Volume 533, May 28, 1942

DIARY Book 533 May 28, 1942 - A - Book Fage Airplanes Shipments to British Forces - Kamarck report - 5/28/42 533 130 Alien Property Custodian Division of functions with Foreign Funds Control - memorandum for FDR (never used) - 5/28/42 262 Australia Negotiation of dollar telegraphic transfers, etc. - American Consulate General, Sydney, report - 5/28/42 268 - B - Billboard on Treasury Lawn See Financing, Government: War Savings Bonds - D - - Davis, Meyer See Financing, Government: War Savings Bonds - 7 - Financing, Government Proposed increase in Treasury bill program - Bell-Haas memorandum - 5/28/42 174 Non-defense Economies: Pending legislation with possibility of non-defense economies - - Foley report - - 5/28/42 179 War Savings Bonds: Billboard on Treasury lawn: HMJr-Mahan conversation - 5/28/42 44 HMJr-Kuhn # - 5/28/42 45 Davis, Meyer: Mrs. FDR-Treasury correspondence concerning participation in program - 5/28/42 164 - G - General Counsel, Office of Report of projects during March 1942 203 - I - India Dollar accounts for American military forces - New Delhi--United States correspondence - 5/28/42.. 276 Inflation Inventory Situation - Haas memorandum - 5/28/42 251 Inventories See Inflation Regraded Unclassified - L - Book Page Lend-Lease United Kingdom: Reciprocal aid (Lend-Lease in reverse) - Conference; present: HMJr, Wickard, Bell, White, Hicks, Hendrickson, Wheeler, Acheson, Achilles, McCloy, Franks, Hansel, Hendren, Cox, Ecker, Roston, Coe, and Rosenthal - 5/28/42 533 78 a) British gold and dollar position, May 15 through December 15, 1942. 124 b) Stimson-HMJr correspondence on three alternative methods for handling problem of diversion from foreign dollar financed contracts to United States Army 120 c) Payments to armed forces abroad discussed 78 d) Phillips' conversation with HMJr and White concerning relief from balance due on British commitments in United States before Lend-Lease - 5/29/42: See Book 534, page 36 - M - Military Reports British operations - 5/28/42 282 Coordinator of Information report: The War This Week, May 21-28 285 Kamarck summary - 5/28/42 286 - S - Silver For HMJr's statement on industrial use of silver, before Subcommittee of Special Senate Committee on Investigation of Silver, see Statements by HMJr Stabilization Fund Swiss France: 1 million purchased from Central Bank of Turkey at rate of 23.26 - 5/28/42 177 (See also Book 539, page 286 - 6/16/42) Statements by HMJr Before Subcommittee of Special Senate Committee on Investigation of Silver, on industrial use of silver - 5/28/42 43 a) Table - United States monetary stocks of silver as of April 30, 1942. 41 Switzerland For purchase of Swiss francs from Central Bank of Turkey, see Stabilization Fund - T - Turkey See Stabilization Fund - U - Book Page U.S.S.R. Shipment of planes and tanks to - Kamarck report - 5/28/42 533 265 United Kingdom See Lend-Lease - W - War Savings Bonds See Financing, Government 1 May 28, 1942 8:50 a.m. TAXES $ Present: Mr. Gaston Mr. Sullivan Mr. Blough Mr. Kuhn Mrs. Klotz H.M.JR: When was this finished, gentlemen? MR. GASTON: Just after I left the pictures last night. H.M.JR: You mean you went back and worked on it? MR. GASTON: No, the girl was typing it. H.M.JR: Thank you, Herbert, for staying so late. Who else was here so late? MR. SULLIVAN: Roy. MR. BLOUGH: I was at Ways and Means. I don't want to take any credit. H.M.JR: Let's do a part at a time, shall we, Herbert? MR. GASTON: All right. H.M.JR: "I have come before this committee tonight to tell you of some instances of what seem to me to be particularly unpardonable attempts to evade wartime taxation and to report what the Treasury is doing and proposes to do to stop these practices. In all of the instances I shall cite the method used--" This sentence, "In all of the instances I shall cite the method used--" 2 -2 - MR. GASTON: "In all of the instances I shall cite--" or just cut out "I shall cite." H.M.JR: You want to cut out, "I shall cite"? MR. GASTON: Yes, we don't need that. It is con- fusing. H.M.JR: "In all of the instances the method used was to inflate corporation operating expenses--" You tax fellows, do you like it that way? I don't like that, "to inflate corporation operating expenses." MR. BLOUGH: Well, take out "corporation" and "operating." MR. KUHN: Inflate expenses. MR. GASTON: Yes, you don't need it. H.M.JR: ".....was to inflate expenses for the evident purpose of avoiding normal and excess profits taxes on corporation earnings." All right? MR. GASTON: Yes. H.M.JR: "The devices used include the payment of excessive salaries, distribution of unearned bonuses and payment of excessive sums for purported services or for supplies to persons closely connected with the management of the companies involved." You have got two "excessives" there, "excessive salaries" and "excessive sums." I don't like it from there on. I don't think it is clear enough - "distribution of unearned bonuses," and couldn't you just say, "and for services to persons closely connected with the manage- ment of the companies involved"? MR. GASTON: The point is that the sums they paid were excessive, as in the case of the rents paid. H.M.JR: All right. Regraded Unclassified 3 - 3 - MR. SULLIVAN: You can change the second "excessive" to "unreasonable, and put across the same idea. H.M.JR: You might want the emphasis. You could go over that again. Do you think all of those things should be in "purported services or for supplies to persons closely connected with the management of the companies involved"? MR. BLOUGH: I am afraid that is true; it is going to be a little hard going there. MR. GASTON: We can simplify that sentence. H.M.JR: I think that is too long. It should be simplified. MR. GASTON: They ought to get the idea their salaries, their bonuses, their payments that were earned for things they were supposed to have done, such as the rent-- MR. BLOUGH: These are all understood, really. H.M.JR: Could I have that sentence a little bit simpler? I want that paragraph with the "devices," - I want it simplified. "The effect that these practices, if successful, would have on the revenue of the Government, the revenue we need 80 urgently in the war effort, will of course be obvious to members of this committee. Even if the recipients of these excess payments should fully declare them as personal income, the amounts represented would escape corporate profits and excess profits taxation. We do not intend that this shall happen. We do not intend that any of these practices shall succeed. We believe that Congress has already given to the Bureau of Internal Revenue power to deal with cases of this kind, but we should like you to know what we propose to do and to ask your counsel and support. If I don't like that. I don't like that sentence, "The effect that these practices, if successful--" It is too long and choppy. You have got too many ideas - 4 - there. MR. BLOUGH: Except for purposes of emphasis you could pass over to the beginning of the next page and leave out all of that. MR. KUHN: We can start by saying, "We do not intend that any of these practices shall succeed." MR. GASTON: You see, you leave out the explanation which you want to get over to the public - what the effect is. H.M.JR: Let me just give you my impression and then you fellows can go in a huddle. How is that, Herbert? Give these other fellows a chance to have a crack at it, Herbert? MR. GASTON: Sure. H.M.JR: "I know that this Committee and the Congress are resolved that no man and no corporation shall be per- mitted to make exorbitant profits out of the war effort. It is the responsibility of the Congress to draft legis- lation to achieve that purpose. It is our responsibility in the Treasury and in the Bureau of Internal Revenue to employ all the powers the Congress has given us to see that all taxes are fully, honestly and justly collected and that by no form of trick or chicanery is any one taxpayer permitted to escape his just share and thus to throw unjust burdens on others." You know what I think? I think that is the place to open up, "I know that this Committee--" I just wonder if that shouldn' be the opening paragraph and put them in a good humor. MR. KUHN: And then go to tell why you appear before them? H.M.JR: Yes. MRS. KLOTZ: It is 8. good suggestion. Regraded Unclassified 5 - 5 - MR. GASTON: I think that is an idea. H.M.JR: They are sore about this "P.M." thing, see, and then if we want to make it a little bit stronger, I might - just put it down on a piece of paper, "I know that this Committee under the leadership of Chairman Robert Doughton." MR. BLOUGH: This is the Joint Committee. H.M.JR: "Under the chairmanship of Mobert Doughton--" "Under the able chairmanship--" some little bouquet there, that opens him up, and he is going to grin all over, then relax and be in & good humor. Am I right? MR. BLOUGH: Honest, able, fearless-- MR. SULLIVAN: Yes. H.M.JR: Just open up with that. Do I have to say something about George, too? MR. SULLIVAN: No. You see, the chairmanship alternates, one session it is with the chairman of the House Ways and Means, and the next session the chairman of Senate Finance. But I can tell him why you did it - George, I mean-- H.M.JR: No. MR. GASTON: I have a feeling it would be too obvious. H.M.JR: Pₙt it in and we can take it out. MR. BLOUGH: Nothing is too obvious for Doughton. H.M.JR: Put it in anyway. I have been bothered all night about that thing, so let's put it in, Herbert, It is very easy to take it out. MR. GASTON: Right. Regraded Unclassified 6 - 6 - H.M.JR: But if I start off that way - I have done it before - he sits back and grins all over. It makes all the difference in the world in the reception I get. MR. BLOUGH: We should say that "young" man, that would make him feel better. 