A RESOLUTION AUTHORIZING A SPECIAL COMMITTEE OF ACT OF 1934 р APRIL 8, 1939 PART 7 Printed for the use of the Senate Special Silver Committee SILVER SATURDAY, APRIL 8, 1939 UNITED STATES SENATE, SENATE SPECIAL SILVER COMMITTEE, Washington, D. C. The committee met pursuant to adjournment at 10:30 o'clock in the room of the Committee on Foreign Relations in the Capitol, Senator Key Pittman (chairman) presiding. Present: Senators Pittman (chairman) and Johnson of Colorado. Present also, at the invitation of the chairman of the committee, the following Members of the House of Representatives, interested in the silver question: Hon. Harry L. Englebright, of California; Hon. Compton I. White, of Idaho; and Hon. John R. Murdock, of Arizona. Present also, at the invitation of the chairman of the committee: Dr. John W. Finch, Director of the Bureau of Mines, E. W. Pehrson, Assistant Chief Engineer, Metal Economics Division, United States Bureau of Mines; Alfred Merritt Smith, State engineer of the State of Nevada, secretary of the Colorado River Commission of Nevada, and a member of the Public Service Commission of Nevada; and Jay Carpenter, professor of mining at Mackay School of Mines, University of Nevada, and Mining Engineer for the Nevada State Bureau of Mines. Present also, at the invitation of the chairman of the committee: Walter E. Trent, Technical Director of the Rocky Mountain Metal Foundation. The CHAIRMAN. The meeting will come to order. The first witness is Dr. John W. Finch, Director of the Bureau of Mines of the United States. Doctor, what is your profession? Dr. FINCH. Geologist and mining engineer. The CHAIRMAN. How long have you been engaged in that profession? Dr. FINCH. Just 40 years now, but I have also been in charge of mining operations. The CHAIRMAN. In what places have you been engaged in mining operations? Dr. FINCH. In the actual conduct of mines in Nevada, particularly at Goldfield, Nev.; in Cripple Creek, Colo., and in Montana, and also in parts of the Orient, particularly in China, where I had charge of considerable mining development. The CHAIRMAN. As an engineer and geologist, you have made examinations of mining properties in various places, have you not? Dr. FINCH. Yes; a great many of them. The CHAIRMAN. In what places have you made examinations? Dr. FINCH. In the districts of every one of the Western States and in some of the Eastern States, and in Canada, Old Mexico, South Africa, Burma, China, Japan, Siberia, Turkey, and other places. The CHAIRMAN. I suppose, having made so many examinations, it is hard to say just where. You have also, have you not, Doctor, appeared in trials over mining properties, where geology was involved, and questions of that kind? Dr. FINCH. Yes; on quite a number of occasions, and particularly on behalf of the Department of Justice, in the prosecution of certain actions. The CHAIRMAN. Well, in your services as geologist, mining engineer, and mine manager, you have had experience not only in the scientific end of it but in the economic phases of mining, have you not? Dr. FINCH. Yes, sir. The CHAIRMAN. When did you become Director of the Bureau of Mines? Dr. FINCH. Five years ago. The CHAIRMAN. What would you say, generally, are the functions of the Bureau of Mines? Dr. FINCH. The functions of the Bureau of Mines are found in the organic act that created it. Section 2 of the amended organic act stipulates that the province and duty of the Bureau of Mines shall be To conduct inquiries and scientific and technologic investigations concerning mining, and the preparation, treatment, and utilization of mineral substances with a view to improving health conditions, and increasing safety, efficiency, economic development, and conserving resources through the prevention of waste in the mining, quarrying, metallurgical, and other mineral industries; to inquire into the economic conditions affecting these industries; to investigate explosives and peat; and on behalf of the Government to investigate the mineral fuels and unfinished mineral products belonging to, or for the use of, the United States, with a view to their most efficient mining preparation, treatment, and use; and to disseminate information concerning these subjects in such manner as will best carry out the purposes of this act. The CHAIRMAN. The Government is really interested, is it not, Doctor, in the development and production of minerals in the country? Dr. FINCH. Yes. The CHAIRMAN. And one of the functions of the Bureau of Mines is to engage and aid in such production, is it not? Dr. FINCH. Yes, sir. The CHAIRMAN. It also has the function, I believe, of developing and inaugurating safety devices and methods in mines, does it not? Dr. FINCH. Yes; that is one of the very important activities