Branch. By the time of my arrival in the latter part of January, a half-dozen major projects were under consideration. Some of these were more clearly feasible than others, some quicker to produce than others, but altogether ap parently capable of producing about 200,000 tons of copper annually by the end of 1954 or 1955, and none requiring overmarket prices. Action on these projects has gone forward as rapidly as the necessary information could be gathered and definite recommendations made.

Other duties of the Copper Branch include the review and the recommendation of action on projects submitted by private persons, or companies, either in the form of letters or formal applications for loans or other types of assistance. Such review starts by getting together all available reports and other information to supplement the information submitted by the applicant. Members of the Branch and the Copper Commodity Committee study the application and all available pertinent data. Where advisable, a Defense Minerals Administration field team may be requested to make an examination of the project and report back to Washington, after which the Copper Branch makes its final recommendation on the application.

The following tabulation shows the status of projects submitted on a somewhat formal basis to the Copper Branch:

Docketed___.

Denied

Processing.

Awaiting exploration program_

Recommended__.

As of Mar.

15, 1951

104

20

49

22

13

About a hundred more or less formal applications for assistance in a variety of small to medium-sized copper projects have been received and docketed. These have ranged in kind from prospecting and exploration to the smelting of copper; requests have been made for loans, contracts, tax relief (accelerated amortization), or other forms of aid. Exploration projects have been set aside pending approval of an exploration program. Production projects that appeared to have considerable merit have been referred to the field for investigation, and a number of reports back from the field have led to either denial of the requested assistance, or to recommendations for favorable action. No copper projects involving Government loans have as yet been approved, because none so far investigated have proved feasible. Tax relief and purchase contracts appear to meet the needs of the large projects. Some projects in the hands of the field investigators may prove worthy of consideration for loans. Many applicants have failed to understand that they are expected to furnish evidence that their projects are based on sound engineering estimates and can operate successfully at prevailing costs and market price. The endeavor to obtain such supporting data has required much correspondence.

The requirements for military and civilian purposes in the next few years have not been determined. Defense Minerals Administration, therefore, has proceeded on the considered belief that an increase in supply on the order of 300,000 tons annually would be required. Such an increase can be expected only if all major projects are carried through successfully and nothing happens to interfere with established production. It cannot come about in less than 3 to 5 years. The small to medium projects cannot affect the over-all result greatly, but are being given the same consideration as the large ones, if they can meet the same requirement—that is, successful operation at the market price. A premium price for copper is not believed to be necessary at this time to encourage increased production.

STATEMENT OF JAMES A. BARR, CHIEF, INDUSTRIAL MINERALS BRANCH, DEFENSE MINERALS ADMINISTRATION

RÉSUMÉ OF EXPERIENCE

1907: Graduate, Michigan College of Mines, B.S., E.M.; instructor at same. 1910: Engineer, Charleston, S. C., Mining & Manufacturing Co.; engineer, International Agricultural Corp.

1922: Chief engineer, International Minerals & Chemical Corp. (same as IAC): inventor of metallurgical processes.

1927: Designed and operated first phosphate flotation plant, Florida, now the basis of 90 percent of Florida phosphate production.

1940: Designer and builder of potash mine and refinery responsible for 25 percent of domestic production; inventor of production of sulfate of potash, a new domestic industry.

1942: In charge of design and construction of magnesium metal plant Plancor 265; in charge of design of numerous phosphate and fertilizer plants, and organic chemical plant and many others.

1949 to date: Retired as chief engineer, International Minerals & Chemical Corp.; consulting engineer; author of numerous scientific articles on sulfuric acid, economics, etc.

February 1951: Defense Minerals Administration.

Functions.-As Chief of the Industrial Minerals Branch:

Pass on applications for loans and other forms of aid within DMA under Defense Act of 1950 and delegation 5.

Assist applicants.

Spread information.

Promote production of industrial minerals, necessary for the defense effort and common welfare, also necessary for defense morale.

Set up and supervise an organization of specialists necessary to implement the program.

