STATEMENTS OF RICHARD SEARLES, UNDER SECRETARY, DEPARTMENT OF THE INTERIOR; DR. JAMES BOYD, ADMINISTRATOR, DEFENSE MINERALS ADMINISTRATION; DR. JOHN D. MORGAN, JR., DIRECTOR, MATERIALS REVIEW DIVISION, DEFENSE PRODUCTION ADMINISTRATION; MAXWELL ELLIOTT, GENERAL COUNSEL; AND IRVING GUMBEL, SPECIAL ASSISTANT TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION; AND CARL SCHWARTZ, ASSISTANT CHIEF, ESTIMATES DIVISION, BUREAU OF THE BUDGET

TUNGSTEN PROGRAM READY FOR FINAL ANNOUNCEMENT

Dr. BOYD. The program has been cleared now, Mr. Engle, and the regulations for establishing the floor price under tungsten have been signed today and sent to the Federal Register by GSA, so that program, as I described it to you last time, is under way and properly authorized.

Mr. ENGLE. You say it is signed today?

Dr. BOYD. That is right; either today or yesterday. That will be sent to the Federal Register by the GSA.

However, the announcement of the program was made some couple of weeks ago so that there is no reason why the industry couldn't go ahead under that announcement.

Mr. ENGLE. I was aware of the fact it was announced some weeks ago, but I hadn't heard anything about it since. Have you got any money for it?

TUNGSTEN SURPLUS BELIEVED IMPROBABLE

Dr. BOYD. The GSA has, I think, $95 million which is set aside for tungsten. That is to permit them to buy any tungsten that might come on the market or that is not properly absorbed by the market at $63. There is a large amount of money which GSA has. If any tungsten can't be sold at $63, the Government can pick it up. There is no possibility that a surplus of tungsten will become available because it is so badly needed in industry it will not necessarily be available to the Government.

Mr. ENGLE. The probabilities are that the Government will not have to spend one dime for tungsten; is that right?

Dr. BOYD. That is right, except in assisting some concentrators in loans, where they need additional help besides the price support, and in the form of exploration.

FIRST TUNGSTEN-EXPLORATION CONTRACT SIGNED

Incidentally I signed the first exploration order last night on a tungsten project. We cleared that away in about 10 days. We have 10 projects approved in the field for signature of the participants. There is the one I signed last night, one is coming in by air mail, and the other is being signed by the operators.

Mr. ENGLE. The fact you signed them doesn't mean they are in operation?

Dr. BOYD. Yes, sir.

Mr. ENGLE. Do you mean on the matter of exploration you have some authority?

Dr. BOYD. Yes, sir.

Mr. ENGLE. I want to congratulate you. That is the first time I ever have known that your signature gets something going. Ordinarily it is just in the nature of a recommendation is it not?

Dr. BOYD. Yes, sir.

Mr. ENGLE. But on this exploration program, when you put yourname on it, things start to happen?

Dr. BOYD. That is right.

Mr. ENGLE. Money is paid out and miners go into the field and things start to happen?

Dr. BOYD. That is right.

Mr. ENGLE. And there are 10 of those you say?

Dr. BOYD. Ten have actually been approved. We have several others in the mill getting ready to go.

Mr. REGAN. And this program is still the same price structure, $63. or $65?

Dr. BOYD. No, sir; this is the exploration.

Mr. REGAN. On the tungsten the price remains $63?

Dr. BOYD. That is correct.

Mr. REGAN. That means then we can forget about tungsten. That program is going forward?

Dr. BOYD. Yes, sir. We won't forget about it. We have got to giveit a lot of help.

Mr. REGAN. The next is manganese.

TUNGSTEN PROGRAM RESTRICTED BY LIMITATION OF AUTHORIZATION TO

COMMIT FUNDS

Mr. ENGLE. Let me ask one more question about this tungsten program. This tungsten program has been limited, has it not?

