Our original understanding was that it was only necessary to certify the amount of funds that would be estimated necessary by prudent engineering judgment. For example, if you had to support the price of a commodity, perhaps you would have to buy only 10 percent of the total supply over the next 5 years, in order to maintain in the support price. However, on working out the programs we found that it was required that we had to set aside the full amount of funds to buy all of a material for the next several years.

For example, if we decided to support the price of copper, lead, and zinc at the present prices we would have to set aside probably a billion and a half dollars a year for as many years as we decided to support the price, even though it is perfectly obvious that we would not buy all of the copper, lead, and zinc available to the United States and put it in Government hands.

Mr. REGAN. You might not buy more than 10 or 15 percent of that? Dr. MORGAN. That is right, but operating under those restrictions, we have overcertified our original $600 million to the tune of about $300 million so when we get our fiscal year 1951 supplemental appropriation we first will have to cover the $300 million that we have already overcertified.

Then the metals and minerals will come in for a very large proportion of the remaining $700 million, and if the money is not available for a particular project under the DPA Act, we will see if we cannot prevail upon the stockpile people to make an interim contract to get a project going and then take it over under the DPA Act when the 1952 regular appropriation is made available. We have been working with them in that manner already.

For example, in the case of magnesium, all of the magnesium plants in the hands of the Government are currently being reactivated and magnesium is being produced under contracts calling for delivery to the stockpile. It is rapidly becoming clear that we need more magnesium to meet the current DO orders of industry than is available from the single producer. As soon as we get the additional funds under the DPA Act, we will instruct the General Services Administration to cease buying this magnesium under the Stockpile Act, Public Law 520, and we will authorize a revolving fund under the DPA Act to remit resale to industry to meet defense orders only. If any magnesium is left over after the requirements of defense orders have been met, this magnesium will then be added to the national stockpile and paid for by stockpile funds.

Mr. REGAN. But you do not have enough flexibility to implement the manganese program that Dr. Boyd has discussed.

Dr. MORGAN. We may have. We haven't explored it yet.

Mr. REGAN. So then Dr. Boyd will need to confer with you and in another week or 10 days if your exploration of this fund business works out favorably, there is a chance you could get this manganese matter cleared and in operation by the end of this month? Is that right?

Dr. BOYD. I think that is a fair statement; yes.

Dr. MORGAN. Yes, sir.

Mr. REGAN. That is a little more encouraging. I think Mr. Murdock had a question on manganese.

FURTHER DISCUSSION OF ARTILLERY PEAK

Mr. MUROOCK. Yes, one more, Mr. Chairman. I asked about Artillery Peak. I hope you won't think I am too narrow-minded about it but as I say I have been interested in it a long time. I understand mining machinery has been moved from Artillery Peak, and not merely the pilot plant equipment. We understand of course that the pilot plant operation has been set up at Boulder City, and that is where it should be, of course, but my people out there are getting pretty anxious, when they see mining machinery being moved from Artillery Peak. It is discouraging. Have you anything to report on that, Doctor?

Dr. BOYD. Well, Mr. Chairman, the only reason we have mining machinery at Artillery Peak is to work out experimentally the method that should be used and followed. That work has been pretty well done and as soon as the project is going ahead, then it will take vastly more mining equipment than is there now.

That is just experimental equipment. It couldn't be anything of

consequence.

Mr. MURDOCK. That is reassuring.

Mr. REGAN. Mr. D'Ewart, I believe, had some questions on manganese.

STATUS OF BUTTE AND PHILLIPSBURG CONTRACTS

Mr. D'EWART. I wanted to question Dr. Boyd briefly on the status of the contracts at Butte and Phillipsburg. That breaks down into two contracts, one for process and the nodulization plant.

Dr. BOYD. There are four or five processes involved.

Mr. D'EWART. Those contracts as I understand it have all been approved by you?

Dr. BOYD. Yes. We finished negotiations. Unfortunately Mr. Cole came back and suggested a change in the contract. He is the contractor. He wanted a change in the contract a few days ago. We had to go back again for that, but we are essentially in agreement. We have completed the work of negotiation in agreement with GSA, so it is a question of clearance where the fund comes from, to sign those

contracts.

Mr. D'EWART. That is the nodulation plant?

Dr. BOYD. And the mines.

Mr. D'EWART. All four contracts are for the mining operation? Dr. BOYD. That is right.

Mr. D'EWART. They then are at the point where only funds are needed?

Dr. BOYD. That is correct.

Mr. D'EWART. Have they been signed?

Dr. BOYD. No. You can't sign them until you have the money. You see we can't sign the contracts until the money is committed. Mr. D'EWART. Can't you sign those contracts and hold them in your fist ready to deliver when the money is available?

Dr. BOYD. I have to refer to counsel for that.

Mr. GUMBEL. I would like to address myself to that particular subject because we have a case in point, the San Manuel Copper Mining

Co., where exactly that situation has arisen. We agreed on the terms of the contract, but we do not have the actual money to execute the contract in the form that we would like to execute it. However, the company has agreed, and we have agreed to execute the contract with the provision in it that this contract is subject to the availability of funds. We have a letter from Dr. Morgan's office saying that when this appropriation does go through they will certify these funds to us, so we are sure that when the Congress passes this appropriation, we will have the money. Therefore, we are completing the contract with the provision that it is subject to the availability of the fund, and that is sufficient to permit the contractor to proceed immediately with carrying out his part of the contract.

