TREASURY DEPARTMENT APPROPRIATION BILL, 1947

TUESDAY, APRIL 16, 1946

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D. C.

The subcommittee met, pursuant to adjournment, at 10:30 a. m., Hon. Kenneth McKellar presiding.

Present: Senators McKellar, Tydings, McCarran, Hayden, Green, and Reed.

Also present: Senator Murdock, of Utah.

Senator McKELLAR. The committee will be in order.

TREASURY DEPARTMENT

BUREAU OF THE MINT

Who is the first witness?

ADDITIONAL STATEMENT OF HON. COMPTON I. WHITE, A A REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO

PURPOSE OF SILVERWARE DEMONSTRATION

Congressman WHITE. Senator, in discussing the price of silver and silverware, there has been much testimony presented here that bears on the profits made from making and marketing sterling silverware. There is a matter before the committee of giving the committee a demonstration. I have taken it upon myself to go into the silver stores of Washington and buy sterling silverware at the retail price and bring it to the committee so that they may be informed as to the price of manufactured silverware. Also, I would like to introduce Mr. L. B. Macurdy, of the Bureau of Standards, and Mr. A. F. Beck, also of the Bureau of Standards, who have brought with them their balances, or official scales. It is our purpose to weigh the silverware that we have bought and balance each piece with silver dollars and fractional silver coins.

CLASSIFICATION, PERCENTAGE MADE, AND EXTENT OF CEILING PRICES ON SILVERWARE

There are three classes of silverware: First, there is plate. That is the rolled silver that is made into spoons and tableware. Next is the hollow ware which includes cake stands and all kinds of little silver service for tables and ornamental uses. The next is jewelry.

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It is my information, from what I can learn of these silver dealers here in the city of Washington, and talking to the representatives of the International Silver Co., that flatware is only about 40 percent of silver goods made, and 60 percent is hollow ware and jewelry, and there is no ceiling on hollow ware and jewelry. The only ceiling is on plate. All plate is fabricated from processed silver, which is only 0.925 percent fine.

ELEMENT OF PROFIT IN PROCESSING SILVER

It might be explained, according to the testimony presented here, that the chief dealers in silver, Handy & Harman, take pure silver and process it into standard silver, which is 0.925 percent fine. There is quite an element of profit in that operation, because 10 percent of process silver is represented by copper. In fact, 10 percent copper goes into all our coinage.

Senator MCCARRAN. Does that mean that 12-cent copper is sold at $1.29?

Congressman WHITE. Processed into silverware, it is much higher than that.

Senator MCCARRAN. We get 12-cent copper and process it into silver and then sell it at whatever Handy Harman can get for it. Is that it?

Congressman WHITE. I only want to present the bare facts to the committee.

SILVER DOLLAR IS 10 PERCENT COPPER

Senator MCKELLAR. Here is a silver dollar of 1890. Is 10 percent of that copper?

Congressman WHITE. Ten percent of every piece of silver, according to law, is 10 percent copper. According to law, every piece of standard silver is 10 percent copper.

FINDINGS IN DEMONSTRATION WITH FLATWARE (TEASPOON)

We will start the demonstration with a piece of so-called flatware, a spoon. I have a receipted bill which shows, "One teaspoon, $2.19; tax, 44 cents." The total is $2.63.

The representative of the Bureau of Standards, Mr. Macurdy, can give us the exact weight of that item in troy ounces.

STATEMENT OF L. B. MACURDY, CHIEF, MASS SECTION, WEIGHTS
AND MEASURES DIVISION, UNITED STATES BUREAU OF
STANDARDS

Mr. MACURDY. The teaspoon weighs 0.90 troy ounce. .
Senator REED. Is that silver in that spoon?

Mr. MACURDY. The weight of the spoon is 0.90 troy ounce with 0.925 pure silver content, 0.83 of a troy ounce is pure silver.

