Mr. WEST. On our own contract, yes. Our prices are not like this. Our contract is an individual contract and our prices are not as high as these. We furnish metallurgical grade ore at a price considerably lower than these prices. Mr. HOSMER. Your organization has invested $5 million in new production facilities since Korea? Mr. WEST. Yes, sir. Mr. RIEHLMAN. Are you operating under tax amortization certificates? Mr. WEST. In our original contracts it was provided that we were to have a hundred percent certificate. By the time they got through with that in Washington they refused to give us any certificate. Later we were able to reopen the question and they finally allowed us a 50 percent certificate. Mr. HOSMER. That is on 50 percent of your investment you got a 5-year depreciation schedule, is that correct? Mr. WEST. Yes, sir. Of course, we have to have a profit to write that depreciation off. Mr. HOSMER. Well, of course you have your loss carried forward and so forth, have you not? Mr. WEST. No, sir. Mr. HOSMER. That is, in the years to come. Mr. WEST. No, sir. Mr. HOSMER. Do you also operate under a depletion schedule? Mr. HOSMER. Would the program that you have outlined in your prepared statement here operate to shift the production over to lowgrade ores at the expense of high-grade ores, therefore stimulating the low-grade production now, and would the producers then hold back their high-grade ore? Mr. WEST. NO. There would be no holding back of high grade ore. There is very, very little high grade ore in the United States. There is a very good amount of low grade that can be upgraded to high grade by a simple process. Mr. HOSMER. That is the removal of some of the impurities. Mr. WEST. Yes. These depots are to collect the low grade ores where you could not afford to put a mill on a mine that was producing only 50 tons a day. Mr. HOSMER. Is the upgrading done at the depot by the government? Mr. WEST. It will be done by the depot. There are no milling facilities provided as yet. They are collecting the ore. Mr. HOSMER. The Government does that upgrading, is that correct? Mr. WEST. The Government will make arrangements to do that upgrading. Mr. HOSMER. At whose expense, the producer's expense or the government's? Mr. RIEHLMAN. How many years have we been mining manganese in the United States? Mr. WEST. Since prior to the First World War. Mr. RIEHLMAN. Where has our main source of supply been coming from, what countries? Mr. WEST. The main supply came from Russia up until the time they cut us off three years ago. And theirs is practically all low grade ores, and is treated just like this program proposes. Mr. RIEHLMAN. Any other questions? Mr. Counsel, do you have any questions? Mr. HINTON. No, I do not, sir. Mr. RIEHLMAN. Thank you very much, sir. Mr. Worthen Bradley? STATEMENT OF WORTHEN BRADLEY, PRESIDENT, BRADLEY MINING CO., SAN FRANCISCO, CALIF. Mr. RIEHLMAN. Will you identify yourself? Mr. BRADLEY. I am Worthen Bradley, president of the Bradley Mining Co., operating in California and Idaho, with 134 employees, and my subject is stockpiles and tariffs. Mr. RIEHLMAN. Would you like to read your statement into the record? Mr. BRADLEY. I will read it within time limitations. I will read most of it. Mr. RIEHLMAN. All right. Mr. BRADLEY. Most of what I have to say has been covered better and more concisely by Mr. Williston, but I will go ahead anyway. Mr. HOSMER. May I ask what metals you mine? Mr. BRADLEY. Tungsten, at present, and we have in reserve antimony and mercury, which at present are shut down. Mr. RIEHLMAN. Which are shut down, did you say? Mr. BRADLEY. They are shut down, yes. That these 2 subjects, stockpiles and tariffs, are to be covered in 1 paper, calls for some explanation. None was given to me, so I have to assume the apparently obvious: That it was thought both subjects apply more to foreign metals than to domestic. By their very nature tariffs do, of course, carry a foreign tinge; but it is sad to realize that stockpiles have also come to be viewed in this light. The Senators and Representatives who passed the Stockpiling Act of 1946 certainly had no intention that the subject should degenerate to a foreign-aid program. Incorporated in the act was the provision that it shall be made in accordance with title III of the act of March 3, 1933. This was the celebrated "Buy American" clause, and was the special target of President Truman in his statement accompanying his signing of the act. He blasted "Buy American" on the grounds that itwill not only materially increase the cost of the proposed stockpiles, but will tend to defeat the conservation and strategic objectives of the bill by further depleting our already inadequate underground reserves * * * Furthermore, there can be a serious conflict between those provisions and the foreign economic policy which this Government is actively pursuing Here we have, in capsule form, the stockpiling philosophy of the last decade and a half. It goes something like this: We should not stockpile our domestic metals, for they are safer left