Confining ourselves to the mining industry right now would you in your own way tell us what you think is wrong with the industry, why there is a hesitancy on the part of private capital to go into the industry, why it is necessary for Congress to pass special acts to encourage the mining of certain minerals, why it is necessary for the Government to participate in the financing of mines, and in general what would you do to establish a going concern private capital mining industry as we had in the past?

Mr. WORMSER. I think that is a broad order.

Senator MALONE. It is. It is the order that the committee has.

Mr. WORMSER. I think you have to break it down into its component parts. In other words, as I see it, every one of these minerals that are produced in this country has an entirely different situation. The situation in coal is different from what it is in oil, and from natural gas. The situation in lead and zinc is different from what it is in copper. The situation in fertilizer minerals is something else. I do not think you can state categorically that a certain approach will answer the problems that every one of these minerals industries have. That is my particular difficulty in giving you a direct answer to the question which you posed.

Senator MALONE. Would you then state the conditions under which you think the mining industry could be revived?

Mr. WORMSER. I think the best thing for the mining industry and it would apply to every one of them, is a good price for their product. That applies to coal, oil, copper, and lead. When you do not have a good market for your product, the industry becomes depressed.

Senator MALONE. What is preventing the mining industry from getting a good price?

Mr. WORMSER. There again if you have the ordinary law of supply and demand operating, it is generally an overproduction or underconsumption.

Senator MALONE. Let us get this straightened out. Do you have in mind a law of supply and demand for American producers, or are you referring to the world supply and demand?

Mr. WORMSER. I think I see what is going through your mind, Senator. There has been great interference with the law of supply and demand internationally, and I might also say in our own land. Coming to the second part first, our interference was the recent one, the Korean incident that began, and we imposed a ceiling on all mineral and metal products. That is a direct interference with the free market. It is of interest, Senator, to know that during that period, I think you will recall, that lead, zinc, and copper were imported into the United States, and consumers paid very fancy prices, far higher than ceiling prices, for these metals. Our miners were not allowed to export these products, and they were not allowed to get higher than ceiling prices. That is quite a substantial interference with the free-market economy.

Abroad we have had interference along the lines of government buying and selling of metals and minerals, which is certainly not a freemarket economy.

Senator MALONE. You mean the buying and selling of foreign governments.

Mr. WORMSER. Yes; that is right.

Senator MALONE. Would you give us a little more detail for the benefit of the record?

Mr. WORMSER. I have in mind particularly the action of the British Government in buying lead and zinc, having the monopoly of buying and selling lead and zinc. They disposed of lead eventually with disastrous consequences on the market over here.

Senator MALONE. Would you be referring to the purchase of lead and zinc and copper with American taxpayers' money that the chairman referred to a while ago?

Mr. WORMSER. The source of their funds-presumably it all came from a central agency, but whether it was a part given by us or acquired through the ordinary function of the Government, I think is anybody's guess. It depends on how you consider it, Senator.

What I am trying to say is whether that money was deliberately given to a foreign government to use for that purpose

Senator MALONE. I doubt that. What do you think of the procedure by which we gave England $200 million to purchase these metals, and then England turns around and dumps these metals on our domestic market?

Mr. WORMSER. Senator, I think I have expressed my views before. I am convinced that a free-market economy is the best thing for the people of the United States. I do not like to see it disappear. I will also put it internationally as well as nationally.

Senator MALONE. When you talk about a free market internationally, do you mean you would like to see the materials produced through the low-cost labor in Africa, Burma, and China, and all the other countries shipped into this country? Do you believe in a free market to that extent? In other words, it would be in competition with our own market.

Mr. WORMSER. When we talk about a free market

Senator MALONE. What do you mean by a free market?

Mr. WORMSER. I mean when the ordinary operations of the law of supply and demand have full play.

Senator MALONE. Are you talking about the United States or the Western Hemisphere or the world?

Mr. WORMSER. I think your question was directed to the local situation, Senator. I am referring to the local situation.

Senator MALONE. In other words, you are talking about a free market in the United States, and a policy by Congress so that freemarket competition is limited to competition within the United States of America.

Mr. WORMSER. That is correct.

Senator MALONE. How would you do that?

Mr. WORMSER. How would I do what, sir?

Senator MALONE. How would you establish a free market in the United States?

Mr. WORMSER. In a free market you do not do any arranging. Everybody has a right to buy or sell as he prefers.

Senator MALONE. That is true.

Mr. WORMSER. There is no planning in a free market.