COST OF TEASPOON

Senator MCKELLAR. What does that spoon sell for ordinarily? Congressman WHITE. $2.63, the total, is made up of the base cost of $2.19 plus tax of 44 cents. This article was purchased from Woodward & Lothrop.

Senator McKELLAR. How much would that be for a half dozen?
Senator TYDINGS. Is that retail?

Congressman WHITE. That is the retail cost, downtown.
Senator McKELLAR. Is that 0.9 silver?

Mr. MCCURDY. It is 0.925 silver.

Senator HAYDEN. Multiply that by 12, please. How much would a dozen of the spoons cost?

Mr. MACURDY. That comes out 10 ounces.

Senator McKELLAR. How much would it cost?

Congressman WHITE. They are $2.63, minus the tax.

Senator MCKELLAR. Include the tax, because we have to pay the tax.

Senator HAYDEN. Multiply it by 12.

Senator TYDINGS. I think you ought to leave the tax off, because that has nothing to do with it, primarily.

Senator MCKELLAR. I would pay it if I went out and bought it.

COST OF DOZEN TEASPOONS

Congressman WHITE. $31.56 is the computation.

Senator TYDINGS. How much of that is Federal taxes?

Mr. MACURDY. That would be $5.28.

Senator TYDINGS. The Government takes $5.28 in taxes off of a

dozen ordinary teaspoons.

Senator HAYD N. Please proceed with your statement.

WEIGHT AND VALUE OF PURE SILVER IN TEASPOON

Mr. MACURDY. With 0.9 ounce silver, that will be 0.83 ounce of pure silver in the spoon.

cents' worth of silver.

If silver is worth 71 cents that will be 59

Congressman WHITE. Fifty-nine cents' worth of silver is turned into $2.63 by fabricating it and adding the tax.

If there is 59 cents' cents an ounce, at. article be worth?

Senator TYDINGS. Give me those figures again. worth of silver in the article and silver costs 71 $1.25 an ounce, how much would the silver in the Mr. MACURDY. That would be $1.04. Senator TYDINGS. What are the other alternative propositions for the price of silver that have been suggested at this hearing?

Congressman WHITE. The price of silver in coinage value is $1.29. The compromise price has been suggested of $1.03.

Senator TYDINGS. At $1.29, how much would be the value of the silver?

Mr. MACURDY. That would be $1.07.

Senator TYDINGS. Therefore, 59 cents is to $1.07 as $2.63 is to X. How much, therefore, would the spoon cost if the whole thing went up in proportion. That is, 59 cents is to $1.07 as $2.63 is to X. You know what the law of extremes and the means is. How much would that cost the consumer, assuming that the taxes and profits of the wholesaler, retailer, manufacturer and transportation all went up as well. How much would it cost?

I

Congressman WHITE. The manufacturer claims

Senator TYDINGS (interposing). What I want to know is the relationship of 59 cents worth of silver to $1.07 worth of silver, and $2.63 to X if the whole thing went up.

Senator MURDOCK. You have one constant in there, Senator, and that is the tax.

Senator TYDINGS. The tax would vary according to the selling price. There would be no constant at all.

Senator REED. It would be 1.8 to 1.

Senator MCCARRAN. Your ratio will not work out, because your expenses and wages and everything come into the thing. You cannot run a ratio on it.

Senator TYDINGS. I could not say the ratio will be absolutely constant, but I do say the ratio will be clearer in giving us an indication of how the increase of cost on silver will pass itself on with taxes and everything else. For example, if you pay 44 cents tax on the 59-centcost unit of silver, you will probably pay nearly twice that much on the $1.07 silver in taxes.

Senator MCCARRAN. However, you prove nothing by it, Senator. Senator TYDINGS. I have shown the cost goes up and the consumer pays the bill.

Senator MCCARRAN. What is the cost of production?

Senator TYDINGS. Just let me get this information for which I have asked.

Mr. MACURDY. It would be $4.77.

