remain the same. As an example, on applying the formula, it may be found that 500 tons of manganese is equivalent in value to 100 tons of lead on the effective date of the act, in which case, the mine which has an average monthly production of not more than 500 tons of manganese would be classified, throughout the life of the act, as a small mine for the purpose of providing simple exploration contracts to small manganese mines.

DISPOSITION OF MATERIALS PURCHASED

All minerals and metals, or equivalent quantities thereof, purchased under the provisions of the bill are to be delivered by the producer to the Administrator of General Services (sec. 6 (d)). Inasmuch as only the largest producers own the smelters and processing plants, it is apparent that the Board or the Secretary of the Interior must arrange with the smelters and processing or treatment plants to accept the ores of other producers and either treat the ores on a toll basis or, as agents of the Government, accept and pay for the ores stipulated in the producers' contracts and return an equivalent quantity of the minerals or metals to the Administrator of General Services. However, other simple means of accomplishing the end result may be devised.

All materials purchased under the provisions of this act shall be offered to the Munitions Board for transfer to the national security stock pile. Unless notified by the Munitions Board to transfer any of such materials or to continue to hold them until 60 days after the next succeeding appropriation for stock-pile purchases becomes available, the Administrator of General Services shall sell them in the open market if and when open-market prices will return to the Government at least the approximate average price paid by the Government for the metals or minerals, and only in such quantities as will not materially depress the market (sec. 6 (d)).

All money received by the Administrator of General Services from such sales in the open market shall be for deposit in miscellaneous receipts of the Treasury. Any transfer of minerals and metals to the national security stock pile shall be covered by a transfer of stock-pile funds to miscellaneous receipts of the Treasury in amounts approximately equivalent to the cost of such materials if purchased in the open market at the time of transfer (sec. 6 (d)).

FINANCIAL AND TIME LIMITATIONS ON CONTRACTS

Section 6 (c) provides that all contracts entered into under the provisions of section 6 shall contain an express provision that they are subject to the availability of appropriated money.

Section 6 (f) provides that no contracts shall be entered into for a period exceeding 2 years or after the expiration of 3 years from the effective date of this act. The committee notes that it would be possible for a producer to obtain two successive contracts for a total of 4 years' duration, and that all contracts must be terminated 5 years from the effective date of this act.

The first provision means that a contract may or may not be worthless after it is obtained by the producer. Certainly the Government would not expect results if such a clause were inserted in its contracts with industry or with foreign producers of minerals and metals, through ECA contracts.

The second limitation also inhibits the effective planning of going operations and prohibits the resumption of production from many closed and abandoned mines. Whereas the maximum length of a contract is 2 years to domestic producers, the ECA recognized the need of long-term contracts to develop foreign sources of minerals and metals and obtained from Congress the authorization to enter into 20-year contracts with foreign producers.

Although a 2-year contract probably would be adequate for most exploration projects, a 2-year conservation project contract, with the possibility of a second 2-year contract, is not calculated to encourage the development of new or abandoned properties which often require three or more years to attain capacity production under ideal conditions. It is like offering a 2- or 4-year contract to a farmer for the crop from an unplanted orchard that requires 5 or 6 years to bear fruit.

AUTHORIZED APPROPRIATION

The bill authorizes an annual appropriation of not more than $80,000,000 for carrying out the provisions of the act, including payments to producers for exploration, maintenance, and production, the costs in whole or in part, of the func tions of General Services under the act (sec. 6 (d)), and the costs of administration, such funds to remain available until expended (sec 9).

ANALYTICAL INFORMATION FOR APPLICANTS

Each producer shall have access to a complete file of all copies of all calculations, analyses, and determinations used as a basis for approval, modification, or rejection of his application. Each producer shall be furnished a copy of each such analysis (sec. 10 (a)).

REPORTS TO CONGRESS

The bill provides that the Secretary shall make annual reports to Congress. Such reports shall include current and summary information detailing the activities and results obtained and anticipated pursuant to the act, and such other pertinent information concerning the administration of the act as will enable the Congress, to evaluate its effect and the need for amendments and related legislation. The reports are to be made on April 15, 1950, and February 15 of each succeeding year. It is anticipated that the filing dates will permit the inclusion of operating results to March 1 or 16, 1950, and to January 1 of each succeeding year.

ADVANCE PAYMENTS FOR EXPLORATION PROJECTS

The Secretary is authorized to make advance payments on approved exploration projects, in such amounts and on such terms as he considers appropriate, where the producer certifies the need for such advance payments as working capital. Advance payments received by producers are not to be commingled with other funds and shall be subject to post-audit.

It is apparent to the committee that few small producers would be able to proceed far with an exploration project without the advancement of funds from the Government's stipulated contribution to the project. Furthermore, a portion of many a producer's share in an exploration project may be in the form of his personal services and equipment, supplies, and utilities furnished rather than a direct money outlay.

CONCLUSION

The committee is acutely aware of the deplorable condition and requirements of the domestic mining industry and the many problems encountered in and the time required for the exploration, development, and production of ores from the mines and undeveloped mineral deposits in the United States. Earlier in the session, the committee carefully considered and reported out H. R. 976 which more nearly meets with the requirements of the mining industry. Although H. R. 976 was considerably weakened by provisions designed to meet the principal objections voiced by the departments and agencies it failed to pass the Rules Committee as a result of continued dissatisfaction of the bill by the departments and agencies.

