Our Government, through the Board of Economic Warfare, in April of this year, took control of our exports of silver to prevent it falling into the hands of Hitler's agents who know how to make good use of it for war purposes. Yet our Government up to date has refused to relinquish the Treasury's hoard of silver for consumptive purposes to enable our armed forces and industries the more effectively and quickly to lick Hitler. If the American people were to find out the great and efficient uses to which silver could be put consumptively in the making of tanks, airplanes and a multitude of electical equipment, and in speedier brazing in the making of bombs, and then were to learn that our Government for no good reason has been, and still is, withholding thousands of tons of Treasury silver from such uses, they doubtless would rise up in deep and righteous anger. I think that day is rapidly approaching. The case for releasing this Treasury silver for industrial use becomes not only stronger but conclusive when it is understood that there is nothing about our monetary structure which suggests that it is unwise to release this huge hoard of Treasury silver to meet pressing war and civilian needs. Indeed, the currency situation in this country would be vastly improved if the silver laws, which not only prevent this use of our Treasury silver but force the Treasury to pursue various unwise silver-money policies, were repealed. In short, such action by Congress would provide the American people with great benefits in at least three ways in war and civilian industries and in improving our monetary structure. Under these silver purchase laws, silver certificates have been expanding rapidly at a time when this has been both unnecessary and undesirable. This expansion has taken place against a metal which has been greatly overvalued by the Treasury. During the last 2 or 3 years, the value of silver in the silver dollar has been approximately 27 cents in the world market. A nation is not building a sound monetary system when it creates silver certificates against a greatly overvalued silver. If it should be necessary for the Treasury to retire some or all our silver certificates because of its release of a large proportion of Treasury silver for consumptive uses in war and civilian industries, our currency structure would be improved in two directions: (1) The amount of these overvalued silver certificates would be restricted. (2) The transaction would enable the Government to replace them by Federal Reserve notes which would have behind them as an ultimate security not less than 40 percent in gold. Today the security against Federal Reserve notes in actual circulation is approximately 106 percent. In speaking of the ultimate gold reserve against the Federal Reserve notes outstanding, I am, of course, going behind the gold certificates held by Reserve banks against their Federal Reserve notes to the gold which the Treasury holds as reserve against the gold certificates. Considering the huge supply of gold held by this country, there is no reason why Federal Reserve notes cannot meet the needs of the American people for paper money. The Treasury could and should keep on hand and in circulation a sufficient amount of silver to take care of our needs for fractional silver coins and perhaps silver dollars if the latter are demanded by the general public. If this policy were pursued, practically all but about 13,000 or 14,000 tons of Treasury silver could be released for use in both war and civilian silver-using industries. Finally, the Government is now fighting a rise in prices. This rise is fostered in part by an overexpansion of currency. This fight is hindered, not aided, by the continued pumping of additional silver and silver certificates into our monetary structure. Since the Government's struggle to prevent an undue rise in prices would be aided by a policy which would at the same time aid in the winning of this war and in the maintenance of our civilian silver-using industries no valid argument remains for a continuation of present silver policies forced on the Treasury and this country by our various silver laws. Congress and the country should understand that from the time that the Silver Purchase Act of 1934 was introduced up until and including the present time leading monetary economists have opposed the expansion in our currency against an overvalued silver. They have been opposed to subsidizing our domestic silver producers (to say nothing of subsidizing foreign producers), on the ground that it is both unnecessary and undesirable, and they have urged that the Treasury buy such silver as it needs for currency purposes at its natural market price. They have held that the expansion of currency against this overvalued silver has been and is uncalled for, and that our currency structure was being weakened rather than strengthened by the pursuit of the policies embodied in our various silver purchase laws. As an example of these views, I should like to introduce into the record a statement made by 65 members of the economists' national committee on monetary policy on April 20, 1942. In this statement these 65 members urged Congress to repeal the Silver Purchase Act of June 19, 1934, and the domestic silver purchase law of July 6, 1939. They commended Secretary Morgenthau for saying that he would be glad to see Congress strike all the silver legislation off the books. They commended Chairman Eccles for supporting Secretary Morgenthau in this and for his own statement of March 30, 1942, that "In view of the war situation, it is all the more urgent that the inflationary effects of the silver program be removed and that so far as possible the materials, machinery, and labor now devoted to silver production be utilized in the war effort.' While the provisions of the Green bill point in the right direction in general, they do not go far enough in clearing up the unhappy silver situation with which this nation is confronted. The bill should provide for the repeal of the Silver Purchase Act of June 