Mr. D'EWART. Then, if I understand these four contracts at this point, no one of you men are going to raise any objection? They are already approved by every one of you, subject to the availability of funds.

Dr. BOYD. May I interject, except in general points. I don't think Dr. Morgan's office has seen them yet.

Dr. MORGAN. I wouldn't make a blanket statement. We could raise no objection until we see them.

Mr. D'EWART. In other words, they aren't approved at all. That is the very point we want to bring out. They are just approved by you?

Dr. BOYD. That is correct.

Mr. ENGLE. Why should Dr. Morgan have to approve those contracts at all, within the general target area of what they need?

Dr. BOYD. It is just a question to certify that they are in the program. I am sure he won't go into the details. In fact, we have been assured by Mr. Gibson he won't. We are not worried about that.

Mr. D'EWART. I understand this is a nodulization plant that operated during the last war and is sitting idle at the moment. These mines, some of them are presently producing manganese.

Dr. BOYD. I would like to point out one more thing. This is not all involved in governmental operations. Some of these contractors are asking specific terms in the contract and they change mind as negotiations go along, so it isn't all to be laid on our doors. The contracts go to the expenditures of large amounts of money and their time, and they are careful about what kind of a contract they sign. Some of these things require the companies to go back and do some work to see what they can do to get the job done, so in the case of the Butte contract that has been the case. Recently the contractor has come back and is asking for a change in his contract.

Mr. D'EWART. That is one of the four contractors. The others haven't come back.

Dr. BOYD. No; but the others depended on that one.

Mr. D'EWART. They are just awaiting Mr. Morgan's O. K. and the fund. Now they know who to go to from day to day when we have to call up and find out why those contracts aren't signed. We will call Mr. Morgan's office and we will know. We won't have to call you any more, Mr. Boyd.

Mr. REGAN. Following this discussion of the billion-dollar appropriation, what is the status of that bill now?

Mr. SCHWARTZ. It was supposed to come up in the Senate yesterday afternoon. I am not sure it did. Do you know?

Mr. ELLIOTT. I don't know.

Mr. SCHWARTZ. The Senate has practically completed action on it. It will have to go to conference. Our best judgment is we may have a bill some time next week. We hope so.

Mr. REGAN. That is fine.

Now we didn't get to copper this morning. Mr. Bennett is here and interested in that subject particularly. Mr. Martin, did you have some further questions you wanted on this manganese? Our time is. about up.

Mr. MARTIN of Iowa. The time is too late to go into that.

Mr. REGAN. We will hope to have Mr. Wolf with us tomorrow morning. I believe we have cleared the air a little bit on this thing generally.

Dr. Boyd, if your office can give me some of the details that are holding up this manganese program for Deming and El Paso, if there is anything serious, I would appreciate knowing it; if you can give me a memorandum tomorrow morning on just what the details are that delay that further in getting it into operation, I would appreciate it.

Dr. BOYD. I will be glad to do that.

Mr. MURDOCK. We have a minute or so before the House convenes. May I make just this one statement. It will be a repetition. The President is here. I notice we have a good many visitors in the committee room this morning. Some of them are businessmen interested in mines and mining and others perhaps are young people interested in the defense program.

I think this one little word of explanation is necessary, following the entire hearing. We Congressmen from Western States seem to be emphasizing that we would like to see mines developed out there. These men in the departments, of course, are handling the defense program. Now the question is, What is our objective here? I want no misunderstanding about this, Mr. Chairman. We understand that minerals and metals, the strategic and critical minerals and metals, are the prime essentials in national defense, and while it is true that I would like to see mines developed in my State, and throughout the entire country, the 48 States, we want to see to it that there is an active functioning mining industry as the best insurance that we will be supplied with these things, and that is the prime objective, and we are trying to get our heads together here with the men who are administering the law, we who help to shape the law, so as to get maximum national security in our effort.

I just wanted the audience to understand that, that we are not aiming, as Congressmen, to develop mines in my State, or his State solely, excepting as it contributes to the national defense.

I have said that before but I wanted to repeat it, possibly to the new audience.

Mr. REGAN. Thank you, Mr. Chairman, for that statement. Mr. Saylor, one question?

Mr. SAYLOR. Dr. Boyd, could you give me this report tomorrow on the status of the contract with regard to Batesville area, the same as Mr. Regan has asked for?

Dr. BOYD. Yes, sir.

(The information requested appears on p. 497.)

Mr. REGAN. I feel we have made some progress this morning. I thank you all for coming. If you can be with us tomorrow morning, we want specially to have Mr. Wolf occupy the vacant chair. We don't want to depend on Kilroy in these hearings. If you will all come tomorrow morning, we will appreciate seeing you at this time.

(Whereupon, at 12 o'clock noon, the committee adjourned to reconvene at 10 a. m., the following day.)