in the ground. And, anyway, we haven't enough of them. And, anyway, it is much better to help foreign countries by removing their metals from the ground. This dubious dogma was reaffirmed in the much discussed Paley Report of 1952. That report in laudable manner recommends that stockpiling be made a permanent instrument of national policy, that annual reviews of the objectives and purchase program be made promptly as planned, that in general acquisitions should be made at minimum cost without favoritism, and that withdrawals be rigidly tightened. But interwoven with these unexceptionable recommendations appeared some of the old bias. For instance, in recommending reviews the report says "they should be comprehensive, including consideration of effects of proposed stockpiling measures upon the economies of the United States and other free nations***" This sounds innocent enough by itself, but when considered with the report's nextto-last recommendation it is somewhat revealing. That particular recommendation was "That the 'Buy American' provisions in the present stockpiling act should be repealed." In expounding against "Buy American" the report goes on to sayThe development of foreign resources may offer alternatives to domestic stockpiling, possibly in the form of stockpiling on foreign soil *** Up to July 1, 1951, ECA purchases for the stockpile amounted to approximately $70 million worth of strategic materials * * * This Materials of foreign origin necessarily play a major role in stockpiling. follows directly from the use of the basic criteria of strategic scarcity. Even so, Congress wrote a "Buy American" provision into the Stockpile Act over the President's strong objections, and it has been the responsibility of the Munitions Board (a) to determine with respect to which materials the application of the "Buy American" Act would be in the public interest, and (b) to set the maximum margin above market prices that could be paid to the domestic producers. Parenthetically I will put in here that that was interpreted as anywhere from zero to 25 percent of market price, in the instances in which they did buy from domestic producers. By June 30, 1951, 77 percent of the expenditures had gone for foreign materials *** In December 1952, the National Security Resources Board submitted its comments on the Paley Report, and in doing so performed the expected by echoing the report's stricture against "Buy American." To all of this, and particularly to the "alternative" of stockpiling on foreign soil, I can only say that the most vital factor has been completely lost sight of. That factor is the concept of a thriving, expanding domestic mineral industry as the base of our stockpile. That is not an original thought. It has been mentioned this morning and will be mentioned further in the day. But perhaps I can have you visualize, to say if you picture the stockpile as a pyramid of materials, the base of the whole pyramid would be the domestic mining industry. The point of whether the stockpile should be available for a 2-year war, a 5-year war, a 10-year war, would vary with each material, with each metal, that is in the stockpile. But I think that is beside the point. I think the main point is to have a flourishing mining industry supporting the whole structure. The Paley Report does admit that The Stockpile Act charges the Departments of the Interior and Agriculture with certain measures aiming at the development of additional domestic sources for strategic materials. But it adds that Until recently the Munitions Board considered the development function as quite outside its own field. *** When asked whether the Board would wish to receive authority in this direction, the Chairman observed that "subsidy activities should be kept separate and apart from stockpiling" * * *. The results of this attitude of noncompliance have been such as might be expected. In general, stockpiling has been a deterrent to the greatly needed expansion of our domestic mining industry. There have been at least two instances of this harmful effect: (1) Metal buying for the stockpiling was timed poorly. Such purchases often occurred during periods of tight metal markets; and there was often little or no buying during weak or slack periods. And (2) purchases contracts to foreign producers were often of longer term and higer price than those granted to domestic producers. This situation resulted in these assisted materials eventually coming back on our own market. But in spite of the false philosophies and administrational blunders, our stockpile has grown. Compare the 17.6 percent fulfillment of objectives, announced in 1948, with the recently reported 78 percent. During the past 5 years there have, of course, been considerable revisions in the list of materials to be stockpiled and in the goals to be achieved, so the percentage figures are not directly comparable. But they are sufficiently divergent to indicate a substantial gain. I have mentioned administrative blunders in the stockpiling program. These were, for the most part, due