1 H.M.JR: You wouldn't say "our responsibility" - however, it is our responsibility. MR. BLOUGH: I wouldn't. MR. KUHN: I like it that way. H.M.JR: "We have come upon the instances I shall mention to you through a special investigation--" Through a "special" or through an "accelerated"-- MR. GASTON: This is a special examination. It isn't the regular examination of returns. H.M.JR: "We have come upon the instances I shall mention to you through a special investigation of the 1941 returns of corporations holding war contracts. Reports of the examination of 32 returns are now available. In seven of them we found the following state of affairs: "1. The sole owner of a manufacturing corporation entered into a contract as an individual to become its sales representative. His compensation as sales agent was $1,656,000." Am I seeing figures? Is that one thousand or one million? MR. GASTON: One million six hundred fifty-six thousand. H.M.JR: Who was that? MR. SULLIVAN: Cannon Manufacturing Company. - 7 - MR. GASTON: It is a different Cannon. This man makes spark plugs. H.M.JR: My God! MR. GASTON: Not the towel Cannon, no. H.M.JR: I was going to say you fellows had gone haywire - Doughton's district - haywire or smart. "Consolidation of his earnings with those of the corporation will result in increasing the corporation's income tax by $1,117,000. "2. "All stock in this corporation is held by three families. Excessive salaries were paid to office- stockholders.' MR. GASTON: That should be "officer-stockholders." H.M.JR: I think I would put "Company A, "Company B." MR. KUHN: That is right. One corporation may think they are all the same iniquitous company. H.M.JR: Put "Company A," and "Company B" instead of "1," "2," etcetera. MR. GASTON: That is right. H.M.JR: "The Revenue Agent has recommended dis- allowance of $82,000 in salaries, and the company has already agreed to a disallowance of $58,000." What company is that? MR. SULLIVAN: Lansdowne Steel and Iron Company. H.M.JR: "3. This corporation paid $31,104 in rent in one year to the wife of the President for 8. property she had acquired for $45,412. A brother of the principal stockholder, without special training or ability, drew a salary of $15,000 8. year and a son and daughter, - 7 - MR. GASTON: It is a different Cannon. This man makes spark plugs. H.M.JR: My God! MR. GASTON: Not the towel Cannon, no. H.M.JR: I was going to say you fellows had gone haywire - Doughton's district - haywire or smart. "Consolidation of his earnings with those of the corporation will result in increasing the corporation's income tax by $1,117,000. "2. "All stock in this corporation is held by three families. Excessive salaries were paid to office- stockholders." MR. GASTON: That should be "officer-stockholders." H.M.JR: I think I would put "Company A," "Company B." MR. KUHN: That is right. One corporation may think they are all the same iniquitous company. H.M.JR: Put "Company A," and "Company B" instead of "1," "2," etcetera. MR. GASTON: That is right. H.M.JR: "The Revenue Agent has recommended dis- allowance of $82,000 in salaries, and the company has already agreed to a disallowance of $58,000." What company is that? MR. SULLIVAN: Lansdowne Steel and Iron Company. H.M.JR: "3. This corporation paid $31,104 in rent in one year to the wife of the President for a property she had acquired for $45,412. A brother of the principal stockholder, without special training or ability, drew a salary of $15,000 a year and a son and daughter, Regraded Unclassified 8 - 8 - just out of school, got $7,500 a year each." Wait a minute. We have got to go back. Company A - - what does it make? MR. BLOUGH: That is the spark plug-- H.M.JR: Let's say it is spark plugs- "Company A, manufacturer of spark plugs." MR. GASTON: Want to identify them that-- H.M.JR: "hat is the matter with that? You have got to give it some kind of a flavor. You don't know whether he is making lawnmowers or what. What do you think, John, is that too hot? MR. SULLIVAN: Let's see if we can labèl them, and not too closely - "automotive equipment." MR. KUHN: "Making a vital part of airplane engines." MR. GASTON: These people - we have already said, "all war contracts." H.M. JR: We have got to make it & little bit hot. Try it that way, "Company A, manufacturer of a vital part of an airplane. Company B--" What was Company B? What was the second company? MR. GASTON: Lansdowne-- H.M.JR: Steel Company? MR. SULLIVAN: Yes, Lansdowne. MR. BLOUGH: It would be safe to say it makes steel. H.M.JR: Steel - and the third Company - what is the third company? MR. SULLIVAN: Switlik Parachutes. Regraded Unclassified 9 - 9 - H.M.JR: Then I would say something about a vital part necessary to the pilot. MR. SULLIVAN: Pilot's equipment. MR. KUHN: Vitally necessary pilot's equipment. MR. GASTON: Airplane equipment. H.M.JR: No, for the pilot. MR. SULLIVAN: Cannon makes connector parts. H.M.JR: I mean, you have got to put in a little bit-- MR. BLOUGH: Yes, and these outfits are really small fellows, not the big ones, They couldn't be identified. H.M.JR: What is the fourth company? MR. BLOUGH: In fact, I think the principal worry is they may say, "This is just peanuts." H.M.JR: "4. This company paid dividends of $40,000 in 1940 and $100,000 in 1941, but salaries totaling $128,000 in 1941 to the President, his wife and his mother. Of the total capital of 100 shares each of the brothers transferred 45 shares to his wife in 1940." What company is that, John? MR. SULLIVAN: Uebelhoer. H.M.JR: What do they make? In each case give enough and don't be too finicky. I mean, if it is something for a pilot, say "Vital parts necessary for a pilot. I don't think, Roy - you see, you have dealt with billions so long that if a person reads about fifty- six thousand dollars, I don't think that is-- MRS. KLOTZ: A small corporation. Regraded Unclassified 10 - 10 - MR. BLOUGH: That one is not 80 bad. H.M.JR: "5. From 1938 to 1940 the salaries of stockholders and relatives of stockholders in this closely held corporation increased 523 per cent. Excessive salaries for 1941 have been disallowed to the amount of $568,000." What is that company? MR. SULLIVAN: Some forge company. H.M.JR: Put down "steel forgings." The next company, six. "Three principal officers of this corporation took salaries of $100,000 each, which have been reduced to $35,000 each." "Which have been," or "which we have"? MR: BLOUGH: "Which we have disallowed." We haven't reduced the salary. H.M.JR: "Which we have disallowed." "Salaries and bonuses of $516,000 in all were found to be excessive. The inventory was deficient by $300,000, research expenditures of $115,000 were charged which had actually been made by a predecessor corporation, and $142,000 due from the War Department was not included in accounts receivable." What does this company make? MR. SULLIVAN: That is Jack and Heintz. H.M.JR: What do they make? MR. SULLIVAN: Airplane stocks. 11 - 11 - MR. BLOUGH: Airplane starters. H.M.JR: That had some other juicy details. You have left out buying those presents for people. MR. SULLIVAN: Sixteen thousand dollars for watches, and photographs, and for picnics. MR. BLOUGH: That is just ordinary extravagance. It is picturesque and we could afford to put it in, but there is this difference-- H.M.JR: Put it in, will you please? MR. SULLIVAN: Nineteen hundred dollars for football tickets. H.M.JR: Pₙt those in, all three, definitely. MR. GASTON: That labels Jack and Heintz. H.M.JR: What of it? What are they going to do, sue me? "The principal owners of this corporation increased their salaries from $12,000 and $15,000 in 1939 to $72,000 and $90,000 in 1941.. The royalty rate on the patent jointly held by them was increased, with the result that royalties paid increased from $87,000 in 1939 to $1,179,000 in 1941." What company is that? MR. SULLIVAN: Link Aviation Devices. They make the Link Trainer. H.M.JR: The Trainer? MR. SULLIVAN: Yes, sir. H.M.JR: Well, "a device"- you can't say, "a device for training pilots," that is too close, isn't it? 12 - 12 - MR. SULLIVAN: We will find & label for each one. H.M.JR: And don't forget to put in the picturesque stuff on Jack and Heintz. "You will note that I have not named any of the cor- porations or the individuals concerned. I leave it to this Committee to decide whether that should be done. Personally, I am inclined to believe it would have a very wholesome effect to do so when the facts in each case have been thoroughly established." If they haven't been thoroughly established, why are they here? MR. GASTON: Yes, I just thought of that. Let's cut that out. H.M.JR: "Personally I am inclined to believe it would have a very wholesome effect to do so." O.K., and leave the rest out. "Assistant Secretary Sullivan and Commissioner Helvering are here tonight to give you further details of the results of some of these preliminary investigations. They stand ready to come before you from time to time and to report what further investigations have revealed, and I hope you will invite them to do so." Instead of "I hope," say, "I am sure, or "I am con- fident that you will invite them to do so." MR. SULLIVAN: "I know you will be glad to have them." H.M.JR: Something like that. "It should be noted that these cases all deal with returns for 1941. It is of course true that all of the contracts for war work covered by these 1941 returns were signed before the United States was attacked and declared war and that nearly all the earnings represented in the tax-dodging devices attempted were pre-war earnings." Regraded Unclassified - 13 - 13 That may be true, but they made out their returns after December 7. MR. SULLIVAN: Not all of them. Jack and Heintz' fiscal year ends October 31. H.M.JR: Do you think it is necessary to put this in? MR. SULLIVAN: Read the rest of the paragraph. H.M.JR: "But I think that changes the