We do not have statistics on stocks currently held by distributors and industrial consumers, but will have accurate figures on this when a canvass now under way is completed about a month hence.

Stocks of Treasury silver as of September 9, 1942, totaled approximately 2,900,000,000 troy ounces, as announced recently by the Secretary of the Treasury. Of these stocks monetized silver comprised about 1,550,000,000 ounces, leaving a balance of about 1,350,000,000 ounces of so-called free silver.

Industrial use of silver has greatly expanded in recent years, and the rate is accelerating as noted earlier in this testimony. In 1940 approximately 44,000,000 troy ounces were consumed in industries and arts. It is estimated that in 1941 about 80,000,000 ounces were so used, and we now estimate that 1942 consumption will be about 125,000,000 ounces.

Senator MALONEY. Might I ask you there, what is going to cause that great increase that you anticipate?

Mr. LUND. Well, the increase from 1941 to 1942?

Senator MALONEY. And from then on.

Mr. LUND. From then on?

Senator MALONEY. Yes.

Mr. LUND. That is new uses, substituting for other metals that are

very scarce.

Senator MALONEY. You are including all of the war purposes, too? Mr. LUND. Oh, yes.

Senator MALONEY. Thank you.

Mr. LUND. It should be particularly noted that by the end of 1942 the annual rate of consumption will be about 145,000,000 ounces after virtually complete elimination of nonessential uses.

Industrial consumption, by major uses, in 1941, with estimates in 1942 and 1943, is shown in the following table.

I have a table here that is not very long, if you would like to have me read it.

Senator MALONEY. Yes; please do so.

Mr. LUND. These are industrial consumption figures of silver, by major uses, in 1941, and estimates for 1942 and 1943.

For decorative arts, principally silverware and jewelry, in 1941 it was 35,000,000 ounces; estimated, 1942, 30,000,000; and for 1943, 2,000,000.

Chemical uses, 20,000,000 in 1941; 1942, 20,500,000; and for 1943, 22,000,000.

Electrical uses, 1941, 5,000,000; 1942, 9,000,000, and 1943, 25,000,000.

Solders, tin-lead and brazing alloys, 5,000,000 in 1941; 1942, tinlead, 2,000,000, for brazing alloys, 30,000,000; 1943, tin-lead, 7,000,000 and brazing alloys, 53,000,000.

Bearings, principally airplane engine bearings, 3,000,000 in 1941; 1942, 15,000,000 and in 1943, 32.000,000.

Senator MALONEY. Is that replacing steel?

Mr. LUND. It is replacing other bearing metals, such as tin, antimony, and other bearing materials. This seems to do the job better. Senator MALONEY. Proceed.

Mr. LUND. Medical and dental uses, 2.000.000 in 1941; 1942, 3,000,000; and 1943, 6,000,000.

Miscellaneous, 10,000,000 in 1941; 15,000,000 in 1942; and 30,000,000 in 1943.

The chemical use figure of 20,500,000 for 1942 includes 12,000,000 ources for photography; 7,000,000 ounces for electroplating, including 3,500,000 ounces of unessential electroplating early in 1942; 1,500,000 ounces for minor silver salts.

The figure of 22,000,000 for chemical uses in 1943 includes 15,000,000 ounces for photography; 4,000,000 ounces for electroplating; and 3,000,000 ounces for minor silver salts.

In connection with the estimated total for 1943 of 177,000,000, it cannot be too strongly stressed that this annual consumption is also the probable median use as of July 1. At the end of 1942, therefore, an annual rate of consumption of 145,000,000 ounces is indicated. Similarly, at the end of 1943, an annual rate of consumption of 227,000,000 ounces is indicated.

It may be noted that the heaviest expansion is for use as solder, brazing alloys, and engine bearings. A notable increase is also shown in its use by the electrical industry.

Any attempt to project the demand for silver for essential uses, even in 1943, is fraught with serious difficulties. A more accurate picture of consumption in 1941 up through September of 1942, will be available when the canvass referred to above is completed about a month hence.

Senator MALONEY. How far is that canvass going?

Mr. LUND. That is going to about 4,000 end users of silver.

Senator MALONEY. Does that include all of the users of industrial silver?

