The technological advance to which I refer is the Prolerizing process for fragmentizing and shredding old automobiles, which has been developed by Proler Steel Corporation of Houston, Texas.

The Prolerizing process first became operational in 1958 and its use has expanded rapidly in recent years. At present there are four Prolerized scrap plants in operation in Houston. Kansas City. Los Angeles and Chicago. These four plants alone have the aggregate capacity for consuming about 1,000,000 gross tons of raw scrap per year on a single shift basis. A fifth plant is presently under construction near Boston, and additional plants are presently being planned for St. Louis, Jersey City and Philadelphia. Hugo Neu Corporation is associated with Proler Steel Corporation in regard to a number of these plants. These Prolerizing plants have successfully utilized a revolutionary ney method of processing old automobiles, which makes it possible, on an economie and commercially feasible basis, to take the impurities out of the scrap without any resort to burning the auto bodies. As a result these new plants have eliminated entirely the obnoxious air pollution by smoke and fumes which are ordinarily generated by open air burning of auto bodies in the nation's wrecking yards and scrap yards.

In the Proler Process, old automobiles and other forms of light iron scrap, as well as refrigerators and washing machines, are fed, through a conveyor, into a hammer mill that fragmentizes the scrap into millions of small pieces. In a series of operations these pieces are cleaned and individually compacted into fist-sized pieces which are then shipped to steel mills in this country and abroad. As part of the process, the various non-ferrous metals are salvaged from the dirt, and the dirt itself can then be used as fill or otherwise disposed of. This means that hundreds of thousands of tons of rubber, of plastic, or tar coating. and other impurities contained in the car bodies, will be safely removed in the ferm of dirt, instead of being vaporized into the air by burning.

In short, the use of the Proler Process means the end of the pollution of our cities and our air which have been formerly associated with wrecking yards and seran yards. It makes this possible on a comerial basis, through private entrprise, and without any need for government subsidies.

These new Prolerizing plants should also eliminate, in time, the unsightly stockpiles of rusting automobile bodies which have disfigured our landscape. In those areas where the Prolerizing plants are now operating, they have already speceeded to a large extent in reducing accumulated stockpiles. The improvement in serap quality which results from these Prolerizing plants makes it possible for them, on an economic basis, to reach out as far as 300 or even 660 miles for supplies of old car bodies. If the Interstate Commerce Commission can be prevailed on to reduce freight rates for mashed automobile bodies, the long distance impact of these plants in reducing stockpiles can be made even greater.

To sum up:

1. There is no longer any economic reason for open-air burning of old automobiles, or for accumulating unsightly stockpiles of auto bodies.

2. There is no reason for government subsidies of the scrap industry. Private enterprise has provided a commercially feasible alternative.

3. An improvement in freight rates would be of assistance for areas remote from these new Prolerizing plants.

Thank you.

Senator MUSKIE. Our next witness is Mr. Benjamin Schwartz, executive consultant of the National Federation of Independent Scrap Yard Dealers, Inc.

Is Mr. Schwartz here?

Mr. SCHWARTZ. Yes, sir.

STATEMENT

OF BENJAMIN SCHWARTZ, EXECUTIVE CONSULTANT, NATIONAL FEDERATION OF INDEPENDENT SCRAP YARD DEALERS, INC.

Mr. SCHWARTZ. With your permission, Mr. Chairman, I will not read my statement but will let it stand for the record with 1 or 2 minutes of observations.

Senator MUSKIE. We would appreciate that, Mr. Schwartz. Mr. SCHWARTZ. The National Federation of Independent Serap Yard Dealers, in whose behalf I am making an appearance, has a clean-cut position to make. We are against S. 3400 in principle and in practice. In principle, because we believe the powers granted to the President in the bill are unnecessary and unwarranted, in view of the fact that it is our conviction that, given the proper marketing incentives, the capacity, the equipment, and the organization of the serap steel industry is prepared to accept all available old automobiles and process them, without the creation of new facilities, without any special privileges and without any subsidies, direct or indirect. In practice, we oppose S. 3400 because it contains a package-you will forgive the expression-of dynamite which has in it the potential of Equidating an industry that is one of the last outposts of individual initiative in this country.

It creates the opportunity of tampering with the law of supply and demand and the movement of the strategic raw material. li creats the potential of a new bureaucracy having something to say about a free enterprise industry that has kept its integrity thus far.

And it has in it the implication of stockpiling which we are not asking for, under any circumstances.

There has been in the last few years-and this is what we are concerned about, not technology, not research or any of the other facetsthere has been in the last few years a concentration of economic power in the scrap industry that has threatened the survival of the small and independent scrap dealer who is a very essential part of the collection and processing service of the industry.

The Senate Small Business Committee made a study and issued a report on the subject of monopoly and teclmological problems of the scrap industry in 1959, after extensive hearings, and termed the situation "a real threat to the economy." They reade very definite recommendations which are contained in my statement.