situtation very little. An attempt to evade lawful taxes while we were actually at war would be only a slight degree blacker than attempts to evade taxes to raise the funds for arming and equipping our land and sea forces when we stood in imminent danger of attack." That is all right. Do you think that is necessary? I suppose so. MR. KUHN: That would be the argument they would use in coming back. H.M.JR: Yes, that takes it out of them. Do you have doubts about it, Ferdie? MR. KUHN: The only thing I never like is the notion that we weren't attacked before Pearl Harbor. All those people who understood the war knew Hitler was out for us, attacking us in many ways. H.M.JR: You can argue that with Herbert - just a small point. You can take it out if you want. MR. KUHN: I think that paragraph should be in, be- cause it is going to be your rebuttal of the attack they are making. H.M.JR: "It may be that these instances are an isolated few and that not many more of the same kind will be found. I sincerely hope that will be the case. I am wholly con- fident that the great and overwhelming proportion of Regraded Unclassified 14 - 14 - American corporations are too patriotic even to con- sider such practices. "We propose to take two courses of action: "(1) Where we find excessive expenditures which have the effect of reducing corporate tax liability they will be disallowed, the corporation will be compelled to include the amounts in earnings, and at the same time the recipient will be required to pay full personal income taxes on the amounts received." MR. KUHN: Split that in two sentences. H.M.JR: Instead of "We propose to take two courses of action, I would put in here, "I am appearing before you today--" What I am saying now isn't the way I want to say it - something for a vote of confidence and approval of this action. MR. GASTON: I had earlier approval on the thing, and John felt and Roy felt that it ought not - we ought not toask them for approval. MR. SULLIVAN: You are there to inform them of what you are doing. You don't have to ask approval. The thing I am afraid of, there are only ten men on this Committee and when the going gets-- H.M.JR: Only ten? MR. SULLIVAN: Yes, the top five on Ways and Means, and top five on Senate Finance. When there are only ten men, big companies can concentrate on them. You don't want to be in a position so anybody can obstruct you in the future. H.M.JR: I thought there would be thirty or forty. MR. SULLIVAN: The ranking three on both committees and the two ranking Republicans. H.M.JR: Incidentally, I listened to one radio and they had a good announcement of what I was going to say tonight - this morning on the radio. - 15 - 15 MR. SULLIVAN: I don't know where they have gotten it. The boys have been in to me. MR. KUHN: I talked to Chick Schwarz, telling him what was brewing, what was going to come up. MR. SULLIVAN: Well, it is all right. H.M.JR: What I told them was, I said that Chick Schwarz, Kuhn, and Sullivan should get together. Those were my instructions. I said that Chick Schwarz, Sullivan and Kuhn should get together and handle it. MR. SULLIVAN: Well, it is all right anyway, because I said to everyone - "Well, now, Irving, how would you feel if I gave this to George Bryant alone?" H.M.JR: If they didn't get to you it is all right. It didn't do a bit of harm anyway. MR. KUHN: That is right. John was tied up. I saw Chick after 8. meeting here yesterday, and the boys all felt that this had to do with the Ways and Means Committee on the tax bill. H.M.JR: I see they had the story in the Wall Street Journal. MR. SULLIVAN: The two things that we want to avoid, and that they both have in their minds, is, first, we are trying to accomplish this twenty-five thousand dollar ceiling; secondly, that we are trying to administratively get the kind of an excess profits tax bill we want. MR. KUHN: Chick had that yesterday. H.M.JR: "We propose to start immediate examinations of the books of corporations having war contracts to determine whether excessive expenditures are being made, without waiting for the normal procedure of the receipt and analysis of annual returns and their reference to field offices for inquiry. By this step we expect to check at an earlier stage unlawful practices of this sort, whether they have been entered into innocently or for the definite purpose of evading taxation." - 16 - 16 "We propose"? I would say, "We have" - it isn't "propose." MR. GASTON: I understand that what we are proposing to do is something different. We are proposing to start examinations. MR. SULLIVAN: We started six weeks ago. MR. GASTON: I thought in addition to this 1941 stuff we were going to do examinations of what they are doing currently. H.M.JR: No, no. If it is true, I haven't heard of it. On this thing instead of "We propose," would you mind putting it, "We have." MR. GASTON: "We will extend," "we will continue to examine-- H.M.JR: Or "We are." MR. GASTON: Well, instead of up above, "We propose to take two courses of action," "We are taking two courses of action." H.M.JR: that is right, Herbert. MR. SULLIVAN: Then, "We have started." H.M.JR: Then on page seven, "By this step we expect to check at an earlier stage unlawful practices of this sort, whether they have been entered into innocently or for the definite purpose of evading taxation.' That is all right. MR. GASTON:* Yes. H.M.JR: "The disallowance of excessive expenditures does not represent a new procedure. In applying the law and regulations which permit the deduction only of ordinary and necessary business expenses for the purpose of ascertain- ing profits the Bureau of Internal Revenue has had occasion 17 - 17 - in the past to disallow expenditures which seemed to lack sound business justification and to be in effect distributions of profits. The problem, however, has under present conditions assumed major importance because of the huge increases in income of a great number of corporations holding war contracts." MR. BLOUGH: That "has had occasion in the past" gives the impression that it might have happened once or twice, and I wonder if we could put in an adjective there that would indicate it has been a fairly common practice. H.M.JR: What do you mean? MR. BLOUGH: This just indicates that maybe once or twice they had in the past disallowed expenditures. H.M.JR: Have they done it often? MR. KUHN: There is a long list of such cases. I would take this paragraph and split it into sentences, say, "The law and regulations permit the deductions of ordinary business and necessary business expenditures, and so forth, then "The Bureau has disallowed expenditures" and so forth, "and there is a long list of court cases in which the Bureau is upheld." MR. SULLIVAN: We don't need to cite those cases. H.M.JR: You say you propose to take two actions on six, and then you go and say "In the examination the follow- ing principles." Does that hang together? MR. GASTON: All this refers to are the principles followed in making disallowances. MR. SULLIVAN: I think this is extremely important, Mr. Secretary, because without this you are just scolding and not helping. Now, in these principles you lay down the guideposts by which you are going to judge their con- duct, and I think that this is the constructive part of your talk. 18 - 18 - MR. GASTON: I think so. It tells the corporations what they can expect. H.M.JR: That is under one and two on page six? MR. SULLIVAN: Yes. MR. BLOUGH: No. He is on page seven. H.M.JR: What are one and two? MR. BLOUGH: One and two are really the two sides of the same thing. One is that we will examine them; the other is when we catch them, we will disallow them. MR. GASTON: Number one says we will disallow them; number two says that we are going to extend these examin- ations to find these cases for disallowance. MR. SULLIVAN: We are doing it earlier than we otherwise would do it. H.M.JR: Anyway, reexamine that thing and see if they do hang together. I am not sure that they do, but re- examine them. "Deductions claimed for greatly increased salaries and extraordinary bonuses paid to officers or employees will be disallowed unless the taxpayer proves that the payments are, in fact, for services actually rendered and are reasonable. "In determining whether the payments are reasonable, it will be assumed that reasonable compensation is only as much as would ordinarily be paid for like services by like enterprizes under like circumstances." I take it that is technically correct. MR. SULLIVAN: These are excerpts from the language of court decisions. H.M.JR: All right. "The factors that will be consid- ered in determining the reasonableness of such payments 19 - 19 - are the duties performed by the recipient, the character and amount of responsibility, the time devoted to the enterprise, and the peculiar ability or special talent of the particular officer or employee. Where the payments are to relatives or to shareholders, the taxpayer must show that family considerations have not influenced the amount paid and that the payments are not distributions of profits in disguise. Large profits attributable to causes entirely unrelated to the activities of the officers or employees, which are not unusual in these abnormal times, do not of themselves justify or warrant large salary payments. "Deductibility of rents, or royalties paid to share- holders depends upon whether such charges are in fact fair and reasonable payments for the use of property and are not merely a device for distribution of profits. Any shareholder should be entitled only to a fair return on his investment in the property which he permits the cor- poration to use. "The deductibility of payments to pension trusts is governed by section twenty-three P. of the Internal Revenue Code. If payments to such trusts are reasonable, their deduction will be allowed. If