I therefore suggest that, in addition to the extension of the leasing principle to all minerals on the public lands, legislation should be enacted to require the recording of all mining claims covering these minerals in the General Land Office, to terminate all rights and interests in such claims on which the assessment work was not done during the current year, and to require the filing each year of a statement, under oath, that such assessment work had been done.

Administration of the mineral resources on lands owned by the United States is now hampered to a considerable degree by the fact that lands acquired by various governmental agencies through purchase, condemnation, or donation are not subject to the same laws governing disposition of minerals as lands reserved from the original public domain. Frequently the acquired lands and reserved lands lie side by side in the same administrative unit. Any broadening of the mineral-leasing principle, therefore, should include the acquired lands belonging to the United States as well as those reserved from the public domain. Attention should also be given to uniform legislation covering the development of minerals on Indian lands.

I now turn to my recommendation for an increase in funds for certain research and investigation work in the Bureau of Mines and the Geological Survey:

Many deep-seated deposits of high-grade minerals are believed to exist, but for their discovery new techniques must be developed analogous to but differing from those devised for locating favorable oil structures. It is not difficult to visualize drilling for deep-seated ore deposits in areas indicated to be favorable by conventional geological procedures and improved geophysical technique.

Improved techniques in the mining, beneficiation, and processing of minerals attain greater importance as the supplies of high-grade ores are exhausted and lower-grade deposits must be utilized. In the present emergency the search for strategic mineral deposits must be prosecuted diligently. Already the investigation of strategic mineral deposits financed by funds appropriated under authority of the Strategic Act of June 7, 1939, has yielded encouraging results. Substantial quantities of antimony, chromite, manganese, nickel, and tungsten ores have been located, as a result of which private industry has begun production of antimony and tungsten from deposits revealed by this work, and development of a large chromite deposit for early production is being financed by R. F. C.

The expenditures authorized under the Strategic Minerals Act will have been completed June 30, 1942, and, unless provided for by new legislation, exploratory work will cease. This work should be continued over a period of years on an increased scale. Appropriations for mineral research and investigation of the Bureau of Mines aggregate about $3,000,000 for the fiscal year 1942. I am recommending that such appropriations to the Bureau of Mines and Geological Survey be increased by $5,000,000 immediately with a further increase for 1943. I also should like to see an expansion in the technical aid now given by the Bureau to prospectors and small-scale operators.

LACK OF DEFENSE ORDERS IN WEST

The defense activities have not yet been spread out through the West to any great extent. I am attaching a tabulation indicating that

14 of the States west of the Mississippi are very much behind the national average in defense contracts, both in relation to their value of manufactures and their State income. The three water-power States, California, Washington, and Oregon, however, are above the national average. It is significant that the areas now ready for the new expnsion of industry are the places where the Government has gambled on the future of a region, as it did in the Southwest adjoining Boulder Dam, the Bonneville-Grand Coulee service area, and the T. V. A. region.

I am implying no criticism in pointing out the unevenness in the spread of defense contracts, but I am convinced that this is not a wise policy for the future. We should aim to narrow the disparity between industrialized and raw material sections of the country rather than increase it.

If the power deficiencies I have mentioned before for the western States were calculated on the basis of the low 14 Western States coming somewhat closer to the national average in defense contracts, averaging, say, up to 15 percent instead of approximately 2 percent of their 1939 manufacturing values, their power deficiencies would, of course, increase by several times their present ratings.

I suggest to you that in the event of an all-out defense effort, or in the event that our foreign imports of ores are interrupted, the consequent increase in mining in many parts of the West will be considerable. Five maps have been prepared to illustrate the mineral resources, and Dr. Sayres and Dr. Stabler will be available to the committee for detailed explanation of them.

I wish to add that very conspicuous work on northwestern minerals. and industrial possibilities has been done by the engineers of the Bonneville Power Administration. They are convinced that the far-Western States have all the materials available for the development of a light metals and steel industry. I am sure that they will be glad to present the results of their engineering work to the committee.

The prospects for the increased use of native ores is indicated by the deficiencies before us for the year 1942.

Even on the basis of spending $23,000,000,000 for defense in 1942, instead of the $40,000,000,000 which would represent an all-out defense effort, we are encountering deficiencies in our capacities for producing strategic minerals. These deficiencies would be increased greatly by any interference with our imports. Copper shows a 1942 domestic capacity deficiency of 1,370,000 tons, but some 500,000 tons of this may be made up by imports, leaving a deficiency of 870,000 tons. Zinc shows a similar deficiency of 505,000 tons. Aluminum, before the new 300,000-ton program, showed a deficiency of 312,000 tons. Lead shows a 165,000-ton deficiency in mining capacity, although none in refining capacity. I am attaching to my statement a table indicating these deficiencies.

CONDITIONS FOR EXPANSION OF WEST

I have insisted that there can be no successful, coordinated development of the West simply through a brief mining boom or a brief power boom. I have said that there was a series of steps which would have to be taken to prevent a collapse and the consequent disappointment

61550-42-pt. 1 2

of all concerned. Those steps would do much to encourage sound and lasting development.

First, it is essential to the West that it insist that new fabricating plants be located close to its raw materials. As you know, there are now no aluminum-fabricating plants near the big water-power reduction plants in the West. Instead of doing something which would bring jobs to the West, we are giving aluminum a joy ride around the country. Similarly, much of the Colorado, Utah, and Nevada zinc goes thousands of miles to be refined and then comes back to the West for

use.