Now our concern is that no act of Government--whether under the powers granted under S. 3400, whether through grants, tax incentives, excise taxes or subsidies in any form-that no act of Government should make the Government a party to the intensification of monopoly in our industry, and should not help to speed up the disintegration of the vital collection and processing service.

Any constructive suggestions that have been made, in cur opinion, should be within the scope of an interdepartmental committee at a Cabinet level, where "the public interest" is involved, in terms of the conservation of natural resources, national defense, and furthering the interests of the small businessman in our national economy.

That top-level committee-including Interior, Commerce, Justice, Council of Economic Advisers, and the Budget Bureau--would have the power to bring about the necessary balancing of the situation, without any additional legislation.

It is within the educational and pressure scope at this high level, to bring about a policy of "balanced metallics," balancing the annual harvest of steel scrap-including the old automobile-with imported iron ore, and not permitting the scrap iron industry to be put in a position by the steel industry, on a "standby" basis.

Under these circumstances I will let the printed statement stand for elaboration. I appreciate the privilege of making our position clear

and distinct that in principle and in practice, we do not think it is necessary to create these additional powers by legislation.

Senator MUSKIE. Thank you very much, Mr. Schwartz. The committee will study your prepared statement.

I think you have supplemented it very clearly.

Mr. SCHWARTZ. Thank you.

(The full statement referred to follows:)

STATEMENT BY BENJAMIN SCHWARTZ, EXECUTIVE CONSULTANT OF NATIONAL FEDERATION OF INDEPENDENT SCRAP YARD DEALERS, INC.

We respectfully submit that S. 3400, in its application to the crap steel industry, is unwarranted and unnecessary, because, given the proper marketing conditions, the capacity, equipment and experience exist within the modern structure of the scrap industry, to handle all the old autos made available to it, without the creation of new or special facilities, privileges or subsidies.

We are, however, gravely concerned that the Bill contains a package of dynamite, in its relation to the scrap steel business, that has the potential of liquidating an industry that is among the last outposts of individual initiative in this country; that this "package" is unwittingly betraying a tradition upon which a free enterprise industry was built; and that this is tampering with the economics and the movement of materials within a free market.

The Bill provides that the President be given power, among others, to take into consideration the effect of any program on "the market for iron and steel scrap"; to "prescribe such rules and regulations as may be necessary"; to make payments (out of the auto excise tax fund), to individuals, corporations, or other business entities; to initiate "a program for the purchase, storage and resale" of the usable scrap, including "resale at a loss," all of which also contains the implication of stockpiling, and manipulation of markets by a new bureaucracy.

Because scrap does not come from a few veins of the earth, but its sources are as wide as the boundaries of the United States, the two important characteristics of the economics of the secondary raw materials industry, are the collection and processing organization at the base of the industry, and the function of the law of supply and demand, operating in a free market. The industry is composed essentially of independent and small business units within a highly "captive" industry, whose survival is threatened by the increasing concentration of economic power in the scrap business. Monopolistic trends in the industry, and the reciprocal and exclusive deal's affecting the commodities, are raising the serious question whether there will be a place for the small or independent dealer in the future of the industry.

The increasing concentration of economic power in scrap is illustrated by a report, after extensive hearings, issued by the Senate Small Business Committee on Oct. 16, 1959, under the title of "Monopoly and Technological Problems in the Scrap Steel Industry". Concluding that "a real threat to the economy is presented", the Senate Committee made the following Recommendations:

"The growing power of Luria Bros. in the scrap steel industry through its exclusive dealings with many steel mills; its monopolization of many regional, domestic, and foreign markets; and its dominance and use of the Institute of Scrap Iron and Steel, have convinced your committee, that a real threat to the economy is presented. Your committee, therefore makes the following recommendations:

"1. The Attorney General and the Assistant Attorney General in charge of the Antitrust Division should conduct an investigation of (a) Luria Bros. for possible prosecution under section 2 of the Sherman Act and perhaps eventual divorcement of brokerage and dealer functions and other measures, to restore competition in the scrap industry; and (b) The Institute of Scrap Iron and Steel for its possible violations of the antitrust laws, as well as its use by Luria Bros. for Luria's own aggrandizement."

The monopoly issue has become aggravated by recent developments, since that report. In the name of "beautification", chains of "giant shredder complexes." are being established by two companies, in strategic locations, with tie-ins and other "captive" devices. What has been overlooked is the potential threat that this presents to the independent operator, in outmoding his recent investments in modern presses and shears, and in reducing him to the status of "glorified peddler" or feeder to a few companies.

We are concerned that no act of government, (whether under the powers of $3400 or in grants, loans, "dismantling" or "excise" taxes or in any subsidy form originating form any other government source,) shall make the government a party to the concentration of economic power in the scrap industry, or shall assist in speeding up the disintegration of the industry's base of independent and small units, so vital to the economics of secondary raw materials.

