However, the Government takes the position that the cost of transporting shell from the middle of the bay or lake or wherever it is dredged to land is not a part of mining cost.

We contend that it should be so treated, and that to have it so treated, the law should be clarified.

There is presently before the committee H. R. 2034, which was introduced at the first session by Mr. Thompson, of Texas. Still another bill, H. R. 1067, was introduced. I am not sure of the status of these bills.

H. R. 2034 covers our situation quite nicely. It provides:

In the case of mollusk shells (including clam shells and oyster shells), the term "mining" includes so much of the transportation of the shells from the point of extraction from the deposit in a bay, lake, or other body of water to the dockside plant or mill of the mine owner or operator, or to a dockside sales point, as is not in excess of 50 miles.

That language would take care of the situation in the oyster industry which we feel under present interpretation is inequitable.

The CHAIRMAN. Mr. Trenam, we thank you for your appearance and the information given to the committee.

Are there any questions?

Mr. Mason will inquire.

Mr. MASON. Mr. Trenam, your problem in your case is a parallel problem and case to the situation the fire clay people face.

Mr. TRENAM. Yes, sir.

Mr. MASON. What constitutes the cost of mining this 5 percent applies to them.

Of course, you do not realize any money until it is sold, until at least the preliminary process to put it on the market is completed.

Mr. TRENAM. Yes, sir.

Mr. MASON. So I have real sympathy with you and your problem, simply because while we do not have any oyster shells, we do have a lot of fire clay and cement and other things that are in the same boat, we will say. Talking about oyster shells, you would probably use the word "boat."

I have great sympathy with you, because it affects many industries in my district.

Mr. TRENAM. Yes, sir. Thank you, sir.

The CHAIRMAN. Are there any further questions?

If not, we thank you.

Our next and final witness this morning is Mr. Horace M. Albright. Mr. Albright, would you come forward and identify yourself for the record by giving your name, address, and the capacity in which you appear?

STATEMENT OF HORACE M. ALBRIGHT, UNITED STATES BORAX & CHEMICAL CORP.

Mr. ALBRIGHT. Mr. Chairman and gentlemen of the committee, my name is Horace M. Albright. I am appearing on behalf of the United States Borax & Chemical Corp., which owns and operates at Boron, Calif., the world's largest known deposit of borax.

The CHAIRMAN. Mr. Albright, can you complete your statement within the 10 minutes allotted to you?

Mr. ALBRIGHT. Yes; I can.

The CHAIRMAN. Without objection, your entire statement will appear in the record.

Mr. ALBRIGHT. Thank you, sir.

In part, this company is the old Twenty Mule Team Borax organization. May I express the gratitude of my associates and myself for the opportunity you have given us to make this appearance before

you.

Under the present law, section 613 (b) of the Internal Revenue Code of 1954, more than 30 minerals, classed as strategic and critical, are allowed percentage depletion at a rate of 23 percent, if they are produced from deposits in the United States. Borax, however, is allowed percentage depletion at a rate of only 15 percent under the present law. As used in the statute, the term "borax" means any boron

material.

Newly developed uses of boron, of vital importance in connection with our defense program, clearly qualify borax as a strategic and critical mineral and entitle it to be included with the other minerals receiving percentage depletion at the 23-percent rate.

While much of the information concerning the present and potential use of boron for defense purposes is classified and details cannot be revealed, we understand that boron is the basic ingredient and of the utmost importance in the production and future improvement of high-energy fuels for jet aircraft, rockets, guided missiles, and other defense items, and for certain atomic applications.

As stated in Time magazine, the issue of June 10, 1957, page 88:

To the housewife, borax is merely a household cleanser, but to industry it is the chief source of boron, a new wonder element and jack of all trades that can be used in everything from drugs and plastics to the superpowered rocket fuels of the future *** The most exciting new use for boron is in exotic fuels, in which it is joined with hydrogen or other elements to generate infinitely greater power with less volume than present fuels. Boron's principal value in high-energy fuels is its ability to bind hydrogen into a liquid or solid form, thus harnessing hydrogen's energy (52,000 B. t. u. per pound against 18,500 for kerosene). The United States Defense Department has already invested $100 million in high-energy fuel development.

More than 90 percent of the free world's production of borax is obtained from deposits located in the United States, in the desert areas of California. It is certain that the demands for borax and its boron derivatives in the immediate future will result in an increasing rate of depletion of these deposits.

Production of borax in the United States has more than tripled in the past 10 years, and it is expected that the demand, now approximately 1 million short tons a year, will more than double during the next 10 years. It is important, in order to assure an adequate supply of borax for civilian and defense needs, that the discovery of new borax deposits and the complete development and exploitation of known deposits be encouraged.

It is pertinent to note that the Federal Government, through the United States Geological Survey, has recently completed a program of drilling core tests in search of more boron-bearing minerals. Granting the 23 percentage depletion rate to borax will encourage discovery and development of boron deposits by private enterprise, and will place borax on a tax equality with other strategic and critical minerals now receiving depletion at the 23 percent rate.

