The outlook for the next 2- and 4-month periods is not good. No mining firms, except Kennecott Copper and Phelps Dodge Corp., which are both copper mines, were willing to give an estimate of employment for these future periods.

No local action has been taken to relieve the manpower situation for this

area.

Now I will read a short statement about the conditions in the industry there.

A year ago the lead-zinc industry in New Mexico employed approximately 1,200 men. Some of these men were employed in the mills, some on the surface at the mines and some underground. Of these, exclusive of salaried employees, but 323 are now employed by the lead-zinc mines, of which but 135 are in production of lead-zinc ore. This means that approximately 900 men have been laid off or been forced to find other work. At present, about 500 of these are registered unemployed and are largely drawing unemployment compensation, but this compensation is for 24 weeks at $25 a week and within a few months this compensation will be completed at which time these men will be financially in trouble unless, in the meantime, they can find some work.

The annual report of the New Mexico State inspector of mines for the fiscal year ending June 30, 1952, shows there were produced 13,205 tons of recoverable lead, valued at $4,707,499, and 50,629 tons of recoverable zinc, valued at $13,270,914. This is approximately 64,000 tons of metal, valued at nearly $18 million. Of this $18 million, approximately 47 percent went for labor, which was spent largely in the area with merchants supplying food, clothing, and household furniture. In addition, the employees bought automobiles, paid taxes, and bought savings bonds. The payrolls now are reduced to 25 percent of the rate a year ago, and this is seriously affecting business in the area.

Six of the major mines in New Mexico have been closed or are operating on the basis of exploration and development. One mine is producing zinc-lead ore in connection with a development program. In addition, over the past years, our mill treated ores from more than 20 large and small mines, all of which have discontinued operations, thus cutting off more than 80 percent of the production. These small and large mines, which have discontinued production in the past year also employed men, most of whom are not included in the above figures for unemployment.

The closed mines are now at a heavy expense to maintain conditions of equipment and keep the water pumped out. As time goes on the costs of maintenance will either be excessive or, lacking proper maintenance, the properties will gradually deteriorate, so that something should be done to get these mines back into operation as promptly as possible.

In normal times, two-thirds of the zinc consumed within the United States is produced by our domestic miners and one-third comes from foreign sources. It is not our wish to prohibit the importation of zinc and lead but to control the importation and protect our domestic mining industry. It is my belief that this proportion is perfectly proper and we were glad to encourage importation of zinc while the price was 1912 cents and the Emergency Lead-Zinc Committee cooperated with Congress in permitting lead and zinc to come in duty free when the price was 18 cents. From December 1951 to October 1952

imports of both metals increased 80 percent. At present, the very small tariff on zinc does not in any way protect the domestic zinc industry, and now more than 60 percent of the zinc consumed in this country comes from foreign sources. If this continues, it is quite likely that many of the zinc mines will be permanently shut down and the Nation placed in a critical spot in the event of sudden need for lead and zinc.

We have had a serious break in the prices of these metals with imports exceeding 60 percent of the domestic consumption in the past and when our domestic mining industry was forced to pay excessive prices. A stabilizing import tax would be a good thing for the consumer by eliminating the fluctuating price, and at the same time it would preserve out lead-zinc mining industry.

To sum up, the excessive importation of lead and zinc from countries having low wage scales has had a disastrous effect upon the domestic mining industry, Hundreds of men in New Mexico are out of work. All lead-zinc mines in this State are closed or operating at terrible losses. This is becoming progressively worse and in an emergency, the cost of reopening will be increasingly high. In our opinion, a stabilizing sliding scale import tax, such as H. R. 4294, is needed promptly to save the lead-zinc mining industry.

The CHAIRMAN. Thank you, Mr. Taylor.

Mr. TAYLOR. I will let you have this other copy, also. I don't have any more copies.

The CHAIRMAN. Mr. McCulloch?

Mr. McCULLOCH. Mr. Taylor, what is the present price of imported zinc ?

Mr.

TAYLOR. The domestic price for zinc is 11 cents, and for lead it is 12 cents.

Mr. MCCULLOCH. Are we now receiving zinc and lead from foreign sources at those prices in this country?

Mr. TAYLOR. That is correct.

