Senator HART. Thank you, Mr. Strauss. You have, as usual, stated your views and those of the Mining Congress extremely forcefully and clearly.

Let me ask you one or two questions. Do you have any comments on S. 2635 which is the administration's bill to dispose of 11 different materials?

Mr. STRAUSS. Yes. I have not actually seen the bill as yet, Senator, but I have through the press become aware in general of its provisions. For example, it provides for a release of 25,000 tons of tin and I assume that this plus the 5,000 tons which the administration is proposing should be given to the International Tin Agreement amounting to a total of 30,000 tons. The total is, therefore, consonant with the provisions of the Domenici bill. We would endorse this tin disposal even though we believe the present tin stockpile objective of only 32,000 tons is inadequate in terms of this country's total dependence on imports.

Nevertheless, we also agree that 200,000 tons is probably in excess of a proper objective and would see no reason to oppose the release of 30,000 tons. As I indicated in this testimony we prefer to see all of that sold to domestic consumers rather than to have 5,000 tons set aside for the International Tin Agreement.

So with regard to tin I would say that we are supportive.

With regard to silver, which is the other item that is of substantial importance in monetary terms to the proposed legislation, we have great reservations. The members of the Armed Services Committee perhaps are aware of the fact that in the development of the cruise missile the use of a silver battery has been considered the most desirable form of providing energy for that missile.

However, less than a year ago statements were put out by the Defense Department indicating that because of the concern over the availability of silver they were not sure they were going to use the silver battery for the cruise missile. Their estimated requirements for silver for this program are about 200 million ounces. It strikes us as strange that on the one hand the Government says that it would have a more effective weapon if it were powered with a silver battery but that an ample supply of silver is not assumed and on the other hand the Government says it does not need a silver stockpile. There is something wrong with that.

Under the provisions of S. 1810 there would in fact be a stockpile objective for silver. My own experiences during World War II indicate to me very definitely that silver was of major importance in fighting World War II. There have been no technical developments that I am aware of that have lessened these defense requirements for silver. To the contrary in the battery field it indicates that there is more need for silver now than in the past.

Therefore, I feel that before any release of silver in the amount proposed in this bill-which is roughly half of the amount now in the stockpile-the matter ought to be looked at with great care and caution by the Congress.

I think the administration should be questioned particularly on this matter of the cruise missile. That is, whether or not in fact we are giving up some efficiency in that important weapon because of an alleged

shortage of silver on the one hand and on the other hand we are putting silver into the market.

Some of the other materials are proposed to be sold-antimony and bismuth. Today due to market conditions sales of either antimony or bismuth would be extremely disruptive. We agree that the stockpile should not be looked at from an economic standpoint. The significance of antimony as a military item has probably diminished over the years because of technical developments and disposal of that antimony should be undertaken, but whether this is an appropriate time to sell it I am not so sure. I would raise real questions about doing that at this time.

Now I know that the members of the General Services Administration have repeatedly expressed their intention to operate in such a manner as not to disrupt the market and the legislation, of course, specifies that they should not do so. However, realistically every transaction, whether a purchase or a sale, has an effect on the market. There is no way you can have an immaculate conception, if I may use that phrase, in regard to stockpile transactions. They are bound to affect the market in one way or the other and I would simply say that this is not an appropriate time in my judgment to be selling either bismuth or antimony.

There will be times in the future when perhaps such sales would be appropriate.

There was also a sizeable item with respect to industrial diamonds as I recall it. On that I would point out that I think you have to bear in mind that substantially all of our diamond supplies come from Africa, from the very areas that are now involved in political and military developments. These are causing so much concern that the continued supply of diamonds to the U.S. market from such places as Zaire, the Union of South Africa, and Namibia, is not assured. There are big uncertainties about this, and here, again, I ask is this the right time to be selling industrial diamonds, of which we have no production whatever in the United States.

So my answer is a mixed bag. I think the tin disposal is warranted and would be helpful. I think the silver and diamond transactions need to be looked at very carefully in light of the current situation and that bismuth and antimony would seem inappropriate because of prevailing market conditions.

Senator HART. We did go into the question on silver in executive session which we held yesterday with the administration witnesses, particularly the Defense Department witnesses. Unless I am factually incorrect, I think the missile technology or the weapon system technology where that is most crucial relates more to the MX than to the cruise.

Mr. STRAUSS. Yes.

Senator HART. Your concern is well placed and I think it is a concern that is shared and we do intend to pursue that with the Defense officials.

Mr. STRAUSS. Very good.

Senator HART. You mentioned on the bottom of page 7 of your testimony that you support, as you did before, the McClure concept of relating stockpile objectives to proven import dependence. In addition to your testimony I think you are generally supportive of the

reform proposal which I offered. Do you find those two to be compatible; that is to say, can the McClure concept be inserted into the S. 2575 framework, do you think?

Mr. STRAUSS. I think so. The real problem, Senator, will center mostly on a relatively small number of commodities and particularly the low volume commodities that have very specific defense applications perhaps or that have no specific defense application where our import dependence is not a measure of their true security strategic requirements. However, when you consider the large volume commodities, if we have an import dependence it is a pretty good measure of how dependent we would be in the event of a war. The simple reason is that constraints of manpower, of manufacturing capacity in this country and other limitations make it impossible for us to use two or three times as much of a given large volume material in wartime as we do in peacetime. It just can't be accomplished.

