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Governor, we welcome you, and, prior to your testimony, I would like to read into the record a telegram which we have received from Gov. Bob Smylie, of Idaho, the chairman of the western governors conference, which, in part, says:

Gov. Charles Russell of Nevada will appear on behalf of the western gover nors' conference at 10 a. m., March 28. Governor Russell is fully authorized to present views of the conference.

Governor, I personally welcome you for the statement you are going to bring us and the resolutions which you are going to present. Would you prefer to present your testimony in full before questions are asked? We will accommodate you whichever way you like.

STATEMENT OF HON. CHARLES H. RUSSELL, GOVERNOR OF THE STATE OF NEVADA, ACCOMPANIED BY LOUIS GORDON, SECRETARY, NEVADA MINING ASSOCIATION; ROBERT STOPPER, MINERVA SCHEELITE MINING CO., WHITE PINE COUNTY, NEV.; AND WILLIAM WAGNER, SECRETARY, WHITE PINE COUNTY CHAMBER OF COMMERCE, NEVADA

Governor RUSSELL. I would appreciate it if I could present the testimony and then, of course, any questions that you or the other members of the committee may care to ask, we will be pleased to answer

them.

Senator MALONE. Mr. Chairman, I would like the record to show that Mr. Louis Gordon, the Secretary of the Nevada Mining Association, is with the Governor and to supplement and help him with his testimony, and that Mr. Bob Stopper, who is in the mining business in eastern Nevada, is here, and Mr. Bill Wagner, Secretary of the White Pine County Chamber of Commerce.

Senator BIBLE. The record may so show the presence of the other distinguished members of the Nevada delegation.

Governor RUSSELL. May I state at the opening that Mr. Gordon appears with me. He is secretary of the mining advisory council of the 11 western governors. He is also secretary of the Nevada Mining Association. He is secretary of the Committee for National Minerals Policy. He is secretary of my own advisory mining council in Nevada, and a member of my Nevada Advisory Highway Committee, representing mining on that committee.

Mr. Robert Stopper, who is here, is a mining engineer and one of the tungsten producers in eastern Nevada.

As you gentlemen know, of course, in the West and particularly in a number of Western States, mining is one of the most important factors we have as far as development and growth is concerned. The production of the raw materials in the West we sincerely feel is not only important to the growth and development of the Western States but also to the Nation as a whole because we feel that in a time of emergency or time of war the closest and main source of material will be in the United States and in the Western States, and a comprehensive, long-range program that will help the mining industry, in turn, will keep it in order to be ready in case any emergency should arise." In representing the 11 western governors in appearing before this committee I have a statement from Governor Clyde of Utah, and also

a statement from Governor Knight of California which I would like to read into the record.

George D. Clyde, Governor of Utah, in a telegram to me, made this statement:

Hon. CHARLES H. RUSSELL,

Governor, State of Nevada,

SALT LAKE CITY, UTAH, March 19, 1958.

State Capitol, Carson City, Nev.:

Circumstances make it impossible for me to appear in person at hearings on long-range minerals policy to be held by Senate Interior and Insular Affairs Committee. I would therefore appreciate your presenting the following statement to the committee on my behalf. I shall forward more extensive written statement to Chairman Murray for inclusion in the record.

I stand solidly behind the resolutions adopted by the governors of the Western States and Territories at our 1957 conference in Reno, Nev., and 1958 conference in Colorado Springs, Colo., calling for an effective long-range minerals policy to stabilize western mining industry and provide adequate national security.

Without some sort of import controls, domestic mines are at mercy of foreign competition in areas of cheap labor, far below American standard of living. Result is adverse to United States interests in two ways. Domestic economy suffers heavily, especially in western mining States. In addition, many mines are forced to close down and cannot be reopened in case of national emergency. Experience in two world wars has shown folly of depending on foreign sources for strategic materials in case of world crisis. Strongly urge effective action to preserve healthy domestic mining industry.

