Mr. STRAUB. I come to protest the definition of "mine leasers" or "block leasers" as employees' as described in H. R. 6000. Our reason for objecting is that we are not mine employees at all, but independent groups of men in partnership mining blocks of ground under lease. Under the present system we do not work for the company. We form a group or partnership and the company does not know any of the men in the group outside the man who holds the lease. We go to work and we quit anytime it suits our plan of operation. The block-leasing system as now in force has a definite advantage for us in that we can make better than a day's pay usually and there is always the possibility of striking unusually rich ore. The men on my lease have received as the smallest check $365 per month and the largest was $1,065 per month. Our average monthly pay as employees would be about $300 per month. We prefer the block-leasing system now in force, therefore, for two reasons: First, we are our own bosses, and, secondly, because we can earn more per month on the average year in and year out. This block-leasing system is one which requires special skill. We are old miners and are able to carry on this type of work successfully. It offers us a means of livelihood as we grow older and we do not wish to see this system abandoned. I think that the company could not operate this system where we are both leasers and employees at the same time, so I foresee the abandonment of the leasing system if we are by law classified as employees. We wish therefore that you would amend H. R. 6000 and specifically exclude "block leasers" from classification as employees. I wish to thank you for listening to our request. The CHAIRMAN. We are very glad to have you, sir. Let me ask you one question. Are your leases limited as to time! When you take a lease from your company, is it limited to months or years? Mr. STRAUB. It is limited to 6 months, with a provision for renewal provided the company is satisfied with our operations; that is, that we have not wasted ground. If we would "bury ore," in other words, pass ore by that the company never could recover again, they might not renew our lease. But if we mine on a fair and equitable basis, we have renewal every 6 months. The CHAIRMAN. It is optional with you whether you do renew your lease? Mr. STRAUB. That is right. The CHAIRMAN. You are not obliged to renew your lease? Mr. STRAUB. No. The CHAIRMAN. Are there any questions by any of the Senators? Thank you very much, Mr. Straub. Mr. STRAUB. Thank you, sir. Mr. SEARLS. Would the committee permit Mr. Butler to read a paper of the same length as this, from the North Star Mine? The CHAIRMAN. Yes, sir. Mr. SEARLS. He is the lucky gentleman who found this piece of "high grade" that you just saw. The CHAIRMAN. Mr. Butler, you may be seated. STATEMENT OF CHESTER C. BUTLER, LEASER, EMPIRE STAR MINE, GRASS VALLEY, CALIF. Mr. BUTLER. My name is Chester C. Butler. Since 1932 I have earned my living by mining and leasing in the Grass Valley, Calif., mining district and nearby districts. Before the war I worked for the Empire Star Mining Co., starting out as a mucker and working my way up to shift boss and later to mine foreman. Even with shift boss' and foreman's wages I was unable to get ahead appreciably. I have been voted by our local leasing organization to make this statement on their behalf. I wish to file this authorization with the committee. The CHAIRMAN. Yes, sir. You may file it, and it will go into the record. (The material referred to follows:) The undersigned, constituting the head leasers of various leaser groups operating at the Empire, North Star, Pennsylvania, Idaho, and Brunswick mines at Grass Valley, Calif., and the Dannebroge mine at Browns Valley, Calif., hereby authorize August Carino, Chester C. Butler, and Albert J. Straub, who are members of the leaser group, to constitute and represent the undersigned as a committee in presenting the opposition of each and all of the undersigned leasers to the proposal in H. R. 6000 now pending before the United States Senate which would (a) define and constitute the undersigned as "employees" of the mining companies from whom they respectively hold leases, and (b) from the provisions of said bill which would levy social-security taxes on the undersigned, either as employees or as independent self-employed persons. Our reasons for this opposition are based on the fact that (1) We wish to maintain our independent status and opportunities for making a stake for ourselves as independent leasers of mining property; and (2) Because we realize that if that status were converted by law from its independent character to an employee's classification, the additional burdens placed upon the lessor companies as employers, coupled with the lack of incentive to the leasers, would result in the entire destruction of the leasing system, with great loss to ourselves and to the communities in which we live. Dated January 