The total demand for silver became so great that suppliers were forced to ration silver for nonessential purposes in May and June. No foreign silver whatsoever was available for these purposes in July or August. The scarcity of foreign silver for the reasons already mentioned was aggravated by order for coinage from friendly and allied countries, and by the diversion from regular channels of distribution of large quantities of silver of foreign origin, particularly Mexican, at prices well above the established ceiling price, in violation of at least the intent of the maximum price regulations. The outlook for the normal use of foreign silver is hopeless. The shortage still prevails and silver conservation order M-199 now prohibits its use for many purposes. Since July 1939, the Treasury Department has maintained a buying price of 35 cents per ounce for foreign silver. On November 28, 1941, the New York official price advanced from 34% to 35% cents, which diverted foreign silver from the Treasury to commercial channels. That price remains unchanged in spite of demand greatly in excess of supply, because of the price ceiling established by the Office of Price Administration. DOMESTIC SILVER The production of domestic silver totaled about 70,000,000 ounces in 1941, but early reports indicate some decline this year. In accordance with provisions of the act of July 6, 1939, our Government has been buying all of the silver produced in the United States and its possessions at a price of 71.11 cents per fine ounce. This silver is purchased by the Treasury Department from the smelting companies upon the presentation of affidavits certifying to its domestic origin. Most domestic silver is sold to the Treasury Department for forward delivery— up to 5 months. The Treasury Department has consented to a postponement in the delivery of silver now due from smelting companies, which should have the effect of making some of the current production of domestic silver available soon for use in industry and the arts. A survey of the supply of silver which might be obtained during the month of August through the procedure outlined reveals that only a part of the estimated monthly production of five to five and one-half million ounces will be available. The amount of domestic silver which could be used by industry and the arts will depend upon what action is taken by the Office of Price Administration with. respect to a readjustment of the price ceilings on silver products (now based on the cost of foreign silver), which would have to take into consideration an increase in the raw material cost of about 100 percent. This is because the price of domestic silver is about double that of foreign silver. TREASURY SILVER This is the silver which is now in the possession of the United States Treasury and in circulation, and totals 3,335,000,000 ounces; 1,166,000,000 ounces is bullion which is allocated to silver certificates; 1,356,000,000 ounces is unallocated; 813,000,000 ounces is in coins either in circulation or held by the Treasury. Some of this silver is now being loaned by the Treasury Department for use in the war effort under agreement that it will be returned to the Treasury after the war. The present law provides that none of the silver owned by the Treasury may be sold at a price less than $1.29 per ounce. CONCLUSION It is obvious that because of scarcity and restrictive regulations no foreign silver will be available for consumption and use for other than war or so-called essential civilian purposes. It is also clear that the immediate supply of domestic silver will not be nearly enough to meet all nonessential demands. In addition, it is only a question of time before the growing war demands will encroach upon and eventually absorb the domestic production as well as foreign silver. Therefore, after no more domestic silver is available, the only possible way that silver can be obtained to keep silversmiths, platers, jewlery manufacturers, mirror manufacturers, photoengravers, and other fabricators from going out of business will be to arrange for the release of silver from the stocks now held by the United States Governmentby whatever means are possible to accomplish this purpose. Senator MALONEY. Senator Green, as the author of this bill, will you proceed as you like? STATEMENT OF HON. THEODORE FRANCIS GREEN, A SENATOR FROM RHODE ISLAND Senator GREEN. Mr. Chairman and gentlemen of the subcommittee, I have a list of witnesses who have asked to appear here in favor of the bill and who will present facts and reasons why they are in favor of it. But before I call on them it seemed to me it would be worth while, perhaps, for me to say a few words about the occasion for the bill and what the bill itself provides. I have heard, and doubtless most of you have, of the growing need for silver in the war effort. One by one various metals have been withdrawn from general use because they were needed in the manufacture of airplanes, tanks, guns, and other war material, and a great effort has been made to find substitutes for them. Silver has unexpectedly proved to be not only a very good substitute for many metals but in many cases has been found to be superior to metals for which it was offered in the first instance as a substitute. The consequence is that there is a great call for the use of silver in the war effort, and the result is that it has been withdrawn to a very considerable extent from use for civilian purposes, which of course is very proper. But the result to those industries which have been accustomed to use