Now, I don't feel that the Government should mislead its citizens, and I am sure you gentlemen would not want that to happen. Your vigilance in that connection has indicated that beyond any doubt. Maybe we have appeared to be a little meticulous, but I say to you in all candor that our purpose is to make certain that the arrangement which the small man enters into with his Government is one based on sound contractual relationships that will assure him of being reimbursed for that which he has incurred. Mr. ENGLE. Mr. Larson, may I interrupt you for a question? Mr. ENGLE. As I understand, what you are saying is this: That a program has been sent over to your agency with reference to tungsten which embodies in it the principle of a continuing offer; is that right? Mr. LARSON. That is correct. Mr. ENGLE. And the essence of it is that the Government will, according to this program, agree to buy tungsten at no less than a certain price for a period of 4 or 5 years? Mr. LARSON. Five years. Mr. ENGLE. The price will be Mr. LARSON. I beg your pardon. It is 1952 to 1956, inclusive; that is correct. Mr. ENGLE. Well in other words, as I read this, it says: UNITED STATES TO BUY TUNGSTEN DURING 1952-1956 AT $63 PER UNIT The Government shall purchase during the 5-year period mentioned in the next preceding paragraph all domestically produced concentrates offered which meet specification at a minimum base price of $63 per short ton (dry weight) of contained tungsten trioxide— and so forth. That is just a brief statement of what it is-isn't it?—without going into too much detail. Mr. LARSON. I don't have that particular document before me. I have before me only the certification which I received from the Defense Production Administration. Mr. ENGLE. Substantially, does that state the case so far as the offer is concerned? Mr. LARSON. As I understand it, that states the case. Mr. ENGLE. Your agency has found some legal objections to that program; have you not? LEGAL OBJECTIONS OFFERED BY GSA TO TUNGSTEN PROGRAM SUBMITTED BY DMA AND DPA Mr. LARSON. We don't think that under the specific provisions of the act an offer which originates beyond June 30 of this year could be accepted; and, while there are some legal points of view to the contrary, we feel, for the reasons which I have stated, that we must be certain that the man who goes out and acts as a result of this offer can be paid, and I refer specifically to section 716 of the act. Before I quote that, I would like to make this statement: That I think anyone who knows me and I have been around here for several yearsknows that I am not one to be picayunish insofar as fine legal interpretation is concerned. I am an alleged lawyer myself, which is a matter that might be subject to separate debate, but I have tried to apply such meager knowledge as I have in that field to my administrative responsibilities, which are paramount, and I must say that I am in agreement with counsel on this particular point, and this provision which I refer you to reads as follows: SEC. 716 (a). Titles I, II, III, and VII of this act and all authority conferred thereunder shall terminate at the close of June 30, 1952, but such titles 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. ENGLE. What would be the matter with putting this program into execution with the proviso that any miner who participated in it should file an acceptance and intention to participate under it according to the terms of the announcement, and to have those filed prior to June 30, 1951? You would have your offer accepted; wouldn't you? Mr. LARSON. Congressman Engle, your judicial approach to the question coincides exactly with my own, and that is exactly what we propose to do before the day is over. Mr. ENGLE. And we should say then to the mining industry as far as tungsten is concerned: "You producers who want to get in under this program have to announce your intentions to accept the Government's offer by June 30, 1951, or unless Congress is willing to extend the period of time for your acceptance, and we don't know whether we can get that done or not. We may try to do that." But, in any event, we have what? This is May. We have 21% months. Mr. LARSON. That is right. Mr. ENGLE. We have 212 months. I bet you will get a lot of acceptances in 212 months, provided they don't have to guarantee ore reserves and all that kind of business. TUNGSTEN PROGRAM AS PROPOSED BY GSA Mr. LARSON. NO; we don't require that. I mean our plan, which we are on the verge of promulgating today, which is not entirely satisfactory from an administrative standpoint, and there are certain legitimate objections from the minerals people, but we think it is the best that we can do under the circumstances and we think that it will accomplish that which can best be accomplished now, and that is the assurance to the mining industry that this $63 price is firm. Then we propose to urge the Congress to amend the legislation so that a continuing-offer type of arrangement