Mr. ENGLE. There are three of you on the committee. If two of you vote for it the recommendation is made, isn't it?

Mr. LARSON. Jack Small is on the committee, RFC is on the committee, Mr. Symington. I think the committee is in pretty general agreement that decontrol of these strategic items is necessary and would be beneficial to the whole economy.

Mr. ENGLE. I can't see why DiSalle would set up a committee with himself on it.

Mr. LARSON. Mr. Wilson set up the committee. DiSalle didn't set it up.

Mr. REGAN. This was a bottleneck we didn't anticipate last week. Mr. ENGLE. They created this after we talked to them.

Mr. LARSON. That is not correct.

As I stated, about 2 weeks ago, Mr. Boyd and myself and Mr. Small and Mr. Gibson petitioned Mr. Wilson to consider the decontrol of these items which would include manganese. There are two groups of items and we pointed out the difficulties in procurement. It was primarily our procurement difficulties that brought this about and one of them is what we are discussing here now.

Mr. ENGLE. As a practical matter, it boils down to this, doesn't it? If you and Dr. Boyd convince DiSalle, the deal will be sold, won't it, to take off the ceilings, and DiSalle will then make a favorable recommendation to Wilson.

Mr. REGAN. They have three other members.

Mr. LARSON. I don't think so. Mr. DiSalle is a member of the committee, as Mr. Boyd and I. It is a matter of convincing the majority of this committee and Mr. Wilson.

The impact of decontrol is a pretty serious impact and that is why it got up to the very highest possible level under the authority granted since the Production Act.

Mr. ENGLE. You are meeting today, are you?

Dr. BOYD. Tomorrow morning at 9 o'clock.

Mr. ENGLE. Mr. Chairman, I wonder if it would be improper to ask that we be advised as to what the recommendation is and when it is made?

Mr. REGAN. Who is the chairman of that committee?

Mr. LARSON. Mr. Eric Johnston.

I think Mr. Boyd and I have indicated what two members of the committee feel like the recommendation should be.

Mr. REGAN. This is a new element that we didn't anticipate last week. We thought we had all of these hurdles pretty well covered and now comes along this committee on the price control features that we thought were all set to be waived last week. I wonder if you would either direct or ask Mr. Johnston to advise the committee of your action?

Mr. LARSON. I will be glad to do that, Mr. Regan, and I am sure Mr. Johnston will be glad to comply. I think within 48 hours we I will have this whole matter cleared.

Mr. REGAN. With that out of the way then we have gone over the last hurdle and we can go ahead with this manganese program once your committee has cleared it. Is that correct? That is, with Mr. Wilson's committee?

Mr. LARSON. This is not an action committee. It is an advisory committee, to advise Mr. Wilson on what action to take on the requests we made.

Dr. BOYD. I think it is important, Mr. Chairman, to realize that our recommendation did not cover all the strategic and critical materials, only those whose costs do not enter into the final products, because when you get into things like copper, et cetera, then you have a much more difficult problem.

Mr. REGAN. At least we would like to know this manganese business is on the road.

Mr. D'EWART. I think, Mr. Chairman, if it is not favorable, then it would be the duty of this committee if we are going to follow through with the effort we are making to write a recommendation for the Banking and Currency Committee for an amendment to the law.

Mr. ENGLE. Not only that but we should take it up with Wilson himself.

Mr. LARSON. If I may take advantage of this opportunity, Mr. Regan, to concur in Mr. Engle's actions in requesting some relief insofar as obligations for contingent liabilities are concerned as they are now required under the present administration of the Defense Production Act, I think that is very, very important to me, for my responsibility, is the most important thing that needs to be done in this whole program. I mean by doing that we really hold up this whole program for what it is and that is of making available to American industry vitally needed critical materials at whatever it costs to make them available; if the situation is serious enough to justify that and without upsetting our whole fiscal program and our whole financing operation of this emergency by having hundreds of millions of dollars tied up that will never be needed. It gives a false picture to the whole operation and to the American people as to what they are up against, and I certainly concur in that and I hope we can come up here very shortly and report to this committee that all of the recommended procurement contracts that have been referred to us have been definitively carried out. We are having some difficulty in the copper area. I would like this committee to be aware of that, and it is taking some time because we feel that it is our responsibility in GSA to take a long last look on behalf of the taxpayer and on preventing a windfall in some of these negotiations.

Mr. ENGLE. You are not talking about the San Manuel, are you?

Mr. LARSON. I am not personally familiar with all of the objections to these contracts but that is among the contracts that is currently being negotiated in my office and negotiations have not yet been completed.

Mr. REGAN. Any other questions?

Mr. Ewing and Mr. Jacoby, I guess your few words answered our questions. We have found these complications of this new committee entered into it. That is what we wanted to get straightened out as to what was the hold-up on this price ceiling. I guess the only thing we can do is wait until we see what the committee recommends to Mr. Wilson.

