Mrs. ProST. Would they also connect other towns?

Mr. GLAVINOVICH. That is right.

Mrs. ProST. They would be going either in the direction of Fairbanks or Anchorage or some other?

Mr. GLAVINOVICH. That is right. One eventually, we hope, would serve as a connecting link with the proposed Nome-Fairbanks Highway. Another would be the connecting link between Nome, Taylor and the tin regions in the vicinity of Lost River.

Mrs. PrOST. Thank you, Mr. Chairman.

Mr. O'BRIEN. If there are no further questions, Mr. Holsworth. Mr. HOLDSWORTH. First, I would like to state that I am pinchhitting for Dr. Patty who was to have presented this subject on tin today. I would ask the committee's permission that his paper which he has prepared, when it is sent over here, will be forwarded if it will be accepted for the record.

Mr. O'BRIEN. Without objection, it will be made a part of the record when received.

(The statement referred to follows:)

Mr. Chairman, I am Ernest N. Patty, president of the University of Alaska. By profession I am a mining engineer and have spent much of my adult life in Alaska as manager of mining operations and in consulting work which has taken me into most of the mining districts of the Territory.

Nature has been very bountiful in supplying the crust of the North American Continent with mineral resources. The one metal that was withheld is tin. Almost as an afterthought, some tin mineralization was deposited in the northwest corner of the continent in what we call the western end of the Seward Peninsula, in northern Alaska. The total production of tin in the United States is in the neighborhood of $2 million and fully 95 percent of this total production has come from Alaska.

Tin is a vital industrial metal with a variety of uses, but its chief use is for food containers and as a bearing metal. We cannot get along without it. In normal times we are supplied from richer deposits in the Malay States, Bolivia, and some other countries, but the chief deposits are located in areas where Communist control is quite a menace and in wartime we could be shut off from our foreign source of supply. I understand that our stockpile of tin would suffice for about 1 year.

Our Alaskan tin deposits occur in two forms: placer deposits and lode deposits. The placer deposits and their reserves are pretty well known. The extent and value of our lode deposits are not yet determined. We would have to be very optimistic to assume that they could be developed to the point where they could begin to supply us in wartime. There is a very good chance, however, that if these lode deposits are fully opened up they could become very important to us in wartime. There is some exciting geology around these deposits and you never know until you get started probing around underground what you are going to uncover. The unexpected in mineral discoveries has fooled our best geologists and engineers, for history is replete with examples of limited mineral exposures which have developed into big and important ore bodies when explored.

Under the present price of tin it is not possible to get risk capital to fully explore the known deposits because the known grade of ore will not yield a profit under present prices. The operators believe they can attract venture capital and get the necessary exploration if they can be guaranteed for a few years a price of $1.25 to $1.35 per pound of tin.

It seems to me just good commonsense, when you balance all equations, to give them this incentive. If they produce the metal it can go into the national stockpile to form good insurance for our country. While they are doing this there is the geologic gamble that they may make some important new discoveries and this would enrich our Nation. If they don't the loss to the Government will be very slight. If they don't produce tin the Government pays nothing.

There is one more factor. These tin mines employ mostly Eskimo labor. If there isn't some place where they can find employment they are going to be on welfare and this is going to cost the Government money. I am old-fashioned enough to want to see the Government spend some money in an attempt to create honest employment in this isolated area. I feel that welfare money destroys the character of our people and should be avoided if possible.

Mr. HOLDSWORTH. The reason I would like to cover tin in Nome is because Nome and tin are synonymous. The people here are dependent, aside from the gold mining operations, entirely on the possible future development of the tin fields here on the peninsula. A little bit of the history, very briefly.

Since 1903 various operations have produced about 2,000 short tons of tin up to the present time. We talk about our vast natural resources, but we don't have very many facts about them, and the only way we can get those facts is to get out in the field and prospect. It goes back again to roads. It also goes back to where are the prospectors, are there any out. There probably aren't more than three active prospectors in the peninsula area at the present time.

You ask why. There is no incentive. The metal tin in itself is always unsettled in price. The Government has acknowledged the fact that it is important, the need for it. They import 20,000 tons a year from South America and maintain an expensive smelter in Texas to process this material.

That brings us to H. R. 7145, with which most of you are familiar. This is a bill which merely asks a floor price for tin produced within the United States or its possessions, a price slightly above the present market price, which is 961⁄2 cents. This bill asks for a floor price of $1.30 a pound for tin produced from lode mines and $1.20 for tin produced from placer mines.

There are two ways in which the Government can spend the taxpayers' money in this, and there are proponents for both methods. They can either give an outright loan on a matching fund basis for exploration of deposits or they can add a slight subsidy to the present price for our metal and not put out one cent unless they receive metal for it. Most businessmen, comparing those two methods, I believe would like to get a little metal for the money they put out.

