It is sincerely to be hoped that the committee, after careful consideration of the facts and consequences of this and similar cases, will see fit to recommend to the Congress a more equitable procedure for providing relief to deserving American industries and workers.

THE CASE OF LEAD AND ZINC

As to the facts of our case: At the conclusion of the Korean war the markets of the United States were flooded with excess imports of lead and zinc at prices below the cost of American production. A national committee representing the lead-zinc mining districts of the country was organized and turned to Congress for assistance in the emergency. And the Ways and Means Committee in 1953 approved provisions for the relief of the industry.

Legislative relief, however, was opposed by high officials of the administration who advised that the remedy rather was to be found in escape-clause action before the Tariff Commission. The industry then proceeded to follow this administration advice.

ESCAPE-CLAUSE ACTION

Indisputable evidence was presented to the Tariff Commission in a hearing at Washington, D. C., November 3-6, 1953, showing conclusively that the mines of this country have been injured seriously by foreign lead and zinc flooding United States markets. The facts are clear and were freely acknowledged by all appearing before the Commission.

Concerned with the deplorable situation confronting the mines, the Senate Finance Committee and the Committee on Ways and Means of the House, each by unanimous resolution, requested the Tariff Commission to institute a general investigation of the domestic lead and zinc industries, including the effect of imports of lead and zinc on the livelihood of American workers. Testimony was heard concurrently with the escape-clause investigation requested by the industry at the suggestion of the administration.

The Tariff Commission on May 21, 1954, after one of the most complete investigations ever made of an American industry, recommended unanimously to the President that relief be granted the miners. The bipartisan commission reported that lead and zinc ores and metals were being imported in such increased quantities as to cause serious injury to the domestic industry.

STATE DEPARTMENT OPPOSITION

But, because of State Department opposition, the President did not follow the experienced advice of the Tariff Commission. He recognized, however, the injury to the mining industry and the need for relief in a directive establishing a stockpiling program for lead and zinc in August 1954.

American producers of lead and zinc have been on the defensive against policies that threatened to destroy their very existence for nearly 20 years. Workers in the mining industry believe in reciprocal trade, but they question the wisdom of Congress surrendering its authority over the Nation's trade and commerce to the State Department.

It is the responsibility of the State Department to look after our foreign interests, but who other than the Congress can American workers and producers look to for similar consideration? Experience indicates that for them under existing procedure survival has become a matter of executive discretion. Peril point and escape clauses provided by the Congress in trade acts for their protection have been rendered meaningless.

If the escape clause and peril point concepts and procedures are to serve any useful purpose for the protection of our industries, they should be allowed to function in good and proper cases where the need can be demonstrated on the basis of complete and convincing data. To deny this is a flout of the law.

CONSEQUENCES OF DENYING RELIEF

What have been the consequences of denying escape clause relief to the mines in the lead-zine case?

Emergency action taken by the President in 1954, to provide a stockpile purchase program for lead and zinc conceals temporarily but does not eliminate the problems of the mines. Imports of zinc ore and metal were greater in 1955 than in 1954 when the President asked the State Department to see that foreign producers were not to take advantage of the stockpile purchases by increasing

their shipments to this country, and the heavy imports are continuing in 1956. But when stockpiling ends, what then? Or is the temporary prop to be made into a permanent crutch?

Some 150,000 tons of the Nation's annual zinc production has been liquidated during the past few years. Unemployment and economic losses are troubling many mining communities. Small independent companies unable to obtain financial support because of inflationary cost increases have been forced out of existence.

WORLD COMPETITION

Prices of lead and zinc are set in competitive world markets. Higher wage costs and the expense of social responsibilities cannot be passed on to the consumer as is the case with the current round of higher wages in the manufacturing industries. Consequently the lead-zinc mines, caught between rising costs and competitive prices of low-wage countries and devalued currencies are being squeezed out of existence.

But is it the policy of Congress to liquidate small business and the employment of workers dependent on the productive resources of this country? Notwithstanding the losses to the lead-zinc mines as a result of existing trade policy procedures the consumer has failed to benefit from cheaper metals. Because of the trend toward greater dependence on other countries for supplies, metal prices are rising. Price increases for lead and zinc have been required to attract more imports in order to replace the supplies wiped out in this country. Imports have taken over the major portion of the United States market for zinc, reversing the relationship that existed prior to the Korean war. The problem of the Nation's lead-zinc mines as well as that of other industries essential to the national defense and civilian welfare, is to compete with world prices that do not carry the higher wages, living standards and social benefits going to our workers. We no longer have the advantages of richer resources and better machinery and equipment. Our foreign aid programs are placing our competitors on an even footing in this respect.

