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(The data referred to is as follows:)

Steel expansion, 1950-52: Data showing details of steel expansion plans of 11 of the Nation's integrated steel companies

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In addition 10 semi- and non-integrated steel companies plan expenditures that total $185,000,000 for producing finished steel. Full details of their plans are not known. The companies are: Allegheny Ludfum, Crucible, Detroit, Empire, Green River, Lone Star, Northwest Steel & Wire, and Sheffield. Also proposed for New England is a $300,000,000 plant along lines of the U. S. Steel Morrisville project. The new 5-year Labrador ore program, Iron Ore Co. of Canada will also cost $200,000,000.

Mr. PICKETT. Doctor, in that connection do you have any familiarity with the results of exploration in the Steep Rock area in Canada just about 150 miles above Lake Superior?

Mr. SANDERS. No, sir. No, I do not.

Mr. PICKETT. I call your attention to this statement which I will quote in a moment appearing in the magazine Steel as of August 21, 1950, the article being written by Mr. Don Reebel, associate editor of the magazine. I would like to read one short paragraph as follows:

On the basis of this exploratory program

referring to the Steep Rock area—

area.

it was estimated that the property contained at least 73,459,596 tons of proven and probable ore in the A and B bodies. The C body, which is currently under development by Inland Steel Co., is expected to add materially to reserves of the It is believed the Inland working will contain at least 100.000.000 tons, and its developers expect an annual production of approximately 3,000,000 tons to be realized in the future. The United States Bureau of Mines recently quoted an experienced mining engineer as saying that not less than 1,000,000,000 tons of high-quality hematite ore will be found in the Steep Rock property.

With that estimated ore availability, Doctor, you do not anticipate any real dislocation of the steel industry from the Midwest, do you, with or without the seaway?

Mr. SANDERS. No, I do not. With or without the St. Lawrence? Mr. PICKETT. Yes.

Mr. SANDERS. Oh, I am not a steel expert, and most certainly the committee should not put any weight very much on whether I think the steel industry is liable to be dislocated if the St. Lawrence is not developed. I do not pose as an expert, and I am sure the committee would not consider my remarks very significant in that regard whether I say yes or no.

But I do think that probably the St. Lawrence would insure the central western steel industry from any necessity for dislocation. It would tend to insure that. Because we are bound to get ore. We will get ore from somewhere in the world. We have the resources to develop it and to buy it, and we will get it if we have to go around over the world to get it I am sure. And if we have to go long distances, the further we go the less important would be the haul from the mouth of the St. Lawrence down into Ohio relatively.

Mr. PICKETT. Doctor, in your presentation you referred to the fact that democracy must be certain that its economic as well as spiritual superiority is not impaired in the conduct of the struggle between democracy and communism. Will you not agree that a sound fiscal economy for the United States is an essential ingredient to economic and spiritual welfare of this country?

Mr. SANDERS. Oh, yes. Yes, sir.

Mr. PICKETT. At the present time our estimated expenditures for the fiscal year 1952 are in excess of $70,000,000,000, are they not? Mr. SANDERS. Yes.

Mr. PICKETT. And we have an estimated Federal indebtedness of approximately $260,000,000,000, or just a little greater? Is that true?

Mr. SANDERS. Yes.

Mr. PICKETT. And it is an admitted fact that we are going to operate on deficit financing for 1952 as well as in succeeding years, despite the effort that may be made to make up the difference between income and outgo by increased taxes?

Mr. SANDERS. Yes.

Mr. PICKETT. Do you not think, Doctor, that the confidence of the American people in the fiscal structure and well-being of the Treasury has a great deal to do with the spiritual well-being of the people and the economic well-being of this Nation?

Mr. SANDERS. Certainly it does.

Mr. PICKETT. Now, do you not concede that with an average of $112,000,000 a year for 5 years that this project will cost we will be going that much further in the red during the period of construction and will remain so until it is amortized?

Mr. SANDERS. Yes. $100,000,000 is equivalent to one-half of 1 percent of our national income-one-half of 1 percent. Now, when you get a project that appears to be economically sound, that is the kind of deficit spending that will strengthen this country. But to spend money on anything that will not yield us a dollar's worth of return, either public or private, is the kind of deficit spending that Mr. Stalin wants us to go into.

