It is to be hoped that the Committee on Mines and Mining can find it possible to report this bill with a recommendation that it be passed without amendment.

STATEMENT OF FRANK L. HESS, BUREAU OF MINES, DEPARTMENT OF COMMERCE

Mr. HESS. Mr. Chairman, if I may, I will here take up some loose ends that seem to have been left. I wish to call attention to a little different phase of investment than that Mr. Callbreath referred to. It is this: In 1920 we imported from Germany about 225,000 short tons of potash, for which we paid about $39,000,000. This year the same quantity of potash cost us $11,700,000, a difference of $27,300,000 on that same 225,000 tons of potash. There is a combination between the German Government and the German mines on one side and the French Government and the French mines on the other side, by which the American market is divided between the two sets of mines. The German mines take 622 per cent of the American market for potash and the French mines 371⁄2 per cent.

I have been told-I do not know whether you want to put this in the record or not-by one of the members of the firms which sells foreign potash, that the French continually want to raise prices. If the combination concludes to raise prices, they can take from us in five or six years at least $200,000,000 before we can help ourselves by the production of our own potash.

The CHAIRMAN. Did I understand you to say that in 1925 our potash bill was $39,000,000 and this year $11,700,000?

Mr. HESS. No; in 1920 our potash bill was $39,000,000 for 225,000 tons of contained potash, which we bought in various potash salts. Last year we bought 251,000 tons of potasht which cost us $13,000,000, and at the same rate the cost of 225,000 tons of contained potash was about $11,700,000.

The CHAIRMAN. What caused that great reduction in the price? Mr. HESS. The combination is watching the potash situation very closely in America, and I believe that it thought it could not afford to keep the price up. It is afraid of possible developments in America. The CHAIRMAN. Is that the only reason for that difference of $27,000,000?

Mr. HESS. Absolutely.

Mr. WILLIAMSON. In other words, the reduction is due to the fear that we may develop potash in this country if they hold the price too high.

Mr. HESS. Yes.

Mr. HARE. Suppose we should undertake this and be unable to do it, where would we be?

Mr. HESS. There is in Searles Lake a deposit of over 30,000,000 tons of potash, which will supply us for 100 years, and if forced to do so, it will be possible to ship all we need from the lake.

There is another consideration also. If we want to develop the extraction of potash from silicates, and particularly green sands in the East, we can produce all the potash this country will use, but it is more expensive than the present sources.

The CHAIRMAN. Are the green sands more expensive than if we should turn up potash as has been indicated?

Mr. HESS. Under any process we know now, the green sands will still be too expensive to use, although they are almost soluble for plants. On some old farms in Virginia, where the green sands were used many years ago, the crops grow better than on the surrounding farms, because the potash is slightly available.

I will go back to this purely business proposition of core drilling. Suppose the Germans listen to the French and raise the prices as high as the traffic will bear, they can easily take $200,000,000 from us in five or six years. The amount of money that is asked for in Senator Sheppard's bill is less than 12 per cent of the amount of money they can take away from us in that period. What business man, if offered perpetual insurance on his profits, would not accept it at 11⁄2 per cent? And yet the appropriation asked for in Senator Sheppard's bill is less than 12 per cent of the sum that could be taken from us in a few years and is a small premium to pay for continued insurance of low prices of potash. We can consider the price of potash at the present time as fairly cheap.

Some one asked about the grade of potash salts being imported. They vary from 12 per cent in kainite to 90 or 95 per cent in the richest salts, which cost us at the present time, about 2.5 cents per pound for the potash sulphate contained. It is hardly possible that we can beat that price in this country even with good deposits.

On the other hand, the Germans are at the present time working between 60 and 100 of 218 shafts they have sunk. Their own experts estimate that they can reduce the number of shafts to 55 and export potash to the United States at 35 per cent less than they are now charging and still make a good profit.

The CHAIRMAN. Then they will pay a subsidy to those that are not working.

Mr. Hess. I do not know whether it is properly called a subsidy. The companies were forced by the German Government to go into practical partnershp with the government. They then closed down those mines which were not paying or which would pay least, and ran only those mines which could be run at the greatest profit, as any corporation would do-closing down the low-paying mines, and working only the best-paying mines. The profits are prorated to all the

mines.

