Mr. ENGLE. Otherwise you are going to run out of time here in about 23 days, and I am sure that there is going to be a lot of people around this Congress who will be unhappy if this Production Act goes out of existence and we haven't formulated or gotten into execution any kind of a program for manganese, which, at least up here on the Hill, currently is regarded as probably the most critical program of the whole business.

Mr. D'EWART. I would like to ask the chairman a question. It is only titles IV and V that have to be renewed; the others go on. Isn't that true?

Mr. ENGLE. The contracting authority runs out. That is where the shoe binds. Isn't that right, Mr. Elliott?

Mr. ELLIOTT. Yes, sir.

Mr. ENGLE. That answers your question, Mr. D'Ewart?

Mr. D'EWART. Yes.

What title does that come under, V or IV? I understand IV. V and IV have to be renewed after June 30. The other titles do not have to be renewed before June 30.

Mr. ELLIOTT. Section 616 (a) of the act says titles I, II, III-and this is title III we are talking about-and VII of this act, and all authority conferred thereunder shall terminate at the close of June 30, 1952, but such title shall be effective after June 30, 1951, only to the extent necessary to aid in carrying out contracts relating to the National Defense, entered into by the Government prior to July 1,

1951.

Mr. D'EWART. The contracts you have entered into will go on, but you have to have new authority to enter into new contracts?

Mr. ELLIOTT. That is right.

Mr. D'EWART. Thank you. I have no more questions.

DISCUSSION OF DOMESTIC MANGANESE PROGRAM

Mr. ENGLE. It looks to me as though this egg hasn't been laid, much less in the process of being hatched; the whole program is a very nebulous thing so far, is it not?

Mr. MITTENDORF. I wouldn't say that. Of course, we have had a manganese program just 2 weeks now. It was approved by the DPA, I believe, on the 25th of May.

Mr. ENGLE. You say you have one?

Mr. MITTENDORF. We do. The Government now has a manganese program-a domestic manganese program-which we did not have prior to May 25.

Mr. ENGLE. That is what Mr. Bradley was talking about, isn't it? Mr. BRADLEY. Yes. That program that I described is one that grew and was set up during the 3 or 4 months preceding the date that Mr. Mittendorf gives you, which was submitted to DPA and under which we are now authorized to operate by DPA.

Mr. ENGLE. What happened, as I understand it, is that your shop, Mr. Bradley, recommended this program, which operates on the principle of making a selective contract, or selective arrangement of some type with reference to particular areas in the United States.

Mr. BRADLEY. That is correct.

Mr. ENGLE. And you defined those.

Now you sent those over to Dr. Morgan; is that right?

Mr. BRADLEY. Yes.

Mr. ENGLE. And he cleared it and sent it back and said, "Go ahead and work out something on it."

Mr. BRADLEY. Yes. The fact is Mr. Mittendorf's office has been doing a great deal of ground work. We got the wheels and the gears and the axles all set up so as soon as permission came for them to turn we were able to at least do that, and begin grinding out contracts.

Mr. ENGLE. This then is the process of putting the program, which in general has been outlined and approved, into execution on a specific basis, and you are talking about Deming, and you set up a purchase schedule. You know, Mr. Mittendorf, that there is serious objection to that purchase schedule from some of the people out there, isn't there?

Mr. MITTENDORF. None have reached me. Nobody has come into my shop and asked for a hearing or came in with figures to show where they would be damaged under that schedule. Nobody came in to show me what they have to invest, how long it will take them to produce, what their rate of production is going to be, which is based on prior operating experience or a complete study.

FASTER ACTION URGED ON DEMING DISTRICT (NEW MEXICO)

MANGANESE PROGRAM

Mr. ENGLE. This program for Deming that you are working up now, you have your purchase schedule set up. Now that applies in somewhat the same manner as the program suggested for tungsten, doesn't it, except that you have a sliding scale?

Mr. MITTENDORF. And except that it relates to a specific district. Mr. ENGLE. That is right, and anybody in that area who can produce under that schedule can sell to the purchase depot?

Mr. MITTENDORF. That is correct.

Mr. ENGLE. Then you are going to set up the sampling plant?

Mr. MITTENDORF. That is right.

Mr. ENGLE. Are you negotiating with anybody to do that?

