1. (a) An "open" carlot purchase program of sufficient duration to encourage private financing for the exploration, development, and exploitation of the concentrating chrome ores resources known to exist, or, (b) individual, long-term open contracts. For the latter program a base price for concentrates should be established which might be renegotiated up or down after a certain tonnage had been delivered.

2. Concurrently with establishment of such a purchase program, a policy of Government aid either through loans or survey and Bureau of Mines assistance, or both, for the exploration of new discoveries of promising size and grade. Inasmuch as the Government is the only purchaser of domestic chrome, either as ore or concentrates, no Government loan or other assistance programs should be put into effect before the establishment of an effective Government purchase program.

The extremely informative article by Mr. H. A. Doerner, metallurgist for the Bureau of Mines, which appeared in these pages in August 1952' describes the excellent results obtained in the smelting of low-grade domestic chrome concentrates. The tests carried on by the Bureau of Mines in conjunction with the Republic Steel Corp. indicated that open-hearth alloy steel made from lowgrade ferrochrome smelted from "off-grade" domestic concentrates compared favorably in all respects with alloy steel obtained from high carbon ferrochrome supplied by commercial producers-that, in short, "the chrome to iron ratio in ferrochrome has little or no importance metallurgically." Furthermore, and most importantly, the tests indicated that the difference between the cost of smelting low-grade and high-grade concentrates is far less per pound of chromium than the bonus offered by GSA for upgraded concentrates or high-grade products. If this is the case high bonuses for high-grade ore and upgraded concentrates would appear unwarranted; certainly so far as Government purchases are concerned. In the light of this work it would appear that minimum specifications for concentrates might be lowered and premiums reduced. The price schedule offered for concentrates should therefore be carefully reviewed to determine whether or not a revised schedule resulting in a somewhat lower price per unit of chromium than that provided by the Grants Pass schedule would be warranted and still encourage development of our chrome resources.

STATEMENT OF WALTER H. HOPPE, ALLIED MINING CO.,

AUBURN, CALIF.

Mr. HOPPE. I am Walter Hoppe. I am one of the operators of the Pelican chrome mine. We have just stuck our neck out for about $100,000 on a mill. I will state that in nearly all of our experience on our particular property we find that you have to mill from 7 to 10 tons of mill ore in order to get 1 ton of high grade. It costs just as much money to mine that mill ore as it does the high grade.

Then we have the other proposition of transporting that to the stockpile from the mine by trucks, or by railroad, to Grants Pass, where it is unloaded from the railroad to a truck, hauled out to the stockpile, weighed and sampled, put back on a truck, taken back on the railroad, and hauled back to Sacramento and then to wherever it goes. That is an economic waste.

The other thing is, when you maybe consider small business a hundred thousand dollars or more, it costs us more than that. There is $100,000 in the mill; there is $100,000 in development. That may be considered small business, but we have done this with our own capital and our own initiative. We do need more time. You can't cut it off in a year or two. With that, we have done no great development. We have taken it where we could find it. We couldn't outline a program where we would say "Now we are going to develop this property."

Can the U. S. Use Its Low-Grade Domestic Chrome Ore? H. A. Doerner, Chief, Metallurgist Division, region III, U. S. Bureau of Mines. Engineering and Mining Journal, August 1952.

You can't do that in 2 years or 3 years. It takes anywhere from 3 to 5 years to really develop a property.

Another thing. Many of us still remember what happened to quicksilver. I know at the time I was operating in Arkansas when they pulled the pin and all of us were left flat. Any investor remembers that incident, and they are not going back into that again unless we have a more secure program. With consumption what it is in normal times, I don't think there is any fear that we would overproduce chrome. There is another question; that is personnel. Our miners are gone. They are all old stiffs like myself or older. The young fellows are gone. They have gone into other industries. Regardless of what you say, it is highly specialized. You have to know your business, and you have to train these men.

In chrome, it is a little different from other minerals, because it is a black rock. You look at it and it looks like that [indicating]. But you can train men after a time so that on a given property they will know what is good ore and what is poor ore. But it takes time, and those people are expensive. It is expensive to train them.

With summer opening up now, we find ourselves in a quandary of where are we going to get the men. We don't know. They will come in today and work a few days, and somebody offers them a job for $2.50 an hour, and they are gone. We can't afford to pay that.

