Mr. BARING introduced the following bill; which was referred to the Committee on Armed Services

A BILL

To amend the Stock Pile Act of 1946, Public Law 520, Seventy-ninth Congress, chapter 590, second session

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Public Law 520, Seventy-ninth Congress, chapter 590, second session, is hereby amended by adding a new section as follows:

"SEC. 11. (a) In order to make purchases of strategic and critical minerals and metals with due regard to the objectives of this Act, all stock-pile acquisitions of such materials shall, insofar as availability permits, be made from domestic sources through contracts made directly with producers thereof.

"(b) Contracts may be made for periods up to five years.

"(c) Contracts shall contain escalator clauses by which the price paid may be adjusted monthly so that the producer will receive his costs, including allowances for depreciation, amortization, depletion, and normal development work, plus a reasonable profit.

"(d) No contract price shall exceed 50 per centum above the prevailing market price."

EXHIBIT 33

MEMORANDUM OF DISCUSSION WITH THE PRESIDENT JULY 11, 1949, ON THE STOCKPILING LEGISLATION

(From the office of Congressman Clair Engle)

This memorandum is a more detailed report on the discussion with the President on July 11, 1949, regarding H. R. 976, a measure for incentive payments for exploration and stock piling of strategic and critical minerals and metals. This bill is stalled in the Rules Committee of the House and needed White House approval to get it out.

I was accompanied to the conference by the following Congressman: Baring of Nevada, Granger of Utah, Mansfield of Montana, Murdock of Arizona, Patten of Arizona, and Peterson of Florida (chairman of the Public Lands Committee). The conference was also attended by John Steelman, assistant to the President. The desperate situation of the mining industry was briefly presented to the President. He claimed to be familiar with it, especially in regard to Missouri, his home State, which is a part of the nationally known tri-State area producing large quantities of the country's lead and zinc. The President felt that the current low prices of minerals and metals resulted from an oversupply; that for a long time after the war supply had not caught up with the demand; that supply had now caught up with the demand and that the surplus had resulted; that this was the operation of natural economic laws; that subsidies are not a proper method of maintaining the domestic mining industry; that he is no more for subsidies now for the domestic mining industry than he was 2 years ago when he vetoed continuation of the premium price plan; that the way to help the domestic

industry is to have the Munitions Board buy these materials while they are cheap and put them in the stock pile; that such a procedure would not only help the domestic industry but add to the stock pile.

I pointed out to the President that the Munitions Board had not and would not buy domestic minerals and metals; that only 13 percent of its current acquisitions were bought domestically; that in any event most American mines could not produce at current prices even if offered a contract by the Munitions Board at those prices; that the Munitions Board regarded its function as purely one of procurement and accepted no responsibility for maintaining the domestic mining economy.

The President indicated that domestic materials had not been bought because they had not been previously available as they are now; that the Munitions Board, being under his direct supervision, would carry but a policy which he directed it to carry out; that the purchases of domestic minerals and metals by the Munitions Board would support the mines which ought to be producing and that there were many small mines which had no right to be in business anyway; further, that Congress had failed to give adequate funds for stock piling and had refused his requested appropriations for that purpose.

I suggested that the only way to get the Munitions Board to buy domestically would be to amend the stock piling law with a mandate from Congress to do it. The President did not think that necessary but could be accomplished by a Presidential directive. No one disputed his statement about the sufficiency of funds for stock piling at the time, but it developed that he was in error as the Appropriations Committee had allowed $40,000,000 at the end of the last fiscal year and $520,000,000 in the new budget. This taken with prior contractual authority gives the Munitions Board in excess of $1,000,000,000 to spend or contract for stock piling in the next fiscal year.

It was suggested that something ought to be done about the tariff situation to protect the domestic mines now going broke producing strategics. The President was against that, pointing out as an illustration that the whole economy of Chile depended on copper. He stressed the importance of the United States in the international picture and in doing what it could to maintain the economy of other nations. In answer to an inquiry he did not feel that the losses to the Federal Government in unemployment insurance and tax revenues due to the closing of the mines would cost more than the premium payments provided in the bill. The President also indicated that he favored some program for exploration$20,000,000 for which was included in his initial budget message. I answered that there was no use for miners to explore for metals unless they had a market for what they found.

In short, the President is against subsidies for mining except for exploration; he believes that the Munitions Board should and can assist the domestic mining industry by buying these materials and putting them in the stock pile; he indicated that he favored a directive to the Munitions Board for that purpose rather than new legislation if the Munitions Board refuses to buy domestically. However, the implication of his statement was that no incentive price should be given by the Munitions Board but that these materials should be bought at current market prices.