Mr. BRADLEY. It is not necessary to negotiate, because that will be a Government owned sampling plant.

Mr. ENGLE. Do you intend to do that yourselves?

Mr. BRADLEY. That is correct, or get the GSA to do it, because they own the existing plants there already, such as they are, that will be expanded into this sampling plant.

Mr. ENGLE. How long is it going to be after this thing gets perking along here before you will know whether or not you are going to have a mill?

Mr. MITTENDORF. I think that is based to a very large degree on the performance of the people within the district, the flow of ore that There are several X's in this equation as to the mill, as I pointed out. It depends upon the miner and his performance.

comes out.

Mr. ENGLE. We could be in a war, be whipped, have a peace treaty, and be occupied by a foreign power before you would get anything done on that, it seems to me. It is too long.

Can't you think of some way to move faster?

Mr. BRADLEY. I think Mr. Mittendorf is merely expressing the most conservative attitude he can take and it doesn't necessarily represent the action which he will take.

82354-52-35

I think the chances that a mill will be erected there in the near future or shortly after the sampling plant goes into operation-I shouldn't say the mill will be erected shortly after the sampling plant-but that the design and contracts for the erection of the mill would come relatively short after the sampling plant goes into operation.

That is just from the knowledge we have of the district.

Mr. ENGLE. Is it your view, Mr. Bradley, that the Government will finance the establishment of the mill by a loan to a private company to carry out the milling operation; is that right?

Mr. BRADLEY. It would appear that that is the way it has to be done. Mr. ENGLE. You do not have an offer to operate that mill or to set it up now?

Mr. BRADLEY. There is a tentative offer in; yes.

Mr. ENGLE. That has not been submitted in specific terms as yet? Mr. BRADLEY. It is so long ago I don't recall. No; the offer is to design the mill, framed like this:

The offer is to design the mill with a view to its later erection and operation by the designer; the operation and erection of it to depend upon the acceptance of the design.

Mr. ENGLE. Just assuming for the sake of argument that the schedule which has been set up here for the purchase of these ores in that area will not be like trying to buy a Prime beef at this time for $5 a head, which I am afraid it may be-in other words, just assuming for the sake of argument that it is a realistic program that will bring out the ores, rather than leave them in the ground and produce nothing you still have to go back to Dr. Morgan, don't you, to get that Ŏ. K.'d? After it comes out of your shop where does it go? Mr. MITTENDORF. This is for the erection of a plant?

Mr. ENGLE. No. This is for the program for the purchase of ores and the erection of the sampling plant.

DMA'S GENERAL MANGANESE EXPANSION PROGRAM APPROVED BY DPA

Mr. MITTENDORF. Dr. Morgan's office has already approved the purchase of the ore.

Mr. ENGLE. So it doesn't have to go back to him?

Mr. MITTENDORF. As you have approved it, within the program, it will go over specifically to you today.

Dr. MORGAN. If I may comment on that, Congressman, the DPA has approved the whole general manganese expansion program of the DMA. This general program calls for purchase of ores in certain places, erection of pilot plants and sampling plants, foreign expansion, research on slag, and all sorts of things like that.

We approved the whole program and have set aside sufficient funds to cover what DMA said this whole program will take.

Now, at this time, the DMA is working out the details of the number of contracts that are necessary. The approval of these individual contracts within the total amount of money for this complete program should present absolutely no difficulty to the Defense Production Administration unless the act is not extended and the funds expire on the 30th of June 1950, which might very well happen.

Mr. ENGLE. Do you have to clear this again, or is it out of your shop?

Dr. MORGAN. It will come back to our shop for certification of the specific amounts of money necessary to carry these contracts out. If, for example, the whole program in one area could be negotiated with one company, and a contract made that costs six or eight or ten million dollars, we in DPA would just certify the six or eight or ten million dollars to the GSA.

GSA would make the contract with the one company to accomplish all the desired objectives and that would be the end of our interest, except to see how performance is going.

Mr. ENGLE. I know, but that isn't the way they have it set up. They have it set up on a purchase schedule and everybody who delivers to the purchase depot will be paid, I assume, up to the amount that has been set aside or earmarked for the purchase of those particular ores; isn't that the way you intended it to work, Mr. Bradley?

