Mr. Speaker, we know that the periodic destruction of financial values by money manipulation, like war, has brought untold loss and distress to the people of every country.

Mr. Speaker, it is unthinkable that in this time of extreme national emergency that anyone, especially a committee composed of our educational leaders, would counsel anything that would disturb out national economy or bring loss to the American people. Let us hope that the patriotism of these economists will overcome any selfish motives that may have influenced their course up to now and they will come to the aid of the Congress and their country with wise counsel and a constructive financial program, rather than a plan to fasten new financial burdens on the American people.

THE SILVER SCANDAL

(Extension of remarks of Hon. Compton I. White, of Idaho, in the House of Representatives, Monday, November 9, 1942)

Mr. WHITE. Mr. Speaker, the war emergency is being seized upon by the opponents of silver and its use as money as an excuse for a return to their attack on this monetary program of the Government with greater fury than ever.

Evidently the Congress is to feel the full weight of united banking influence in this country.

There seems to be a well-financed campaign directed to first securing the repeal of all laws authorizing the purchase and use of silver as money and then the retirement of all forms of dollar-silver currency in circulation and replacing it with irredeemable paper Federal Reserve bank-note currency.

In the long and sustained campaign of misstatement and misrepresentation waged by the opponents of silver and publicized through the medium of the press, there appears two recent articles in publications of Nation-wide circulation in which the assault on silver is renewed, and the Senators of our Western States are accused of obstructing our war effort. It is even charged that there is a silver scandal.

Mr. Speaker, what are the facts, and is there a silver scandal, and what is the nature of this scandal?

We know that the American people are in desperate need of money to finance the war and at the same time to furnish our Allies around the world in their urgent need with food and war materials in their fight to bring the war to an early and successful conclusion. We know that in making our sacrifice to win the war we are shouldering an unbearable interest load and willingly accepting ever-increasing taxes that consume our substance and while we are willingly doing all this, we know our Government has on hand, paid for and ready to use, the money equivalent of a billion seven hundred million dollars in money metal ready and authorized by law to be converted into money and put into circulation without further expense other than engraving the necessary silver certificates-money that can be used in paying Government expenses and to supply the currency needs of business.

We know that while the Nation has been and is losing the use of this interestfree money, the Federal Reserve banks have been permitted to inflate the currency by issuing and lending into circulation the record-breaking amount of two and a half billion dollars to be exact, on April 1 there was $9,056,131,060 Federal notes in circulation which was inflated by issuing an additional $2,956,432,600 new money in the last 7 months to make the grand total of Federal Reserve notes outstanding on November 1 of $11,652,563,660-Treasury circulation statement March 31-October 31.

Mr. Speaker, there is a silver scandal, a scandal of a different kind than these money despoilers would have us believe. It is a scandal that 65 economists, the supposed leaders of financial thought and education in this country, would stoop to be a party to such deception to further the interest-collecting schemes of financiers against a people already overburdened with an unbearable interest and tax load.

When we come to analyze the silver situation and the effect of the Government silver purchase program, we find that under the mandatory provisions of existing law the Treasury has bought large quantities of silver at a profit and balanced its books by putting half of this silver amounting to almost $2,000,000,000 into circulation as money in paying Government expenses, money that flowed into the channels of trade and business to supply a part of the money needs of the country.

The other half of the Government silver amounting to 1,320,474,530.4 ounces with a dollar value of $1,707,281,135.24-Treasury statement, November 4-has been left idle and unused because the mandatory provisions of the law simply provided that—

"The Secretary of the Treasury is authorized and directed to issue silver certificates in such denominations as he may from time to time prescribe in a face amount not less than the cost of all silver purchased under the authority of section 3 and such certificates shall be placed in actual circulation."

The Secretary of the Treasury has repeatedly stated there was nothing in the law that prevented the use of this second half of the Government's silver as money in the same way the first half was used-Senate Silver Committee hearing, page 677, paragraph 9.

