Document mmXmnvBN2ppqr8YopxXY0ngN0

L I A 2 15 8 9 Statement of Felix Edgar Iforaser, E* )U at the meeting of the KIHIHG AHD IcMAliUEG 1CAL SOCXETT CP AMERICA on Tuesday, October 15, 1948 Z am pealr'^g this evening solely as a member of the mining engineering profession* Ky observations nay, or may not, be shared by ay friends la the lead Industry* * Z aa afraid the gap between Evan Just's valued opinion and ay ora think- lng Is so aide, and so fundamental, that thore Is little prospect of bridging It* If Z understand him correctly, he Is willing to tolomte u large amount of Govern ment control for the mining industry in return for seme cecurlty. Z feel, on the contrary, that the very things he advocates will not lead to security but to suob a lost of our precious freedoms that the result would be most unpleasant* This question of security for all of us Is too broad a toplo to debate this evenings ^ but It slight well be a subjeot"for same future meeting* In these serious times Z think we aro ell justified in exerting our most strenuous but peeoeful efforts to remove Govor;;ient controls from the becks of the nooferrous metal Industry, controls that vividly demonstrate what they can do not only in the lead industry but also In meat, housing, and dosens of other lnstanoes* Z anticipate a strong drive to oontlnue certain oontrols but I hate 1lhkfciisdlMM......... m .... fsr >*MflfceWhdishs8a>'lh*lill ri n i f t m h * W t .ij-rw* r t m ^ W . r r iiiw f ^ t r ia ir t w i^ i t o w A A i . i'lmS'q w U iiU u i .*i,n<i in fci.nirfatti B i.l.g'im^^ V t to any one fron tho mining industry giro it any enoouraf.eaent, Tho C*P*A* has already announoed it* intontioa to reocccend to Congress an extension of Goverment oontrol* on Isad and othor ooeuodltie* noxt year* What doe* that noanf It signifies, in peacetime, continued inability to *oll load in the best market available, nationally or internationally, inability to purehc.ee foreign lead even though desperately needod, Inability to produoo many useful load produet* for whieh there my be an intense publio demand* It neasa having a Government agenoy decide whether white lead, shoot lead, ethyl fluid, and dosena of other items are to be produoed, and in what quantities, 1 think we hare had enough of the*e oontrol*, and that the sooner we get rid of then tho sooner will the lead industry grow and continue to serve the publio* I as confident that the lead industry doe* not eubseribo to Evan Just1* reocranondatlon of "producer ooopaote designed to stabilise production under Government's surveillance* The lead industry went all through that during KRA days* Then, and Z oelievo now, they want free market* and competition. Let ne also say a word on the tariff sines this is brought into the discussion by Ur* Just* Again I oust disagree with hie premise. The United States is not a creditor notion* This sray earns as a surprise to him* as lt/has ! to others, but the fasts are elear to any one who studies the statistical findlr^s of the Department of Ccmerce, or say, those of tho R.tlconl City fr"VT Tlt is no reason, therefore, why w* should redueo our moderate tariff protection* Z still think it is desirable to protect Aaerio&a labor by means of the tariff* During the business depression of the *SO's, I recall visiting the 1st* Senator Borah in Washington and disousslng with hia the Government's proposed BKA program for industry* Senator Borah advised then, quite wisely X felt, that we ought to solve our own problem, that introducing the heavy hand of the Government into our business would ultimately be regretted by us* The lead industry generally shared that opinion, and you my reoall timt the CMs of Fair Competition for the Lead Industry, when finally evolved, was a simple doou- +r*K* ( ,i,ii.iiiir:-i--r------ i>aawiy.'rcBg -. : _- ?w_r- '. LIA 2159 1 > 3 Mat - essentially a labor code, I boiler# that the lead industry hat not changed its views sinoe then and that it withe* to conduct lt affair* without Government wartime control* or "planning** I bcliera it want* a fra* caapeti* tiro market* I think it can be thown that wherever Government doe* enter into lndui trial relationships with bualn*** the prlae It generally *- epf Look at on production, profit*, laport* and price* the lead situation today* A* a rasult of Gorerment oontroiya severe shortage ha* been created with unemployment among uter* already visible* Gorerment oontrol* have been imposed on nearly all lead mining operation* in the United State* through subsidies dlctributed under a discriminatory premium price plan* The subsidised lead nines are forbidden by the Gorerment to earn more than a oertaln aergin of profit* Z don't knew anything bettor calculated than this to destroy incentive. Observe how the Government oontrols on wages, on expert* and Imports* and Goverment control* on prlees all interlock* and how the establish ment of one oontrol, to become effective, lead* to the imposition of another* and o on. 0*?