zinc-using industries in favor of competitors who rely on substitute and competitive materials.

Another question is raised by the proposed base price of 15 cents as provided in the pending bill. In 1947 the average price of prime western zinc was 10.5 cents; in 1948, it was 13.58 cents; in 1949, it was 12.15 cents. In 1950 until June it was 13.8 cents, and between June of 1950 and June 1952, the price ranged for a time from 17.5 cents to 19.5 cents, and by June 19, 1952, back to 15 cents.

The temporary price in excess of 15 cents stemmed from the sudden demand following the onset of the Korean war. From June 1952 and to this day the price has never again been as high as 15.5 cents. Applying the Bureau of Labor Statistics index, as the bill does from 1939 to the present, the price should be 10 cents. If we were to take the period following World War II, for present purposes, say 1947-4) as a base, the price according to the bill's Bureau of Labor Statistics index should be 13.7 cents. Why, then, should a base price be fixed at 152 cents? We don't understand-and perhaps the committee will not-how such a base price can be justified on the facts.

This industry believes that the present Tariff Act provides for an orderly investigation and determination of an appropriate tariff and it fails to understand why such available procedures have not been utilized in forestalling any serious dislocations which may be involved in the zinc-producing industry. There is a vast difference, however. between a tariff which is known and which will apply for at least a reasonable period in the future and one which fluctuates substantially at quarterly intervals, particularly to an industry like ours whose products often take months to deliver after they are ordered, and are used in industries whose members must have some reasonable stabil ity of prices, at least for the period necessary for them to procure and utilize the brass mill products they buy. The industry can adjus itself to a known constant tariff, as it has, for instance, to the tarif on nickel, which, incidentally, is for revenue only, as there is essentially no domestic nickel-producing industry.

The position of the brass mill industry in opposition to the proposed sliding scale tariff provision for zinc in H. R. 4294 may then be summarized as follows:

As one of the most important users of zinc, it objects to a procedure which it believes will cause a constantly and substantially fluctuating price in one of its principal raw materials, and which, because of this and the uncertainty of prices even a quarter in advance, will disas trously affect the market for its products, and hence also reduce its purchases of zinc. It objects also to a base price apparently arbi trarily arrived at subject to variation on the basis of the Bureau of Labor Statistics Wholesale Commodity Index, as such an arrange ment will tend even further to distort the price situation applicable to zine. It is convinced that the arrangement will not realize the objective of minimizing unemployment in the zinc-producing indus try; that, on the contrary, it would inevitably lead to dislocation in the zinc-using industries, and, therefore, necessarily in the zine-preducing industry itself. If one of the purposes of the sliding scale tariff is to protect the investment of small mines by having a higher price so that they can demand a better market rather than go out of business when prices decline, we believe that the proposed tariff is not

an effective procedure for attaining that objective. It should be obvious that if zinc can be produced abroad at substantially lower prices than the price demanded in this country and if an unreasonably high tariff prevents such zinc from entering this country in that form, it will be utilized abroad in the manufacture of zinc-containing products. These can then readily be exported to this country at attractive prices, thus negating the attempt by the proposed tariff to protect domestic employment or investment.

Another point to be considered is the probability that once foreign zinc which is prevented by too high or uncertain a tariff from coming here, establishes a firm market abroad, our demands for it when it is again sorely needed will go begging. That would not be a new experience in the metal-using industries.

This industry believes that the pending tariff proposal is uneconomic in fact and unsound in principle, and that it should be rejected. Mr. SIMPSON (presiding). That completes your statement, sir? Mr. VELTFORT. Yes, sir.

Mr. SIMPSON. Are there any questions?

I believe not, and we thank you kindly for your appearance, sir. Mr. VELTFORT. Thank you.

Mr. SIMPSON. The next and final witness, according to my list, is Mr. H. K. Hochschild of the American Metal Co.

Mr. Hochschild, would you kindly take the chair and proceed as you see fit, after identifying yourself to the secretary.