the payments are unreasonable in amount, or if the trust is not created for the exclusive benefit of employees, or if it is a device to distribute profits to shareholders, the deduc- tions will be disallowed. It is also our purpose to set up a barrier to deductions of large salaries, bonuses, or insurance premiums for officers under the guise of payments to & pension trust. "The deductibility for income tax purposes of costs of repairs depends upon whether the expenditure is actually for repairs, or is in fact a capital expenditure which should be added to capital investment or charged against reserve for depreciation, since the costs of repairs are deductible while capital expenditures are not. We must guard against the tendency during high profit years to make extensive improvements and to charge the cost of such improvements against profits under the caption of repairs. Regraded Unclassified 20 - 20 - "It will be our policy to scrutinize carefully the items claimed as deductions for expenditures for repairs. We shall disallow such deductions where it is not shown that the expenditures are in fact for repairs instead of for improvements or betterments which should be capitalized." I take it this is all technically correct. MR. SULLIVAN: Yes, sir. That language was furnished by the Bureau and fought and bled and died over. MR. BLOUGH: As far as I know, it is all right. I have gone over it pretty carefully. MR. GASTON: Number four is one that will make them sit up and take notice. MR. BLOUGH: Except that the standard is an extremely general one. MR. SULLIVAN: The cases we found aren't going to support us in this. H.M.JR: What do you mean? MR. SULLIVAN: On four - I suggest taking it out. MR. BLOUGH: This was in yesterday morning's draft. MR. SULLIVAN: I suggested taking it out. H.M.JR: Why? MR. SULLIVAN: Because the Washington representative cases we found so far we found to be fairly reasonable. MR. BLOUGH: This won't hurt any, though. The fact that you haven't found any cases to throw out doesn't mean it isn't wise to mention it. H.M.JR: Wouldn't you leave it in? MR. BLOUGH: I would leave it in. If we were trying to give examples of everything, I wouldn't. Regraded Unclassified 21 - 21 - H.M.JR: "Expenses or allowances paid to obtain Government business, including fees paid to Washington representatives or for other professional services." I brought you in once before, Sullivan, and Helve. I don't see why I should bring you in again. MR. GASTON: That was just an attempted conclusion. I think we might find some general sermon. MR. KUHN: We ought to have a conclusion to show how you are going into secret session. H.M.JR: There ought to be a sermon at the end. I think that this, on the whole, is pretty good now, Herbert. MR. KUIIN: How about the advertising, Mr. Secretary? It is just another policy there. I think you are going to put an awful chill into a lot of the genuinely pa- triotic advertising which we are asking for. H.M.JR: Look, don't approach me this way. If we left it out and didn't mention it, it would be conspicuous by its absence. MR. BLOUGH: Let me suggest one very good reason for putting it in. We are trying to avoid legislation to put special restrictions on advertising. We don't want it if We can help it. But there is a good deal of avoid- ance of the excess profits in this way. If this would accomplish the result, it would be so much better. MR. KUHN: The advertisers are still being asked and are agreeing to do more than just keep their trade name before the public for public patronage after the war. H.M.JR: Frank Knox said to me, "Henry, you are leav- ing yourself wide open, you have got to take advertising from somebody for .Var Bonds, and then go over the income tax." They will say, 'Mr. Morgenthau, we did this adver- tising for you, how can you jump on us?'" Regraded Unclassified 22 - 22 - MR. GASTON: I was just going to ask whether our War Bond advertising would be legitimate under that rul- ing we have laid down there. H.M.JR: All right, if it isn't, then better strike it out now, better kill it. MR. KUHN: Unless you put in, "If they are not directed to continue public patronage or to fulfill public purposes. If MR. SULLIVAN: Ferdie, your question here isn't whether you are going to kill War Bond advertising. The question is whether under the law an advertiser who boosts War Bonds is in any different tax position than the fellow who just boosts his own product. H.M.JR: That is the point. MR. SULLIVAN: We can't give a tax subsidy to a company who is helpful to us. MR. KUHN: No, but he is in a different position under this explanation. Under this explanation if Macy's advertise their own products it is O.K.; but if they advertise War Bonds, it is not O.K. MR. SULLIVAN: That is right. MR. KUHN: There you are. It is a clear conflict of all we have been doing with the advertisers. H.M.JR: Then the quicker we kill it, the better, because certainly as we go into this thing, and the fellow has spent fifty thousand dollars in advertising War Bonds, and John Sullivan comes along and disallows it, where does it leave me? MR. GASTON: Let's suppose that Jack and Heintz make a profit of three million dollars; they have profits on the books, expect profits, of three million dollars, 80 they decide they are going to have to pay ninety-four excess profits. They decide, "What we will do with that Regraded Unclassified 23 - 23 - three million dollars is that we will spend two and a half million in a program of War Bond advertising, and on the bottom of each of those War Bonds we will say, 'This advertisement contributed by Jack and Heintz, makers of airplanes and automobile starter motors. MR. KUHN: They don't put that on. H.M.JR: Let me say this, Ferdie, and I am beginning to get angry - I told Frank Knox that Harold Graves, in his position in reorganizing Internal Revenue, wouldn't accept one penny of advertising if in any way it would be subsequently disallowed; and if he has done it, then it is absolutely criminal. It is absolutely criminal, because Harold Graves - I know you. .don't, but Harold Graves knows this business inside out, and if 1 am in the position that we have taken this thing and then Sullivan has not to disallow it, it is absolutely criminal on the part of Harold Graves, because he knows this stuff. He is a lawyer. He can practice before the Washington bar, spent two years in this thing, and so forth and so on. It would be the most criminal thing, on his part, to sit there day after day and accept this stuff. God damn it - excuse me, ladies - we went all through this thing on Texas Oil Company, and they came and asked them whether it would be all right before they gave us this thing last year on the program. The War Bond people told them it would be all right. It isn't as though Harold doesn't know. If I am on a hot spot, the quicker 1 get out from under it, the better. God almighty, we have got six hundred lawyers in the Treasury; and if we have been taking stuff which Sullivan is going to throw out, then under my rule, "Let the chips fall where they may," the War Bonds would get it first, and they should. So don't stand here pleading something which is illegal. You had better take a look at the stuff right away, if I can't rely on Graves. God, Graves knows this thing inside out. MR. KUHN: I think there is an answer to it. Let's ask Graves about it. I think there is an answer to it. Regraded Unclassified 24 - 24 - H.M.JR: Well, he is sick, he can't get at it. MRS. KLOTZ: There must be an answer. I mean, there is no question about it. H.M.JR: Then why all this? Why put the thing on me? I am not a lawyer. Why not find out before you write it up? You have had this thing since day before yesterday. Why always wait until the last second, when here I have to go before a Silver Committee at ten o'clock. I have General Marshall for lunch. I have got the War Department and State at three. I am right up against a gun and you bring up an important thing for me-- MR. KUHN: It was out yesterday, wasn't it? H.M.JR: Putting it out doesn't help any if we have been doing something that makes us a party in crime. That doesn't help any by leaving it out. I mean, if what we are doing and letting advertisers get around paying their income tax by advertising War Bonds and Sullivan is going to disallow it, taking out the statement doesn't help matters any. MR. SULLIVAN: Let's take a look at it, Mr. Secretary. H.M.JR: I mean, everything is always left to the last minute. Here I am, right up against the gun, and here is an important thing. God, I fought and bled for this War Bond thing until I am getting a bellyful. Of all the incompetence I ever saw. I think if this is legally and technically correct about the advertising, it should stay in. If the War Bond people have been breaking the law, God help them. That is all that I can say. MR. GASTON: I think the rule we have got to apply is simply this, that we will have to take this War Bond advertising as ordinary good-will advertising by a firm, as ordinary institutional advertising, have to interpret it as such, and if with the War Bond advertising their total advertising expenditures are excessive in relation Regraded Unclassified 25 - 25 - to their present and future business, they have to be disallowed, regardless of whether they are war Bond advertisements or general institutional advertisements. In other words, what they contribute in the way of advertising has got to come out of a regular legitimate appropriation for institutional advertising. MR. KUHN: I think that is the way it was done. MR. GASTON: I think they state it SO. H.M.JR: I think so. In fact, I wanted - but I say now, if the War Bond people, if Harold Graves, with his eyes open, has been a partner in assisting these companies to evade income taxes, he has got an awful lot