After the conference, Mr. Steelman indicated that the President was in error about the appropriations for the Munitions Board. I told him I thought so too and would check into the situation, and in the event the President was in error further discuss the matter with Mr. Steelman with a view to securing a directive to the Munitions Board. I returned to my office, checked the appropriations and found that the Munitions Board had received substantially all the money in current appropriation bills which had been requested. I then called Steelman and asked him to formulate a directive to be issued by the President to the Munitions Board. Mr. Steelman said he intended to check the figures himself, talk to the Munitions Board and to Mr. Johnson, Secretary of Defense, and call me back in the next day or two. He did not call the 12th or 13th, so I tried to contact him both on the 14th and 15th but was unable to do so. However, he did return my call on Thursday the 14th, when I was on the floor of the House. I and continuing my efforts to get together with him.

It is expected that the Munitions Board will vigorously protest the directive mentioned by the President. I therefore set a meeting of the Mines and Mining Subcommittee for Monday, the 25th of July, requesting the Munitions Board to appear and show the current status of their funds, the current status of the stock pile percentagewise on each of the strategics, and what reason, if any, it has for not buying domestically. It is expected that this procedure will reduce the pres

sure which is to be anticipated on Steelman from the Munitions Board against the directive we are trying to secure. In the meantime, the matter will be pursued further with Steelman. There is a possibility also that a new bill will be introduced authorizing exploration payments only. The purpose of this would be to get the benefit of the $20,000,000 suggested for that purpose in the President's budget.

Mr. ENGLE of California introduced the following bill; which was referred to the Committee on Public Lands

July 27, 1949

Reported with amendments, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

[Omit the part struck through and insert part printed in italic]

A BILL

To stimulate the exploration for strategic and critical ores, metals, and minerals.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "National Minerals Exploration Act of 1949”.

STATEMENT OF POLICY

SEC. 2. (a) It is the policy of the Congress that every effort be made to stimulate the maximum exploration for strategic and critical metals and minerals by private enterprise to supply the industrial, military, and naval needs of the United States by providing for the development of these materials in order to decrease and prevent, wherever possible, a dangerous and costly dependence of the United States upon foreign nations for supplies of such materials. To this end it is the further policy of the Congress that every effort be made to expand exploration for those ores and other mineral substances which are essential to the common defense.

(b) "United States" when used in a geographical sense means the United States together with its Territories and possessions.

SEC. 3. (a) This Act shall be administered by the Secretary of the Interior, who may delegate the authority to a suitable administrator.

The Secretary is hereby authorized and directed, (1) to perform the functions hereinafter specifically authorized, (2) to prescribe rules and regulations for carrying out the provisions of this Act in the simplest manner, and (3) so far as he deems practicable, use or establish field offices, situated at points convenient to the mining industry in carrying out the provisions of this Act.

(b) The Secretary may select, employ, and fix the compensation of such engineers and other experts as may be necessary to carry out the purposes of this Act without regard to the civil-service laws and the Classification Act of 1923 as amended and shall employ such other staff as he may deem necessary.

(c) All records of the Office of Premium Price Plan for Copper, Lead, and Zinc shall upon request by the Secretary be transferred and delivered to the Division. SEC. 4. (a) The Secretary shall enter into written contracts providing for contributions by the United States for exploration projects for those ores, metals, or minerals determined to be strategic or critical, pursuant to section 2 (a), Public Law 520 (Seventy-ninth Congress, ch. 590, second session), and included in group 1&a of Munitions Board list of strategic and critical materials: Provided further, That contributions by the United States shall not exceed $25,000 for a particular project during each twelve-month period.

Such contributions shall not exceed the following portion of the cost of such projects on an annual basis. Ninety per centum of the first $10,000; 80 per centum of the next $10,000; 70 per centum of the next $30,000; 60 per centum of the next $50,000; 50 per centum of the next $50,000; 40 per centum of the next $100,000; and 10 per centum of any amount in excess of $250,000: Provided, That contributions may be 50 per centum of cost in excess of $270,000 where the Secretary finds (i) the project is desirable for the purpose of this Act, and (ii) the applicant is unable to bear more than 50 per centum of such excess.

(b) Exploration payments shall be made periodically on the basis of proof of such payments for work performed: Provided, That advance payments may be made for exploration projects the annual cost of which does not exceed $150,000, in such amounts and on such terms as the Secretary deems appropriate, where the producer certifies the need for such advance payments as working capital. Advance payments received by operators shall not be comingled with other funds and shall be subject to post-audit.