Mr. WILLIAMSON. Including the nonproducing ones?

Mr. Hess. Including the nonproducing ones, because their capital is taken into the partnership.

May I speak about the potash prospects, concerning which you have asked our opinions. It seems to me that the showings that have been made by drilling for oil have been such as would encourage any miner to go ahead with this work. You will ask then, why do not miners take this up, and the answer is in what I have been telling you about the foreign combination. Its prices can be lowered 35 per cent according to the German engineers, if wished. I doubt if any American company could operate at 35 per cent less than the present potash prices, even if we were to strike rich potash salts. On the other hand, whether or not there is a possibility of developing potash mines anywhere in this country, there is no doubt that we can always get all the potash we need for Germany has a world's supply for 1,700 years, and France for 275 years, considering the present rate of consumption to be 1,300,000 tons. But it will be an insurance of low

potash prices if we can find this potash, which seems probable enough to encourage any prudent miner to underake prospecting by coredrilling.

Mr. HARE. Do you think that private enterprise could not mine cheaper than it is now shipped here by the Germans?

Mr. HESS. I do not think it could.

Mr. HARE. Then if we should develop this industry after finding this potash, do you think there is any probability that the industry could succeed in competition with Germany?

Mr. Hess. I look at it in this way. If we develop mines from which we can produce potash, both the French and the Germans will see to it that we get potash cheaply, and the mine will pay for itself over and over in cheaper prices.

Mr. HARE. It is a precautionary measure,

Mr. HESS. An insurance measure.

Mr. HARE. I was wondering if we would be called upon to put a tariff on potash if we got this established and protect the industry and the farmers pay the difference?

Mr. HESS. If we do not have the industry we will not have a tariff, but if we have merely an insurance mine, we will have our cheap prices. It seems to me that the important question is whether we are going to have cheap potash, for we can not raise tobacco nor cotton nor truck products in the East without potash.

Mr. HARE. I asked Doctor Smith a question about our cotton crop in 1921 being less on account of this Searles Lake potash?

Mr. HESS. They had not learned to take out their borax.

Mr. HARE. Will that be guarded against in future development of the potash industry?

Mr. HESS. That is all taken care of now. They found they could not sell their potash with a borax content and they are taking that out by a better method of separation.

Mr. CARPENTER. Are those ore bodies in the German mines as deep as with us?

Mr. HESS. Both the German and the Alsatian mines average about the depths at which potash is found in New Mexico and Texas. At Stassfurt the shafts are from 1,200 to 3,500 feet deep; the Alsatian mines are 1,600 to 2,624 feet deep.

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Mr. WILLIAMSON. And the thickness is about what?

Mr. HESS. The thickness of the German potash deposits is as much as 500 feet, but variable and lenticular as already mentioned. One of the important points is that the average salts mined contain between 8 and 11 per cent potash, as Mr. Turner brought out.

Mr. HUDSPETH. If as evidenced before the committee, that potash is present at 800 feet in sludge that was referred to, a stratum of 400 feet, could we not produce as cheaply in this country as they produce in Germany at 3,000 feet?

Mr. HESS. I would not want to say that because we have not enough data now. You must remember we have a long haul.

Mr. HUDSPETH. This is right on a railroad trunk line.

Mr. HESS. There are a lot of engineering data necessary in order to pass on that.

Mr. CARPENTER. It depends on your process of mining, etc.

Mr. HUDSPETH. If they discover at an 800-foot depth a 400-foot stratum, if we can not produce as cheaply as Germany, why not? Mr. CARPENTER. They have not proven this sludge up yet. The test is taken from the sludge.

Mr. HUDSPETH. The drills showed it.

Mr. CARPENTER. I did not understand they had a core on that. The Secretary said it was a churn drill.

Mr. HESS. We need cheap potash, and if we can extract it cheaper than it can be extracted abroad, some American firm will do it. Mr. HUDSPETH. That is, if there is, as stated, a 400-foot stratum at 800 feet.

Mr. HESS. If that can be proved plenty of firms will want to go into the business.

