Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1942-10-24

was not. It was solved by liberalizing the
Reconstruction Finance Corporation rules
The Jesse Jones system Of banking wa
altered to meet the new problem Now it is
possible to finance mining, from the grass
roots to a smelter, through RFC loans else
through direct financing of the Metals Re-
serve Corporation Nor is this confined to
the little fellow" The great Anaconda
Copper Mining Co. is working with govern
ment money in opening up the chromite
properties Of southern Montana. They and
many other large companies are using gov
eminent money knowing that a new order
has come. Many Of these are powerful
enough so that they could raise the money
through a bond issue or even through a
stock ISSUE but why should they go into
a major encounter with the government? It
is far easier to accept the new order.
This is not confined to the mining in
dustry We know about mine financing be-
cause it is all around us. But it applies to
ship building, to practically every essential
enterprise in the country today. Many Of
the loans" are not good banking paper,
in all probability, but that makes no diff
ference. The new order is being established
at a time when it provides needed direct
action 1t is on the same principle that the
government goes into the power business
thereby eliminating some of the largest tax
payers. Even If the government enterprise
runs at loss, the goal Of production for
use" is established and in due course of time
the plan is to offset loss of tax revenue by
greater profit in government operation
All Of this is a background to the very
casual statement of Leon Henderson, head
of the Office of Price Administration, that
he favored payment of some form of
REWARD or subsidy to those who actually
made discovery of new oil reserves, rather
than an increase in the price of production
from present reserves.
There is no doubt but that it was planned
that way The OPA has given deaf ear to the
petition Of the oil industry for higher prices
to meet growing demands of the govern
ment. The movement OF products by rail
rather than by cheap water transportation
brought increased costs. The government re-
fused to allow higher prices but proposed in
stead a subsidy plan, on the theory that the
war caused the expense and therefore the
government should pay it. Then came the
problem of cutting down gasoline recovery
in refineries, to increase the output of fuel
oil. Government agencies again talked in
terms of a subsidy
Gasoline rationing will not have the dire
effects many imagined because there is such
a tremendous demand for gasoline for war
projects on which there will be no restric-
ton of use either of gasoline or rubber But
where the shoe does pinch, the government
IS going to offer subsidies as a solution
All the power of the oil industry has been
nod {v, aff -
ration to see the necessity of granting in
;reases in the price Of oil and petroleum
products. to avert an actual oil shortage An
Ill shortage is coming as certainly as is the
continuation of the war. But the answer of
he administration win not be price in
reases but SUBSIDIES
The attitude of the industry was expressed
~ Russell B. Brown at the recent hearing
'efore the subcommittee of the senate COM
nittee on public lands and surveys at Wash
ngton, d. G. He said:
The amazement of the witnesses at this
ropOsal (of a subsidy may be understood
7hen we realize that, although proposals for
rice increase have been pending for more
han IL months no suggestion had been
offered as an answer to these
roposals. In fact, no answer had been made
D such proposals.
Testimony before this Committee has
cen presented to the effect that an in
rease in the price to be paid for crude
etroleum is now needed for the following
sasons:
Much of the oil is now being produced
at costs exceeding the price at which a
ceiling has been placed by the office of
price administration
To supply the necessary funds with
which to carry forward an increased
exploratory program to discover new re-
serves of petroleum and to provide the
incentive to encourage operators to en-
gage in such a program.
To supply funds sufficient to make
possible the, development Of secondary
recovery programs in areas where the