General, Secretary of the Navy Knox; Secretary of War Stimson; Donald M. Nelson, Chairman of the War Production Board; Governor Marriner S. Eccles, of the Federal Reserve Board; and Secretary of the Treasury Morgenthau. And the Navy will be represented at our hearings, as well as the War Production Board, and perhaps the Treasury Department. I should like to put in the record at this point a self-explanatory letter from the Secretary of the Treasury, which I think I might read [reading]: OCTOBER 13, 1942. MY DEAR MR. CHAIRMAN: Further reference is made to your letter of September 15, 1942, relative to S. 2768, to authorize the use for war purposes of silver held or owned by the United States. It is understood that it is the purpose of S. 2768 to permit the silver which is being lend-leased by this Government for use in war industries to be maintained as security for outstanding silver certificates and to permit the sale or other disposition of all silver which is not so held. This Department approves of any such legislation which is designed to permit the use of silver held or owned by the United States for purposes which will further the successful prosecution of the war and, accordingly, recommends the enactment of S. 2768, as modified by the suggestions contained in this letter. Reference is made to the following proviso in S. 2768: "Provided, That no silver shall be sold under this Act at less than its cost to the United States or at less than the then current market price for silver, whichever is the higher.' In this connection, it should be noted that the silver now held in the Treasury has been acquired at various cost prices, the average cost to the United States of all silver not now held as security for outstanding silver certificates being approximately $0.485 per fine troy ounce. Furthermore, there is no single current market price for silver. Prices vary depending upon various circumstances and ceiling prices established by the Office of Price Administration vary for silver of different categories. It is, accordingly, suggested that the above-quoted proviso be changed so as to read as follows: "Provided, That the average price for all silver sold under this Act shall not be less than 50 cents per fine troy ounce." It should also be noted that there is a situation in which silver might be made available for war purposes, which is not specifically covered by S. 2768. Approximately 350,000,000 ounces of silver now held as security for outstanding silver certificates is in the form of standard silver dollars. Approximately 35,000,000 ounces of this silver is in the form of coins not fit for circulation. Less than 70 million standard silver dollars are now in circulation and it is unlikely that there will be any heavy demand for those held by the Treasury. If the Congress desires that any part of the silver dollars held in the Treasury be used as provided in S. 2768 for other silver held by the United States, it will be necessary to add certain provisions to S. 2768, including an authorization for an appropriation for melting losses. Since the War Production Board is primarily concerned with the problem of seeing to it that all available silver is allocated in such a manner as to best further the war effort, the Department would, of course, consult with the War Production Board in disposing of silver pursuant to the provisions of the proposed legislation. The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your Committee. Very truly yours, Hon. ROBERT F. WAGNER, H. MORGENTHAU, Jr., United States Senate. Chairman, Committee on Banking and Currency, I would like to read, with the further permission and forbearance of the subcommittee, a letter addressed to Senator Wagner by Mr. Nelson of the War Production Board [reading]: OCTOBER 10, 1942. The Honorable ROBERT F. WAGNER, Chairman, Committee on Banking and Currency, United States Senate. DEAR SENATOR WAGNER: This is in answer to your letter of September 15, in which you requested my views on S. 2768, a bill to authorize the use for war purposes of silver held and owned by the United States. This legislation would authorize the President, through the Secretary of the Treasury, to sell, lease, or dispose of, upon such terms as the Secretary sees fit, the silver owned by the United States. The Secretary is authorized to sell this silver for use in connection with the war effort, "including but not limited to❞ essential war and civilian needs. I wish to be certain that the silver purchases will still be subject to control by the War Production Board through its priority and allocation powers, so that essential requirements for the war effort can be met. I think it would be advisable, therefore, to add the phrase "upon the recommendation of the Chairman of the War Production Board" after the words "through the Secretary of the Treasury," at the end of line 4, page 1. With the above recommendation, I approve the passage of this bill. The Bureau of the Budget has indicated that it has no objection to the submission of this letter. Sincerely, DONALD M. NELSON. I would like also to put in the record a communication addressed to Senator Wagner from the Attorney General [reading]: Hon. ROBERT F. WAGNER, Chairman, Committee on Banking and Currency, OCTOBER 12, 1942. United States Senate, Washington, D. C. MY DEAR SENATOR: This acknowledges your request of October 7 for my views concerning a bill (S. 2768) to authorize the use for war purposes of silver held or owned by the United States. As this legislation does not impinge on any activities of this Department and relates to matters of policy within the jurisdiction of the Treasury Department, I would prefer not to make any suggestions concerning the merits of the legislation. You may desire to obtain the views of the