we do not need the metals, they come into the American market to depress prices and close down domestic plants.

The lead picture closely paralleled zinc, except that there was less spread between domestic and foreign prices. The foreign producer was able again to profit at our expense by selling large quantities of lead at 22 cents per pound when our domestic ceiling was 17 cents. We were unable to secure the metal we needed, obtaining only 248,864 tons by imports in 1951. Toward the end of the year, supply caught up with remand and in 1952 foreign governments and producers began a frenzied unloading, prices plummeted, and imports of lead skyrocketed to more than 73,000 tons in May 1952. Total imports in 1952 were 615,481 tons.

Already copper producers in the United States can see the handwriting on the wall. The E. & M. J. Markets weekly publication dated March 26, contains the following statement: "Fabricators have 'tickets' for 135,000 tons of April metal (foreign and domestic), but it is still too early to determine whether this large quantity will be absorbed under prevailing pricing ararngements. Sentiment in numerous instances has turned bearish on forward metal. *** The fact that Rhodesian and Katanga copper is now being offered in the United States market has made a profound impression on the Chilean authorities, and unofficially they are far from confident over their ability to obtain 351⁄2 cents per pound, Chilean ports." How familiar this sounds. Just like the comments on lead and zinc a year ago.

We hope these data will be helpful to you in supporting legislation to establish a sliding scale stabilization import tax on lead and zinc.

CONDITIONS FORCING CLOSING OF DOMESTIC MINES AND DANGER OF RESULTING DEPENDENCY ON FOREIGN SOURCES

The general assumption of people not familiar with mining is that metal production can be started or stopped more or less at will; that it is possible during unfavorable periods to shut down and save the metal for more profitable periods. To visit a mine in operation, see the openings supported by massive timbers, the water being pumped, the fan installations to keep proper ventilation, the supervisory organization, the manpowers, and the specialized equipment needed to sustain active operations would correct this erroneous impression. Even brief closure means high cost to maintaian equipment, replace failing timber, and keep the mine pumped out. Long closure makes these activities prohibitive and the mine is abandoned. Then it floods and caves when timber fails. Supervisory and mining crews are disbanded, making resumption of mining costly and oftentimes prohibitive.

Two operators in the Utah area report their temporary shutdown and maintenance costs. One, normally employing 400 men and producing 300 tons of lead and 350 tons of zinc per month, gives its cost as $20,000 per month. The other, normally employing 175 men and producing 500 tons of lead and 500 tons of zinc per month, reports its cost to be $30,000 per month, $15,000 of which is for power to pump water from the mine.

The last 12 years have seen emergency demands for maximum metal production alternating with surplus production, encouraging dumping of foreign metals in our market and resulting in many temporary and some permanent mine closures. Each such cycle has resulted in higher costs, lower profits, loss of both immediate and future potential production and the discouraging of further investment in mining.

The average price of lead and zinc in the period from 1946 to the present ( premium-price plan ended June 30, 1946) has been adequate to sustain domestic mining. In other words, the average price has been in line with costs of production in the domestic economy. However, the low periods, caused by "dumping," have been of such duration that many mines could not sustain the financial losses related to operating in the red or to shutdown and maintenance. (See attached price chart.) The present price depression promises to be of long duration, for the simple reason that throughout this entire 12-year period for eign mining has rapidly expanded under prices favorable to them. Foreign production has been further stimulated by the generosity of our Government in advancing our money for development, and through having had practically free access to our market when surpluses existed.

Free world productive capacity of zinc at 172 cents per pound has been estimated at 2.5 million tons, whereas consumption in the same area from 1948 to 1952 has ranged from 2 to 2.1 million tons. The excess productive capacity of free world zinc over consumption, considering cheaper foreign costs, can and will

likely continue to flood our market unless import restrictions are provided. The foreign producer has a favorable cost margin of about 5 cents per pound. This situation could continue to the almost complete destruction of our lead-zinc mining industry. With domestic competition eliminated we can be assured that prices will be elevated to whatever point demand and "our dependency" permit. Chile's recent exaction of 121⁄2-per-pound premium for copper and earlier experiences with tin and rubber but illustrate that the domestic consumer of metals and other raw materials literally "pays through the nose" when dependency permits the foreign producer to take that advantage.

We maintain that through passage of the lead-zinc import tax legislation, we will keep alive our domestic industry and keep metals available at prices lower in the long run than would result if our industry were seriously crippled.

21¢

LEAD PRICE

195

17¢

15¢

134

94

74

966

1946

1947

1953.

