Senator BARKLEY. The 47,000 tons you speak of are entirely different from the 51,000? Senator MCCARRAN. Entirely different. May I be frank with you, so as to make it just as clear as I can? The Treasury calls it free silver, and for convenience I adopt the term, but it is not free silver in the general sense of the word. It is silver that was purchased for monetary purposes and is in the Treasury, but represents the difference between the price paid for the silver at the door of the Treasury and the monetary value of silver established by law. In other words, to use the existing condition, it represents the difference between 71.11 cents and $1.29 in the case of domestic silver. Senator BARKLEY. Is that 47,000 tons earmarked in the Treasury so that it does not become amalgamated with the 51,000 you have been referring to, or is it all in a lump for bookkeeping purposes? Senator MCCARRAN. No. My understanding is that on the books of the Treasury it is all considered one way. Senator BARKLEY. All in one book, which would make 98,000 tons without any earmarking of the 51,000 tons or the 47,000 tons? Senator MCCARRAN. My understanding is, at the time the Secretary of the Treasury appeared before us it was 113,456 tons altogether. Senator BARKLEY. Whatever it is. Senator MCCARRAN. Whatever it is. Senator BARKLEY. It is not kept on the books of the Treasury as two separate items of silver? Senator MCCARRAN. Yes; I think it is. Senator BARKLEY. Is it? Senator MURDOCK. If I may interrupt, Mr. Chairman, the Treasury does keep it in two separate items; and unless I am mistaken, Senator McCarran, what is known as the free silver is the larger amount. That is, the 47,000 tons that you speak of is the silver necessary, under the Treasury's statement, to secure the outstanding certificates. Senator MCCARRAN. No; 47,000 tons is free silver. Fifty-odd thousand tons is pledged for the redemption of outstanding certificates. Senator MURDOCK. Well, you say the 47,000 Senator MCCARRAN. Is not pledged; 51,000 tons is pledged. At this point I may say that the Secretary of the Treasury informed the Senate Silver Committee that as of April 30, 1942, the amount of silver held in the Treasury was 2,900,600,000 ounces (99,438 tons), and that the silver outside the Treasury at that time was 408,900,000 ounces (14,018 tons). This makes a total of 3,309,500,000 ounces (113,456 tons). The silver outside the Treasury consists of silver dollars, half dollars, quarters, and dimes. The silver held in the Treasury consists of 1,360,500,000 ounces of bullion silver (46,640 tons) to which the Treasury refers as "free" silver; also silver bullion held for silver certificates amounting to 1,160,400,000 ounces (39,780 tons); also silver dollars held in the Treasury against silver certificates amounting to 371,800,000 ounces (12,746 tons); also subsidiary silver coin in the General Fund amounting to 9,800,000 ounces (336 tons). Senator BARKLEY. Would not the amount pledged for the redemption of outstanding silver certificates fluctuate from time to time depending upon the number of outstanding silver certificates? Senator MCCARRAN. That is probably true. Senator BARKLEY. So that if there were enough silver certificates issued, it would require all the silver in the Treasury as a basis for the issue of that currency? Senator MCCARRAN. That is entirely correct. And I tried to touch on that a little while ago, and my discussion, I am sorry to say, has been a little broken into and I did not complete my statement. All the silver in the Treasury was purchased and acquired by the Treasury for monetary purposes, and the law says that the Treasury shall purchase silver until silver arrives at the price of $1.29 or until there is a ratio between the silver and the gold in the Treasury of one-fourth silver and three-fourths gold. Senator MALONEY. Can it ever happen, Senator? Senator MCCARRAN. Has it ever happened? Senator MALONEY. No; can it ever happen under the existing situation? Senator MCCARRAN. It can, yes; because gold is now being sold. It can happen; yes, indeed. As the gold holdings diminish the disparity between the gold and silver stock values decreases. The CHAIRMAN. Are there not still about $20,000,000,000 in gold? Senator MCCARRAN. I do not have the figures right here. I think it is twenty-odd billion. Senator MURDOCK. Mr. Chairman, may I just interject here? Senator MCCARRAN. May I just finish that thought? In the interim the influx of gold, the incoming gold, has been so great, much greater than the influx of silver, or the acquisition of silver has been so curtailed, that the ratio did not work out as it was planned. Furthermore when the price of gold was increased from $20.67 to $35 an ounce it became necessary to acquire more ounces of silver than was originally anticipated, the monetary price of silver not having been raised commensurate with gold. Senator MURDOCK. Just in order to keep the record straight, if it will not interfere with the statement, I find that as of November 19, 1942, the silver ounces behind silver certificates are 1,171,775,992.9 ounces; that the ounces of silver which are carried at cost value, and which are the free silver as