Dr. BOYD. No; I have never heard that term used in that way. What we do is recommend-there are several things to do. In the case of a loan we recommend that the loan be granted under certain terms. We would assume, before we made that recommendation, that the project was feasible, and we would determine that it was feasible, so when we recommend the loan we would say that it was feasible and could return the loan.

Mr. BENNETT. Before a project is feasible, you have to say it is feasible?

Dr. BOYD. Yes.

Mr. BENNETT. What are the factors that go into determining whether a given project is feasible?

Dr. BOYD. It will depend on each individual case. Is the ore reserve there, for instance? Is there any chance of the ore being there to make a project warranting expenditure of Government funds? Are the materials and equipment in short supply?

Mr. BENNETT. Is the cost of getting it out taken into consideration? Dr. BOYD. Yes; it is.

Mr. BENNETT. What factors did you consider there?

Dr. BOYD. Cost?

Mr. BENNETT. Yes. Take copper, for instance. What price would you consider unfeasible, put it that way. Suppose you have a known deposit and application was made for a loan and you know how much copper is there and then it gets down to a question of how much it is going to cost to get that copper out.

Dr. BOYD. At the moment we are trying to get those projects going that can produce at the market price, so we would have to determine whether it is possible for them to produce at the market price.

Mr. BENNETT. You are not considering projects where there is any likelihood that the cost is going to be greater than the present market price?

Dr. BOYD. Not at the moment.

Mr. BENNETT. Do you intend to consider projects of that kind? Dr. BOYD. We will when we know that the requirement for copper is sufficiently high to demand it.

ADVANTAGE OF PREMIUM PRICE PLAN DISCUSSED

Mr. BENNETT. Most of the projects that are not in operation are not in operation because they haven't been able to operate at market price; isn't that true?

Dr. BOYD. No; there are a number of projects that are before us today that couldn't have operated at 17 or 12 cents price, that could operate at the 2412 cents price.

Mr. ENGLE. Yes; but Dr. Boyd, a lot of copper people would get into operation if they figured they could get 2412 cents, but they are not going to start because these metal prices fluctuate so sharply.

Dr. BOYD. That is the reason we are entering into these contracts with them, to assure them of a floor at a price of 242 cents.

Mr. ENGLE. I don't object to that, except I think the premium-price plan is better. If you don't put in a premium-price plan, it is better to do that because you are never going to get metal production in this country until you assure the mining industry a market and the only

way you can assure the mining industry a market is to assure them a price that they can rely on for a period of time.

If they knew, for instance, that they could get 241⁄2 cents for copper for a period of 5 years, you would see some of these fellows really going to work.

Dr. BOYD. That is essentially what we are doing, Mr. Engle, as far as we can. We are doing just that.

Mr. ENGLE. We disagree about methods and not objectives. I think we should make that clear. I think the premium-price plan would be better than what you are doing, but if you are not going to adopt the best method, I hope you will adopt the next best method. Now, are you going to peg the price of copper at 242 cents for the next 5 years?

Dr. BOYD. We haven't discussed that one yet.

Mr. ENGLE. You are going to make a lot of people rich if you do that.

Mr. BOYD. That is the worry about it.

Mr. ENGLE. And there is going to be some kicking about it, but if you put it on a premium-price basis you wouldn't have to face that argument. I think with tungsten it may be quite different. Probably you can take the price of 63 and your requirements may be all right, but can we agree on this, that the thing the domestic mining industry needs is some assurance of a market and that is provided in two ways, first by assuring a price for a given period of time, so that they will know for 5 or 10 years they can go ahead and operate, just like they are doing with the San Manuel. It is an 11-year contract; is it not? Dr. BOYD. That is right.

Mr. ENGLE. Now, the nice thing about that is that those people know that for 11 years they have a market for their product and they have a floor that will work.

Dr. BOYD. Yes.

Mr. CRAWFORD. Mr. Chairman, is the gentleman from Michigan through?

Mr. BENNETT. I would like to ask one or two questions.

