FASTER ACTION IN DPA ON CLEARING DMA RECOMMENDATIONS NOW POSSIBLE

Mr. REGAN. Dr. Morgan, our time is running short. We have two other witnesses here this afternoon. I don't know whether we should hear them or more from Dr. Morgan, but it seems to me, Doctor, that this committee is very concerned in carrying out the program advocated in the bill last fall to get these strategic minerals developed in this country, if possible, and consolidating all of these initial departments to which Mr. Budge referred into one PDQ.

Now, we heard from Mr. Gibson this morning that he certifies a list of materials for which we want the Defense Minerals Administration to formulate a program. They have formulated X number of programs, very few, one of them was the chrome program sent over to you. I would like to know how long, I think the committee would like to know how long, after he sent this program over that he was requested to furnish, that it was over there before you sent it back for further revision.

Was it in your hands, or did it have to go clear up the line and back down and finally sent back for one correction, as I understood your statement a while ago, that the program is pretty well all agreed to with one exception and that you sent it back for revision on that one exception. How long did that take and that is the bottleneck sort of a thing that the committee is interested in seeing what they can do to eliminate, and to get these programs in and Mr. Gibson certify to the DMA what minerals are to be procured-that is the way we have it set up, at least, that Dr. Boyd there then send back the program to you, I assume.

Now, where does it go and how long does it take, ordinarily, to get approval of such a program and what can be done to expedite the handling of that procedure?

Dr. MORGAN. In regard to your specific question on the chrome program, I believe that as submitted by Dr. Boyd, there were probably 5 or 6 weeks between the time of submission to DPA and its return to DMA for implementation.

Mr. DONOVAN. May I ask a question there?

Mr. REGAN. Yes.

Mr. DONOVAN. Was the delay in any way caused by the fact that you had to refer to the State Department in connection with foreign chrome?

Dr. MORGAN. No, sir, not on this specific proposal. We are aware of the State Department's position on these materials. We didn't have to check this one individually with State. Not in apology, but the thing came over when the DPA was in the process of moving and being reorganized and people being hired and telephones disconnected and all those other little things that we shouldn't have to mention at a hearing like this, but the absence of secretaries and the fact that they still hadn't hired lawyers and all those things-

Mr. REGAN. Well, is it true that in another 30 days you will have a going concern?

Dr. MORGAN. I think if that were to come over now, we would handle it in a week or less instead of 5 or 6 weeks.

DETERMINATION OF DEGREE OF NECESSITY REQUIRED BEFORE ABOVE-MARKET PRICE ON COPPER WOULD BE RECOMMENDED

Mr. BARING. Dr. Morgan's statement that he was instrumental in setting the price on chrome, the Government was willing to pay up to 25 cents for copper during the last war. The ceiling was about 12 or about 16 cents premium. Under the present scale of inflation, do you think that they should be willing to pay up to 35 cents or 242 cents, that is about an 11-cent premium?

Dr. MORGAN. I wouldn't care to express an opinion on that, sir, just offhand like that. It would depend. I believe that we would be willing to recommend payment of any price for a thing if we really need the material badly enough.

Mr. BARING. You would say that it was very short and very tight, wouldn't you, the supply of copper?

Dr. MORGAN. We certainly wouldn't recommend a rise in the general price ceiling to that point. Now, if a specific mine, a new source of supply could produce a specific amount that might go purely into a national security program, that proposition would be given careful consideration.

Mr. BARING. Just how high a premium would you recommend?

Dr. MORGAN. We are not opposed to paying higher than market prices where necessary to bring out production. The question is, how necessary is it. That is what we have to try to determine.

MANGANESE SITUATION DISCUSSED

Mr. SAYLOR. Dr. Morgan, on the first page of your statement you say that you and your policy division are responsible for advice on broad policies and program intended to expand supplies of raw materials and channel them into programs essential to the defense effort of the United States.

When we had Mr. Wampler on the stand this morning, he said that one of the principal items we needed if you were going to have a war was steel and you couldn't make steel without manganese.

I want to know what program you have, if any, or what policies you have with respect to manganese.

Dr. MORGAN. I think the Government recognized the significance of the manganese under the Stockpile Act. When the Soviet Union severely curtailed shipments of manganese to this country in early 1949, the situation was quite acute and we formed an Interdepartmental Manganese Coordination Committee at that time which was headed by Dr. Boyd.

We reviewed all the possibilities as to expansion of supply in this country, conservation in the use of manganese, new processes such as recovery of manganese from open-hearth slags and others and increased importation from foreign countries that were accessible to us. As a result of programs developed at this Interdepartmental Manganese Coordination Committee, the withdrawal of the Russian supply, which had been over 35 percent of our normal supply has been completely overcome, the needs of industry are being met

Mr. SAYLOR. You will be interested in knowing that you disagree with the report of Mr. Wilson, which he submitted on April 1, because on page 40 he said that "partially filling the vacuum created by the

almost complete disappearance from our imports of Russian manganese, substantially greater quantities of this vital ore have become available from India and Africa. During 1950, imports of this commodity from all free nations were 50 percent higher than in the previous year."