For example, I know that aluminum has very many highly significant wartime applications. One could say that in wartime our requirements for aluminum will rise very sharply. Yet we will find we simply don't have the men, the energy supply or the fabricating capacity to convert a much larger quantity of aluminum in wartime. than we do in peacetime.

What will happen is what happened in World War II-not for reasons of lack of supply but because of manpower restrictions. A large-scale war may make it impossible, for example, to manufacture perhaps passenger vehicles. This happened in World War II.

So I feel that the McClure formula does have a real advantage and I see no great incompatibility between S. 2575 and the McClure bill. The McClure bill simply goes a step further than S. 2575 in setting up guidelines requiring that import dependency shall be given heavy weight except where it is not deemed appropriate by the administra

tion.

Then they have got to spell out why it is not appropriate..

Senator HART. We would welcome your comments further on stockpile goals so long as the record is open and particularly reviewing the other commodities materials that the administration is proposing.

Mr. STRAUSS. Yes. As indicated, Senator, it was not clear to me from the statement that was issued last fall in which it was declared that the Carter administration reaffirmed the general program as set out in the previous year under the Ford administration. It was not clear to me whether that represented an endorsement of the Ford individual stockpile goals or whether it simply referred to the overall principles. I have read the statement several times and it can be interpreted either way and I have had no clarification of it.

Now if the stockpile goals are still specifically those set out by the Ford administration in 1976, then we would have some comments on some of the specifics.

Senator HART. I welcome back Senator Hatfield from Montana.
Senator, do you have any questions of Mr. Strauss.

Senator HATFIELD. No; not at this time. Thank you.

Senator HART. Thank you very much, Mr. Strauss.

Mr. STRAUSS. Thank you.

[Subsequent to the hearing the following letter was received from Mr. Simon D. Strauss:]

AMERICAN MINING CONGRESS,
Washington, D.C., March 14, 1978.

Hon. GARY HART,

Chairman, Subcommittee on Military Construction and Stockpiles,
Committee on Armed Services,

U.S. Senate,

Washington, D.C.

Dear Mr. CHAIRMAN: At the time of my appearance before your Subcommittee on Thursday, March 9, you indicated that witnesses would be permitted to submit supplementary information in regard to pending legislation on stockpiling.

Following my testimony before the Subcommittee, Senator Dennis DeConcini and Representative Morris Udall appeared before you to announce that they were introducing new legislation authorizing the disposal of tin and the purchase of copper for the national stockpile. I was not aware of this pending legislation at the time I made my statement on behalf of the American Mining Congress.

Apparently the DeConcini-Udall proposal has the endorsement of the Carter Administration, as in fact Mr. Royal of the General Services Administration indicated later. Under the circumstances, it seems appropriate on behalf of the American Mining Congress to express our views with respect to the DeConciniUdall proposal.

The mining industry is grateful to the Arizona congressional delegation for having pursued this subject in discussions with Administration spokesmen. We believe that their representations to alert the Administration to the dire plight of the copper industry and to the fortuitous circumstance that the government's stockpile program can be properly used as a vehicle for ameliorating the industry's present situation, without violating the principle that the strategic stockpile should be used for strategic purposes only. We believe, therefore, that progress is being made toward meeting the country's strategic goals.

However, we feel constrained to point out several respects in which the proposed legislation requires careful examination by your Committee and the Committee on the House side.

The DeConcini-Udall bill provides that proceeds from the sale of the first 5,000 long tons of tin in fiscal 1978 and from the sale of the first 10,000 long tons of tin sold in fiscal 1979 shall be covered into the Treasury as miscellaneous receipts. This provision is at odds with H.R. 4895, introduced last year by Rep. Charles Bennett, and with S. 2575, both of which provide that the proceeds of sales from disposal of stockpile surpluses shall be earmarked for subsequent stockpile acquisitions. As you know, the American Mining Congress believes that one of the prime incentives to misuse of the strategic stockpile has been the desire to raise funds for budgetary purposes.

A second problem arises from the increase in the quantity of tin to be disposed to a total of 45,000 tons as compared with the previous figure of 30,000 tons embodied in the Domenici bill, S. 2167. In our judgment this increase in the quantity of tin to be sold will create opposition on the part of the tin producing countries. While the tin exporting countries have agreed that some disposal of tin is desirable to prevent a runaway price situation, to date the discussion has been limited to the maximum of 30.000 tons. A 50 percent increase in the quantity authorized for disposal is likely to bring about pressure on the State Department. We recognize that disposal authority is not necessarily used. However, if as a result of opposition by tin producers, sales are limited to a smaller figure—say, 30.000 tons and if the proceeds of the first 15,000 tons sold are earmarked for the Treasury rather than for new stockpile purchases. then it is unlikely that the government will have at is disposal a sufficient sum of money to obtain the quantity of copper of "up to 225,000 short tons" embodied in the bill.

In fact, it would eliminate disruption of the market if the quantities were made specific rather than indefinite. This could be accomplished by eliminating the phrase "up to" both with respect to disposal of the tin and acquisition of the

conner.

The legislation also provides for proceeds from the sale of tungsten to be used in the purchase of copper but this only applies to sales of tungsten in excess of 3,000,000 pounds in each fiscal year.

We hope that in considering the various proposals before your Committee, the Members will take into account these observations. We would appreciate it very much if you would make this letter a part of the March 8 and 9 hearing record on pending stockpile legislation.