this contract, therefore, there would be no problem of getting the cadmium.

Senator BEALL. You mean give you some preference? If you could get some relief you wouldn't have to buy this cadmium at $1.90.

Mr. LEONARD. The present market price is not $1.90. I understand the present market price is $1.70 and if we had, if we could-that D.O. number could be honored and our present supplier would give us the required amount at $1.70.

Senator BEALL. Yes.

Mr. COBURN. Do you have any recommendations about what should be done with reference to the surplus in the stockpile?

Mr. LEONARD. Well, it disturbs me we can't get any and there are 10 million pounds sitting there that can't be used.

Mr. COBURN. How do you feel about using the national stockpile as a means to provide the consumers as a price protection?

Mr. LEONARD. I think some of that cadmium should be released to normal channels so that the normal users can get it. I realize that you can't dump it on the market and depress the price of cadmium but I think it could be allocated-as I understand it from our supplier there is only a small percentage of shortage, 4 to 6 percent.

I don't know what that means in pounds, but he suggested that 2 million pounds a year would take care of the demands for the plating industry, at least.

Mr. COBURN. I see.

All right. Thank you.

The next witness, Mr. Chairman, is Mr. Simon Strauss.

Senator BEALL. Raise your right hand, Mr. Strauss.

Do you swear the testimony you will give will be the truth, the whole truth, and nothing but the truth?

TESTIMONY OF SIMON D. STRAUSS, VICE PRESIDENT, AMERICAN SMELTING & REFINING CO., NEW YORK, N.Y.

Mr. STRAUSS. I do.

My name is Simon D. Strauss. My business address is 120 Broadway, New York, N.Y. I have a prepared statement and I would like to read that statement, if I may, sir.

Mr. COBURN. It will be all right, Mr. Chairman. We were provided with a copy of this in due time, so you may read your statement, if you like, Mr. Strauss.

Mr. STRAUSS. My name is Simon D. Strauss. I am vice president in charge of sales of the American Smelting & Refining Co. of New York City which is a producer of cadmium with plants for the recovery of this metal located at Denver, Colo., and Corpus Christi, Tex.

The company's production of cadmium normally is between 311⁄2 to 4 million pounds a year.

In the statement my figures appear in tons. But since the discussion has been in pounds, I would like to keep it on the same level.

I appear in response to a request from your committee to present our views as to the nature of the cadmium market, the causes for the short supply that presently exist, the history of cadmium prices, and the desirability of releasing a portion of the stockpile surplus for sale to consumers of cadmium.

It is our understanding from information that has been published that the U.S. Government holds in stockpile approximately 16,500,000 pounds of cadmium and since the maximum objective for cadmium is now set at 6,500,000 pounds, about 10 million pounds is considered to be surplus to national requirements. Those of us in industry do not have access to military information that would qualify us to make a proper estimate of the national stockpile requirements for this or any other metal.

Nevertheless, our experience during World War II, the Korean war, and in the period since the end of the Korean war cannot help but affect our thinking on the problem of stockpiling,

We observe that the targets that are set for individual materials. appear to vary quite widely from time to time as concepts of military strategy and the nature of warfare change. We understand that currently the goals for military stockpiles are in many cases considerably less than they were at times in the past. It is for this reason that today there appear to be substantial surpluses of many commodities in the national stockpile.

Generally speaking, it is extremely difficult to expand the production of strategic materials rapidly. Consequently, the availability of these materials in stockpile is an excellent safeguard for the Nation, not only against military necessity, but also against the problems of reconstruction of the civilian economy following any major war. If materials now classified as surplus are disposed of too hastily, adverse repercussions may well ensue. In the first place, as these materials are sold in competition with current production they will defer or dissuade producers from making new investments and modernizing existing plants, both steps that are vital to the longrun health in the American economy.

In the second place, if the concept of strategic requirements should change again, as it has in the past, the Government could find itself endeavoring to reacquire and possibly at a higher cost-the items that it has liquidated from its stockpile.

