Document qdBygqXMo000goZ2bvwnwo4Nn

j iw --p mh w i) jin ji.i.ijjiiiiiipiwi g,<p^wpg|iawi8i^^ " l 1^2A87 'fw.- -ka- .> . i *. fifc.'fca ' ~ `~"-- LEAD INDUSTRIES ASSOCIATION 410 UDUNOTON AVtNUX NKW TOM 17, M. V. July 14, 1949 To henbors of the lead Industries Association: SOEJECT: TENTATIVE DRAFT OF STATEHEWT FOR SCUTS COJCilTTEt 6ti ll.'tnjOR AN& INSULAR AFFAIRS ---------------------- tentative draft of a statement to be filed by the Association rtth the Senate Com?lt^?rn-i?twrior,and Insu'r Affairs on S. 840 and s, *105, which deal with nine incentives. , -P1* statenent has had the preliminary approval of the Executive Cocoittee. ^ ipppnpp^iu ii i.njuj.jujiiiyiwwpi v - ' -'T e T LIA2A871 - yjr itetfirfirrTr* t r " * j 4 3 \ Tentative Draft July Hi, 19ltf PROPOSED 3THT7POT OJ l p a d iKanrara a s s o c ia t o n t o Br Fiifl 1rrra SEKA7S CSJinTK OH IMT KIOR ANT* nSTT.'.R AE7A.IB3 OK 3. giiO AMD 3. ?1Q$ Ve desire to lend our support to constructive efforts to develop end strengthen the nlnlr^ Industry of the United States, to conserve our mineral rosourcee, and to provide taetal for the nation's permanent nilltxry stockpile, which are the broad objectives of 8. 2ii0 and S. ?105 'e oppose In general the Idea of subsidisation of the ainlng Industry, feeling that its nrobleas car best be solved within the franework of our free enterprise *y-te*, pref-rably by revision of the tax laws acre fully to recognise the Inherent rink of rlnlng, a risk that has beeone greater as the oore easily accessible deposits have been discovered and worked out and costs of exploration, development and production have Increased, Specifically ve believe that, for tax purposes, exploration and development costs night be allowed as r>pc*"*Une expanses before, as well as after, production begins, that depletion allowances right be Increased (both of these provisions now apply to tho petrol run Industry), and that a tax free | .Pled right be allowed for new ventures after they start to produce, we realise that asm -ijn.ru. oiw'uu. nw^i>a""',*"a!w.'-"^uwimif>JMepw-maig^ppBBww^riwgr^w-a<x'Ww^s!ww-'1' u ' ifsnissw. N 1779.01 IWpWiWiPI! HU 4jJJMIWI I'M Wipa|JlP^^ LIA24872 m i .! 1 i - N tax revision Is not within the purview of your Comittec but respect fully bu zz at the early and carcfhl consideration by the Congroas of the r^eonmendations of the Ancrican I'inlng Congress for revision of tax law* t affocting nirdng. sen/mmoa mcEHtpra Ponding such tine as the tax lafs take a nore constructive atti tude toward raining, we believe that 3. 2l0 end 3. 2105 offer a feasible approach to the problcn of encouraging cxplor itioru Both bills roqulre participation In the cost by the producer as tell as by the Govenrsent, thus assuring a greater degree of efficiency In the operation. S, 21*0 is nore definitive in this respect than S, 2105 and therefore is to be referred fron this angle clth-sigh 3. 2105 could bn slcply acended In See. 6 to be wire explicit as to th proportion of Oorexment and private participation and to avoid any discrimination between different producers* h believe th.*t S* 21*0 goes too far in offering Goverm.-nt participation up to 90 per cent of the cost, although there is no obj-'ctlon to a sliding scale, as provided In that Bill, which treats all producers alike. '4a respectfully suggest specific inclusion of geophysical prospecting under tho definition of "Eligible exploration," p-JBUglTT In tho provisions r- latlng to exploration, S. 21*0, See* S, and S. 2105, See. 6, night bo considered a logical expulsion of tho work dene in tho rast by the Bureau of Hinas, Wo rust, however, point out a basic distinction* for uacy years, tho Bureau of I'inos has boon engaged in natlon-*ddo prosp ctlng and oxrleratloo of alrural deposits. w >n ........... . ' iijM L ,< It - tl^2A873 1 J i * i - 3- lliis has been done In the national interest and the information obtained has been available to all of our people. On tho other hand, S. 2ti0 and S, 2105 would provide for the first tine, except in a war emergency, that the Bureau of Hines or a similar Goverment agency aoko financial grants to individual companies and the rosultlng exploration and informa tion would bo for the exclusive benefit of tho comparer participating. As a safeguard against discrimination if Congress provides for tho joint participation by Goverment and the mining industry in exploration programs, the Act should clearly set forth the rul'S and regulations under which th.- programs should be undertaken, (as in S. 21,0 but not in S. 2105), nnd should provide that all contracts or similar arrangements between the Government and Industry become public knowledge ns soon as entered into. G0..!tu:rxD ~p.cnt u id rncrtKno;i.mf re'res Jo ar. opposed to th . provisions of S. 2Jj O which provide for production prenims guaranteeing a profit to tho producer, -re know of no industry in this country which is gu rerrtcvd a profit. Ho individual in Government should be placed in the position of having to determine a reasonable profit. Per the Goverment to guarantee a profit entails, of necessity. Government control of salaries, wages nnd all the other elements of cost in n mining enterprise. In our opinion to establish Such n policy would be dangerous, would be an Improper interference in tho operation of a highly technical Industry, and would r-iprosont a step toward nationalisation of the mining industry. S. 2105 docs not guarantee n profit but discrimination might arls^ undi r the bro.