EXPLORATION CONTRACTS APPROVED AS OF MAY 11 INVOLVED

APPROXIMATELY $750,000

Mr. BUDGE. What are you using the $10 million for that was allocated to your office?

Dr. BOYD. For exploration projects.

Mr. BUDGE. Have you spent any of that yet?

Dr. BOYD. We have sent, as of last night, 11 contracts to the field for signature. We have signed the first contract. We have had clearance for that program for less than 2 weeks. In that 2 weeks we have sent 10 or 11 contracts for signature to the field, to the contractor and I have signed one of them.

Mr. BUDGE. On what metals are those?

Dr. BOYD. I can give you a list of them. They are on lead, zinc, tungsten; the first contract signed was on tungsten.

Mr. BUDGE. The only contract that has been signed was on tungsten. Dr. BOYD. That is right, the only one that has come back to us from the field for signature, from the contractor himself; lead, zinc, tungsten, mostly on lead, zinc, and tungsten at the moment.

We haven't had any applications for mica yet.

Mr. BUDGE. How much have you negotiated in contracts out of this $10 million?

Dr. BOYD. These contracts involved about $750,000.

Mr. BUDGE. Where are they located?

Dr. BOYD. They are located in Nevada, in Utah, Colorado, Kansas, and Washington.

Mr. BUDGE. The only one you actually completed is the one for tungsten?

Dr. BoYD. The only one the contractors have signed to date and sent back for signature is tungsten.

Mr. BUDGE. How much is that for?

Dr. BOYD. Government participation, $4,650.

Mr. BUDGE. $4,650 out of $10 million?

Dr. BOYD. Yes.

Mr. BUDGE. How much have you asked for to take this program ahead?

Dr. BOYD. $10 million.

You mean for next year?

Mr. BUDGE. Any time.

Dr. BOYD. $10 million for the rest of this fiscal year and we will ask for a larger sum next year.

Mr. BUDGE. How much will you ask for next year?

Dr. BOYD. From the $10 million we were asked for, incidentally, we

were cut down to $5 million.

Mr. BUDGE. You will have $5 million for fiscal year 1952?

Dr. BOYD. 1951.

Mr. BUDGE. 1952.

Dr. BOYD. That hasn't been appropriated yet.

Mr. BUDGE. That is what you asked for?

$40 MILLION EXPLORATION PROGRAM REQUESTED FOR FISCAL YEAR 1932

Dr. BOYD. We will ask for more than that. We will ask for $10 million.

Mr. BUDGE. You asked for 10 and they cut you for 5?

Dr. BOYD. That is right, for the rest of this fiscal year.
Mr. BUDGE. Who cut you to five?

Dr. BOYD. The Bureau of the Budget.

Mr. BUDGE. Why was this $10 million held up since last October? Dr. BOYD. We didn't apply for it until January because at the time, as I explained to this committee last time, under the tax laws as they stood we couldn't even give money to do this job. Until the tax laws were passed by the Congress in January we couldn't go ahead with any program. That law was changed and we went ahead and developed the program. It was approved and funds allocated to it and we were given final authority to go ahead about 2 weeks ago.

Mr. BUDGE. You applied for $10 million in January, is that correct? Dr. BOYD. That is correct.

Mr. BUDGE. To whom did you apply?

Dr. BOYD. Defense Production Administration.

Mr. BUDGE. When did the Defense Production Administration say you could spend $5 million.

Dr. BOYD. I can't give you the exact dates. We have a chronology of that case in our files.

Mr. BUDGE. About how long ago?

Dr. BOYD. I would say it would be about March.

Mr. BUDGE. About 3 minutes ago you told me it was cleared 3 weeks ago.

Dr. BOYD. It had to go further than that before it came to us. When approval of DPA was made, we had to get regulations drawn and the forms printed and the allocation of the fund made by the Bureau of the Budget.

Mr. BUDGE. Did that take from January until 2 weeks ago?

Dr. BOYD. That is right.

Mr. BUDGE. Then for fiscal year 1952 you have asked for $40 million?

Dr. BOYD. That will be the request of the budget, I understand; that is approved by the DPA. We have put that in our budget.