Secretary of the Treasury concerning the matter. Sincerely yours, FRANCIS BIddle, I should like also to put in the record a letter from the Chairman of the Federal Reserve System [reading]: Hon. FRANCIS MALONEY, United States Senate, Washington, D. C. OCTOBER 9, 1942. DEAR SENATOR MALONEY: I have your letter of October 8, 1942, regarding the hearings before a special subcommittee of the Committee on Banking and Currency of the Senate respecting S. 2768, to authorize the use for war purposes of silver held or owned by the United States, which will commence on Wednesday morning, October 14, 1942. I have not as yet had the opportunity to consider the proposed bill, but I shall get in touch with you early next week so as to advise whether I would wish to appear as a witness or designate someone else in the Board's organization to do so. It may also develop that our interest in the matter can be satisfied by sending you a statement respecting the bill. Sincerely yours, M. S. ECCLES, Chairman. I should like also to put in the record a somewhat similar letter from the Attorney General, addressed to me [reading]: Hon. FRANCIS MALONEY, United States Senate, Washington, D. C. OCTOBER 10, 1942. MY DEAR SENATOR: This acknowledges your letter of October 8 inviting me or someone under my jurisdiction to testify before a subcommittee of the Committee on Banking and Currency of the Senate, at hearings on a bill (S. 2768) to authorize the use for war purposes of silver held or owned by the United States. I appreciate your courtesy in this matter but desire to suggest that in view of the fact that the legislation relates to a matter within the jurisdiction of the Treasury Department, you will probably find it more satisfactory to procure the testimony desired by you from the Secretary of the Treasury or someone under his jurisdiction. With kind personal regards, FRANCIS BIDDLE, Attorney General. Before we proceed to hear witnesses, Senator Danaher has some material he would like to put in the record. Senator DANAHER. I should like it to appear that I have received many, many dozens of communications from constituents in Connecticut, who report the impact of the situation as it exists today upon their individual welfare. I should like to have the members of the subcommittee know that the material I refer to is available for the inspection of the subcommittee when we later meet in executive session with reference to the bill. On that account I will not ask that they be printed in full in the record. I should also like to say that at the time of previous consideration of other measures a record has been made, which is quite complete, Mr. Chairman, and therefore the status of the silver situation is quite apparent. Handy and Harman, analysts, have recently compiled a brief résumé of "The Silver Situation Today," under that title I mean, and it appeared in the edition of Saturday, August 29, 1942, in the Bridgeport Life. Since it is brief but very pointed I should like to have it appear in the record in full. Senator MALONEY (chairman of the subcommittee). Without objection the committee reporter will make it a part of the record. (The article referred to is as follows:) [From the Bridgeport Life, August 29, 1942] THE SILVER SITUATION TODAY In response to numerous requests, Handy and Harman outline the silver situation FOREIGN SILVER This is silver produced outside of the United States, or domestic production prior to July 1, 1939. Most of it comes from Mexico, Canada, and South America. The production of foreign silver in the Western Hemisphere during 1941 was approximately 135,000,000 ounces. It is running at about the same rate in 1942, but some of the silver is not reaching this market. During 1941, about 72,000,000 ounces of foreign silver was purchased by the United States Treasury Department at 35 cents an ounce. During the first half of 1942 such purchases were negligible. The use of foreign silver for direct war purposes has increased tremendously. Silver brazing alloys, silver for bearings and contact metals represent the principal uses. In addition, silver for some purposes other than war production but considered to be essential are being given priorities by the War Production Board The total demand for silver became so great that suppliers were forced to ration silver for nonessential purposes in May and June. No foreign silver whatsoever was available for these purposes in July or August. The scarcity of foreign silver for the reasons already mentioned was aggravated by order for coinage from friendly and allied countries, and by the diversion from regular channels of distribution of large quantities of silver of foreign origin, particularly Mexican, at prices well above the established ceiling price, in violation of at least the intent of the maximum price regulations. The outlook for the normal use of foreign silver is hopeless. The shortage still prevails and silver conservation order M-199 now prohibits its use for many purposes. Since July 1939, the Treasury Department has maintained a buying price of 35 cents per ounce for foreign silver. On November 28, 1941, the New York official price advanced from 344 to 35% cents, which diverted foreign silver from the Treasury to commercial channels. That price remains unchanged in spite of demand greatly in excess of supply, because of the price ceiling established by the Office of Price Administration. DOMESTIC SILVER The production of domestic silver totaled about 70,000,000 ounces in 1941, but early reports indicate some decline this year. In accordance with provisions of the act of July 6, 1939, our Government has been buying all of the silver produced in the United States and its possessions at a price of 71.11 cents per fine ounce. This silver is purchased by the Treasury Department