STATEMENT OF HAROLD K. HOCHSCHILD, CHAIRMAN OF THE BOARD OF THE AMERICAN METAL CO., LTD., NEW YORK, N. Y.

Mr. HOCHSCHILD. My name is Harold K. Hochschild; I am chairman of the board of the American Metal Co., Ltd., of New York City, a New York corporation which owns and conducts mining, smelting, and refining operations in the United States and Mexico and has minority interests in copper, lead, and zinc operations in Africa. Mr. SIMPSON. You may, of course, be seated, sir, if you prefer. Mr. HOCHSCHILD. Thank you.

My brief was filed with the committee. afternoon have expanded on subjects that would like to pass over those very lightly.

Some of the witnesses this were in my brief, and I

Mr. SIMPSON. I have before me your brief, and you have asked that that be extended in the record, and you may then proceed. (The statement referred to is as follows:)

STATEMENT FOR HOUSE WAYS AND MEANS COMMITTEE

My name is Harold K. Hochschild. I am chairman of the board of the American Metal Co., Ltd., of New York City, a New York corporation which conducts mining, smelting, and refining operations in the United States and Mexico and has interests in copper, lead, and zinc operations in Africa.

Accompanying this report are two graphs which seem to me to prove conclusively that the United States must have lead and zine from foreign countries in order to service its manufacturing industries. The chart on lead compares mine production and secondary production for lead with consumption for the period 1930 to date. This shows not so much that production of lead in the United States has declined as that consumption has increased beyond the ability of our mines to supply it even with the help of an expanding secondary production.

The second chart with reference to zinc compares the slab zinc production of United States smelters with the recoverable content of United States mine pro

duction. It is clearly evident that the demands of our smelters for raw materials have run well ahead of the ability of domestic zinc mines to supply them. It should be pointed out that this comparison leaves out of account more than 100,000 tons of zinc in ore which goes directly each year into the manufacture of zinc oxide, lithopone, and zinc chloride.

Clearly we must have foreign raw materials to maintain our smelter production.

Our country has had tremendous industrial growth which in practically every field including nonferrous metals has outpaced the productive possibilities of our mining industries. Our economy, our high standard of living must be fed partly by foreign raw materials.

My company has been spending large sums of money for many years exploring in the United States for mineral deposits. We have not yet found any new noferrous metal mines. We do not know of any new production in the United States which, in the foreseeable future, could make any substantial reduction in the dependence of the United States on lead and zinc supplies from foreign countries.

Everyone wants a healthy mining industry in the United States but an erratic, uneconomic, or artifically high price will encourage substitutes for lead and zinc, thus inflicting permanent injury on the lead and zinc mining, smelting, and re fining industries and on the maufacturers who devote themselves to these prod ucts. There is good reason to believe that the relatively high prices at which lead has sold at intervals during the past 30 years have been the cause of its losing much ground to substitutes in various industries, among others in pig ments, in glass and ceramics, and in cable manufacturing.

Enactment of the proposed bill would have a disastrous effect on the economies of foreign supplying countries, intensified by the fact that it would be bound to discourage investment of United States capital in the further development of mineral resources in such countries. It would completely contradict the Pres dent's policy of maintaining goodwill abroad toward the United States and it would challenge the concept that as a creditor nation we must let other nations earn dollars in order to make both ends meet and in doing so to buy our goods. The proposed duties would repudiate our Government's foreign policy, one of whose main objectives is to make it possible for foreign countries to buy American goods. The result would be widespread damage among United States manu facturers who are the mainstay of our economy.

The passage of this bill would be an invitation to extend the same principle to other goods and commodities. It would also invite retaliatory action by other countries. The resulting damage to our international trade structure staggers the imagination.

Lower wage rates in foreign countries have been stated as a chief reason for imposing higher tariffs against the importation of foreign lead and zine. There has been much loose talk on this subject. The principal Canadian lead producer, Consolidated Mining & Smelting Co., is now paying its miners in British Columbia an average of $1.71 an hour, Canadian currency, plus $28 cents per hour in indirect remuneration, such as paid holidays, insurance benefits, etc. This compares with an average wage, including indirect benefits, of $1.92 paid in the United States lead and zinc mining industries in 1952.