Mr. BUDGE. Have you broken that down as to specific minerals and metals?

Dr. BOYD. No, sir. That depends on the contracts that will come in. We have no idea what it will be. It will be largely lead and zinc, however, and copper.

Mr. REGAN. Would the gentleman yield to the Chair right there? Mr. BUDGE. Yes, Mr. Chairman.

Mr. REGAN. I believe we need a little clarification of this matter. I don't know whether this will help it or not, but this law was passed last September, this defense minerals program, and the Defense Minerals Administration were to start the ball rolling.

The first application form they prepared was a 12-page instrument that didn't bring any applications in because the man out in the field couldn't understand what he was doing and so no applications came along until along in January, or later.

Now, even in January there were no applications to speak of that would be implemented into this program, and so the $10 million was set up out of the $600 million. Of course, that hasn't been allocated, or any part of it. As I understand, the Defense Minerals Adminis

tration revised and reduced the terms and all of the provisions in that application down to a two-page application form.3

Dr. BOYD. That is correct.

Mr. REGAN. Now, since the two-page application has been out for about 3 weeks, isn't it, Doctor?

Dr. BOYD. Yes, sir.

Mr. REGAN. Applications are coming in but the $10 million was obviously more than they were going to be able to use before the end of the fiscal year of 1951, or June 30, 6 weeks hence, so $5 million looks like it will be more than adequate to take care of the applications that can be processed between now and June 30. Isn't that right, Doctor?

Dr. BOYD. That is correct, sir.

Mr. REGAN. So next year, assuming that we do now have an application that the miners can understand and we can get something going, they probably will need as much as $40 million for fiscal year 1952, but maybe five now is all they are going to use by the end of this year the way it now looks. Does that sort of clear up the thing a little, Mr. Budge?

Mr. BUDGE. I thank the chairman for that statement.

However, I don't understand why when this act was passed last September Dr. Boyd only asked for funds in January and the funds were not certified to him until the latter part of April. That is

6 months.

DMA EXPLORATION PROGRAM DELAYED UNTIL TAX LAWS CHANGED

Mr. ENGLE. May I say to the gentlemen the tax laws were in such shape that all money advanced under the program would be subject to income tax.

In other words, a miner would come in and ask for a hundred thousand dollars to do some exploration on a matching basis and lo and behold, he found out he was going to have to pay income tax on the hundred thousand dollars advanced by the Government to do exploration.

When we found that out we went over to the Ways and Means Committee and jerked the kinks out of that. I am not sure we got them all out even then. There are some left. But the proposition was in such shape that nobody could take any money. That is what you are saying?

Dr. BOYD. That is correct. May I correct a point in the record, Mr. Chairman. The tax law was passed in January, and we presented this program to DPA early in February, not in January itself.

Mr. ENGLE. Incidentally, the tax law that passed the House had the things in it we are talking about, but it came out under a closed rule. We couldn't do anything about it. We went over to the Senate and got Senator Milliken, of Colorado, to go to work on it.

Mr. BUDGE. I still would like some estimate from your office now that your office has concluded to recommend this particular applica tion. I still want some kind of a statement from you as to how long you think it is going to be before you can actually sign this contract. Dr. BOYD. I will estimate it as 3 weeks, Mr. Budge.

The form is printed on pp. 755 and 765 of the appendix as exhibits 43 and 44.

Mr. BUDGE. I appreciate that.

Dr. BOYD. Thank you.

Mr. BUDGE. Thank you, Dr. Boyd.

Mr. REGAN. At this time, the Secretary of Interior called yesterday afternoon with respect to the appearance of Mr. Wolf, whom we have had some discussions about before this committee. He said that Mr. Wolf was acting in the capacity of his administrative assistant and was not a man with the authority to pass on matters one way or the other, other than to present them to the Secretary, and he suggested that Mr. Wolf could not give the committee much information.

I explained to the Secretary that we wanted to see what Mr. Wolf looked like at least, and see for ourselves whether he could answer any of the questions that this committee might propound with respect to the hold-up of the program.

