The CHAIRMAN. Well, you know that there has been no mill built out there? Would you know it if there had been a mill built out there? Mr. PEHRSON. I think so. There has been no new construction of significance that has been started. The CHAIRMAN. You have already stated, Doctor, that two-thirds of the production of silver is mined in connection with the production of other metals, such as lead, copper, and zinc; you have stated already that the price of silver was determinative in some mines that produced silver, lead, copper, and zinc, as to whether or not they could be mined at a profit? Dr. FINCH. Yes, sir. The CHAIRMAN. I am sorry that you have not late reports as to mining conditions, with respect to the West; but we will have to get those from other sources, which we will. I can say they are steadily getting worse, without going into the details of it, and unemployment has been increasing. That will be shown by the report of the convention of western governors, held in Nevada. At this point I will insert a table prepared by the Bureau of Labor Statistics showing monthly percentages of change and indexes from January 1937 through February 1939, by months, for employment and pay rolls in metal mining in the following States: Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, and Utah. Now, you are familiar with towns like Goldfield, Nev.? Dr. FINCH. Yes, sir. The CHAIRMAN. In what year were you engaged in mining opera tions there? Dr. FINCH. I went there first as engineer in 1905, and took over the management of the Goldfield Consolidated properties in 1906 and 1907. I returned several times afterward on engineering work. The CHAIRMAN. Approximately how many miners were engaged there, would you say? Dr. FINCH. I have forgotten that. I can supply it for the record. The CHAIRMAN. You can supply it for the record? Dr. FINCH. Well, there were over 20,000 inhabitants in Goldfield, and all of those depended upon the mines. Official statistics are not available on employment in Goldfield during the boom period of 1907 and 1908. However, according to press reports, some 3,600 miners were employed in the spring of 1907. According to T. A. Rickard the total population of the camp in 1908 was 22,000. The CHAIRMAN. Well, you didn't have 20,000 men working in the mines? Dr. FINCH. No; but we had several thousand. The CHAIRMAN. I think you will find that, including all the popu lation of Goldfield, there were five people to every one in the mines. Dr. FINCH. Yes; they had some large families. The CHAIRMAN. Was there anything out there to support those 20,000 people there except mining? Dr. FINCH. No. The CHAIRMAN. Then the shutting down of the mines in Goldfield would have resulted in placing 20,000 people out of employment, would it not? Dr. FINCH. Yes; they would have had to move. The CHAIRMAN. And then, taking mining camps, as we call them, instead of towns-we always speak of Goldfield as a mining camp, although there were 20,000 people in it, and now there are about 200, since the mines closed-but take Tonopah. You were also familiar with that camp, were you not? Dr. FINCH. Yes; I was there quite often. The CHAIRMAN. It is not far from Goldfield. Well, and there were probably 15,000 people in Tonopah, were there not? Dr. FINCH. I should say so; yes. The CHAIRMAN. And probably about 3,000 miners? Dr. FINCH. Probably; yes, sir. The CHAIRMAN. Was there anything else to support that town. except the miners? Dr. FINCH. No, sir. The CHAIRMAN. I agree with you that there is not a thing. Now, then, after the production of about $135,000,000, the commercial ore was exhausted, as it does happen in all mining camps. at some time? Dr. FINCH. Yes. The CHAIRMAN. The population of Tonopah today is probably 1,500 people, just living there like they live in camps after the companies stop work? Dr. FINCH. Yes, sir. The CHAIRMAN. In 1935, 1936, and 1937 there was an increase of 100 percent in population? Dr. FINCH. So I understand. The CHAIRMAN. Why? Because while the little pillars of ore and things that were left there did not justify big mining operations, the miners of the camp took what they call leases up there. You are familiar with that, are you? Dr. FINCH. Yes. The CHAIRMAN. And it very frequently happens when ore decreases in value and the companies stop work, is that true? Dr. FINCH. Yes, sir. The CHAIRMAN. When the price of silver was 77.57 cents an ounce there were 150 leases working in the old mines at Tonopah The CHAIRMAN. Then the President cut the price of domestic silver from 77.57 to 64.64 an ounce, commencing with the beginning of 1938, and today there are not 60 leases operating in that mining camp. Now, Doctor, the general public does not understand that when the population of a community depends solely upon mining, when that mining ceases there, the whole population has to go somewhere else to look for jobs. That is not true of communities supported by various industries. Then these figures that you have here in your tabulation show, first, that the production of silver-the value of the silver produced in 1937-that is, when silver was 77.57 cents an ounce-was 71,408,625 ounces, and that when the price was reduced to 64.64 cents an ounce, in 1938, it dropped-that is, the silver production in the United States dropped-to 60,562,636 ounces. Dr. FINCH. 11,000,000-ounce drop. The CHAIRMAN. 11,000,000-ounce drop. What percent is that, Dr. Finch? Let us just figure that for a minute. Dr. FINCH. Over 15 percent. The CHAIRMAN. In other words Mr. TRENT. In ounces. Then there is also a drop in the price. The CHAIRMAN. I am not talking about the price. I am talking about the percentage of reduction now. Wouldn't you consider a drop of 15 percent in 1 year in the production of silver quite an extraordinary fall? Dr. FINCH. Yes, sir. The CHAIRMAN. Now, that was caused, of course-and I know of no other cause except in the closing down of some properties that were designated as silver properties, which is about one-third of the total, isn't it? Dr. FINCH. Yes. There was, of course, one extraordinarily rich silver mine in Idaho that continued production. Mr. TRENT. Not so rich any more. Dr. FINCH. Not so rich as it was. The CHAIRMAN. Now, the closing down of what we call straight silver mines, which were one-third of the producers of silver, and the closing down of lead and copper production-that depended upon he value of silver in the ore? Dr. FINCH. Yes, in the case of the straight