it for ordinary civilian purposes has been almost disastrous. The silverware and manufacturing jewelry industry is a very large one. Their employees represent many tens of thousands of workmen specially trained for that work, and I have been very much. impressed with the attitude of the owners of those businesses and their employees in view of this disastrous condition. Many of them had to go under. Others have attempted to survive, and all that could have been trying to transform their businesses from a peacetime basis to a wartime basis. In other words, they are trying to convert their establishments, their factories, their places of business, and the qualifications of their employees, from peacetime to wartime. use. They have assured me over and over again from the very beginning that while they hoped something could be done to remedy the situation, they did not want to ask anything that would be unfair in any way to the war effort. If it is necessary for them and their businesses to be sacrificed they are willing to make the sacrifice, but they hope they won't be called upon to make it unnecessarily. The most of these businesses are small, but in proportion to the general output are very much larger than people would ordinarily think of them as being; so of course the silver situation affects quite a considerable number of people. To meet the difficulties I inquired of various Government departments as to the situation as they saw it, and as a result drafted and introduced in the Senate this bill you have met to consider today. The bill itself may be summarized as follows: It meets the requirements of the jewelry silver manufacturers to the extent that they are contributing to the war effort, and they do not expect it to go any further. To that extent the president of the New England Manufacturing Jewelers Association, who has a representative here today, has approved this bill; and so have various other organizations. In fact, a large number have met together, representing silver users, and they have endorsed the bill also, as have representatives of employees. The bill provides this: the President of the United States, through the Secretary of the Treasury, can under this bill sell any silver owned by the United States, for the following four purposes: 1. For making munitions of war. 2. Supplying civilian needs contributing to the war effort. 3. The converting of existing plants to those purposes. 4. Other uses in connection with the war effort. But this authority is not unlimited. It is subject to three conditions: 1. Silver cannot be sold at less than its cost to the United States, or less than its market price, whichever is the higher. 2. The Treasury must at all times keep under the ownership of the United States and in its possession or control an amount of silver of a monetary value equal to the face amount of all outstanding silver certificates. 3. The authority given will expire January 1, 1944. Now, under the provisions of the bill it will be possible for the Treasury to take silver now retained for silver certificates, and which cannot be used for any other purpose, and use it for nonconsumptive purposes. Then the free or unlimited silver now owned by the Government for nonconsumptive purposes, can be sold for consumptive purposes. The amount of silver so released for sale amounts to over a billion ounces. The uses for which this silver can be sold must be determined by both the Treasury Department under the provisions of this bill and the War Production Board in accordance with powers given it under other laws. From what I have said it will be noted that the relief this bill will give the jewelry and silver manufacturing industry is limited in extent by the necessities of the war effort, and more cannot be hoped for and more is not asked for by silver and jewelry manufacturers. But this assistance will prove of real value and justifies the passage of the bill. The popular view is that the Government has bought all this silver under the provisions of the Silver Purchase Act, which it is not proposed to repeal or modify except to this very limited extent in its operation; and this silver has been buried at West Point. This bill will still hold that silver as security for the issue of silver certificates since it will not be used for consumptive purposes but only lent for nonconsumptive purposes; and it will free all silver now being used for nonconsumptive purposes and therefore help to keep going, during the process of conversion, these industries. When we first had a meeting, some months ago, in Washington with Mr. Nelson and other Government officials, it was expected that the extent to which this conversion could go would be perhaps 15 percent. But with the ingenuity shown by manufacturers the extent has been greatly increased. Witnesses will testify to what extent, in some cases 40 percent, and in other cases 50 percent, and sometimes 60 percent. In the process of this conversion these manufacturers have invested large sums of money in the expectation they would be able to keep going, up to perhaps three-quarters of a million dollars in my own State. But the many uses found for silver have resulted in many other metals being withdrawn from use, and silver itself is for practical purposes invaluable. That is the situation as it exists today and the occasion for the bill and the provisions of the bill. In view of the letters the Chairman has read from the Secretary of the Treasury and the Chairman of the War Production Board, I have drafted a letter addressed to Senator Maloney, which I now read, suggesting certain amendments: DEAR SENATOR MALONEY: In view of the suggestions made by the Secretary of the Treasury, Mr. Morgenthau, and the Chairman of the War Production Board, Mr. Nelson, I desire to make the following changes in the draft of S. 2768. 