But I do not think Mr. Stalin would be very delighted for us to go in and develop the St. Lawrence under the condition that the facts show. In other words, I do not believe that this is the kind of deficit spending that will weaken the United States.

Mr. PICKETT. Well, personally, Doctor, I am not going to be persuaded in my decision in this or any other matter by whether Uncle Joe Stalin is going to approve or disapprove. But I am wondering if you cannot concede there might be a point to some of the opposition based upon the continue deficit financing and the increased public indebtedness of the Federal Treasury from year to year.

Mr. SANDERS. Oh, yes. We certainly sympathize with that, and we so testified just recently before the Ways and Means Committee of the House.

Mr. PICKETT. Yes, sir, and you were in opposition to increased taxes at that time?

Mr. SANDERS. That is right.

Mr. PICKETT. Doctor, of course I am not going to prolong the discussion with you in this forum on the economics of the Federal budget and the Federal Treasury, but do you not think that as a sound fundamental principle the people of the United States and the Congress of the United States are going to have to exercise very great caution in far greater measure than they have in recent years

Mr. SANDERS. Yes, sir.

Mr. PICKETT. Before approving any expenditures that are not absolutely essential to the military defense of this country?

Mr. SANDERS. Yes, that is true. And, furthermore, so long as I am in the Grange and representing it in the legislative capacity. I would like for the Grange to have a policy on all public works, if you please, all public works, and it does have at the present time in its policies that unless a public work can return more total public and private benefit, then we should not under any circumstances appropriate money for it.

Mr. PICKETT. I certainly agree that that would be a sound basis to approach the problem on, Doctor. Now, then, of course, you and I will concede that every flood-control program, every soil-conservation program, every harbor development, every water transportation route that is developed by the United States must add something to the general welfare of the Nation, else it is not justified. And you are familiar, of course

Mr. SANDERS. Well, every one that yields us a benefit in excess of what it costs us. Of course, you never can get a net benefit to the Nation if you undertake a proposition that will yield both to the public and the private a smaller benefit than it costs the public.

Mr. PICKETT. I think you and I are talking about the same thing, and I just did not use the well-chosen words you did.

Doctor, there has been a suspension of construction of new publicworks programs in the last 2 or 3 years primarily because of the fiscal situation of this Nation. I think we are agreed on that, are we not? Mr. SANDERS. Yes; and I think it is a good thing, too.

Mr. PICKETT. Yes, sir.

Mr. SANDERS. I believe under the present emergency it is.

Mr. PICKETT. And, to the extent they are economically justified on the basis on which I understand you to place it, those projects have

been suspended and to that extent deferred the development of the general welfare of the country?

Mr. SANDERS. Well, yes-even considering that the projects do return a net benefit?

Mr. PICKETT. Yes, sir.

Mr. SANDERS. Yes; in a way it does, but the situation is such that to expend our resources in defending ourselves will yield us so much greater return that it is wise under present conditions to cut out as many of those projects, even though they will yield a net return, as we can possibly cut out and yet not interfere with our maximum defense efforts.

Now, the reason we are so strongly supporting this project is we believe it will add materially to our defense efforts because we believe the defense struggle is not going to be over within the 3 or 4 or 5 years that will be required to develop this to where it will begin to give us some returns toward defense efforts.

Mr. PICKETT. Notwithstanding that it will project the deficit in excess of $100,000,000 per year over the 5-year average and notwithstanding the fact that the companies who are developing the Labrador ore bodies say they are going to bring in 5,000,000 tons of ore a year by existing canal facilities in the St. Lawrence Seaway? Mr. SANDERS. Yes; I would say that that would be our conclusion. Mr. PICKETT. Thank you, Doctor.

The CHAIRMAN. Thank you.

Mr. SANDERS. Thank you very much, gentlemen.

The CHAIRMAN. We will adjourn until tomorrow morning at 10 o'clock.

(Thereupon, at 12:25 p. m., the committee was adjourned, to reconvene at 10 a. m. Friday, March 2, 1951.).

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