ernment does not pay for what it cannot recover and which would tend to encourage the operator to plan his work on an overoptimistic figure.

Furthermore, in the case of the Haile mine schedule it does not go down to low-grade ores below 20 percent, which narrows the program and is less favorable to small operators.

The schedule that we plan to adopt provides for an increasing price based upon grade of ore, in order to encourage the mining of the higher grade ores and partial beneficiation of the lower grade ores before delivery.

This program as now presented assures these or adjusted schedules for a period of 5 years, which eliminates the difficulties experienced during the last war in programs of a limited duration.

That is in brief, Mr. Chairman, the reasoning behind the study of these plans.

In the case of what you have referred to as the Mittendorf plan, we have a very thorough and careful study behind the reserves and the cost of recoverability and the increases in the costs that have taken place since the World War II program and we have taken into consideration the recoverability.

Now the Haile mines' proposal would have to be reduced from those prices by the recoverability factor. Otherwise the man would supply the ore and have to pay back something at a later date.

I think the committee agrees we should not be paying for things we can't actually recover as a part of our supply.

I would like to also point out again and reiterate that the Haile mine schedule does not go below 20 percent. It starts at 20 percent and does not go below that.

Mr. REGAN. Dr. Boyd, have you had discussions now with the miners with respect to this schedule that you have just covered?

Dr. BOYD. No, sir. We have not had that kind of a detailed discussion with the miners. We would plan to get this thing out as quickly as we can and have something to work with and have a meeting with the miners as soon as they have seen and had a chance to work with this schedule. We can adjust it after that.

Mr. REGAN. Mr. Bradley has had an acquaintance with manganese and the properties out there. Is this the schedule of the price that he thinks would bring about the desired result?

Dr. BOYD. Unfortunately Mr. Bradley has been a consultant with us and had to return constantly to San Francisco to attend to his own business and has been here about 3 weeks at a time. Some of these discussions have gone on in his absence and he has not been at that time familiar with all the details of the thing.

I have talked to both Mr. Bradley and Mr. Mittendorf at considerable length on this problem to see which is the proper thing to follow, for me to judge between the two of them and the difficulty I find is we have no background information at all on which to base judgment on this price schedule of the Haile mines. In the other case we have a very carefully worked out background data on the figures involved. Mr. REGAN. What would 25-percent ore bring under that schedule? Dr. BOYD. The Mittendorf schedule?

Mr. REGAN. That you are getting out now, I understand, in the next few days.

Dr. BOYD. That would bring 25 percent. That would be $22.25 per long ton.

Mr. REGAN. $22.25 per long ton?

Dr. BOYD. Yes.

Mr. ENGLE. Put that in terms of units.

Mr. REGAN. The reason, Mr. Engle, I want to know what it will bring in tons. I have had some inquiries from some of the miners who want to know what are the per ton profits on 20 percent or better ore. Mr. ENGLE. We can get both figures.

Dr. BOYD. I had that all worked out and I seem to have left it behind.

Mr. REGAN. On that 25 percent what would the unit price be?

Dr. BOYD. I had that worked out Mr. Chairman and I seem to have misplaced it. It is a little difficult for me to get into this kind of details. I haven't been into the details of this thing.

I think I can calculate it.

Mr. REGAN. That can be worked out at any time.

Dr. BOYD. That would be approximately $1.04 per unit.

Mr. REGAN. About $1.04 per unit?

Dr. BOYD. That is right."

Mr. REGAN. But the miner would get $22.25 per long ton of ore at 25-percent value?

Dr. BOYD. That is right.

Mr. REGAN. Now this schedule to which you refer is one that will be published in the next week or so; is that right?

Dr. BOYD. That is correct. I haven't checked to see if that has been certified to GSA, but we are in pretty general agreement. It is something we can get out right quickly.

Mr. ENGLE. What this statement amounts to is a defense of the Mittendorf proposal isn't it?

Dr. BOYD. Perhaps it is, but after reading the testimony of last Monday I sat down with Mr. Bradley and Mr. Mittendorf to see what the difference of opinion was and I have come to this conclusion myself, that the Mittendorf proposal has been more thoroughly studied and in detail and we can substantiate it better than the program which was offered to us otherwise.