13, 1950. (Signed by the following head leasers :) A. D. McConnell, W. II. Stein, AMENDMENT TO H. R. 6000 SUGGESTED TO THE SENATE FINANCE COMMITTEE BY REPRESENTATIVES OF GRASS VALLEY GOLD MINE LEASERS I. The leasers concur in the amendments proposed by the representatives of the American Mining Congress excluding them from the classification as “employees" and their income from these leases being classified as "wages." In addition the leasers request that their income be excluded from the term "selfemployment income" as used in the act by adding to section 1641, subdivision (b), page 158, line 5, a new subsection to be numbered (3), reading as follows: "(3) The amount or value of or returns from ore, metal, bullion, amalgam, or concentrates received or derived by a mine leaser or a group or partnership of mine leasers from their mining operations." Mr. BUTLER. After the war I returned to leasing in the Grass Valley district at the Empire Star mine, hoping to earn better than day's wages. I leased a block of ground in the Rowe shaft area from the 900 level to the surface, a block which had been closed down in 1917 because the company could not make it pay. 1 Mr. Butler holds lease with Rowe Shaft; all others hold leases with North Star. There are 14 men on my lease, sharing equally in the profits from production. With the incentive that we might make a stake, we have through hard work, careful planning, and selective mining made the lease pay far better than wages. In the last 2 years each man on the lease has received approximately $15,000, or an average of $7,500 per year, which is far more than could have been earned working for wages. These men have spent their earnings for homes, cars, and other necessities of life, thus contributing to the economy of the community in general. Their production has also profited the company and helped the company to fulfill their obligations to the leasers in supplying equipment and materials. This much-favored system of mining will cease if your H. R. 6000 bill is made a law. Mine executives have informed us they will have no other alternative than to close the mines if this bill passes. Under present conditions of high cost of materials, high wages, and the set price of gold it is impossible-except for the very high grade gold mines, which are very few-to operate in any other way than the present leasing system. Therefore, if the bill passes we will be out of work. Consequently we oppose those portions of this bill that would make us employees. We wish to be left alone as free and independent leasers under the present leasing system with the chance to make a stake for ourselves, and the opportunity to make our own future security in a good American way without having to fall back on the Government for social security. The leasers in this district are well satisfied and are getting ahead under the present leasing system. The interests of the leasers and the company are profiting by this system because the leasers are able to make a stake for themselves and the company in getting ground mined that could not profitably be mined by day's pay miners. For the above reasons I urge you to amend bill H. R. 6000 so as to exclude block leasers from the bill. Thank you. Senator MILLIKIN. Mr. Chairman, may I ask the witness: What are the principal towns in the Grass Valley, Calif., mining district? Mr. BUTLER. Well, there is Nevada City, Downieville, Sierra City, Auburn, Newcastle, Browns Valley, Alleghany, Smartsville. Senator MILLIKIN. Those towns are held together by your mining activities? Mr. BUTLER. That is practically what keeps those towns in existence. Senator MILLIKIN. They would fold up if you could not continue your leasing system? Mr. BUTLER. They would undoubtedly. Senator MILLIKIN. And the miners have their homes there and are raising their children in schools there? Mr. BUTLER. That is right. Senator MILLIKIN. You belong to lodges there and enter fully into the life of the communities? Mr. BUTLER. That is correct. Senator MILLIKIN. Would you know what the average age of the miners is who work under these systems in your part of the country! Mr. BUTLER. The average age? Senator MILLIKIN. Yes; just take a rough shot at it. Mr. BUTLER. Oh, I would say between 45 and 55. And there are some a lot older. Senator MILLIKIN. The elderly man under this system has a chance of keeping going longer than if he worked as a straight employee for a mining company; is that not correct? Mr. BUTLER. That is true. Because some of the old men become crippled up, and their health is broken down to a certain extent, where they can't work under company regulations; and when they are under the leasing system, they can more or less work at their own leisure, and there is nobody to bother them. Senator MILLIKIN. They may not be able to do as much physical work, but they can bring to bear the skill which they have acquired during a long life of experience? Mr. BUTLER. That is right; they