Mr. ENGLE. It is a hundred miles from Yreka to Grants Pass and they have to bring it up out of the canyon for 85 miles more. Mr. LYON. They could ship-Yreka is at Grants Pass.

Mr. ENGLE. They have to pay the freight.

Mr. LYON. But it isn't 20 cents a ton-mile.

Mr. ENGLE. They have to run their trucks up out of the canyon, but why don't you go ahead and establish a stockpile at Yreka like you had before?

Mr. LYON. From the history of the stockpile we had at Yreka, it wasn't satisfactory.

Mr. ENGLE. What was the matter?

Mr. LYON. Too low grade. I understand there was about 10,000 tons of stuff they were paid $52 a ton, still lying there.

Mr. ENGLE. $52 a ton.

Mr. LYON. Yes; something like that.

Mr. ENGLE. It probably would be worth more than that now. Mr. LYON. It may be if it is milled, but it isn't suitable for use the way it is.

Mr. ENGLE. Did you get any high grade out of northern California at all?

Mr. LYON. Yes; some came out. I am not familiar with the figures. Mr. ENGLE. What I am worried about is whether or not this deal is tailormade for two or three operators up there, who have some high grade, and everybody else would be out of luck.

Mr. LYON. I don't think so.

Mr. DONOVAN. Why do you say "don't think so"?

Mr. LYON. Because there is very little that is known about these chrome deposits. Sir, they are small, sporadic occurrences of chrome ore, and you get into a pod or small deposit and mine it out, then you have got to go look for another one, and it just so happens that there are not developed reserves around there any place of any consequence. Mr. DONOVAN. I don't see how that answers my question as to why you don't think they will be out of luck.

Mr. LYON. Who?

Mr. DONOVAN. The people to whom Mr. Engle is referring.

Mr. LYON. I think the price is sufficient to bring it in. That is the reason we raised it to $115.

Mr. ENGLE. The plain fact is, you put the specifications so high that only about three operators up there can meet them.

Mr. Lyon. According to the history of the preceding war, there were more than that.

Mr. ENGLE. I know who they are. It is up in my country. I am telling you that they just simply can't meet those specifications and what I am afraid of is that this program has been tailored to give certain chrome people in southern Oregon the business, and we have a big program announced and it doesn't do anything for anybody else. Mr. REGAN. What is the average value of this chrome in the mine to which Mr. Engle refers; I mean percentagewise? Do you have a 48-percent?

Mr. LYON. It varies all along the scale we may have set up there. Mr. REGAN. But you think this program of $115 will bring in quite a lot from these smaller mines?

Mr. LYON. I think it will at least get it started so we can find out what it is.

Mr. REGAN. Do you think that price will be sufficient to encourage it?

PROPOSED CHROME PROGRAM PRICE ALMOST THREE TIMES AS MUCH AS
-FOREIGN PRICE

Mr. LYON. If it isn't sufficient we will have to raise it, but Mr. Regan, you want to remember that $115 for that chrome is against a $38 to $40 foreign price, which the Government is now paying and we have a great many hurdles to get over before we can get even that through, and if it was very much higher than that I am afraid it would just be kicked out entirely.

Mr. REGAN. In other words, you are moving liberally but yet with caution?

Mr. LYON. Yes.

BUREAU OF THE BUDGET REQUIRES ALLOCATION OF FUNDS ON GROSS

CONTINGENT LIABILITY BASIS

Mr. REGAN. You mentioned that you had to allocate certain funds, or limit your amount of purchase. Out of what funds are you apportioning these amounts? Out of the $10 million funds?

Mr. LYON. No sir. That $10 million fund is merely an exploration fund.

Mr. REGAN. What is your ceiling on funds?

Mr. LYON. GSA has to supply the fund.

Mr. REGAN. The $95 million that Mr. Larson referred to?

Mr. LYON. Yes. The total chrome, tungsten program, as we set it up, amounts to about $180 million, and we have had to put that figure in it, and we originally named $95 million in there because we thought that in the event the market fell, the Government would only have to buy at the most $95 million worth, but theyMr. REGAN. $95 million worth of tungsten?