GEORGE D. CLYDE, Governor of Utah. Senator BIBLE. That statement may be amplified by the Governor at a later date.

(The following statement was subsequently received:)

STATEMENT BY GOV. GEORGE D. CLYDE, OF UTAH, ON LONG-RANGE MINERALS POLICY

To Hon. James D. Murray, Chairman, Senate Committee on Interior and Insular Affairs, and Members of the Committee.

GENTLEMEN: I welcome this opportunity to present my view on long-range minerals policy for the consideration of your honorable body, and I regret that circumstances prevented my appearing before you in person.

Let me say at the outset that I shall not try to present the more technical aspects of western mining problems. I shall leave that to the qualified experts, including the manager of the mining association of my own State of Utah. I do wish, however, to discuss briefly some of the broader aspects of the problem and their effect on my own State, on the western mining region and on the Nation as a whole.

The basic position of the governors of the Western States and Territories, including myself, was set forth in resolutions adopted at the 1957 conference of western governors in Reno, Nev., and the 1958 conference of western governors in Colorado Springs, Colo. For the sake of clarity and completeness, I should like to include the text of these two resolutions in my own presentation at this point.

"RESOLUTION ADOPTED BY WESTERN GOVERNORS' CONFERENCE HELD IN RENO, NEV., APRIL 26 AND 27, 1957

"Whereas the western governors' conference fully recognizes and appreciates the efforts that have been made by the Federal Government to help the minerals industry to adjust to postwar conditions in a greatly changed international climate; and

"Whereas the conference further recognizes the fact that many of these efforts have, of necessity, been temporary in nature and of terminal value; and

"Whereas the time has now come that it is imperative that these temporary programs be replaced by sound, long-range programs that will provide a climate conducive to attaining a permanent stability in the minerals industry; and

"Whereas this permanent stability can only be achieved if the industry can, with confidence, formulate and carry out long-range plans, including exploration and development and the improvement of techniques of mining, recovery, and ultimate use of metals; and

"Whereas a stabilized minerals industry is necessary both to a sound peacetime economy in this country and to guarantee the national security in case of war: Now, therefore, be it

"Resolved, That the western governors agree that the necessary program can best be expressed in some form of protection for the domestic minerals industry against the differentials in the economy structures of various world producers of minerals; notably the differential between wage scale in this country, which we wish to maintain, and that of many foreign areas; and that effective steps should be taken to prevent this country becoming a dumping ground for cheap foreign production, and to permit the domestic minerals industry to operate on a basis of normal supply and demand, with only the amount of protection needed to adjust the differentials previously referred to."

"RESOLUTION ADOPTED BY THE WESTERN GOVERNORS' CONFERENCE,
COLORADO SPRINGS, COLO., FEBRUARY 26, 1958

"METAL AND MINERAL MINING

"Whereas in the last 20 years the United States has changed from almost complete self sufficiency in nonferrous metals to almost 50 percent dependence on foreign supplies; and

"Whereas in the same 20 years tariffs have been reduced both by actually reduction of rates and by internal inflation of the currency by from 60 to 80 percent so that they are now almost universally below 10 percent ad valorem; and

"Whereas during that period mining costs have risen to 3 to 41⁄2 times the 1958 level while prices have risen only to 2 to 21⁄2 times 1938 prices; and

"Whereas the world mining industry has supplied all the metals and minerals for two wars and the United States Government stockpiles; and

"Whereas those stockpiles are now filled and the productive capacity which supplied metals and minerals for those stockpiles is no longer needed; and

"Whereas while much of this capacity was built in foreign countries, with United States Government encouragement, most of the portion which will have to close becaues of high costs lies within the United States; and

"Whereas foreign metals and minerals now enjoy about one-half of the United States market and unless adequate steps are taken they will take over much of the remaining one-half now supplied by domestic producers; and

"Where it is self evident that domestic mining cannot long survive unless it is assured its fair share of the domestic market on a reasonably long-term basis; and