19, 1934, the domestic silver purchase law of July 6, 1939, and those provisions of the so-called Thomas inflation law of May 12, 1933, and the Gold Reserve Act of January 30, 1934, which relate to silver, in order to dispose of the laws which enable or require the Government to continue to purchase silver at artificial prices and to withhold it from use also at artificial prices. It also would be most desirable and helpful if the power of the President to change the price of silver and the ratio between silver and gold were repealed and those powers reclaimed by Congress. It is with Congress that they properly belong. It is my opinion that this withholding. of silver, from consumptive uses in war and civilian industries has been able to continue this long only because the American people have not yet become fully aware of the facts. The subject, as we all know, is in may respects too technical for the layman to comprehend easily. Furthermore the real issue can be, and has been obscured in various ways. But I believe that the time is rapidly approaching when the American people will have a good general idea as to the main issues involved and probably will condemn those who have the power to correct this situation thoroughly and promptly but fail to do it. The American people certainly expect their representatives to see to it that every metal that is needed and can be used in war and civilian industries is put to proper use. Our Treasury silver is a vitally needed strategic metal, and its proper use does not involve hoarding thousands of tons of it at West Point while thousands of boys and men are being sent to their deaths because of scarcities of metals. 65 MEMBERS URGE CONGRESS TO REPEAL THE SILVER PURCHASE ACT OF JUNE 19, 1934, AND THE DOMESTIC SILVER PURCHASE LAW OF JULY 6, 1939 APRIL 20, 1942. We, the undersigned members of the Economists' National Committee on Monetary Policy, again urge Congress to repeal the Silver Purchase Act of June 19, 1934, and the domestic silver purchase law of July 6, 1939. The former has never been sound in principle or practice, the common arguments for it were neither valid nor admirable, and its results have in the main been harmful to both the United States and certain foreign countries. The latter act has been an indefensible subsidy to the domestic producers of silver and has forced the Treasury to pay approximately twice the world market price for this domestic silver with the consequence that the Treasury has greatly overvalued the silver which it holds. Both acts have disturbed the silver markets of the world, have drained silver from industry and other countries' treasuries to our Treasury vaults, and have been important factors in the expansion of our money supply at a time when such expansion has been unnecessary and undesirable. It is gratifying to note that both Secretary of the Treasury Morgenthau and Chairman Eccles of the Board of Governors of the Federal Reserve System are recommending the repeal of these laws. In January of this year, Secretary Morgenthau stated to the House Appropriations Committee that "So far as I am concerned, I will be glad to see Congress strike all of the silver legislation off the books." In the hearings before the Committee on Ways and Means of the House in March and at a press conference in February he again made similar statements. Chairman Eccles, in a letter to Senator Arthur H. Vandenberg on March 30, this year, stated that his views on this matter are generally in accord with those expressed by Secretary Morgenthau. Chairman Eccles pointed out in this letter that he had held these views for several years, and added: “In view of the war situation, it is all the more urgent that the inflationary effects of the silver program be removed and that so far as possible the materials, machinery, and labor now devoted to silver production be utilized in the war effort." On April 20, 1934, the executive committee of the Economists' National Committee on Monetary Policy issued a statement opposing the enactment of the pending Silver Purchase Act of 1934. Substantial majorities of the full committee signed pronouncements in opposition to the Government's silver program as follows: May 25, 1936-recommending abandonment of the silver-purchase policy and that Treasury silver be disposed of as advantageously as possible; June 14, 1937-advocating repeal of the silver purchase program; December 28, 1937—urging, among other things, repeal of the Silver Purchase Act of 1934; December 23, 1938-urging that Government subsidy to silver interests be ended and that the Silver Purchase Act be repealed; May 15, 1939 urging enactment of the Townsend bill repealing the Silver Purchase Act of 1934; September 30, 1941-recommending, among other things, repeal of the Silver Purchase Act of 1934 and of the act of July 6, 1939, providing for the purchase of domestic silver at 71.11 cents per ounce-approximately twice the market price. We agree with Secretary Morgenthau's statement of January that if the Government's silver program were repealed “* * * it would be helpful at this time. I think it would be well received." Eugene E. Agger, Rutgers University; Benjamin M. Anderson, Jr., University; William O. Weyforth, Johns Hopkins University'; Hon. ROBERT F. WAGNER, UNITED STATES SENATE, COMMITTEE ON THE JUDICIARY, October 13, 1942. Chairman, Committee on Banking and Currency United States Senate, Washington, D. C. DEAR SENATOR WAGNER: In connection with the hearings on S. 2768 (to authorize the use for war purposes of silver held or owned by the United States) which are being concluded tomorrow, I respectfully request that this letter and the enclosures be incorporated in the printed record. The first letter is from Mr. Charles S. Maine, who represents the Pen and Pencil Workers Union Local 19593 of Janesville, Wis. Mr. Maine's letter is selfexplanatory and indicates the serious problem which confronts the pen and pencil workers industry and the concern of the industry with any unwarranted shortages. I might add that Mr. Maine's letter is