Mr. LYON. Yes. But they made us put the entire amount in the program as if the Government was going to buy all of these 2,900,000 units. Now in the case

Mr. REGAN. That leaves how much more then for other minerals? Mr. LYON. You see if that is earmarked, and allocated like the budget wants to do, every time you put a program in it uses up that much more and there is going to be a limit someplace.

Mr. ENGLE. I have a telegram here. Are you through?

Mr. REGAN. I don't get this allocation of funds too clearly yet. You were instructed by the budget to apportion your funds on these various minerals that you are setting up a program to explore and develop?

Mr. LYON. Yes.

Mr. REGAN. What is the ceiling on the total funds?

Mr. LYON. I couldn't tell you. That probably comes up to you. gentlemen here to fix.

Mr. REGAN. But it has not yet been fixed?

Mr. LYON. I think it has been fixed up until the end of the fiscal year, but I don't think there is anything further.

82354-52-25

Mr. REGAN. In other words, when you are setting up a program for the development of manganese or chrome or zinc or any of the other minerals then you have to clear with the budget as to how much money you can allocate for that program?

Mr. LYON. We have to show the entire amount as though the Government were going to spend it all. Now in the case of tungsten I doubt if the Government will ever spend any but it is all earmarked and set aside.

Mr. REGAN. You are earmarked how much for tungsten?

Mr. LYON. We have earmarked 185 million.

Mr. REGAN. Of which you will probably spend nothing.
Mr. LYON. Probably.

Mr. REGAN. Yet when you go to set up something for chrome you say you can only set up so much money because—

Mr. LYON. Well, they are going to have to have all that out for chrome because industry is not going to take it when they can get it for $40.

Mr. REGAN. That is understandable, so you are limited to a top amount of chrome, and in turn you say no one operator may supply more than 2,000 tons, is that right?

Mr. LYON. That is to give them all a chance and see what it is, yes.

DISCUSSION OF FORMULATION OF PROPOSED CHROME PROGRAM

Mr. DONOVAN. May I ask a couple of questions?

Mr. REGAN. Mr. Donovan.

Mr. DONOVAN. Is chrome critically short?

Mr. LYON. It isn't as critical as many other of the ferro-alloys, but it is short.

Mr. DONOVAN. I noticed you said that you can't get any domestic manufacturers or users of chrome to purchase any of this chrome at a price of $115 a ton when they can get all they want at $40 a ton in the foreign market. They can't get all they want at $40 a ton in the foreign market, can they at the present time?

Mr. LYON. They are at the present time. Now the reason for setting up this

Mr. DONOVAN. Can the stockpile get all it wants at $40 a ton at the present time?

Mr. LYON. I couldn't tell you how much they are getting.

Mr. DONOVAN. Does your administration have anything to do with the stockpile?

Mr. LYON. We know about the stockpile; yes. That is part of the requirements that we have to calculate in our programs.

Mr. DONOVAN. Who fixes this price at $115 a ton? Do you fix it? Mr. LYON. We recommend it.

Mr. DONOVAN. The answer is that you don't fix it?

Mr. LYON. We recommend it.

Mr. DONOVAN. Who do you recommend it to?

Mr. LYON. We recommend it to the DPA.

Mr. DONOVAN. And the DPA recommends it to whom?

Mr. LYON. They will certify it, unless

Mr. DONOVAN. To whom?

Mr. LYON. To the GSA.

Mr. DONOVAN. That is the General Services Administration. That is Mr. Larson. Does the Price Stabilization have anything to do with it at all?

Mr. LYON. I am afraid they will probably get into it.

Mr. DONOVAN. Have they been into it already?

Mr. LYON. They have been in the tungsten thing. That is one of the things that delayed it.

Mr. DONOVAN. It is safe to say they will be in chrome?

Mr. LYON. They probably will.

Mr. DONOVAN. How long after DPA recommended to the price stabilization the price, did it take for the Price Stabilization to come out with the price or agree with it, weeks, days, or months?

Mr. LYON. We first had to get an agreement.

Mr. DONOVAN. I am talking about tungsten.

Mr. LYON. I am talking about that, too. We first had to get agreement with Di Salle's price stabilization.