PROPORTIONATE ADVANCE IN COSTS

OF SILVER SPOON WOULD BE REFLECTED IN COSTS TO CONSUMER

Senator TYDINGS. So that, if all costs in the manufacture of that spoon at $1.07 for raw material in it were to advance proportionately as the cost of the silver has advanced at $1.07 over 59 cents, the price would be $4.77. If we were to subtract $2.63 from that, we would get a constant of almost 100-percent increase, provided all the factors went up in that ratio. They will not go up in that ratio, but at any rate, it proves that the increased cost of the silver content reflects itself in the increased cost to the ultimate consumer and that, I understand, was the burden of this exhibition here.

FINDINGS IN DEMONSTRATION WITH SILVER DOLLAR

Congressman WHITE. There is silver that cost $2.63, manufactured, and here is a silver dollar. They just about balance on the scales. The silver in a dollar at 71.11 amounts to 55 cents. That is only flatware. That is only a very small part of it.

DISCUSSION AS TO COST OF PRODUCING THE SILVER

Senator MCCARRAN. Before you drop that subject, what is your cost of production and where does that figure into it?

Senator TYDINGS. What do you want to know?

Senator MCCARRAN. I want to know what the cost of production is, if that, as you say, went up on the ratio used by you.

Congressman WHITE. I will assume, for the sake of this illustration, that the cost of production is the same whether you pay 59 cents for the silver or $1.07.

Senator MCCARRAN. You cannot do that, because you will not get the silver under those conditions.

Congressman WHITE. Do you mean the cost of production in the shop of the silversmith, or in the mine?

Senator MCCARRAN. I mean the cost of producing the silver in the first instance, the raw metal.

Senator MURDOCK. You also have the situation, Senator McCarran, that your wages and nearly everything else has been up, and here we are on a silver basis of 71 cents, antedating 1939, whereas, throughout the world today, you cannot buy silver at less than $1.15 or $1.20

an ounce.

Senator MCCARRAN. I want to show that you cannot work a ratio and a slide rule on it.

FINDINGS IN DEMONSTRATION OF AN ALLOY TEASPOON

Congressman WHITE. A very practical optical demonstration can be made: I have here a very well-made alloy spoon.

Senator MCCARRAN. You are now talking about the cost of production, in the processing of a spoon?

Congressman WHITE. Yes. This spoon is bought at a local fiveand-ten store for 15 cents. I would like to pass this alloy spoon around the table for the members of the committee to see the fine workmanship it contains. There is the workmanship on this 15-cent spoon which you can compare with the workmanship on this $2.63 sterling silver spoon.

Senator MURDOCK. The point you are making here is that the alloy spoon, as far as workmanship and design are concerned can compete with the silver spoon.

Congressman WHITE. That is right, Senator Murdock.

Senator MCCARRAN. In other words, the design and the workmanship does not change the situation; is that it?

Congressman WHITE. That is it: Also, it is stamped on the back. There is every mark of workmanship on that spoon that is on the silver spoon.

Senator GREEN. Mr. Chairman, in view of Senator Murdock's remarks about the cost of silver, I would like to state that I have evidence that silver has been sold or is for sale at much less than the price named. As evidence, I would like to put in one letter now from the Industrial Trust Co., Providence, R. I., dated April 12 of this year. It is directed to the president of the Gorham Manufacturing Co., Providence, R. I. I offer the letter in evidence.

(The letter referred to was read to the committee and is as follows:)

LETTER FROM INDUSTRIAL TRUST CO., PROVIDENCE, R. I., ON SILVER PRICES

Mr. EDMUND C. MAYO,

President, Gorham Manufacturing Co.,

INDUSTRIAL TRUST CO., Providence, R. I., April 12, 1946.

Providence, R. I.

DEAR MR. MAYO: At your request we cabled Mexico on April 11, 1946, asking for a firm price on silver for export from Mexico. We have received this morning a cablegram from our Mexico friends that a firm in Mexico City offers 500 kilos silver for spot delivery for export at $27.33 United States currency per kilo f. o. b.