Before proceeding to a discussion of the cadmium situation itself, I should also like to stress that surplus materials should be sold with the smallest possible disruption of the normal channels of commerce, and wherever possible such sales should be handled through the usual channels of trade.

The General Services Administration would be well advised to set up advisory committees from industry to meet with it from time to time to assist it in formulating the disposal programs. Any such advisory committees would properly include representatives of both the producers and consumers of the particular material involved.

Turning now to cadmium, this metal is produced entirely as a byproduct in the recovery of other metals, chiefly zinc. So far as we know, nowhere in the world is there a mineral deposit in which cadmium is the chief element of value. Regardless of fluctuations in the demand for cadmium, the rate of production of cadmium is determined primarily by the rate of production of zinc and, to a lesser extent, of lead.

It is for this reason that from time to time cadmium has appeared to be either in short supply, or, at times, in oversupply. This set of

this contract, therefore, there would be no problem of getting the cadmium.

Senator BEALL. You mean give you some preference? If you could get some relief you wouldn't have to buy this cadmium at $1.90.

Mr. LEONARD. The present market price is not $1.90. I understand the present market price is $1.70 and if we had, if we could-that D.O. number could be honored and our present supplier would give us the required amount at $1.70.

Senator BEALL. Yes.

Mr. COBURN. Do you have any recommendations about what should be done with reference to the surplus in the stockpile?

Mr. LEONARD. Well, it disturbs me we can't get any and there are 10 million pounds sitting there that can't be used.

Mr. COBURN. How do you feel about using the national stockpile as a means to provide the consumers as a price protection?

Mr. LEONARD. I think some of that cadmium should be released to normal channels so that the normal users can get it. I realize that you can't dump it on the market and depress the price of cadmium but I think it could be allocated-as I understand it from our supplier there is only a small percentage of shortage, 4 to 6 percent.

I don't know what that means in pounds, but he suggested that 2 million pounds a year would take care of the demands for the plating industry, at least.

Mr. COBURN. I see.

All right. Thank you.

The next witness, Mr. Chairman, is Mr. Simon Strauss.

Senator BEALL. Raise your right hand, Mr. Strauss.

Do you swear the testimony you will give will be the truth, the whole truth, and nothing but the truth?

TESTIMONY OF SIMON D. STRAUSS, VICE PRESIDENT, AMERICAN SMELTING & REFINING CO., NEW YORK, N.Y.

Mr. STRAUSS. I do.

My name is Simon D. Strauss. My business address is 120 Broadway, New York, N.Y. I have a prepared statement and I would like to read that statement, if I may, sir.

Mr. COBURN. It will be all right, Mr. Chairman. We were provided with a copy of this in due time, so you may read your statement, if you like, Mr. Strauss.

Mr. STRAUSS. My name is Simon D. Strauss. I am vice president in charge of sales of the American Smelting & Refining Co. of New York City which is a producer of cadmium with plants for the recovery of this metal located at Denver, Colo., and Corpus Christi, Tex.

The company's production of cadmium normally is between 31⁄2 to 4 million pounds a year.

In the statement my figures appear in tons. But since the discussion has been in pounds, I would like to keep it on the same level.

I appear in response to a request from your committee to present our views as to the nature of the cadmium market, the causes for the short supply that presently exist, the history of cadmium prices, and the desirability of releasing a portion of the stockpile surplus for sale to consumers of cadmium.

It is our understanding from information that has been published that the U.S. Government holds in stockpile approximately 16,500,000 pounds of cadmium and since the maximum objective for cadmium is now set at 6,500,000 pounds, about 10 million pounds is considered to be surplus to national requirements. Those of us in industry do not have access to military information that would qualify us to make a proper estimate of the national stockpile requirements for this or any other metal.

Nevertheless, our experience during World War II, the Korean war, and in the period since the end of the Korean war cannot help but affect our thinking on the problem of stockpiling.

We observe that the targets that are set for individual materials appear to vary quite widely from time to time as concepts of military strategy and the nature of warfare change. We understand that currently the goals for military stockpiles are in many cases considerably less than they were at times in the past. It is for this reason that today there appear to be substantial surpluses of many commodities in the national stockpile.