This method as proposed under H. R. 7145 is, of course, one method. The other is your DMEA program. When you discuss the two types of spending Government money we cannot refrain, or at least I cannot personally, from sitting on the sidelines in Alaska, remarking as to the success of the DMEA program within the Territory.

Here in this isolated area, with our high costs, the experience has been that DMEA has brought in inexperienced people, those not experienced in mining, who end up as the operators, and the actual balance sheet for DMEA in Alaska has been rather sad. The only one which has paid back actually on a loan is the Quicksilver Mine on the Kuskokwim, and it is paying back.

DMEA definitely has its place. It is good money, cheap money for a mining company, a big one that knows the business and is willing to step in and develop strategic minerals. But the experience in Alaska has been very sad.

Mr. ABBOTT. The United States Tin Corp., were they operating under DMEA loan?

Mr. HOLDSWORTH. They had two types of loans. They had a small sum from DMEA and another small sum from DMPA, which is loaned against actual production.

Mr. ABBOTT. Is the committee correctly advised that they have now pulled out entirely?

Mr. HOLDSWORTH. That has not been announced as far as I know DMEA policy.

Mr. ABBOTT. I am speaking of the United States Tin Corp. actvities.

Mr. HOLDSWORTH. That has also not been announced.

Mr. ABBOTT. Do you know of your own knowledge whether or not they are through with their operations?

Mr. HOLDSWORTH. All I have heard since arriving in town is that they have pulled the pumps in the mines and indications are they will be pulling out.

Mr. ABBOTT. And with a balance, perhaps, remaining of some two plus million dollars on the loan? Will you be available at Anchorage? Mr. HOLDSWORTH. I will be. In fact, I was to testify there only and not here.

Mr. ABBOTT. We had hoped, of course, to supplement your comments, because the tin bill will be very definitely before the committee, with those of Dr. Patty.

Mr. HOLDSWORTH. Speaking of this tin, I don't want to pass up the point there are known reservations other than United States tin.

Mr. ABBOTT. On that point. The bill has been considered within various suggested frameworks. In your view, would the 10,000 long-ton unit provision in there operate best under a time limitation or a purchase up to that amount?

Mr. HOLDSWORTH. Much better on a purchase up to that amount, for this reason: that a company will not put in the expenditure on equipment and continued exploration over a short period of time.

Mr. ABBOTT. I believe Mr. Bartlett developed in the hearings that we had in Washington on 6175 the probability that Congress would insist, of course, on a predetermined cutoff date.

Would a 10-year program or an 8-year program be sufficiently long if you retained not more than 10,000 long-ton units?

Mr. HOLDSWORTH. I would say 10 years would be a satisfactory

program.

Mr. ABBOTT. The figure of $1.25 which we have been using, an alternative to that, as we understand it, has been suggested now, with delivery CIF Seattle. Are there any other Northwest points where it might be delivered?

Mr. HOLDSWORTH. It could be but that would be the logical one. Mr. ABBOTT. To refresh the memories of the members, I believe the testimony was Mr. Holsworth indicated there have been 2,000 tons of tin produced in the United States in the last 50 years, that we are presently consuming annually within the exterior boundaries. of the United States some 55,000 tons, and that of the annual production, some 180 tons last year, if I recall correctly, 175 or 177 of it came from Alaska. Is that correct?

Mr. HOLDSWORTH. Yes.

Mr. ABBOTT. Are you in a position to state at this time what you feel the reserves are on the Seward Peninsula?

Mr. HOLDSWORTH. No; I can't say that I am; except to this extent: Drilling on, for instance, one stream, Cape Creek, has proven roughly 4 million pounds, which is equivalent to the total production to date, in a million yards of gravel, with a million yards of overburden to be removed. People from the mining States know what 4 pounds of tin per yard would be worth.

Mr. ABBOTT. On that same point. Have you had a successful tin lode operation any place on the peninsula?

Mr. HOLDSWORTH. As fas as successfully financially, no.

Mr. ABBOTT. Your principal production has resulted from a placer operation?

Mr. HOLDSWORTH. Not entirely. I should say that out on the cape at one time there was a successful lode operation many years back. Mr. ABBOTT. Would the reserves to which you make reference be removed through a placer operation?

Mr. HOLDSWORTH. Those reserves definitely are placer, that one particular creek.

Mr. ABBOTT. Entirely apart from the tin which might be produced under the program, do you feel it would encourage rather than simply use the known reserves would it encourage further surveys and an approach to determine just exactly what may be here that is now not definitely known or even speculatively known?

Mr. HOLDSWORTH. That is definitely needed. That would be an incentive to conduct more exploration.

Mr. ABBOTT. It becomes rather important, of course. Is it simply to take what you now know to be reserves and work toward 10,000 long-ton units incentive program which might be approved by the Congress, or would it actually result in additional exploration?

Mr. HOLDSWORTH. Let us say the only proven reserves are those 4 million pounds.

