For instance, no prudent man will project a capital investment on equipment or plant facilities to reduce his operating costs and develop his reserves with only 2 foreseeable years in which to amortize his investment.

Since improving our resources and reserves is one goal of this legislation, time in which to effect such results is a must. Ultimate consumers or processors of chromite ores are volume buyers, generally purchasing in ship-cargo lots, contracts in fact usually arranged 1 to 2 years in advance.

Take a brief look at this picture; stainless steel mills are operating at 25 percent of capacity, with ample stocks for processing for from 12 to 24 months ahead, contracts already written for additional supplies, forecast for any immediate upturn in business rather dim. Therefore, to wait out a market in this quarter again suggests that time is a serious factor. Since there can be no general correction of economic conditions at the international trade level because of the 5-year extension of the Reciprocal Trades Act, any suspension of financial incentive short of 5 years would not be realistic.

We again remind this committee that this proposed legislation is supposed to be the long-range minerals program per Cabinet recommendation to the President in 1954.

The incentive price of $46 set forth in S. 2816 is fairly close to being realistic to analyze this briefly, please note:

S. 2375 offers $21 per ton in 1957. This just about offsets the increase in labor and material costs above the base under which the chrome mines were opened for the stockpiling plan in 1951.

The added $25 per ton set forth in the Murray bill, S. 3816, in 1958 is just short of meeting the freight cost from source of origin to the major market for the mineral in the principal refining center of the Nation.

We point out that certain functions heretofore carried out by the GSA purchase depot must now be taken over by the ore producer; we name these items of expense that should also receive consideration: Storage of facilities, loading provisions, and assay expense.

Not having the Government breakdown of costs for such overhead, we can only hazard a guess that this will approximate at least $10 per ton of ore handled. This figure should be added to the incentive compensation.

Value of ore is predicated upon the chromium content.

We believe this bill should spell out in definite terms the specific dollar incentive to stimulate upgrading as far as possible, the quality of ore delivered.

Based upon the $56 average price we recommend, with acceptable grade limited to a maximum silica content of 10 percent and the minimum chrome-iron ratio 2 to 1, price schedule should be substantially as follows: Incentive figure, $42 per long dry ton for 42 percent Cr2O, content, with an added $2 per ton for each 1 percent increase in chromic oxide content.

Such incentive schedule to apply through grade of 56 percent Cr2O3. We suggest no premiums or penalties for iron, which is now well known after 200,000 tons of delivery. While the incentive favors producing a higher quality product, the volume available will be

limited. The average grade of ore will hereby result in a quality of 46- to 50-percent oxide content, considered top metallurgical grade. Senator MALONE. What is the price of such material whenever there is a competitive situation?

Mr. HOLMAN. The E. and J. price on 46 percent is running about $44 to $46 a ton today. But, on 48 percent 3-to-1 iron ratio is quoted at from 51 to 55 percent or, rather, $51 to $55.

Senator MALONE. That is foreign price?

Mr. HOLMAN. Foreign price at Baltimore ports.

Having called this committee's attention to the marketing or procurement method used by industry, provision should be made in this measure which will permit the chrome producers to either select their own marketing agent or to form their own corporate sales and handling medium.

We recognize that there is bound to be a sales lag until industry stocks and commitments are balanced out. Therefore, if this measure will authorize payment of incentive upon proper certification that delivery has been made to the selected sales agent, the miner will receive immediate partial compensation for his production and can. possibly, wait out final disposal for his full return. This is the only manner in which we can see a practical and immediate method in which to utilize this form of stabilization.

Your attention is again directed to the recommendation of Secretary Seaton in his 1957 proposal, setting the starting date of the incentive program at termination of the stockpiling authorization, June 30, 1959.

Domestic chrome mining of metallurgical-grade ores came to an end on the Pacific coast the third week in May of 1958. Today, these mines are shut down, the miners are out of work. Only prompt legislation this session of Congress can continue the excellent development of this mineral in the national interest.

From personal field knowledge, I can assure this committee that beneficial strides have been made in domestic chromite production.