Mr. McCULLOCH. But within the last year or two we were paying as much as 22 cents or more for lead and 31 cents or more for zinc? Mr. TAYLOR. That is true. The industries that required lead and zinc within the past 2 years paid excessive prices from foreign sources. Mr. McCULLOCH. In other words, when lead or zinc is in short supply from domestic sources, the foreign producers charge all the traffic will bear?

Mr. TAYLOR. Every bit of it.

Mr. MCCULLOCH. And I suppose it is elementary to conclude that, if the zinc and lead miners are ruined in America, again we will pay all the traffice will bear from foreign sources?

Mr. TAYLOR. That is true. And as an example, just in recent years, the price of zinc went to 9 cents a pound. We shut down 2 mines, each employing more than 100 men. After 8 months we were able to, at considerable expense, start up one of those mines. One of the steel companies, after a while, came to us and begged us to start up the other mine. They said they needed the zinc so badly they would pay what it would take. Well, of course there was a ceiling on it and we couldn't receive any more than that ceiling. However, we did start that property up. The original cost of starting up was more than $50,000. We ran that property until the end of December. We furnished them the zinc from that property at the ceiling, and it saved

them from paying a very high price for an equal quantity from foreign

sources.

Mr. McCULLOCH. Is it your studied and sincere judgment, that if a reasonable protection be given the producers of lead and zinc in America, that in the long run it will be in the interest of American economy?

Mr. TAYLOR. I am sure it will be in the interest of the American economy to maintain a zinc-lead industry in this country.

Mr. McCULLOCH. And that we pay less for lead and zinc if we maintained such an industry that if we left that industry to become bankrupt?

Mr. TAYLOR. That is correct.

Mr. McCULLOCH. That is all.

The CHAIRMAN. Mr. Patman?

Mr. PATMAN. In that way, then, eventually it will not cost the people anything, because over the long run it will save more.

Mr. TAYLOR. I am confident that it will save this country money to maintain a lead-zinc mining industry in America.

Mr. PATMAN. That is all, thank you.

The CHAIRMAN. Mr. Multer?

Mr. MULTER. No questions, Mr. Chairman.

The CHAIRMAN. Thank you very much.

This is getting information not from the grass roots but from the miners' roots, right where you dig the ore itself. Thank you very much.

We will take a brief recess at this time.

(Brief recess,)

The CHAIRMAN. I would like to have the reporter file the statement of Mr. Bell at this point.

(The data referred to follows:)

STATEMENT OF CHARLES N. BELL II, THE KING LEASE, INC., OURAY, COLO.

NOTE. Net value per ton down $2.189 in 1952; expenses up $1.691. Although the tonnage was nearly equal for the 2 years, company suffered a loss of $38,519 in 1952. For the first 3 months in 1952, the King Lease, Inc.'s loss is, approximately, $25,000.

We have a

The CHAIRMAN. We will proceed as fast as we can. number of witnesses and do not want to shut anyone off. But in the interest of brevity, we do hope, if you have a long statement, you will brief it yourself, and give these good Congressmen, and I mean no exaggeration as I have already been complimented by the questions asked, the right to proceed with the questioning. They are always pleased to help you. They are all good thinkers and they know what they are asking. And they know what they are trying to get out of you. You really are ahead if you try to do that.

Now we will call Mr. Miles I. Romney. He is manager of the Utah Mining Association.

STATEMENT OF MILES P. ROMNEY, MANAGER, UTAH MINING ASSOCIATION

The CHAIRMAN. We are glad to see you this morning, sir. It is nice to have you with us. You people from the States of New Maxico and Utah that have to come over here for this hearing are welcome indeed and we are glad to have you participate in the hearings. You may proceed.

Mr. ROMNEY. Thank you. I have a prepared statement here that I will brief. I would like to just read a few paragraphs from a paper which I do not have a duplication of, just by way of introduction. The general but frank statement that continuation of 23 cents combined lead-zinc price as compared to 382 cents 1 year ago, for any extended period, would kill off the major portion of western leadzinc production. To date, mines having a high proportion of zinc with low silver values have been the hardest hit. A good example is New Mexico which, as Mr. Taylor told you, has only one producing property running today. A large number of smaller properties in other States have closed down, the smaller properties being the most sensitive to reduced prices because of being unable to long sustain any operations at a loss.