from the smelting companies upon the presentation of affidavits certifying to its domestic origin. Most domestic silver is sold to the Treasury Department for forward delivery— up to 5 months. The Treasury Department has consented to a postponement in the delivery of silver now due from smelting companies, which should have the effect of making some of the current production of domestic silver available soon for use in industry and the arts. A survey of the supply of silver which might be obtained during the month of August through the procedure outlined reveals that only a part of the estimated monthly production of five to five and one-half million ounces will be available. The amount of domestic silver which could be used by industry and the arts will depend upon what action is taken by the Office of Price Administration with respect to a readjustment of the price ceilings on silver products (now based on the cost of foreign silver), which would have to take into consideration an increase in the raw material cost of about 100 percent. This is because the price of domestic silver is about double that of foreign silver. TREASURY SILVER This is the silver which is now in the possession of the United States Treasury and in circulation, and totals 3,335,000,000 ounces; 1,166,000,000 ounces is bullion which is allocated to silver certificates; 1,356,000,000 ounces is unallocated; 813,000,000 ounces is in coins either in circulation or held by the Treasury. Some of this silver is now being loaned by the Treasury Department for use in the war effort under agreement that it will be returned to the Treasury after the The present law provides that none of the silver owned by the Treasury may be sold at a price less than $1.29 per ounce. war. CONCLUSION It is obvious that because of scarcity and restrictive regulations no foreign silver will be available for consumption and use for other than war or so-called essential civilian purposes. It is also clear that the immediate supply of domestic silver will not be nearly enough to meet all nonessential demands. In addition, it is only a question of time before the growing war demands will encroach upon and eventually absorb the domestic production as well as foreign silver. Therefore, after no more domestic silver is available, the only possible way that silver can be obtained to keep silversmiths, platers, jewlery `manufacturers, mirror manufacturers, photoengravers, and other fabricators from going out of business will be to arrange for the release of silver from the stocks now held by the United States Government by whatever means are possible to accomplish this purpose. Senator MALONEY. Senator Green, as the author of this bill, will you proceed as you like? STATEMENT OF HON. THEODORE FRANCIS GREEN, A SENATOR FROM RHODE ISLAND Senator GREEN. Mr. Chairman and gentlemen of the subcommittee. I have a list of witnesses who have asked to appear here in favor of the bill and who will present facts and reasons why they are in favor of it. But before I call on them it seemed to me it would be worth while, perhaps, for me to say a few words about the occasion for the bill and what the bill itself provides. I have heard, and doubtless most of you have, of the growing need for silver in the war effort. One by one various metals have been withdrawn from general use because they were needed in the manufacture of airplanes, tanks, guns, and other war material, and a great effort has been made to find substitutes for them. Silver has unexpectedly proved to be not only a very good substitute for many metals but in many cases has been found to be superior to metals for which it was offered in the first instance as a substitute. The consequence is that there is a great call for the use of silver in the war effort, and the result is that it has been withdrawn to a very considerable extent from use for civilian purposes, which of course is very proper. But the result to those industries which have been accustomed to use it for ordinary civilian purposes has been almost disastrous. The silverware and manufacturing jewelry industry is a very large one. Their employees represent many tens of thousands of workmen specially trained for that work, and I have been very much impressed with the attitude of the owners of those businesses and their employees in view of this disastrous condition. Many of them had to go under. Others have attempted to survive, and all that could have been trying to transform their businesses from a peacetime basis to a wartime basis. In other words, they are trying to convert their establishments, their factories, their places of business, and the qualifications of their employees, from peacetime to wartime use. They have assured me over and over again from the very beginning that while they hoped something could be done to remedy the situation, they did not want to ask anything that would be unfair in any way to the war effort. If it is necessary for them and their businesses to be sacrificed they are willing to make the sacrifice, but they hope they won't be called upon to make it unnecessarily.. The most of these businesses are small, but in proportion to the general output are very much larger than people would ordinarily think of them as being; so of course the silver situation affects quite a considerable number of people. To meet the difficulties I inquired of various Government departments as to the situation as they saw it, and as a result drafted and introduced in the Senate this bill you have met to consider today. The bill itself may be summarized as follows: It meets the requirements of the jewelry silver manufacturers to the extent that they are contributing to the war effort, and they do not expect it to go any further. To that extent the president of the |