1956 1957 1958.

TABLE II.-Actual receipts

[All figures are given in thousands of tons, rounded off to the nearest thousand]

In determining how this bill will work hardship upon the foreign producers, two things should be borne in mind. First, U.S. producers are allocated 200,000 tons of fluorspar containing more than 97 percent of calcium fluoride and 125,000 tons of fluorspar containing not more than 97 percent of calcium fluoride.

It is only subsequent to this allocation that the foreign producers' quota is set. Since it appears to be the fact that there is to be no more stockpile purchasing of fluorspar, the figures showing actual industrial consumption would be roughly equivalent to the Secretary's determination of amounts needed for consumers' requirements under section 4. It is unlikely that the determination of "excess" would be great enough so that the percentile apportionment of "excess" between domestic and foreign producers would be of any great magnitude.

Accordingly, these tables show that if the act had been passed prior to 1956, the foreign producers, who actually shipped 263,000 tons of acid-grade fluorspar in 1956, would have been able to supply only some 90,000 tons; in 1957, as against actual shipments of 281,000 tons, they would have been able to supply only 129,000 tons; in 1958, the foreign producers shipped 238,000 tons, but would have been entitled to ship only 59,000 tons. A similar analysis may be made with regard to the column showing fluorspar containing under 97 percent of calcium fluoride.

Second, relief for the foreign producers under the provisions of section 6(a) "Barter contracts" is dubious. It should be noted that the Commodity Credit Corporation is not directed to enter into barter contracts for the purpose of bringing total imports from the foreign producers up to the average, but it is merely told that it "shall, to the extent possible," take such steps.

It is submitted that foreign fluorspar presently finds itself in competition with a great variety of other commodities which the Commodity Credit Corporation would consider for barter, and if the stockpile policy of the United States with regard to fluorspar has diminished in urgency (as it would seem), such consideration would probably not be great.

Thus it is clear that enactment of S. 1285 would work a hardship on the foreign producers and importers. In this connection, there are certain other considerations which should be expressed.

First, it must be remembered that many of the foreign producers now exporting to the United States were encouraged to do so and encouraged to increase their productive capacities by the United States in order that they could export more to the United States and on a more regularized basis. In fact, a part of this foreign production was stimulated by the domestic producers themselves, who, during the Korean crisis, were unable to supply the needs of the United States from domestic resources, and contracted with foreign suppliers to deliver foreign fluorspar.

In the case of one of the Spanish producers, a U.S. Export-Import loan was made for the specific purpose of increasing production. The interest and amortization on this loan are payable in dollars, and the only place where Spanish fluorspar can earn dollars is in the United States. In the case of one of the Italian producers, a very large loan was made from U.S. counterpart funds to enable that producer to expand substantially. In the cases of other foreign producers, U.S. stimulation of their production was effected through purchases for the national stockpile.

The quotas provided by S. 1285 will hit hard at all of these producers. Presently, many of them are foreclosed from certain markets because of the loyalty of the governments of these producers to policies supported by the United States which forbid shipment of fluorspar (among other commodities) to otherwise previously available markets. These producers, then, must wait until the industrial production of their countries has reached levels where local demand will again absorb production at optimum rates. In the interim, these producers must suffer heavily. Similarly, if these, or others, can develop new markets, this too can only be done over a long period of time during the course of which they will suffer hardship. In addition to such producers, there are others whose production has been called into existence relatively recently by U.S. demands. Such producers having lesser financial reserves, and being in an earlier state of amortization than other producers in the same countries, can probably not survive through the period of waiting for additional development in local markets, or the development of export markets other than the United States; they will probably go out of business entirely.

Undoubtedly the hardship felt by the foreign producers, as discussed above, will result in unfavorable public opinion in the countries in which these producers are located toward U.S. trade policies. In addition, as the nature of S. 1285 becomes more clearly known to people in these foreign countries, we may expect adverse general public opinion of another type toward our broad trade policies.

The people in these foreign countries will reason that the President of the United States already has sufficient powers to impose import restrictions when it is necessary in the clear and immediate interest of U.S. national defense to do so. We are sure that few countries, or few people in those countries, would feel that it was unreasonable so to protect the national interest.