of explain- ing to do to me. MR. GASTON: I don't think so. H.M.JR: That is the indication from what the man is saying. MR. SULLIVAN: Listen, after all, you have known Harold a long while and never known-- H.M.JR: Why does Kuhn bring it up at this late hour? MR. KUHN: I am objecting to the language. H.M.JR: No, you are objecting to - what you said is on the record. It kills all of our War Bond adver- tising. MR. KUHN: No. H.M.JR: Yes, you did, Ferdie, and if what you say is true, then Graves has been permitting these fellows to try to evade their taxes. MR. BLOUGH: What was the word you didn't like? Regraded Unclassified 26 - 26 - MR. KUHN: The words "public patronage?" I don't think that was ever intended under the law. This advertising is institutional advertising that creates goodwill. It isn't the same as Macy's advertising for public patronage. H.M.JR: This was the whole plea that Frank Knox made, and I was confident he was wrong. MR. KUHN: "If they are extravagant and are not directed to continued public goodwill." MR. BLOUGH: No, no, you couldn't have that, because - take these airplane companies, they are just wasting money hand-over-fist, and advertisements in some of these big journals on a reasonable purpose of public patronage, present or future, are not justifiable. On the basis of some vague notion of goodwill, maybe they are. MR. GASTON: I don't know about that. I think they are all ambitious to be the big manufacturers in the future. The airplane business is going to be a big business, and they want to keep their names before the public. There is another aspect of it. They like to glorify what they are doing. MR. BLOUGH: That is what they are doing, and enjoy it. Well, I would prefer - my own feeling would be, let these technical people take a look at this and see if there is any objection to some minor companies. H.M.JR: Will you give me a written opinion on what - get a dozen different types of advertising which have been done for War Bonds over the name of different com- panies. Give mea technical, legal opinion on whether this will be allowed or disallowed. MR. SULLIVAN: What the ruling of the Bureau would be? H.M.JR: Yes, because I will be asked that the first thing tomorrow morning. Regraded Unclassified 27 - 27 - MR. BLOUGH: It will all depend on how much they are doing, and not just the type. H.M.JR: John, get your boys on it. The other thing they are going to ask me is this: "What about this Toland thing?" Do you think you will have an answer by tonight? MR. SULLIVAN: On that particular company? They telephoned yesterday morning. H.M.JR: Will you make every effort so before I go on the Hill I will have that. The only time I can see you gentlemen again will be two o'clock. Would you, all of you, please, shut off the - do nothing else? I have never been in a worse spot. I am in a terrible spot. You did a nice job, Herbert. MR. GASTON: I just tried to get an idea of organiza- tion. H.M.JR: I think if you could give it what the President calls a little "snapper" to it-- MR. GASTON: Yes, yes, and I think we-- H.M.JR: but this is a nice job, and it is laying down to the American businessman the principles that we are going to follow. MR. SULLIVAN: The standard we expect them to comply with. H.M.JR: One of you write this down. Say, "In appearing before you and giving this out to the public, I am trying to be constructive. I am trying to be con- structive so as to give the honest businessman a guide- post by which he can - or a chart, by which he can go.' MR. KUHN: That would go right in at the beginning of the principles. Regraded Unclassified 28 - 28 - H.M.JR: "Morgenthau said this. God, what is he going to allow?" Well, I am up there to say this to the committee, to give a chart to American business under war conditions on how the Treasury is going to enforce these rules. See? MR. SULLIVAN: That is right. MR. BLOUGH: It is your wish that I stay away from the Hill and work on this or not? H.M.JR: My God, yes. I mean, I am asking you all - you can go down to my dining room, anywhere. Why don't you go in the poster room where there is no telephone? MR. GASTON: Too accessible. H.M.JR: No, no, nobody goes in there. I will put a guard in there. Herbert, nobody is allowed in that room. There is a nice table in there. MR. GASTON: We can go in our room and say I am not there for anybody and that is all there is to it. H.M.JR: Will you do that? 3d dreft, 5/28/42 8:45am I have come before this committee tonight to tell you of some instances of what seem to me to be particularly unpardonable attempts to evade wartime taxation and to report what the Treasury is doing and proposes to do to stop these practices. In all of the instances I shall city the method used was to inflate corporation operating expenses with the evident purpose of avoiding normal and excess profits taxes on corporation earnings. The devices used include the payment of excessive salaries, distribu- tion of unearned bonuses and payment of excessive sums for purported services or for supplies to persons closely connected with the management of the companies involved. The effect that these practices, if successful, would have on the revenue of the Government, the revenue we need so urgently in the war effort, will of course be obvious to members of this committee. Even if the recipients of these excess payments should fully declare them as personal income, the amounts represented would escape corporate profits and excess profits 30 - 2 - taxation. We do not intend that this shall happen. We do not intend that any of these practices shall succeed. We believe that Congress has already given to the Bureau of Internal Revenue power to deal with cases of this kind, but we should like you to know what we propose to do and to ask your counsel and support. I know that this Committee and the Congress are resolved that no man and no corporation shall be per- mitted to make exorbitant profits out of the war effort. It is the responsibility of the Congress to draft legis- lation to achieve that purpose. It is our responsibility in the Treasury and in the Bureau of Internal Revenue to employ all the powers the Congress has given us to see that all taxes are fully, honestly and justly collected and that by no form of trick or chicanery is any one taxpayer permitted to escape his just share and thus to throw unjust burdens on others. We have come upon the instances I shall mention to you through a special investigation of the 1941 returns of corporations holding war contracts. Reports of the examination of 32 returns are now available. In seven of them we found the following state of affairs: Regraded Unclassified 31 - 3 - 1. The sole owner of a. manufacturing corporation entered into 8. contract as an individual to become its sales representative. His compensation as sales agent was $1,656,000. Consolidation of his earnings with those of the corporation will result in increasing the corporation's income tax by $1,117,000. 2. All stock in this corporation is held by three families. Excessive salaries were paid to office-stockholders. The Revenue Agent has recommended disallowance of $82,000 in salaries, and the company has already agreed to a disallowance of $58,000. 3. This corporation paid $31,104 in rent in one year to the wife of the President for 8. property she had acquired for $45,412. A brother of the principal stockholder, without special training or ability, drew a salary of $15,000 a year and a son and daughter, just out of school, got $7,500 a year each. 4. This company paid dividends of $40,000 in 1940 and $100,000 in 1941, but salaries totaling $128,000 Regraded Unclassified 31 - 3 - 1. The sole owner of 8. manufacturing corporation entered into a contract as an individual to become its sales representative. His compensation as sales agent was $1,656,000. Consolidation of his earnings with those of the corporation will result in increasing the corporation's income tax by $1,117,000. 2. All stock in this corporation is held by three families. Excessive salaries were paid to office-stockholders. The Revenue Agent has recommended disallowance of $82,000 in salaries, and the company has already agreed to a disallowance of $58,000. 3. This corporation paid $31,104 in rent in one year to the wife of the President for & property she had acquired for $45,412. A brother of the principal stockholder, without special training or ability, drew a salary of $15,000 a year and a son and daughter, just out of school, got $7,500 & year each. 4. This company paid dividends of $40,000 in 1940 and $100,000 in 1941, but salaries totaling $128,000 32 - 4 - in 1941 to the President, his wife and his mother. Of the total capital of 100 shares each of the brothers transferred 45 shares to his wife in 1940. 5. From 1938 to 1941 the salaries of stockholders and relatives of stockholders in this closely held corporation increased 523 per cent. Excessive salaries for 1941 have been disallowed to the amount of $568,000. 6. Three principal officers of this corporation took salaries of $100,000 each, which have been reduced to $35,000 each. Salaries and bonuses of $516,000 in all were found to be excessive. The inventory was deficient by $300,000, research expenditures of $115,000 were charged which had actually been made by a predecessor corporation, and $142,000 due from the War Department was not included in accounts receivable. 