Senator MALONE. I am speaking now of the United States of America, and the free market there; is there any interference in that free market from elsewhere?

Mr. WORMSER. When you speak of the international market, yes, there are interferences.

Senator MALONE. How would you deal with the international market in order to maintain free market in the United States?

Mr. WORMSER. Sir, that is beyond the province of the Department of the Interior.

Senator MALONE. I am asking you. You are an expert and you are in the mining business.

Mr. WORMSER. I think about all you can do is to foster the idea of a free-market economy and hope other nations will follow along the same line of thinking, sir.

Senator MALONE. Do you mean a free-market economy? Let us compare the production of copper and zinc in the Western Hemisphere with production in Africa. Do you favor a free market with no regulations of imports at all?

Mr. WORMSER. I think I see what you are driving at.

There you

touch upon the tariff question. I would say there you have to appraise each case on its own merits.

Senator MALONE. You are talking about each metal.

How

Mr. WORMSER. Each metal, precisely, or each mineral, if you will. Senator MALONE. Each mineral, that is probably correct. would you do that? There are other ways besides the tariff.

Mr. WORMSER. I believe, sir, that is your function, the function of Congress.

Senator MALONE. Not at the present time it is not. I have to disagree with you. The 1934 Trade Agreements Act transferred that constitutional responsibility from the legislative branch to the executive branch, and you are in the executive branch. Do you not remember, that Congress has nothing to do with it now at all?

Mr. WORMSER. I believe that is true, sir, under the Reciprocal Trade Agreement Act.

Senator MALONE. They call it the reciprocal trade. The two words do not appear in the act. Some people call it the 1934 Trade Agreements Act. It is an executive responsibility now, is it not?

Mr. WORMSER. That is correct, sir.

Senator MALONE. I agree with you that when you and I memorized the Constitution of the United States, it was a legislative function. Article I, section 8 of the Constitution says, "Congress shall have the power to lay and collect taxes, duties, imposts, and excises," and then says, "to regulate commerce with foreign nations." In other words, the Constitution states that Congress is to regulate foreign trade, and to adjust the duties, imposts, and excises. I am sorry we do not have the 1934 Trade Agreements Act here, but we will make it a part of the record at this point.

(The 1934 Trade Agreements Act is as follows:)

AN ACT To amend the Tariff Act of 1930 (48 Stat. 943)

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Tariff Act of 1930 is amended by adding at the end of title III the following:

"PART III-PROMOTION OF FOREIGN TRADE

"SEC. 350. (a) For the purpose of expanding foreign markets for the products of the United States (as a means of assisting in the present emergency in restoring the American standard of living, in overcoming domestic unemployment

and the present economic depression, in increasing the purchasing power of the American public, and in establishing and maintaining a better relationship among various branches of American agriculture, industry, mining, and commerce) by regulating the admission of foreign goods into the United States in accordance with the characteristics and needs of various branches of American production so that foreign markets will be made available to those branches of American production which require and are capable of developing such outlets by affording corresponding market opportunities for foreign products in the United States, the President, whenever he finds as a fact that any existing duties or other import restrictions of the United States or any foreign country are unduly burdening and restricting the foreign trade of the United States and that the purpose above declared will be promoted by the means hereinafter specified, is authorized from time to time

"(1) To enter into foreign trade agreements with foreign governments or instrumentalities thereof; and

"(2) To proclaim such modifications of existing duties and other import restrictions, or such additional import restrictions, or such continuance, and for such minimum periods, of existing customs or excise treatment of any article covered by foreign trade agreements, as are required or appropriate to carry out any foreign trade agreement that the President has entered into hereunder. No proclamation shall be made increasing or decreasing by more than 50 per centum any existing rate of duty or transferring any article between the dutiable and free lists. The proclaimed duties and other import restrictions shall apply to articles the growth, produce, or manufacture of all foreign countries, whether imported directly, or indirectly: Provided, That the President may suspend the application to articles the growth, produce, or manufacture of any country because of its discriminatory treatment of American commerce or because of other acts or policies which in his opinion tend to defeat the purposes set forth in this section; and the proclaimed duties and other import restrictions shall be in effect from and after such time as is specified in the proclamation. The Presi dent may at any time terminate any such proclamation in whole or in part.

