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Mr. MARTIN of Iowa. Fleischmann.

Mr. LARSON. Fleischmann doesn't have that authority.

Mr. MARTIN of Iowa. Of course, Administration is General Harrison and his superiors.

Mr. LARSON. Fleischmann doesn't have that authority; it is lodged in Mr. Wilson.

Mr. MARTIN of Iowa. The Munitions Board even had this mixed up. I had this authority in a letter from the Munitions Board.

I see they have it in the final report. I am looking to the man who has the final say on that and to whom I can look for final responsibility because it is a serious responsibility.

Mr. LARSON. Insofar as instructions which I receive I look to Mr. Harrison for it. That is the Defense Production Administration. Mr. MARTIN of Iowa. That is Defense Production Administration. Mr. LARSON. Defense Production Administration.

Mr. MARTIN of Iowa. I am glad to get that clear.

Mr. LARSON. What is the date of that report? You know there was a change in Executive orders lodging that responsibility here a couple of months ago, and prior to that time; Harrison was the National Production Authority?

There

Mr. MARTIN of Iowa. Now, you do not have the power to make a final determination as to the placement of the materials you purchase as between the stockpile and civilian use, current civilian use. is no need of my proceeding with any further questions with you. Mr. LARSON. That is right, Congressman. Once I get physical control of the property it goes into the stockpile and then only as provided in Public Law 520 can it be removed.

Mr. MARTIN of Iowa. Now, back to 520: There is a basic concept, that the health of the American mining industry is even superior to the actual status of the stockpile, and I was hoping in your colloquy here with Mr. Engle that I would discover a little ray of light on whom I should look to for any determinations in the strategic and critical items regarding the building up of a healthy domestic mining industry.

Mr. LARSON. Well, under the Defense Production Act, the defense minerals-under the authority of the Defense Production Act of 1950-the Defense Minerals Administration has the responsibility of promulgating the programs for the expansion and stabilizing of domestic sources of raw materials. That is in the minerals field.

That has been most welcome. I may speak personally, now, in light of my experience with the stockpile, because there exists a group of industry trained people and technicians who have the skill and the technical know-how to formulate such programs, and to pass judg ment upon separate installations that might fall within such pro

gram.

GSA RESPONSIBLE ONLY FOR PURCHASING UNDER THE STOCKPILE AND DEFENSE PRODUCTION ACTS

I am a purchasing agent. I am like the purchasing agent of General Motors Corp.; the engineering department designs the new models, lays out the production line, sets up the schedule when materials must flow into that production line, and tells me what it is; and I go out and contract for those materials, pay for them, transport them, ware

nouse them, feed them into the production line, in accordance with the schedule.

That is my job and that is what Congress had in mind when they set up this authority and they wanted it to be a continuing authority in my opinion so that the thing wouldn't happen, as happened after the last war, for instance, when Defense Minerals Corporation came to an end at the expiration of the emergency and there was no continuing policy there.

There was a lot of minerals left around, and a lot of commodities left around, and nobody to take advantage of them. We got them all mixed up in surplus property.

Mr. MARTIN of Iowa. You have one now, don't you?

Mr. LARSON. I think to correct that situation, Congress had in mind creating that situation when they passed Public Law 520.

Mr. MARTIN of Iowa. Somebody had an awful interest in creating that loophole in 520 to get them into private industries' hands instead of the stockpile.

Mr. LARSON. You mean

Mr. MARTIN of Iowa. There is a loophole in Public, 520 regarding the transfer of any of those materials in Government jurisdiction and a very little tiny trickle of them got into the stockpile because they mostly went out to industry through the loophole.

Mr. LARSON. I just merely mention that. You have been up here more than I have.

Mr. MARTIN of Iowa. I have been watching this quite a while. I want to pin this responsibility down. If you are limited to $95 million-if I were in your place and had any responsibility on it, I would go seeking some authorization from the properly constituted authorities to get some of the stockpile funds to build up this mining industry and get a domestic mining industry under good headway.

If that is the only source of funds, go to the fellow who has jurisdiction of those funds and get a slice of it and get in here and get to work. We have to have action. We cannot explain by any complicated mechanism of administration our failure to have that healthy mining industry that is the over-all objective behind the whole stockpile program.

Mr. LARSON. That is right, Congressman; and neither can I.