"Whereas the internal economic health of most of the Western States is heavily dependent on the dollars brought into those States by the export of metals and minerals and those few Western States not so directly dependent on the mineral industry and directly affected by the economic health of the adjoining States who are more dependent on the industries; and

"Whereas much of the tax income on which the Western State governments operates is derived directly or indirectly from the mineral industry; and

"Whereas it is day by day becoming more apparent that in the event of another national emergency, no appreciable amounts of any metal or mineral will be available from overseas sources and if the Eastern States are to have metals for the manufacture of munitions and essential civilian requirements they must come from the West and from Canada and Mexico; and

"Whereas should such an emergency result in the use of atomic weapons, the amounts of metals and minerals required for minimum reconstruction would be far beyond any currently available supply: Now, therefore, be it

"Resolved, That the maintenance of a healthy metal and mineral mining industry in the Western States is of the utmost economic importance to those States both for themselves and as major markets for Eastern manufacturers, as well as being of the utmost importance to the national security and such a healthy industry may best be maintained by:

"1. Joint action by the administration and the Interior and Insular Affairs Committees of both Houses of the Congress in adopting and implementing a national minerals policy without delay; and by

"2. The Ways and Means Committee of the House of Representatives and the Senate Finance Committee taking all steps which may be needed to assure to the domestic mining industry at least one-half of the domestic market or the present proportion of the domestic market (whichever is higher) either by adequate tariffs, excise taxes, or quotas or allocation of import receipts or such combination as may be most suitable whenever an individual metal or mining industry has shown it can reach such levels.

"More specifically it is recommended

"As to lead, zinc, tungsten and mercury, the Tariff Commission take early and favorable action.

"As to copper, lead and zinc, the Congress approve pending industry legislation, and that the United States Tariff Commission approve applications for tariff relief now pending before that Commission.

"As to copalt, tungsten, mercury, fluorspar, colombium (and possibly manganese) the House Ways and Means Committee approve legislation providing sufficient import control to maintain present domestic levels of production.

"As to antimony, chrome, asbestos (and possibly manganese), the House Ways and Means Committee to approve legislation allocating import receipts to maintain a minimum nucleus of production in these metals. "As to thorium, the Atomic Energy Commission either to provide a purchase program or release it from Government control and cease the purchase of foreign monozite at the expense of closing domestic mines.

"As to uranium, the Atomic Energy Commission refrain from purchasing high cost foreign production while limiting production domestically. We urge and request that immediate action be taken to provide adequate purchasing depots and milling facilities located sufficiently close to ore reserves and stockpiles in order that excessive transportation now paid by the Government and the producers may be obviated.

"As to gold and silver, grant to United States citizens the same right to own gold as granted to foreign governments and an increase in the depletion rate from 15 to 23 percent."

As I see it, there are two main issues on which the question of long-range minerals policy must be decided. These are: (1) the economic impact on local, regional, and national bases; and (2) the considerations of national security. Let us examine these questions in the order listed.

In considering the purely economic aspects of the problem, it is inevitable that we come face to face with two conflicting theories, those of protection and of free trade, both of which have many advocates among the professional economists. I have neither the theoretical background nor the desire to attempt a detailed analysis of these two theories, but I strongly feel that certain practical aspects of the problem they present must be given full consideration in the formulation of an effective long-range minerals policy.

I fully realize that the protectionist theory can be carried too far, so as to be harmful to everyone concerned-including the industry being protected. We have all seen past examples of industries receiving tariff protection to the point that they did not have to compete with foreign rivals. The result has been, and must always be, to remove the stimulus to efficiency and quality production. This is harmful to the American public and to the industry itself. Our whole economic and industrial system is founded on the principle of competitive free enterprise, and most or all of the inventive and production wonders that have made American industry the marvel of the world have come about under the spur of wholesome competition.

