic consumption. It was coming in for refining. Mr. TERRY. For what? Mr. MATTHIESSEN. For refining. Mr. LEAVY. How does that copper come in, as concentrate? Mr. MATTHIESSEN. Some of it comes in in the form of blister copper and some comes in in the form of concentrate. Mr. COLLINS. Mr. Matthiessen, if we are able to produce and secure a certain amount of copper, from the figures you have given, and it is evident that the defense needs are going to be greater and greater as time goes on, that means ultimately that the civilian population will be denied, as I see it, the uses of copper. Now, have you thought about ways that we could bring about the increased production of copper in this country? Mr. MATTHIESSEN. Yes; I have, most assuredly. WAYS TO SECURE INCREASED PRODUCTION OF COPPER Mr. COLLINS. I am going to ask you at this time to set out in the record the various ways in which we can bring about an increased production of copper. You do not have to answer that question now, but you can think over it along with your associates and insert it in the record at this point. Mr. MATTHIESSEN. Yes, sir. (The statement referred to is as follows:) OFFICE OF PRODUCTION MANAGEMENT, Memorandum to: Mr. C. H. Matthiessen, Jr. From: Frank A. Ayer. Subject: Methods of increasing copper production. The following methods of increasing copper production have been set up by the copper-zinc branch of the Materials Division of the Office of Production Management. 1. Representatives of the production department have visited practically all of the executives of the large copper properties and many of the smaller producers in their offices and have also requested them to come to Washington. We have made every effort to get all of them to increase copper production to the limit of their ability. 2. The same requests have been made of all large copper producers operating outside of the United States where production can be shipped to the United States. This applies especially to the large copper mines in Chile, Peru, Northern Rhodesia, and the Belgian Congo. Any added production gotten in Northern Rhodesia decreases the amount of copper the United States has to deliver to the British under Lend-Lease. 3. Copper producers have also been asked to increase the capacities of their plants wherever more ore can be mined than is now being treated. In some cases this is being done by the mine's capital and in other cases Government financial aid has been extended. The policy has been to confine these extensions to plants which can be brought into production in a reasonably short time so that the copper may be available in this emergency. 4. Price subsidies to high-cost producers have been granted to enable different properties which could not operate on present 12-cent price to come into production. This program has been approached systematically, confining the subsidies, first, to aid of 1-cent per pound which amount of subsidy has been gradually increased. This policy has been adopted with a view to bringing in the maximum tonnage with minimum subsidy before embarking upon higher prices. 5. Attempt to inaugurate a minimum of 48 hours' work per week in copper mines. One of the retardents to copper production has been the 40-hour or 5-day week. In one of the largest copper mines we could obtain 20 percent more production right now, which would amount to 20,000 to 24,000 tons more copper per year, if the union in that district would approve working 6 days instead of 5 days per week. They fine their members $10 per day for each day worked over 5 days a week, even though their members would receive overtime on the sixth day if they would work the sixth day. In carrying out the above program our energies have been directed, first, toward the very large copper producers where there was the greatest possibility of obtaining increased production, and secondly, the smaller producers. But at the present time we do not consider any increase in copper production too small for our consideration. As a result of the above program, increases in production amounting to over 250,000 tons per year have, to date, been pledged by different copper-mining companies. FRANK A. AYER, Assistant Chief, Copper-Zinc Branch. OFFICE OF PRODUCTION MANAGEMENT, Memorandum to: Mr. C. H. Matthiessen, Jr. From: John A. Church. Subject: Methods of increasing copper production. Every known deposit of copper in the United States, capable of producing material tonnages of copper at the present copper price, is being utilized, and production is being increased as rapidly as physical and other obstacles can be overcome. The principal physical difficulty is the large amount of new equipment necessary, the difficulty in obtaining essential mechanical parts, and time required for installation. In one instance lack of additional water supply is an obstable. In another, there are difficulties in obtaining an adequate supply of skilled mining labor, but we are informed that these are being largely overcome. A large part of our economic copper reserves in the ground are in the form of extensive deposits of very low grade, but lying near enough to the surface to be worked by power shovels, instead of by more costly underground methods. To produce 1,000 tons of copper per day from certain typical deposits of this character requires the mining and concentration of about 80,000 tons per day The mechanical equipment necessary to excavate, transport and treat even a fraction of this tonnage is enormous, and the manufacture and installation of such equipment requires many months, in some instances as much as 2 or 3 years. Steps have been taken to expand production from these deposits where expansion is physically