7. The principal owners of this corporation increased their salaries from $12,000 and $15,000 in 1939 to $72,000 and $90,000 in 1941. The royalty rate on the patent jointly held by them was increased, 33 - 5 - with the result that royalties paid increased from $87,000 in 1939 to $1,179,000 in 1941. You will note that I have not named any of the cor- porations or the individuals concerned. I leave it to this Committee to decide whether that should be done. Personally I am inclined to believe it would have a very wholesome effect to do so, when the facts in each case have been thoroughly cotablished. Assistant Secretary Sullivan and Commissioner Helver- ing are here tonight to give you further details of the results of some of these preliminary investigations. They stand ready to come before you from time to time and to report what further investigations have revealed, and I hope you will invite them to do so. It should be noted that these cases all deal with returns for 1941. It is of course true that all of the contracts for war work covered by these 1941 returns were signed before the United States was attacked and declared war and that nearly all the earnings represented in the tax-dodging devices attempted were pre-war earnings. But I think that changes the situation very little. An Regraded Unclassified 34 - 6 - attempt to evade lawful taxes while we were actually at war would be only a slight degree blacker than attempts to evade taxes to raise the funds for arming and equipping our land and sea forces when we stood in imminent danger of attack. It may be that these ins tances are an isolated few and that not many more of the same kind will be found. I sincerely hope that will be the case. I am wholly confident that the great and overwhelming proportion of American corporations are too patriotic even to con- sider such practices. We propose to take two courses of action: (1) Where we find excessive expenditures which have the effect of reducing corporate tax liability they will be disallowed, the corporation will be compelled to include the amounts in earnings, and at the same time the recipient will be required to pay full personal income taxes on the amounts received. (2) We propose to start immediate examinations of the books of corporations having war contracts to deter- mine whether excessive expenditures are being made, 35 - 7 - without waiting for the normal procedure of the receipt and analysis of annual returns and their reference to field offices for inquiry. By this step we expect to check at an earlier stage unlawful practices of this sort, whether they have been entered into innocently or for the definite purpose of evading taxation. The disallowance of excessive expenditures does not represent a new procedure. In applying the law and regulations which permit the deduction of ordinary and necessary business expenses for the purpose of ascertain- ing profits the Bureau of Internal Revenue has had occasion in the past to disallow expenditures which seemed to lack sound business justification and to be in effect distributions of profits. The problem, however, has under present conditions assumed major importance because of the huge increases in income of & great number of corporations holding war contracts. In the examination of returns from this standpoint, the following general principles will be followed: 1. Salaries and Bonuses Paid to Officers or Employees, and Rents and Royalties Paid to Shareholders. 36 - 8 - Deductions claimed for greatly increased salaries and extraordinary bonuses paid to officers or employees will be disallowed unless the taxpayer proves that the payments are, in fact, for services actually rendered and are reasonable. In determining whether the payments are reasonable, it will be assumed that reasonable compensation is only as much as would ordinarily be paid for like services by like enterprises under like circumstances. The factors that will be considered in determining the reasonablenass of such payments are the duties performed by the recipient, the character and amount of responsibility, the time devoted to the enterprise, and the peculiar ability or special tanent of the particular officer or employee. Where the payments are to relatives or to shareholders, the taxpayer must show that family considerations have not influenced the amount paid and that the payments are not distributions of profits in disguise. Large profits attributable to causes entirely unrelated to the activities of the officers or employees, which are not unusual in these abnormal times, do not of themselves justify or warrant large salary payments. 37 - 9 - Deductibility of rents or royalties paid to share- holders depends upon whether such charges are in fact fair and reasonable payments for the use of property and are not merely a device for distribution of profits. Any shareholder should be entitled only to a fair return on his investment in the property which he permits the corporation to use. 2. Payments to Profit Sharing or Pension Trusts. The deductibility of payments to pension trusts is governed by section 23(p) of the Internal Revenue Code. If payments to such trusts are reasonable, their deduction will be allowed. If the payments are unreasonable in amount, or if the trust is not created for the exclusive benefit of employees, or if it is a device to distribute profits to shareholders, the deductions will be dis- allowed. It is also our purpose to set up a barrier to deductions of large salaries, bonuses, or insurance premiums for officers under the guise of payments to a pension trust. Regraded Unclassified 38 - 10 - 3. Payments for Repairs. The deductibility for income tax purposes of costs of repairs depends upon whether the expenditure is actually for repairs, or is in fact a capital ex- penditure which should be added to capital investment or charged against reserve for depreciation, since the costs of repairs are deductible while capital expendi- tures are not. We must guard against the tendency during high profit years to make extensive improvements and to charge the cost of such improvements against profits under the caption of repairs. It will be our policy to scrutinize carefully the items claimed as deductions for expenditures for repairs. We shall disallow such deductions where it is not shown that the expenditures are in fact for repairs instead of for improvements or betterments which should be capitalized. 4. Expenses or Allowances Paid to Obtain Government Business, In- cluding Fees Paid to Washington Representatives or for Other Professional Services. 39 - 11 - Whether deductions for items of this class will be allowed depends upon whether they meet the test laid down in the Internal Revenue Code, that is, whether they are necessary and ordinary and reasonable. If such items are considered exorbitant or unreasonable, they will be disallowed as deductions. Many of the factors that apply in determining the deductibility of salaries and bonuses will apply also in determining the deductibility of items of this class. Particular attention will be given to deductions for payments which are against public policy, and all such deductions will be disallowed. 5. Amounts Paid for Advertising. The test of whether expenditures for advertising are deductible is whether they are ordinary and necessary and bear a reasonable relation to the business activities in which the enterprise is engaged. If they are extrava- gant and are not directed to continued public patronage which might reasonably be expected in the future the payments will be disallowed as dedictions. Amounts Regraded Unclassified 40 - 12 - paid to keep the corporate name or the trade marks or names of its products before the public, in conformity with the past practice of 8. corporation, will be allowed as deductions, provided the amounts expended therefor are not extraordinary and are not disproportionate to amounts so expended in the past. With this statement of the problem we have before us and the manner in which we propose to deal with it, I should like to ask you to permit Mr. Sullivan and Mr. Helvering to present the details of some of the examinations they have already made. 41 May 28, 1942 This is what the Secretary took with him to the Hill this morning for his meeting with the silver Senators. 42 TABLE I - United States Monetary Stocks of Silver (April 30, 1942) Millions of Omess Short Tons Silver held in Treasury 2,900.6 99,438 Silver outside the Treasury 408.9 14,018 Total 3,309.5 113,456 TABLE II - *Estimated Monetary Stocks of Silver of Other Countries (January 1, 1941) China 480 1,646 India 950 3,257 Other countries 1,530 5,245 Total 2,960 10,147 *Includes coin held by the public. Does not include 890 million ounces not allocated to monetary or non- monetary uses. TABLE III - Classification of Treasury Holdings of Silver (May 21, 1942) ilver bullion held for silver certificates 1,160.4 39,780 Alver dollars held against silver certificates 371.8 12,746 Bullion at cost 1,360.5 46,640 Subsidiary coin in the General Fund 9.8 336 Bullion in the General Fund at recoinage value .001 - Total Treasury holdings of silver 2,902.5 99,503 TABLE IV - Sources of Treasury Holdings of Silver Bullion at Cost (April 30, 1942) Silver Purchase Act Silver 1,246.1 42,719 Proclamation Silver 35.5 1,217 Act of July 6, 1939 78.3 2,684 *Silver Ordinary 4.9 168 Total Silver Bullion at Cost 1,364.8 46,788 *Disposable by the Treasury. TABLE V - Estimated Production, 1942 World production 245.0 8,390 United States production 62.0 2,123 United States imports 120.0 4,110 BLE VI - Estimated Demand Including Military Bearing materials 14.6 500 Chemical industry 20.0 685 Containers (returnable) 102.1 3,500 Dental and medical 2.9 100 Electrical industry 58.3 2,000 Solder 67.1 2,300 Miscellaneous 14.6 500 Decorative arts (silverware, jewelry, etc.) 49.6 1,700 Total 329.2 11,285 Non-consuming uses Bus bars 1,166.8 40,000 Other non-consuming uses 583.4 20,000 Regraded Unclassified Pgs 671 675 43 SILVER HEARINGS BEFORE A. SUBCOMMITTEE OF THE SPECIAL COMMITTEE ON THE INVESTIGATION OF SILVER UNITED STATES SENATE SEVENTY-SEVENTH CONGRESS SECOND SESSION PURSUANT TO S. Res. 187 (74th Congress) A RESOLUTION AUTHORIZING A SPECIAL COMMITTEE OF THE SENATE TO