Dr. BOYD. Yes, sir. It has to be limited for reason of the limitation of authorization to commit funds. We are working under congres-sional authorization for funds. In other words, we cannot commit any more funds than the Congress has authorized us to commit. Therefore, the GSA were forced to put a limit on the amount of tungsten that they could commit in general. We are making it clear to thepublic that that limit does not necessarily limit the program at all because we do not expect anything like that amount to come on the market or will be required to be picked up as a surplus. The program is so large and the requirements of the military and the industrial requirements are so great that there is no chance of that amount of tungsten coming on the domestic market.

DMA ADMINISTRATOR BELIEVES TUNGSTEN PROGRAM PROVIDES FIRM MARKETSUPPORT

Mr. ENGLE. The purpose of this program was to firm up the tungsten. market, was it not?

Dr. BOYD. That is right, at a high level.

Mr. ENGLE. And to give a tungsten miner some reason to believe that if he went out and spent his money developing a tungsten property that he wouldn't be left holding the sack, as some of our miners were immediately after the last war.

Dr. BOYD. That is correct.

Mr. ENGLE. And if you were a tungsten miner would you assurance that had a floor under you?

you

feel some

Dr. BOYD. I would, Mr. Engle, but I am quite sure that until those in the field understand it a little more, they may not feel as secure as I am and we must carry a campaign of explaining this to the people in the field so they will know they have an assurance. They feel with that limit on price they should be guaranteed a certain portion of it. If we did that we would restrict the program. Therefore, we must show them that this is in essence a firm and solid support for the tung. sten market.

Mr. ENGLE. What the Government has said is this: "We announce to the public that we will pay $63 a unit for tungsten"; is that right! Dr. BOYD. Tungsten concentrates; yes, sir.

Mr. ENGLE. We will do it for 5 years, and then the Government says “But if more than 1.5 million units come in the offer terminates." Is that right?

Dr. BOYD. That is right.

Mr. ENGLE. So I am a tungsten miner out in the country and I have a property and I say, "Oh, boy. I think I can go on in" so I sit down and write a card to Dr. James Boyd, Director of the Bureau of Mines. Defense Minerals Administration, and say, "Dear Dr. Boyd: I accept your offer. I am going to start my tungsten property" and with that assurance I go out and I spend $150,000 or $200,000 developing my property. Lo and behold, 3 years from now the market drops out from under tungsten and it drops below $63 and I write to Dr. Boyd again and say "Dear Dr. Boyd: I am stuck. Please accept my tungsten production."

Are you going to write back and say, "Dear Mr. Engle: I am sorry to inform you that by reason of some small print in that publication we issued the Government purchases were limited to 1.5 million units and therefore your contract isn't any good and we can't take your production"?

Dr. BOYD. That is true; it can happen, Mr. Engle. There is a possibility it could happen. It is very highly improbable and unlikely to happen. In working this program out in the future we will have to attempt in future requests for funds to work out a greater support for that so it will be clear. At the moment the limitation of funds prevents us from going any further than that.

Mr. ENGLE. Mr. Searles is a business man and he knows something about risk capital. I would like to ask Mr. Searles if he thinks on that basiş he would plunk down $100,000 of his money in tungsten property?

Mr. SEARLES. Well, I believe I would because I think Congress would take care of me in the end. They know partly the reason I am going into this is to help in our present emergency.

Mr. ENGLE. You had better go back and read the record of about how Congress took care of the miners after the last World War and after the First World War. It is a history of being sold down the river by their Government, which is one of the most flagrant in all the operations of our Government and there isn't an ounce of confi dence out in the far West as far as I know that the Government will do anything to help the miners out. As a matter of fact, I had a bill in here to help some of those fellows who were left holding the sack

In the last war and the President of the United States vetoed it and I have never been able to get anywhere with one since, so I don't know whether this tungsten program is going to work or not.

I appreciate that from the standpoint of your budgetary requirenents, and we have a member of the Bureau of the Budget here, Mr. Schwartz?

Mr. SCHWARTZ. Yes, sir.

CONTINGENT LIABILITY INTERPRETATION EXPLAINED BY BUDGET

REPRESENTATIVE

Mr. ENGLE. Your problem there is this: You do not want a contingent liability sitting over your head that you do not know the amount of; is that correct!

Mr. SCHWARTZ. That is correct.

