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10,000 and 15,000 tons of these 2 metals with a crew of 350 to 400 men. We have some 9,000 stockholders scattered through nearly every State of the Union. The Park City district has, since its discovery in 1872, produced 15,590,000 tons of ore, having a net smelter value of $384,810,000. At no time since its discovery in 1872 has there been a complete shutdown of all mines and in the judgment of geologists, engineers, and operators, the district under normal conditions of balance between prices and costs, has many years of life ahead of it.

Right today, however, only 1 mine is still operating, which is the lowest record in the history of this 80 years of continuous operation.

Working under high pressure and a tight schedule as this committee is doing, it would be an imposition to burden you with data already furnished or waste your time with long arguments. However, if anything is omitted or not made clear, I shall be glad to answer any questions I can.

At your meeting in Denver a week ago, representatives of the Mine, Mill, and Smelter Workers Union strongly urged a return to the premium price plan, more or less as in World War II, for the encouragement of small-mine owners and prospectors.

A very similar bill to that proposed in Denver, was S. 2105 introduced in the first session of the 81st Congress on June 17, 1949, by Senators Hayden, McFarland, and Malone. We in Park City and throughout the West generally gave S. 2105 our full support. However, we went up against a stone wall of opposition that subsidies paid any industry in peacetime are economically and fundamentally unsound. I believe such opposition would be even stronger today.

When the entire lead industry of this country, large and small producers alike, is either shut down, contemplating a shut down, or in uncertainty as to how long they can continue operations, we must adopt some other approach than a premium price plan for small mines and prospects.

With the deplorable situation of the small miner, owner, and prospector, and with the utmost sympathy for them, I still think the greatest help that could be given them would be the assurance there is a market for his ores in this country, if he is successful, at prices that will yield a reasonable profit. Without this, all the assistance that might be given him is valueless.

The testimony of Messrs. Travis and Larson at your Denver meeting, favoring legislation for a premium-price plan, does not by any means represent the thinking of organized labor in Utah. For example, the United Steelworkers of America, who are the bargaining representatives of the lead-zinc miners in that State, have had their economists and statisticians from their headquarters in Pittsburgh, going over the situation since early in the year. As a result and entirely independent of the ideas of management, they came to the conclusion the legislation embodied in H. R. 4294, the sliding-scale tax on lead-zine imports when the domestic price for these metals is below 15 cents a pound, had the most likelihood of passage and would provide the most stability of employment for the membership of their union. As proof of this decision, three members of this union from Utah are now in Washington and will appear as witnesses at the hearings before the Ways and Means Committee on H. R. 4294.

On the last page of this brief there is a tabulation of data from the Paley Commission's report relative to the production and consumption of copper, lead, and zinc in the United States and the free world exclusive of Russia and the satellite countries for the year 1950 and the estimated production and consumption of the United States and the free world for 1975.

You will note in table I, the United States in 1950 was an average of 66% percent self-sufficient in these 3 metals and it is estimated we shall be only 49 percent self-sufficient in 1975. Also, the primary production of these 3 metals combined, it is estimated in this 25-year period, will show a decrease of only 8 percent; that is, the report estimates domestic production will maintain its production of 1950.

You will also note in table II, it is estimated if the demand for metals in the United States and the free world are to be satisfied in 1975, the free world must double its 1950 production. In the text of the report it is frankly stated the capital required for this doubling of foreign production must be furnished largely by the United States.

The Paley report assumes, therefore, our domestic industry will continue to produce metals for the next 25 years at about the 1950 rate of production, even though tariffs are entirely removed and regardless of what may happen to prices. In your hearings you have been given data showing what the increased importations of lead-zinc in 1952 over 1951 have done to domestic prices. Doing away with all tariffs will add still more incentive to increased imports, lower

domestic prices, and consequently drastically decreased domestic production. As far as reliability to predict 25 years hence, the authors of this report have fallen flat on their faces in the first 6 months since the report was published. Every ton by which domestic production may decrease, by that much, increases our dependency upon foreign sources. By the recommendations of the Paley commission, if carried out, it is inescapable that some very large share of the capital invested in domestic mining must be written off. The report does not admit this, but the experience of the past year admits of no other alternative. For every $1 we must write off from our investment in domestic mining, we must invest another in foreign mining and we have not entirely forgotten what has happened in Bolivia and Iran.

This rash, theoretical experiment to which the Paley Commission would first commit us (doing away with all tariffs on metals) is striking at the Achilles heel of our future economic health and safety. With our 7% percent of the world's population consuming 45 percent or more of the world's supply of metals, this indifference as to the fate of the domestic mining industry in the report and this eagerness to build up the foreign industry regardless of how dependent we may become, is disturbing to say the least.

