R. D. WERNER CO., INC., Greenville, Pa., May 29, 1958. MINERALS SUBCOMMITTEE OF THE SENATE INTERIOR AND INSULAR AFFAIRS COMMITTEE, Washington, D. C. GENTLEMEN: We have been advised of the domestic minerals stabilization plan and after a thorough review we must protest some of the inadequacies of this basic plan. The members of the aluminum industry are always under severe competition with domestic and foreign fabricators of copper, brass, lead, and zinc products. We have always met their competition in the open market without complaint and will continue to do so on a legitimate businesslike basis. We, however, feel it is unfair for us to be subjected to the Government-subsidized competition which would be created by this plan. We recognize that the plan does not provide direct subsidy payment to these fabricators, but only to the primary producers of copper, lead, and zinc. It would bring about an unfair competitive situation for the aluminum fabricators because: (1) Depressed market prices would be offered to the fabricators for copper, lead, and zinc since the producers would be getting only a part of their revenues from them and the balance in the form of huge Government subsidies. (2) This plan then would bring about depressed prices for all competing fabricators of aluminum, copper, lead and zinc. (3) The plan would not provide for direct subsidies to the aluminum fabricators nor for lower raw material prices as would be the case for fabricators of competing metals. (4) Basically, this plan would create unfair competition, since it would involve subsidies to be paid out of Government tax receipts, and would force the aluminum fabricators to finance in part this threat to its markets, prices and profits. We request no special consideration but insist that favored treatment should not be given to our competitors in the metals market. If the adoption of this domestic minerals stabilization plan is absolutely necessary, then the fabricated aluminum products should definitely be included as well as the competing metals. Very truly yours, L. L. WERNER, Vice President. AMERICAN METAL CLIMAX, INC., Hon. JAMES E. MURRAY, United States Senate, Senate Office Building, Washington, D. C. DEAR SENATOR MURRAY: I was unable to appear at your hearings on the Seaton plan for copper, lead, zinc, tungsten, and fluorspar. My intention had been to support a subsidy to the lead and zinc industries as the best step that can be taken at this time. To my mind, higher tariffs or quotas would not solve the problem in the United States for the bulk of the mines and would be unpopular, to say the least, with foreign countries. There is a technical point in connection with the proposed legislation with which the Department of Interior has attempted to deal. This is the possibility that some domestic producers might use the subsidy to reduce market prices to levels which would reduce the bulk of imports and eliminate production from the higher cost domestic mines. This possibility might be live in view of the heavy stocks of lead and zinc in the hands of producers in the United States and if pressure develops to convert these stocks into cash. As I understand it, the Seaton plan is a substitute for other measures which would be resented, particularly abroad, such as higher tariffs and import quotas. If my understanding is correct, you may wish to consider an amendment of S. 3892 which would minimize the possibility of using subsidies to decrease market prices in the United States. One method would be to provide that below certain market prices, say the current prices of 10 cents for zinc and 11 cents for lead, the subsidy would be reduced pro rata. For example, the maximum subsidy for zinc is 22 cents. If the price for zinc declined to 9 cents, the maximum subsidy would be reduced to 12 cents. Of course, the reduction of the maximum subsidy in the event of prices below the "base" prices suggested above would not necessarily have to be pro rata to the market price decline. It could be 75 percent or even 50 percent of the reduction of the market prices. Sincerely, COMMITTEE ON INTERIOR AND INSULAR Affairs, United States Senate, Washington, D. C. J. VUILLEQUEZ. REYNOLDS METALS CO., DEAR SIR: The domestic minerals stabilization plan discriminates against the aluminum industry by favoring copper, lead, and zinc. The plan provides Government subsidies for these competitors to aluminum. Copper, zinc, and lead producers and fabricators thus subsidized could arbitrarily cut domestic prices below cost without sacrificing a penny of profit. This is made possibile by the plan because the Government would pay them the difference between the artificially low market price and the so-called "stabilization" prices established by the proposed program. The aluminum industry is in daily and vigorous competition with copper, lead, and zinc. If this plan went into effect, our industry would find itself