Generally speaking, it is extremely difficult to expand the production of strategic materials rapidly. Consequently, the availability of these materials in stockpile is an excellent safeguard for the Nation, not only against military necessity, but also against the problems of reconstruction of the civilian economy following any major war. If materials now classified as surplus are disposed of too hastily, adverse repercussions may well ensue. In the first place, as these materials are sold in competition with current production they will defer or dissuade producers from making new investments and modernizing existing plants, both steps that are vital to the longrun health in the American economy.

In the second place, if the concept of strategic requirements should change again, as it has in the past, the Government could find itself endeavoring to reacquire-and possibly at a higher cost-the items that it has liquidated from its stockpile.

Before proceeding to a discussion of the cadmium situation itself, I should also like to stress that surplus materials should be sold with the smallest possible disruption of the normal channels of commerce, and wherever possible such sales should be handled through the usual channels of trade.

The General Services Administration would be well advised to set up advisory committees from industry to meet with it from time to time to assist it in formulating the disposal programs. Any such advisory committees would properly include representatives of both the producers and consumers of the particular material involved.

Turning now to cadmium, this metal is produced entirely as a byproduct in the recovery of other metals, chiefly zinc. So far as we know, nowhere in the world is there a mineral deposit in which cadmium is the chief element of value. Regardless of fluctuations in the demand for cadmium, the rate of production of cadmium is determined primarily by the rate of production of zinc and, to a lesser extent, of lead.

It is for this reason that from time to time cadmium has appeared to be either in short supply, or, at times, in oversupply. This set of

circumstances is inherent in the nature of the trade and is unlikely to change.

The production of primary cadmium in the United States since 1950 has varied between a low of 8,300,000 in 1951 and a high of 10,600,000 pounds in 1956.

The shipments made by the U.S. producers to their consumers over the same period have varied between a low of 7,922,000 pounds in 1958, and a high of 12,150,000 in 1960.

These figures include exports to other countries, chiefly in Western Europe. In other words, demand for cadmium fluctuates more widely than does output.

Because fluctuations in production and deliveries do not always coincide, the producers of cadmium have at times carried sizable stocks. At the end of 1950, for instance, during the Korean war stocks were only 523,000 pounds or considerably less than 1 month's supply. By contrast at the end of 1958 producers had unsold stocks on hand of 5,368,000 pounds or more than half of that year's production.

It is these fluctuations in producers' stocks that are primarily responsible for the fluctuation in the price of the metal.

Attached to the copies of this statement is a tabulation that shows every change in price quoted by our company for cadmium sold directly to consumers since the beginning of 1950.

It will be noted that the price has ranged from a low of $1.30 a pound to a high of $2.55 a pound. There have been long periods when we have not changed our price-as, for instance, from February 1, 1954, until January 23, 1957-about 3 years.

On the other hand, there have been times when our price has changed with relative frequency. The attachment also shows the base discount we allow distributors who serve the electroplating trade.

Our most recent price change was put into effect on February 20 of this year. At that time, we increased our base price to $1.75 a pound from the previous price of $1.70.

These prices are considerably lower than those which prevailed at the time of the Korean war, but are somewhat higher than the prices prevailing during the period of poor demand in 1958 and early in 1959.

Your chief counsel asked for the causes of the short supply that presently exists. There has been a considerable increase in the demand for cadmium in the United States.

One important contributing factor is the high level of operations in the automobile industry since a substantial portion of the electroplating demand for cadmium comes from that industry.

In addition, there is currently some increase in the use of cadmium in association with nickel or silver for the production of special types of storage batteries, some of which have military applications. The plastics industry has also become a consumer of cadmium in fairly

The improvement in the demand for cadmium began in the latter part of 1959, at a time when stocks were still quite large. This is stocks in the hands of producers, of course.

These stocks were heavily drawn down, however, due to a low rate of cadmium production in late 1959 when a number of cadmiumproducing plants were on strike, including one of our two plants.