FORMER SECRETARY OF TREASURY REFUSED TO COIN AS MONEY THE

UNOBLIGATED SILVER

The day that the Green bill was enacted, we had that much silver in the Treasury. When the Green bill went into operation we had over 1,000,000,000 ounces. We had 1,500,000,000 ounces of silver in unobligated silver in the Treasury which Mr. Morgenthau refused to put into use as money, although he had authority to do so under the provisions of the Silver Purchase Act of 1934.

Senator McKELLAR. What was the reason?

Congressman WHITE. We would have to guess at that. I have been a member, since I came down here to Washington, of the Coinage, Weights, and Measures Committee. We had Mr. Morgenthau up before our committee many times, and if he would have used that silver for coining it into money he could have saved the people of the United States a great amount of money in interest. It was over 1,000,000,000 ounces.

COINAGE VALUE OF TREASURY SALES OF SILVER BETWEEN MAY 6, 1942, AND MARCH 6, 1946

By going back and adding the total of the revalued silver to the total of the unrevalued and unobligated silver on hand in the Treasury on May 6, 1942, to the silver purchase, according to Treasury figures, since that date we have a grand total of 2,964,486,221 ounces. Of this amount, according to the Treasury statement, we find there was on hand in the Treasury on the 6th day of March this year, a total of 1,979,623,655 ounces, both monetary and unobligated silver, showing the Treasury silver stocks have been reduced by 984,862,566 ounces of silver that had a coinage value of $1,273,357,372.59, as computed by a Treasury official (exhibits 1, 2, 3, Treasury Statement for March 6, 1946).

They have not minted any dollars to amount to anything since 1934, but they are from time to time coining and striking subsidiary silver, which is half dollars, quarters, and dimes.

LIFE OF SUBSIDIARY COINS

Senator MCKELLAR. What is the ordinary life of this subsidiary silver?

Congressman WHITE. I have handled and seen many silver coins, some very old, dating before the Civil War. I would say on the average 50 years the Treasury can furnish more accurate figures.

Senator MCKELLAR. That may be, but I do not recall ever having seen any money that was coined before the Civil War.

BREAK-DOWN OF TREASURY SILVER ON HAND JULY 12, 1943

Congressman WHITE. Now, coming to the Treasury operation under the provisions of the original Green bill, by taking the Treasury statement on the date of the enactment of the original Green bill, we find that on July 12, 1943, there was, without counting worn and subsidiary coins, an accumulation of 2,777,855,640 ounces of silver in the Treasury.

This reserve was composed of 1,525,455,641 ounces of revalued monetary silver and 1,252,399,999 ounces of unrevalued and unobligated silver.

TREASURY ACQUISITIONS AND SALES SINCE JULY 1943

Since that month in 1943, according to Treasury figures, there has been purchased 1,665,611 ounces of silver. During this period the Treasury decreased its silver stocks by putting 204,345,553 ounces of silver dollars and subsidiary silver coins into circulation.

Money just disappears. People move out and go to other countries, and then there is hoarding and hiding, and it is just for that reason that the Government issues paper money in lieu of circulating coins.

GOLD CERTIFICATE ACT PASSED TO STOP ABUSES WITH GOLD

We passed the Gold Certificate Act because there were so many abuses in handling gold. Some Chinese used a leather bag that they sloshed back and forth in their laps and they would sweat the gold, coming out some times with two or three times a day's wages.

Also among the abuses was the practice of the banks who would give you, when you exchanged your certificates for gold, just so many gold coins for the certificates, but when you brought your gold back they would weigh it and if it did not weigh as much as it should have, then you took a loss.

The Chinese had a trick in San Francisco of putting a $20 gold piece in a vise and by the use of a small drill they would drill a hole and leave a little collar by diverting the drill in several directions and they would run some lead in the hole and then plug it with gold, then Congress passed a law that gold certificates would circulate in lieu of gold coins. In that way we saved a substantial amount of metal from abrasion. If a ship blew up or was sunk, or if a train was wrecked, or if clothes caught fire, we saved the metal. It was always on deposit.