Mr. LUND. Yes, sir.

Senator MALONEY. That is a silver inventory?

Mr. LUND. Yes, sir.

Senator MALONEY. Thank you. I suggested that more than a year ago.

Mr. LUND. The estimates for 1942 in the above table are necessarily rough estimates that have been obtained mainly through silver suppliers.

The estimates for 1943 appear to be reasonably certain for such uses as silver lead solder, engine bearings, and photography. Inasmuch as the war uses for brazing alloys are multitudinous, it is virtually impossible to estimate 1943 requirements, except by applying a percentage increase based on scheduled increases in the construction of ships, airplanes, tanks, guns, bombs, shells, and so forth, in which work brazing alloys find very important uses.

Current demand for silver for war and essential civilian uses is running at the rate of about 110,000,000 ounces annually. The best estimates we have had from the trade indicate that this demand is rising at the rate of from 5 to 10 percent monthly with this increase distributed quite evenly throughout the field of essential uses. this rate of increase, the demand for essential war uses will equal the supply of newly mined available foreign and domestic silver by about January 1943.

At

Potential uses, new uses for silver, some of which are sizable, develop suddenly without any warning. As an example, we were approached the other day regarding the possibility of using sterling silver for chains to which identification tags are to be fastened, replacing the

more easily destructible cotton tapes now in use. This use would require approximately 5,000,000 ounces of silver a sizable amount in relation to supplies now available for consumptive use.

Demand for silver for foreign coinage, although a subject touching on the monetary field, is pertinent to this discussion inasmuch as it has been customary in the past to fill these requirements in large measure from newly mined foreign production. Under existing legislation it is very important that arrangements be made to utilize silver from Treasury stocks to meet these demands.

Another monetary use which has recently developed is the substitution of silver-copper-manganese 5-cent pieces for the copper-nickel coins in order to effect important savings of nickel and copper, This use will require approximately 30,000,000 ounces of silver annually merely to mint additional new coins needed. Again, we deem it vitally important that supplies to meet this need be drawn from Treasury stocks.

Returning to consideration of industrial uses, the entire field of substitution of some form of silver to replace other metals as closures for containers opens up a very large potential demand, but one impossible to evaluate accurately. The possibility of substitution of silver for other metals as plating on returnable containers opens up another potentially large demand that might be measured in tens of millions of ounces.

We feel that it is not beyond the realm of possibility or probability that demand for silver to fill war and essential civilian uses may reach an annual rate of from two hundred and fifty to three hundred million ounces by late in 1943 or early in 1944, with the possibility that it may even go to 400,000,000 ounces per year.

Senator DANAHER. Did we ever use any such amount at any time? Mr. LUND. Never did, Senator, no.

Senator DANAHER. Would that include putting bands on pipes and cigarette holders and things like that, in your estimated predictable potential use?

Mr. LUND. NO. This is essential uses; not luxury uses for pipe holders.

Senator DANAHER. I see.

Mr. LUND. There is the possibility of its going into very sizable uses, such as returnable containers where it might substitute for nickel or tin plating on such things as milk cans, for instances, where you have to have metal to protect food, or the material contained therein.

Senator MALONEY. What is the metal used in the case of plated milk cans?

Mr. LUND. Well, I presume it would be on steel of some form. Again, it is an essential civilian use, but it would be substituting for other much more scarce metals such as tin and nickel.

In view of the possibility that such a demand may have to be met for a period of up to 5 years in connection with the war effort, we feel that sizable amounts of silver stocks held by the Treasury will have to be drawn upon to fulfill these needs.

Very little has been said as yet regarding the demand for silver for manufacture of articles of low essentiality, such as silverware, flatware, jewelry, pens, pencils, and so forth. Under the terms of conservation order M-199, foreign silver cannot be purchased or put into process for the manufacture of such restricted items after October 1,

unless these items carry a preference rating of A-3 or better. Use of newly mined domestic silver for these purposes is still permissible, but it is questionable how heavy the demand for this higher-priced silver will be for these uses in view of the fact that the manufacturer will have to absorb the difference in the cost of his raw material. Up to the present the Office of Price Administration has not granted permission to raise the prices of their products to allow for this differential. We believe, however, that there will be a continued demand for 71-cent silver for restricted uses that may be measured in at least tens of millions of ounces per year some of which will receive preference ratings.