Dr. MORGAN. That is a true statement and we are also importing manganese from Brazil and we have some domestic production, and we are at the present adding-well, we are meeting the full needs of industry and we are adding some manganese to the national stockpile. It is no secret to say that we are not adding it anywhere near as fast as we would like to, but the stockpile has been added to right up to the present time at a very small rate.

Mr. SAYLOR. Do you think that there is a critical shortage of manganese?

Dr. MORGAN. Not at the present time, since the full needs of industry are being met. There is insufficient to permit the early achievement of the manganese stockpile objective.

Mr. SAYLOR. Ön the 21st day of September 1950, before a special subcommittee on stockpiling of the Armed Services of the House, Dr. Boyd, in response to a question-and this was the question-Dr. Boyd, would you say, as your own personal professional opinion, that manganese, as of today, is one of our most critically short items? His answer was, "Yes, sir."

Following that, as late as November, you are familiar with the fact that the Government had to direct manganese to the Bethlehem Steel because their supply was so short that they were shutting down some of their plants.

I want to know where this tremendous influx has come since those two statements, if the supply is not now critical.

Dr. MORGAN. Considering the unfulfilled stockpile objective, there is by no means enough manganese to meet the total security requirement. Considering the current needs of industry alone and the fact that industry is operating at full level of steel production, there is enough manganese coming in, I am informed, to meet the current needs of industry and add small portions to the national stockpile.

If you will check, sir, the stockpile report on manganese-it is now classified Secret by the Munitions Board-you will see that small quantities are being added to the stockpile at this time.

Mr. SAYLOR. But if we come to an all-out war, and our supplies are cut off from India, Africa, and Brazil, we don't have enough to carry us for more than 18 months, do we?

Dr. MORGAN. That is a substantially correct figure, yes, sir, but the strategic guidance as to what areas will be cut off is given to us by the military experts of the Government-the Joint Chiefs of Staffand I cannot say in open session what their opinion is as to the wartime accessibility of India, Africa, and South America, but we do know that in World War II central and southern Africa were accessible and South and Central America were accessible, with some shipping losses from submarines.

Mr. SAYLOR. One question: But you know and I know that the contract which they have let and which Dr. Boyd testified to with regard to the Three Kids Mine will not go into effect until January, 1952, as far as increased domestic production is concerned, is that correct?

Dr. MORGAN. No, sir. In considering the shortage, we consider the state of the national stockpile and I don't want to pass the buck. am not sure how much has been said openly, but you might ask t Munitions Board to give you their opinion of the status of the copp stockpile at the present time.

Mr. BENNETT. They would say it is classified, would they not? Dr. MORGAN. But they will give it to you.

Mr. BENNETT. I would just like to read a short paragraph, a port by the Senate Small Business Committee in the Seventy-eigh Congress, entitled "Survey of the Nation's Critical and Strate Minerals and Metals Program."

It appears on page 12 of the report.

It says:

Disapproval of new domestic mining projects and expansion technicall; the field of critical copper continued right through the tight periodthis is back in 1943

More than 30 domestic projects which were optimistically prepared for proval by the Primary Production Section, Copper Division, some pen for more than 2 years, still are held in abeyance. The chances now appear si that any of these will be permitted to operate during the war. The los domestic copper to the war effort up to the fall of 1943 is estimated at well 250,000 tons. At the same time, Herculean efforts were made to keep ports at the maximum figure. By good fortune no important interference the shipping program occurred and there were no domestic or foreign stopp of sequence so that a reasonable copper sufficiency has been maintained in of the restrictive domestic policy. The philosophy of those who advoca policy of scarcity and who have the big-mine complex, is best illustrate extracts from a letter dated December 22, 1942, written by Mr. Fred Se Jr., who then was Director of the Facilities Bureau. Searls resigued his pos when Vice Chairman Ferdinand Eberstadt, principal exponent of the “econo scarcity," left WPB at the request of Donald M. Nelson, but he reappeared sh thereafter in a stronger position as production adviser to James F. By Director of the Office of War Mobilization. Searls is closely connected with Newmont Mining Corp., the well-known holding company for mining stoë There is no reason to believe that Searls or his former associate friends in t WPB ever receded from the position expressed in his letter despite the Roosevi Nelson-Wilson policies.

I would like, Mr. Chairman, to present for introduction in the r ord a tabulation which I understand came at the recommendation the Copper Division of the WPB, March 15, 1943, which was a proved, but which I understand was rejected by the Appeals Divisi‹ of the Review Board, of which the same Mr. Searls was chairma These projects, according to this tabulation, would have produc some 150,000 tons of copper annually. I wish, Mr. Morgan, that yo would take a look at them and I submit them for your consideratio Dr. MORGAN. I would be very glad to, sir.

Mr. BENNETT. I think you will get all the copper you need fro those and other projects.

Mr. REGAN. You would like that inserted in the record.
Mr. REGAN. Without objection, it will be so inserted.
Mr. BENNETT. Yes.

(The information referred to is herewith inserted.)

DPA NOT HOLDING UP MANGANESE CONTRACTS

Mr. SAYLOR. May I ask one question?

Mr. REGAN. One question.