Mr. MARTIN of Iowa. I would still like to know-I have been after the Munitions Board on this for a long time but I understand when we passed this Defense Production Act of 1950, we stripped them of some of their authority and I have been running into alibis there. I am still hunting for the fellow I can put my finger on and say, “I want you to make up your mind to carry out some of the objectives we have had." One of the principal ones is the health of the domestic mining industry.

Mr. LARSON. I have said before committees of Congress-I think it is a matter of record-before the Appropriations Committee, as a result of the questioning of Congressman Case of South Dakota, who for many years watched these programs, both as a Member of Congress and as a citizen of a marginal mining area; and I said then there could be no better defense of this country-and I am only stating what has been stated much better than I can many times before me: there is no better stockpile than a healthy mining industry.

Mr. MARTIN of Iowa. You have my language there.

I will not carry this any further. I think you have got my point. I am not willing to have you by-pass your responsibility on the matter; If you still have it within your power to go to some other agencyGeneral Harrison or whomever it may be please use that power and get their O. K. on using some of these funds to get the domestic mining industry into operation effectively.

Mr. ENGLE. Will the gentleman yield?

Mr. MARTIN of Iowa. Yes; I am all through.

Mr. ENGLE. Mr. Larson, as I understand you haven't any responsibility for formulating anything. They come down to you by certification from the Munitions Board and DMA; isn't that right? Mr. LARSON. Only the operating program; only the procedures to get the physical property.

Mr. ENGLE. You said here a moment ago it is your responsibility to formulate a program. To say that would be like the procurement man going back to the engineers who engineered the automobile and telling them what they ought to put in it. You don't do that, do you? Mr. LARSON. No. I don't do it. I hope I never get in position to do it.

Mr. ENGLE. It is the responsibility for formulating the program and getting the money to carry out Public, 520; that is strictly upon the Munitions Board and they certify it to you?

Mr. LARSON. Not getting the money. They certify to me a program and I add up the dollars and cents of that program and come to Congress and say this is what it is going to take to carry out this program given to me as a directive under Public Law 520 by the Munitions Board.

Mr. ENGLE. Have you any directive now to buy chrome?

Mr. LARSON. Yes. We have a broad directive now to buy chrome. Our most recent directive from the Munitions Board is pretty broad so it gives us a lot of leeway. At one time we couldn't make a contract beyond a year without going back and it had to go all through the Munitions Board, et cetera; but since Jack Small has been the chairman over there we have gotten a lot more flexibility, and now we can enter into a contract up to 5 years without reference back to the Board, and the whole list of items are listed and the objectives set forth; and chrome is one of those items.

Mr. ENGLE. Have you any program on price with reference to the procurement of chrome?

Mr. LARSON. I can't answer that, Congressman Engle, because now as you know, price is a matter of concern, of first, the Defense Minerals Administration who have to consider the price necessary in order to encourage the expansion, just as they have here in tungsten; and then clearing that with the Price Stabilization Agency from the standpoint of the over-all price control and economy; and I am governed by the results that come up following such working out of an arrangement on price. It is my understanding—and I will clarify it for the record if I am not correct-that we are purchasing chrome under some fixedprice contracts, such as I indicated to Congressman Budge over here on zinc and lead.

Mr. ENGLE. On price, do you take your directives on stockpile from the Munitions Board?

Mr. LARSON. No. The Munitions Board is not now limiting us on price.

Mr. ENGLE. Why don't you make contracts out there in northern California for instance, and southern Oregon to bring in some of that chrome?

Mr. LARSON. I think that we do have some contracts out there, and we have some more in the course of negotiations. You asked me about that on the telephone and I am sorry that I had another hearing and didn't have time to get that information for you.

I didn't understand it was to be discussed here this morning but I will get it for you.

PRICES PAID BY GSA FOR DOMESTIC MINERALS AND METALS SAID TO BE RESTRICTED BY PRICE STABILIZATION ORDER

Mr. ENGLE. It is next in order as far as DMA is concerned; but they pulled the 25-percent limitation off-the "Buy American" clause in Public, 520, which means you don't have any ceiling at all.

That means you could go out and pay two and a half or three times the world market for chrome for domestic production if you wanted to do it and on 5-year contracts; isn't that right?

Mr. LARSON. I think that is correct. The only restriction might be if the Office of Price Stabilization has frozen the price. I am sorry. I don't have that information. I will get it for you.