Let me point out, however, that the western mining industry is not asking for a degree of protection that will remove it from competition with foreign sources of supply. Rather, the industry is asking only enough protection to place it in a competitive position with foreign producers. The Reno resolution of the western governors' conference, which I have included above, specifically asks only protection "against the differentials in the economic structures of various world producers of minerals; notably the differential between the wage scale in this country, which we wish to maintain, and that of many foreign areas"; and further urges action "to permit the domestic minerals industry to operate on a 27255-58-pt. 1-19

basis of normal supply and demand, with only the amount of protection needed to adjust the differentials previously referred to."

It should be realized that there is a fundamental difference between an American industry that produces a raw material and one that turns out a finished manufactured product, in their relation to foreign competition. Mass production methods and highly complex machines offer a manufacturer many advantages to offset lower labor costs in foreign areas. On the other hand, the major cost in the extraction of a raw material is labor, and it is impossible to apply standard American wage scales to this type of operation and compete directly with foreign producers whose labor costs are measured in pennies a day rather than in dollars an hour.

We cannot-nor do we want to-drop the wage level in the domestic minerals industry below the standard of the rest of the domestic economy. It then becomes obvious that we are faced with two alternatives. We can (a) provide the domestic minerals industry with a measure of protection sufficient to allow it to compete, on a basis of normal supply and demand, with foreign producers, or (b) abandon the domestic market to foreign producers, and close down most or all of our domestic mining industry.

I do not know if any ardent free trade theorists are actually advocating this second alternative. I do know that it would be ruinous to the economy of my own State, to the economies of the bloc of Western mining States, and, in the long run, to the economy of the Nation as a whole.

Many Western States, including my own State of Utah, have built their economies to a considerable extent on the minerals industry. As a result, the mining industry now provides a large part of our tax base on a substantial proportion of our basic employment. When mines are forced to cut back, or to shut down, the effect on the State's overall economy is immediate and drastic. The immediate local effect is soon felt on a broader, regional basis and it is not too long before it becomes a serious factor in the national economy. Unemployment means reduced purchasing power, and reduced purchasing power in the West is quickly felt by manufacturers in other parts of the Nation, who lose a part of their normal market.

This basic economic fact must be kept in mind at all times; but it has additional importance at a time like the present, when a widespread business recession has made the national economy more than usually sensitive to adverse influences.

I should like to point out to the committee, too, that the mineral wealth taken from the ground of our Western States over the years has played an important role in the building of America. We could not have reached our present position of world eminence without the great wealth of natural resources that are found within our own borders. Recognizing the substantial contribution of western mining to the wealth and strength of the Nation, and being aware of the large number of people who have come to depend on this great industry for their livelihoods, I maintain that it would be grossly unfair to sacrifice their industry and the people engaged in it on the altar of some new theory in foreign aid.

Turning from this short discussion of the basic philosophy of the situation, let us look at some hard present realities, as reflected in unemployment figures in my own State of Utah.

Employment in Utah metal mines in February 1958, was nearly 2,000 less than it was a year ago. This unfortunate situation was mainly caused by low prices and faltering demand for copper, lead, and zinc. In February 1957, for example, we had 1,729 people employed in mining lead and zinc. In February 1958, the number had dropped to 1,100-a reduction of almost 30 percent. The Salt Lake Tungsten Refinery, with 80 employees, was forced to close down entirely on January 15 of this year, due to the collapse of the tungsten program. The refinery had processed tungsten ores from a number of neighboring States. The fluorspar operation in Utah has been drastically cut in recent years, due to the importation of ores from northern Mexico. At a time when every agency of Government and private industry is struggling desperately to create more jobs, this is a serious situation, indeed.

In the field of nonmetal mining, the situation is only slightly less critical. In Utah coal mines, the actual reduction in number of jobs in February 1958, as compared to the same month a year ago was only 200-but the miners still on the job were working a much shorter workweek, with correspondingly less pay and less purchasing power. The average workweek in Utah coal last

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