For the purposes of the program, a mine can be defined as an operating unit consisting of a shaft, an adit, or an open pit through which ore is regularly taken to the surface, regardless of ownership. Or a mine can be defined as segregated or aggregated units forming one operation on the same basis as they are combined or separated for the purpose of calculating depletion under the Internal Revenue Code. A direct payment to the miner of the type contemplated under this proposal is worth twice as much as an equivalent increase in the market price of the metal, and would effect a considerable saving to the domestic consumer as compared with the cost of a tariff providing equal protection to the domestic miner. In the event of a temporary surplus of metal and a consequent drop in the market price, the small producers would not be wiped out and the larger producers could fall back on a higher average price for their production as they curtailed to correct the market condition. The proposal does not eliminate the need for reasonable tariff protection. In fact, it is based on increasing tariff rates sufficiently above present levels to provide funds sufficient to pay the costs of the proposed bonus payments. I claim no originality for the proposal outlined. This or similar proposals, have been considered by leaders in the industry since the end of the premiumprice plan. I believe that a plant of this type offers the cheapest and most effective means of maintaining a healthy domestic lead-zinc mining industry and of assuring our consumers an adequate supply of lead and zinc at a reasonable price. The plan would be virtually automatic in its operation, and will allow free operation of the market. It treats all domestic producers equitably, and provides encouragement for the prospector and small miner and the stable market conditions required by the larger producers. The industry needs an effective, long-range program. The failure of succeeding administrations to provide such a program during the past 25 years has gradually driven men and capital from the industry. Many of the temporary expedients adopted have done more to encourage the foreign producer than to aid the domestic miner. A strong industry can do much to improve its position through research for new markets and mechanization for lower costs. Our industry can probably do much more than it has done in these fields, but large capital expenditures are required, and our industry has been ailing for a long time. I believe that legislation will be required to provide an effective answer to our problems, and suggest that the industry get together on a politically acceptable plan for presenting to the Congress as soon as possible. I believe that the proposal outlined here can form the basis for such a plan. Senator CARROLL. I did not want to commit Mr. Palmer to a set program, but I was wondering if they are exploring the possibilities of the mining industry to this sort of an approach. Senator CHURCH. I think it would be beneficial for the committee to have the recommendations of Mr. Arents, because his statement does outline a program of the general nature that you suggested. Senator ALLOTT. Mr. Chairman and Senator, would you yield to me just a moment? I have just received a call, and I have to leave. Senator CHURCH. Surely. Senator CARROLL. Surely. Senator ALLOTT. I would like to ask you, specifically, if this letter was written by the President. Mr. PALMER. I can't answer that question. Senator CHURCH. Was it signed by the President? Mr. PALMER. The signature on the letter was that of the President. Senator ALLOTT. And when was it written, approximately? Mr. PALMER. In the last 2 weeks. Senator ALLOTT. Mr. Chairman, I am going to have to leave to keep another appointment. Senator CHURCH. All right, Senator. Do you have any further questions, Senator Carroll? Senator CARROLL. Just one observation. I think we ought to clear up the record here just a little bit, at least for myself. From 1942 to 1945, there was a program to stimulate mining, as I understand, and that arose by virtue of an Executive order under the War Powers Act? Mr. PALMER. That is right. Senator CARROLL. That was extended for a year? Mr. PALMER. That is correct. Senator CARROLL. It was after that period of time that we came to the Congress seeking legislation to try to correct the very condition in which we find ourselves today. Mr. PALMER. Many members of the industry proposed an additional extension, at that particular time, of that plan. Senator CARROLL. There is only one thought that occurs to me. When you say Uncle Sam was doing the planning, it seems we have to look and see who is doing the planning for Uncle Sam. I have been in some of the oil investigations, and Uncle Sam is charged with a lot of things, but I find the big oil companies kind of tell Uncle Sam what to do, and I wonder if that could be true in mining, too. Mr. PALMER. I think the industry is more united today than I have ever seen it. I think the industry is working together in unison. There may be some companies which have no mines in the United States that are still objecting to a domestic mineral industry program, but, in the main, I think the industry is working together in unison as it has never worked before, including the strong cooperation of all the mining unions. Senator CARROLL. I ask Mr. Redwine-I asked the question the other day-do we have set in the record all of the American mining corporations and their holdings overseas in other countries, and the extent of their holdings, and the extent of their production, and the extent of their imports into this country? Mr. REDWINE. No, sir; Senator, we do not. Senator CARROLL. Could we not have that