Mr. DONOVAN. I am watching the clock. I don't want to know what you had to do. I merely want to know how many months, or how many days, or how many weeks did it take before you got the Price Stabilization Administration to go along with the DPA or the Defense Minerals Administration on the recommendations as to price on tungsten.

Mr. LYON. About a month.

Mr. DONOVAN. How long did it lie over there in the case of chrome? Mr. LYON. It just reached there, sir.

Mr. DONOVAN. Would you care to speculate as to how long it will lie over there before you get anything from them on it?

Mr. LYON. I will tell you, I think that your investigation has done a great deal of good and I think

Mr. DONOVAN. That is not an answer. Do you care to speculate? If you don't

Mr. LYON. I couldn't speculate but I think it will be much more rapid than the tungsten.

Mr. DONOVAN. In other words, you are saying that if it weren't for this congressional committee's investigation that it would be still over there?

Mr. LYON. It probably might be still there.

Mr. PARSONS. Mr. Chairman.

Mr. REGAN. Mr. Parsons.

Mr. PARSONS. I might clear the thing a little bit in this way, since no floor price is being put on chromium, it is not important particularly about what Mr. Di Salle and his crew does at the moment. Mr. DONOVAN. It wasn't true in the case of tungsten?

Mr. PARSONS. Yes.

Mr. REGAN. That will probably not slow up your chrome program? Mr. LYON. It could.

Mr. DONOVAN. We now have a difference of opinion. Mr. Parsons says probably not and Mr. Lyon says it could.

BENEFICIATION MILL FOR STILLWATER, MONT., DEPOSITS

I would like to ask a couple of more questions. You mentioned a mill out in Montana. That was built during the last war, wasn't it? Mr. LYON. There was one built during the last war.

Mr. DONOVAN. Is it still there?

Mr. LYON. No, sir.

Mr. DONOVAN. What happened?

Mr. LYON. It was sold.

Mr. DONOVAN. Who controls it now? Who owns it?

Mr. LYON. The owners of the property, I believe, there are two I think one of them is named Mullen.

owners.

Mr. DONOVAN. How much was it sold for?

Mr. LYON. The Government sold it. They owned it.

Mr. DONOVAN. You don't know?

Mr. LYON. I don't have the slightest idea.

Mr. DONOVAN. Is it in operation now?

Mr. LYON. No, sir.

NEED FOR PREPARING PROCUREMENT CONTRACTS BY JUNE 30, 1951 Mr. REGAN. Mr. Bennett.

Mr. BENNETT. Mr. Lyon, does your department have anything to do about determining the over-all supply needs under the program? Mr. LYON. We are supposed to get the requirement figures from the "DPA." We put all the supply figures together in our shop, but they have been rather slow in coming, so we have formulated our own requirement figures.

Mr. BENNETT. These contracts for procurement that "GSA" has anything to do about must be made according to the testimony here this morning by June 30 of this year. Is that your understanding? Mr. LYON. They aren't contracts. They are just intentions. They are going to send out a little form so that all the man has to do is sign his name to it and say he intends to participate in the tungsten program. That is all there is to it.

Mr. BENNETT. The whole thing as I get it from the testimony of Mr. Larson is that the commitments under this whole program must be in the hopper by June 30. Otherwise, or in other words, as of that date the program ends so far as expansion and purchasing of anything else is concerned, is that true?

Mr. LYON. Well, the commitment on the part of those that wish to participate in it must be in before June 30, providing the act isn't extended.

Mr. BENNETT. If the act isn't extended, all authority to make purchases, all authority to make contracts, or loans, ends on June 30, is that correct?

Mr. LYON. Yes.

Mr. BENNETT. That is about two and a half months from now? Mr. LYON. Yes.

Mr. BENNETT. That applies also in a case where "DMA" authorizes or recommends a loan for expanding those productions of a given mineral or metal. Is that correct?

Mr. LYON. That is correct.

Mr. BENNETT. All of these contracts must be submitted by then too? Mr. LYON. Yes.

Mr. BENNETT. In other words, the whole program ends so far as commitments are concerned on June 30?

Mr. LYON. If it is not extended.