I have prepared an appendix, which I ask be inserted in the record for your consideration, which sets forth additional data in support of an increased rate of percentage depletion for borax, including facts as to the known commercial deposits and the present and potential uses of borax. At the end of the appendix is a draft of an amendment of section 613 of the Internal Revenue Code of 1954 to provide percentage depletion for borax at the 23 percent rate, effective for taxable years ending after June 30, 1958.

May I ask, Mr. Chairman, that that appendix be included with my statement also.

The CHAIRMAN. Yes, together with the draft of the proposed amendment.

Mr. ALBRIGHT. Thank you, sir.

(The appendix and draft of proposed amendment are as follows:)

APPPENDIX

KNOWN DEPOSITS OF BORON

Boron materials are not abundant in ores or brines. The occurrence of boron in the earth's crust compares with some of the more important materials now receiving a 23 percent depletion allowance as follows:

Boron ores are found in various parts of the world-in Turkey, Argentina, Chile, as well as in the United States, but the richest, i. e., sodium borate, is found in volume only in the United States.

Ore bodies are not large in foreign lands and consist of deposits frequently difficult of access, expensive to refine, and consequently not generally competitive in the world's markets.

Except in the case of Turkey, the deposits are remote from civilization. In South America the boron ores occur in very high altitudes or in regions with wholly inadequate transportation facilities for exploiting them. There is boron mineral production in Russia and on its borders and under its influence. While the extent of the Russian reserves is not precisely known, it is believed that these are considerable and new discoveries were reported in 1957. Borates also exist in Tibet, now under Russian and Chinese control.

So far as is known, American interests do not own or operate any of the foreign deposits of boron, and it is believed that none of the income from the foreign deposits is subject to United States income taxes.

Here in the United States, boron resources which can be economically exploited in peacetime are in the desert area of California in Kern, San Bernardino, and Inyo counties. The sodium borate mine at Boron, Kern county, is owned and operated by the United States Borox & Chemical Corp. About 60 miles north, borax is produced from brines at Searles Lake, by the American Potash & Chemical Corp. and by Stauffer Chemical Co. Domestic production of borax in the United States from other deposits is nominal.

USES OF BORON

Uses for boron chemicals, principally borax and boric acid, have been many and varied. Over 100 exist. Best known to the people generally are the packaged products—borax, boric acid, and soaps, et cetera. However, of far greater importance are the needs of the industries engaged in glass (including fiberglass) and porcelain enamel production. More recently, borax has become a fertilizer material of immense value in certain crop cultivation, and as a deterrent to weed growth when used in larger quantities under controlled conditions.

Also, borax has important fire resistant properties, and the most recent use in this connection has been in the control of extensive forest and brush fires. The future uses of boron, the potential demand for it in elemental form, in new organic and inorganic chemicals are under much discussion at the present time. But data on the research on many of these new chemicals and uses for them is classified and details cannot be revealed. As previously stated, however, boron is of the utmost importance in the development of high-energy fuels for jet aircraft, rockets, guided missiles and other defense items, and for certain atomic applications.

In a press release dated March 8, 1957, approved by the United States Navy Department on the occasion of the ground-breaking ceremonies at Muskogee, Okla., for the new high-energy fuel plant being built by Callery Chemical for the Navy, it was stated by Dr. Schechter, vice president of Callery, that:

"HiCal" (Callery's trade name for the boron-containing fuel) can be used in several different ways. The greater energy can extend the range of an aircraft, reduce the weight of the airframe, increase the payload or improve tactical performance such as speed and climb.

"In addition, HiCal can be used efficiently at altitudes where ordinary fuels will not burn. With HiCal, it may be possible to extend the area covered by carrier-based aircraft or missiles several times. In-flight refueling of aircraft may be reduced by using the high-energy fuel.

"Although the Navy, along with Callery, pioneered in developing the highenergy fuel, the United States Air Force currently is engaged in a program of high-energy fuel production to meet its own requirements. The programs of the two services are closely coordinated.

"HiCal is a combination of three basic elements-boron, carbon, and hydrogen. With this combination, hydrogen-a gas that burns with a greater heat or combustion per pound than any other pure material-is chemically locked in a liquid form. In this state it is easy to handle and transport, and it can be burned with greater safety.

"Boron, which is found in the natural state in borax, is the most efficient carrier of hydrogen. In addition, it is light in weight and also burns."

The Air Force is already receiving high-energy fuels made from chemical compounds of boron, and it is expected that such fuels will ultimately be used in civilian airplanes. In the Wall Street Journal of July 10, 1957, in an article entitled, "Air Force Getting High-Energy Fuels Using Boron," it was stated: "Olin Mathieson Chemical Corp., announced it is now shipping new highenergy fuels' to the Air Force. The fuels are made from chemical compounds of the mineral boron, which is derived from borax, once used mainly in household cleansers.