can be entered into with less detail than the offer-and-acceptance arrangement which we are going to have to promulgate as of the moment; or, likewise, in order to definitely determine this-the law is what the last judge found it to be and, of course, the law with us is what the Attorney General finds to be, and I apologize we have not sought the advice of the Attorney General before this on this, but a letter went out last night seeking his advice, which might change that arrangement. In the meantime, we are noti fying as of today the mining industry in this country that those who wish to participate in the expansion of their production or in new production can bring that production into the Government. If they can't get an equal or better price somewhere else, then we will pay them $63 a unit for it. We want that to extend for such period of time as it will encourage not only the miners but the people who will operate mills and refineries for concentrates, et cetera, to channel private capital into those establishments so that this industry can get on its feet to meet the emergency. I appreciate, Mr. Engle, you are putting it in much better language, and shorter than I, what our proposed plan is. Mr. ENGLE. I don't see why that won't work provided you don't make the acceptance a matter of a man making any firm commitment with reference to what his deliveries will be. Mr. LARSON. He can accept it on a penny post card if he wants to, just so we have got his name and there is an expression of his intention to call upon the Government to fulfill in his behalf this offer which they are making. Mr. ENGLE. In other words, what you want him to do is to notify the Government that he is accepting their offer. Mr. LARSON. That is right. Mr. ENGLE. And that he will look to the Government for a floor price of $63 if he can't sell on the market for an equal or better price? Mr. LARSON. That is right. And the boys from Defense Minerals, who are the real experts in this field and the boys with the actual practical experience, assure me that in their opinion it will be some time before the Government will ever have to set up its receiving facilities to take in this ore. We have got to have it available. We have got to have funds obligated, of course; under the administrative procedures in carrying out the defense-production ability we have to obligate funds. FINANCING OF TUNGSTEN PROGRAM Mr. ENGLE. That is another thing I wanted to ask you, about the mechanics of funds. I can understand how some fellows down there in the Bureau of the Budget will just start to turn somersaults when they see an agency committing itself to an unspecified obligation. They will say, "Sure, you are going to buy everything that anybody produces at $63 a ton if the market price goes below that." I can see some of those fellows down there who have sharp pencils just simply having a fit over that kind of arrangement. Have you had any talks with them about it? Mr. LARSON. Yes, indeed. That is exactly the objection, and I think perhaps justifiably so, Mr. Congressman. Mr. ENGLE. I know. Let's go one step further. Why don't you go over to the Munitions Board? They have all sorts of funds earmarked and allocated and contracted for and various and sundry other designations of ways to latch on to funds, and get the Munitions Board. to agree to underwrite this program to a certain extent of their funds. They are going to have to have tungsten anyway. So, if they will just take off a bit of this and underwrite it, you will have that out of the way; won't you? Mr. LARSON. I can't give you the details of that. My understanding is that that is not administratively possible. However, I will look into it and determine, if we do not get the funds. dollars earmarked, which is enough to start. on this program. Now we have 95 million Mr. ENGLE. Will you tell me what being "not administratively possible" means? You didn't learn that language, Mr. Larson, out in Oklahoma. You learned that since you got back here, and that is not good legal language, either, What does it mean when you say it is "not administratively possible"? Mr. LARSON. I mean the funds which were appropriated to the defense were appropriated primarily for the finished, the end product, the implement of war, or whatever you want to call it that the Defense Department requires to carry out its programs or equip its troops. They insist their funds be obligated only for those things, and that the Defense Production Act contemplates the financing of these raw materials that flow into industry, that get that sort of thing out; but let me hasten to say that this fund thing, as of the moment, is not a deterent to this program, only if it gets about $95 million. Mr. ENGLE. I know, but the Munitions Board still has the obligation of stockpiling under Public Law 520. Mr. LARSON. No. We have the obligation of stockpiling under Public Law 520. We coud go out and obligate stockpiling funds, but if we got it in stockpile