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My interest in this matter became very enthusiastic after being named as chairman of this Investigation Committee by Congressman Martin of Massachusetts, especially when I noted the large effect and ramifications of the committee or conference, as IMC is called, which was set up without any statutory authority as far as I can ascertain.

It is my belief that remedial action had to come about by removal of the International Materials Conference. In this respect I will say to the committee that Senator Ferguson of Michigan was the first to note the harmful operation of the functions of the International Materials Conference, and I have become very interested in the same activity.

When the Senator introduced S. 2873 I introduced H. R. 7157, which is the same bill in every detail.

My bill by segments or divisions, and commencing with line 5 on page 1, states:

If the domestic production of any commodity is in excess of the amount necessary to meet allocations for defense stockpiling and military assistance to any foreign nation authorized by any act of Congress, no restriction or other limitation shall be imposed under this title upon the right of any person to purchase such commodity in any foreign country, and to import and use the same in the United States.

This, Mr. Chairman, would permit the United States consumers to purchase any commodity, such as copper, abroad for import, and use in this country, without restriction, in cases where the domestic production is sufficient to meet the needs for defense, stockpiling and military assistance programs, but not sufficient to meet all civilian needs.

Part 2 of my bill, starting on page 2, line 1, reads:

No restriction or other limitation shall be imposed under this title if the domestic production of any commodity is sufficient to meet all civilian domestic requirements and the requirements for defense, stockpiling, and military assistance to any foreign nation authorized by any act of Congress.

This, Mr. Chairman, would permit unlimited domestic usage of any commodity produced in this country, in sufficient quantity to meet all civilian needs, as well as the needs for defense, stockpiling, and military-aid programs.

Section 2 of my bill, which deals with price control, reads:

No rule, regulation, or order issued under this title shall apply to purchases by any person of any material outside of the United States or its Territories and possessions for importation into the United States for his own use or for fabrication by him into other products for resale.

This, Mr. Chairman, would prohibit import price ceilings under any conditions.

Mr. Chairman, I did not lay the foundation here for the International Materials Conference, and I did not do so in order to save the time of the committee this morning, but it is outlined in detail, as we have found it during our investigation. The report being placed in the record will tell about the IMC's background and its functioning. Upon my return this morning, I also found that a Mr. Loree had testified here on Friday, and to my surprise he testified for my amendment, and I find that he had somewhat gone into the International Materials Conference, and for that further reason I did not desire to go into that here today.

Mr. BROWN. Do you desire to insert any material into the record?

Mr. SADLAK. I would like, Mr. Brown, to insert in the record the report which we made as a result of our investigation in regard to the shortage of copper, and how it is caused by the International Materials Conference.

Mr. BROWN. That may be done.

(The information referred to is as follows:)

REPORT TO REPRESENTATIVE JOSEPH W. MARTIN, JR., REPUBLICAN LEADER OF THE HOUSE, ON THE ELECTRICAL INDUSTRY AND THE INTERNATIONAL MATERIALS CONFERENCE

Report is by a specially appointed committee of eight House Republicans: Representative Antoni N. Sadlak, of Connecticut, chairman; Representative E. Ross Adair, of Indiana; Representative William G. Bray, of Indiana; Representative John C. Butler, of New York; Representative Robert J. Corbett, of Pennsylvania; Representative James P. S. Devereux, of Maryland; Representative Albert P. Morano, of Connecticut; Representative Paul F. Schenck, of Ohio.

On March 10, 1952, some 70 Republican Members of the House of Representatives met at the call of Representative Joseph W. Martin, Jr., of Massachusetts, House minority leader, to discuss the International Materials Conference and the unemployment and hardship the Conference has brought about. The Members present represented areas where unemployment has resulted because of materials shortages, which in turn were largely traceable to the actions of the International Materials Conference.

At the close of the meeting, Mr. Martin appointed four committees to study and report on various aspects of the problem that had been created by the International Materials Conference. These committees were to examine the electrical manufacturing industry, the automotive industry, various consumer industries, and the question of the legality of the International Materials Conference.

Following a month of study of the IMC and its many ramifications, this committee, which was assigned to examine the electrical industry, has reached certain conclusions. Before stating the conclusions, however, it is necessary, for the sake of a clear understanding of the problem, to start with the background of the IMC itself and outline its development since its start more than a year ago. In this report, emphasis is placed on IMC actions affecting the supply of copper, the basic material which has been the major determining factor with regard to the production rate and employment in the electrical industry.

BACKGROUND OF IMC

The story of the International Materials Conference goes back to December 1950, when Clement Attlee, then Socialist Prime Minister of Great Britain, came to Washington to visit President Truman and request a larger share of the world's key commodities. Messrs. Truman and Attlee agreed to form an intergovernmental organization specifically designed to handle the problem of raw materials. The French Government was then consulted, and on January 12, 1951, the United States State Department issued a release announcing the formation of what was to become the International Materials Conference.