The activities embrace all means within the act and delegation 5 to assist in helping small business to increase production of scarce materials (MO 1), and other industrial minerals essential to the defense effort, and offer the same service to industry in general.

Type of assistance available from Defense Minerals Administration is outlined in the act and has been very thoroughly covered by Mr. Feiss. However, the members of this Branch are familiar with the assistance offered since we answer many inquiries on the subject and are very meticulous in explaining each type of assistance, especially to the small-business man who is more in need of such help than a well-staffed organization, but all inquiries are impartially handled.

For example, we often get a letter laboriously written in longhand covering many subjects, all of which we endeavor to answer to the best of our ability, keeping in mind that it is important to encourage defense morale.

The qualifications for applicants are: (1) Is it necessary for defense effort?

First we consult agencies handling requirements. This has been difficult and replies are often overlapping.

In addition, we check necessities by conferring with Government specialists in the particular commodity and also in special cases we consult with experts from industry and DMA staff consultants available on request. For example, we have available Dr. Gillson, international authority on such commodities as barite, fluorspar, and sulfur.

(2) It is necessary that the applicant have control or own necessary tonnage of ore reserves to justify the size of the project.

If necessary the question is referred to a DMA field team, but before doing this we consult with the Geological Survey where the required information is very often available.

Again, we may ask applicant to furnish additional data and suggest further exploration and, if necessary, point out assistance available.

(3) Applicant must have necessary skill or experience.

We carefully check each application for the background. Very often members of this Branch or of other bureaus and agencies can assist in expediting the application_because of their personal knowledge of the applicant or the area involved. Few applications have to be referred to field teams for this type of knowledge or assistance.

The principals often visit this office for information and assistance in having their application processed.

The background and standing of the applicant is similarly checked. This is quite important in order that we may render a fair, unbiased decision, based on first-hand information rather than rumors.

The necessary backing for loans is not determined by this Branch, but any information we have is supplied to the proper branch.

Applications for this Branch, are received from the executive secretary's office of DMA and when completed as to examination are returned for forwarding through the same office.

The Industrial Minerals Branch has proposed:

(1) Establishment of Government purchasing depots for scarce and strategic minerals in supply below requirements such as mica.

More specifically, we recommend a depot for Spruce Pine, N. C., and similar locations to stimulate domestic mica production.

(2) Consideration of assistance for research and development of such longrange projects of serious import such as sulfur from pyrites, from steel-plant wastes, from gypsum and the like. Also in this category are synthetic quartz and domestic graphite production. The latter is a controversial subject, but we think it can and should be solved.

Function of Industrial Minerals Branch is described substantially above, but also embraces many phases outside of applications such as

(1) Consulting service: For instance, in examining an application involving use of CO from a lime kiln we are able to advise applicant on precautions necessary and design points necessary for successful operation. Likewise, we advised several companies contemplating use of pyrite instead of sulfur in manufacture of sulfuric acid as to requirements of roasting, gas scrubbing, and economics in general and also called attention to possibility of a valuable byproduct in smeltered iron calcine.

We advised other branches on benefication of such commodities as kyanite, graphite, and magnesium, etc., from personal experience. This assists in protecting domestic interests and furthering the defense effort.

A similar problem arose recently when a commercial attaché from a European country visited our office and requested certain information. Our personal knowledge of the particular section and the economies of costs, design of power plants and transmission systems enabled us to pass the delegation on to the next step and we hope helping in international good will.

We examine an applicant's process and often recommend changes of metallurgy and beneficiation which would save the applicant financial losses and protect the Government interests.

It is often necessary to protect the applicant from his own misguided enthusiasm by putting him on the right track without leaving a bad impression. The difficulties of the mining industry, aside from the financial and financial security, is in obtaining necessary material. This Branch feeds information to the Supply Division for handling this phase.

We do not merely offer assistance in filling out forms but guide the applicant in supplying needed auxiliary information and, if necessary, enlist the aid of other Government departments.

The final step is determination of defense necessity and the protection of the taxpayers' interest; i. e., is the project justified?