silver mines. It was a contributing factor in lead and copper mines. The CHAIRMAN. There was a great reduction in the production of those mines? Dr. FINCH. Yes. The CHAIRMAN. As a matter of fact, Doctor, there are some mines that were not even making a profit that were compelled to operate? Dr. FINCH. In the hope that conditions might improve. The CHAIRMAN. But there are, of course, very few miners employed in those operations? Dr. FINCH. Yes. The CHAIRMAN. Now, that gets back to employment. In 1937, when silver was 77.57 cents an ounce, there were 13,000,000 manshifts per year? Dr. FINCH. Yes. The CHAIRMAN. And they dropped the price to 64.64 cents per ounce, in 1938, and there were 12,500,000 man-shifts-a fall-off of 500,000 man-shifts? Dr. FINCH. Yes. The CHAIRMAN. Now, that is a fall-off of about 4 percent, roughly speaking, I should say. Dr. FINCH. Yes; I think that is right. The CHAIRMAN. That is just approximate. It is 500,000 against 13,000,000? Dr. FINCH. Yes. The CHAIRMAN. Now then, if your labor, based on those manshifts, falls off 4 percent, and they are out of employment, because they are miners and don't know anything else, then, in a camp like Tonopah, where everybody depended on the mine, at least five persons not miners would lose employment to every miner put out of employment? Dr. FINCH. Yes. The CHAIRMAN. Let us go further: We have reports here from the Mine Operators' Association and the western section of the Mining Congress, to the effect and also by the University of Utah-to the effect that half-50 percent of the people of the State of Utah depend upon mining operations. Dr. FINCH. Yes; that is true. Mr. TRENT. Senator Pittman, may I say at this time that the State of Utah has determined that the living of 17 persons is dependent upon each man on the pay roll of a mine. The CHAIRMAN. Yes. Put that down: That the State of Utah has determined that 17 people in Utah are dependent upon each miner or each person employed in mining operations. Put it that way. Mr. ENGLEBRIGHT. Doesn't that go further than that and extend to people out of employment in other lines, such as factories? The CHAIRMAN. That is true I will come to that-but, as a matter of fact, I am trying to let those in States where they have no mines understand what it means to close down a mine or mines, or reduce the capacity in mining communities. Now we have got down to the point where the State of Utah, through its various statistical bureaus, and the University of Utah, have found, as a matter of fact, that half of the people of that great State depend for their livelihood on mining operations, and that for every miner employed 17 persons are dependent upon him. I say that for this reason: That whenever any western Senator or Congressman attempts to estimate the total unemployment caused by this fall, as shown here, they think only in terms of the actual figures, as to the actual men working in the mine operations. They cannot get out of that. Dr. FINCH. The men on the pay roll. The CHAIRMAN. That is right. They can think of only the men on the pay roll. Now, I have asserted that there were 200,000 persons taken off of this legitimate high-class, profitable work since 1937, by reason of the reduction in the price of silver. Does that sound reasonable to you? Dr. FINCH. Closing mines affects everybody in every industry, including agriculture. The CHAIRMAN. Of course, if affects agriculture, because many of the farmers in Utah depend on the mines for their market. When you close the mines, they lose their market. Now, as stated by Mr. Englebright, isn't it true that the unemployment in those mining camps affects employment in industry in every State in the Union, because the mines buy from nearly every State in the Union some of the things they use? I believe it was estimated that the mining operations in Utah resulted in the purchase of products from 46 States outside of Utah. Then the reduction in these mining operations in, we will say, 11 Western States, not only affects employment in the 11 Western States, but indirectly affects employment by reason of the cessation of purchasing by mines, mills, and smelters in every State where they manufacture materials and stuff that is used in those operations. Isn't that true? Dr. FINCH. Yes, sir. The CHAIRMAN. I have heard it said somewhere, Doctor, that the Government should ascertain the cost of production of an ounce of silver. How would you go about finding the cost of the production of an ounce of silver? Dr. FINCH. Mr. Pehrson, you can say something on that. STATEMENT BY THE BUREAU OF MINES REGARDING THE AVERAGE COST OF PRODUCING SILVER The Bureau of Mines has not published any report on the average cost of producing silver nor is it aware of any study of this nature by other Government agencies. Most of the silver produced in the United States is derived as a byproduct from operations where copper, lead, zinc, and gold are the principal sources of revenue. This being the case, it would be difficult to arrive at an equitable average cost of producing silver because the allocation of costs to the various constituents of a complex ore is largely a matter of accounting practices. These vary greatly among the many concerns engaged in the business. For the relatively few companies operating on straight silver ores, sufficient data are not available to permit an estimation of their average cost of production. Some years ago I was employed in the income-tax unit as a valuation engineer, and this problem of trying to allocate the profit of mining operations to the various metals produced from complex ores was very carefully considered. I can assure you that there is no simple answer to that question. The CHAIRMAN. And I say to you, Mr. Pehrson, that if you go back and look at the record of the hearings before the gold and silver committee of the United States Senate, in 1920, 1921, or 1922-I don't know the exact date of it-I was on the committee-you will find a similar report to the one you just made, by a very distinguished mining engineer, who spent 3 months in the field, going to every mine in the United States that produced silver, to try to answer that question, and you will find that he speaks very much like you do; but he said that if he struck an average that would keep all the mines operating on the value of the silver that was in the ore he would have to say it could not be done for less than 80 cents an ounce; but he said, |