however, to let ourselves be frightened into discarding these concepts altogether. "Government subsidization is obviously the antithesis, and the murderer of private enterprise. On what grounds, then, could the mining industry believe in the one and also accept the doubtful aid of the other?

"The answer is clear enough. Only on the basis that the public interest demands it can industry subsidies be defended. It is on this basis alone that air lines, steamship lines, railroads, the farmers, and other groups have at various times been subsidized.

"It is equally clear that the public interest demands an adequate and continuing supply of mineral raw materials, preferably from domestic sources. Private industry has done, and is continuing to do, a splendid job in this respect. "However, there are two areas in mining that private industry cannot enter. One is the region of long-shot exploration for ore deposits, where the odds against discovery outweigh the probable rewards.

"Private industry cannot afford much of this sort of risk taking; yet there is a very definite need for it. The San Manuel copper-ore body shows that Government can help do the job without becoming involved in the mining business. "The other closed area is the marginal mining property where: (1) Decreasing grade, increasing depth, or other factors have choked off profitable mining; (2) yet the district or the mine still holds substantial reserves of metals that may be permanently lost to industry if the continuity of mining them is broken.

"In these areas, and in these areas alone, Government support of minning may be justified under today's conditions. The O'Mahoney bill was written to provide for this sort of Government activity, both in exploration and in support of marginal mines or districts. The bill had the approval of the administration and of the Interior Department.

"For our part, we approved of the spirit of the bill, although we had misgivings on several features of it. For example, we doubted, and still doubt, the wisdom of giving such broad spending authority for subsidies to the Interior Department, which still harbors many outspoken advocates of the welfare state. Also, the bill, under its most recent proposed amendments, sets up a potential threat in the special stock pile of metals.

"In brief, S. 2105 was hastily written, and it left too much to the imaginations of its proposed administrators. But it did represent an attack on an industry problem that has to be solved sooner or later.

"However, when the bill went through committee, it picked up amendments that, among other things, made it mandatory for the Government to pay half the exploration and development costs of any likely prospect or any mine that produced less than 100 tons a month of combined copper, lead, and zinc. These payments were to be handed out merely on application, with only the simplest kind of prior investigation.

"The intent of these amendments was to help the small miner, an objective with which we are in complete sympathy. But the effect would have been to make possible a liberal dipping into the taxpayers' pockets that could hardly be justified as an act in the national interest.

"We are informed that, in a last-minute effort to secure passage, Senator O'Mahoney will offer new amendments, if S. 2105 reaches debate, that will require more thorough investigation of applicants for subsidies. Other features of the bill were to be modified as well.

"Despite these changes, however, S. 2105 still offers a threat, rather than a benefit, to mining. It is a hastily and loosely contrived piece of legislation. It lacks the support of even all of the industry elements who would receive its subsidies. And its justification as in the national interest is doubtful, where no doubt should exist.

"We look much more hopefully toward action on tax problems, such as outlined, or to a revival of the RFC mine-development loan, as solutions to the problems of the small miner.

"We would welcome, and we will assist, further efforts to bring to the mining industry governmental aid in these channels, or in the areas defined earlier in this editorial. But we cannot support an effort that we sincerely believe would in the end bring mining's house down upon its own head."

Mr. MALONE. Mr. President, I ask unanimous consent to have printed in the record at this point the letter from the Acting Director of the Bureau of the Budget to the Secretary of the Interior under date of August 15, 1949, which is printed in the Senate committee report.

There being no objection, the letter was ordered to be printed in the record, as follows:

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington, D. C., August 15, 1949.

The honorable the SECRETARY OF THE INTERIOR. MY DEAR MR. SECRETARY: This will acknowledge your letter of this date requesting the views of this Office on your proposed report to the chairman of the Senate Committee on Interior and Insular Affairs concerning S. 2105, a bill to stimulate exploration for conservation of strategic and critical ores, metals, and minerals and for other purposes. We understand from members of your staff that this replaces and rescinds your letter on this subject of July 28.