1. Page 1, line 4 at the end of the line, after the word "Treasury," add the words "upon the recommendation of the Chairman of the War Production Board". I do not think this alters the meaning of the bill at all, but it may be useful to have that provision incorporated in that place, as Mr. Nelson suggests. I continue reading from the letter: 2. Page 1, line 10, strike out the words "in connection" and substitute the words "not inconsistent". That broadens the bill somewhat. It is for the Secretary of the Treasury and the Chairman of the War Production Board, or especially the latter, to determine what these uses may be. There would seem to be no necessity for restricting the use of silver except to the extent that it may be inconsistent with the war effort. I continue reading from the letter: 3. Page 2, lines 5 to 8, strike out the words beginning with "provided" in line 5, and ending with the word "higher" in line 8, and substitute therefor the words "Provided, That the average price for all silver sold under this act shall not be less than fifty cents per fine troy ounce". That is the provision which you have just heard read from the letter of the Secretary of the Treasury. It seems to me a very desirable improvement. I continue reading from the letter: Your committee may find it desirable to make two further changes. 1. Providing an authorization to the Secretary of the Treasury for an appropriation for melting losses so that the whole or any part of the silver dollars held in the Treasury may be used as provided in S. 2768 for other silver held by the United States. This also is a provision recommended by the Secretary of the Treasury. It does not affect the purpose of the bill. I continue reading from the letter: 2. Page 2, line 14, substituting for the words "on January 1, 1944" the words "at the temination of the war". In view of the fact that these various provisions are put in the bill, or if they are put in the bill in addition to those originally there, it might be wise to extend these powers throughout the duration of the war. Perhaps the fixing of the date "January 1, 1944" is too optimistic. At this time I submit this letter to the chairman of the subcommittee. Now, Mr. Chairman, may I call the various witnesses? Senator CLARK of Idaho. Mr. Chairman, might I ask Senator Green a question? Senator MALONEY. Senator Clark is recognized. Senator CLARK of Idaho. Senator Green, your second amendment, page 1, line 10, where you propose to substitute for the words "in connection" the words "not inconsistent", I suggest of course that that would make this not a war measure at all. It may be desirable and the subcommittee may want to approve it, but a release of silver for commercial purposes might tend to defeat the war effort. Senator GREEN. It does not release silver for civilian purposes. It gives power to the Secretary of the Treasury and the Chairman of the War Production Board to release silver for civilian purposes when not inconsistent with the war effort. And why not? There are a good many civilian uses that are important in connection with the war effort. Let us take one illustration: Suppose this is a long war. Are the people to go without knives, forks, and spoons? Are they to be reduced to eating with paper? And there are other illustrations I might use to show that it may be necessary and more important to use silver for munitions of war, but so far as it does not interfere with such use it seemed to me that for ordinary civilian uses it might be desirable that these restrictions be removed upon the authority of these high officials, and for silver to be used for civilian purposes. It does broaden it. Senator CLARK of Idaho. I do not want to controvert you, but do want it made clear to both of us and to other members of the subcommittee, that this would become quite a different bill, I mean with that amendment, than it was originally drafted. Senator GREEN. I would not say quite a different bill but it does broaden it somewhat. Senator DANAHER. The Senator's interpretation of the bill will be of great help to me, and following up the very point made by Senator Clark, is not this a fact: Granted that the President may authorize the Secretary of the Treasury to sell, lease, or otherwise dispose of, certain silver, he may do it for a use not inconsistent with the war effort, but it will be actually limited by the remaining language of the bill, which you have previously cited. Is not that so? Senator GREEN. That is so. Senator DANAHER. So that in addition to the requirement that it be not inconsistent with the war effort, it must also tend to assist in the making of munitions of war, the supplying of civilian needs contributing to the war effort, and the converting of existing plants for those purposes. Senator CLARK of Idaho. Oh, no. don me for interjecting there. Senator Danaher, you will par Senator DANAHER. I want to know what Senator Green means. Senator CLARK of Idaho. He says it is not so limited, in line 1, page 2. Senator GREEN. Those are mentioned specifically, and then there are other uses in connection with the war effort. Now, the question is, how to consider that language "in connection with the war effort"; in order to make it a little broader I changed the language to read 78102-42- -3 |