While this money metal, paid for and ready for use, without cost to the taxpayer, has been forced into a slacker position through influences that we are unable to fathom. The shortage of critical war metals in this country where the bulk of the world's silver is in reserve-we do not hear anything about the need of silver for the war industries of our Allies who are bearing the brunt of the war and manufacturing far more war equipment than we are presented these wouldbe despoilers of the people's money with a grand opportunity to renew their attack and accomplish their questionable purpose in a plan advocated by a leading Washington paper, always hostile to silver, when it said in an editorial: "Now, if ever, the silver bloc should prove vulnerable to assault." The results were immediate and planned to be devastating on the Congress. The assault on the Western Senators impugning their motives was spread through the columns of some of the most widely circulated publications in the Nation by the selfsame propagandists that have been flooding the mails of the Members of the House and the Senators continuously with misleading propaganda against silver. Even before the silver legislation was enacted, now with the shortage of critical metal in the war emergency as an excuse they pounce upon silver again calling it a slacker metal in a renewed effort to carry their point and drive the Congress to repeal the Silver Purchase Act, when in fact the Secretary of the Treasury with the sanction of the western Senators made available all the unobligated silver the Government owns amounting to 46,000 tons for the use of our war industries in an agreement reached April 8 with the War Production Board.

The first allocation of the 40,000 tons of this silver was made on May 6. The delivery of the first silver was started on June 29 and now 6 months after the silver was allocated-November 11-the war industries have been able to take delivery of only 14,000 tons.

All the needs of silver for consumptive use of the war industry are being more than taken care of by the allocation of foreign silver being imported into the country at the present rate of 100,000 ounces per year. The commercial users of silver are being permitted to buy our domestic silver at the statutory price of 71.11 cents per ounce which is not subject to priorities on allocation. The O. P. A. price regulation permits the purchaser to add the cost of freight to the price paid for silver which in many cases gives the commercial users of silver for industrial purposes an advantage over the Treasury which is deferring its purchases to these users.

This practical solution of the use of silver in our war industries has spoiled the plans promoted at such heavy expense by these self-seeking profiteers and their paid propagandists.

We are told in a recent article in an influential publication with Nation-wide circulation of the disastrous effect on poor China of doing the identical same thing that these so-called economists are attempting to persuade us to do here. I quote from the article Silver Scandal, published in the October 31 issue of the Saturday Evening Post:

"It forced China off the silver standard and onto an incontrovertible paper currency-a 'managed' paper currency which is exacting terrible penalties from her in the form of fantastic high prices for commodities and services at the very time she is fighting for her life against Japan."

What a deadly parallel our "patriotic" economist brings to us in his disinterested effort to trap the American people into the use of fiat money by persuading them to dispose of their silver stocks held for the redemption of the only redeemable paper in existence in this country. Paper money that has been accepted in good faith by our citizens with implicit trust in their Government and its promise to redeem every dollar in silver certificates with silver dollars on demand.

In dealing with this attempt to discredit and discard our silver money let us remind these "patriotic" economists that silver money under the standard of bimetallism has built America. Every foot of territory in these continental United States was acquired by the Union when we were using silver as moneythe Louisiana Purchase, the Florida Purchase, Texas and California, the Gadsden Purchase, and Alaska. Silver money worked then and it is working now. Let these propagandists prove to us that there is anything wrong with it. The greatest era of development of any country in the world's history occurred in our own United States during the period when we used both gold and silver as money under a bimetallic standard.

Now we are engaged in a great war, and the world must readjust itself to peace and international commerce when the war is over. Let us return and take up the program placed on our statute books by the wisdom and foresight of the statesmen who guided America through its greatest period of development. Let us place this sound financial basis under the political and business structure_we must build when the war of liberation in which we are now engaged is won. us brush aside these carping critics with their selfish motives and carry forward the constructive program placed in our statutes and never repealed:

Let

"Section 311: It is hereby declared to be the policy of the United States to continue the use of both gold and silver as standard money, and to coin both gold and silver into money of equal intrinsic and exchangeable value, such equality to be secured through international agreement, or by such safeguards of legislation as will insure the maintenance of the parity in value of the coins of the two metals, and the equal power of every dollar at all times in the markets and in the payment of debts. And it is hereby further declared that the efforts of the Government should be steadily directed to the establishment of such a safe system of bimetallism as will maintain at all times the equal power of every dollar coined or issued by the United States, in the markets and in the payment of debts.