Mr. CRAWFORD. You hold the floor until you get your questions asked, will you, please?

DOMESTIC MINERALS PROGRAM GEARED TO FOREIGN PROGRAM

Mr. BENNETT. Doctor, is there any intention on the part of your department to gear this program with our foreign requirements? Dr. BOYD. Certainly the activities we are involved in must gear to the foreign program. There are not the resources in this country to meet the requirements, so you have to gear your program to the foreign situation.

Mr. BENNETT. What I meant is this: Is there any intention on the part of your department to be a little wary of the size this production program gets to be for fear that it might cut down our dependenceon foreign production at some later date?

Dr. BOYD. Definitely not; no sir. We feel, and I might state that it is the policy of the Administration that we have been working with,. that we have got to make every effort we can to get assured sources of raw materials. That means at home when we can possibly get

it done at reasonable costs. This thing can go to tremendous quantities of money and we have to present this before the Appropriations Committees of the House and Senate to indicate how much money this thing is going to cost, including the contingent commitments against the Government which will be required to maintain these prices that Mr. Engle and I have been discussing.

That amounts to enormous sums of money, so we must do it on a reasonable extent and with reasonable security.

LARGE COPPER COMPANIES OPPOSED TO ANY TYPE OF SUBSIDY PLAN TO INCREASE PRODUCTION

Mr. BENNETT. Most of the larger copper companies in the United States are opposed to any type of subsidy for copper production; isn't that a fact?

Dr. BOYD. I couldn't answer that for the moment. I don't know. I would assume they would be; yes.

Mr. BENNETT. Do you have people in your set-up, in your own and DMA, who have formerly been connected with some of the bigger copper-mining companies?

Dr. BOYD. Yes.

Mr. BENNETT. Do you think that those people can take a sympathetic view to the problem of the small copper-mine owner who is in need of a subsidy?

Dr. BOYD. I have had long discussions with, I think, all of them and I think every one of them is in complete sympathy with this program and particulary with helping the small miner. We have a very definite feeling among all of us that the small mining operation is a vital part of the mineral industry and has to be strengthened. I have never seen any one of them that didn't feel that way or take any action that would oppose that point of view.

Mr. BENNETT. Do you have on your staff any people who have been formerly associated with the small-mine operators of this country? Dr. BOYD. Yes.

Mr. BENNETT. How many?

Dr. BOYD. I would have to analyze it in my mind and see who each of them are.

Mr. BENNETT. Are there several?

Dr. BOYD. There are several of them.

Mr. BENNETT. Do they hold important positions?

Dr. BOYD. Yes.

Mr. BENNETT. Do they have anything to say about the making of these contracts?

Dr. BOYD. Yes; very definitely.

Mr. BENNETT. You mean they are at policy-making levels?

Dr. BOYD. Well, the policy-making level is political clear through the whole operation. I would, myself, make no policy determination that had not been worked out for me by those who know what they are talking about. I don't know enough about all the various angles to make a policy determination or recommendation. Those recommendations come to me from those who know what they are talking

about.

COPPER PRICE DISCUSSED

Mr. BENNETT. Do you think the price of copper is high enough today in view of the President's order?

Dr. BOYD. Practically; no.

Mr. BENNETT. Do you think we would get more copper if we raised the price?

Dr. BOYD. Not much immediately; no. Eventually we will.

Mr. BENNETT. Our price is 242 cents a pound. I understand the world price of copper is something around 30 cents a pound.

Dr. BOYD. The British raised the world price to 262 cents, I think the day before yesterday.

Mr. BENNETT. Copper scrap is selling in this country for as high as 40 cents a pound, isn't it?

Dr. BOYD. Yes, I understand so.

Mr. BENNETT. Would you recommend it or would you be willing to recommend to the power that be that the price of copper is such as to stimulate additional production?

Dr. BOYD. I would not like to answer that directly here. We have been thinking about it in discussion. I haven't got a final position in the matter at the moment, because it involves a lot of other things than just copper. It is a pretty broad decision to make, to recommend the raising of these ceilings at this stage of the game and when we are having difficulty with the stabilization program.