INVESTIGATE THE ADMINISTRATION, AND THE ECONOMIC AND COMMERCIAL EFFECT, OF THE SILVER PURCHASE ACT OF 1934 MAY 5, 6, 8, AND 28, 1942 Preference Rating Order No. P. 56-a PART 9 Printed for the use of the Senate Special Silver Committee UNITED STATES GOVERNMENT PRINTING OFFICE 73052 WASHINGTON : 1942 Regraded Unclassified 70 SENATE SPECIAL SILVER COMMITTEE ELMER THOMAS, Oklahoma, Chairman OT EDWIN c. JOHNSON, Colorado CHARLES L. McNARY, Oregon PAT McCARRAN, Nevada HENRIK SHIPSTEAD, Minnesota SHERIDAN DOWNEY, California JOHN THOMAS, Idaho JAMES E. MURRAY, Montana ALBERT A. GRORUD, Secretary II Regraded Unclassified CONTENTS Statement of- Page Batt, William L 591 Bradbury, Charles L 636 Carr, Hon. Ralph L 645 Conover, Julian D 602 Jones, Hon. Jesse H 709 Knowlson, J. S 638 Knorp, Albert 616 Malone, George W 648 MacBoyle, Errol 629 McCarran, Senator Pat 506 Morgenthau, Hon. Henry, Jr 671, 675 Murphy, Matt 632 Nelson, Hon. Donald M 673 Nelson, Wilbur A 513, 540, 600 Palmer, Robert 8 621 Strickler, Dave P 641 III Regraded Unclassified 100 OF - 100% THE - wat nichielas incime, (nidemster) Y 180 there Regraded Unclassified PREFERENCE RATINGS FOR MINING MACHINERY AND EQUIPMENT TUESDAY, MAY 5, 1949 UNITED STATES SENATE, SPECIAL COMMITTEE ON SILVER, Washington, D. C. The special committee met at 10:30 a. m., pursuant to call, in room 424, Senate Office Building, Senator Elmer Thomas of Okla- homa (chairman) presiding. Present: Senators Thomas of Oklahoma (chairman), Johnson of Colorado, McCarran, Thomas of Idaho, Downey, and Murray; and Albert A. Grorud, secretary to the committee. Present also: Senators Millikin and Bunker. Present also: The following members of the House of Representa- tives: Hon. Harry L. Inglebright (California), Hon. Lawrence Lewis (Colorado), Hon. William S. Hill (Colorado), Hon. J. Edgar Cheno- weth (Colorado), Hon. James G. Scrugham (Nevada), Hon. Compton I. White (Idaho), and Hon. John R. Murdock (Arizona). Present also: Governor Ralph L. Carr (Colorado). Present also: Dr. Wilbur A. Nelson, Administrator; Dr. Marcellus H. Stow, Deputy Administrator, and F. L. Eaton, attorney, Ma- terials Division; and Shaw Livermore, principal industry economist, Office of Progress Reports Division, War Production Board; Mr. Julian D. Conover, secretary, American Mining Congress, Washing- ton, D. C., Mr. A. W. Dickinson, the American Mining Congress, Washington, D. C.; Mr. Albert F. Knorp, secretary, California Chapter, American Mining Congress, 300 Montgomery Street, San- Francisco, Calif.; Mr. James A. White, director, Rocky Mountain Metals Foundation, Washington, D. C.; Mr. Robert S. Palmer, secretary, Colorado Mining Association, 204 State Office Building, Denver, Colo.; Mr. George W. Malone, managing director, Industrial West Foundation, Wasbington, D. C., and San Francisco, Calif.; Mr. Errol MacVoyle, chairman, State Mining Board, California; Mr. J. C. Kemprance, Mining Association of California, 381 Bush Street, San Francisco, Calif; Mr. Matt Murphy, inspector of mines, State of Nevada; Mr. Charles L. Bradbury, president, New Mexico Miners and Prospectors Association, 912 Ridgewest Drive, Albuquerque, N. Mex.; Mr. R. E. Whitten, care of Owyhee Hotel, Boise, Idaho; Mr. David P. Strickler, president, Cripple Creek Development Co., Colorado Springs, Colo.; Mr. Thomas A. Copeland, Cripple Creek, Colo.; Mr. Merrill E. Shoop, Colorado Springs, Colo.; Mr. Edward D. Dickerman, Leadville, Colo., and Mr. H. M. Bratter, Washington, D. C. The CHAIRMAN. The committee will be in order. 487 Regraded Unclassified 438 SILVER SILVER 439 This is a meeting of the Senate Special Committee on Silver. This committee is in session by virtue of a resolution of the United States You are invited to appear at that hearing And testify before said committee. It is to be regretted that on account of the small appropriation made available Senate, known as Senate Resolution 187, of the Seventy-fourth for the committee's use, no allowance can be made for witness fees or traveling Congress. For the record, I will have a copy of the resolution placed at this point. expenses. Dated this 13th day of April 1942. (Resolution No. 187 referred to is as follows:) Respectfully, ELMER THOMAS, Chairman, (8, Res. 187, 74th Cong., lot poss, Aug. 16, 1935) ALBERT A. GRORUD, Secretary, Senate Special Silver Committee. RESOLUTION The CHAIRMAN. This particular hearing was called to consider just Resolecd, That a special committee of five Senators, to be appointed by the one phase of the silver program. An order has been issued by the President of the Senate, in authorized and directed to confer with the Secretary War Production Board which has had and may have more effect of the Treasury relative to the administration, and the economic and commercial effect in the United States and abroad, of the Silver Purchase Act of 1934, Public upon silver mining than we now may appreciate or may now under- Law 1178). Numbered 438, Seventy-third Congress, approved June 19, 1934 (48 Stat. stand. It seems that under this order 8 number of silver mines me be closed, or if not closed, severely restricted. So, for the record, the The said special committee, or any subcommittee thereof duly authorized by order will be placed at this point. the special committee, in further authorized to hold such hearings, to sit and Act at such times and places during sessions and recesses of the Senate in the Seventy- (The order referred to is as follows:) fourth and succeeding Congresses, to employ and call upon the executive depart- ments for clerical and other assistants, to require by subpena or otherwise the PART 002-MINES Attendance of such witnesses and the production of such correspondence, books, Preference Rating Order P-56 (as Amended March 2, 1948) papers, and documents, to administer such oaths, to take such testimony, and to make such expenditures as it deems advisable, The cost of stenographie services Section 982.1 is hereby amended to read as follows: to report such hearings shall not be in excess of 25 cents per hundred words. The § 982.1 Preference Rating Order P-56. For the purpose of facilitating the expenses of the committee, which shall not exceed $10,000, shall be paid from the acquisition of material for continued and expanded operation of Mining Enter- contingent fund of the Senate, upon vouchers approved by the Chairman. prises in the public interest and to promote the national defense, preference The said special committee shall report to the Senate as soon as practicable the ratings are hereby assigned to deliveries of such material upon the terms hereinafter results of the Investigations, together with its recommendations. set forth: (Membership of committee increased to nine, by motion of Senator (a) Definitions. (1) "Person" means any individual, partnership, association, Pitman, January 17, 1939.) business trust corporation, governmental corporation or agency, or any organized group of persons whether incorporated or not. The CHAIRMAN. The resolution provides for the appointment of & (2) "Mining Enterprise" means (i) Any plant actually engaged in the extrac- special committee of five Senators. We operated under the resolution tion by surface, open-pit, or underground methods, or in the beneficiation, con- with five Senators for the first few years of the committee's existence, centration, or preparation for shipment of the products of mining activity, but but on January 17, 1939, Senator Pittman made a motion to amend not including any plant more than 30 percent of the production of which in dollar value consists of gold and/or silver; the resolution by increasing the number from five to nine. At the (if) Any plant wholly engaged in the processing and burning of refractories; present time provision is made for a committee of nine members, but (iii) Any prospecting enterprise for the discovery or exploration of new or there is one vacancy, and the membership is as follows: additional mining projects. Myself, Senator Thomas of Oklahoma, chairman of the committee; (3) "Operator" means any person operating a Mining Enterprise, who holds a Serial Number issued in accordance with the provisions of paragraph (b). Senator Edwin C. Johnson of Colorado; Senator Pat McCarran of (4) "Supplier" means any person with whom a purchase order or contract has Nevada; Senntor Sheridan Downey of California; Senator James E. been placed for delivery of material to an Operator or to another Supplier. Murray of Montana; Senator Charles L. McNary of Oregon; Senator (5) "Material" means any commodities, equipment, accessories, parts, assem- Henrik Shipstead of Minnesota; and Senator John Thomas of Idaho. blies, or products of any kind. (6) "Maintenance" means minimum upkeep necessary to continue the work- There future. is one vacancy that will probably be filled in the very near ing condition of equipment used by an Operator in the operation of a Mining Enterprise at its then current rate of production or operation. Pursuant to the authority contained in the resolution, the commit- (7) "Repair" means the restoration of property or equipment used by an tee saw fit to fix this date and hour for a special bearing, and I will Operator in the operation of a Mining Enterprise to a sound working condition after wear and tear, damage, destruction, or failure of parts or the like have made place in the record nt this point a. copy of the notice of this hearing. the property or equipment unfit or unsafe for service. (The notice of the hearing referred to is as follows:) (8) "Operating Supplies" means material which is essential to and consumed in the operation of property and equipment used by an Operator in the operation UNITED STATES SENATE, of a Mining Enterprise and which is generally carried as Operator's stores and SENATE SPECIAL SILVER COMMITTEE, charged to operating