It is our position that scrap is charged with the "public interest", because it involves three national policies-national defense, conservation and the preservation of small business. Fundamentally, the major problem is one of merchandising and marketing, of removing the forces that tamper with the "free market" function. We respectfully question whether "solid waste" or "natural beauty" are proper forums for the study of the "free market".

It is our conviction that, instead of new legislation, what is called for, is an interdepartmental committee at Cabinet level, (including, among others, the Depts. of Commerce, Interior, Justice, Council of Economic Advisors, and Budget Bureau,) to study and implement with appropriate actions, the balancing of the metallics in the annual "crop" of scrap, with imports of iron ore, with the aim of bringing about a larger use of the scrap in the melting process. The Committee should concern itself with the scrap cycle, in terms of national defense and the conservation of a natural resource, and with the effect of research and technological proposals on the small and independent operator, as part of the essential collection and processing function of the industry.

Senator MUSKIE. Senator Boggs?

Senator BOGGS. I have no further questions.

Senator MUSKIE. Thank you very much, Mr. Schwartz.

Mr. SCHWARTZ. Thank you, Mr. Chairman.

Senator MUSKIE. Senator George Murphy, who is unavoidably detained and who is a member of this committee, has a statement which will be presented by Mr. Carter of his staff.

Mr. CARTER. Senator Murphy unfortunately has lost his voice.

Senator MUSKIE. I don't know whether that is a blessing or a hardship.

STATEMENT OF HON. GEORGE MURPHY, A U.S. SENATOR FROM THE STATE OF CALIFORNIA, PRESENTED BY JOSEPH CARTER, LEGISLATIVE ASSISTANT

Mr. CARTER. Mr. Chairman, this is Senator Murphy's statement: Mr. Chairman, before beginning I want to again congratulate the distinguished chairman of this subcommittee for his vision and for the leadership he has given this Nation in the fields of air and water pollution.

In my judgment, the pollution problem is one of the most serious domestic problems facing our country today. While serious, it is not yet critical. But time is not on our side. It is running out. Delay will not only be costly in terms of dollars, but even more important will be the possible detriment to human health and the interference with the general well-being of our society.

Damage resulting from air pollution in this country has been estimated at $11 billion a year. Economic losses alone indicate the need for action.

It has been estimated that agricultural losses in California alone total approximately $132 million annually. Pollution contributes to the deterioration and corrosion of our physical structures. The consumer may see the effects of pollution by the need for more frequent trips to the laundry.

Even more important are the adverse effects that pollution may have on human health. Evidence grows associating air pollution with certain respiratory disorders, such as asthma, bronchitis, emphysema, and lung cancer. While the evidence is not conclusive, a strong suspicion is present, and one thing is certain, air pollution does not do us any good.

Although there has been a great deal of activity lately in the air pollution field, probably due in no small part to the Clean Air Act, it appears to me that the Nation has not fully grasped the seriousness of the air pollution problem.

This is true despite the fact that polluted air is daily gasped by all too many Americans.

For some reason the American public has the impression that the air pollution problem only exists in Los Angeles and a handful of other cities. Over the years I have had the pleasure of flying across this Nation and seeing much of the country.

In so doing, I can say that contrary to this popular notion, Los Angeles is not the only area with a major pollution problem. While this may have been true at one time, one can clearly see that today air pollution is a national problem and a growing one.

Take the Nation's Capital, Washington, D.C., for example. Our Capital City truly is a bountiful one. The millions of tourists whe flock to Washington yearly cannot help but return to their respective States with a better understanding and a better appreciation of what America is all about.

Washington continues to be a great source of inspiration to me personally. This is why I view with great concern the inadequate pollution programs in the District of Columbia area. For Washington, although a great inspirational and beautiful city is also, from an air pollution stan Ipoint, a dirty city.

Experts say Washington is many times dirtier than the city of Los Angeles. That such is the case saddens me as it should all Americans, for it should not be. For Washington has no substantia! industry and far better meteorological conditions than Los Angeles. Such pollution is also inexcusable because modern technology has advanced to such a state that most of the pollutants from stationary sources can, and should be, reduced or eliminated.

In Los Angeles County a vigorous and effective program to abate air pollution from stationary sources is paying off.

Aimed at reducing air pollurion levels from stationary sources to those existing in 1910 the goal has almost been reached. Los Angeles County control program for stationary sources has kept more than 5.000 tons of contaminants out of the air daily.

The District of Columbia area could also achieve similar results by eliminating or reducing pollutants from stationary sources. It can and should be done.

Under the Clean Air Act. Federal action is authorized to abate interstate air pollution problems. The Secretary of Health, Education, and Welfare again may take such action on his own initiative or after consultation with the officials of the States involved or at the request of the States.