There are five groups of commodities under this Branch composed of approximately 125 different minerals which range from aluminite to zirconium commonly known as nonmetallics or industrial minerals.

There are many shortages at present but these are being corrected or remedied without any critical blockade of the defense effort. We will not itemize, but the following are some of the critical points, because of foreign origin, or of waning domestic reserves or low production; i. e.; Steatite talc, sulfur, asbestos, industrial diamonds, graphite, mullite (artificial), mica, quartz (radio grade), corundum, monazite and other rare earth minerals.

There are others but they are not in the industrial-minerals allocation. This Branch does not have control, as a function, but is only concerned with promoting necessary production.

As in any organization of the scope embracing the nonmetallics industry of the United States, it is a difficult task to set up a branch handling 125 or more items to expedite smooth operating assembly-line type of functioning but the progress has been good in the light of unusual starting difficulties.

We have been delayed by program preparation because of somewhat conflicting outside organization scope. Office space and facilities have been extremely difficult to obtain. Experienced help-i. e., engineers-are very scarce but the situation is clearing and progress is accelerating.

We have received all-out assistance from the various branches of the Bureau of Mines and the Geological Survey as well as many others.

STATEMENT OF JAMES L. HEAD, CHIEF, LIGHT METALS BRANCH, DEFENSE MINERALS ADMINISTRATION

This Branch is established to carry out the functions of the Supply Division, DMA, as they relate to the production goals of aluminum, magnesium, and titanium to meet forecast requirements.

It acts in cooperation with the Administrator of DMA and Director of the Division in programing and planning the production of these metals from established sources and in determination of the extent to which new facilities should be established. Toward this end it examines and studies applications for certificates of necessity and loans to producers and recommends, in cooperation with the Chief Economist's office, the extent to which accelerated amortization shall be granted such facilities. As of April 1, 43 such applications have been received, 28 have been recommended for tax amortization, 1 has been denied, and 14 are in the process of investigation and study.

The objective of this Branch is so to program and facilitate the supply of aluminum, magnesium, and titanium as to meet the forecast requirements of military and civilian uses and the establishment of the national stockpile.

The principal difficulty is adequate supply of power over normal requirements of the aluminum industry to permit expanded production. A possible solution or expedient is to have the Government purchase its required aluminum at the normal price and in addition stands the expense of high-cost power being created to meet the emergency. This has already been arranged in the case of two old aluminum plants which are being reactivated at Baden, N. C., and Massena, N. Y.

The only restriction on production of light metals for which other Government agencies are accountable is aluminum power supply. This comes about through the requirements of the Atomic Energy Commission for power from TVA, which has resulted in the latter agency withdrawing from Reynolds Metal Corp. and Aluminum Co. of America a portion of their normal power supply, threatening to curtail their production by 1,000 and 2,500 tons per month, respectively, of aluminum destined for the national stockpile. Here again the remedy is to secure high-cost emergency power from steam-generated facilities tied in with the TVA system, with the Government paying the excess cost. The modus operandi is being studied by General Services Administration.

Based on NPA's estimate of aluminum requirements for the Military Establishment during the next 5 years and estimating civilian consumption on the basis of 50 percent of pre-Korean levels under the present restrictive controls placed upon its use by NPA, our plans contemplate that production from present aluminum facilities, the two reactivated old plants and the new plants being established will take care of these requirements as well as meeting the goals set for the national stockpile by 1953. The only shortage is in the year 1951, while production from new facilities is lacking. Production from these new facilities is expected to commence in the latter half of 1951 and to reach full production in the latter half of 1953.

In the case of magnesium, requirement figures are not yet complete. However, arrangements have been made to reactivate six of the old Government plants, to be operated on management contracts by individual firms. A seventh plant is also available for reactivation. The anticipated production from these plants together with expanded production from the Freeport, Tex., plant of Dow Chemical Co. is expected to take care of all shortages that may become apparent upon completion of requirement figures.