True, the Paley report dangles before us the hope we may be able, as our dependency increases, to buy these metals abroad cheaper than they can be produced at home. If so, this hope is contrary to all our past experience. We have at times been dependent on foreign sources of supply for essential materials. To name only a few-potash, quinine, camphor, diamonds, crude rubber, coffee. Did the cost of production of these commodities bear any relationship to the prices we were forced to pay? Not the slightest, and our foreign suppliers through cartels controlled production and price to earn the maximum profit. The law which determines prices is not the cost of production, but the need of the buyer. A good example is the recent behavior of copper and lead-zinc prices. In 1952, demands for copper exceeded by some 10 percent available supplies, with the result foreign copper was held at 361⁄2 cents while our domestic prices remained unchanged at 242 cents. A 10 percent insufficiency caused an increase of 50 percent in price. In the other direction, lead-zinc was in somewhat excess supply over demand, approximately 10 percent with the result leadzinc dropped some 40 percent in price. This thin margin of insufficiency or excess of supply over demand is multiplied in determining price from 4 to 5 times. We can exercise no control over foreign production or prices even though every dime required to produce a commodity is American money. The only control we have is through our own domestic production. Yet we are urged by the Paley report not to be concerned about whether the domestic industry survives or perishes; let it take its chances in competition with some of the world's poorest paid labor and in some inscrutable way, whichever may win (and this is a matter of indifference), it will all work out for the best.

[Excerpts from Paley report. Copper from graphs p. 58 without allowance for scrap. Lead and zine from figures in vol. II including scrap in both production and consumption in United States] I. United States production, imports, scrap recovery and consumption 1950 and estimates for 1975

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1 In 1950 imported 100,000 tons copper from foreign stocks.

2 In 1950 imported 250,000 tons zinc from foreign stocks.

NOTE. Average change for 3 metals: United States primary production, -8 percent; United States total consumption, +47 percent.

II. Free world production, exports to United States and consumption for 1950 and estimates for 1975

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NOTE. Average change for 3 metals: Free world primary production, +97 percent; free world total onsumption, +69 percent.

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House of Representatives, Washington, D. C.

(Attention: Hon. Gordon Grand, secretary.)

GENTLEMEN: We as mica fabricators are extremely concerned about the increase in the importing of fabricated mica from Mexico, Japan, Germany, England, India, and elsewhere.

Your committee no doubt realizes the strategic nature of mica as an electrical insulator in electronic equipment (radar, proximity fuses, guided missiles, air, sea, and ground communications), and electrical equipment (electric motors, electrical controls, and high-voltage transformers and coils).

Our Government is stockpiling mica in large quantities, to be prepared for any eventuality. Mica, being a product of nature, requires a great degree of human skill, at every operation, to realize the highest yield in fabricated parts from the original piece of mica. One hundred pounds of mica, mishandled, will produce as low as 1 pound of fabricated mica, whereas 100 pounds of mica handled by skilled domestic fabricators, will produce 50 pounds of fabricated mica.

Therefore, the strategic stockpile of mica, in terms of finished, fabricated, usable mica, is dependent upon experienced mica fabricators who are wellequipped and financially able to fabricate large quantities of mica at the first sign of an emergency.

The stockpile is presently deficient in condensor film mica, which is being fabricated outside this country and brought into the United States at prices too low to allow competition by domestic mica fabricators.

As an example of the price differential between foreign fabricators and domestic fabricators, one particular fabricated mica condensor film is brought into this country, duty paid, for $1.80 per thousand pieces. The domestic price on this same part is $2.80 per thousand pieces. This wide and unfair price differential prevails on all parts fabricated outside the United States.

The present import duty on fabricated condensor film mica is 221⁄2 percent. It was formerly 45 percent before it was arbitrarily cut, with no consideration for the effect this act would have upon the domestic mica fabricators.

Recommendation.-We strongly recommend that the import duty on all imported fabricated mica be raised to a minimum of 45 percent.

The present import duty on block, or unfabricated mica is 15 percent plus 2 cents per pound. Foreign fabricators do not pay a duty on the mica they import. Their sources for mica are the same as the domestic mica fabricator sources. Thus the domestic mica fabricator is at a disadvantage when buying the raw material. Domestic supplies of raw mica are so marginal that the Government, for its stockpile, is paying domestic miners 10 times the amount received by foreign miners for the same type mica.

Recommendation.-We strongly recommend that the import duty of 15 percent and 2 cents per pound be entirely eliminated on block mica coming into this country.

We also recommend the elimination of the 20-percent duty on condensor splits (not fabricated condensor mica).

The two recommendations set forth will not eliminate the importation of foreign fabricated mica. Instead, these recommendations will enable the domestic mica fabricator to compete on a more equal basis with the low-paid labor of foreign countries.

We, as mica fabricators, have always appreciated the extreme necessity for our Government to stockpile mica as a strategic material. However, we have been negligent in appraising the effects of foreign fabricated mica on our own strategic fabricating industry.