have the experience, and if they have some younger men under them they can go around and more or less supervise the younger fellows and teach them their knowledge. The CHAIRMAN. May I ask: Do you own your own equipment, or do you get it from the company? Mr. BUTLER. There is some equipment that the leasers do own themselves, and if they have not got it themselves, the company does furnish it. The CHAIRMAN. On a rental basis? Or how? Mr. BUTLER. Well, it is furnished. The company furnishes the materials as part of their leasing contract if the leaser doesn't have them available himself. However, there are instances where the leasers do furnish part of their own equipment. But in most cases those fellows are not financially able to get started on their own, and the company loans them this equipment to work with. However, as they go along and they make a little money and they need another tugger or another machine or something, that is not available from the company, they can buy it themselves; which they do, in some instances. The CHAIRMAN. Does the miner have very much investment in his equipment the leaser? Where he furnishes his own equipment, where he procures it? Mr. BUTLER. Himself? The CHAIRMAN. Yes, sir. Mr. BUTLER. In some instances not an extreme lot of money. The machinery at the present time, with the cost of materials, runs into a pretty considerable sum of money, too, for an individual. Senator JOHNSON. How much money? Mr. BUTLER. Well, he used to be able to buy a machine for about $250, and at the present cost of machines a new machine will cost anywhere from $550 to $1,000. Senator MILLIKIN. A machine? What kind of a machine? Mr. BUTLER. A drilling machine. Senator MILLIKIN. The leasers would not be able, even if someone had the power to change the system, to furnish the air, to keep the whole mine timbered, to run the trackage and the cartage necessary to conduct these operations, would they? Mr. BUTLER. No; not as large as the mines are in Grass Valley. The company almost has to keep those mines open, because it would be too much for any one individual. Senator MILLIKIN. From the standpoint of the self-interest of the company, they have to keep their mine free from water? Mr. BUTLER. That is right. Senator MILLIKIN. And I assume that you have air operations to keep your workings in good condition? Mr. BUTLER. That is right. Senator MILLIKIN. That is a very elaborate procedure involving a lot of machinery? Mr. BUTLER. That is correct. Senator MILLIKIN. Carrying pipes and so forth and so on. That would be beyond the reasources of an individual miner; would it not? Mr. BUTLER. Yes; it would, unless he had a lot of capital. Senator MILLIKIN. And there is no reason why the individual miner should undertake the responsibility for keeping the whole mine timbered so that he can work on a small part of the mine? Mr. BUTLER. That is right; he couldn't do it. Senator MILLIKIN. No; he could not do it if he wanted to. So that this practice that you have is fitted to the necessities of the business; is that not correct? Mr. BUTLER. That is correct. The CHAIRMAN. Any further questions? Thank you very much, sir, for your appearance. Mr. BUTLER. Thank you. Mr. SEARLS. Mr. Chairman, before turning the presentation over to the Colorado delegation, Mr. Hopkins R. Fitzpatrick, the general manager of the Empire Star Mines Co., has a paper which would take about 3 minutes to read. However, if the committee does not care to hear it, we would like to have the privilege of filing it. The CHAIRMAN. I think we will be able to hear Mr. Fitzpatrick. Come around, Mr. Fitzpatrick. Identify yourself, if you will, for the record. STATEMENT OF HOPKINS R. FITZPATRICK, GENERAL MANAGER, EMPIRE STAR MINES CO., LTD., GRASS VALLEY, CALIF. Mr. FITZPATRICK. My name is Hopkins R. Fitzpatrick. I am a mining engineer employed as general manager of Empire Star Mines Co., Ltd., a company owing and operating several gold mines at Grass Valley, Calif., where I live. The purpose of this statement is to protest inclusion of mine block leasers as employees under the proposed extension of social security insurance. The Empire Star Mines Co., Ltd., has leased 34 underground blocks of ground in its mines to 28 leasers, each of whom develops and mines his block or blocks of ground as he pleases with his own crew. The leased blocks of ground lie at various depths, some lying more than a mile below the surface. Most of the leaser blocks lie a mile or two from the nearest hoisting shaft. Only a small percentage of the lease ground could be profitably mined by company employees due to the small size of the veins, remoteness from operating shafts, and prohibitive cost of supervision. During the nearly 100 years of continuous operations of the Grass Valley mines, development has often opened veins too low grade or too small to be profitably mined by the operating companies. Also, there have been other economic periods, as at present, when the fixed |