Your proposed report enclosed a redraft of the legislation which incorporates a number of points on which agreement has been reached with representatives of the Executive Office in discussions over the past several days. Pursuant to these discussions, you are advised that there would be no objection from the standpoint of the President's program to submission of your proposed report and redraft to the committee.

With respect to the provisions in your redraft concerning Federal aid for minerals production and for maintenance of mines in stand-by condition, it should be emphasized that this clearance is given with the understanding that such Federal assistance is designed solely for the purpose of conserving sources of essential supply which, as a practical matter, would otherwise be rendered unavailable in times of national emergency. From the standpoint of the President's program this assistance would not be acceptable on any other basis. Approval of the elements of production subsidy in your redraft should not be construed in any way as constituting an approval of subsidy for other than strictly conservation purposes. If it should become necessary for the Federal Government to take special action to relieve unemployment in the affected mining areas, other means would have to be found than the use of production subsidies. In this connection we should like to draw your attention to the provisions of section 4 (d) requiring the Minerals Conservation Board to determine the maximum and minimum prices which may be paid for purchases of metals or minerals. In assuring that such purchases are made solely for purposes of conservation, we believe it might be most advantageous to require that these price determinations allow only for coverage of the costs of operation and maintenance, without provision for net profit to the producer. The ultimate return to the producer rests in the long-run availability of his property, conserved with the assistance of the Government, for production and sale on the open market under more favorable circumstances. We have held preliminary discussions with your representatives on this proposal to bar profit allowances and while no conclusion has been reached and no such amendment is included in your redraft, we feel strongly that the committee should give this matter serious consideration. We note that the provisions in the redraft for these conservation aids are entirely disassociated from the Government's stock-piling program. The only relationship between the two programs is that materials acquired by the Government pursuant to conservation aids, are made available to the stock pile, if suitable to its purposes, on precisely the same conditions as are any materials privately produced for sale on the open market. We consider it most important, to assure accomplishment of the legitimate purposes of both programs, that the conservation of domestic mineral resources should remain entirely distinct from stock-piling for national security purposes. Under no circumstances should their separate objectives become confused in the process of developing conservation legislation.

As you know, it had been our view in the Executive Office of the President, that materials acquired by the Government in the course of the conservation program and not transferred to the national security stock pile should be sold on the open market as fast as they accrue, in order to avoid building up large Government inventories of a miscellaneous character. In place of a provision for automatic sale, your redraft provides that sales must be made only at prices which will return to the Government the average of prices paid for the material sold. The redraft further provides that sales may be made at lower prices, when considered to be in the best interests of the Government, taking into account costs of continued storage, so long as it is determined that such action will not substantially depress the market. In our view, these arrangements constitute the maximum departure from provision for automatic sale which could be accepted as a matter of sound policy.

We have discussed with your representatives the organizational status of the Minerals Conservation Board established under S. 2105. The language of the original bill and that of your redraft would appear to establish the Board as an independent agency of the executive branch. We believe that this is not intended and that it might create problems respecting the handling of appropriations as well as running counter to efforts, supported by the Commission on the Organization of the Executive Branch of the Government, aimed at reducing the number of separate agencies by grouping them under appropriate existing departments and agencies. Therefore, we suggest that serious consideration be given to amending the bill so that the Board would be an agency of the Department of the Interior and the Department be authorized to perform such housekeeping services as the Board may require. Appropriations for the expenses of the Board would then be made to the Department. Such an amendment should, of course, be so drawn as to safeguard the independent exercise by the Board of its substantive powers under the act.

In accordance with our understanding, a copy of this letter should accompany your report and redraft when submitted to the committee.

Sincerely yours,

F. J. LAWTON, Acting Director.

Mr. MALONE. I also ask unanimous consent to have the language of the Senate committee, on tax relief, as published in its report on the pending bill, be printed in the Record at this point.