for the record so we would have some general idea? Mr. REDWINE. It will be quite an undertaking involving several months of inquiry, but we will accomplish it. Senator CARROLL. We have had this in the oil industry. We had all the major oil corporations, showing their holdings and their imports into this country. We get some idea of what we are dealing with. Mr. REDWINE. We will develop that information, Senator. Senator CARROLL. We found, for example, that the Standard Oil of New Jersey had approximately 200 subsidiaries operating in every free country in the world where its refineries were, and it seems to me, if we are going to deal with this mining program, let us get to the root of it and the core of it and find out who these people are and how big they are, and find out who the marginal owners are so we get some concept. I am not going to commit Mr. Palmer to this, but I remember well in 1948 or 1949 when we had the premium price plan, which we thought was acceptable to the administration. This committee for it and it is my own opinion it was blocked by some of the big mining companies. It may be that through the years they have gained some experience and they have learned a lesson and they will either hang together or they will hang separately, but I think we ought to get in the record, Mr. Chairman-and I am very serious about this, and I think our staff ought to compile it for us-these facts to see what this cost may be to the Government, to the taxpayer, and what it means to the survival of the Nation and the survival of the mining industry. Senator CHURCH. Senator Carroll, I could not agree with you more, and I think that the kind of facts that you have asked for are basic and that without them we are groping in the dark. I think that the committee ought to undertake to ascertain these facts from the industry. Mr. ŘEDWINE. We will initiate such inquiry immediately. Senator CARROLL. If necessary, issue subpenas, because they are operating under a tax statute of the United States. They are operating under many provisions which give blood to their mining arteries, and we are entitled to know these facts in this consideration. I want to commend Mr. Palmer for a very able presentation. Senator CHURCH. I join in that. Mr. PALMER. May I suggest to the committee that a subcommittee of this committee made a rather extensive study. I think a large sum of money was expended in a more or less complete study of the mining industry, and I am sure that that report is available for the use of the committee. It impressed me very much as a very elaborate study. May I point out to the junior Senator from Colorado that many of these mining companies have gone abroad with the encouragement of the Government of the United States. They have been encouraged to go abroad to develop the sources abroad, and what I am trying to say here is that if the United States Government has encouraged production abroad by granting concessions, tax concessions and all types of concessions, mutual aid funds, building railroads, building powerplants, building dock facilities, providing cheap transportation in the form of subsidized ships, and so forth, they can adopt a program which will be a realistic program for the continuation of the mining operations within the United States. Senator CARROLL. That is exactly the point, and while we are going into a long investigation it does not mean that we should not do something to sustain this sick industry until we get a chance to find out what the facts are. Then we can look into those. I am heartily in accord with the remarks of the chairman, the able junior Senator from Idaho. If we are going to approach this thing in a sound legislative way we have to know what we are doing. If the facts are in other committee records and reports, let us know what they are. Let me give one concrete illustration and I will not belabor the point further: We found that in Texas, which has 46 percent of the oil reserves of this Nation, there are 8,000 small oil producers that I never heard of before. I have heard of the major ones, but I never heard of these small ones. The question was what was their access to the pipelines and how do they function in the area. The question was what was the inducement for the big oil companies to go overseas. The Government did not have to push them there. The oil was there, and they went into it. The question was what about the oil that is coming into our country, and what does it do to our economy. This, it seems, is the same basic principle. So we ought to have our facts. Mr. REDWINE. Mr. Palmer, is it not true that under our tax statutes an American company with mining operations overseas gets the benefit of the depreciation allowance on its overseas operations as well as at home? Mr. PALMER. There are certain tax advantages. Senator CARROLL. The other day I asked that question of a witness, and Senator Malone-I think this is in the record, it was a surprise to me said that in 1954 the depletion allowance on minerals was confined to the continental limits of the United States. Is that right or wrong? Mr. REDWINE. That is not my understanding. However, we will develop that. Senator CARROLL. I want to know about that because I thought seriously sometime back that we confined the limit of the depletion allowance to the oil coming from Saudi Arabia that amounted in 1 year to some $120 million, and, of course, there is another tax statute, may I say, long before the present administration and the preceding one, in 1918, which gives encouragement to American private capital to go overseas, and permits that tax statute as an offset. This is the concept many people feel very strongly about, that, rather than have tremendous