Mr. ABBOTT. So you would necessarily have to look elsewhere?
Mr. HOLDSWORTH. Yes.

Mrs. GREEN. I heard the port of Seattle mentioned. Am I correctly informed that Portland, Oreg., is closer to Nome in shipping than Seattle, Wash.?

Mr. HOLDSWORTH. That I do not know.

Mrs. GREEN. I believe that is correct.

Mr. ABBOTT. If it is agreeable, Mr. Chairman, it seems to me we must have more of Mr. Holsworth's testimony, and I believe he is going to be given that opportunity.

Mr. HOLDSWORTH. May I make one remark relative to this division. The Alaska Legislature has memorialized, which we hope eventually gets to Congress, the establishing of depots like in the States. In the second division we have a few prospects where we might mine seolite or tungsten concentrate. They can't sell that. There is a 1-ton minimum on acceptance of shipments outside. We have a department of mines here with four established assay offices. We could, if properly arranged, purchase their material locally, give them 75 or 80 percent of face value, give them money then to continue their work, and handle that through the normal smelter, accumulate and ship to proper smelters.

Mr. ABBOTT. Would that be on an open-market basis or under Public Law 20?

Mr. HOLDSWORTH. It could work either way. Most of those are being terminated shortly. It would be domestic production.

Mr. ABBOTT. Is what you are seeking authority for those purchases? Mr. HOLDSWORTH. That is right. That is, we have contacted the buyers of ores. They are willing to accept our results as far as that basis is concerned, but a fund would have to be set up. It would be paid back, of course. It would not be depleted. But something by which the miner could be paid immediately for at least partial value of the shipments so he can continue working in the field.

Mr. ABBOTT. You have in mind a revolving fund?

Mr. HOLDSWORTH. Yes.

Mr. ABBOTT. Would you be in position to elaborate on that next time?

Mr. HOLDSWORTH. Yes; because that is quite important to this division.

Mr. ABBOTT. Would it be limited to tungsten?

Mr. HOLDSWORTH. No; any metal.

Mr. O'BRIEN. Thank you very much. We will see you again at Anchorage.

Mr. ANDERSEN. Mr. Jones will not be able to be here. He will submit a written statement.

Mr. O'BRIEN. Fine. We will insert Mr. Jones' statement at this point in the record.

(The statement referred to follows:)

UNITED STATES CONGRESS,

NOME, ALASKA, December 14, 1955.

Committee on Interior and Insular Affairs,

House of Representatives, Washington, D. C. (Attention: Mr. J. L. Taylor, Consultant.)

GENTLEMEN: In reply to yours of December 2-the delay in replying is due to my having been called outside and the request for me to prepare a statement having gone astray.

A study of the Geological Survey reports upon the Seward Peninsula is quite illuminating as to the possibilities for many types of minerals. To interest capital one particular factor is accessibility and economical transportation. This, on the Seward Peninsula, we do not have. Roads for the whole of the second division, by the military, have not been a factor in their program. A road was surveyed from Fairbanks to Nome and Teller in the last year of the war to make the ledge and placer tin at Lost River available and the placer deposits out to the Cape, Buck Creek, and Potato Mountain. With the cessation of the Japanese war it was dropped and nothing since has been done with it.

This road, had it been constructed, would have gone right through the area where many oil seepages are known and a reconnaissance survey showed many indications of its potentialities-an instance, float oil on a tundra lake was gathered by men working the vicinity and used in their lubricators on their hoisting engines.

At Haycock, Dime Creek, a large gold recovery was made and a considerable amount of placer platinum. There are many possibilities and indications of other minerals. Uranium has shown some possibilities, many deposits of gold are known, but with the murder of gold by the Roosevelt administration in taking the United States off the gold standard, pegging the price and not allowing us to own our gold, but little effort is being made to develop these placer deposits. Haycock is at the head of Norton Bay, at the waist of the Peninsula and it is about 100 miles from Norton Bay to Kotzebue Sound. Indications of possibly workable deposits of several types of minerals have been found along the waist. Without roads the costs of prospecting do not make it at all attractive.

Following out along the coast line the Fish River section, which enters into Golovin Bay, of which the Niukluk River has many tributaries, from which gold in paying amounts has been extracted (the most prolific being Ophir Creek), from which millions has been taken and some small operations are still being conducted. Reported finds of ore along with extensive known low-grade placer deposits can be made available by road construction.

The next section following up the coast is a bluff, where on Daniels Creek and the beach millions in gold was recovered. Indications of cinnabar, which is found with the placer gold; also a ledge of gold ore with potentialities is in this section and small creeks with potentialities for small mechanical operations-when gold again takes its rightful place in our economy.

The next area is the basin including Spruce Creek, Solomon River, Bonanza, New Eldorado, Flambeau, and Discovery Creeks from all of which much gold has been recovered-Solomon River producing millions and with known ledges (gold) with great potentialities.