mine is producing, if it is encouraged through incentive payments to bring in the marginal ore it is conserving ore that otherwise would be wasted.

Thank you.

Mr. LEMKE. Have you any comment to make on that?

Mr. HILL. That is a pretty long question to answer, Mr. Chairman. All I can say is that it is the kind of a statement that is very difficult to answer because it is based on certain assumptions.

NSRB MAKES NO ATTEMPT TO ESTIMATE STOCK-PILE REQUIREMENTS; NSRB AND MUNITIONS BOARD GOVERNED BY ASSUMPTIONS PRESENTED BY THE MILITARY SERVICES

In our procedure in the National Security Resources Board and the same is true in the administration of the Stock Pile Act by the Munitions Board, it is neecssary for both of these Boards to be governed by the assumptions that are given to them by the military people.

We would not attempt to forecast the situation that Mr. Russell has set out. We feel that that is for the people who are specialists in that field.

Mr. LEMKE. May I ask a question right there?

Mr. HILL. Certainly.

Mr. LEMKE. Suppose these specialists fall down on the job and the Nation's life is at stake?

Isn't it time for you to do something to prevent that?

Mr. HILL. Mr. Chairman, I have the greatest respect and admiration for our military services.

Mr. LEMKE. So have we all.

Mr. HILL. I will say I was with the Army in World War I and with the Navy in World War II.

Mr. LEMKE. May I say this right there, we always see better backward than forward.

Mr. HILL. I quite agree with you.

Mr. LEMKE. The Navy member of the Executive Committee of the Munitions Board, who appeared before this subcommittee, has agreed that there is a deplorable shortage, not in exact amounts or anything but in the general viewpoint, and that something ought to be done. Do you agree with that?

Mr. HILL. I could express the general feeling that we have been very prodigal with our natural resources, in two wars, and in the periods of peace surrounding those two wars, and that I am fully in accord with our building up our stock pile of natural resources. I do not know exactly how to discuss it with you. If you are talking about the question of subsidies for submarginal mines, that is one thing. If you are talking about what should be acquired for the nanational strategic stock pile, I believe that is another.

FACTORY PURCHASES OF NECESSARY MATERIALS ABOVE MARKET PRICE CONSIDERED BUSINESS DEAL AND NOT SUBSIDY; FEDERAL ACQUISITION THROUGH MINE INCENTIVE PROGRAM IN SIMILAR CATEGORY

Mr. LEMKE. Would you say it was a subsidy if we developed our own mineral or mining industry so that it could supply the Nation's

wants, in part at least, by the Government seeeing that it is done and being a partner if necessary in bringing about that result? That is, for national defense?

Mr. HILL. I beg your pardon?

Mr. LEMKE. Let me put it a little differently so you get my meaning: Suppose you have a factory that produces a certain kind of goods, but you are unable to produce it because you cannot manufacture and sell it below cost of production. However, I need it and need it badly. Mr. HILL. I did not quite understand you.

Mr. LEMKE. I say, assume that I needed that particular line of goods badly and am willing to pay you something in addition to the prevailing market price or your reward up to cost of production. Would you call that an incentive or a subsidy?

Mr. HILL. Well, if I get your question correctly, you mean that I, as a businessman, want to buy some product of the factory which it cannot manufacture at a current price?

Mr. LEMKE. Yes.

Mr. HILL. And that I need it in order to fabricate or manufacture whatever I want to manufacture.

I might go make a deal with that factory, yes, to pay them a higher price than market price in order for them to furnish me the material I want.

Mr. LEMKE. That would not be a subsidy. That would just be paying for what you wanted in order to get it.

Mr. HILL. That would be a business deal in which I paid the people for the material which is essential to my manufacturing process. Mr. LEMKE. You and I will agree on that.

Mr. Martin?

NSRB INDIFFERENT TO PROCUREMENT POLICIES OF MUNITIONS BOARD

Mr. MARTIN. Mr. Hill, the Munitions Board published on January 23, 1948, a nonconfidential report in which they made this statement: All materials have been purchased at not higher than current market prices and in most instances at prices a bit lower than current market prices. Unless the material in question was far behind the required acquisition schedule even the current market price was not paid as this was felt to be out of line with the commodity prices in general.

Have you changed that policy in any way recently?