Mr. Wolf is here. I told the Secretary that we would try to hear him early in the proceedings this morning so that he might be dismissed as early as possible, so since you are immediately to my left here, Mr. Engle

Mr. REDDEN. Mr. Chairman, before you go into that, I would like to ask a question or two.

If you need to go into that now, I will withhold the questions.

Mr. REGAN. In keeping my pledge to the Secretary, what I thought we might do, Mr. Redden-the House is not in session today, and we have the line-up here of the various departments that are handling this program-I thought we might, if the committee liked, have a short session this afternoon, if the men present can be with us this afternoon.

If your question of Dr. Boyd at this time has bearing on the matter just discussed, go ahead and ask it.

DMA DEVELOPING A MICA PROGRAM TO ENCOURAGE DOMESTIC PRODUCTION

Mr. REDDEN. Dr. Boyd, I want to ask you, Has your department fixed a mine price for mica?

Dr. BOYD. No, sir. We have not at the moment. As you know, we are working on this mica problem. It is a very complicated business. It took a great deal of time and effort in the last war and we are basing our program on that experience.

Mr. REDDEN. Do you expect to finish the prices?

Dr. BOYD. We will establish prices in the local areas involved depending upon the grade of mica and the conditions in that area such as in your State.

Mr. REDDEN. When do you think those prices will be established? Dr. BOYD. That work is well under way. I don't like to make these estimates for you because I can't always live up to them. We are doing it as rapidly as we possibly can.

Mr. REDDEN. That is getting attention?

Dr. BOYD. Yes, sir. It is top on the list.

Mr. REDDEN. I notice in these hearings to Mr. Herres testified that $500,000 was needed in the purchase of mica for the fiscal year ended June 30, 1951. That year is about over. I just wondered have you purchased any mica?

Dr. BOYD. No, sir; we have not.

Mr. REDDEN. Is that $500,000 still available for the purchase of mica?

Dr. BOYD. No. That would be the estimate which we would put to DPA. Those funds have now been committed.

Mr. REDDEN. Where do you get to get most of your mica, this country, or abroad?

Dr. BOYD. Most of it will come from abroad; Brazil and India. Mr. REDDEN. Will you get it abroad as long as it is available in this country?

Dr. BOYD. We are going to work on the domestic deposits first. But if we cannot meet the demand here we will have to continue to get it from abroad.

Mr. REDDEN. You do expect to encourage domestic or local production, don't you?

Dr. BOYD. Very definitely.

Mr. REDDEN. I believe that is all.

Thank you.

Mr. REGAN. Mr. Engle.

EXPLORATION PROGRAM ADMINISTERED BY DMA

Mr. ENGLE. May I ask you one question, Dr. Boyd, on this exploration program? What is the matching ratio on tungsten?

Dr. BOYD. Seventy-five to twenty-five.

Mr. ENGLE. Is that automatic?

Dr. BOYD. Yes, sir.

Mr. ENGLE. In other words, if I come in with $50,000 you will put up 75 percent more than that?

Dr. BoYD. We will put up $150,000.

Mr. ENGLE. You will put up $150,000?

Dr. BoYD. That is right.

Mr. ENGLE. You don't go out and look at the mine?

Mr. BOYD. Oh, yes; we have to look at the mine.

Mr. ENGLE. In other words, you are not going to risk the $150,000 just because I am going to lose $50,000?

Dr. BOYD. Unless we have records of that particular deposit in our office here which has been investigated recently, we would have to look at it and see what you propose to do was a feasible project and we would be very liberal about it because it would be putting our judgment against yours. Since you are putting up your money we would expect that you used good judgment on it.

Mr. ENGLE. Do you exercise any control over the moneys spent! Dr. BOYD. Yes, sir. You would report to us once a month what you had spent it on and we pay you on the basis of what you have spent. Mr. ENGLE. Do I understand you have the authority to sign those authorizations?

Dr. BOYD. That is correct.

Mr. ENGLE. And it doesn't have to go to DPA or anything?
Dr. BOYD. That is right.

Mr. ENGLE. I am glad to see that finally somebody has recognized that you have intelligence enough to sign a piece of paper that will not get the Government into trouble, and that your authorization can start some mining activity in the field. That is what I wanted to discuss with Mr. Wolf.