to the awkward interdepartmental routine and inherent bureaucratic redtape. They became particularly evident when a metal producer went to Washington and tried to ascertain the stockpiling policy for his product. He had a right to know about this in general, without necessarily hearing actual confidential figures and percentages. But he soon became lost in such a maze of Government agencies and committees, both military and civilian, and he received such conflicting and confusing advice from the various sources, that he was usually willing to creep home in baffled resignation. Among those who have become fed up with this state of affairs is President Eisenhower himself. Early this month the President noted "the present undesirable confusion of responsibilities" between the Office of Defense Mobilization and the Army and Navy Munitions Board. He proposed that the ODM be reorganized and strengthened, and that this civilian agency take over from the Munitions Board the task of running the stockpile. The ODM would also take over, from the Secretary of the Interior and from the Secretaries of the three military services, the setting up of stockpile policies. Another step would find the National Security Resources Board also going under ODM. The NSRB was originally set up to do long-range mobilization planning, but is now almost defunct. Pending all this reorganization, it is kinder to withhold further adverse comment. We can only add that we hope the President's planned reforms are effected, and that a sounder stockpiling program will result. The formulators of this sounder program should never forget the dangers of war-interrupted shipping lanes, and they should also bear in mind-if we may repeat something we sincerely believe bears repeating-that the true foundation of a stockpile is a üve mining industry. Such an industry must not only produce in the present; it must also find new ore deposits, or extensions of old ones, which will enable it to produce in the future. For that reason the exploration-withGovernment-assistance program now being carried on under the Defense Minerals Exploration Administration is so vital. It ties right in with stockpiling, and we sincerely hope the DMEA will be extended long beyond its expiration this summer. This program has been most effective in encouraging much needed development and exporation, and has resulted in many discoveries: Thus our natural resources are being increased, and the Government recovers its money as the new ore is processed. This is one of the most sensible and constructive Government programs ever to be enacted for a natural-resource industry. Furthermore, the program has been under way long enough to attain positive results, but the practical operation has been smoothed out and the field teams well organized. The DMEA program is off to a very good start, and it would be shortsighted to permit the lapse of this excellent aid to our natural resource growth. We should not close this section without an accolade to the General Services Administration for this tungsten-buying program. That program is really more a price-supporting arrangement to bring out more tungsten for domestic consumers. It has succeeded nobly in that endeavor, proving again that there is nothing like the profit motive to stimulate industry; and in doing this, GSA has been able to purchase for the stockpile a substantial quantity of tungsten concentrates. The same murky philosophy that has for so long dominated our stockpile program, has been even more damaging in its application to tariffs. The trend has been from reduction of already pitifully low metal tariffs, toward their complete elimination. Propaganda for this elimination started rapidly accelerating during the latter part of 1952, and has recently been snowballing at an alarming rate. "Trade, Not Aid" is a slogan which, in its ultimate effect, means neither trade with nor aid to our domestic mining industry. The misguided proponents of this unworthy cause lean on an old conservationalists' argument when they say that our metals should be left in the ground. Then, because metals stay grounded owing to lack of tariff protection, the cry is "Look! We always knew this country has never had enough of its own metals. Might as well remove the remaining protection, and go all-foreign in our metals purchases." And so the vicious circle continues. No thought is given to the vulnerability of our dependence upon foreign metals, in the event of submarine action in a future war. It will surprice no one to learn that the State Department of the previous administration got into the act. I will insert here, too, that apparently they were a little worried about going out of business, and thought they had to pull some last minute acts in substantiation of their theories. In December 1952 the Department announced that it had spent 1 year and $10,000 in the preparation and publication of a certain booklet. This booklet, entitled "Together We Are Strong" purports to prove that no nation is self-sufficient and that mutual cooperation is |