However, since it will appear to these people that the President is not exercising these powers, it would certainly seem to them that the real function of this bill is merely to provide for a special alleviation of local and perhaps temporary distress. Foreign public opinion may take this to mean that similar legislation is possible in the case

of other commodities where no real aspect of national defense is involved. This, in turn, may impel public opinion in those countries to reexamine the general national approach toward the U.S. reciprocal trade program.

The imposition of a quota such as is here proposed at this time would certainly be detrimental to the U.S. program of preventing new trade barriers and increased restrictions against U.S. exports. It is clearly inconsistent with the intent of the last Congress when, in reporting the Trade Agreements Extension Act of 1958, the Committee on Finance of the U.S. Senate said:

The United States is in a unique position to help discourage many new trade restrictions from being imposed. *** It is to be hoped that administrative agencies will be able to effect a more coordinated economic policy regarding international trade and to make such progress toward the mitigating of trade restrictions abroad.

Were this bill to pass, surely some of the nations with whom we are currently negotiating the mitigation of existing trade restrictions against our products might advise us to remove the mote from our own eye first.

The enactment of S. 1285 would not be in the best economic interests to the United States for a number of reasons.

In the first instance, it is common knowledge that there exists a great degree of competition among the foreign suppliers. This competition tends to keep prices at a healthy level, while the enactment of S. 1285 (as more particularly shown below) would force actual price rises.

It has been said that if the foreign suppliers completely dominated the U.S. market (a happening which, as we show below, we think not likely) price rises are inevitable. We cannot agree with this, not only because of the presently existing competition among foreign suppliers, but because all evidence points to a continuation of that competition in the future. This is because each foreign nation is in competition with all others for dollars, so that the dollar earners of each such nation are in competition with the dollar earners of all other foreign nations. In addition, there are clear signs that countries which have not hitherto produced fluorspar for export are bending their efforts to do so, and these new producers will in turn be in competition with existing producers.

In addition, this bill would give a large, uneconomic competitive advantage to one group of domestic producers, while the customers of another group of domestic producers would be saddled with exorbitant delivered prices.

At this point we should like to refer to the statement of the E. I. du Pont de Nemours & Co. submitted under cover of letter dated January 26, 1959, to the Director of the Office of Civil and Defense Mobilization. The statement itself, dated January 21, 1959, was prepared by Mr. J. L. Gillson, the very well-known chief geologist of that company, who is recognized as one of the country's great authorities on fluorspar. Mr. Gillson quite clearly demonstrates that the Illinois-Kentucky producers of fluorspar (who in 1957 produced almost 58 percent of the total of domestic production) are presently in a very favorable competitive position vis-a-vis foreign producers. To quote Mr. Gillson:

The Illinois-Kentucky district can supply acid grade consumers in Joliet, Ill., and Calvert City, Ky., to excellent advantage. It can serve metallurgical consumers in Gary and East Chicago, Ind., and Middletown, Ohio. All these can be served by short rail haul from southern Illinois and Kentucky.

A little wide circle in which it may compete will reach from Bauxite, Ark., to Detroit, Cleveland, Youngstown, Pittsburgh, and Nitro, W. Va., with shipments by rail or by barge, or by barge plus rail.

In this circle it is in close competition with Mexican and European fluorspar sent up the Mississippi and Ohio Rivers and European and Canadian (and Newfoundland) spar brought in via the St. Lawrence.

Mr. Gillson also demonstrates that the consumers in the Mountain States have fluorspar resources fairly close to hand, with which imported fluorspar could not possibly compete.

It is submitted, therefore, that as to these situations the protection afforded the producers by the legislation before us is not only unnecessary, but uneconomic and unnecessarily expensive to the consumer.

Since the bill provides for generous quotas in the domestic producers, and provides for a ceiling price based on point of shipment, it is clear that some consumers, whose plants are far distant from domestic sources of supply, are going to have to buy some portion of their needs from these domestic sources at excessively high prices. This means that over and above the $55 price for domestic acid grade fluorspar at point of shipment, consumers must pay high freight charges (to quote again from Mr. Gillson):

Acid-grade fluorspar shipped from Northgate, Col., must pay a freight to St. Louis of $13.58. This compares with barge rates from New Orleans to St. Louis of $3.07, and from Brownsville to St. Louis of $5.73.