The Treasury statements show a lot of gold being held against national bank notes and gold certificates that are still expected to come in some day.

VALUE OF SILVER ON HAND SINCE ENACTMENT OF GREEN BILL

Taking the silver on hand in the Treasury on the date of the enactment of the Green bill and adding the silver purchased since then we have a total of 2,779,521,251 ounces. There we have, gentlemen, over 2,750,000,000 ounces of silver which is worth over $3,000,000,000. Deducting from this amount the 1,979,623,655 ounces, which was the total silver on hand in the Treasury on March 6, 1946, and the 204,345,553 ounces which have been taken out of the Treasury and added to the outstanding silver coinage making a total of 2,183,972,208 ounces, we find the silver disposed of by the Treasury since the Green bill was enacted amounts to 595,549,043 ounces-almost 600,000,000 ounces went out (exhibits 2, 3, 4, July 12, 1943, Treasury statement; circulation statements June 30, 1943, and February 28, 1946).

AMOUNT OF SILVER LEND-LEASED TO ENGLAND

When we deduct from this figure the 300,000,000 ounces of silver lend-leased to England we find there is still 295,549,043 ounces to be accounted for by the Treasury; silver that, if converted into dollars as calculated by Mr. Timothy Quirk of the Mint would have minted $382,123,928.62.

INDUSTRIAL CONSUMPTION OF SILVER IN PAST AND FUTURE YEARS

The testimony of the silver fabricators before this committee reveals that in peacetime the industrial consumption of silver per year in this country was between 25 and 30 million ounces of silver. (See testimony of Judson C. Travis, of Handy and Harman, p. 158 of the hearings.) In this hearing the silver fabricators estimated the future annual silver consumption at 35,000,000 ounces per year (some said 125,000,000 ounces for the first year-see testimony of Travis, p. 152 of hearing); see statement of Ray C. Wilcox on page 161 of the hearing (exhibit No. 5, hearing, Senate Appropriations Committee).

COMPARISON OF TREASURY DISPOSITIONS WITH FUTURE NEEDS OF INDUSTRY

By dividing the 25,549,043 ounces disposed of by the Treasury since the Green bill was enacted by the estimated annual consumption of 35,000,000 ounces, we find-without counting the silver loaned to England-that the Treasury has already disposed of enough silver to supply the silver fabricators in this country at this rate of consumption for over 8 years.

Senator MCKELLAR. You gentlemen will have to excuse me. I have to go up to the Senate and Senator Hayden will take the chair. (Senator Hayden assumed the chair.)

SOURCE OF SUPPLY AND USE OF SILVER IN WAR YEARS

Congressman WHITE. In determining what has gone with the silver reserves of the Treasury, it develops from the testimony of the fabricators that during the war the use of silver for civilian purposes was sharply curtailed (see testimony of Mr. Travis, of Handy & Harman); that of the 140,000,000 ounces of silver used for industrial purposes in 1945, 28,000,000 ounces was bought from the domestic mines and 50,000,000 ounces was imported, the balance, or an estimated 70,000,000 ounces, came from the Treasury; and of the 140,000,000 ounces used in 1945, 70 percent, or 98,000,000 ounces, was for military purposes.

I think you will recall that the war industries were very heavy consumers of silver and that they actually were consuming and had consumed 95,000,000 ounces for war purposes.

In considering the source of supply for the industrial use of silver, it develops that the silver users obtained in that year a supply of 50,000,000 ounces of foreign silver, 28,000,000 ounces of domestic silver, and 70,000,000 ounces from the Treasury reserves. That is the peak. How does the Treasury account for the disposal of all the

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silver that the record discloses has gone out of the Treasury since the Green bill has been enacted?

Aside from the silver lent to England, if we take 295,549,043 ounces of silver the Treasury has disposed of since the Green bill has been enacted, and divide this amount by 70,000,000 ounces, the peak figure supplied to the silver fabricators, the silver that has been taken out of the Treasury would supply the domestic users for over 4 years.

