From Boon to Boondoggle

In each of its past three wars, the U.S. has paid heavily for lack of a sizable domestic tungsten industry. Each time it has been gouged by foreign producers for the vital metal needed to toughen high-grade steels. After the Korean war, when world prices per standard 20-lb. unit leaped from $18 to $90, the Government finally began 1) stockpiling tungsten for defense and 2) fostering a domestic industry with a $30 million annual subsidy to buy U.S. tungsten at $63 per unit, about twice the world market price. Last week the tungsten subsidy was blasted from an unexpected quarter--one of its biggest beneficiaries.

Philip McKenna of Kennametal Inc. told a House committee that the U.S. already has enough tungsten to last 18 years. He called the stockpiling program an out-and-out "boondoggle," called further appropriations "silly." A recent House report had said that of some 700 producers who were supposed to benefit from the program only 49 have actually participated, and the top nine have received 87% of the funds. McKenna added further facts: Kennametal's subsidiary mine, Nevada Scheelite Corp., has taken in $10 million from selling tungsten solely to the U.S. Government. For its own needs, Kennametal, a Pennsylvania tungsten toolmaker, has gone on buying from foreign producers at a far cheaper price.

McKenna's attack pleased the House Appropriations Committee, which has already knocked out a supplemental 1957 subsidy, displeased Western mining state Senators, who restored the request and raised the subsidy in the Senate appropriations bill to $40 million. They argue that ending the subsidy would end the domestic industry within 90 days. Actually, loss of the subsidy would probably not put all domestic tungsten miners out of business, since far more are selling to industry than to Government. But with the Government out of the market, tungsten prices might go down. In any case, there seemed no doubt that the U.S. has plenty of tungsten on hand. Defense Mobilizer Arthur Flemming himself said that the stockpile is big enough to last at least six years.

Though some officials still think the domestic industry should go on under protection, one Interior Department tungsten expert disagreed. Said he: "We're jerking out of the ground tungsten that we shouldn't have to pull out for the next 50 years. McKenna is right. Since we've got enough tungsten for an emergency, let's leave it in the ground."

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