Mr. ENGLE. It doesn't amount to a pinch of salt, does it? Mr. ENGLE. Then does not that raise the basic question as to whether or not that, taken together with the rest of the manganese program, we are not going to meet the requirements? Mr. BRADLEY. Unfortunately that is true. The only really large quantities of manganese, domestic manganese ores that are in sight are those that are in the Cayuna and in slags and possibly in Maine. There is a possibility of some in the Dakotas. Mr. ENGLE. Some of these fellows from out in New Mexico have told me they could bring four times as much ore out of that area as the DMA thinks they can. In other words, they do not agree with the ore reserve figures of DMA. I don't know about that, but it seems to me if you are going to set up a program you could give them a crack at it and if you are only paying for what you get, and if you don't get it, you don't pay for it; it doesn't cost the taxpayers anything, but it does two things if you make up that kind of a program, and we are talking about the material that is absolutely essential to the defense industry of our country, our steel industry can't go without it, and we are talking about $8 million, when we have a military budget that may run $30 or $40 or $50 billion. Last year it was $16 billion. Here we have a thing that can stop us just as sure as anything on earth, and we talk about a little piece of money, just dribbles. What I am saying is that if you set up a program that is big enough, that operates on this schedule we are talking about, at least you get those fellows out there digging for that stuff. This business of, as I say, nipping the dog's tail off an inch at a time, wouldn't get the capital investment to bring out the production. Mr. GUMBEL. Mr. Engle, I think maybe we are worrying about something that isn't too serious. Mr. ENGLE. What I am basically worried about is Mr. GUMBEL. I understand Mr. ENGLE. I am worried because I can't see any manganese around. I would like to see it stacked up on the ground. Mr. GUMBEL. We have this appropriation for $8 million to buy manganese, which is an amount that Defense Minerals thinks is sufficient. Let us assume it is not enough, that more manganese will come in. As we get that manganese, we are not going to keep it. We are going to sell it to industry, and as we sell it to industry we get our money back and we replenish that $8 million and then we are in position to go out and buy more manganese. This is in the essence a revolving fund. Mr. ENGLE. I understand about all of that, Mr. Gumbel, but I am sure Mr. Bradley knows what I am talking about when I say that, if you don't make a program big enough and underwrite it, you don't get the capital investment from the miner to go out and dig the stuff. That is all there is. It is as simple as that; isn't it, Mr. Bradley? Mr. BRADLEY. That is a true statement. Mr. ENGLE. In other words, if you were to earmark á hundred million for this and get out there with your cash money, you would get the initial impetus, the initial investment of cash to do it, but if you have a little sniveling program, a little pinch-of-salt program that doesn't amount to a hill of good old Iowa beans. The average miner out there will say, "Let's see; here we have so many units, and there are so many producers, and we are going to run out of money there. I am not going out and put my money into a mining operation and hope to God that the Government will bail me out." In fact, the experience of the mining industry is the exact opposite. The mining industry in this Nation has taken a beating in 2 wars, and they are not going to do it again. They are going to say, "Listen, we want to see where the money is coming from"; and that is why I can't understand a program that is too little, too late, and too cheap, especially on an item like this, if you please, that they just can't run out those battleships without the manganese. Now, I didn't intend to interrupt you with a speech, Mr. Gumbel, but I was afraid that you didn't realize that my concern goes to the basic proposition in the program, as well as the mechanics. I am afraid of the mechanics, too. There are too many hurdles around here. I can see a fellow convincing Phil Bradley, then having to convince Mr. Mittendorf, then go to Dr. Morgan and then convincing Mr. Gumbel and then talk to Captain Maull and then argue with Ewing about whether he has a price ceiling that can't be violated, and I want to get around to that in just a minute. Mr. SAYLOR. If the gentleman will yield Mr. ENGLE. Yes. DISCUSSION OF MILLS-MARTIN BILL Mr. SAYLOR. Mr. Bradley, in setting up your program what has been your objection to the so-called Mills-Martin bill? Mr. BRADLEY. I personally have had no objection to that, so long as that price schedule in that bill is