Mr. HILL. We have not changed the policy so far as any action by our Board is concerned; no, sir.

Mr. MARTIN. As I understand it, the Munitions Board is looking to you as the policy-making organization, is that right?

Mr. HILL. They are looking to us for broad policies as set forth

in the law.

As to the administration of the stock pile, that is the Munitions Board's function.

Mr. MARTIN. Is it any concern to your policy-making Board as to whether or not they are still following this policy that I have just read from their statement of January 23?

Mr. HILL. It is a concern to our Board as to whether or not they are able to acquire material for the stock pile. There were a number of factors that entered into their price policy.

Mr. MARTIN. I am not talking about their getting materials. It is what price they were paying for it. Is that of any concern to your Board?

Or to put it another way, shall we look to the Munitions Board as the departmental authority on following this policy or discontinuing it?

Mr. HILL. I would like to get exactly clear in my mind just what you

mean:

Do you mean, do we disregard the price that they pay for the material they acquire for the stock piling?

Mr. MARTIN. Yes, do you determine the policy as to whether they shall pay not higher than current market prices and in most instances at prices lower than current market prices for their stock-pile acquisitions?

Mr. HILL. I would say from a broad policy standpoint-and I believe that would be true in almost any transaction in business-that the problem would be whether to get the material or not, and if the policy were to be set the policy would be to acquire the material, but not as to the details of how they acquired it.

Mr. MARTIN. And if it is a tight market, with the materials in short supply, they should be in position and willing to pay more than current market prices in order to attain the objective of an adequate stock pile?

Mr. HILL. I think in a free market no such situation would exist. The minute they paid a higher price, that would be the market price. Mr. MARTIN. Are we getting to that situation or does this policy still prevail? Has the policy been changed?

Mr. HILL. I would like to know, if I may, what Admiral Paine's answer to that question was, because I think he was up here the day before yesterday, and I have not ascertained in the meantime what their policy is.

Mr. MARTIN. Yes; we talked it over with him, and I understand from Admiral Paine that his was not the policy-making Board, or his Board was not in position to determine policies.

They were looking to you and your Board.

That is why I am asking you the question, as to what policy prevails? Mr. HILL. The Munitions Board has not asked us for any policy ruling on that particular question.

Mr. MARTIN. And unless they ask you for a ruling on it, they are free to go ahead on their own determination?

Mr. HILL. They are certainly free unless they get some policy ruling from our Board.

Mr. MARTIN. And you have not looked into this phase of it, so therefore their policy as announced stands for the time being, at least? Mr. HILL. They stand until we give them any policy direction. Mr. MARTIN. All I am trying to do is to find out who is making the policy, and to whom I can talk regarding that policy, and I do not like to be waived aside from one organization to another. I would finally like to get down to the fellow that determines the policy, if I can.

Mr. IIILL. We will be glad to take that question under consideration. Mr. MARTIN. Does the Munitions Board have to clear its policy with you or do you let it operate until you run into something that you don't like?

Mr. HILL. They operate under a special act of Congress known as Public Law 520

Mr. MARTIN. I understand very fully under what laws they operate. Mr. HILL. Which has been in existence for over 2 years.

Mr. MARTIN. There has been another law passed that we are talking about this morning that has some bearing on that. There was a law passed last year. It is referred to as the National Security Act of 1947. It has some bearing on who determines policy.

Now, I shall not question you further on that point, but I am trying to get at questions of policy.

CONTINUATION OF OPERATION OF TEXAS TIN SMELTER AND EXTENDED LIFE OF RFC RECOMMENDED TO PRESIDENT BY NSRB

Now, the action of RFC in disposing of strategic and critical materials was largely consummated before your Board came into being?

Mr. HILL. That is correct, sir.

Mr. MARTIN. Have you control over disposition of material still within the ownership or jurisdiction of the RFC?

Mr. HILL. We have the authority to advise the President concerning his attitude on the subject.

Mr. MARTIN. As of December 31, they had only $213,517,000 worth of strategic and critical materials and operating supplies so that they are largely out of this picture at the moment but as to the disposition of that tiny fraction of what they once handled, do you have any jurisdiction?

Mr. HILL. I would not say we had jurisdiction. We have no obligation, I believe, other than to advise the President.