Thank you.

STATEMENT OF JOE HOLMAN, CHAIRMAN, CHROME COMMITTEE, WESTERN MINING COUNCIL, SAN JOAQUIN VALLEY, CALIF.

Mr. RIEHLMAN. Would you identify yourself, please.

Mr. HOLMAN. I am Joe Holman, chairman of the Chrome Committee for the Western Mining Council, California, former chairman of the Chrome Committee for the Oregon Mining Association, and a chrome miner in the San Joaquin Valley.

The point that Mr. Bristol didn't emphasize that I think might stand a little clarification is that he pointed out that the Munitions Board considered 200,000 tons a year minimum requirements in case of an emergency. In a published mining journal last summer, there was quite a dissertation given on chrome that was highly informative. To touch upon that subject, would make a point very clear as to why small business in chrome mining might very well be bolstered with committee action. Our total requirements according to this bulletin amounted to 1,250,000 tons a year. Those are normal requirements. Our metallurgical grade comprises about 48 percent of that. That is the type that goes into steel alloys for armorplate, gun barrels, tool steel, and drill steel. About 38 percent of it is used in refractory grades. Just recently, in finding out what was involved, it occurs to me that to operate an open-hearth furnace, to provide steel for this country-and we provide the best steel in the world-it takes for maintenance alone in an open-hearth furnace 40 tons of chrome-compounded refractory brick to keep that in repair. Every 9 months it takes 190 tons just to floor one of those open-hearth furnaces.

Thirty-eight percent of that million and a quarter tons is needed just to keep the furnaces in shape so that you can raise the box heat sufficiently to fuse your metals together. The remaining percentage goes into chemical grade.

If only 200,000 tons are minimum requirements for Munitions or to support our very highly essential needs, then there is quite a discrepancy there.

At the present time we are falling far short of fulfilling our requirements, as you can see by the figures that have been brought out. When your overseas shipments are cut off, and you have nothing coming from overseas, somebody is going to have to do without unless we have a stockpile of manpower and know-how in the hills. It applies to all of the other metals that are in short supply, as it does to chrome. But chrome particularly is one of the large-volume requirements of the Nation.

Mr. BRISTOL. I might add something: You were talking about overproduction. I had felt that this program should be set up to push toward the 200,000 tons every single year, which is actually near the 20-percent point. Then, in case of an all-out emergency, it could probably be increased along with the stockpiling that we have, and we probably could stay in an all-out war and cut out all the automobiles and everything else until it was over, and we might get by. That was the minimum they said we could even stay in business on.

Mr. RIEHLMAN. Mr. Counsel, do you have any questions? Mr. HINTON. I was just wondering about this 200,000. I take it that is just our military requirements?

Mr. BRISTOL. That is the military requirements, with no civilian whatever.

Mr. RIEHLMAN. I believe you made the statement, Mr. Bristol, in reply to a question that was propounded by my colleague here, Mr. McCulloch, that the industry itself would probably be able to bring about the production from each and every mine should there have to be a limit on the tonnage that could be produced, if we continue this program indefinitely. Wasn't that the understanding, that that agreement could be brought about within the industry itself, without putting on strict Government regulations?

Mr. BRISTOL. Yes. There might be a peak of any 1 year from any 1 mine. Somebody might hit a 50,000-ton kidney and want to bring it all in in 1 year.

Mr. RIEHLMAN. That is the problem.

Mr. BRISTOL. Yes.

Five thousand tons is too small to get any legitimate standard mining company interested in the chrome business. If it is too small a business for them to go out and spend a half to three-quarters or a million dollars to put in a substantial installation, that is.

Mr. RIEHLMAN. There are many other questions that I am sure we could ask you and the other witnesses, but time is running short. It is an important subject, and we deeply appreciate the constructive information that you have given to us this afternoon.

At this point I would like to insert into the record a statement that has been furnished by Mr. William R. New, with respect to the mining problem.

(Mr. New's prepared statement follows:)

To the Honorable Members, House Select Small Busines Committee:

My name is William R. New. I am former president of the Idaho Small Mine Operators Association and now residing in Reno, Nev., also former director of public relations, Western Division of Small Mine Operators, in charge of minelegislation program in Washington, D. C.