protected by a provision for the purchase the basis of the recoverability, reasonable protection on the basis of recoverability, because, as you know, there are many ores that will assay 20 percent manganese from which you can't get five or six or seven units at best. In other words, ores which by assay will contain 20 units under the Mills bill cost $20 per ton, from which you simply can't for chemical reasons obtain more than 6 or 7 units of manganese. Mr. SAYLOR. Would you be willing to enlarge this program that you have started then along the lines of the Mills-Martin bill? In other words, say that the Government will guarantee to purchase all of the ore that is produced that will assay within a schedule that you set up and produce so much manganese. Mr. BRADLEY. I personally would put it this way: I would set that schedule up, but I would say that it would be required that the ore be tested and the recoverable content of the ore determined and the price reduced-the price paid by the Government-reduced in proportion to the departure from the standard. Mr. SAYLOR. In other words, you would, instead of having just on the assay reports, pay on a recoverable ore? Mr. BRADLEY. That is right; an ordinary smelting practice. Mr. SAYLOR. Let us move on to Mr. Mittendorf. What do you have to say about that? Mr. MITTENDORF. I concur with Mr. Bradley. One objection to the Mills bill, we stated here a few minutes ago, in manganese ores, the type of mines, the type of ore, the type of complection in the mineral varies so that we feel we should tailor programs to fit an individual district. Mr. SAYLOR. Would the limitation which Mr. Bradley placed on that fit in with your tailoring? Would that not require the recoverable ore to be the basis upon which you were paid? Mr. MITTENDORF. That would correct it. Mr. SAYLOR. That would correct the situation? Mr. MITTENDORF. That would correct it. Mr. SAYLOR. Let us move on. Dr. Morgan, what do you have to say about it? Dr. MORGAN. We in DPA don't get into the technical details. We generally concur in whatever DMA says will get the manganese. If it requires anywhere near the right amount of money, we will approve it. Mr. SAYLOR. Do you understand the theory of the Mills-Martin bill: That the Government will buy for a stated period all of the ore that is produced? Mr. Bradley feels that it should be a requirement; that it is not just the assay ore that comes out but it is the recoverable ore that is produced, and with that limitation he thinks it is a good proposition. So, if he goes along with it, would you be willing to say that for 5 years the Government will buy all that ore on a schedule-pay set-up? Dr. MORGAN. Sir, whatever the Defense Minerals Administration thinks is the best way to get the manganese out, if it is anywhere near reasonable and I don't have enough technical knowledge about this detailed proposal to judge just at the spur of the moment whether it is or isn't-if it makes any sort of sense, it would be approved. If it is a 5-year contract, or a 1-year contract, or involves building a plant or buying ore, or testing it or analyzing it-whatever it takes-DMA has the experts on manganese and must negotiate the contract. All we in DPA say is we need so many hundred thousand tons more of manganese, more than we have now, and we are willing to put up the money to get it. The people in DMA go out and find the way to get it. Mr. SAYLOR. We have passed you by. Mr. Elliott, what do you have to say? Mr. ELLIOTT. If that is recommended and certified, of course, we would execute the program with this qualification: That under the rulings of the Budget Bureau that we mentioned in our previous hearings there would have to be an over-all ceiling. Mr. SAYLOR. In other words, while the program would last for 5 years, your Department would have to put a ceiling on the number of units that were paid for; is that correct? Mr. ELLIOTT. That is correct, sir, because of the ruling of the Bureau of the Budget that requires us to put up the cash for the maximum contingent liability of the Government. Mr. SAYLOR. But, if the Defense Minerals Administration can in their over-all picture figure out how many units are recoverable. throughout the United States and would certify that to you, then you would be willing to go along with that figure; is that correct? Mr. ELLIOTT. That is correct, sir, assuming that DPA certified the amount of money to the Budget Bureau and they made that money available. Mr. SAYLOR. All right, sir. Now we will come to your counsel, Mr. Gumbel. Do you agree with that? Mr. GUMBEL. That is right. PRICE OF MANGANESE ORE TO BE DECONTROLLED Mr. SAYLOR. Let us move over to the OPS. Mr. Ewing, how does that affect you? Mr. EWING. We plan to decontrol the price of manganese ore. Mr. SAYLOR. Folks, I think