MEAN LEAD PRICE ADJUSTED
TO VALUE OF DOLLAR

MEAN LEAD PRICE

15.484

MEAN ZINC PRICE ADJUSTED
TO VALUE OF DOLLAR

MEAN ZINC PRICE.

13.35

LEAD-ZINC PRODUCTION AND IMPORTS 1930-1952-COMMENTS ON CONDITIONS AFFECTING DOMESTIC MINING

Attached are tables of lead and zinc domestic production and imports from 1930 to 1952. You will note that the charts are blocked into sections 1, 2, 3, 4. Brief comment on conditions affecting domestic mining and on international conditions during those periods is pertinent.

Section 1-1930 to 1939-covers the depression and the return-to-normalcy years. Domestic production largely satisfied domestic demands, but due to tariff reduction and very low prices during most of the period many mines were forced to mine their higher grade ore and to limit development and exploration expenditures.

Section 2-1940 to 1945-World War II saw our country become overnight the "arsenal of democracy." Ceiling prices were placed on lead and zinc, and the premium-price plan served to give above-ceiling prices to the marginal producer. Taxes on profits were greatly increased. Production, however, was materially increased from domestic mines-again at the great expense of development and exploration-due to lack of manpower and in many cases to lack of income sufficient to finance such work. Imports increased tremendously. The Metals Reserve Corporation was set up to buy foreign materials to supplement our own production, and most such purchases were made at prices higher than the imposed domestic ceilings. Toward the end of this period, a combination of low domestic prices caused by inadequate protection against low-wage imports and the exhaustion of reserves minable at those prices served to diminish domestic production.

Section 3-1941 to 1949-expiration of the premium-price plan returned free marketing of metals. Pent-up consumer demand supported higher prices and high import tonnage levels. Foreign production, stimulated by high demand and high prices, continued to seek our market because of Europe's inability to absorb it; also because of the attractiveness of the dollar market and our own need. Taxes on profits, however, remained high, labor and supply costs skyrocketed, and the domestic mines were unable to convert higher prices into badly needed development and exploration. Purchasing power of the dollar dropped from 0.945 in 1945 to 0.645 in 1949 and costs went up accordingly. Near the end of this period, demand slackened materially. Most of the foreign producer countries devalued their currencies, giving them an immediate margin of favor in our domestic market. (See chart attached.) Dumping of metals in our market began, and the price of lead fell from 212 cents in March 1949 to 10 cents per pound in March 1950.

Section 4-1950 to 1952-dumping of foreign metal in our market; reaching 542,000 tons of lead and 428,000 tons of zinc in 1950-threatened disaster to domestic mining, but it was literally "saved by the bell" through the "emergency" created by the Korean situation. I will not repeate the 1951-52 experience except to state that runaway foreign prices prevented our getting the needed metal again into our "arsenal of democracy." 1952 saw a return to "dumping." This dumping was intensified by the increased foreign production stimulated by high foreign prices and our own Government's "largess" in providing loans, grants, etc., to foreign mining on the assumption that the emergency and the shortage would be of long duration.

The domestic mining industry desperately needs import tax provisions designed to bring about metal prices in our domestic market realistically related to the cost of production in our domestic economy. We feel the present proposed legislation will take a long step toward this goal.

Zinc: United States mine production, imports, exports

Sources: U. S. Bureau of Mines and American Bureau of Metal Statistics.

Lead: United States mine production, imports, exports

DEVALUATION OF FOREIGN CURRENCIES

The following table shows the changes in currency values, brought about by devaluation, of countries that have shipped lead to the United States in recent months, based on information supplied by Federal Reserve and New York City banks:

UNITED STATES LEAD AND ZINC IMPORTS, 1948-1952-SOURCES OF FOREIGN LEADZINC SHIPMENTS TO UNITED STATES-AVERAGE, LOW, AND HIGH PRICES, DOMESTIC AND FOREIGN

We believe you will find of great value the accompanying chart, showing lead and zinc imports of the United States from various sources during the period from 1948 to 1952 inclusive.

You will note that the tables emphasize the extreme difficulty of securing metal from foreign sources when it was most sorely needed for our defense program in 1951. The 1952 column spotlights the "dumping" of foreign metal on the American market just as soon as supply caught up with demand.

A glance at the price data given just below each table shows how foreign producers took advantage of our situation and charged exorbitant prices for their products during the scarcity.

You can also get from a study of the chart a general picture of the sources from which our United States imports came and are now coming.

Lead imports of the United States, 1948-52

Sources: E. & M. I. Metal Markets and the American Metal Market.