SEIGNIORAGE PROFITS

The loss to the Government by the disposal of silver under the Green bill is shown by the Treasury in another way. Turning to page 71 of the Treasury Bulletin for July 1943, the silver seigniorage table discloses the Government made a substantial profit in the way of seigniorage on minor coins of $280,100,000 and the seigniorage on other silver revalued for monetary use, dollars, and silver certificates, totals $820,500,000.

In addition to the actual seigniorage, the figure in the last column of the table in this report gives the potential seigniorage on the unrevalued silver bullion then in the reserves of the Treasury and is shown at $1,029,500,000, which would have increased the Treasury monetary reserves by that much if all the silver on hand had been revalued and used for money (exhibit No. 6, Treasury Bulletin for May 1942).

By referring to this Treasury Bulletin you will find that the Treasury gets out a very complete list. Here is the seigniorage table and there is the figure mentioned. It is shown there, and that is the potential seigniorage. All the figures are there.

Turning to the February Treasury Bulletin of this year, by referring to the silver seigniorage table on page 71, we find that the potential seigniorage on unrevalued silver bullion reserves has shrunk to $333,200,000. This is a falling off of $696,300,000, a loss in seigniorage which might have been a profit if the silver had been converted into money in the same manner the other silver was revalued and placed in circulation (exhibit No. 7, Treasury Bulletin, February 1946).

Here is the seigniorage table that shows those identical figures on seigniorage. There are some other figures in there.

PRESENT VALUE OF SILVER IN FOREIGN COUNTRIES

As to the present value of silver in other parts of the world, in checking with the British Empire Unit of the Department of Commerce, the Research Division of the Federal Reserve Bank, and the Monetary Research Division of the United States Treasury, we find that the bullion value of silver is considerably above a dollar per ounce as is disclosed by the following reports obtained from these governmental departments.

I have checked on this very carefully with the British Empire Unit of the Department of Commerce, with the Research Division of the Federal Reserve Bank, and with the Monetary Research Division of the United States Treasury.

As reported by the Department of Commerce:
Bombay, Jan. 9, 1946__

Baghdad, September 1945___

As reported by Federal Reserve System in Washington:

Per ounce $1.10 1. 06

Gentlemen of the committee, the Congress has by recent enactment reduced from 40 to 25 percent the gold security for the paper money in circulation in the form of Federal Reserve notes. This has been done at a time when the statements of the Federal Reserve and the Treasury disclose the money and credit of this country is supported by a total of $107,700,000,000 in Government bonds, held by the banks as security for the money and commercial credit supplied by the banks and in everyday use to finance business in this country (exhibit No. 8, p. 48, Treasury Bulletin, February 1946).

Would you turn to that, Mr. Chairman? It is on page 48 of the Treasury Bulletin for February 1946. You will see it indicated there. Senator HAYDEN. I have it.

AMOUNT OF GOVERNMENT BONDS HELD BY INSURANCE COMPANIES

Congressman WHITE. In addition to this the very heart of our national financial security is at stake in the Government bonds held by the insurance companies-bonds which represent the security of the dependents and loved ones in every city, town, hamlet, and community in America and totaling, according to the report made in the Treasbury Bulletin for March, $22,400,000,000.

AMOUNT IN TRUST FUNDS

But that is not all. We have in the Treasury as shown in the February 15, 1946, Daily Treasury Statement, a sacred trust for those that labor in this country the funds that have been gleaned from the laborers themselves and their employers in industry, $15,357,949,486.13. This amount is composed of:

Old-age survivors trust fund.
Unemployment trust fund__
Railway retirement funds___.

$7, 137, 583, 177. 55 7, 497, 917, 024. 83 722, 449, 283. 75

Practically all of these trust funds are represented by Government bonds now on deposit in the Treasury. Less than 1.2 percent of this total amount is cash, which amounts to-as shown for all three by the Treasury Statement-$187,342,056.13, and this cash itself is simply