Faced with the probable rise in demand for silver to meet war and essential uses that may reach a rate of one hundred and fifty to one hundred and sixty million ounces annually within only a few months, we are formulating plans to extend the restriction in the use of silver for nonessential purposes to cover all silver rather than the foreign alone as now provided in our silver conservation order. There is always the possibility that a new use will suddenly develop which will demand important amounts of silver, making it all the more imperative that supplies be available to meet these unexpected requirements.

Senator MALONEY. Might I interrupt you there to remind you that this bill in its present form leaves all of the power with your Board?

Mr. LUND. Yes, sir.

The bill S. 2768, introduced by Senator Green on September 14, 1942, concerning which this hearing is being held, would "authorize the use for war purposes of silver held or 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, any silver held or 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 needs, civilian needs contributing to the war effort, and for conversion of existing plants to direct and indirect war work.

I wish to submit the following comments with respect to this proposed legislation:

(1) We wish to be certain, in the first place, that silver sales and purchases under the act will 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. We 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.

Senator MALONEY. Senator Green suggested that earlier today. Mr. LUND. (2) We assume that it is the intent of S. 2768 to permit the silver which is being leased by the Treasury Department for nonconsumptive uses in war plants, to be maintained as backing for outstanding silver certificates. This will thus permit putting silver stocks owned by the Government to the maximum possible use in connection with the war effort, and make available supplies that we feel will be urgently needed for dissipative essential uses, at the same time putting the monetary stocks into war work.

Senator DANAHER. That can be done under regulation now, can it not, by the Treasury?

Mr. LUND. I don't think I can pass on that point, Senator.

Senator DANAHER. If it may not be done under existing law and regulations to be issued by the Secretary of the Treasury, do you recommend that this bill be amended to cover the point?

Mr. LUND. I think it is the view that the bill as it stands will permit that. Does that answer your question?

Senator DANAHER. Not if it does not exist in the present law and regulations, I would say not-that is, the Bureau. But, you go ahead, sir, and I will take a look at the bill again..

Mr. LUND. (3) The proviso relating to price at which the silver shall be sold requires clarification, in our opinion. Treasury silver stocks were bought under a wide range of prices, so that a sale of different lots under the terms of the proposed legislation might be made at an equally large number of price levels.

Inasmuch as supplies of foreign and newly mined domestic silver will, within a few months, be insufficient to meet the rising demand for war and essential civilian requirements, with the consequent need of drawing upon Treasury stocks, we approve the passage of S. 2768 with the changes recommended above.

Senator DANAHER. Mr. Lund, you have appeared before our committee before; have you not?

Mr. LUND. No, sir; I have not.

Senator DANAHER. Not this committee, but I mean the Banking and Currency Committee.

Mr. LUND. No, sir.

Senator DANAHER. It seems to me I have seen you here and I wondered whether you had been here as a witness, in 1939.

Mr. LUND. No, sir.

Senator DANAHER. Thank you; sir.

Senator MALONEY. Senator Butler, any question?

Senator BUTLER. No questions.

Senator MALONEY. Thank you very much, Mr. Lund.

We have heard from the Government witnesses who have expressed a desire to be heard. Now, are there any others?

Senator GREEN. I believe the representatives of the employees should be heard because they are, in numbers, at least, most vitally interested, and I am going to ask Mr. Martin N. Thompson, representative of the Parker Pen Co. Union, of Janesville, Wis., to come forward.

Senator MALONEY. Please come forward, Mr. Thompson.

STATEMENT OF MARTIN N. THOMPSON, PRESIDENT, LOCAL 19593, AMERICAN FEDERATION OF LABOR, JANESVILLE, WIS.

Mr. THOMPSON. My name is Martin N. Thompson and I live in Janesville, Wis., where I have been a resident for 23 years. For 18 years I have worked for the Parker Pen Co. as a pen-grinder. About 8 years ago I helped organize the union, Local 19593 of the American Federation of Labor, and this union includes all the men and women employed by the Parker Pen Co. at Janesville, except the office workers. I am now the bargaining agent of the union and have been a member of the bargaining board since its organization.