Mr. LARSON. Mr. Regan, I personally don't thing the committee will be a hold-up. I think that in ordinary administrative processes it might take longer. If this committee gives a clear recommendation that decontrol take place on this group of strategic materials that we recommended originally, that action will be faster than it would have been otherwise.

Mr. REGAN. If you can advise us on that, Mr. Larson, we are all very interested in seeing it cleared. We would appreciate it.

I believe unless there is something else we will take advantage of this 15 minutes.

Thank you again, all of you, for being with us.

We will stand adjourned.

(Thereupon, at 11:45 o'clock a. m., the subcommittee adjourned.)

THE DEFENSE MINERALS PRODUCTION PROGRAM

THURSDAY, OCTOBER 4, 1951

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MINES AND MINING OF THE
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D. C.

The subcommittee met at 10 a. m., Hon. Clair Engle presiding. Mr. ENGLE. The Subcommittee on Mines and Mining will be in order.

Mr. Regan, chairman of our subcommittee, is necessarily absent and, in his absence, he asked the present occupant of the chair [Mr. Engle] to preside.

Unfortunately, the House is scheduled to go into session this morning at 10 o'clock, a circumstance we did not know would occur when this meeting was scheduled. That accounts for our difficulty in getting members here. I think, though, some will come in a little later. If we have a quorum call, we can recess and answer the quorum call and then come back in order to proceed and try to get the essential data we are after, which I think we can do notwithstanding the fact that the House is in session, because this meeting is only for the purpose of getting information and not for the purpose of taking legislative action.

We have with us Mr. George Holderer, Chief of the Manganese Branch, Supply Division, Defense Minerals Agency, and Mr. Frank Johnson, Chief of the Loan Division of the Production Expansion Division of the same agency.

Will you gentlemen please come forward and identify yourselves to the reporter?

STATEMENTS OF GEORGE HOLDERER, CHIEF, MANGANESE BRANCH, SUPPLY DIVISION, AND FRANK JOHNSON, CHIEF, LOAN DIVISION, PRODUCTION EXPANSION DIVISION, DEFENSE MINERALS ADMINISTRATION; AND THOMAS P. THAYER, GEOLOGIST, U. S. GEOLOGICAL SURVEY

Mr. ENGLE. You gentlemen understand, I take it, that we asked for some information in regard to chrome.

Mr. HOLDERER. That is correct.

Mr. ENGLE. I assume you do not have a prepared statement.
Mr. HOLDERER. We do not.

Mr. ENGLE. Very well. We will proceed by question and answer, if that is agreeable.

Mr. Holderer, can you give us the status of the chrome program? I observe you are Chief of the Manganese Branch, but you also handle chrome?

Mr. HOLDERER. I handle manganese as well as chrome; yes, sir.

STATUS OF THE DOMESTIC CHROME PROGRAM

Mr. ENGLE. What is the status of the chrome program at the present time?

Mr. HOLDERER. At the present time, we have a purchase depot at Grants Pass, Oreg., for the purchase of specification chrome.

Mr. ENGLE. When you refer to "specification chrome," you mean chrome meeting certain specified minimums?

Mr. HOLDERER. Meeting certain specified minimums; yes, sir.
Mr. ENGLE. How long has that been in operation?

Mr. HOLDERER. To the best of my information, that has only gone into operation within a matter of a week or two, where they are prepared to accept and pay for deliveries. That is the information I have from GSA. Defense Minerals has nothing to do with the actual operation of the purchase depot. That is purely a GSA function. I believe they are now accepting and paying for ore at that point.

UNITED STATES REMAINS WHOLLY DEPENDENT UPON FOREIGN SOURCES FOR

CHROMITE

Mr. ENGLE. Without revealing any classified information, is it a fair statement to say that approximately 98 or 99 percent of the chrome used in the industry of this country is imported?

Mr. HOLDERER. It is better than that. We import annually on the order of 1 to 1.5 million tons, and our domestic production is on the order of 400 or 500 tons, which is a pretty small percentage.

Mr. ENGLE. In other words, it is negligible?

Mr. HOLDERER. It is negligible.

Mr. ENGLE. Less than 1 percent?

Mr. HOLDERER. That is right.

Mr. ENGLE. In other words, we are wholly dependent upon foreign importations?

Mr. HOLDERER. That is correct.

Mr. ENGLE. And upon our stockpile?

Mr. HOLDERER. That is correct. That is point No. 1 on our program.

STATUS OF DOMESTIC CHROME PROGRAM (CONTINUED)

Point No. 2 is the reactivation of the Mouat Mine in Stillwater County, Mont. That mine was operated or planned for that purpose during the war. Anaconda was the operating agency. Some $12 million were spent in developing that deposit and building the mill, which had a capacity of some 200 tons per day. Regretfully, after the war, the whole thing was sold by War Assets, and the mine and mill were completely stripped.

The Stillwater deposits account for 80 percent of the known chrome in this country. Most of the ore is of a grade which lends itself quite readily to concentration, and Defense Minerals has recommended that the Mouat project be reactivated, and that is in process now of being · carried out.