*A price control required the establishment of aubaldiet* and eublilies required control* on wages. If anyone/feels that th* functioning cf c peacetime subsidy plan is a simple proposition with the mining operator on tho receiving end* and without any sacrifice on his part* I think be will be disappointed* t h e pgErrai raics run It is said that the prealua prioe plan has saved the ooustry hundreds of millions of dollar* and impressive figure* are advanced to prove the point, but -- I note they invariably leave off any mention of the fact that. If there hod net been a discriminatory price system, but a flat prealize* or no premium, the Gorerment would have reaped large sums in the fora of taxes, fra* the Zowooet produoere* or*iy needed to defray the oost of an expenalve war* On balance* Z do not think the *haring for tho*e who defend the premium prioe plan 1* as oo**> Tinclng as they try to make it# ^V|W,Lfe ... Jill I).." it.--neeuuni^M'iii.pmi'nii ij j j iu u ..m y* jHi'i1'JjWJt.'^iT'l-JWi'.'HfUJ.y*m^i'liiv' ' ,.<,,. ---- ; '1v 4 zl^q 2' _ <2 4 If we are to continue to have the Gore~nment participate in oar lnduat.-y through the peacetime granting of subsidies, then the mining industry ought to drlee for e uniform type of aubsldy, 2 do not *ee why the wining industry should here a subsidy system different from that given agricultural interests. Ho oattle raiser during the war was asked to disclose his profits and have his oattle subsidy patterned on his individual profit position, nor did any dairy receive suoh treatment* But the mining Industry did, and I think It is discrimination against the much smaller nonferrous mining industry# Every pound of lead produoed, regardless of where it originates, should receive the ease subsidy per unit of wdight. That would be a much fairer system, in that it treats all operators alike no natter where they are situated, Why should the lead from, say, Utah, oomsaad more than the lead from Missouri, or rice versa! Flat premium would talcs away the decision as to the slse of a aaotal subsidy from some human odealttee, working under highly oamplloated formulae, and the possible Introduction of emotional factors in their decisions, to the ^tomatlo operation of a uniform subsidy much more easily adminlsterable* More importantly, it would not destroy the inoentlve to produce efficiently. In addition, the more profitable operations would pay larger taxes to tha Govern* meat and thereby help to reduce the public debts Some lead mining companies receive no premlua frea the Government and are compelled to sell their output today at the oeiling price of 8.25/ per lb, although they could obtain 10,26/ in the world market. This situation is par* tleularly unjust as the Government, at the same time, is purchasing heavy tonnages of leed frem Uexloo and other countries at 1* 0.26/ per lIb, with no questions on profits asked, sad reselling It la the United States at 8.26/, absorbing the 2/ per lb, loss. Why shouldn't our own people receive treatment equal to that aooorded the Mexicans! What kind of a subsidy system is this tMt favors the nationals of other ecuntrles at the expense of all of us! Of course, when the Administration's polloy Is to subordinate everything else to the sain* .ivyuiej.ni'nmswifmeii wj. ih'j auiii; i> : / *'-* ' `- --y&Ln.i..*' , .. LIA21593 -6tenanoe of a fixed low cellin' price end pertly oertellies the world loed eoonomy, we run Into euch discriminatory praotlce* And note whet happens to the lead ooaauaer under the subsidy end Ocvsrnnent cartel eyttea* You may here reed In the newspapers how seme lead manufacturers here already been foroed to shut down for look of lead* In anticipation of this unpleasant prospeot, and anxious to keep their men at work* a few hare approached Washington for permission to Import lead privately, with the understanding that they would obserre dooestlo oeillnga, and would absorb any loss Involved Inthe purohase of higher oost foreign lead* Their pleas were denied* Naturally, no other deolslon oould be expeeted voder the existing system when every thing oust revolve around the prlee oontrol axis* Lead mining ecopanies receiving an arerago price of loss than 11*311 per lb. (or the world market price of 10*23/ plus the emergency tariff of 1*03/) can contend they for their output today* including the benefit cf any premiums,/are not being subsidised, tor they eould obtain that for their production la an open market* They are being saorlfleed on the altar of prioe stabilisation* Therefore, only those mines averaging more than 11,51/P*r lb. for their lead may be raid ' to be subsidised by the Government* The present discriminatory prsluu[ p*ioe J plan works to the detriment of the low cost efficient producer, for the Governmeet denies the noapreaiun, and lov-premiiw mines, the opportunity in peacetime of selling their production in the best market available* Moreover, no natter how hard the subsidised mines may work to reduos their oests* whieh might be refleoted in greater profits, the effort would oeoo to naught because the Oovwrment would sake a prompt adjustment in oach quota as profits improved^ This goes against the grain of the mining onglneer trained under the free enterprise system who feels that his responsibility it to help procure the utmost In value in exploiting a resource that oan only be mined ones* Only by dint of extraordinary effort have the silver minors, who were sueoessful in procuring sa advaroe in silver prioe from 77/ to PC/ been able to J L1A 2159 4 prooure a refleqtion of the silver price in thoir quote calculations* Until rooently thoy reoeivod no oredit for their ellror oontent whatsoever* Sone months