of the Bureau. It was the main reason for its creation. The CHAIRMAN. I am going into these matters particularly right now, Doctor, because, having been connected in various ways with mining all my life, since I was grown-I have been in the Senate for 26 years I have tried to impress upon the Senate the importance of that Bureau and to obtain sufficient financial support from the Government to permit it to function to its fullest capacity. I realize, however, that I have not succceeded entirely because whenever a department is called upon to cut down on the budget, they say, "This is a theoretical department," and they cut your department. But I am putting this in the record and I wish to state right now that if the Bureau had done nothing but devise and install and place in use safety devices and methods it would have accomplished very much, be cause it has resulted in the saving of many thousands of the lives of the miners. Doctor, you may now read your statement, which you state you have prepared. STATEMENT OF DR. JOHN W. FINCH, DIRECTOR OF THE BUREAU OF MINES Dr. FINCH. I might say, before reading, that I have brought with me Mr. Elmer W. Pehrson, of the Economics and Statistics Branch of the Bureau, who is largely responsible for the assembling of some of the statistics which I will quote, and who will be able to answer any questions pertaining to them. (Dr. Finch then read the following prepared statement:) EFFECT OF GOVERNMENT SILVER PRICES ON THE MINING INDUSTRY OF THE UNITED STATES The Bureau of Mines is primarily concerned with the effects of silver prices on the domestic mining industry and in consequence is not in a position to comrient on the monetary and international aspects of the silver problem. Authoritative information on these questions doubtless will be presented by representatives of the Treasury, State, and Commerce Departments. Before presenting a detailed analysis of events that have taken place since the inauguration of the Government silver-buying program, it may be well to summarize briefly the incidents affecting the silver industry prior to 1933. Shortly after the World War debasing of silver coinage and abandonment of silver as a monetary metal took place on a world-wide scale. Exports of domestic silver, which always had accounted for a large part of the domestic output, declined sharply. Having lost this export market the silver miner was in a plight somewhat similar to that of domestic producers of cotton and wheat. Since the principal use of silver had always been as a medium of exchange, these events initiated severe repercussions in the silver market. New York prices declined sharply from 69.1 cents per ounce in 1925 to 53 cents in 1929. With the advent of the depression the downward trend was accelerated and in 1932 the price of silver averaged only 27.9 cents. Needless to say, silver mining became unprofitable at many mines and domestic production declined steadily from 66,700,000 ounces in 1925 to less than 61,000,000 ounces in 1929 and to less than 23,000,000 ounces in 1932. The decline in prices and production continued into the early part of 1933; during the first 2 months prices averaged less than 26 cents an ounce. Following the inauguration of President Roosevelt on March 4, various laws pertaining to monetary metals were enacted as a result of which silver prices advanced rapidly. On December 21, 1933, the President, by proclamation, established the price of newly mined domestic silver at 64.64 cents an ounce. On April 10, 1935, the price was raised to 71.11 cents and on April 24 to 77.57 cents. This level was maintained until January 1, 1938, when the Government price was dropped again to 64.64 cents. This price will prevail until existing legislation expires on June 30 of this year. EFFECTS ON PRODUCTION The Government prices paid for silver since 1933 have had a decided effect in stimulating mining activity, particularly in our Western States and have thus contributed to the alleviation of unemployment which had become so serious in the early thirties. Domestic mine output of silver, exclusive of the Philippine Islands and Puerto Rico, increased steadily from slightly more than 23,000,000 ounces in 1923 to nearly 71,500,000 ounces in 1937. It will be noted that production in 1937 was over three times greater than in 1933 and was the largest annnal output since 1916. Owing to the fact that two-thirds of the silver is obtained as a byproduct from ores mined principally for other metals, all of the above increase cannot be attributed solely to the increase in the price of silver. Increasing industrial activity during the intervening 5 years has called for larger tonnages of copper, lead, and zinc and the production of byproduct silver has increased |