Mr. ARENTZ. On page 43 of this report, Bulletin 785-B, it states as follows:

In Germany it is necessary to mine at depths between 3,500 and 5,000 feet; in the Oligocene deposits of Alsace the sylvite and halite salts are found on the average at 1,700 to 2,200 feet. In both fields deeper mining is necessary than would be required in western Texas, where showings that may reasonably be expected to prove commercial have now been located at as shallow a depth as 900 feet, and the maximum depth for showings likely to prove of value appears to be 1,800 feet.

Mr. WILLIAMSON. I would like to know about the thickness of the mines in Germany and Alsace.

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Mr. HESS. The beds are lenticular in Germany, and the thickness of the beds is as much as 500 feet. The Alastian beds are thinner but richer, and they have beds 5 to 18 feet thick, that carry as much as 33 per cent potash, but the material as mined carries about 13 per cent of potash. I have here an article on the subject which may be put in the record.

The CHAIRMAN. When the transcript is submitted to you, do it then.

[Part of an address delivered at the Southern Improvement Convention of the American Mining Congress, March 16, 1926, by Frank L. Hess.]

POTASH AND THE SOUTH

THE GENERAL SITUATION

Potash is essential and irreplaceable for most crops. There is no "just as good." The great southern crops, cotton, tobacco, and citrus fruits must have phosphate, nitrate, and potash these three, but the greatest of these is potash.

Phosphate the South can and does produce in abundance. The atmosphere is three-fourths nitrogen, unfixed to be sure, but every thunderstorm fixes some and delivers it free to the planter. Muscle Shoals has been placed in the South ready for the fixation job, and Uncle Sam has the Fixed Nitrogen Laboratory at work finding out just how best to do it.

But as yet, although the South buys and uses more potash than all the rest of the United States, although its cotton, tobacco, and citrus fruits are products which especially need potash, and although as I expect to show, it is dependent on foreign potash deposits that are controlled by a trade combination directed especially at the United States, yet the South and most of the United States have no available known potash supplies.

Besides the South, the Eastern States and the California citrus belt are also large users of potash, and as lands are cropped longer the use of potash will undoubtedly grow.

Not only will the acreage on which potash is used increase, but the quantity of potash used per acre will also probably increase until it approaches the quantity used in Germany, and that small country uses nearly half of the German output.

Our use of potash is peculiarly agricultural, and about 95 per cent of the potash marketed in this country goes into fertilizers, only about 5 per cent being used in chemicals and miscellaneous uses.

At present so far as an American potash supply is concerned the South and most of the remainder of our country are largely at the mercy of a foreign combination formed to get every practicable dollar from us.

I propose to show a possible way in which the United States may develop potash deposits so that it will have the whip hand in the fixing of potash prices.

SOURCES OF POTASH

The potash used in this country comes almost wholly from Stassfurt, Germany, and Mulhouse, Alsace. Before the Great War we imported annually an average of about 200,000 short tons of potash, contained in various salts, for which we paid about $10,000,000, or, roughly, $50 per ton. With the beginning of the War in 1914, the price immediately jumped more than 50 per cent to $82, and the potash cost an extra $3,000,000 over the price of 1913, but this was a small rise compared with the prices that followed.

A "potash hunger" came with the continuation of the war. The average price of contained potash in 1916 was $437 per ton. Great efforts were made in this country to isolate potash from brines, alunite, greensand, kelp, wood ashes, cement kilns, and other sources, but in our best year, 1919, after four years of experimentation we were able to produce at almost five times the price less than one-fifth as much as we imported in 1913, and we were held up badly on the price after the war. In 1920 we imported about 225,000 short tons (224,792) of contained potash, for which we should have paid about $11,250,000; but because the potash was controlled in Europe we actually paid about $39,000,000, so that more than $27,500,000 was extracted from our pockets in that one year without an equivalent return.

CONTROL OF MARKET

The Stassfurt mines are closely controlled by a combination of the German Government and the mining companies. The Alsace mines are likewise controlled by the French Government and the Alsatian mining companies.

On August 14, 1924, German and French representatives of the potash industry signed an agreement for three years, retroactive to May 1, 1924, governing their exports to the United States, the largest buyer, and to Sweden. The market was divided, 622 per cent to Germany and 371⁄2 per cent to Alsace. Prices were raised somewhat and in the spring of 1925 they were changed slightly. They were, c. i. f. eastern ports, as follows:

Prices for potash shipped c. i. f. to Eastern United States ports