Mr. ENGLE. As a consequence you assume you had better make it sure and get some figures. Is it true that it has been put up to $200 million rather than $95 million?

Mr. SCHWARTZ. No, sir. The President has allocated $95 million because we have almost exhausted the $600 million the Congress authorized in the Defense Production Act. There is another billion dollars estimate now pending before the Congress and I understand when that is approved the DPA will certify an additional amount for tungsten.

Mr. ENGLE. They will certify an additional amount?

Mr. REGAN. What was the additional amount you say that has been requested?

Mr. SCHWARTZ. As I recall the original proposal to GSA was $185 million; is that correct, Mr. Elliott?

Mr. ELLIOTT. That is correct.

Mr. SCHWARTZ. Because of the fact we practically exhausted the $600 million, only $95 million could be made available but DPA made it clear that when the billion dollars became available that they would certify the additional amount to the GSA and then of course we would be prepared to authorize its release by the Secretary of the Treasury. Mr. ENGLE. What this amounts to is this, that you have in effect written an insurance back of this program to the extent of $95_million. You may not use one dollar of it and if time rolls on and you do not use any portion of it you can reduce the amount of the security, can you not?

Mr. SCHWARTZ. As long as it is estimated that there is a contingent liability we will have to fully cover that amount. If the contingent liability we will have is reduced to something less than $185 million or $95 million, as the case may be, then the amount we have reserved to cover that contingent liability can also be reduced.

$95 MILLION AVAILABLE FOR TUNGSTEN PROGRAM

Mr. ASPINALL. If the gentleman from California will yield for a question

Mr. ENGLE. I yield.

Mr. ASPINALL. Has the $95 million item that you speak of been appropriated by Congress as yet?

Mr. SCHWARTZ. Yes.

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Mr. ASPINALL. It is in what funds?

Mr. SCHWARTZ. When the Defense Production Act was passed authorized the President to utilize $600 million as public debt tra action. The GSA requested the President, through the Director of t Budget, to release $95 million of the $600 million for this tungste program. The President approved that recommendation. The moner has been released and is available for use today.

NEED CITED FOR AVOIDING REPETITION OF FALSE INDUCEMENTS EXTENDED TO MINE OPERATORS IN WORLD WARS I AND II

Mr. MURDOCK. Mr. Chairman

Mr. REGAN. Mr. Murdock.

Mr. MURDOCK. I wanted to say in support of the statements made by Mr. Engle a moment ago that we have had some unhappy experi ences after both the First World War and the Second World War. You have heard me say-and it is in the records of this committeethat I felt that in any emergency we ought to see to it that that thing is not repeated.

I am delighted to hear my friend Dick Searles say, as a businessman, "I think I would be willing to plunk down my money because! have confidence" and all that, but I want to say to Dick that I can name individuals in Arizona who did that in the First World War and also individuals who did that in the Second World War and have been left holding the sack.

We must safeguard the public funds. We want to get maximum benefits in a time of emergency from this essential material and we want to safeguard that fund so as to get those results, but I never took much stock and do not care very much about the small type that is written in at the bottom of an insurance policy, later to be pulled on one and to pull the rug out from under the fellow that thought he had protection.

I wish we could avoid that small-type business but if we do have to have it there, it must be in larger type.

Mr. REGAN. Do you suppose we could pass a resolution tomorrow in small type?

Mr. MURDOCK. No; I think we must insist on larger type and that is exactly what this record will do. Mr. Engle is saying-and this is what I want to say-that these miners out there must not be deceived. They must know the price they are going to get and how much of a floor it constitutes, and that there is a limitation and they must not expect to exceed that or if they do, then the floor no longer supports them.

I just wanted to say that to get it off my chest.

Mr. REGAN. Dr. Boyd, suppose now that Mr. Searles goes back to business and he wants to put in one of these $100,000 mines, and he writes this "Dear Dr. Boyd" a letter. Do you have any authority to say to him that he is going to be taken care of for a 5-year program! That is what we are trying to get at but yet we have a limitation there that he might be cut off in 3 years. Is there not some way we could take care of a situation of that sort so we don't have repetition of those referred to in World War I or II?