competing against unduly low prices for these metals-prices made possible only by the proposed subsidies. The plan would demoralize, not stabilize, market prices for copper, lead, and zinc, and necessarily for their competitor, aluminum. If a Government subsidy program for the metals industry is required by current world conditions, it should be practical and equitable in concept and application. It should not single out copper, zinc, and lead for favored treatment and ignore aluminum, a competing metal. Yours very truly, R. S. REYNOLDS, Jr., President. INTERNATIONAL MINERALS & METALS CORP., Hon. JAMES E. MURRAY, Chairman, Committee on Interior and Insular Affairs, Senate Office Building, Washington, D. C. MY DEAR SENATOR: We are writing you on behalf of our zinc smelter, National Zinc Co., Bartlesville, Okla. Your committee and your subcommittee on minerals matters will play a decisive part in formulating Government action which finally seems to be impending on lead and zinc. We were shocked and amazed by the latest domestic minerals stabilization plan as presented by Secretary Seaton and by indications that the Government is considering dropping tariff action altogether. Enclosed is a copy of telegram we sent to Secretary Seaton on May 5. The smelters, an important and useful segment of the minerals industry, have been ignored in the latest formulation of Government policy. Unless something more constructive is done, immediate danger is ahead for this branch of the industry, as well as for the mines. As indicated in our telegram, we believe that action along the lines of the Tariff Commission reccommendations is imperative, if we want to get our industry through present troubles. Even temporary quotas, distasteful as they otherwise are, would be preferable to closing down more of our smelters and mines under conditions which make their later reopening questionable. We should particularly point to the part of our telegram relating how we, as a smelter, continued to buy ores from the mines at the price prevailing during the last several months in reliance on the Government's statements that tariff protection would be forthcoming. Much of the metal from this ore we are still holding, and if all tariff increase is now denied, the price for this metal will undoubtedly collapse further-illustration, today's drop in the lead price. We urgently bespeak your interest in this matter. Yours very truly, F. R. JEFFREY. CHAMBER OF COMMERCE OF THE UNITED STATES, Hon. JAMES E. MURRAY, Chairman, Senate Committee on Interior and Insular Affairs, Minerals, Materials, and Fuels Subcommittee, Senate Office Building, Washington, D. C. DEAR SENATOR MURRAY: The Chamber of Commerce of the United States strongly recommends that your subcommittee not approve S. 3892, which would attempt to stabilize production of copper, lead, zinc, acid-grade fluorspar, and tungsten from domestic mines by means of a domestic minerals stabilization plan. The chamber's board of directors, on June 13, 1958, went on record as opposing the domestic minerals stabilization plan proposed in S. 3892, pointing out that Congress has already provided a means of relief in the escape clause section of the Reciprocal Trade Agreements Act. The chamber is not unmindful of the plight of the domestic metals and fluorspar mining industry due to imports of these materials at prices which the domestic industry cannot meet. The result has been a closing of some domestic mines and the operation of others at a loss which cannot long be continued. The chamber believes that the mining industry within the continental United States is of prime importance both to our national well-being and safety. Even if the necessity for progressive increases in importation of certain minerals and metals is conceded, we can have national welfare and security only through a sound and active domestic mining industry. S. 3892 proposes to attempt to alleviate the distress conditions in certain segments of the domestic mining industry by establishing "stabilization prices" for domestic-produced copper, lead, zinc, acid-grade fluorspar, and tungsten. Domestic producers of these commodities would sell their production at the current market prices. The Federal Government, up to certain quantity limitations, would pay the producers the difference between the market price and the "stabilization" price, but maximum limits per pound (or ton) are set for the Federal payments, in case the market price fell too low. If the sales in any quarter exceeded the quantity limitation, the Secretary of the Interior would allocate the payments "equitably" among the producers, except that small producers would receive full payments. Section 2 (A) (2) of the bill provides that the Secretary of the Interior may fix quarterly limitations on the total amounts of each material on which stabilization payments are made, and that when sales of any material exceed such quarterly