Mr. BENNETT. You think the price is too low?

Dr. BOYD. For the long run, I feel that the price of copper has not been sufficient to permit the exploration and discovery of new reserves to maintain the supply.

Mr. BENNETT. That is all.

INDIVIDUAL CONTRACT SYSTEM VERSUS BLANKET PREMIUM PRICE PLAN

SYSTEM DISCUSSLE

Mr. CRAWFORD. Dr. Boyd, this 11-year contract that Mr. Engle just referred to, other firms can make similar contracts can they not? Dr. BOYD. Yes; we have several propositions before us.

Mr. CRAWFORD. In other words, this firm has no corner on contracts whatsoever?

Dr. BOYD. Absolutely not.

Mr. CRAWFORD. When a contract is made with a mining firm, one of the main objectives of which is to induce that operation to go into low-grade ores, are there any provisions put in that contract which some way pushes them into a position where they will go after the low grade instead of staying on the high grade?

Dr. BOYD. Yes. I think the terms of the contract would do that. You see, virtually all we are doing in the contract is assuring that market for a lengthly period of time. He may sell his copper on the market and constantly the incentive of profit is there to make him do the best job of operation.

Mr. CRAWFORD. Let me illustrate this to you: Supose I have a mining property, we will say with 30,000 acres in it, where we have low grade and high grade and medium grade and so on down the line. When I make a contract with you on the basis of say 24 cents with a floor of 17 cents, I follow the market down to 17 and when I

reach 17, if I don't want to follow it any further, I sell my stuff to the Government.

Dr. BOYD. That is right.

Mr. CRAWFORD. When you make a contract with me to that effect under your present plan, do you put any provisions in that contract obligating me, directly or indirectly to go after my low-grade stuff, instead of staying on the high grade? I might have a board of directors silly enough to keep me on the high grade and say "Let's get the stuff while we can. Mine every pound we can, high-grade ore converted into the present market price and take our winnings now, while we can get it."

put

I might have a board of directors who are foolish enough to do a thing of that kind instead of going after the low-grade ore. Do you anything in the contract which obligated the company to mine the low grade ore so as to increase the total production of the tonnage? Dr. BOYD. No, sir, I don't think we have at the moment. This particular contract referred to is a body which is pretty uniform in grade, so that that question wouldn't arise. It is only really in the

Mr. CRAWFORD. You have been saying-I want to get away from that contract now, because I simply wanted to reveal that that company had no corner on that type of contract.

Dr. BOYD. That is right.

Mr. CRAWFORD. You have been pointing out that one of the objective, at least, is to get low-grade ore mined. All I am asking is, Is there anything in these contracts which obligates the company to mine its low-grade ore, if it has low grade, along with high-grade ore or medium?

Dr. BOYD. Mr. Crawford, what we are driving at really is to get the maximum production as quickly as we can. Naturally, the production will come first from the high-grade ores. When we went back to discuss tungsten, we were so critically short of tungsten that we have to make it profitable for these people who mine the much lower grade ores to get the total production up. That would vary with different metals and materials.

Mr. CRAWFORD. Wait on that a minute. Suppose you do have it in your power to accomplish what you have just said, but the world market is such that the price moves downward toward the ceiling or the floor, the price you put in that contract, covering whatver metal is involved. Your floor might be 17 cents, it might be 10 cents, it might be 8 cents on this, that or the other matter.

Now, if this open market does not induce the operator to mine this greater tonnage from high grade and low grade, medium grade and so forth, which he sells at the open market, certainly your floor price is not going to induce him to do it.

Dr. BOYD. That is true.

Mr. CRAWFORD. So then you set a ceiling up here in the hope that somewhere between the ceiling and the floor is a price which would induce him to bring forth greater tonnage. That is your objective? Dr. BOYD. Yes.

Mr. CRAWFORD. And then if he does get into a situation where his costs are so high on this increased tonnage that he cannot sell in the open market to cover those costs, and yet his costs are below that floor, he can continue to operate at the floor price?