In Mexico wages are lower, but a comparison with the United States is difficult because the productivity while it varies is in general still considerably lower than in the United States. The best proof of this is what has been happening in Mexico.

It is not merely in the United States that the current low level of lead and zinc prices has resulted in shutdowns, curtailment of operations and unemploiment. The same thing has happened in Mexico. The mines of our company there are operating at a loss and unless the prices for lead and zinc improve su stantially during the next few months we will have to shut down some of these properties. Our smelter and refinery in Mexico treat the output not only of our own mines but of a large group of small Mexican mines. Many of these have already shut down, with the result that the production of lead from these mires has been reduced by more than 50 percent during the past year.

These tariffs would damage American foreign policy in another way. By shutting the foreign producing countries of lead and zinc out of the America market and fostering large-scale unemployment in such countries, they would put the governments of these countries under great pressure to sell lead and zine to the Soviet and its satellites.

Far from the stability claimed by the advocates of this bill as one of its enefits, its effects on lead and zinc industries would be unsettling. We have lways had market fluctuations but never the kind of abrupt changes which his bill would force upon the markets at the end of every quarter when the ariffs will have to be revised according to the price. Consuming manufacturrs would find that the bill seriously impedes orderly buying and would greatly nterfere with the pricing and marketing of their products. Such sharp and rtificial fluctuations would be of benefit only to shrewd professional speculators nd manipulators-in fact, the sliding-scale tariffs might well be renamed the rice-instability tariffs.

The import duties today are 116 cents on lead and 70 cents on zinc. At today's omestic prices of 12 cents for lead and 11 cents for zinc, the bill would add .06 cents per pound to lead and 6.2 cents to zinc. The resultant bill to Amerian consumers would be about $200 million per annum. Many would suffer for he benefit of the few.

The chief mines which supply the United States manufacturing industries with mported lead and zinc are owned or controlled partly or wholly by United States apital and represent the shareholdings of many thousands of Americans. One of our United States operations is the Blackwell Zine Co. of Blackwell, kla., which is the largest individual producer of slab zinc in the United States y the horizontal retort process. Its annual production is approximately 80,000 ons, or about 9 percent of the United States smelter production of zinc. Blackell employs over 900 men and depends for its raw materials upon the mine roduction of foreign countries, chiefly Mexico.

The American lead and zinc mines cannot hope to supply all the needs of merican smelters and refineries. Hence, our smelting and refining industries ust draw upon foreign supplies. The foreign suppliers to Blackwell would be orced to turn to European smelters. The higher the tariff on imported ores nd concentrates, the more difficult it becomes for United States smelters to urchase foreign supplies. The business of smelting and refining zinc and lead res and concentrates is highly competitive. The very existence of the Blackwell Zinc Co. is threatened if the proposed tariffs are legislated.

This bill is trying to turn the clock back 40 years to the time when American onsumption of lead and zinc was still in the modest ranges of tonnage where I could be supplied by American mine production. It simply cannot be done ow. It is the increase in American consumption far more than the decline 1 American production that has made us dependent on foreign lead and zinc nd that dependence so far as we can see now is going to be permanent. During the period from 1940 through 1952 imports of refined and unrefined ad and zinc were about 4,700,000 and 4,500,000 tons, respectively. In other ords, over 30 percent of our lead consumption and over 26 percent of our zinc ›nsumption had to be imported. American mines cannot supply these deciencies. Furthermore, out of these imports more than 70 percent of the lead id more than 80 percent of the zinc came from our Western Hemisphere neigh›rs, Canada, Mexico, and Peru. The bulk of the imports came overland from anada and Mexico. These are the countries on whom we depended largely r our lead and zinc during World War II and on whom we shall again be dendent if there is another war. Their ability to supply our needs in times war as well as in peace should not be damaged by a body blow such as this ll would be. Their chief market is in the United States and it is vital to us at their mining industries remain healthy.