Our proposals, if adopted, will assure our Government that it will have a vital, strong, and healthy mica-fabricating industry to depend upon if the time arrives when the strategic stockpile of mica is needed for an emergency.

Yours very truly,

FARNAM MANUFACTURING CO., INC.,
F. C. FARNAM, President.

ALRECO METAL CORP.,

New York 4, N. Y., May 29, 1953.

Re Simpson bill zinc and lead.

Mr. DANIEL A. REED,

Chairman, Ways and Means Committee,

House of Representatives, Washington 25, D. C.

DEAR MR. REED: We would like to offer a suggestion in connection with the sliding-scale tariffs which have been proposed in the Simpson bill.

Although we are importers of metals, we feel that a certain amount of protection for the domestic lead and zinc refineries in form of increased tariffs is well justified.

(1) TIME BASIS OF VARIABLE DUTIES

We find, however, that the sliding-scale tariffs in the suggested form are extremely clumsy and unpractical and, if applied, would possibly lead to new problems. If the sliding-scale tariffs would be adjusted every 3 months in accordance with the domestic lead and zinc prices, this would reverse the price trend every quarter of a year and instead of leading to stability, the prices would still fluctuate and the markets would be anything but stable.

This fundamental error has apparently been recognized by the National Lead and Zinc Committee whose chairman, Mr. Otto Herres, submitted a new and changed proposition in which it is suggested to put the import tax calculation on a weekly basis instead of a quarterly basis. We do not think that this would solve the problem, because weekly fluctuation of a duty rate could hardly be successfully managed by importers, consumers, or customs officers.

To our knowledge no machinery exists to deal with weekly variations of duty rates, and this period is much too short to take into consideration the usual

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delays of steamer arrivals, filing of customs entries, etc. In other words, weekly variations would definitely prove unworkable and lead to continuous controversies and other very serious disturbances in the import procedure.

A monthly determination of sliding tariffs would definitely be much more convenient to everybody concerned.

(2) PRICE BASIS FOR DETERMINATION OF VARIABLE DUTIES

If the sliding duties are determined on basis of the domestic prices as published in the E. & M. Journal the objection may be raised that in effect the domestic refineries can themselves determine the duties by raising the domestic zinc and lead prices deliberately. In our opinion a fundamental error has been made in tying the sliding tariffs to the domestic metal prices. The new tariff is supposed to equalize the difference which exists between the domestic breakeven price and the depressed price at which foreign metal is offered. It is aimed at bringing stability to the domestic price level. By making the new tariff dependent on the domestic price, one recognizes as a permanent fact that domestic prices will fluctuate in accordance with foreign offers. If we understand the new tariffs correctly, their purpose is to avoid just these fluctuations and to make domestic prices fairly independent of foreign offers. You will agree with us that there is something illogical in this situation and unless our interpretation is wrong, we can only assume that the promoters of the sliding tariffs apparently have not given sufficient thought to this obvious contradiction.

We believe that the sliding tariff would really work, if based on actual foreign metal prices. The London Metal Exchange provides a fairly accurate picture of foreign zinc and lead prices. If, to give just an example, a foreign price of £100 (after addition of freight and normal duty) would be assumed to be equal to the domestic break-even price, whereas any price below £100 would be considered a dumping price, the sliding scale tariffs could be fixed as follows: If the London quotation is £100 per ton, or over, no additional duty.

If the London quotation falls under

£100 per ton, extra duty

£90 per ton, extra duty.
£80 per ton, extra duty.

£70 per ton, extra duty

Cents per pound

1

2

3

The actual duty could be established monthly, based on London averages for the preceding month. Thus any new duty would apply to the metal which was actually sold at the price which forms the basis of the duty, assuming that a period of several weeks must be allowed between shipping and arrival date.

This method would leave domestic prices out of the picture completely. It could be assumed that they would move to at least a break-even point and stay there. It would also leave the door open for necessary imports and give foreign suppliers a sufficient leeway to send their metal here and get even a better return than now while no sliding tariff exists and prices are depressed. These new duties would thus protect the domestic industry without being prohibitive. This fact alone should remove the objections raised by the foreign supplying countries and make sliding tariffs compatible with the administration's "Trade, Not Aid" policy.

Very truly yours,

Hon. DANIEL A. REED,

ALRECO METAL CORP.
E. G. KOCH.

REPUBLICAN NATIONAL COMMITTEE,
Washington, D. C., May 18, 1953.

House Office Building, Washington, D. C.

MY DEAR CONGRESSMAN: It has been brought to my attention that there is pending in the Ways and Means Committee of the House H. R. 4294, which provides for a graduated tax on imports of zinc.

I am writing you urging your support of this legislation inasmuch as it has a great bearing on quite a number of communities in New Mexico. This is especially true of the area around Silver City, where there are important zinc mines. I have just learned that as a result of the low price of zinc about 700

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