only one of a large number of similar letters which I have received from employees in this industry. I have likewise received a great many letters from jewelers in Wisconsin expressing similar protests. I have selected one or two of these letters at random and I ask that they be included in the record. One of these letters represents the membership of jewelers located in the Fox River Valley and Lake Shore area in Wisconsin. I have urged members of the Senate Special Silver Committee to give consideration to this problem and I have likewise written directly to Under Secretary of the Treasury D. W. Bell and to Mr. W. S. Murphy of the Miscellaneous Minerals Branch of the War Production Board. It is my understanding that efforts have been made to secure Presidential consideration for the possibility of utilizing some of our stores of free and unencumbered silver for industry and I have supported these efforts to secure Presidential consideration. I have not seen the testimony of witnesses who presented views in the hearings in connection with S. 2768 but I cannot too strongly urge the committee that the views of the workers and artisans in industry utilizing silver be given every consideration. Yours for victory, ALEXANDER WILEY. PEN AND PENCIL WORKERS UNION, DEAR SIR: We have had the silver situation explained to us in a body and learned that unless prompt and effective action is taken by Congress a serious unemployment problem here is bound to arise. We are writing you to help us on this because it is apparently up to Congress, and the whole silver problem seems to be one of politics and not economics. Every Parker pen and Parker mechanical pencil contains a small amount of silver. The use of this metal is necessary because the metals ordinarily usedcopper, brass, stainless steel, carbon steel, aluminum, and others have all become critical and their use restricted to the manufacture of articles bearing high priority ratings. Effective October 1, 1942, by order of the War Production Board, the use of foreign silver is denied to the manufacturers of fountain pens and pencils, as well as to the makers of silverware, jewelry, and other civilian goods. The management of this company tells us they have had orders in for domestic silver but that it is not possible apparently to obtain it. Unless therefore something is done by Congress to make silver available, and its use for articles like pens and pencils permissible, manufacture at this plant will cease, and hundreds of people will be out of work. It should be mentioned here that this company is engaged in a heavy program of munitions manufacture, and has been for a long time. The departments producing munitions could not possibly absorb the people engaged in the manufacture of pens and pencils. It should also be mentioned that while fountain pens are not by any means a article of war, they certainly do play an important part in the maintaining of morale of the fighting forces by making letters to and from home possible. A very large percentage of this company's present output of pens and pencils go directly or indirectly to men in the armed services. From what we read in magazines and newspapers (Time magazine, the New York Times, and many other newspapers), this silver difficulty is ridiculous, unnecessary, and a national scandal, and we would resent it even if it were not endangering our jobs. You probably are aware that there are 3,330,000,000 ounces of silver in the United States Treasury stocks, of which 1,360,000,000 ounces is free silver. A small amount of this free silver has been released by the Treasury for use as busbars to Government-owned or controlled war plants, but none of the rest of it is available to manufacturers like this. So all this talk about Treasury silver being available to civilian industry is misleading. Sincerely yours, Hon. ALEXANDER WILEY, Senate Office Building, Washington, D. C. DEAR SENATOR: As Secretary of the Fox River Valley and Lake Shore Jewelers Club, with membership of over 50 jewelers, I was instructed by our members to write in regards to the prohibition upon the use of silver. Unless the Government releases the 21⁄2 billions ounces of silver which lie idle in Government vaults it means most jewelers will have to discontinue business in a very short time. Silver is the one remaining metal left. It is the last resort for the jewelry industry. If the supply of silver required for both war and civilian industries were insufficient, the jewelry industries would gladly yield as they have on copper, nickel, tin, and other metals. Please help us stay in business so we can meet our increased taxes and buy War bonds. Sincerely yours, Fox River Valley and Lake Shore Jewelers Club, BURLINGTON, Wis., September 16, 1942, Senator ALEXANDER WILEY, Senate Chamber, Washington, D. C. DEAR SIR: I am only one of over 20,000 jewelers in the United States that faces the fact that we are liable to be soon put out of business on account of laws that prohibit the use of silver. We all know that the Government has more silver stored at West Point than they will ever use for war purposes. Jewelers depend on silver for their very existence. Without silver, we would have nothing left but solid gold. More than 150,000 people are employed in the manufacture and sale of jewelers' merchandise. Most of them are unable to shoulder a gun. They have a right to earn a living. It is a crime to prevent them earning a living just because we have laws that hold back tons of silver that are hoarded in Government vaults, a small part of which could just as well be released. If there was a scarcity of silver, I would not be writing to you. There is more than plenty on hand and more still could be purchased from Mexico if necessary. I trust that you will use your best efforts to have enough released so that we can still stay in business and continue to pay our taxes and buy bonds and end this war as soon as possible. We are depending on fighters like you, Senator Wiley, for our very existence. (Whereupon, at 1 p. m., the committee adjourned.) |