S. 2105, a substantial portion of which was drafted by the Department of the Interior and the Bureau of the Budget in consultation with other departments and agencies, while not meeting many of the essential requirements for creating and maintaining a sound and active mining industry, will provide material, although temporary, assistance to some mines of the United States which have closed or may close in the future unless Government assistance is extended at this time.

Inasmuch as S. 2105 in its present restricted form is the only bill endorsed by and meeting with the approval of the executive branch of the Government at this time, and inasmuch as the bill provides a measure of desperately needed assistance for the domestic mining industry, the committee unanimously urges the acceptance and passage of the bill at the earliest possible moment.

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. DEPARTMENT OF THE INTERIOR,

Hon. JOSEPH C. O'MAHONEY,

OFFICE OF THE SECRETARY, Washington, D. C., August 15, 1949.

Chairman, Committee on Interior and Insular Affairs,

United States Senate.

MY DEAR SENATOR O'MAHONEY: Reference is made to your request dated June 20 for a report on S. 2105, a bill to stimulate exploration for and conservation of strategic and critical ores, metals, and minerals, and for other purposes,

which has been the subject of several informal conferences between members of the staffs of your committee, of the Bureau of Mines, and of the Bureau of the Budget.

It is the opinion of this Department that S. 2105 as first introduced (not the committee prints of July 13 or August 6) is the best measure yet presented for providing a system of incentives to encourage private industry to explore for and to conserve deposits of strategic and critical mineral resources or other essential mineral resources. However, the consideration given to S. 2105 by the groups referred to above has revealed the desirability of perfecting a number of the details of the bill. To accomplish this purpose a suggested revision of the provisions of the bill is enclosed with this letter. This Department recommends that S. 2105 be enacted substantially in the form of this suggested revision.

Two major purposes are embodied in this measure. The first is to stimulate exploration for metals and minerals. The second is to promote conservation of mineral resources by maintaining either in stand-by condition or in production submarginal properties containing valuable minerals or ores the production of which would, in the absence of financial aid by the United States, be discontinued or remain discontinued under such circumstances as 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. Exploration would be promoted by direct participation by the Government in the costs of exploration projects. Conservation would be accomplished either by contributing to the costs of maintaining properties in stand-by condition or by purchasing the products of submarginal mines at prices that would enable them to continue in production. The broad policy determinations which must necessarily be made from time to time in order to permit the effective application of the bill to changing conditions would be placed in the hands of a board composed of the agencies best qualified to pass judgment on these matters: The Departments of the Interior, Defense, Commerce, and Treasury. The day-to-day administration of the bill, including the approval or disapproval of applications for financial aid from individual producers, would be placed in the hands of the Secretary of the Interior, subject to the policy determinations of the board, and subject to the right of the producer to appeal from the action of the Secretary to the board. The Secretary would be required to conform his action upon applications to the recommendations of suitable experts, or if he disagreed with their determinations, to submit the matter to the board for determination.

The bill, in its proposed amended form, would completely divorce all activities under it from activities under the Strategic and Critical Materials Stock Piling Act (60 Stat. 596), except that the stock-piling authorities, at their option, could acquire for the national-security stock pile any materials purchased under the terms of the bill which conform to stock-piling specifications. Materials which are not taken over by the stock-piling authorities would be sold by the Administrator of General Services in the open market (1) if and when open-market prices will return to the Government at least the average price paid by the Government for the metals or minerals, or (2) at current prices at such times and in such quantities as in the judgment of the Administrator would not injuriously depress the market and would be advantageous to the United States, taking into consideration the cost of continued storage. Inasmuch as any materials purchased under the bill for purposes of aiding conservation would necessarily be bought at prices higher than those current at the time of purchase, it is believed that the restriction on any sales in the open market at below cost, except under the circumstances indicated, would tend to prevent any depression of the market when prices are low and would also tend to put a damper on prices becoming inordinately high.

In general, it is believed that S. 2105, with the perfecting changes here suggested, would establish workable procedures for aiding private industry in exploring for new sources of metals and minerals, and in conserving essential mineral resources. It is also believed that, with these changes, S. 2105 would meet, insofar as practicable the expressed desires of the various interests involved.

It is obviously impossible to make any estimate in advance of what production might be eligible for financial aid or what applications might be made for Government participation in exploration projects. Under these circumstances, no estimate is attempted of the probable costs of carrying out the provisions of the bill.

The Bureau of the Budget has advised me that there is no objection to the presentation of this report to your committee.

Sincerely yours,

Secretary of the Interior.

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.

EXHIBIT 8

HOUSE DEBATE ON MOTION TO SUSPEND THE RULES AND PASS S. 2105 [From the Congressional Record of Monday, October 17, 1949, vol. 95, No. 194] HOUSE OF REPRESENTATIVES

EXPLORATION FOR CRITICAL ORES, METALS, AND MINERALS

Mr. ENGLE of California. Mr. Speaker, I move to suspend the rules and pass the bill (S. 2105) to stimulate exploration for and conservation of strategic and critical ores, metals, and minerals, and for other purposes, as amended.

The Clerk read as follows:

"Be it enacted, etc., 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 Untied 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 for 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