limitations, the Secretary may adjust stabilization payments to producers for that quarter "so as to distribute the benefits of the program equitably among the producers." It further provides that stabilization payments shall not be denied on any sales of any producer during such quarter whose sales did not exceed certain stated quantities. The Secretary of the Interior, in a letter of May 22 to the President of the Senate accompanying the draft of the bill, stated that these limitations on stabilization payments will "permit the stablization of each commodity at about the present levels and permit some adjustments." In other words it will limit the domestic production of these commodities to about the present unsatisfactory levels. The domestic minerals stabilization plan is, therefore, a direct subsidy device. It does not in any way attempt to stem the flow of imports of these commodities but instead would subsidize the domestic producers to a certain limited extent in the hope that they could thus compete with the imports in the market place. The national chamber has long opposed any policy or proposal which, directly or indirectly, might either lead toward the nationalization of the mineral industry, in whole or part, or unnecessarily hinder its development. This opposition applies to action by legislation, administration, or intergovernmental agree ments involving the regulation or limitation of production, distribution, or prices. The domestic minerals industry, we believe, should not only be permitted but encouraged to develop and expand its activities under our system of free, competitive private enterprise. The chamber is therefore opposed to S. 3892 because 1. It does not believe in direct Federal subsidies of this type. The chamber vigorously opposed a somewhat similar subsidy plan for agricultural production proposed some years ago by the then Secretary of Agriculture Charles Brannan. We believe that enactment of S. 3892 would establish a precedent that could be broadly extended to every industry in trouble because of imports. 2. It believes that the authority given the Secretary of the Interior to adjust the stabilization payments to the individual producers cannot be "equitably" administered and could only lead to direct Federal controls over the domestic mining industry. 3. It does not believe it is equitable to limit the production and sale of domestic commodities while at the same time allowing unlimited importation of these commodities from foreign countries. 4. It is doubtful if the "stabilization" prices and payments allowed in S. 3892 are sufficient to alleviate the distressed conditions in the domestic mining industry. It should be noted that the "stabilization prices" set for lead and zinc in S. 3892 are considerably below the "base prices" in the Secretary of the Interior's 1957 proposal for sliding-scale import excise taxes for the protection of the domestic lead- and zinc-mining industry. The chamber realizes that the only legislative alternative for relief of the distressed domestic mining industry appears to be either increased tariffs or import quotas or both. We believe that the United States should pursue a constructive and realistic tariff policy which will encourage the flow of international trade and at the same time afford reasonable protection for American industry and agriculture against destructive or unfair competition from abroad. In supporting the reciprocal trade agreements program we have testified on our belief that this legislation should provide an escape clause permitting modification or withdrawal of concessions in order to deal with unforeseen developments seriously injurious to domestic producers. We believe that unreasonable or unethical competition must not be the cause of serious injury to domestic producers, but the determination of injury due to imports should be judged in the light of the national interest. The chamber believes, therefore, that relief for the distressed domestic mining industry should be afforded through the application of the escape clause procedure of the Reciprocal Trade Agreements Act rather than through such a proposal for direct subsidies, with danger of Federal controls of the industry, as embodied in S. 3892. Because of this belief, we strongly urge your subcommittee not to give its approval to S. 3892. We request that this letter be made a part of the record of the hearings on S. 3892. Cordially yours, CLARENCE R. MILES, Manager, Legislative Department. KAISER ALUMINUM & CHEMICAL CORP, Hon. JAMES E. MURRAY, Chairman, Committee on Interior and Insular Affairs, United States Senate, Washington, D. C. DEAR SENATOR: The domestic minerals stabilization plan as presented to Congress by Hon. Fred A. Seaton, Secretary of the Interior, represents a discriminatory effort to aid the producers of some metals, but excludes aluminum. We wish to request that your committee take positive action