CONSTITUTIONAL RESPONSIBILITY

The escape clause provisions of the Trade Agreements Act, as amended, afford a solution to the import problem, if fairly administered. The bipartisan United States Tariff Commission is competent to investigate and determine, under the escape clause and peril point provisions, whether or not an industry is essential to the national defense and public welfare, and whether or not the domestic industry requires protection to remedy serious injury caused by imports in increased quantities actual and relative to domestic production.

Unfortunately the Tariff Commission is not allowed to function in this manner; unanimous bipartisan findings of the Commission are reported to the White House, there to be rejected through State Department influence. An escape clause amendment to the Trade Agreements Act requiring the Commission to report its recommendations to the Congress rather than to the White House would remedy the situation and possibly bring matters more closely in line with constitutional principles as well.

The American people look to the Congress to exercise its constitutional responsibility for their well-being in matters of trade and foreign commerce. We trust that the committee will recommend procedures that will restore to the Congress any surrender of authority assumed by other branches of the Government, or international bodies. Action by law rather than by administrative edict we believe to be the sounder procedure in matters affecting the people's livelihood.

Hon. HALE BOGGS, Chairman,

UTAH MINING ASSOCIATION,
Salt Lake City, Utah, September 17, 1956.

Customs, Tariffs and Reciprocal Trade Agreements Subcommittee of the Committee on Ways and Means, House Office Building, Washington, D. C. DEAR MR. BOGGS: Attached is a statement prepared by the Utah Mining Association on lead-zinc mining, which we present to your subcommittee for consideration in the hearings now being conducted. We submit this statement in support of the statement presented by Mr. Otto Herres, chairman of the National Lead and Zinc Committee, under date of September 14, 1956.

Yours very truly,

MILES P. ROMNEY, Manager.

MEMORANDUM ON LEAD-ZINC MINING BY MILES P. ROMNEY, MANAGER
UTAH MINING ASSOCIATION

The critical condition of Utah's and other western lead-zinc mining is emphasized by the recent closing of the New Park mine at Park City, Utah.

Fifty-six Utah lead-zinc operations produced ore in 1948. 1956 finds small, independent lead-zinc operations practically nonexistent in Utah. However, five major operations have remained active. Recently, New Park closed down after many months of continuous operating losses. United Park City Mines Co., also at Park City, reopened in 1954 after 2 years shutdown, but have operated on the loss side. Chief Consolidated Mining Co. at Eureka and Combined Metals Reduction Co. at Stockton and Bauer have continued to mine, but on a greatly restricted basis. United States Smelting Refining & Mining Co. has continued near normal operations at Lark, Utah. Thus, of the 5 major operations, 1 is closed, 3 are on a reduced basis compared with the period previous to 1952, and 1 is producing at or near normal rates.

That other western lead-zinc mines have suffered similar fate is evidenced by the great reduction of lead and zinc produced by Utah's mills and smelters from the ore received from independent mine operators. These mills and smelters have long been the marketing outlet for independent mine operations in Utah and portions of Arizona, Colorado, California, Nevada, Idaho, and Montana. In 1948, Utah mills and smelters produced 46,060 tons of lead and zinc from the ore purchased from such mines. In 1955, they produced only 6,968 tons, or but 15 percent of the 1948 tonnage. The record from 1948 to 1955 follows:

Lead and zinc produced by Utah mills and smelters from custom ore

What has happened since 1948 to force so many mines to close and to so seriously threaten continued operation of those present surviving? Advocates of free trade and further tariff reduction on metals state that the closed mines were marginal in character and therefore uneconomic. Mines normally become marginal and uneconomic when the grade of their available ore reserves becomes too low.

The record, however, shows that average grade of ore from Utah's mines has increased substantially while the economics of their operations have deteriorated, Comparison, 1948 and 1955 underground lead-zinc mine production

The uneconomic aspect of lead-zinc mine operations is related almost wholly to the fact of greatly increased operating costs and failure of metal prices to make a compensating increase.

The base wage for miners is now 50 percent higher than the average for 1947-49.

Freight rates on lead and zinc metal from mines to market have increased 25 percent since 1948.

Consumers Index, generally indicative of supply cost, is up 17 percent above the 1947-49 average.

This means that mine-operating costs have gone up 30 to 35 percent varying from mine to mine and area to area. (Labor costs in Utah's underground mines constitute approximately 60 percent of the total operating cost.)

In the period 1947-55 metal prices for lead-zinc, gold and silver, the products of lead-zinc mines, have been as follows:

By comparison, for the same period, aluminum ingot price has increased 68 percent, basic steel price 56 percent, and copper price 93 percent.

It is almost amazing that any lead-zinc mines can continue operations. Mining of higher grade ore and concentration on efficiency improvement have offset some of the cost-price differential. Improved efficiency is to be commended, but high grading of mines means an ultimate economic loss to the mines and to the general economy, in that lower grade ore is bypassed and in some cases lost.