"Section 313 (ch. 8, 28 Stat. 4): The provisions of sections 146, 313, 314, 320, 406, 408, 411, 429, 455, and 751 of this title and sections 51, 101, and 178 of title 12, Banks and Banking, are not intended to preclude the accomplishment of international bimetallism whenever conditions shall make it expedient and practicable to secure the same by concurrent action of the leading commercial nations of the world and at a ratio which shall insure permanence of relative value between gold and silver (Mar. 14, 1900, ch. 31, par. 14, 31 Stat. 49)."

Which is the only plan that will ever give our country a sound monetary system and provide for a stable and workable international exchange.

TWELVE MEN AGAINST THE NATION? WHAT HAVE THEY DONE? (Extension of remarks of Hon. Compton I. White, of Idaho, in the House of Representatives, Tuesday, October 27, 1942)

Mr. WHITE. Mr. Speaker, if they are responsible for the Silver Purchase Act and then maintaining the Government's silver-purchase program against all opposition until the Government has succeeded in creating and putting $1,922,162,972 interest-free paper money in circulation, redeemable and fully secured by 1,536,156,528.9 ounces of coined and uncoined silver bullion at no cost to the Government, they have done a great service to the Nation. But this is not all. Fy Yankee trading in doing this they have caused the United States Treasury to pile up an extra 1,327,373,210.2 ounces of silver not obligated or used in any way by the Treasury. Silver that is on hand ready to be turned into money in exactly the same way the other silver was made into money, which would add another $1,716,160,823.47 of new money for the Government to use in paying its bills. This represents real profit made by real Yankee trading.

None of this silver, either the pile held for redemption of the paper money or the extra silver not in use, cost the taxpayers anything. All of it was paid for by the people that accepted silver dollars and silver certificates in exchange for goods and services at their face value.

Twelve of our western Senators are being pilloried in the papers of the country for this service to the American people. The chief ground for complaint by the banks and their stooges, concerning this Government money deal, is that the banks have lost out on a fine interest yield-interest on almost $2,000,000,000 that has by-passed their interest-gathering mechanism-silver money already put out. Now they fear that these Yankee 12 will find a way to put the other one and three-quarters billion dollars of silver money into circulation-a plan that

will make further inroads on the banks' special prerogatives to create money and loan it into circulation, collecting interest on the borrowers' supporting note as a price of keeping the money from flowing back to the bank and out of circulation and out of use until some other borrower puts up the necessary collateral and repeats the interest-paying operation.

"Away with these Yanks and their screwy money scheme. We want a managed currency in this country." Silver, the common man's money, has always been an abomination to the big financiers and their propagandists ever since the National Bank Act went into operation and national-bank notes were created and lent into circulation that started the interest stream flowing into the privileged banks.

Our 12 Senator-Yankee traders have cut the Government in for a little profit and the people in for a small interest saving. More power to these 12 stalwarts, if they are the ones responsible for piling up almost $4,000,000,000 worth of money metal for our Government and succeeding in getting two billions of this metal actually turned into money and put into circulation in paying Government bills— money that is handling the business of this country, money that is passing over counters and from hand to hand in every community in this good old United States of America. These 12 immortals will outrank the great financiers of the past, Jay Gould, Rockefeller, Carnegie, and even the "greatest Secretary of the Treasury this country ever had," the late Andrew Mellon.

As statesmen, let a stable money system, supported by our store of silver be their enduring monument.