contributions in foreign aid, let American capital go overseas and invest, and this is the way to help those countries. Mr. PALMER. May I suggest to the Senators, if you intend to investigate foreign activity that you gain access to the records of all the international agencies and Federal agencies which have been aiding and sustaining foreign production. I think you will be astounded to find out how much money has been loaned, granted, and given away to encourage foreign production. Senator CARROLL. Are you referring to minerals, or is this broader? Mr. PALMER. Just to minerals. Senator CARROLL. That is very interesting. Senator CHURCH. I appreciate the suggestions that you have made, Senator Carroll. I think, in the interest of developing a long-term solution to this problem, the facts that you pointed to are indispensable and that the committee ought to be fully apprised of them. Senator CARROLL. I thank the chairman, and I thank Mr. Palmer. (The letters referred to by Mr. Palmer are as follows:) The PRESIDENT, The White House. HOUSE OF REPRESENTATIVES, DEAR MR. PRESIDENT: I am enclosing for your perusal some 200 letters sent to me by my constituents in which they show the greatest concern regarding the affairs of our Government. They state that they are depending on me as their only Representative from Nevada to do everything within my power to trim the budget and cut unnecessary spending. They point out in particular that they want foreign aid stopped entirely and special mention is made that they would like to see Government-operated businesses terminated so that private industry can have a chance. I listened intently to your joint message to Congress last Thursday and I noted that you emphasized foreign aid and reciprocal trades in a speech which otherwise pointed out our position in the world today with regard to national defense. Let me state, Mr. President, that I have just completed 5,500 miles within the boundary of my own State and there are unemployed miners everywhere and talking to my colleagues from other Western States, where mining has always been the chief industry, I find the same conditions prevailing throughout this region. The reciprocal trades, the free-trade policy, and the point 4 program of our foreign aid has completely demoralized a very important segment of our national economy. It was the mines of America that built this country and now with our American tax dollars developing "undeveloped" countries where cheap or slave labor is being used, the minerals from such transactions are pouring back into this country, duty free, and are completely making it impossible for our American miners to compete against this kind of competition. The tungsten mines are all closed. The lead and zinc mines are all closed and copper is on its "last legs." The refusal of this administration to have a free market on gold has ended this great industry and it is impossible to mine gold at its present $35 an ounce. Now, all of these various facets of mining have been brought to the attention of your various department heads, including Secretary Seaton (personally) but we have had no relief. I am sure other industries throughout America have also suffered in a like manner regarding the reciprocal trades and this so-called giveaway program. There will not be enough people working to pay taxes if this condition continues to exist and I, personally, humbly implore that you make it your personal concern to look into these conditions on the home front for most of us have already found out that widespread unemployment does exist. We do not go along with the contentions so strongly advocated in your message on the aforementioned issues. I, for one, will follow the mandates of my people whom I represent, in voting for your many recommendations concerning national defense, but I will oppose free trade, foreign aid, and reciprocal trades for I am in strong accord with the wishes of the people who have to pay the taxes. We in Nevada have gone a long way toward national defense and will continue to do so and I believe we of America want our country strong but if we continue to give away our hardearned money to unappreciative peoples, our backbone, now bent, will be broken. Surely, 10 years has shown us the impracticability of this program. I sincerely hope that you and the Director of the Bureau of the Budget will review at least a few of the enclosed letters which will give you an idea of what the "man on the street" is thinking. Respectfully yours, WALTER S. BARING, Congressman for Nevada. THE WHITE HOUSE, Washington, January 24, 1958. Hon. WALTER S. BARING, House of Representatives, Washington, D. C. It DEAR MR. BARING: I appreciate your giving me an opportunity to read the enclosed letters received from your constituency over the past several months. Without attempting a prolonged discussion, I feel obligated to call to your attention that, fundamentally, the position you set forth is self-defeating. serves no sensible purpose to build up our defenses at huge expense while at the same time tearing them down by permitting the loss of free world nations. The approach you outline would compel withdrawal of much of the most effective striking power that our country has. Thus it would encourage Soviet military adventures that could lead to war. Moreover, I know of no surer way, save national destruction by our own hand, to lose our struggle with world communism than to dispose of our SAC bases abroad, permit our allies to crumble inwardly, dissolve the shield of NATO and other military forces, and invite Soviet imperialism into the vast underdeveloped regions of Africa and Asia. Were such a program adopted by the United States, I am convinced that we |