possible, but for the reasons stated, results in terms of refined metal cannot usually be expected for months to come. To increase production from deposits worked by underground mining methods often requires much preparatory work in the mine, as well as additional equipment. All of these considerations illustrate the fact that a material increase in our national copper output calls for an orderly program of equipment over a long period. For mines which require copper prices 2, 3 or even 4 cents per pound above market in order to operate economically, a special procedure of subsidy has been set up. This procedure is available, not only for new properties, but to maintain operation at existing mines, where on account of advancing depth or other causes, costs have overtaken receipts. Subsidies have already been applied, and the procedure will doubtless be further extended. PRICE INCREASES FOR LOW-GRADE COPPER PRODUCED Mr. COLLINS. Now, it seems to me, while I am not in favor of price increases, it is going to be necessary that we secure price increases for at least the low-grade copper that is produced. In other words, a man or a concern is not going to go into that field of business and mine lowgrade copper and be required to sell it at the prevailing price of copper, because if he does he would not last very long financially. If that lowgrade copper is mined and made usable for the trade or for defense purposes, they are going to have to secure more for that copper, as I see it, than is being paid now. I would like to have you survey that particular field when you give your answer. LOWERING OF TARIFF ON COPPER Now, it may be that we could get an increase in the shipment of copper from abroad by lowering the tariff rates on copper, which would enable them to mine and bring into existence copper that is unprofitable now, but which would be profitable if they could bring it into this country without these tariff rates. Personally, I think we ought to increase our production of copper in this country, not only for defense needs but also in order to supply private concerns in this country and private business and private individuals, and I would like to have you people down at O. P. M., with the facilities that you have at your command, to give this committee information along those lines. Mr. MATTHIESSEN. Yes, sir. Mr. COLLINS. Probably Congress can help you to solve these problems. Mr. MATTHIESSEN. Yes, sir; we will be very glad to prepare such a statement. (The statement referred to is as follows:) A large part of our economic copper reserves in the ground are in the form of extensive deposits of very low grade, but lying near enough to the surface to be worked by power shovels, instead of by more costly underground methods. To produce 1,000 tons of copper per day from certain typical deposits of this character requires the mining and concentration of about 80,000 tons per day of ore. The mechanical equipment necessary to excavate, transport, and treat even a fraction of this tonnage is enormous, and the manufacture and installation of such equipment require many months, in some instances as much as 2 or 3 years. Steps have been taken to expand production from these deposits where expansion is physically possible, but for the reasons stated, results in terms of refined metal cannot usually be expected for months to come. Price subsidies to high-cost producers have been granted to enable different properties which could not operate on present 12-cent price to come into production. This program has been approached systematically, confining the subsidies, first, to aid of 1 cent per pound, which amount of subsidy has been gradually increased. This policy has been adopted with a view to bringing in the maximum tonnage with minimum subsidy before embarking upon higher prices. The Metals Reserve Company is engaged in buying the entire available foreign supply of refined copper, on which they have secured the payment of duty from a special fund. As long as this arrangement continues, the enactment of the subject bills would not expedite the entry or availability of the copper involved. There is under normal conditions an additional importation of foreign copper in crude forms, such as the concentrates and "blister," the latter being metallic copper awaiting refining. I understand that lack of shipping space has interfered to some extent with importation of these materials from South America, but their import has not been affected by the import tax, since there is ample export on lend-lease requirements and purchase by the P. B. C. to absorb all of the tonnage, involved on a drawback basis. On the same basis, we are enabled to import copper from Mexico and British Columbia without difficulty. In summary, the present 4-cent import tax on copper is having no adverse effect on importation. DOLLAR-A-YEAR MEN Mr. TARVER. Mr. Matthiessen, you have an assistant named Hammond, have you not? Mr. MATTHIESSEN. Yes, sir. Mr. TARVER. What is his function? Mr. MATTHIESSEN. He is consultant in charge of copper allocations. Mr. TARVER. Is he connected with a copper company? Mr. MATTHIESSEN. I believe he is, sir. Mr. TARVER. What is his company? Mr. MATTHIESSEN. The Kennicott Wire & Copper Co. Mr. TARVER. That is one of the three largest producers in the United States? Mr. MATTHIESSEN. The parent company is the producer; this is a branch of it. Mr. TARVER. Well, he belongs to that organization, which, while it has various corporate links, is one of the three who produce 80 percent of the copper produced in this country? Mr. MATTHIESSEN. Yes, sir; that is correct, sir. Mr. TARVER. What salary does he draw? Mr. MATTHIESSEN. I cannot answer that. |