It has taken but a year and a half to fill the last half of the stockpile quota allotted to our domestic mines. To be specific, 100,000 long dry tons of ore was produced so fast that the stockpile program has been concluded 1 year ahead of time. But this is not all. Developed reserves at this point are such that another 100,000 long dry tons can be produced from these same mines in the next 12 months.

One of the outstanding contributing factors that has come out of this search for this elusive mineral has been a new invention of a truck-mounted exploratary drilling device. I submit herewith a picture of this machine, that you may know the far-reaching advantages to mining, in general, that American ingenuity can develop when challenged by a problem.

In less than 1 year, volume of chromite was determined in 1 California district alone that produced nearly 30,000 tons of ore in 4 months, but left unmined developed reserves of 58,000 tons in just 1 of several operations in this district.

Senator MALONE. What is the price now offered on chromite out there, with the stockpile program run out?

Mr. HOLMAN. With the stockpile program out?

Senator MALONE. Yes.

Mr. HOLMAN. Is there a war with anything?

Senator MALONE. No. What is the offered price. What can you get for your chromite when the Government is out of the market? Mr. HOLMAN. Well, there has been one tentative offer made to one of the volume mines in the district offering $1 per each percent of chromic oxide content in the ore. Specifically, a 20-percent content of chromic oxide in the ore would be worth $20 per ton f. o. b. railhead.

Senator MALONE. Go ahead.

Mr. HOLMAN. The operators of the formerly little mines, by taking advantage of new techniques and improved mining methods, have again proven that the big mines are developed from constant attention to comparatively small prospects.

These honest, sincere people, who have been devoting their lives to the rugged mountainous areas of our West, want to stay in business on a permanent basis. They do not desire to remain a burden to the Federal Government, and for this reason have been, also, seeking a solution that would create a sound, self-sustaining industry.

The domestic chrome producers do have a plan, but, because they are out of business today instead of June 30, 1959, are handicapped in their orderly development of such plan. Perhaps this measure, S. 3816, in some temporary modification, can offer the immediate relief needed while other arrangements are being made.

It should be very apparent to this committee that the domestic producer is competing in the worst market, that of primary production. Why? Because American mining costs versus foreign mining costs present a wide gap. But, by a combination of primary with ore-refinement costs, it is not only possible to minimize the discrepancy but, also, to reverse it.

The most serious criticism that can be made of the administration proposal is the principle of compensation by subsidy. This so-called tip to the waiter by Government gets nothing of value in return except a smile, while the recipient, as he takes the tip, wonders how soon the tipping is going to end.

Dollarwise, S. 3816 will require approximately $4 million to $5 million per year to implement, without having offered the domestic producer any lasting advantage.

Feasibility studies, industry surveys, and careful analysis by the domestic industry itself suggest a different approach which, we are sure, will not only minimize Federal assistance but build within this industry the capability of future growth and self-respect.

For the same money, it would take to finance S. 3816 for 5 years with no lasting value received, if the appropriation were used to purchase for the national supplemental stockpile 50,000 tons of industry specification ferrochrome to provide an assured market for a 5-year term while the domestic producers extend their private sales in our expanding western markets which are convenient to source and processing, a permanent program would be established. The resulting value in this important strategic hard-metal alloy material is not only sound investment, but the assurance of creating a lasting segment on chromite mining in the Nation is excellent insurance.

Senator MALONE. Does that complete your statement?
Mr. HOLMAN. Yes, sir.

Senator MALONE. The same question to you: Is there any way to keep you in the chromite-mining business except to have that additional price represented by a fixed price or a duty or tariff adjustable to make the difference in foreign costs and the production costs here! Mr. HOLMAN. Well, greater mines than mine have devoted the last 3 or 4 years, through the mineral groups assisting our various western governments, and they have come up with no other answer. If we do not have tariff protection, there is no other way we can stay in business, except to have our cost price equalized by some form of support.

Senator MALONE. Isn't that generally recognized all over the United States. The only way you can make money is to have some difference in the cost of labor and the cost of doing business here and in the chief competing nations where they have our machinery and know-howand they do everywhere now-isn't that generally recognized?

