Memorandum of Disapproval of Bill To Continue Certain Mining Subsidies.
I AM withholding approval of H.R. 1602, a bill "To stimulate exploration, development, and production from domestic mines by private enterprise, and for other purposes".
I am taking this action only after the most careful consideration of its effect upon the mining industries directly concerned and its relation to the general interests of the public.
This bill would require the Reconstruction Finance Corporation to continue to make premium payments to subsidize highcost production of copper, lead and zinc and would provide new subsidies for domestic manganese production. Payments of $70,000,000 would be authorized for the two-year period ending June 30, 1949, with not to exceed $35,000,000 of this available in the fiscal year 1948.
The premium price plan was initiated early in the war. It was effective in stimulating production of non-ferrous metals for war purposes, while maintaining price ceilings at prewar levels. Two years ago in signing Public Law 88 of the 79th Congress, authorizing continuance of these and other wartime subsidies, I urged that these programs be reduced or discontinued as rapidly as feasible whenever such payments became no longer necessary for war purposes.1 With the end of hostilities and the decontrol of prices, almost all other wartime subsidy programs have been discontinued. No adequate reason is apparent for continuing to subsidize the output of copper, lead and zinc; and even less reason exists for adding to the list of subsidized commodities.
1 See 1945 volume, this series, Item 65.
Continuance of the present plan would contribute very little, if at all, to production of the metals now in shortest supply. Since the removal of price ceilings, prices of all these metals have risen sharply. The market prices of copper and lead, the two scarcest of these metals, have been high enough in the last six months so that only a negligible share of the total output has been eligible for subsidy payments. With the minor exception of payments for exploration and development work, therefore, continuance of the present plan could not materially increase the supply of these metals. If the plan were restored, the great bulk of the subsidy payments, in fact, would continue to go for high-cost production of zinc, the supply of which is becoming relatively ample. Similarly, the industrial demand for manganese does not now justify subsidy payments to make available a relatively minor increase in low-grade domestic ore.
Even if there were sufficient justification for continuing to subsidize production of these metals, the plan provided in this bill would be too inflexible to meet present needs. Since it was specifically designed to meet wartime needs, the largest amounts of subsidies were authorized for production of zinc and copper, the metals then in shortest supply. Now, lead is the scarcest of these three metals and zinc is in relatively adequate supply. Yet this bill would not permit any major revisions in payments to shift the emphasis from zinc to copper and lead production. If it were to become law, the taxpayer would be subsidizing primarily zinc production, and the benefits to lead and copper production would be of minor significance.
Most important, continuation of this wartime subsidy program would conflict with our long-run peacetime objective of conserving domestic mineral resources. While the provisions of the bill would encourage exploration and development of new ore bodies, other more efficient methods would be preferable--methods which do not inevitably involve the premature exhaustion of the newly discovered reserves. It is particularly shortsighted in time of peace to continue to encourage extraction of metal from previously produced dumps and tailings instead of allowing these to remain available for future emergencies.
H.R. 1602 would authorize $35,000,000 in subsidy payments in both the present fiscal year and the fiscal year 1949. The bill, however, would provide subsidy payments at rates which would probably require even larger amounts than those authorized, especially in the event of a decline in market prices of any one or more of these metals. Accordingly, supplemental authorizations might well be necessary to carry out the provisions of the bill. In the present fiscal situation, neither the expenditures specifically authorized by the bill nor such possible additional expenditures appear justified.
I am not unmindful of the dislocations in the mining industry which are caused by the expiration of the premium price plan. We must all agree, however, that we cannot regard this plan as a permanent part of our economy. It is clear that the changes in employment and other adjustments which are necessary at the time of the plan's termination, whenever it occurs, can be made more readily and with less hardship in a period of high employment and business activity, such as the present, than at any other time. Consequently, this seems to be the best time for making this inevitable postwar adjustment.
HARRY S. TRUMAN
Harry S. Truman, Memorandum of Disapproval of Bill To Continue Certain Mining Subsidies. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/232196