Mr. MARTIN of Iowa. If you will yield, on this matter of price; I am curious as to who has the say on the price. Suppose you get an authorization, or a directive to purchase at a given level, a given price. Do you have any jurisdiction over that? Do you have the authority to slow up the program, or to criticize, or impede acquisition at that price?

Mr. LARSON. Do I have any authority-I would say that I could drag my feet on it if I were a mind to, probably; understand what I mean, Congressman?

There certainly would be no inclination on my part, again speaking personally and officially, to do that sort of thing.

Now, of course we have this general price freeze. Price Stabilization froze prices. We don't have any authority to go above that price without clearing it back with the Price Stabilization people.

Mr. ENGLE. You are not under them for the stockpile?

Mr. LARSON. Insofar as domestic purchases are concerned we are. Mr. ENGLE. I didn't know that.

Mr. LARSON. We would have no trouble. We have had no trouble, where the Defense Minerals Administration feels that a certain price has got to be paid in order to justify the actual economics of expansion and to encourage expansion-the Price Stabilization Agency will go along with us. I say no trouble; it is a matter of clearing it. That usually occurs as between those two and I don't enter into it.

My personal feeling is-perhaps I might be misunderstood, I won't put it that way. Let me put it more dignified: My responsibility requires me to be vigorous in meeting the stockpile, so far as stockpile is concerned, objectives, and that is my main responsibility in that regard-meeting the objectives.

Mr. ENGLE. Can you tell me now what your program is on purchases of chrome for stockpile?

Mr. LARSON. No, I can't, Congressman.

Mr. ENGLE. You mean you don't know? Or you don't have it in your own mind?

Mr. LARSON. I don't have that information. I am not in a position to follow the day-to-day process.

Mr. ENGLE. Mr. Walsh would know.

Mr. LARSON. Mr. Walsh has it. I apologize. I didn't know chrome was to be the subject. I thought it was tungsten and that is all I informed myself on.

Mr. ENGLE. May I ask that you have Mr. Walsh be prepared to give us some information on that?

Mr. LARSON. Most certainly. I regret that we couldn't tie this up here now.

Mr. ENGLE. You were just asked to come up here on the tungsten matter and the legal aspects?

STEELMAN ORDER OF AUGUST 10, 1950, PERMITS PRICE DIFFERENTIAL IN EXCESS OF 25 PERCENT AROVE MARKET PRICE FOR STOCKPILE PURPOSES

Mr. MARTIN of Iowa. If the gentleman will yield, on this matter of price and the "Buy American" clause in the Stockpile Act, this letter that I placed in the record in your previous hearings, some 2 weeks

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Mr. MARTIN of Iowa. Written by John R. Steelman and dated August 10, I understood was the last word as to price with reference to the stockpile program; and in that Mr. Steelman says:

Cases may arise in which procurement of the material in the United States serves a public interest of such weight as to justify a price differential in excess of 25 percent.

Thus strategic urgency of procurement for the stockpile of some highly essential material should be considered justification for that flexibility in price policy necessary to protect the national security.

In this connection the insufficiency of a material may be actual or anticipated. However, this poliy should not be considered a mandate for general price increases or premiums for materials being stockpiled.

In assessing implications of this procedure with respect to stockpile procurement for national security due consideration should be given to the possible curtailment of low-cost production that may result from stimulation of marginal production through competition for labor facilities and equipment.

Each instance of the payment of a price in excess of 25 percent above market price should be justified in terms of urgency in national security need.

Mr. LARSON. That is correct.

Mr. MARTIN of Iowa. That is my understanding of the policy but I still want to know who drags their feet; and who has authority to maneuver within that.

Mr. LARSON. I think I can honestly say, Congressman Martin, that nobody is deliberately dragging their feet; and everybody in this program is alert to the needs. I mean we wouldn't last very long if we weren't; and the objective is to meet the requirements.

Now, you can, of course, appreciate that there has got to be some balance here; because you can't go out and buy for the stockpile and take all of the supply and leave none for meeting the current defense needs; as approaches in the case of tungsten. So there has got to be some balance there.

Likewise, there has got to be some judgment used in purchasing for the stockpile in that you don't support a rigged market, which could have been the case insofar as rubber is concerned-if we had fallen

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