Mr. BRADLEY. Yes, and we are assured by the DPA now that if we run over these sums it won't be a very serious matter, and may I say, too, that the purchase of the ores is really to me the important thing at the moment. You can always mill them, once the mines have been put under way and the ore starts out of the ground.

That great hurdle of starting a mine has been passed over and the hurdle of starting a mill is nothing as compared with that at the mine. There is a great step to get the ores started.

Mr. ENGLE. I can't see any use in going back to Dr. Morgan at all except to indicate the amount and you have already done that, haven't you?

Dr. MORGAN. Sir, it is just a matter of the paper work of certifying the funds to the GSA, and, whether this has to be done in 10 little pieces or one big piece, the paper work will go through and the money will be set aside. Unless there is a very radical change over the previously approved general program, I wouldn't anticipate any difficulty at all on that score. If DMA suddenly comes in and wants many times as much money for a project as they originally said, we are going to ask some questions. On the other hand, as they negotiate it out some parts might cost less. Then again other parts might cost more, and we recognize that their original figure was an estimate. Within their program there will be no problem.

GSA TO ACT AS PURCHASING AGENT

Mr. ENGLE. When this program is finally certified over to GSA, with, say, $8 million earmarked for the purchase of the ores, what is GSA going to do about it?

Mr. GUMBEL. Well, we publish the regulation in the Federal Register and send some men down there to pay for the ore when it comes in. It is very simple, Mr. Engle. The same way we are doing with the chrome and with the tungsten program.

Mr. ENGLE. You are going to ask these fellows to agree or file some kind of an application which indicates that they wish to participate in the program?

Mr. GUMBEL. They will have to notify us for their own protection. Mr. ENGLE. So you have a contractual relationship with those fellows?

Mr. GUMBEL. That is right.

Mr. ENGLE. When they accept this general offer, the general offer will contain the same kind of limitations with regard to Government obligations which you put into the tungsten program?

Mr. GUMBEL. That is right.

Mr. ENGLE. You have too little lined up. Some fellow will say, "I don't know whether I ought to go to the trouble of opening a mine to do that or not," won't he?

Mr. GUMBEL. Of course, Congressman, you must remember that this regulation can be amended. If we start running out of money we can always go back to Defense Production and ask for more money and then we can publish another regulation extending the quantities and the amounts to cover that.

Mr. ENGLE. That goes to the very point I am driving at. Nipping off the tail of the dog isn't the way to get mining production because if you make a little program, then your miners out in the field will not make the initial capital investment necessary to put that production into existence; isn't that right, Mr. Mittendorf?

Mr. MITTENDORF. Yes.

Mr. ENGLE. If you were sitting out there and you had a sack of money in the bank and it was good and safe there, you wouldn't gamble it in a hole in the ground unless you were pretty sure you were going to have a stable market, would you?

Mr. MITTENDORF. I should do that. I have been pretty much of a gambler in the mining business and I haven't had any umbrellas held over my head. I always took a chance and I was raised that way by a forty-niner.

MANGANESE PROGRAM HELD TOO SMALL TO ENCOURAGE NECESSARY CAPITAL INVESTMENTS IN MINING ENTERPRISES

Mr. ENGLE. Do you think you have a program set up here that will put a miner out in the field with his own cash money to open a hole in the ground to get out manganese?

Mr. MITTENDORF. I think in the case of Deming we have.

Mr. ENGLE. How much is the total amount you are going to earmark? Is it $8 million? Am I pretty close on that?

Mr. MITTENDORF. You are pretty close on that; yes.

Let us look at the engineering data we have and bear in mind that this district was reexamined as late as July last year. Let us consider that it was examined and the deposits were examined, not only by the Bureau, by the Survey, but by some of the very best engineers that are in the private practice.

The estimates differ drastically as to the potential of that district to produce. They are down as low as 100,000 tons of ore within the entire district, up to an optimistic appraisal of 400,000, which is not substantiated by technical facts.

The amount of money we have set aside will buy and pay for 260,000 tons of ore, which we believe is a very realistic appraisal of what that district can produce.

Mr. ENGLE. What is that in terms of the national consumption? Mr. MITTENDORF. A very small amount, percentagewise. I can't express it, but it is within the limit of rounding off figures, as you add up your requirements.