"TWELVE MEN AGAINST THE NATION"

The honor roll: John Thomas of Idaho; D. Worth Clark of Idaho; Burton K. Wheeler, of Montana; James E. Murray, of Montana; Elbert D. Thomas, of Utah; Abe Murdock, of Utah; Carl Hayden, of Arizona; Ernest W. McFarland, of Arizona; Edwin C. Johnson of Colorado; Eugene D. Millikin, of Colorado, Berkeley L. Bunker, of Nevada; and Pat McCarran, of Nevada.

Let me add to the 12, 2 illustrious silver men omitted from the list: Ellison D. Smith, of South Carolina, and Elmer Thomas, of Oklahoma, the greatest old Romans of them all.

STATEMENT OF FRANCIS H. BROWNELL, EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS OF THE AMER ICAN SMELTING & REFINING CO.

Mr. BROWNELL. The American Smelting & Refining Co. is the largest handler of silver in the world. We buy more silver from the mines and we sell more silver produced from mine output than does any other company. We are in the custom smelting business. We buy ores and concentrates from the mines. In the case of the United States there are over 400 mines whose silver we buy. We pay the miner on the day the silver arrives at the smelter, and then we have to go through the process of smelting and refining, and we sell the resulting silver.

The CHAIRMAN. Do you buy foreign silver?

Mr. BROWNELL. Yes, sir. Our position in the matter of silver today is approximately this, for 1942: Our plants will produce approximately 30 percent of the entire United States silver. That is, silver that is eligible for sale at 71 cents. And if we assume that foreign silver available to the United States is about 115,000,000 ounces, which is the latest figure, we will purchase about 45 percent of that. The CHAIRMAN. Is that per year?

Mr. BROWNELL. Yes, sir; and the 115,000,000 ounces is for the year

1942.

The CHAIRMAN. You take how much of that?

Mr. BROWNELL. Forty-five percent of it. So that we handle about 45 percent of the foreign silver available for the United States at the present time, and 30 percent of the domestic silver available in the United States.

Senator MALONEY. Does it go through your plant to the Federal Government?

Mr. BROWNELL. Yes, sir. We sell it to the Government, except insofar as we sell it to the trade.

The CHAIRMAN. Do you sell some silver to the trade now?

Mr. BROWNELL. Oh, yes. That is the point I wish to make in connection with this bill.

The CHAIRMAN. All right.

Mr. BROWNELL. In the case of this bill it is based apparently from the hearing of October 15 on two desires: one is to provide sufficient silver for the war necessities; and the other is to provide sufficient silver for the demands of the nonessential silver fabricators.

The condition of the market on October 15 was radically different from the market at the present time. It has changed very rapidly, almost overnight. On October 15 it looked as though there would not be enough foreign silver for war essential purposes. Shortly after October 15 two things at least, and perhaps other factors, entered the situation, but the two things that interested us were that, first, we ran out of a supply of cadmium. That is used in the fabricating of silver. When they could not get cadmium they could not use the silver. The other was that many figures of the amount of silver necessary for war production were based upon the period when the plants using it were getting a sufficient inventory inflow. In other words, if I may use the parallel of a reservoir, here all of a sudden you may want a supply of hydroelectric power and you build a dam. Then you want to build the water up back of the dam. After the water is built up the amount of water necessary is much less than when you were doing both things.

So, these figures, judging from the trade-and we handle so much of this silver that I think we ought to have some knowledge of it—I say, these figures were based upon the amount of silver required. when they were building up the inventory inflow. Now that that has been completed it apparently has had the effect that they do not need as much silver as they thought they would need for war essential purposes.

That raised quite a problem, and a big problem for my company. We e were buying in Mexico approximately 40,000,000 ounces of silver a year. We were paying 45 cents an ounce for it at that time.

Senator MALONEY. How long ago was that?

Mr. BROWNELL. That was since our Government established the arrangement. Let me go back on the history of the thing if you would like to hear it.

Senator MALONEY. I do not want to interrupt you but do want to understand the situation.

Mr. BROWNELL. The price of foreign silver at the beginning of this year was 35 cents. Then as the war demand arose there was a demand for silver currently to fill the reservoir and actually it turned the rate above the foreign demand for a while.

Senator MALONEY. You mean above the foreign supply.