During the time I spent in Washington representing the Small Mine Operators of Idaho, I found that many Members of Congress representing that portion of our country which had no mining were of the impression that our mineral resources throughout the Western States were practically depleted, and it was impossible to create any worthwhile interest. It is very gratifying that this committee has taken the time to come out and personally interview some of the leaders in the mining industry and take back to Congress some of the true facts of our domestic mining operations. I am confident the honorable members of this committee will be thoroughly convinced that we are far from being a havenot Nation and, if proper legislation is enacted that will give the small and large domestic mine operators an equal break with the foreign program that our Government has inaugurated, we will soon be producing sufficient strategic metals to assure a sufficient stockpile for any emergency that may arise.

Let me emphasize that a fair and equitable tax program such as now enjoyed by the mining industry in the Dominion of Canada and a drastic change in the personnel of the Security Exchange Commission and its regulations would be of valuable assistance to our domestic mining industry, especially the small operators. Private industry could handle the stockpiling program much more efficiently and economically than the Government, especially the way it has been administered in the past and is being administered today.

I cannot emphasize too strongly that we cannot depend wholly on the importation of metals, that unless Congress gives more consideration to legislation that will enable our domestic small operators to remain actively in mining operations and give some assurance to the future, should world war III come upon us the success of our Armed Forces could not be assured.

Our entire national economy is based on the production of raw materials, the products of our farms, mines, and forests.

The combined income of agriculture and mining is always one-fifth of our national income; and every time there is a reduction of $1 billion in mining or agriculture, our national income must drop $5 billion.

It

No segment of our society can escape the effect of this economic law. affects the retailer, the wholesaler, the manufacturer and wage earner alike. Labor may think it can escape this law by keeping wages high, but the percentage of reduction in our national income will be reflected in unemployment. The farmer may think he can escape it by subsidies, but unemployment will bring reduction in consumption and continue to pile up huge surpluses.

Seventy percent of our metal mines are now closed and this will adversely affect employment and every line of business.

While our own mines are being closed, we are importing foreign metals which will not be available to us in the event of war; and I want to say very frankly to you that unless something is done to put our mines in operation, we are going to lose the next war.

In closing, let me emphasize that rather than reducing the present depletion allowance of 15 percent, I believe it should be increased to at least 25 percent to compensate the mines for the exhaustion of their mineral resources.

Mr. RIEHLMAN. Is there a Mr. C. N. Schuette here?

Mr. SCHUETTE. Yes, sir.

Mr. RIEHLMAN. Would you identify yourself for the record?

STATEMENT OF C. N. SCHUETTE, CONSULTING MINING ENGINEER, SEBASTOPOL, CALIF.

Mr. SCHUETTE. I am a consulting mining and metallurgical engineer.

Mr. RIEHLMAN. Would it be possible for you, Mr. Schuette, to brief this statement of yours, sir?

Mr. SCHUETTE. I will try my best.

Mr. RIEHLMAN. With your permission, if that is agreeable, we would like to put it in in its present form in the record and then let you summarize it, if you do not mind. Is that agreeable, sir?

Mr. SCHUETTE. Yes, sir.

(The statement is as follows:)

QUICKSILVER—TESTIMONY BY C. N. SCHUETTE, CONSULTING MINING ENGINEER, SEBASTOPOL, CALIF.

The quicksilver mining business finds, develops, and mines its own raw material which is the sulfide of mercury or cinnabar ore. This ore is, in all cases, processed at the mine in retorts or furnaces and the end product is pure quick-. silver. Thus, this little industry is composed of many mines, each of which is a completely integrated unit designed to produce a finished marketable product, not one of which has over 100 employees.

It is an old and honorable business in this part of the United States, having started when this was still a part of Mexico. Its product helped to produce the wealth of the gold rush days and later it furnished the quicksilver used to amalgamate the silver ores of the Comstock Lode.

Thus, for over 100 years, this small business has been with us, producing its share of this country's wealth. It has had many ups and downs but it has never been counted out. In both World War I and World War II it rallied magnificently-confounded its detractors—and produced all the quicksilver needed to carly on these wars.

The pertinent facts concerning the industry are given in the accompanying table. This table covers 42 years and 10-year averages have been computed. Incidentally, this period covers my association with the industry as I held my first job in the Guadalupe quicksilver mine in 1911.