There being no objection, the matter referred to was ordered to be printed in the Record, as follows:

"TAX RELIEF

"Cogent evidence has been presented to the committee that tax allowances for exploration and development costs are an effective means of attracting much needed venture capital into mining. The committee recommends, therefore, that the appropriate congressional committee undertake a study of the possibility of providing tax incentives for the domestic mining industry. However, it realizes the impossibility that any such action can be taken, or that its effects would be felt, in time to deal with the present emergency situation in respect to domestic sources of essential minerals and metals.

"S. 2105 provides a new approach to the extremely complex and difficult problem of developing our reserves and revitalizing our mining industry, which has been and is a cornerstone of our national economy in peace or war. Time is very much of the essence in the situation, and the committee respectfully urges prompt action on the bill.

"The favorable report of the Department of the Interior, signed by Secretary Krug, under date of August 15, 1949, together with the report of the Bureau of the Budget, are hereinbelow set forth in full and made a part of this report." The VICE PRESIDENT. The bill is open to further amendment. If there be no further amendment to be offered, the question is on the committee amendment, as amended.

The amendment, as amended, was agreed to.

The VICE PRESIDENT. The question is on the engrossment and third reading of the bill.

The bill S. 2105 was ordered to be engrossed for a third reading, read the third time, and passed.

81ST CONGRESS

1ST SESSION

EXHIBIT 6

S. 2105

[Report No. 1416]

Union Calendar No. 594

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 10, 1949

Referred to the Committee on Public Lands

OCTOBER 11, 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 the part printed in italic]

AN ACT

To stimulate exploration for and conservation of strategic and critical ores, metals, and minerals, and for other purposes

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 Act of 1949."

SEC. 2. (a) It is the policy of the Congress that every effort be made to stimulate exploration for and conservation of strategic and critical metals and minerals and other essential metals and minerals by private enterprise to supply the industrial, military, and naval needs of the United States, and that every effort be made to encourage the development and maintenance of sources of these metals and minerals within the United States in order to decrease and prevent, wherever possible, a dangerous and costly dependence by 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 maintain a sound and active mining industry within the United States; to expand exploration for those ores and other mineral substances which are essential to the common defense or the industrial needs of the United States; and to prevent the discontinuance of mine operations under such circumstances as to make it probable that production would not or could not be resumed when needed for the national economy or security.

(b) In carrying out these policies small mining enterprises shall be encouraged to apply for aid under this Act, and for this purpose the Secretary of the Interior shall provide small mining enterprises with full information concerning this Act, and shall make special provision for expeditious handling of applications from small mining enterprises.

SEC. 3. A Minerals Conservation Board, consisting of the Secretary of the Interior, the Secretary of Defense, the Secretary of Commerce, and the Secretary of the Treasury, is hereby established. The Secretary of the Interior shall be the executive chairman of the Board. The members of the Board may delegate their powers, functions, and duties, including those relating to appeals, to suitable officers of their respective agencies.

SEC. 4. To carry out the policy of this Act, the Board shall by regulation determine

(a) the amount of appropriated money to be allocated to the aid of exploration, on the one hand, and to the aid of conservation, on the other hand : (b) the amount of appropriated money to be allocated to the aid of exploration for any metal or mineral or group of metals or minerals, as specified by the Board;

(c) the amount of appropriated money to be allocated to the aid of conservation of any metal or mineral or group of metals or minerals, as specified by the Board;

(d) the maximum price or the minimum price, or both, which may be paid for the purchase of any metal or mineral for conservation: Provided, That adequate allowance shall be made for depletion and depreciation in computing costs of operation or maintenance;

(e) the maximum amount or the minimum amount, or both, which may be paid on account of participation in the costs of maintenance for conservation with respect to any metal or mineral;

(f) the maximum amount or the minimum amount, or both, which may be paid to any producer or class of producers on account of exploration for any metal or mineral or group of metals or minerals, and the ratio which the Government's contribution for exploration shall bear to the contribution of any producer or class of producers for exploration;

(g) the particular metals or minerals or ores thereof and specifications therefor that shall be eligible for aid for conservation;

(h) the particular metals or minerals that shall be eligible for aid for exploration; and

i) the time limits or dates within which contracts for aid for conservation shall terminate.