(c) "Cost of exploration" means the costs directly attributable to exploration including rental or depreciation of equipment used in exploration, direct labor and the supervision thereof, and materials and supplies actually used in exploration less the salvage value thereof, but excluding capital outlays and royalties, but may include a proper proportion of general overhead and administrative expense.

(d) Exploration payments shall be expended only in the search for new ore deposits or for extensions of known ore deposits.

(e) Any contract may be terminated for fraud and the applicant or producer shall be refused any benefits under this Act.

SEC. 5. No contract shall extend beyond June 30, 1954.

SEC. 6. There is hereby authorized to be appropriated the sum of $15,000,000 $20,000,000 per annum to carry out the provisions of this Act.

EXHIBIT 35

81ST CONGRESS HOUSE OF REPRESENTATIVES

1st Session

REPORT No. 1135

STIMULATING THE EXPLORATION FOR STRATEGIC AND CRITICAL ORES, METALS, AND MINERALS

JULY 27, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. ENGLE of California, from the Committee on Public Lands, submitted the following

REPORT

[To accompany H. R. 5725]

The Committee on Public Lands, to whom was referred the bill (H. R. 5725) to stimulate the exploration for strategic and critical ores, metals, and minerals, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass.

The amendments are as follows:

Page 3, line 21, strike out the period, insert a colon, and add the following: Provided further, That contributions by the United States shall not exceed $250,000 for a particular project during each twelve-month period.

Page 4, line 22, delete the figure "$15,000,000" and insert in lieu thereof the following: "$20,000,000 per annum."

EXPLANATION OF THE BILL

The bill is intended to provide means of encouraging the maximum exploration by private enterprise for domestic ores of strategic and critical minerals and metals. For the purposes of the act "domestic" includes the United States together with its Territories and possessions.

The pending bill provides for contributions by the United States for exploration projects for those ores, metals, or minerals included in group 1-a of the Munitions Board list of strategic and critical materials which are defined as comprising

"those strategic and critical materials for which stock piling is deemed necessary to insure an adequate supply for a future emergency (a) primarily because of a dependence on foreign sources of supply or (b) primarily because of the lack of the means for obtaining adequate domestic production to meet emergency needs." The executive departments have endorsed Federal aid for minerals exploration. H. R. 5725 is similar to a draft of a proposed exploration bill submitted to the committee by the Department of the Interior. Federal aid for minerals exploration is part of the assistance required by the domestic mining industry. As a necessary supplement to such assistance the executive departments are now considering other means of stimulating the mining of domestic minerals resources, including possible tax relief.

The committee notes that Federal aid for minerals exploration of domestic resources is part of the President's program and that $15,000,000 for the purpose was included in the President's budget for the fiscal year 1950. The Department of the Interior proposed that $20,000,000 per annum be authorized for the purpose. The committee believes that an essential to our national security is an accelerated discovery of new ore bodies and an increase in the development of additional ore reserves in the United States. It is the considered opinion of the committee that the pending bill will provide a means for successfully accomplishing these objectives.

SECTIONAL ANALYSIS OF REPORTED BILL

Section 1 cites the proposed act as the "National Minerals Exploration Act of 1949."

Section 2 sets forth the purpose and intent of the act.

Section 3 (a) provides that the act shall be administered by the Secretary of the Interior, who may delegate the authority to a suitable Administrator; outlines the duties of the Administrator; gives the Administrator rule-making powers and authorizes him to use or establish field offices at convenient places if he so desires. Section 3 (b) exempts such experts as may be employed from the provisions of the civil-service laws and Classification Act of 1923, as amended, and authorizes the employment of necessary staff. All personnel not specifically exempted from the civil-service laws are, of course, subject to such laws.

Section 3 (c) authorizes the Secretary to take over such records of the old premium-price plan as he requires.

Section 4 (a) sets up the authority for the Secretary to enter into individual written contracts providing for contributions by the United States for exploration projects for strategic and critical minerals and metals.

A schedule of Government participations is provided, ranging from 90 percent to a small project to 10 percent to a large project. Where the cost is $270,000 or more the Secretary may scale the operator's contribution down to 50 percent, when he finds the project to be desirable but the operator is unable to bear a larger share of the costs. Contributions by the United States are limited to $250,000 for a particular project during each 12-month period.

Section 4 (b) provides that the Government shall make its contributions to the exploration project "periodically" upon the operator furnishing proof of his expenditures. Monthly settlements would seem reasonable so the small operator particularly is not penalized by tying up large amounts of his money while waiting