just going to sit there and isn't going to try to promote a deal? Everything is promotion, stores and everything else. Mr. HOSMER. What if he gets a patent and still can't promote it? Mr. KYLE. All right. He never finds any ore. It is just like some of those old prospectors. They have a little house and a little garden, and they get so old they cannot do the assessment work any more. And some hobo comes along and says, "You can't do the assessment work," and he kicks him off. That was his home. Is that right? Mr. MULTER. You are suggesting that the homestead law apply to these claims? Mr. KYLE. Something like that. And put a tax on these claims. Have a district engineer to go out to the different districts and see that he has spent the equivalent of $500 on a claim. Then, if he spent that $500 on a claim, give him a deed to it, let him start paying taxes. This tax that he pays on all of his claims and the other man and this man will go to pay for a district engineer or someone to go out and see that he has spent the $500 equivalent to a claim. Mr. HOSMER. Thank you very much. Mr. KYLE. Thank you. Mr. HOSMER. Will you identify yourself for the record, Mr. Bradford. STATEMENT OF ROBERT BRADFORD, REGIONAL DIRECTOR, GENERAL SERVICES ADMINISTRATION Mr. BRADFORD. I am Robert Bradford, the regional director of the General Services Administration for the southwestern States here. I would like to comment very briefly on the manganese program, on Mr. Stoval's testimony, particularly. The domestic manganese program is a 5-year program and it started in the middle of 1951, but the Wenden Depot did not open until January of this year. I think it is only right that the program at Wenden be extended by 2 years, or so, as Mr. Stoval asked for it, and I think I can get that accomplished through DMPA in Washington. I am going to try it right away, and I will be glad to report back to the committee as to how I come out on it. It won't cost the Government any more, because there are 37 million units in that program which won't be reached in the time period anyway. We have the money from Congress for the 37 million units. It is just extending the time so that the miners can put in their capital improvements and have a 5-year period. Mr. HOSMER. That is a very fine offer. I am sure the manganese men appreciate it greatly. We will be interested to know how you come out on it. Mr. BRADFORD. I would like to leave, if I may, the 4 certificates we use on the 4 domestic mining programs. I do that because this was called our postcard program when your committee was meeting last weekend in San Francisco. I want the counsel here to see that that is according to publications in the Federal Register and is entirely binding on the Government, not on the miners but on the Government. (The material referred to follows:) GENERAL SERVICES ADMINISTRATION REGION 9, ARIZONA, CALIFORNIA, NEVADA, AND TERRITORY OF HAWAII CERTIFICATE OF AUTHORIZATION, DOMESTIC ASBESTOS PROGRAM (December 23, 1952, 17 F. R. 11695) Number To: Date: Your notice dated indicating your desire to participate in the domestic asbestos program and your undertaking to deliver nonferrous chrysotile asbestos produced in the State of Arizona to the Government has been received. You are hereby authorized to deliver to the Government, in accordance with the terms of the program, nonferrous chrysotile asbestos produced in the State of Arizona meeting the minimum specifications contained therein. Thirty days' notice should be given to the Government with respect to deliveries under this program. ROBERT B. BRADFORD, Regional Director. Number GENERAL SERVICES ADMINISTRATION REGION 9, ARIZONA, CALIFORNIA, NEVADA, AND TERRITORY OF HAWAL Date: Your notice dated indicating your willingness to participate in the domestic tungsten program and your undertaking to prospect for or produce tungsten, has been received. You are hereby authorized to deliver to the Government, in accordance with the terms of the program, tungsten concentrates meeting the specifications contained therein. Reasonable notice should be given to the Government with respect to the availability of any tungsten concentrates for inspection. ROBERT B. BRADFORD, Regional Director. GENERAL SERVICES ADMINISTRATION REGION 9, ARIZONA, CALIFORNIA, Nevada, AND TERRITORY OF HAWAII CERTIFICATION OF AUTHORIZATION Number DOMESTIC MANGANESE PROGRAM Date Your notice dated stating that you have read the July 7, 1952, regulation setting up the domestic manganese program and accept the terms and conditions, and further stating that you desire to participate in this program has been received. You are hereby authorized to make shipments to the Government under this program. Reasonable notice should be given to the Government with respect to the availability of any manganese for inspection under this program. ROBERT B. BRADFORD, Regional Director. Your notice dated indicating your desire to participate in the domestic manganese program and deliver manganese ore to the Government Materials Purchase Depot at Wenden, Ariz., has been received. You are hereby authorized to deliver to the