(b) Nothing in this section shall be construed to prevent the application, with respect to rates of duty established under this section pursuant to agree ments with countries other than Cuba, of the provisions of the treaty of commercial reciprocity concluded between the United States and the Republic of Cuba on December 11, 1902, or to preclude giving effect to an exclusive agreement with Cuba concluded under this section, modifying the existing preferential customs treatment of any article the growth, produce, or manufacture of Cuba: Provided, That the duties payable on such an article shall in no case be increased or decreased by more than 50 per centum of the duties now payable thereon.

"(c) As used in this section, the term 'duties and other import restrictions' includes (1) rate and form of import duties and classification of articles, and (2) limitations, prohibitions, charges, and exactions other than duties, imposed on importation or imposed for the regulation of imports."

SEC. 2. (a) Subparagraph (d) of paragraph 369, the last sentence of paragraph 1402, and the provisos to paragraphs 371, 401, 1650, 1687, and 1803 (1) of the Tariff Act of 1930 are repealed. The provisions of sections 336 and 516 (b) of the Tariff Act of 1930 shall not apply to any article with respect to the importation of which into the United States a foreign trade agreement has been concluded pursuant to this Act, or to any provision of any such agreement. The third paragraph of section 311 of the Tariff Act of 1930 shall apply to any agreement concluded pursuant to this Act to the extent only that such agreement assures to the United States a rate of duty on wheat flour produced in the United States which is preferential in respect to the lowest rate of duty imposed by the country with which such agreement has been concluded on like flour produced in any other country; and upon the withdrawal of wheat flour from bonded manufacturing warehouses for exportation to the country with which such agreement has been concluded, there shall be levied, collected, and paid on the imported wheat used, a duty equal to the amount of such assured preference.

(b) Every foreign trade agreement concluded pursuant to this Act shall be subject to termination, upon due notice to the foreign government concerned, at the end of not more than three years from the date on which the agreement comes into force, and, if not then terminated, shall be subject to termination thereafter upon not more than six months' notice.

39888-53-pt. 1--2

(c) The authority of the President to enter into foreign trade agreements under section 1 of this Act shall terminate on the expiration of three years from the date of the enactment of this Act.

SEC. 3. Nothing in this Act shall be construed to give any authority to cancel or reduce, in any manner, any of the indebtedness of any foreign country to the United States.

SEC. 4. Before any foreign trade agreement is concluded with any foreign government or instrumentality thereof under the provisions of this Act, reasonable public notice of the intention to negotiate an agreement with such government or instrumentality shall be given in order that any interested person may have an opportunity to present his views to the President, or to such agency as the President may designate, under such rules and regulations as the President may prescribe; and before concluding such agreement the President shall seek information and advice with respect thereto from the United States Tariff Commission, the Departments of State, Agriculture, and Commerce, and from such other sources as he may deem appropriate.

Senator MALONE. Congress passed the Trade Agreements Act in 1934, and thereby transferred these powers of Congress under section 8 of the Constitution to the Executive. Now I am asking you what you think can be done to create a going concern domestic mining industry, one in which private capital would be invested?

Mr. WORMSER. Again, sir, I must ask you to be a little more specific as to whether you are referring to coal, oil, copper, lead, zinc, mercury, tungsten, or manganese.

Senator MALONE. All the metals.

Mr. WORMSER. I am sorry, sir. It is a question that I cannot answer without having a specific example put before me.

Senator MALONE. Take your own case of lead and zinc. Whether you take mercury, tungsten, or anything else, I do not see why any difference in the policy would be necessary. I would like to know what you think can be done in lead and zinc.

Mr. WORMSER. You mean to attract more capital to the development and exploration of these mines, or do you refer to the going property? Senator MALONE. A going concern domestic mining industry and a going concern mining industry in my book does not mean Government-operated.

Mr. WORMSER. Or mine either, sir.

Senator MALONE. I knew that. So without further ado, tell us what could be done to create a going concern mining industry in the lead and zinc field.

Mr. WORMSER. Our problem, Senator, is to get a higher price for these metals.

Senator MALONE. I know what your problem is. I asked you how you would do it.

Mr. WORMSER. You would have to assume all sorts of powers.

Senator MALONE. You have them. The Executive has the power. You can make contracts. You can change your agreements on tariffs and trade.

Mr. WORMSER. There are lots of things you can do. I tried to make some of them clear in a speech I made in Idaho a few months ago. For example, you can subsidize. You can raise the tariff. You can change your stockpiling objectives. There are three things that can be done. You can impose quotas on imports coming into the United States in excessive quantities. Those are items-not all of them-but some of them would require legislative action.

Senator MALONE. We have had legislative action for 21 years. We extended it again this year under your administration and mine.