ego, prior to appearing at ft Senate Committee hearing, X canvassed both large ana snail lead miners in the United States to learn their sentiment toward the current subsidy system and to inquire whether they favored a return to a free market* X found they were all in favor af an open and unsubsidised load market. They were quite willing to faoo the possibility that they nay, at sone tine in the future again have a period of low prioes, possibly forcing sone to shut down* After all, they have lived through simi tar periods in the past, and survived, and they believe they can do so again* Just now when lead is soaroe and proedses to be so for ths `foreseeable future" tho minora do not have any marketing problem, but X don't doubt but what the shoe nay be on the other foot in a matter of years* X an sure that one ef these days they shell want oustoners again] With suoh a wonderful netal to sell as lead, tho minors oan then do what they have done in the past, use their cca bined resources to promote the netal for berth old and new uses and stimulate / markets to keep the nines busy* I think that is a such sounder system for ths lead industry than to lean upon a Gcvornaont crutch, either in tines of adversity or during -enoral prosperity* The C.I.O* Halted Itine, sU.ll and Saoltor Workers Union has publicly deolared itself in favor of nationalising the nonforrou* netal nines in the United States, by which X take it thoy want the Government to purchase then, so that the Union will work for the Government and not for private capital* If that should happen X piesuae the need for a union would dinappoer* X note also that tho sane Union is strongly In favor of a continuation of the present oceplioatod subsidy plan for nonferrous notals* It is quite easy to grasp why this should be so* Under the ourrent promise prloo plan the Unions oan demnd whatever labor rate they see fit, and rely upon the Gororaaent, through liberal quota treatment, to make up the Increased cost* V ' ........... ' Ll^l^ iwr 1m I believe that those employers who ar* inollned to fiver RubsIdiot ahould thick twiee before they fall in tho snare of thi* toalalittlo thinking* It it quite oonoelvabla that a continuation of tho present subsidy system will increase the cost of mining la tho Onltod States to oueh on extent that tho ? nonferrous metals will bo prioed above the world market, and out of their ' in - regular outlets, with serious unemployment threatened during any business rooessian* I sympathise with those producers who have been roociring up tc -v.^ 16-3/4/ por lb* for their lead, 17-1/2/ for sine usd 28/ for oopper and. who 3ut fear the future will vritnese a period of low prloes, /why should they despalrf .., Copper, lead and lino to ay mind have a bright future* Extraordinarily largo amounts of these metals trill be required for our eoonomy which it beginning to i iaAA wake up again after a long sleep during the *50*s* I don't knew where the metal will oamo from, especially load, which will havo now responsibilities thrust upon it when tho atools power age begins in earnest* I don't think any cue oast say that tho possibilities - or markets, if you prefer - for those great servants i of mankind have been fully exployed* TThy not, then, cultivate them Intensively, creating suoh a demand that the prloes will be satisfactory to nearly everyone 1 Because of the present terrlfio business readjustments the probabll- lties ore good that sons of the markets these three nonferrous metals have enjoyed for years will vanish in whole cr in part as a result of high postwar prices and because cheaper substitutes are now ready to take over* We must mot . forget, hearever, that nonferrous metal prices are not high in comparison with the general price level* Lead, today, should be selling at close to 11/ per lb# . when ooapored with the Bureau of Labor Statlstios index for all ooonodities, and at 13*6/ when ocapared with the index for farm products* . Instead the oelllng is 8,28/. In oonoluslon, I have an idea that most of my want and adventurous mining friends, deep down in their hearts, when they refleet upon the subsidy WBwapqjs.im;pi'ij  t '.3WBa<^ti<a)ri^'T>^^]|g> Fy< f!y!<yll|tfy' *!f!yygJ<fiwja;ffi"wy;^i~Mj^ ^fWWaaftJClijlBaitlo--11X1 1 n' ' . LIA 21596 0 problem, have distlnot reservations about tho wisdom of permanent pee ostime subsidies# If they insist upon subsidies for theasslres X suppose they are prepared to grant a similar right to the marginal petroleum producer, or to the numerous nometallio industries frees fluorspar to talo, so indispensable in war as in peace, or to the lumber industry and others# Xf that is the kind of a sea on whioh they with to enbark, they will hare to excuse me for staying behind# X would prefer to be ooaneoted with a line of work that will continue e the tradition of free enterprise that made Icaerioa great# lfaybe that's reaction ary thinking today# But xf it is reaotion to steer away from socialism, or .fee beginning of tho compulsory state, I an proud of the designation# Only I shall be keenly disappointed that some in sty profession, so noted for pioneering and adventurousness, end for its resourcefulness, hare become soft, and under ths siren slogan of security arc saerlfieinr their independence and enterprise# / j ry Bgai.yjr j j .j w .i pwmi i t