Mr. ENGLE. Are you convinced it is right?

Dr. BOYD. Actually, when you get the recoverability factor, the two schedules don't differ more than 5 percent per unit, when you actually get down and take the recoverability factor into consideration. Mr. ENGLE. What about the limitation on the total amount of high grade?

Dr. BOYD. Total quantity?

Mr. ENGLE. Yes.

Dr. BOYD. That is a question of the indication of the reserves in the area. Now that has been extremely and thoroughly studied by the Bureau and the Geological Survey, not only in their own field studies, but the study of the private reports in the area and the estimate of reserves, not only outlined reserves but inferred reserves, ones that you can geologically infer exist beyond the actual outlining of the ore in the mine, would indicate that the schedule of something over 4,000,000 units is quite an optimistic schedule to reach.

Now we have had the indications from the Haile mines that they have one or two mines that can go way beyond that, to 10 million

units, but we have absolutely no substantiating information for it at all. The company has not given us that information.

Mr. ENGLE. There is one thing about it. If they don't produce it you don't have to pay for it.

TOTAL VALUE OF MINERALS PROGRAMS NOW EXCEEDS AVAILABLE FUNDS

Dr. BOYD. Then we get into this rather desperate problem that I discussed with the committee the last time. We have at the moment approximately $800,000 worth of such contracts before us in the mineral industry across the board. The balance left in the program, the new appropriation from Congress, is about $600 million. Therefore, we have got to reduce these allocations of funds between the various mineral programs to the realizable limit, to give all the incentive we can without taking it away from some other program which is just as vital and that is our difficulty.

We have to hold down the minimum. I would gladly make this thing wide open so people could get all the manganese they can produce and we will pay for it, but unfortunately that is not the way the Congress authorizes our allocation to us. They say we must have an allocation and that is probably right.

DMA CONTENDS FURTHER RESEARCH MORE DESIRABLE THAN

AN EXPANDED MANGANESE PROGRAM

Mr. ENGLE. How many units do we use a year?

Dr. BOYD. To get back to the units, we use at the present rate of about 1.8 million tons of the 48 percent equivalent today. It is coming not quite up to that yet, but we will be up to it by the time the steel industry has expanded.

Mr. ENGLE. Four million units is only a flyspeck, isn't it?

Dr. BOYD. That is right; so is 14.million still only a flyspeck.

Mr. ENGLE. That is what I am talking about. I can't visualize a program more necessary to the security of the Nation than making ourselves self-sufficient in the field of manganese, where we have over 90 percent importation from foreign areas, some of which have a zero factor of availability if we get in an all-out war.

Dr. BOYD. That is right. Our programs are calculated on those zero factors where they apply. This has to be tied into the stockpiling program and to the progress of our other programs in research, and so forth. The program as now established would go beyond any possibility of the industry being able to consume the total quantity, if we go ahead with all these projects and get them all cleaned up in time. It could get away from us.

Mr. ENGLE. You can always put what you don't consume in the stockpile and it won't be wasted.

If someone should walk up to you right this moment and hand you a note saying that the informant was sorry to advise you that we had stepped off into the brink of all-out war with Russia, and from now on we were in the big fight, how would that affect or moderate your attitude on this manganese program?

Dr. BOYD. We would stop all the research we are doing today at the point the research programs are out and authorize the plants to be erected to produce manganese from the slags, from the Artillery

Peak operation, from any other low-grade deposit which would come into the program.

Mr. ENGLE. In other words, you would stop horsing around and start building?

Dr. BOYD. It isn't horsing around, Mr. Engle. I take exception to that statement because what we are trying to do, while we have the opportunity to do it, is develop this thing on as economic a basis as possible. If we ge into total war we will have a tremendous drain on manpower, equipment, and so forth, and the more efficiently we use our materials and manpower, the stronger we will do. If we were forced to go ahead today with the program we now have, we know we can get the job accomplished but we would be wasting manpower and materials in that stage. We should not be forced into putting these projects into operation until the research has gotten to the point where it is certain it can be economically done. We are going ahead with the slag program as has been mentioned before, even to the point of discussing with industry the construction of a first semicommercial scale plant to test out the flow of ores and the use of the material on a large scale.

