Profit Motive in War

U.S. businessmen last week got evidence that the Government does not intend to ditch the profit motive entirely during wartime. To coax out more copper, lead and zinc, OPA and Metals Reserve Co. announced that the U.S. would pay a bonus for all increased production of these metals over 1941.

This is not the first time Leon Henderson has raised prices to raise output. He did it to paperboard and zinc in 1941. But both were stingy raises, offering little incentive for business to work harder. This time the incentive looks real. Although premium prices will vary (they will be set mine by mine), those who get the maximum will get 17-c- a Ib. for copper, highest price since 1930 and 42% above the present ceiling. The zinc maximum is 11-c-, best since 1916 and 33% above ceiling; lead 9 1/2-c-, highest since 1926 and 42% above ceiling. For such prices, any miner worthy of the name will push operations to the limit, reopen high-cost mines, even start prospecting.

This is a Government subsidy scheme, will not affect consumers. Metals Reserve Co. will pay the premium prices, resell to fabricators at regular ceiling prices.

Copper is the tightest of all base metals. Before last week, 1942 U.S. output plus imports was estimated at 1,800,000 tons. Even with no new cars and before allowing for the newly projected 3,500,000-man Army, this was about 100,000 tons shy of 1942 military and civilian needs, according to OPM. But the new 17-c- ceiling may close this gap. Biggest single boost will be Phelps Dodge's newly opened Morenci mine (TIME, Nov. 10), scheduled to turn out 75,000 tons this year. Washington thinks that Anaconda and Kennecott can add another 40,000 tons.

Further increases will come from small mines like Inspiration, Park Utah and hundreds of others in Western States.

Copper mines cannot count on getting the maximum premium for all their increased output. Exact prices and quotas will be 'based on wage rates, ore yield, "other factors." One "other factor": willingness previously shown. Thus hardworking Kennecott--which has been on a seven-day-week since October 1940, even worked Christmas--may get better prices even though its cost of production is lower than others. While all output of Phelps Dodge's Morenci mine will be new tonnage, "allowances" will be made so the company does not get too rich. This week the company was glum about getting any premium on Morenci's first 75,000 tons.

Zinc & Lead. OPM expects the premium scheme to boost zinc output "at least 30%" this year. Biggest hitch will be refining capacity, not mining. But this will be eased when American Smelting opens its $5,200,000 Corpus Christi zinc plant. Lead got a double boost. First the ceiling was raised from 5.85-c- to 6.50-c-, then the premium (up to 9 1/2-c-) was tacked on. As in zinc, OPM expects a 30% boost in 1942 output.

All this points to boom times again for the Western mining States. U.S. Smelting & Refining may reopen its Eureka, Cal. Sunnyside Mine, which has been closed since June 1938; Utah's Lakeside Mine--boarded up since 1927--may also be reopened; prospecting in Idaho's famed Coeur d'Alene district is sure to increase.

This week Washington was pleased with the response to its new scheme. If it works, it may be extended to munitions makers. The way: extra pay, not thank-you-notes, for ahead-of-schedule deliveries; bonuses, not brush-offs, for bright manufacturing ideas to help beat the Axis.

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