Government, in accordance with the terms of the program, manganese ore meeting the minimum specifications contained therein. Reasonable notice should be given to the Wenden Materials Purchase Depot with respect to deliveries of ore. ROBERT B. BRADFORD, Regional Director. Mr. MULTER. As a matter of fact, the entire manganese and tungsten programs both can be extended so far as the period of time is concerned without costing the United States Government another dollar? Mr. BRADFORD. Yes, sir. And there is almost no hope in reaching the present number of units on the present program on either tungsten or manganese. Mr. HOSMER. Thank you. Mr. Robert J. Dalton? Please identify yourself. STATEMENT OF ROBERT J. DALTON, PRESIDENT, YUCCA MINING & MILLING CO., YUCCA, ARIZ. Mr. DALTON. I have a prepared statement here, Mr. Chairman. Mr. HOSMER. May we accept it? Mr. DALTON. Yes. (Mr. Dalton's prepared statement follows:) TEXT OF STATEMENT OF ROBERT J. DALTON The Honorable WILLIAM S. HILL, APRIL 30, 1953. Chairman, House Committee on Small Business, Phoenix, Ariz. MR. CHAIRMAN: I am the president and general manager of the Yucca Mining & Milling Co., Mohave County, Yucca, Ariz. We operate a copper-zinc property and when operating at full capacity, we employ between 40 and 50 men, and mine and mill approximately 140 tons of ore per day. Our normal payroll averages about $20,000 per month and supplies cost another 12 to 15 thousand. Our operation was a considerable factor in the economy of the county. Today, we are virtually shut down. In March 1949, we started construction of our mill. At that time, copper was 232 cents per pound and zinc 161⁄2 cents. Mine and mill labor was $8 to $10 per day. In May both the price of copper and zinc had started to fall off and before we had the mill finished in July the price of copper had dropped from 232 cents to 162 cents, and zinc from 161⁄2 to 94 cents per pound. When the price of metals started up again in the spring of 1951, Korea was upon us, and our labor and supplies had increased to such an extent that, still there was no chance of making any money. In December of 1951, it was very apparent that because of economic conditions and Government controls, we would either have to have Government help or cease operating. After 4 months of negotiations with the DMPA in Washington, we finally received a contract from the Government with a supported price that would allow us to operate, but at no profit, other than 2 cents per pound of copper produced in lieu of depreciation. Under the contract there was to be no profit on the zinc, lead, gold, and silver. The pertinent conditions in that contract were: 1. The contract could be canceled by either party on 60 days' notice. 2. The contract was automatically canceled the date that ceiling prices were removed. In other words we had to operate a mine on 1 day's notice and plan accordingly. This was not all-any reduction in costs whether by improvement in operating efficiency, purchase of additional capital equipment, increased metal recovery, or any other method of increasing the profit, was for the account of the Government and we could accrue no part of it. We were to be allowed the 2 cents per pound of copper produced and that was all. That was the reason for the 60-day cancellation clause. All during this period the price of foreign copper was above the contract price we were receiving from the Government, and the whole industry was in short supply. Ceiling prices went off on February 25 and our contract was canceled. Our financial condition today is about the same as when we applied for the contract, and we now have 30,000 tons less ore. At the time we made the application for our contract with DMPA we also made an application for a loan of $50,000 to be used as operating capital. The DMPA finally decided that they could not make the loan, and somewhere, somehow, in the maze of Government policymaking, it was decided that the RFC would handle all DMPA loans, when recommended by DMPA. The DMPA, on the basis of our audited accounts, an analysis of our operating history, and Government engineers' examinations of our property made a recommendation to the RFC that the loan be made. (I have never seen the recommendation and do not know what it contained.) In October of 1952, 9 months after the application, we were notified by the RFC that the loan had been authorized. As a matter of fact, I read it in the trade publications as a consummated fact, before I had received any word from the RFC. To the public, we had the $50,000 and the RFC had fulfilled its function. However, as of today, we do not have the money and under the circumstances we have no use for it. I have here the file of negotiations for the RFC loan. I am not going to bore you with the futile correspondence that various people in the employ of RFC were paid to write. Let me quickly sum up the conditions for the loan. For a loan of $50,000, we were to give: 1. A first mortgage on all of our assets, which included approximately 100,000 tons of indicated ore, and 500,000 tons of inferred ore. 2. A complete mining and milling plant which had a book value of $111,000 The original cost of which was $148,000. 