The purpose of the new organization, according to the release, was to "bring about cooperation among the free countries of the world to increase the production and availability of materials in short supply and to assure their most effective use." Thus, the IMC's birth was accompanied by a flow of vague, high-sounding verbiage that gave little hint of the damage the organization would eventually cause in the electrical and many other important industries.

However, the third paragraph of the State Department release gave a strong indication that the IMC was intended to wield world-wide power in dividing up the resources of the various countries. The release stated that "commodity problems cannot be dealt with on a regional basis but must take account of the needs and interest of the whole free world."

The release also disclosed that it was the Government of the United States, under the prodding of Socialist Prime Minister Attlee, that was taking the most prominent role in organizing the IMC. The release stated that "the Government

of the United States has * * * agreed to send invitations immediately to

other interested friendly governments" for the establishment of committees to deal with key raw materials.

ORGANIZATION OF IMC

IMC headquarters were established in Washington, initially in a State Department building at 1778 Pennsylvania Avenue NW., and now in the new Cafritz Building, 1625 I Street NW.

IMC now consists of a headquarters body called the central group and seven standing committees. The central group consists of representatives of the three original members-the United States, the United Kingdom, and France-plus Canada, Italy, India, Australia, and Brazil. Also represented on the central group are the Organization of American States and the Organization for European Cooperation.

Each country has one representative plus alternates on the central group. The present United States representative is James F. King, who also has the title of Deputy Administrator for International Activities and Defense Materials in the Defense Production Administration. Mr. King was appointed to the central group on April 23, 1952, succeeding Gabriel Ticoulat, who returned to the Crown Zellerbach Corp. Mr. King has been a Federal employee since 1938.

Participating countries have one representative plus alternates and advisers on the various commodity committees. Committee meetings are held in Washington. So far, seven committees have been formed. They are: Copper, zinc, and lead; sulfur; tungsten and molybdenum; manganese, nickel, and cobalt; cotton and cotton linters; wool; pulp and paper.

According to a recent speech by Edmund Cetzin of the Non-Ferrous Branch, Office of Materials Policy, United States State Department, memberships in each committee are limited to those countries "which have a substantial production or consuming interest in the commodities concerned." Twenty-eight countries are now represented on one or more committees. Mr. Getzin stated that "for most commodities, member countries together account for between 80 and 90 percent of production and consumption in the free world."

However, it is important to note that the allocations drawn up by IMC apply to nonmember countries just as to member countries. As Mr. Getzin bluntly said in his speech, the seven committees "are virtually autonomous bodies free to consider any aspect of the problem of world shortages in the commodities concerned." Office of Materials Policy, United States State Department, memberships in each committee are limited to those countries "which have a substantial production or consuming interest in the commodities concerned." Twenty-eight countries are now represented on one or more committees. Mr. Cetzin stated that "for most commodities, member countries together account for between 80 and 90 percent of production and consumption in the free world."

However, it is important to note that the allocations drawn up by IMC apply to nonmember countries just as to member countries. As Mr. Cetzin bluntly said in his speech, the seven committees "are virtually autonomous bodies free to consider any aspect of the problem of world shortages in the commodities concerned." This is a frank statement that the IMC committees have, in their own opinion at least, unlimited power over the raw materials of the entire free world.

WHAT IMC HAS DONE

IMC committees have placed seven basic materials under allocation-sulfur, tungsten, and molybdenum beginning in the third quarter of 1951, and copper, zinc, nickel, and cobalt beginning in the fourth quarter of 1951. New allocations have been ordered for succeeding periods.

Other commodities studied by the committees have not been placed under allocation so far. Supply and demand in manganese, according to Mr. Cetzin, were judged to be "about in balance." Cotton and cotton linters, "while in short supply last year, were expected to be much easier." The wool committee could not agree on how bad the wool shortage was and what should be done about it. The pulp and paper committee, while it has made relatively "small" allocations of newsprint, has not imposed an over-all allocation system.

EFFECTS OF IMC ON THE ELECTRICAL INDUSTRY

A principal effect of IMC has been to divide up the resources-and the jobsof the American people and to lower their living standards.

This is shown clearly in the case of copper. An IMC news release of December 20, 1951, announced that the United States allotment of copper in the first quarter of 1952 would be 366,000 metric tons, or 403,000 short tons. It turns out that this is also the approximate amount of primary copper that the National Production Authority authorized for United States usage in the first quarter of 1952. So it is apparent that United States consumption of copper-and this means jobs in factories throughout the United States-is being controlled by this super cartel called the International Materials Conference.

The IMC release announcing the copper allocations spoke of an "entitlement for consumption" for each country. This is a strange new term that has been dreamed up by the people who like the idea of trying to rule the world. It is this "entitlement for consumption" that determines whether thousands of workingmen in Massachusetts, Connecticut, New York, Pennsylvania, Maryland, Ohio, Indiana, Michigan and other metal-fabricating States will have jobs or will go on the dole.