to include aluminum in any plan for subsidies or for direct acquisition of metals by the Government. If, because of economic conditions and current world tensions, a Government program for subsidies or direct purchases is justified and required, then I am sure you will recognize that it should not be discriminatory, but should include aluminum and not be limited to copper, lead, and zinc. Aluminum is strategically important and is currently undergoing a drastic drop in production with resulting shutdown of plants and employment reductions. The aluminum producers are constantly in strong competition with these other metals. We ask that you and your committee, in fairness and equity, include aluminum in any plan for domestic minerals stabilization. Yours very truly, CHAD F. CALHOUN, Vice President. Hon. JAMES E. MURRAY, LOS ANGELES, CALIF., June 9, 1958. Chairman, Committee on Interior and Insular Affairs, Senate Office Building, Washington, D. C.: Our Montana operations preparing to furnish substantial quantities columbium concentrates to Government stockpile. Significance of columbium to atomic energy program and new jet age development should warrant continuance of stockpiling program through 1959. This project also furnishes substantial addition to Ravalli County income. Urge committee continue this program. CONTINENTAL COLUMBIUM CORP. MEYST. STATEMENT OF MR. FRANK N. HOFFMANN, LEGISLATIVE DIRECTOR, ON BEHALF OF MR. DAVID J. MCDONALD, PRESIDENT, UNITED STEELWORKERS OF AMERICA, AFL-CIO The United Steelworkers of America commend the Senators who acted as cosponsors of Senate Resolution 304 as introduced by Senator James E. Murray, the chairman of the Interior and Insular Affairs Committee. We support the Domestic Minerals Stabilization Act of 1958 as a step in the right direction. This proposal would pay domestic producers, for 5 years, the difference between the market price and the stabilization price on annual production not in excess of 1 million tons of copper, 350,000 tons of lead, and 550,000 tons of zinc. (The proposal also covers tungsten and fluorspar.) The stabilization prices for these particular metals would be-copper, 272 cents per pound; lead, 144 cents; zinc, 1234 cents. The proposal would further restrict price cutting by setting limits on payments; the maximum payments would be 31⁄2 cents for copper, 3% cents for lead, and 21⁄2 cents for zinc, thus-in effect-setting floor prices of 24 cents, 113 cents, and 104 cents for copper, lead, and zinc, respectively. Annual limitations on production would be broken down into quarterly quotas; whenever sales for any quarter exceeded the quota for that period, payments would be equitably distributed among all producers, with no producer getting less than certain fixed minimums. The Secretary could also, when total production exceeded quotas, set limits on the amounts that would be paid to individual producers in succeeding quarters. Payments would be completely suspended whenever production for two successive quarters exceeded total quotas by specified amounts until production was again brought within quota limits. The net effect of the proposal would be to provide for Government support of production-at levels approximating 1957 production, and within a limited price range. Secretary Seaton estimates that the plan will cost $161 million the first year and lesser amounts each succeeding year if, as he anticipates, the program brings supply and demand into better balance. The problem we are confronted with is to tie in the short-range approach of immediate stockpiling and a long-range program wherein the domestic metals mining industry can take its place in the economy on a mature, relatively stable basis rather than on the boom-or-bust, hand-to-mouth existence it has experienced during the past two decades. I would like, therefore, to call the committee's attention to the following: Since this is a fluctuating industry, continually changing its pattern and direction, this proposal is made up of five points designed to stabilize conditions in the industry. Each blends into the other to provide a suitable overall approach. Nevertheless, the division of the points in the program is appropriate for separation into short-term and long-range action. It is essential that Congress consider simultaneously the immediate and long-run steps in any program it has under consideration. The first two parts could be enacted pending the consideration of the long-run aspects. All five points are designed to stabilize the metalmining industry. 1. Certain of the more important key minerals should be stockpiled-—not neces sarily for defense purposes, although that certainly must and should be a consideration. A buffer-stockpile concept should be developed. A Federal Government agency should buy minerals when the market price drops. The agency should sell when the market price rises. This means, of course, that as a general |