"The new fuels will be used in military aircraft and guided missiles. They represent a major advance over conventional fuels, such as gasoline, because they produce about twice as much energy per pound as fuels derived from petroleum, Olin said.

"Olin calls its high-energy fuels HEF-2 and HEF-3 and says it has completed research on an even more powerful fuel called HEF-4. The exact composition of the fuels is not stated, but it is known that they contain the chemical compounds of boron called pentaborane and decaborane. The light metal lithium is also an ingredient in some fuels. But the company did not say whether it is using lithium.

"Although all the output of the new, high-energy fuels is now going to the Air Force for use in planes and missiles, they will also have uses ultimately in civilian airplanes. Brig. Gen. C. H. Mitchell of Wright Patterson Air Force Base at Dayton, Ohio, said recently he could visualize the use of the new fuels in the not too distant future' for transporting civilians in planes nonstop from one point to another 'over distances heretofore considered impossible'."

On December 24, 1957, the Wall Street Journal published another report which is quoted here.

"The Air Force awarded North American Aviation, Inc., a contract to build the first models of an intercontinental bomber designed to fly at speeds over 2,000 miles an hour with the powerful thrust from a new chemical fuel.

"The award for making prototypes of the craft, designed to fly at better than twice the speed of sound, ended a two-company competition between North American and Boeing Airplane Co. that had been underway since development efforts started 2 years ago.

"Producing prototypes of the craft, known as the WS-110A, will benefit other concerns besides North American, which will build the airframe. General Electric Co. is believed to be contractor for the engines that would go into the planes,

and Olin Mathieson Chemical Corp. has been developing 'exotic' fuels for the Air Force.

"Although the Air Force disclosed no dollar figures in announcing the North American award, it's understood about $90 million has been earmarked for the whole project-airframe, engine, and fuel work-for the current fiscal year. which ends next June 30.

"The plane, described by the Air Force only as a craft that could fly long distances as far as range is concerned, is understood to have about the same 6,000mile capability of the long-range B-52 bomber, which has a speed of about 700 miles an hour. The Air Force's most advanced current bomber, the B-58, has a shorter range but can fly at a reported 1,300 miles an hour.

"Besides superiority in speed and range, the WS-110A would fly at ceilings of over 70,000 feet, the Air Force said. This is 20,000 feet higher than the B-58's ceiling.

"Service officials made no comment on whether the new craft is expected eventually to replace the long-range B-52. They noted the WS-110A still must be fully developed before quantity production can begin. North American's initial job, they declared, will be to produce one or more prototype planes leading to fullscale output later on.

"Fuel under development

"Actually, the new chemical fuel to be used by the new craft is still under development, with Olin Mathieson Chemical Corp. doing the main work. A Pentagon spokesman described the liquid fuel as a super-strong ‘exotic' compound containing boron, which has inherent high-energy properties. This type of fuel, whose development is also sought for use in ballistic missiles, is said to provide a more powerful thrust than conventional petroleum-based jet fuels.

"The 'chemical' bomber will be able to use advanced conventional fuels if the new exotic fuel isn't ready at flight time, according to an Air Force official.

"North American's design-development race with Boeing for the WS-110A swung into the 'advanced competitive stage' last October. Air Force Secretary Douglas made the final decision on giving North American the production contract after unanimous recommendations up the line from various service units, an Air Force officer said.

"J. H. Kindelberger, chairman of North American, told a reporter on the west coast that it would be at least 2 years before the prototype project resulted in 'very much' of an increase in employment at the company's Los Angeles plant. 'A lot of research and development work lies ahead of us,' he declared.

"Most important' contract

"The North American executive described the contract as 'the most important one we have ever landed.' He said some new construction would be entailed in connection with the chemical bomber project but declined to elaborate. He added that it will be 'months' before some confusion as to the number of prototypes to be built is cleared up.

"Boeing President William M. Allen expressed disappointment over losing the award. In a statement issued in Seattle, Mr. Allen said, 'We feel we submitted an excellent design and that we are in position to do an outstanding job for the Air Force.' But he congratulated North American, promised Boeing's 'utmost effort' on current contracts and said the company will 'aggressively pursue other projects which we are seeking to deevlop for the future.'

"Lt. Gen. C. S. Irvine, Air Force Deputy Chief of Staff for Material, last month disclosed a decision was a few weeks away on which company's design was to be selected. He described the WS-110A as 'truly intercontinental-able to make round-trip runs to the target without refueling.'

"Another new aircraft he said the Air Force plans to produce is the F-108 interceptor plane, also to be manufactured by North American. The company got a development contract for this craft last spring.

"Power of new fuels

"Industry sources figure such high-energy chemical fuels as ones made from boron and hydrogen can produce as much as 1% to 2 times as much thrust per pound as petroleum-derived fuels. A ramjet test missile, believed to be the guided Snark, and using these fuels, recently is understood to have flown more than 3 times the speed of sound, or better than 2,000 miles an hour.