Drastically reduced import duties on lead and zinc and an overstimulation of foreign production, much of it through use of funds advanced as grants and loans from our Government, are the basic causes of depressed prices. Those two factors, in their stimulation of excessive imports, have been predominate in creating conditions which have rendered our domestic mines marginal and uneconomic-not from a change of physical character of the mines, but from changes in their economic climate resulting from policies and acts in the fields of foreign trade and foreign aid.

The severe import duty reductions on lead and zinc made in trade-agreement negotiations are ilustrated below. These duty reductions have been discriminatory in character because the net result has served to reduce protection on leadzinc far greater than the reduction on most other dutiable items:

The 50 percent reduction of the cents per pound original duty rate on lead and the 60 percent cut on zinc actually reduces protection to one-sixth of the original rate on lead and one-seventh on zinc. In contrast duty cuts on other commodities, selected at random from Tariff Commission schedules, illustrate the discriminatory nature of the cuts on lead and zinc. (Each item is protected by ad valorem import duty rates and, therefore, compensates for price increases.)

It is rather incongruous that labor and investment involved in the manufacturing of lead products is protected by a 30 percent ad valorem duty rate, while the labor and investment in mining lead is protected by a rate as low as 6.6 percent in its ad valorem application. Silver plate duties compared with duties on silver (none) also give food for thought.

If the original duty on lead and zinc had been 38 percent ad valorem rather than on a cents per pound basis, present duties on lead-zinc, assuming a 50 percent cut, would have been 19.25 percent on lead and 19.2 percent on zinc, or 3.08 cents on lead and 2.58 cents on zinc.

Discriminatorily low duties and surplus world production have combined to invite excessive imports of lead and zinc with inevitable price depression. The natural result has been domestic mine failures-again not from changes in physical character of the mines, but from conditions foreign to the economy in which they must operate.

In 1947-49 domestic zinc production averaged 620,200 tons. In 1954 it was 467,000 tons, a drop of 25 percent. Lead production in 1947-49 averaged 394,900 tons, but only 325,000 tons in 1954, a drop of 18 percent. Ninety hundred and fifty-five production for both metals improved slightly under the stockpiling program, which has furnished a temporary prop under prices-a day-to-day buffer against excessive imports of both lead and zinc metal.

In 1947-49 domestic mines produced 81 percent of domestically consumed slab zinc and 52 percent of the new lead consumption. In 1955 domestic mines produced but 47 percent and 44 percent respectively of that consumption.

Temporary, stopgap type of measures and policies for mining will not serve to rejuvenate the closed down portions of the industry or to stimulate the critically needed search for new ore reserves. Such measures are but serving to keep the stronger mines open while they liquidate their ore reserves.

The industry needs the long range assurance of protection afforded by import duties and controls consistent with the cost of paying for labor, supplies, freight and taxes in our domestic economy. Failure to obtain such a long range basis for the industry will but assure its being "temporized" to death-a process well advanced among Utah and other western lead-zinc mines.

REYNOLDS METALS CO., Richmond, Va., October 15, 1956.

The CHAIRMAN, SUBCOMMITTEE ON CUSTOMS, TARIFFS
AND RECIPROCAL TRADE AGREEMENTS

Ways and Means Committee, Washington, D. C.

DEAR SIR: Enclosed herewith is the statement of Reynolds Metals Co. on tariffs on aluminum and aluminum products, which I should greatly appreciate your having included in the records of your committee.

With best wishes, I am,

Yours very truly,

MAXWELL CASKIE, Assistant Vice President.

STATEMENT OF REYNOLDS METALS Co., ON TARIFFS ON ALUMINUM AND ALUMINUM PRODUCTS

The strategic and critical role of aluminum in national defense has been not only recognized, but emphasized, by the Government through its activities in stockpiling both bauxite, the raw material, and aluminum pig. Although military aircraft requirements for aluminum may change, all other forms of military demand continue to increase so sharply that total military requirements for aluminum are bound to be much higher in the years ahead than ever before. A domestic aluminum industry capable of supplying a tremendous quantity of aluminum in the form of pig, sheet, plate, foil, extrusions, rod, castings, forgings, wire, and powder is thus a prime military necessity.

While this country has demonstrated that in an emergency it can build a tremendous aluminum producing capacity in a period of 2 or 3 years, many of our military leaders have predicted that future wars, if they come, will not permit us the luxury of preparation periods running over 1 or more year's duration, but instead will require us to utilize plants and plant capacity in-being at the beginning of hostilities. In the interest of national defense, the Congress and the administrative agencies of the Government should encourage the greatest possible expansion of our primary aluminum industry and our aluminum fabricating industry.