SEC. 5. (a) The Board shall promulgate such rules and regulations as may be necessary to carry out its functions and duties under this Act, and to provide fair and equitable treatment for all applicants for aid.

(b) The Secretary, subject to the rules and regulations of the Board, may prescribe rules and regulations for carrying out the provisions of this Act and which must be complied with by applicants for contracts under the provisions of this Act.

(c) The Secretary may delegate any of his functions under this Act.

(d) All rules and regulations issued under the authority contained in this section shall be published in the Federal Register.

SEC. 6. (a) Any producer may file with the Secretary an application for financial aid in carrying out a specified project for exploration or financial aid to conserve a deposit of ores or minerals. An application to conserve may be either for aid by participating in the costs of maintaining the property in standby condition or by purchasing all or any part of the metals or minerals resulting from production from such deposit. The application and the project for aid disclosed by the application must conform to the express policy and provisions of this Act and with the rules and regulations of the Board and of the Secretary: Provided, however, That simple contracts covering exploration projects shall be awarded upon application to small base metal mines and such contracts shall provide for the payment by the United States of one-half of the total reasonable costs of all tunnels, shafts, winzes, and raises in such a mine if the application or examination discloses that there is a reasonable promise of developing unknown or undeveloped sources of metals or minerals. All eontraets covering exploration projects shall contain provisions for repayment of the United States of sums paid by the United States pursuant thereto: liability for such repayment to be limited to payment of a reasonable portion of profits aceruing from production resulting from such expleration.

(b) The Secretary shall cause qualified mining engineers, geologists, and any other necessary technicians to make examination of and to report on each application, and to certify it to the Secretary either for acceptance, as presented or subject to specified modifications, or for rejection. In the case of a project for exploration, the examining experts shall certify whether the project offers reasonable promise of discovering unknown or undeveloped sources of metals or minerals. In the case of a project for aid to conserve a deposit or ores or minerals, either by participating in the costs of maintaining the property in stand-by condition or by purchasing all or any part of the metals or minerals resulting from production from such deposit, the examining experts, considering economic and practical factors, shall certify whether the project offers reasonable promise of maintaining in stand-by condition or in production, as the case may be, a property the production from which would, in the absence of financial aid by the United States, be discontinued or remain discontinued under such circumstances as to make it probable that for economic or technical reasons such production would not or could not be resumed when needed for the national economy or security.

(c) The Secretary shall either accept and approve the application, subject to any modification therein which he may require, or he shall reject it: Provided, That if the Secretary's action on the application conflicts with the recommendation and certification of the examining experts, he shall refer the application to the Board; and the Board shall either confirm and approve the action of the Secretary, or shall reverse it, or shall direct the Secretary to reconsider it. Confirmation or reversal of the Secretary's action by the Board shall be final, and direction to reconsider shall place the application in the same status it was in before action upon it by the Secretary. If the Secretary accepts the application, either in its original or modified form, the terms of the application and acceptance shall be merged in a formal, written contract. Any applicant who is dissatisfied with the decision of the Secretary upon his application, may at any time within thirty days after receipt of notice of the decision, unless further time is granted by the Board, appeal to the Board, and the Board, as expeditiously as possible, shall review the entire matter, make its findings thereon, and notify the applicant of its decision, which shall be final.

(d) All metals or minerals purchased under the provisions of this section, or such equivalent quantities thereof as may be permitted by the contract with the producer, shall be delivered by the producer to and shall be received by the Administrator of General Services at such places and times as may be provided in the contract. The Secretary shall transfer to the Administrator for the performance of his functions hereunder such funds as the Administrator, with the approval of the Director of the Bureau of the Budget shall determine to be necessary, in addition to any funds appropriated to the General Services Administration, for the proper performance of said functions. The Administrator shall from time to time, and in any event before selling them in the open market, notify the Munitions Board of the inventory of metals or minerals held by him under the provisions of this Act and shall continue to hold all metals or minerals received by him under this Act until at least sixty days after he has given the 99483-50-ser. 23-10