81ST CONGRESS 1st Session SENATE { REPORT RELIEF OF THE OWNERS AND OPERATORS OF CERTAIN GOLD MINES WHICH WERE CLOSED OR THE OPERATIONS OF WHICH WERE CURTAILED BY WAR PRODUCTION BOARD LIMITATION ORDER L-208 FEBRUARY 22 (legislative day, FEBRUARY 21), 1949.-Ordered to be printed Mr. MCCARRAN, from the Committee on the Judiciary, submitted the following REPORT [To accompany S. 45] The Committee on the Judiciary, to whom was referred the bill (S. 45) for the relief of the owners and operators of certain gold mines which were closed or the operations of which were curtailed by War Production Board Limitation Order L-208, having considered the same, do now report the bill to the Senate favorably with amendments and recommend that the bill, as amended, do pass. AMENDMENTS On page 2, beginning with and including the word "property" on line 18 thereof, delete all through and including the comma following the word "period" on line 19. On page 3, beginning with and including line 18, strike out all of section 2 down through and including line 8 on page 4, and insert in lieu therof the following: SEC. 2. The Secretary of the Treasury is authorized and directed to make use of the facilities of any Government agency to determine the validity and amount of claims. It shall be the duty of the Secretary of the Treasury or the authority designated by the Secretary of the Treasury to render decisions on all claims filed within one year after date of filing thereof, except where prevented by unusual circumstances. On page 4, line 16, delete "certified to him" and insert in lieu thereof the word "validated". On page 4, line 20, delete the word "examiner" and insert in lieu thereof the following: "Secretary of the Treasury or the authority designated by him". PURPOSE OF AMENDMENTS The purpose of the first amendment is self-evident. It corrects a typographical error in that the deleted phrase is repetitious of the identical phrase immediately preceding. The purpose of the second amendment is to permit the Secretary of the Treasury, or an authority designated by him, to determine the validity and amount of claims. It is the consensus of the committee that the Secretary is properly equipped in his department to perform this function without additional legislation authorizing an examiner and staff specifically to undertake the work. In addition, the committee believes that the amendment permits the Secretary more discretion and flexibility in his endeavor to carry out the intent of the bill. The third and fourth amendments are simple technicalities for the purpose of making sections 4 and 5 of the bill conform to section 2, as amended. STATEMENT The reasons for enactment of this legislation are explained fully and completely in a unanimous subcommittee report of July 19, 1946, to the whole Committee on War Claims of the House of Representatives, following lengthy hearings on H. R. 4393 in the Seventy-ninth Congress, a bill similar in its purposes to the instant measure. On October 8, 1942, the War Production Board issued order L-208, which summarily closed the gold mines in this country. The order was rescinded on July 1, 1945, having been in effect approximately 21⁄2 years. The evidence in support of the bill shows that the gold-mining industry was selected as a guinea pig for the purpose of testing the feasibility of closing what was called nonessential industries. No similar order was issued against any other segment of American industry The order completely failed to accomplish its purpose, or any purpose whatever, and inflicted irreparable and unjustified loss on the gold-mining industry. Your committee believes that this order inflicted a sacrifice on the gold-mining industry which the Federal Government in common fairness should try to relieve. Four main points were developed at the hearings through the testimony of industry witnesses, Government witnesses, and the introduction of a detailed report on the history and operation of War Production Board Order L-208, known as the gold-mine-closing order. In the opinion of your committee the evidence presented, both oral and documentary. overwhelmingly supports the following contentions. 1. WPB Order L-208 was unique in that it was the only Government order closing a productive industry. 2. Issuance of the order was an administrative error, based upon a statistical misconception, and may, furthermore, have been illegal. 3. The net results of the order in accomplishing its avowed primary purpose of channeling manpower to "essential" mines were negligible. 4. The economic loss to the gold-mining industry has been great and in some cases the damage may be irreparable. All the above points are discussed at length in the afore-mentioned WPB historical report on L-208, entitled "The Closing of the Gold Mines (August 1941 to March 1944)," June 1, 1944-Report No. 9, Policy Analysis and Records Branch, Office of the Executive Secretary, War Production Board, printed in the appendix of the hearings on H. R. 4393, and were generally corroborated by Dr. Wilbur A. Nelson, who administered L-208 for the War Production Board. This report was written for the private use of WPB Chairman Donald M. Nelson and, until recently, was classified as "confidential." It is interesting to note that the testimony of both industry and Government witnesses merely tended to corroborate the statements and conclusions from this WPB report Fur which are quoted below in support of your committee's recommendations. ther corroboration may be found in Senate Subcommittee Print No. 6 of the Senate Small Business Committee, entitled "Survey of the Nation's Critical and Strategic Minerals and Metals Program," issued in June of 1944, in which the effect of L-208 is discussed in some detail. - An elaboration upon the four points outlined above follows. THE UNIQUENESS OF THE ORDER The star witness at the hearings, Dr. Wilbur A. Nelson, who was intimately connected with all phases of the issuance and administration of L-208 during his term with the War Production Board, participated in the following exchange: "Mr. ENGLE. The fact that this industry was the test case-the guinea pigfor such policy, and that similar nonessential industries were not shut down, throws emphasis on the controversy as to the method of closing the gold mines, & controversy that otherwise might be passed lightly over. "Mr. NELSON. I think that is a very true and correct statement. "Mr. ENGLE. And it is true that the gold-mining industry was a guinea pig? "Mr. NELSON. Definitely. "Mr. ENGLE. And no other segment of American industry was treated in an identical manner? "Mr. NELSON. I know of no one." The above opinion was corroborated by other witnesses and also by the special WPB report, to Donald M. Nelson, previously referred to. This adverse selective treatment, in the opinion of your committee, places the closed or curtailed gold mines in a special category and subject in turn to special treatment by the Congress. ORDER L-208 WAS AN ADMINISTRATIVE ERROR The testimony before your committee conclusively showed L-208 to have