-.d discretionary provisions of Sec. 7, It is truo T ii.-J ii.iuswwuqi S!?SP nUMJUMPjMijjpMW < ' ppnp iil ii )iipiirff4iijj i jr^ijs niifcihir-ii 11<~ --au.---- --g- * *ui^A87 It- that creation of a four-e.an Board is soma check on possible misuse of 1 the discretionary powers granted* Bull publicity on all arrangements between 3overnaent and the mining Industry should bo nroridod in this section as an addod safeguard. The intent of this section appears to be that the powers be used only to conserve resourcos which night be perma nently lost without CoTerrtscnt help, but it would bo most difficult to administer this provision fairly. take for example too adjacent and similar properties. One. efficiently operated, can produce profitably on a reasonably low market. J The other, an inefficient operation, cannot. The foraor continues to operate. The latter shuts doun and asks for aid on the grounds that ' ore in the ground will be permanently lost because the operator ccnnot afford to continue pumping and maintenance work. Tho on determine fairly whether the claim for aid is Justifi d? Should the efficient operator foot the bill, through taxes, to keep the unsuccessful one goingT It would be extremely difficult, if not impossible, to deturnine whether an operator would be able to keep on without Oorerment aid if no Government aid were available, and whether the ore would. In fact, be forever lost if he did shut down. After all, in the period of high prices Just passed, many mines that had been shut down completely for years were reopened profitably, and were able to produce motel at the very time it was moat needed. WOT KETBEL rt)K STOCrPILHO Under present conditions in the metal market thuro la no need for this legislation to aid the Oorerment stockpiling program. There wee1,1 * mjiji v i.rjwf mwgegapmrgi >w u <m. wi 1 * wg^fn wiiw'W* i^WjUMW^f^lBW "-- W**V L1^2^675 --*--* } * * i o -5- i* an anplc supply of nost ratals and, in the caso of lead and many othor notals, the !hanittons Board is currontly purchasing slaablo tonnages* S, 2li0 provides that subsidised production be stockpiled and therefore rusves It fron the open Market* S. 210$ does not contain this provision and would put tho subsidised netal In dlroct coapctltlon with unsubaidlied netal* COST Jhile 3. 2li0 would cost In excess of a half billion dollars, S. 2105 places no lirdt on expenditures, on tho duration cf the Bill, on the duration of contracts nadc under It, nor does it designate the octal s or drieralt which nay receive aid, except as determined by the Board* FUrtucrnorc, in S. 2105 no celling is placed on the prieo plus subsidy that any be odd* It would bo nost difficult to estimate the cost of S. 2105 but it could conceivably be very large* An unnecessary expense is created by 3. 2L0 in its establish ment of a new Pivision in the Interior Departm.'ot to adeinistcr It* In our opinioi the Bureau of fines nnd Oeolocieal Survey h.avo long and satisfictc~` dealings .rith the raining industry and are able to handle Intelligently and cconodcclly y natters pertaining th reto* 00NCtlTSI0:3 In conclusion, we nro opposed to nine subsides In prlnclplo nnd particularly to that type which guarant.tcs a profit* It is our opinion that fbndaa.eitnl and sound aid to the dnirg Industry can bust bo given through proper tax treatment, A tax approach, norcover, would require no new adilnlstr-tive machinery, would avoid th' d*ng r of discrldnr.tlon, nnd would result In far loss cost to th. Oovomrsed, wrv ? t ywwr1 wr f b p mm liirilYiil j?Vit* .. .jr-i- "fiTi-it---*------- - - -*-- *8?6 .1 -6- nth refcroneo to 3. 2h0 and S. 2105 specifically, we ere not opposed to the exploration elds proposed, tut believe that the amount of Government participation and the fact that there shall be no dis crimination among producers should be clearly set forth in the bills themselves* S. 2li0 is satisfactory in this respect except that we believe the isaxlsun Oovernient participation of 90 per cent to be too large. S, 21C5 appears to be too indefinite and should be amended to be more specific* 3e do not favor production subsidies which guarantee a profit* as provided in S* 2tr0* 'le also feel that proAction subsidies ostensibly intended to aid conservation* as provided in S. 2105, would lead to discrimination and would bo a costly experiment and wo are therefore oppos<d to that. Certainly* if S. 2105 is enacted into law its pro visions should be surrounded with safeguards as to the maximum prices that might bo paid, total cost to the taxpayer, and the metals and minerals to be included* Finally* wc believe that all contractual or other arrangements between the Go Vermont and producers should bo ru>dc public ss s means toward assuring efficient atalnlstr tlon and freedom from discrimination and that s requirement for such publicity should be aado a port of the law itself* k LMUW 'SWMgW1 liimr.ij. ifsjiiaa-'wvMiffvi' rrwy