we couldn't resell to industry. We don't want to get it under 520 funds but under 744 funds, so it will be more flexible, so it will flow directly into industry. So, just like we are in rubber and in tin, as of the moment, we are the sole buyers in this country. We buy, and we obligate funds. We pay for it, but the rubber never physically comes into the hands of the Government. It flows right into industry, and we are repaid for it. Mr. ENGLE. I know what you mean when you say "administratively impossible." What you mean is, when under Public Law 520, once the item goes into the stockpile, you can't get it out. Mr. LARSON. I didn't think, when you said "Munitions and Defense Department," you were referring to 520 specifically. Mr. ENGLE. That is what I am talking about. Mr. LARSON. I have explained that. Once it gets into the stockpile, it can only be taken out by Presidential order. Mr. ENGLE. But you can do this, from the standpoint of the budget people, who are going to worry about undetermined commitments made under this program with the requirements of the stockpilecan't you?—and to that extent you can say, "Well, even if we have to buy a lot of this, we always have this stockpile obligation back here which we are required to meet under Public Law 520, and we can always pick it off," and you never have to do that anyway unless domestic industry couldn't handle it. Mr. LARSON. That is true, but it is my understanding that we wish— that tungsten is in such a critical position Mr. DONOVAN. Do you mean shortage? Mr. LARSON. Shortage. As far as shortage is concerned and requirements for defense programs, and requirements for our domestic needs, that it is the desire-and the Defense Minerals people can answer this better than I-that it is the desire to increase this production and have it go directly into industry. Now, if we obligated any portion of 520 funds, we would have to show some accretion to the stockpile for that. Perhaps I am getting into matters that are somewhat classified, and I am a little hesitant about how far to go; but, generally speaking, it is considered to the best interest of national defense and the Government-only generally speaking-that perhaps our foreign purchases going into the stockpile and our domestic expanded production go directly into our own industrial requirements and defense requirements. So, I don't want to leave the impression that the stockpile is being ignored completely so far as tungsten is concerned. It isn't, but this program here is primarily for the purpose of meeting the immediate needs of defense. GSA PLANS FOR STIMULATING TUNGSTEN PRODUCTION Now, what you want to do, and what we want to do and what the law contemplated doing, is getting the job done so far as defense is concerned. In order to get that job done, we have to make it just as easy as possible on everybody concerned, and at the same time have assurance that we will get that. Now, I think we are on the road to working that problem out, as of this moment. We are going to issue this statement which I indicated today, and we are going to follow it up vigorously throughout the mining areas and throughout the industry, to let every single miner, if he just has a donkey and a pick and shovel, learn about this program; to encourage him to go out and get into tungsten production. Now, perhaps it might be considered somewhat red tape and somewhat bureaucratic to have this acceptance of the offer, but as a lawyer I think you will appreciate that and you other gentlemen will appreciate it, particularly in light of our experience in the last war, when people suffered real hardships as a result of having depended on the Government's continuing offer. Now, I visualize the time when, if we have to get into this, that we will have regular established depots perhaps where people can bring in the mining areas, once they are defined. People can bring them in and get their check from the Government right there on the spot, as disbursing officer and everything else, all tied up in one place, and, to the maximum extent, take advantage of the human desire of people who follow mining to be paid for the labor that they put out. That is what we are trying to do, Mr. Engle, and I think as of today that we have got the best solution that we can. We hope that the law is changed to clarify it. We hope the Attorney General says that we are wrong maybe in our own interpretation of the law, but until then we don't think it is fair to again mislead the American miner. Mr. ENGLE. We certainly have no intention that should happen. Mr. LARSON. I know you don't. Anybody that has followed the record of this committee-and particularly you, Mr. Engle-knows your activities in that regard. Mr. ENGLE. But what I am worried about-you say you are going to issue that order today-what worries me is after you get it out of your shop, Budget is going to say, "Red light on this. Let's stop it." Mr. LARSON. We have got 95 million dollars. We can start on that. 4 |