To take another example from Mr. Gillson:

*** the rail freight from Darby, Mont., which is a point of shipment of metallurgical grade fluorspar to Gary, Ind., is $19.57. Hence metallurgical grade fluorspar selling for $35 per ton at point of shipment would cost $54.57 shipped from Darby as compared with $42.60 if delivered from Rosiclare, Ill.

It is always dangerous to tamper with normal economic forces, although in times of national emergency we are sometimes forced to. However, it is noteworthy that as soon as the state of emergency is over, we move rapidly to restore the normal economic climate. S. 1285 has certain provisions which do impose certain restraints upon normal economic behavior. These provisions are most undesirable precedents in peace time.

We refer specifically to the provisions which fix price, and those which have the effect of vesting appointed officials of our Government with the power to control the supply (ultimately the output) of this particular raw material. We believe that these provisions in themselves constitute a further nibbling away at that freedom of action for normal economic forces which we boast distinguishes our economic system from certain others. We would hope that the Congress would take long, deep thought before legislating these types of interference with the American economic process.

In addition, there are certain broader implications which might be attached to the enactment of this bill as an expression of congressional intent which might affect future congressional behavior.

For instance, if the enactment of this bill be taken as a true reflection of congressional intent, what may we expect when, as and if the phosphate rock producers turn the fluorine contained in that rock

(presently a waste product) into a profitable byproduct? There are literally enormous quantities of fluorine presently so wasted that may some day be turned into usable form.

When this happens, undoubtedly the domestic fluorspar producers will feel that they need protection. What will the Congress do then? To what extent does this Congress, or any subsequent Congress, propose to restrain natural competitive forces, and to grant premiums to uneconomic production at the expense, ultimately, of the taxpayer?

It is right, as the Congress has done in past, and we sincerely hope will continue to do in future, to protect the citizen from the effects of unemployment due to economic forces beyond his control. Congress has been both wise and just in the enactment of legislation to cushion the shock of unemployment to the individual, and to alleviate broad scale economic distress in wide areas of our country. But Congress does not normally enact laws to arrest economic forces, such as competition, which are in the long run good for the country.

Nor can Congress enact laws to prevent unemployment as a consequence of inevitable economic forces-as, for instance, in a change of styles in ladies' clothing, or in the case of depletion of a specific mine. It is an inevitable, though unhappy, fact that mines shut down when their reserves are exhausted, or when they become too uneconomic to operate.

If, in fact, certain domestic fluorspar mines are presently uneconomic to operate because of competitive forces, and those minerals can be obtained elsewhere at a lesser price, should Congress step in to force the consumers' money to make up the deficit to provide jobs, any more than it should so use the taxpayers' money when a mine has been exhausted?

Of the seven firms listed among the principal producers of finished fluorspar in the United States by the Bureau of Mines, there are only two independents, Ozark Mahoning and Minerva Oil Co. The others are so-called captive producers, who produce for their own consumption, or for the consumption of corporate affiliates.

None of these so-called captive producers support this legislation. Of the nine firms which the Bureau of Mines informs us are engaged in metallurgical grade production, the leading three supply 79 percent of the total.

As we have earlier noted, this bill does not provide for the apportionment of proportionate shares among all of the domestic producers. We believe, therefore, that the operation of this bill would tend further to concentrate production in those who are presently the leading domestic producers. We believe that the inevitable result would be the emerging of one or two producers as the sole producers of domestic acid grade fluorspar, and of one or two producers as the sole producers of all other grades.

Thus, enactment of this bill will result in benefits to less than a handful of firms. This would seem to us to be more in the nature of special legislation than a public law.

We believe that a domestic fluorspar producing industry not only should continue to exist in this country, but can exist profitably without the passage of S. 1285. We believe that if the Congress were to preserve this industry in its present size in the United States by the

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