Mr. HOLMAN. It is recognized so well in the manufacturing segment of the United States that, in general, I think, their industry is pretty well protected by tariffs. At least there is some duty on a good many of the products that they manufacture.

Senator MALONE. Now, then, will you tell me, then, why producers come in from states all over the nation and tell the story that you are telling; that their Congressmen vote for the free trade? What is the reason?

Mr. HOLMAN. The only reason I could give is that our voice isn't loud enough. We don't have a club to make them listen.

Senator MALONE. You are at home, where they are. You don't have to come back here and convince me.

Mr. HOLMAN. We have got a lot of wide-open spaces in the West. Senator Malone, as you well know, and a voice crying in the wilderness out there to affect the tariff situation is

Senator MALONE. I don't see how it is a cry in the wilderness when every industry is closing down, except the war economy where the armed services are buying a substantial amount of the material.

Mr. HOLMAN. Industry hasn't caught up with the facts facing the mining industry as yet. But I am convinced they will. In the meantime, mining expires.

Senator MALONE. You sat here yesterday and listened to the Brass Association, representing all the brass companies.

Mr. HOLMAN. Are they happy?

Senator MALONE. They are going out of business, they say, because of competition. We have listened to, probably, a hundred industries in the Senate Finance Committee, and others. The House Ways and Means Committee has listened to several hundred industries. Still, the prediction by the leading newspapers on the Atlantic coast and the White House is that this 5-year extension with another 25-percent lowering of the tariff should be passed by both Houses.

Mr. HOLMAN. Who is feeding the editorial material to the papers all over the land? I have read several in some of the California papers that are

Senator MALONE. They are not feeding it to them. They are writing it.

Mr. HOLMAN. Well, they are certainly writing it on a left-handed approach that would indicate to me that there is little information

at hand of sound basis upon which to predicate some of their arguments.

Senator MALONE. Now, if you want to read two well-written editorials, I will recommend the New York Times and the Wall Street Journal as of today. They are mighty well-written editorials. Would you like to read them? Pick them up off the newsstands. Mr. HOLMAN. And the basis of those editorials?

Senator MALONE. The basis of those editorials is the good of the United States for America.

Mr. HOLMAN. To continue free trade?

Senator MALONE. That is right. We just have to do it.

Mr. HOLMAN. Well, it is unfortunate that more of those people that are writing those articles cannot sit in some of these hearings andSenator MALONE. I think they are here, all right, but I think it is unfortunate that the people that are testifying don't talk to their people at home and move in behind those that are doing the voting. You don't have to convince me. I don't think you have to convince the majority of this committee. But if the majority-as long as the majority of the House and Senate vote for it, you have got it.

And if they don't vote for it, nobody can do anything.

Mr. HOLMAN. We have a serious handicap, Senator, that the boys that are mining our ore are, generally, back in the hills. They are not in too frequent contact with the city dwellers that they can get their story across.

Senator MALONE. The boys in the textile business are down in the flats. The boys in the cow business and the wool business are out there where you can see them. And, if we do not get the wool bill extended, the subsidy on wool, before we go home, 90 percent of those sheep won't come out of the mountains this fall. You know that, don't you?

Mr. HOLMAN. We miners will lead them, then. Senator MALONE. Maybe you can get together. Now, the cattle have started to come in from New Zealand. I just don't understand it. I think, sometimes, you know-I don't think I have, but I don't see how a majority for 24 years in Congress can prevail, with as many industries as there are in trouble now and have been almost continuously. They are remaking the industrial map in the United States. Where are you from?

Mr. HOLMAN. I am from Pasadena, Calif.

Senator MALONE. Look over the list. You have 28 Congressmen. They are going to vote over there tomorrow. Tomorrow is the day. And all but about two of them are going to vote for free trade. Maybe five. You should be over at the House right now, instead of here.

Our next witness is Mr. S. K. Droubay.

Do you have a prepared statement?

Mr. DROUBAY. Thank you, Mr. Chairman. Yes; I have a prepared

statement.

Senator MALONE. You may identify yourself for the record, and go right ahead any way you see fit.