Second, it is essential that the prices of the metals developed by lowcost water power be brought down and kept down to levels where they will be more widely used than they have been in the past. That seems to me to be the hope that is inherent in the cheap water power of the West-that it will bring the prices of materials down to the place where they will be used to a greater extent. I hope that, with the entrance of competitors into fields previously monopolized, and with the use of the low-cost water power of the West, a really free price and a relatively low price will be attained. The result should be that such industries would stay in the West and act as centers for fabricators. This would hold true of magnesium and those other metals and products whose prices have been controlled upward in the past. To put the matter in another way, the question is whether the Government money put into water powers and steam plant is to go to the advantage of the whole West, or simply to the companies which get the power contracts and to the relatively few individuals who get direct employment. I would be very reluctant, for example, to see those powers, built for the development of the West, turned over to the private utilities.

I understand that in order to bring into production many of the ores Essential to national defense, it will be necessary to have prices high enough to induce their production. This is probably a necessary condition to bringing them into use. It would, however, be undesirable for the West to try to rest on a high-cost raw material system. The high initial prices ought to pay for opening up the area. After that. large-scale production ought to result in lower prices. I do not think that the country will permanently go in for paying high costs for its raw materials if it can get them abroad for less. The West can, it seems to me, legitimately and advantageously, now start putting itself into the position where it can produce on a large scale with the consequent lowered costs that would be involved. I think that large production and relatively low unit profits, the recipe of the automobile industry, is the way of success for the future, rather than small production and high unit profits, the way of the aluminum industry.

The third condition of the full development of the West is that there must be no monopolization of the raw materials. I have noticed that some of the Senators believe that when a large company has materials. both in the East and the West it will hold back development of its western properties, unless it is forced by the threat of competition to open them up. I think that nothing would foreclose the full development of the West so much as the control by a single company in any area of the refining plants and also of the prices paid for ores or control of the deposits themselves. If everybody is to be encouraged to produce

ores, and to get the advantages of large-scale production on his own. property, there should be a custom mill which would take all ores on a basis of analysis rather than of ownership.

I do not believe in the Government doing things for people which they can do themselves, but I believe strongly in the Government taking down the hurdles and barriers so that people can do things for themselves. In Lincoln's time this meant taking down the barriers to the settlement of land. In later days it has meant making water available to farmers who could not live without it. So we passed the Reclamation Act and its amendments. In the industrial age it means also making power available to the people and the communities, and we are now doing that.

Fourth. We have the problem of providing cheap credit for development of those resources which have not been a good financial risk up to the present. There is financial risk to the Government and to private bankers in some mining developments. If they are on a defense-boom high-price basis, they may be a great risk indeed. It is probably true that there are some long-term investments which the Nation needs which cannot pay out on a high rate of interest compounded annually. Yet at a low interest rate they could be financed, would give the Nation needed materials, would give work, and would pay out. I do not think that nature recognizes compound interest. Nor do I think that we should let the development of the West be conditioned, as at present, by the chance that here a man will be able to get a loan from a bank, and there he will not. I believe that Congress might consider establishing credit for long-term resource developments at a very low percent of interest, conditioned upon an examination of the ore by the Bureau of Mines and the Geological Survey, and a general observance of a socially desirable price and development policy.

Development of the mineral resources of the West would put the agricultural and livestock industries of the region on a sounder basis. An expansion of industrial production naturally would swell the nonagricultural population and create larger markets for farm and ranch products near at hand. Similarly it would provide opportunities for employment of those rural boys reaching maturity who are not now needed on the home farms and ranches.

There are other recommendations which the Department is considering, and I shall appreciate the opportunity of communicating them by letter to the committee before the close of its work.

The West, as the natural depository of so many raw materials and the physical resources to develop them, has enough to make itself a far more industrialized section than it is now, and with that establish itself on a sounder basis of growth and development. I have made various recommendations to the committee to help in a new type of development of the West. Perhaps the most hopeful part of the pect, however, is the fact that the West itself is not inclined to let iself be stopped forever by obstacles, if it can see a way of overcoming them. I wish the committee every success. The chiefs of the bureaus stand ready at your call to discuss the subjects in which you are interested. Following that, I have some tables.

pros

Senator O'MAHONEY. The tables may be introduced in the record immediately following your statement.

(The tabulations above referred to are as follows:)

Estimates by the Federal Power Commission of the deficiencies in power facilities for the area west of the Mississippi on June 6, adjusted to allow for the new aluminum expansion and the current Federal installations, were 1,051,728 kilowatts for 1945 and 2,106,000 kilowatts for 1947. However, the Bonneville Power Administration, which has experienced a great demand for lowcost power from many companies, estimated in June that there was a greater need for peak capacity for the Pacific Northwest than the amount estimated by the Federal Power Commission at that time. The Bonneville figures indicated a need of 927,000 kilowatts additional for peaking by 1945.

Since its June estimates, the Federal Power Commission has increased its figures so that the deficiency now calculable for 1945 for the area west of the Mississippi stands approximately as follows:

The Federal Power Commission estimates are not on the basis of an all-out defense effort, and small portions of northeastern Nebraska and eastern South Dakota are not included in it. While these new Federal Power Commission estimates do not show, as the earlier ones did, deficiencies for 1947, they show deficiencies for the area west of the Mississippi of 2,455,000 kilowatts for the year 1946, an increase of about 400,000 kilowatts in that 1 year.