3. A warehouse inventory of supplies and equipment of $30,000. 4. Approximately $10,000 of unencumbered cash. Our only liabilities were those to our stockholders. To all of the above, we agreed. But that was not enough. In addition the RFC evidently investigated the financial condition of a few of our stockholders and required that each of five selected stockholders personally guarantee the $50,000. We were supposed to take that same collateral to a bank and have the bank refuse to make the loan, before the RFC would consider it. It is quite obvious that the RFC had no intention of making this particular loan. I have here, a letter from the executive vice president, Mr. John A. Long of Photo Switch, Inc., who were the recipients of an RFC loan to establish an earning record, which would permit private financing. I would like to know the terms under which this loan was made. I believe, as chairman of the Small Business Committee, you may be able to uncover a condition that would be of benefit to the small mine operator. I say, "small operator" because I don't believe a select group of stockholders in Magma Copper Co. or Copper Range, each personally guaranteed $95 million and $157 million respectively, which I understand is the amount that has been loaned these companies. I may be a few millions off on those figures. We also have a $59,470 exploration contract with the DMEA under which the Government was to loan us half the cost of the contract. To date, we have performed $10,000 worth of work and for various reasons, we have only received $1,840 from the Government. At the present time, the work is at a standstill, because we have encountered a fault underground, and until now, the procedure to get started again has been so involved, that as of today, it has not been untangled. Here is an example of what happens when a contingency occurs. When we encountered the fault, we notified the Bureau of Mines office in Tucson, by telephone. They informed us that they would send a man out. Since we had an operating organization, we proceeded with crosscutting. We had to do something. About a week later, an engineer of the United States Bureau of Mines, DMEA staff came out and inspected the situation. He gave his personal opinion that under the circumstances, and with the information available, he would do the same thing as we were doing. However, he could not approve of, or say that the Government would contribute their share of the work, but that he could take the information to Tucson and try to arrive at a decision. In the meantime, our costs ran merrily on. Sometime later, not having heard from Tucson, I called Mr. Storms, chief of the Division on the telephone. Mr. Storms advised me that he was not yet familiar with the details, but would become so, and would advise me. Keep in mind, that all this time, we had an operating crew and of necessity, we had to keep working. Lacking any better ideas, we went ahead with the work as we thought best. On October 7, we received a letter from Mr. Storms. UNITED STATES DEPARTMENT OF THE INTERIOR, BUREAU OF MINES MY DEAR Mr. DALTON : In answer to your telephone call of yesterday, asking if the crosscuts you are driving from the southwest drift on the fifth level of the Antler mine would be allowed under the contract, it seems to us that it is permissible to drive these crosscuts in order to pick up the vein again on the south side of the fault. Our Mr. L. L. Farnham inspected your property last week and believes that such crosscuts are necessary. However, we cannot be certain that the executive officer of the DMEA field team in Denver will approve such an expenditure of contract funds as the terms of the contract must be followed very closely before the DMEA disbursing officer will certify the accounts for payment. Sincerely yours, WALTER R. STORMS, Chief, Arizona-New Mexico Branch, Mining Division, Region IV. From that, it would appear that the disbursing officer, is the final judge of the geological conditions and the final arbiter of what shall be done. So far, we haven't been able to get the disbursing officer underground. You will note that a week had transpired from the time of Mr. Farnums visit and the date of the letter. I don't know what we were supposed to do with the help during this period. But I do know they had to be paid. I have gone over our history, and cited these instances and conditions because I believe they are the best that can be obtained under Government administration and control. It was originally my intention not to appear at this meeting, because I had nothing constructive to contribute, except a plea or a demand for more aid from the Government. Having been the recipient of virtually every form of Government aid available to an operation in our category, and having devoted most of my time and energies in the past 2 years in conniving, and I use the word knowingly, to get it, I am thoroughly convinced that that is not the course to pursue. The end is neither profit nor pride but frustration and disgust. |