referred to by the Secretary of the Treasury, on that date are listed at 1,315,390,418.5 ounces. So, while I do not want to insist on my point, I think that the larger amount of silver in the Treasury, the larger item, is the free silver rather than that behind the silver certificates, according to this statement here. Senator BARKLEY. Let me ask you this Senator MURDOCK. I am giving it in ounces. Senator MCCARRAN. Pardon me, Senator Barkley. Senator BARKLEY. No; I do not want to ask the question. Senator MCCARRAN. Now, to answer the question of the Senator from Connecticut, he wants to know, Could we ever arrive at that point? If we had decreased the silver content of the silver dollar as we decreased the gold content of the gold dollar, we would have entirely accomplished the end sought by the law. It is not to be assumed that the present content of the gold dollar is perpetual. Let me go back to my thought again; otherwise I am going to hold this committee too long entirely. The Secretary of the Treasury was very frank, and will be very frank, if he comes before this committee; that the silver in the Treasury standing behind outstanding certificates 78102-42-pt. 2--2 is a pledge of the Government of the United States to the people of the United States. I do not believe, and I say this without any authority whatever, that the Treasury of the United States would freely consent to the use of that silver for any other purpose than that for which it is pledged. I doubt it very materially. I have reason to doubt it. Mr. Chairman, if this were a move to utilize silver or gold solely for war-essential purposes, you would find all the Senators behind the movement. This is not an effort to utilize silver for war-essential purposes. Senator MALONEY. No one has maintained that that is the purpose of this bill. It has a relationship to the war because its purpose is to prevent the liquidation of industry and to prevent hundreds and perhaps thousands of silver workers from being denied the chance to earn their living. That is the purpose of the bill. Senator MCCARRAN. I am very glad, now, to have the statement made frankly and fairly. Senator MALONEY. That has been the purpose all the time; there has been no effort to state that there was any other purpose behind the bill. Senator MCCARRAN. Mr. Chairman, we will, as long as the breath of life is in us, oppose the use of the pledged or unpledged silver in the Treasury for use in other than war activities. It is the money of America. It stands behind the integrity of our financial system. It is clamored for by the peoples of the world. Our Treasury today is the object of jealousy of the nations of the earth and of the peoples of the world; and, to go back to what I said at the beginning, England is asking us for 21⁄2 million ounces of silver per month, not alone for industrial purposes but because the British people are asking for silver. Australia is asking for silver and is praying to us to send silver for monetary purposes. Silver produced in Canada was just a short time ago shipped over to Australia for monetary purposes, because the peoples of the world know that a piece of silver as big as your thumbnail will buy a loaf of bread and that a bale of paper will not buy anything in the years to come. Senator DANAHER. Senator, do they contemplate in Australia, so far as you know, utilizing that silver so shipped at $1.29 an ounce when it is worth only 35 cents, let us say, in the world market? Senator MCCARRAN. The monetary value of the silver in the Australian monetary system in August 1939, was $1.11 an ounce in United States money. I am not able to say what its value is today. I know also that it is required and requested and prayed for over there. I know that silver is utilized by more than nine-tenths of the population of the world. In fact, in 1939 there were only four countries on the face of the globe that did not use silver as money. Furthermore, during the past 22 years the consumption of silver in the monetary systems of all governments throughout the world has shown a net increase of 47.3 percent. The average monetary value of silver of all governments in 1939 was a trifle more than $2.50 an ounce. They know in India only silver. The wealthiest man in all the world is in India, and his wealth is in silver. Senator BARKLEY. Senator, may I ask a question? Senator BARKLEY. It has been some years, and I have forgotten the details, but I recall 4 or 5 years ago that we had up this silver question with Senator Pittman. Senator MCCARRAN. That is right. Senator BARKLEY. And we worked out a plan by which everybody apparently was satisfied, which, as I recall, paid for silver or obligated the Treasury to buy it at around 71 cents an ounce. Senator MCCARRAN. It was worked out in percentages, Senator, if you will recall. Senator BARKLEY. Yes. Senator MCCARRAN. Fifty-five percent was to be paid to the miner, and Senator MURDOCK (interposing). Forty-five and fifty-five. Senator BARKLEY. That is right. Now, that was rather an arbitrary and, it may be said, to some extent an artificial price-fixing of silver by the Government. To what extent has that law withdrawn silver to the Treasury beyond