Civilian requirements of titanium are very small at present due to the high price of the metal and its limited supply. Virtually all titanium now being produced is being used for military purposes and is produced by two private companies whose output is exceedingly small. Arrangements are being made with each of these companies to multiply their production by expansion of their plants as soon as possible to meet the military requirements and to provide for anticipated civilian demand.

STATEMENT OF PAUL W. MCGANN, CHIEF ECONOMIST, DEFENSE MINERALS ADMINISTRATION

BIBLIOGRAPHICAL NOTE

Previously Assistant Chief Economist of the Bureau of Mines. Before the autumn of 1950, was employed by Massachusetts Institute of Technology upon

operations analysis work for the Chief of Naval Operations. Lectured in the School of Business Administration, University of California, at Berkeley, 194749. Acting chairman of statistics department of American University in 1947. Chief of Retail Building Materials Price Section, OPA, in 1946. Naval weather officer, 1943-45. Acting head of the Research Section in the Machinery Price Branch of OPA, 1942.

Research assistant of the National Bureau of Economic Research in 1942 working on industrial pricing practices. 1941 university fellow at the University of Chicago. 1938-40 was teaching assistant in the University of Minnesota School of Business Administration. Graduated as AB from Brown University 1938. Member of Phi Beta Kappa, American Economic Association, Institute of Mathematical Statistics, and Econometric Society.

Question a. The validity of over-all supply and requirements estimates: The validity of over-all supply and requirements estimates may be affected by two sources of error: The assumptions and definitions concerning what to estimate, and the accuracy of judgments of facts. Errors arising from incorrect assumptions and definitions are especially difficult to analyze. For example, it is hard to resolve the differences of opinion concerning the four categories of requirements: Stockpile, gross export, civilian, and military. Even if there were no question of definition or assumption, some error would inevitably creep in because of the obvious impossibility of knowing all the information accurately. DMA has the responsibility of reducing errors to reasonable proportions at reasonable cost and also to keep accessible records of how large the estimated errors are. DMA is proceeding along these lines.

In general DMA is not the agency primarily responsible for requirements. estimation, but it has been forced to form its own opinions in this area in order to judge how fallible are the requirements data it receives from other agencies. because other agencies do not universally assess the reliability of their requirements estimates. DMA may retain doubts concerning the requirements estimates. it must abide by, but it must accept them as limitations upon its programing for expanded production. This agency is constantly pressing for improvements in requirements estimates, and is doing its best to anticipate such changes in its planning.

The balance sheets which show how supply and requirements match over the next few years are classified information and can be discussed in detail only in executive session, but general remarks can be made without danger of breaching security to show how the development of programs affects their validity. The present supply and requirements estimates used by the Defense Minerals Administration are considered to be the best that could be obtained under the limitations with which the agency has had to work. These estimates. are constantly being revised and improved, but for critically scarce minerals it can be stated that the supply estimates and requirements data are reasonably good.

Stockpile requirements for the immediate future are clearly given to DMA and other defense agencies, but for later years these requirements are likely to change and some effort must be made to forecast such changes. Exports are generally a small item for minerals and their requirements status is rather similar to stockpiling—they are determined for the immediate future by other agencies, but it is necessary for DMA to guess what those agencies will demand in later years.

Civilian requirements are estimated under the supervision of DPA and are generally assumed to encompass needs for increased inventories and for normal growth of postwar consumption. Under total war, of course, civilian consumption would be drastically cut. Special problems arise in connection with estimating some mineral requirements because of temporary related shortages and technological changes.

Military requirements are handed down to DMA by the Department of Defense through DPA, and major problems of assumption and definition exist. It is the policy of DPA that the appropriate military requirements to use for policies of stimulating production expansion, allocations, and many other emergency actions are the military requirements keyed to the present military budget supporting 3,500,000 men in uniform. This is not the military requirements for total war with 15,000,000 or more men in the services, but it is a fair guess as to what military effort will be considered appropriate by Congress and the administration for a few years. The stockpile is designed to get us over any hump involved In rising from requirements based on these assumptions and the requirements of total war. Moreover, for some minerals the total of all-out war requirements 82354-52

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