It is the "entitlement of consumption" that bars electrical manufacturers and other enterprising businessmen from scouring the markets of the world to find a relatively small amount of copper that would mean the difference between the job and the dole.

On January 9, 1952, Charles E. Wilson, then Director of Defense Mobilization, speaking of the possibility of going out into the world market to obtain whatever copper we need, said: "In the case of copper, it isn't worth it for this Nation to go out and to pay higher prices and to get only a minor addition of the material." He said that "efforts are under way to get a better allocation of copper for the United States from the International Materials Conference."

Mr. Wilson ignored the fact that the barrier is not one of price, and Manly Fleischmann, Defense Production Administrator, has taken the same position as Mr. Wilson. The crux of the matter is that the people who need copper are absolutely prohibited from trying to buy it in world markets regardless of price. Messrs. Wilson and Fleischmann, through the domestic allotment system set up by their agency, have provided the mechanism that prevents American manufacturers from using any more materials than the IMC says they are enttiled to use.

IS IMC'S COPPER ALLOTMENT TO UNITED STATES FAIR,

This question can best be answered by applying the very yardsticks which Mr. Fleischmann says his agency uses. When Mr. Fleischmann, representing Mr. Wilson, appeared before the Senate Banking Committee on March 21, 1952, to discuss IMC, he stated the following regarding IMC allocations:

"The share of world supply recommended for the United States has in every case corresponded closely with the share the United States secured for itself in the days of free competition for supplies in the years of 1948, 1949, and 1950." Then Mr. Fleischmann went on to give the following explanation of how IMC allocations were computed:

"The basis of allocation in most of these metals is this: The defense production, the mobilization contribution of each country, is assessed as carefully as can be by us, and that amount of copper for the mobilization effort of each country is first set aside. That is a preferred use, you see, in each one of the countries that is contributing anything to our mobilization effort. After that, an estimate is made of the available balance of the world supply in accordance with the estimates of probable supply, and that amount, which is the amount going to the civilian economy, is then divided on a historical basis."

Then Senator Bricker made the following comment:

"This International Conference is distributing the copper and other strategic minerals to countries who are taking no part in the defense program."

Mr. Fleischmann replied:

"They are sharing only on a percentage use, based on their civilian use. In other words, unless they are contributing to the mobilization program, they get no recognition in the mobilization effort."

If there is a pre

Both of Mr. Fleischmann's explanations cannot be correct. ferred allocation for defense, as he says, the United States would logically get the largest share of such an allocation. Therefore, our total share would be larger than in the years 1948-50. Yet Mr. Fleischmann has just declared that the United States' share under IMC "corresponded closely" with the 1948-50 share.

THE FIGURES ON COPPER

When Mr. Ticoulat, then Deputy Administrator of the Defense Production Administration, appeared before the Senate Banking Committee with Mr. Fleischmann on March 21, 1952, he stated copper was allocated by IMC on the following basis:

"A priority for direct defense requirements, provision for minimum strategic stockpiles, and the distribution of the remaining supply for civilian requirements on the basis of consumption in 1950."

Mr. Ticoulat gave the following figures on United States copper consumption prior to IMC:

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[In short tons]

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Then Mr. Ticoulat gave the following figures on "the results of the IMC recommendations as they affect the United States":

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NOTE. The United States share for the second quarter of 1952 is also 49.1 percent of the total supply.

The following facts are available upon which to make a check of IMC's copper allocation to the United States, based on the formula described by both Mr. Fleischmann and Mr. Ticoulat:

(1) In the above-mentioned speech by Mr. Getzin of the State Department (made before the American Institute of Mining and Metallurgical Engineers in New York on February 19, 1952), he said:

"The (IMC) committees have generally given a priority for direct military requirements, and metal has been set aside to meet such requirements before distribution is made for civilian requirements on an agreed basis. The problem of screening military requirements is one that has also been difficult to cope with. No standard method of calculating military requirements has been developed. Reliance must therefore be placed on other criteria such as the relative proportion of military requirements to total requirements and upon budgetary figures for military expenditures."

(2) On March 13, 1952, W. Averell Harriman, Director of the Mutual Security Agency, testified before the House Foreign Affairs Committee, the Senate Foreign Relations Committee, and the Senate Armed Services Committee. He told the committees the military budgets of the European countries in the North Atlantic Treaty Organization, including Germany, for the coming year would be $14,000,000,000. He further stated that the corresponding United States budget figure for security programs would be $64,000,000,000.

(3) Mr. Fleischmann told the Senate Banking Committee on March 21, 1952, that the military received 40 percent of all the copper used in the United States today.

CONCLUSION

As long as the Government's present philosophy prevails, its only answer apparently will be to make the copper shortage still worse by placing artificial restrictions on the amount the United States may import and consume. Under these conditions, there can be no permanent solution to much of the widespread unemployment in the electrical industry. Manufacturing companies will have no choice but to continue to operate at only a fraction of their potential, and consumers who want and need their products will have to do without them. While

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