its needs and has thereby automatically deprived commercial enterprise of silver that it needs, would have bought on the market? Senator MCCARRAN. My answer must be: Not at all has it deprived commercial or industrial users of silver. I shall have to go into that just a little bit, if I may, Senator. Certain agencies have arisen and certain conditions have arisen in the past few months. For instance, the O. P. A. has put a price ceiling on foreign silver, as well as on domestic silver; and then again the War Production Board issued an order stipulating that silver can only be imported into this country for use in war industries. The reason for that, of course, was that it was required for war-essential purposes. As to these non-war-essential purposes, no one has more sympathy than I; no one has more sympathy than the silver group. But, at a time when the making of bearings for planes and the making of solder and the making of brazings for war-essential purposes is uppermost, the making of jewelry as a subsidiary is an offhand thing. We do not look upon it as a war essential. And when the able Senator from Connecticut says that many of his people have been put out of employment, may I say to you that thousands upon thousand of miners in America have been, by order of the War Production Board, within the past 2 months, put entirely out of employment because of closing of so-called non-war-essential mines. Senator MALONEY. Let me say at that point, if I may, that there are not enough miners available to do the mining the country needs; and I should like to emphasize for the record that those supporting this bill are not concerned primarily with the manufacture of jewelry. That is incidental. Knives and forks and spoons and the necessary household articles made from silver are the principal things with which we are concerned. Senator MCCARRAN. Well, our soldiers eat without silver spoons and silver knives and silver forks. Senator MALONEY. You would not think so if you were familiar with the purchases that are made. Senator MCCARRAN. There are thousands of people in this country who never had a silver spoon or a silver knife or a silver fork in their homes, and they are living and they are working and they are sweating and they are toiling. Senator MALONEY. The Army and Navy are using silver knives and forks and spoons. Senator MCCARRAN. I hope they are. I would be very glad of that, because we cannot do anything too good for them to suit me. But I have my doubts about that. Senator BARKLEY. The thing that was running in my mind in asking the question is this: Roughly speaking, the Treasury has nearly twice as much silver as it needs to back up present outstanding silver certificates. Now, is it within range of reasonable contemplation that the Treasury would ever issue enough silver certificates to absorb all the silver they have which was bought for monetary purposes, and the purchase of which may have been stimulated by the law we passed that I spoke of awhile ago? Senator MCCARRAN. The Secretary of the Treasury has that authority, to issue up to every ounce of silver that he has in the Treasury, but he has not exercised it Senator BARKLEY. Well, that is true, and was then. Under the Thomas amendment to an agricultural bill they had power to issue $3,000,000,000. They have never done it, never have issued any of it. So that the mere authority does not mean that it would be exercised. I am only trying to find out the reasonable possibility, likelihood, of all the silver being necessary in the future. I realize that there has to be a comfortable margin, but I am wondering whether it really is economically sound to maintain in the Treasury nearly twice as much silver as is necessary to maintain outstanding currency. Senator MCCARRAN. That same question, of course, might be addressed to gold. But may I now go on and answer the Senator's question? Senator BARKLEY. It is not quite a parallel situation, although there are some phases of it that are parallel. Senator MCCARRAN. May I answer the Senator's question by rather a lengthy answer in which my own views will be expressed? Senator MURDOCK. I wonder if the Senator, right there, would not let me give him a figure. Senator MCCARRAN. Yes, indeed. Senator MURDOCK. Which I think is directly in answer to Senator Barkley, and that is this: That notwithstanding the fact that the Treasury has bought all of this silver and has failed to issue certificates against it, we find that. between October 31, 1941, and September 30, 1942, with the acquiescence and certainly not with the disapproval of the Secretary of the Treasury, there has been brought into circulation in the monetary system of the United States $3,311,711,633 in Federal Reserve notes. Now, Federal Reserve notes cannot come into the circulatory stream of money in the United States except through debt and except by bearing a tribute of interest; whereas, if the Secretary of the Treasury had seen fit to issue silver certificates against the people's silver lying idle in the Treasury, at least a billion, seven hundred million dollars' worth of this private currency, Federal Reserve currency, would not have come into circulation. |