that is a remarkable statement. That is the first crack in the armor. Mr. EWING. Possibly Mr. Jacoby could explain our position a little better, but I think the statements of these gentlemen will confirm it. Mr. SAYLOR. Let us find out where you come in, Mr. Jacoby. Mr. JACOBY. On this manganese situation, the tonnage of manganese ore we are talking about in the United States is an insignificant factor in the manganese picture. Our usage this year will be about 2,000,000 tons. For the last 5 years, I think our production in the United States has been less than 150,000 tons. Most of our ore today is purchased by four of the largest producers of manganese alloys. Those people purchase their requirements abroad and as such are not subject to the price regulations. Some of the ores do come in through brokers, and is subject to price regulation, but that is a small amount. On the basis of that position, we are recommending the decontrol of manganese ore. We are also prepared to recommend that GSA be not subject to any provisions of the existing GCPR; that we hope to get out promptly in advance of our decontrol of prices on manganese ore. MANGANESE PROGRAM PROVIDING UNIFORM PRICE FOR ALL DISTRICTS HELD LESS ADAPTABLE TO PROFIT CONTROL Mr. SAYLOR. All right. Now we will start back with Mr. Bradley. Mr. Bradley, what is wrong with the program that I have just suggested as a solution and an over-all picture in the domestic manganese problem? Mr. BRADLEY. Do you mean for the Nation, or for this area? Mr. SAYLOR. I mean for the entire country. We have manganese in very few spots in this country. Mr. BRADLEY. There are certain ores we can get more cheaply, and we ought to do it, and our other ores will cost a little more and we have got to get them somehow. Mr. SAYLOR. In other words, if there is ore in certain places, you feel that the defect with this is that if there is ore that can be recovered at a lower cost, therefore, the Government should take advantage of that and the man that owns it should not have that benefit at all; is that correct? Is that your statement? Mr. BRADLEY. I don't want to be driven into a statement on profit control, because I am essentially a producer myself, and I don't like the idea of profit control; but, nevertheless, sitting on the Government side, it doesn't seem too proper for a man to make a bonanza out of an emergency. Mr. SAYLOR. How is the man going to make a bonanza out of an emergency if he happens to own the land that contains ore that is easier to mine than a man who doesn't? In other words, you are going to penalize him because you are sitting in the position you are. Mr. BRADLEY. Well, he is not penalized. We were trying to add just these prices, or, in my department, we tried to recommend prices that are necessary to bring the ore out of the ground, and obviously that price is a price which will allow a man to make some money off of a thing, or he wouldn't go into it. I won't go into things I can't make money off of or don't stand a pretty good chance. Mr. SAYLOR. That is right, and you can't expect anybody else to stick their money into it unless they have a reasonable chance of getting a fair return. Mr. BRADLEY. That is right. Mr. SAYLOR. Now, if you set up a standard whereby the average fellow has a chance of getting a fair return, the mere fact that one fellow happens to be in a position where he can get more, do you think there is sufficient reason not to put the program into effect? Mr. BRADLEY. It depends on the ore. It depends on the metal. In tungsten, some people are going to make money on this Government price. They are going to make a lot of money probably. Mr. SAYLOR. What is wrong with the other people making a little money on manganese? Mr. BRADLEY. You couldn't divide tungsten; the occurrence is sporadic, etc., but manganese has a chance of better control, and I think it better that the price be controlled within these few areas that we speak of. Then, outside of those areas in the sporadic deposits, let them be paid on the basis of this schedule that you and I speak of, but let us control these districts. There are only four or five at the most of them, and adjust them to the prevailing conditions in the district. Mr. SAYLOR. Do you feel that that will be necessary before you could go along with the over-all picture I have outlined? Mr. BRADLEY. Well, the fact of the matter is that the prices are pretty generally set up for these districts, and they do depart somewhat from this mill (Mills bill) schedule, but not too far. Mr. SAYLOR. Could you prepare, or are you in a position to give this committee your estimates of what it would be necessary to pay per unit of recoverable ore in each one of these areas? Mr. BRADLEY. I would prefer to give you figures like that as a confidential communication. |