There are few western lead-zinc mines now operating at a profit, and there are none operating at what you might call a proper or a needed profit. By that needed profit, I mean sufficient to pay operating costs, to recover invested capital, to develop replacement reserves, to finance exploration work for new mines, and give the stockholders a reasonable return on their investment. To continue to mine without those needed or reasonable profits is similar to a merchant holding a bankruptcy sale in order to liquidate his stock and go out of business. The operators are now rapidly approaching the hour of decision as to how long they can continue to sustain losses and deplete ore reserves. That, however, is the individual operator's problem, and one which I would not presume to answer for him. However, they have gone on now for 4 or 5 months, weighing losses against the dreaded conditions to shutdown, such as high maintenance costs, loss of working crews and staffmen, and the probable loss of ore reserves through falling timber, caving ground, et cetera.

Many have resorted to the process of high-grading to continue to operate for this length of time. The price depletion promises to be of long duration, considering the abundance of free world lead and zinc reserves and the ability and willingness of foreign lead and zinc producers to undersell our market.

This price depletion could be terminated through passage of the present proposed sliding scale stabilization importation legislation or it will be terminated through the shortsighted alternative of permitting the wrecking of a sufficient portion of our domestic industry to allow foreign producers to raise prices as dependency upon them permits.

One other point I would like to make is that the average price for lead, 1946 to 1952, inclusive, was 15.48 cents. That includes 6 months under the old premium-price plan when the price of lead was pegged at 62 cents. This average price of 14.48 cents is a price sufficient to sustain domestic mining. The price range, however, over this period, was 612 cents to 2112 cents. The price was well below the average

from March 1949 to September 1950, and again dropped below the average in September 1952.

Very few mines, particularly the small ones from which the large ones grow, can continue to operate through an extended no-profit period. Each cycle of depressed prices takes its toll in reduction of actual and potential lead-zinc production in discouraging development, in discouraging exploration and plant investment. Each such cycle draws the noose tighter. The buyer over the years has paid an adequate price, adequate to keep the industry alive. But the feast-orfamine marketing process along the way has occasioned many casualties. All that the western lead-zinc mining industry asks are the means to stabilize prices at near the average levels which buyers in the past 6 years have indicated a willing to pay.

The lead-zinc mining industry is in a desperate plight. Its production capacity and its ability to survive has so long been taken for granted that it is difficult to impress upon the people of our country the critical status of its present condition and the nature of the stake they have in its continuation as a healthy, prosperous industry.

Depressions, emergencies, taxes, tariff policies, and internationaltrade philosophies and conditions have all taken their toll and left their mark, until today it is rather commonly assumed that our metal resources are nearly exhausted, that we should conserve what we have by keeping it in the ground, and that we should largely substitute imported metals for our own domestic production.

Mining is a high-risk business. There are risk factors involved in mining which are not experienced in any other type of business, such as farming, manufacturing, wholesaling, and retailing. In each of these, conditions affecting cost of production, cost of plant, abundance of raw materials, and market for the new product are sufficiently defined to permit careful analysis of the opportunity for success before making the investment to set up the business.

One other feature distinguishes their risk in comparison to that of mining: That is that their source material of supplies or inventories are largely reproducible, whereas the ore reserves of a mine are a shrinking asset, exhausted when the physical limits of the ore are reached. Before it can be determined whether or not a profitable mining operation is possible, many thousands or hundreds of thousands or in some cases millions of dollars must be spent in exploring the suggested ore body. Only after this risk investment stage can a mining company reasonably estimate the value and extent of its source of supply, its cost of production, and its cost of plant. Mining of copper, lead, and zinc is one of the most important industries in the West, not only as it is related to the economy of the West, but as it relates to the production of raw materials for the Nation's economy.

The West in 1952 produced the following percentages of the total United States production of lead, zinc, copper, gold, and silver. I will read the lead and zinc; 67.5 percent of the lead and 58 percent of the zinc. I am going to skim several paragraphs here and go on to this statement:

If present conditions force the closing of the major portion of the domestic lead-zinc mines, then it is but logical to assume that the smelters and refiners will also be forced to close. Why emphasize so obvious a conclusion? I do so for the simple reason that with our