In the meantime our research is going on, improving the methods. We know now it will work.

DEMING DISTRICT (NEW MEXICO) MANGANESE PROGRAM DEFENDED BY DMA

Mr. ENGLE. If you were a miner out in the Deming area on the basis of this assurance would you put in a plant involving a capital investment which you were responsible for?

Dr. BOYD. You mean open up a mine, put in a mining plant?
Mr. ENGLE. Yes.

Dr. BOYD. I would have to know in each individual case. Remember, there are various mines around there that have different ores and different conditions. I am not enough familiar with that, in the detail, to say yes or no, but from our studies of the area and our calculations of what happened before, I think there were 23 operators in that area before, operating at considerably lower prices than this, although of course the costs having gone up in the meantime, I would think based on my information that I would be willing to go ahead.

Now it is more important to get this schedule out now and give these people a chance to look at it. As soon as we see how it is working we can have an industry meeting and if it is wrong, certainly we will have to improve it.

Mr. ENGLE. Don't you think it is a little unrealistic to announce a program without talking to the miners about it?

Dr. BOYD. Well, we have had many discussions with individuals in the area. Our people have been down there and many of their representatives have been here. We have heard their story individually.

Mr. ENGLE. Have they uniformly told you this is not a practical program?

Dr. BOYD. Not uniformly. I have only had one complaint.
Mr. ENGLE. That was an operator?

Dr. BOYD. That was the operator that has not given us any justification for that program, on what he bases his ore reserves.

Mr. ENGLE. You are not going to authorize a plant under this setup you are going to announce in connection with this schedule?

Dr. BOYD. No; we will get the ore flow established first. If we needed manganese in industry to keep the steel industry going I would. be willing to recommend any kind of a program to put any kind of a plant in there to do that job, but we are not in that position today. Mr. ENGLE. How long does it take?

Dr. BOYD. To build a plant?

Mr. ENGLE. Yes.

Dr. BOYD. Under forced draft those plants can be build in 6 or 8: months.

Mr. ENGLE. Do you have ore reserves enough in the country to keep· the steel industry going?

Dr. BOYD. Yes, sir.

Mr. ENGLE. You would be slicing mighty thin at the end of 6 months,. would you not?

Dr. BOYD. No; it would be well over a year, assuming all imports are cut off. That is hardly likely.

Mr. ENGLE. What you are taking, Dr. Boyd, is a calculated risk, isn't it?

Dr. BOYD. Yes; we are taking a calculated risk with the strength of our economy. These are calculated risks the military are willing to take and we base our judgments on their advice.

PRESENT LIMITATION OF FUNDS NECESSITATES CAUTION IN ALLOCATING: MONEY FOR VARIOUS PROGRAMS

Mr. REGAN. If you will yield there, I want to get back to this money set-up a minute.

You stated something a minute ago about the $800 million you are about to allocate and with $600 million, on the theory that anything. you agreed to buy during this 5-year period you would freeze the funds. for; is that right?

Dr. BOYD. I am sorry

Mr. REGAN. On tungsten you are going to buy $185 million over the period?

Dr. BOYD. Yes.

Mr. REGAN. So you freeze that much of your total budget. Yet, you know that that is going to clear just about as rapidly as possible and get right into industry, so that the Government is not going to have any considerable part of that $185 million tied up actually; is that right?

Dr. BOYD. Well, on the tungsten program we don't believe we will ever have to spend any of that money.

Mr. REGAN. But nevertheless, $185 million is going to be frozen.. Dr. BOYD. Yes, sir.

Mr. REGAN. Just in case?

Dr. BOYD. That supports that particular program.

Mr. REGAN. Do we have a similar set-up on manganese, that you are going to allocate X dollars in case of this El Paso business; you are going to buy 50,000 tons of ore, we will say at about $20 a ton, or you are going to have $1 million frozen in that thing?

Dr. BOYD. That is right.

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