Mr. MARTIN. Then whenever I talk to RFC about this matter they cannot sidestep me and say that they are following out the policies as determined by the National Security Resources Board?

Mr. HILL. It all depends upon whether policies have been made. Mr. MARTIN. Have you made any policies affecting the RFC? Mr. HILL. We have had some matters under consideration affecting RFC.

The Texas tin smelter is one; the recommendation for the continuance of the law for the operation of the Texas tin smelter. Our Board has also made recommendations that the life of RFC be extended

Mr. MARTIN. And if they are extended and if they get back into the field of strategic and critical materials, acquisitions and dispositions, do you understand the rule of your Board to be that you have jurisdiction or will have jurisdiction in determining policies governing their activities in that field?

Mr. HILL. We will only have jurisdiction if it is delegated to us. Our only authority at this time is to advise the President.

Mr. MARTIN. On such matters as the President asks you for advice, or on your own motion?

Mr. HILL. On our own motion or if he asks us..

Mr. MARTIN. And if you found that the RFC had assigned their stock piles to other places and our cupboard is practically bare in national defense stock piles, you would feel that it was within your role to go to the President and advise him to stop that process? Mr. HILL. I think we would.

Mr. MARTIN. But it was too late when your Board was organized to stop the disposition of the stock piles that carried over from World War II under the jurisdiction of the RFC?

Mr. HILL. Yes; it was too late.

Mr. MARTIN. And when RFC comes before me at any time to dis cuss this matter, they cannot say that they are dependent on your Board, or were dependent on your Board, for their policies?

Mr. HILL. You mean in the past?

Mr. MARTIN. Yes.

Mr. HILL. No; they cannot.

CHAIRMAN OF NSRB UNFAMILIAR WITH "BUY AMERICAN" PROVISION

STOCK PILE ACT

Mr. MARTIN. When your Board was organized you no doubt had occasion to examine the background of Public Law 520 of the Seventyninth Congress, the Stock Pile Act?

Mr. HILL. Yes.

Mr. MARTIN. And in that act you found the "Buy American" clause and if you examined the matter carefully, you found that the Presi dent in signing that bill into law expressed certain policies with regard to the "Buy American" Act, virtually instructing the agencies carrying out Public, 520 to ignore the "Buy American" clause.16

Have you had occasion to discuss that matter with the President? Mr. HILL. I have not.

Mr. MARTIN. Do you know what has been done in the matter of abiding our mining industries through the "Buy American" provision in Public, 520?

Mr. HILL. No.

Mr. MARTIN. Do you know what margin the Bureau of Federal Supply has established in the price paid for domestically produced materials to carry out the "Buy American" provision of Public, 520! Mr. HILL. I am not familiar with it.

Mr. MARTIN. Do you have any ideas what margin should apply? Mr. HILL. I do not know just what you mean, Mr. Congressman. Do you mean that they should pay for American production? Mr. MARTIN. I am discussing now particularly the circular letter "B-61" dated October 1, 1947, signed by Clifford È. Mack, Director of the Bureau of Federal Supply, stating the policy as to the "Buy American" clause." [Reading:]

In applying the exception which permits purchase of products of foreign origin if the cost of domestic products is unreasonable the following differentials shall be applied by executive departments and independent establishments in favor of domestic products to be delivered in the continental United States. Where the cost of the foreign product exceeds $100 a differential of 25 percent.

Have you any comment regarding that policy? Have you examined it at any time?

16 SUBCOMMITTEE NOTE. Refer to the Appendix, p. 1232 for the Stock Piling Act Public 520 p. 1235 for the original "Buy American" provisions, title III of the Act of March 3, 1933 (47 Stat. 1520); and p. 1236 for the President's statement on signing the Stock Piling Act into law.

17 SUBCOMMITTEE NOTE.- The circular letter referred to is included in the appendix as exhibit 39. p. 1242. Exhibit 37, recent correspondence of a Senate committee and the Bureau of Federal Supply, p. 1240 and, in particular, exhibit 38, p. 1241, a letter to the Subcommittee from the Bureau of Federal Supply, show interpretations of the "Buy Amer ican" provisions of the Stock Piling Act that precludes its application to virtually all producers. Exhibit 70, p. 1501, also illustrates the complete and arbitrary abrogation of the intents and purposes of the Buy American Act by the Armed Services with respect to strategic and critical materials.