been issued as the result of an error in compiling labor statistics. The agencies generally classified as gold mines those mines which produced a material amount of gold as well as strategic and critical minerals. The Mining Branch of WPB, which constantly fought against issuing L-208, took a more realistic viewpoint. The War Manpower Commission and the Labor Divisions of WPB had a wholly exaggerated idea of the number of miners to be released by closing what they considered "gold" mines, many of which were known by the Mining Branch of WPB to be producing essential minerals and which could not be closed without damaging the war effort. The figures furnished the Army and Navy by the agencies laboring under this misconceived definition indicated that a large pool of miners would be made available by the issuance of L-208. The voice of the Mining Branch of WPB was not strong enough to reach the higher policy levels, nor were the figures submitted by the industry credited. The Secretaries of War and Navy therefore demanded action and got it. Gold-mine operators had informed the Government that if all gold mines and dredges in the United States were closed approximately 3,270 men would be released, of which only 896 would be miners and muckers. Some 300 of these would be required to maintain the larger mines on a stand-by basis. Of the balance some were physically unfit for work in copper mines. It appears from the record that as far as transferrals could be checked through USES, the operators' estimates exceeded the eventual results in manpower captured for strategic metal mines. The War Production Board report on L-208 reaches this conclusion: * * it may be concluded that since the number of gold miners actually reemployed was negligible, their contribution in increased production of copper, lead, zinc, etc., was likewise small, and probably was counterbalanced by the loss of such metals as are normally produced as byproducts of gold mining.' This conclusion is amply supported by the evidence placed before your committee. It appears from the above that the American gold-mining industry was wrecked to no good purpose, while at the same time presumedly precious mining equipment was being steadily exported to keep whole our allies' gold-mining industries. Writing in May, 1943, Gustav Peck, labor adviser to Donald M. Nelson, stated in a memorandum to William L. Batt: "The mines are beginning to deteriorate; if they are once allowed to cave or flood to any appreciable extent, subsequent dewatering and reopening operations costing millions of dollars may prove prohibitive." S. Repts., 81-1, vol. 1-52 In the 3 years which have since passed, this deterioration has become a very serious factor, as many industry witnesses informed your committee. Dr. Peck raised still another issue when he stated: "The political and economic factors underlying the continuance of foreign gold mining are recognized, but a long-range view of the domestic situation raises the issue of whether the domestic gold-mining industry may be facing extinction while foreign gold mining anticipates an early return to prewar status." It may be noted that a distinct thread of thought runs through the testimony to the effect that certain economic forces were delighted at the prospect of cutting off the production of domestic gold by any excuse. In support of this contention it may be noted that Milo Perkins stated: "It is essential * * * that a reduction in gold mining should be envisaged for the postwar period." It is well known that the War Production Board had no authority to issue orders concerning manpower That was a function of the War Manpower Commission. Yet it is a well-understood fact that Order L-208 was issued primarily for the purpose of rechanneling manpower, and at the imperative instance of the Army, which threatened otherwise to curtail essential copper production by refusing to return drafted miners to the mines. The testimony and exhibits before your committee show that the then general counsel of the War Production Board, Mr. John Lord O'Brien, had grave doubts as to the legality and force of an order from WPB, an agency supposedly authorized to be concerned only with materials, but actually designed to have the effect of a manpower directive. Dr. Wilbur A. Nelson stated before your committee: "I can say it was a grave question in the minds of certain members of the War Production Board. They definitely used their priority authority to handle the manpower problem." To further show the confusion in thinking among the agencies, the War Production Board report states flatly: "The truth of the matter was that those concerned with the order did not agree among themselves as to its real purpose." As a matter of fact the Army and Navy had made up their minds and the civilian agencies had to act, willy-nilly, and then attempt to justify the action at a later date if possible to do so. The WPB report states the results succinctly: "The anticipated protests against the order materialized immediately; the benefits did not." The testimony before your committee certainly indicates the benefits never materialized but vast damage to an important industry did. ACTUAL RESULTS SHOW FEW MINERS CHANNELED INTO STRATEGIC MINERAL MINES It has been pointed out that gold-mine operators furnished the War Production Board with estimates of the potential manpower pool of miners and muckers which would be made available by L-208. This estimate amounted to less than 600 as against agency estimates ranging from 5,000 to 10,000. The Secretaries of War and Navy stated more modestly on October 5, 1942: "There are 2,000 to 3,000 hard-rock miners engaged in gold mining, now of no use in war production." Dr. Wilbur A. Nelson testified before your committee that his figures, compiled in April of 1943, showed that 497 gold-mine workers "probably were actually placed in metal mines due to the gold-mine closing order * * * which would be about 300 miners and muckers." He also testified that most of these did not remain in their new jobs any length of time. It must be noted that one of the primary reasons for the loss of labor at copper, lead, and zinc mines, aside from the draft, had been the high-wage inducements of the Army construction projects. The War Production Board states that "less than a week after the gold mines had been closed, largely because of the insistence of the Army, the Army ski-tow construction project at Pando, Colo., was completed. In the period October 15 to November 1, 1942, some 7,000 workers were released. This project was located only 20 miles from the Climax molybdenum mine, one of those particularly in need of employees. It has been alleged, and the records seem to substantiate the allegation, that a few of 7,000 workers released by the completion of the project returned to the mines from which they originally came. There was thus allowed to be dissipated a labor force of more than double that which conceivably could have been obtained by the closing of the gold mines." It is clear that these workmen, as well as those |