expense account. The term does not include raw materials Washington, D. C. which enter into or form part of the finished product. NOTICE OF HEARING (b) Certification of mining enterprises. (1) Domestic Mining Enterprises. The agency designated by the Governor or other chief executive officer of each Resolution The Senate 187, Special Silver Committee authorized under and virtue of Senate State, territory, or possession of the United States, including the Commonwealth ton, D. C., at Seventy-fourth Congress, will hold a public by at Washing- of the Philppines, shall furnish to the War Production Board a certificate setting May 1942. room 424, Senate Office Building, at 10:30 B. hearing on the 21st day of forth the names of the persons operating Mining Enterprises within such State, relating to Subject, preference rating order No. Pôfl-a m., 1942, territory, or possession. The War Production Board will thereupon issue a Serial ment, and related material subjects entering into the production of mining machinery of March and 2, equip- Number or Numbers to each such person who may be approved by the Director of Industry Operations. Any person aggrieved by failure or refusal of A State Agency to certify him M an Operator may apply in writing to the Director of Regraded Unclassified 440 SILVER SILVER Industry Operations for issuance of & Serial Number. The Director of Industry 441 Operations may thereupon take such action as he deema appropriate. Serial Numbers may be cancelled by the Director of Industry Operations in appropriate (e) Application of preference ratings-(1) Application of A-1-a or A-1-c rating by operator. An Operator, in order to apply the A-1-a preference rating assigned cases. (2) Foreign mining enterprises, The Director of Industry Operations may, in by paragraph (c) (1) (i) or the A-1-c preference rating assigned by paragraph (e) his diseretion, issue a Serial Number or Numbers to A person operating & Mining (1) (ifi) must communicate with the War Production Board, Washington, D. C, Enterprise outside the limite of the United States, its territories, and possessions Ref.: P-56, describing the material needed for emergency repair and the nature and may cancel any such Serial Number. of the emergency, or the reasons why advance provision in necessary to avert (3) Standards. In issuing, denying, or cancelling Serial Numbers, the Director breakdown or suspension, and such other Information as may be required. The of Industry Operations will consider the importance to National defense of the Director of Industry Operations will notify such Operator, whother, and to what present and prospective output of materials to be produced, the consumption extent, its application is approved, and 8 copy of such notification shall be fur- of essential materials by the Mining Enterprise in its operations, the necessity to nished by the Operator to its Supplier to evidence the A-1-A or A-1-0 rating. the Mining Enterprise of obtaining priorities assistance, and the available after- (2) Application of ratings by an operator to deliveries of machinery or equipment. native methods of obtaining such assistance. An Operator, in order to apply the ratings assignable under paragraph (e) (1) (v), (e) Assignment of preference ratings. Subject to the terms of this Order, the must communicate with the War Production Board, Washington, D. C., Ref.: following preference ratings are hereby assigned; provided, that no preference P-56, describing the machinery or equipment needed and the reasons why such rating is assigned to the delivery of any machinery or equipment, or repair parts machinery or equipment is essential for the proper operation of the Mining Enter- therefor, unless such machinery and equipment are used primarily to maintain prise. The Director of Industry Operations will notify such Operator whether or to increase the existing production of the Mining Enterprise, and not primarily its application is approved, and if approved, shall assign a Preference Rating to reduce operating costs. Nothing herein contained shall prevent the use of thereto; a copy of such notification and assignment of rating shall be furnished by the Operator to his Supplier. any other or higher rating to which any person may be entitled by reason of Any other Preference Rating Certificate or Order. (3) Standards. In acting on any application pursuant to paragraph (e) (1) (1) As to deliveries to an operator. (i) A-1-a to deliveries of material for repair or (2), the Director shall consider the importance to national defense of the of property and equipment used in and essential to the operation of a Mining material to be produced by the machinery, equipment, or other material for Enterprise, when and only when there has been an actual breakdown or suspen- which rating is requested, and the consumption of scarce materials in the construction thereof. sion of operations because of damage, wear and tear, destruction or failure of parts, or the like, and the essential material is not otherwise available. (4) Application of other ratings by operator or supplier. An Operator in order (ii) A-1-0 to deliveries of repair parts for machinery and equipment of the to apply the A-1-c preference rating assigned by paragraph (c) (1) (if), the A-8 types listed in Schedule A hereto; provided, that such repair parts are for use in preference rating assigned by paragraph (e) (1) (iv), or the A-10 rating assigned a Mining Enterprise less than 30 percent of the production of which in dollar by paragraph (c) (1) (vi), or a Supplier in order to apply any preference rating assigned by paragraph (c) (2), must endorse the following statement on the value for the previous calendar quarter WAS derived from any one or more of the following: original and all copies of the purchase order or contract for such material, signed Sand (except foundry sand), gravel, crushed stone, and slag, Including all Supplier: by B. responsible official duly designated for such purpose by such Operator or commercially recognized forms of these products; Materials for & Mining Enterprise, Rating A- under Preference Clay of all types, except those used for refractories and ceramics for electrical use; Rating Order P-56, Serial No. and in compliance therewith. Bullding and ornamental stone of all types; Gypsum, tale, state (except for electrical use), and all raw material (Name of operator a Supplier) for the manufacture of lime and calcareous cements. By Such rating shall be applied by any Operator only to deliveries in any calendar (Atthorized signature) quarter of a quota consisting of such dollar value of repair parts as may be ex- pressly authorized by the Director of Industry Operations after application by If the material in for export outside the limits of the United States, Its territories such Operator in form prescribed by the Director of Industry Operations. For and possessions, the Commonwealth of the Philippines, or the Dominion of the first calendar quarter of 1942 such quota shall be the dollar value of repair Canada, such endorsement shall also contain the sentence: parts which bears the same ratio to the dollar value of repair parts delivered to dated This material is for export and is covered by Export License No. the Operator in the last calendar quarter of 1941 ne the dollar value of the Opera- tor's production in the first calendar quarter of 1942 bears to the dollar value of Such purchase order or contract so endorsed shall be delivered to the Supplier the Operator's production in the last calendar quarter of 1941. of such material. Such endorsement shall constitute a representation to (he (III) A-1-c to deliveries of repair parts for essential productive facilities to War Production Board and the Supplier with whom the purchase order or con- other Mining Enterprises and/or for other types of machinery and equipment up tract in placed that such purchase order or contract in duly and properly rated to the minimum required to make reasonable advance provision to avert an actual in accordance herewith. Such Supplier shall be entitled to rely on such repre- breakdown or suspension as described in paragraph (e) (1) (i), sentation, unless he knows or has reason to believe it to be false. Any such pur- (iv) A-8 to deliveries of material for other repairs to, for maintenance of, and chase order or contract shall be restricted to material the delivery of which is for operating supplies for, property and equipment used in and essential to the rated in accordance herewith. With respect to any purchase order or contract operation of a Mining Enterprise. for such material placed before the effective date of this Order, such preference (v) to deliveries of essential machinery and equipment, whether or not included rating may be applied by delivering to the seller a duplicate copy of such purchase in Schedule A, such preference ratings as the Director of Industry Operations may order or contract 80 endorsed. from time to time assign to particular orders for such equipment submitted to (5) An Operator or Supplier placing any such rated purchase order or contract, him for approval in the manner described in paragraph (e) (2) below. and the Supplier of the material covered thereby, must each retain endorsed copies (vi) A-10 to deliveries of material for all other repairs, maintenance and of all such purchase orders or contracts, and certificates and notifications made or operating supplies. received pursuant to this paragraph (e), for & period of two years from the date (2) Aa to deliveries to a supplier. Deliveries of material which will be delivered thereof, for inspection by authorized representatives of the War Production Board. under any preference rating assigned by or pursuant to paragraph (e) (1) are (or physically incorporated into material which will be delivered) to an Operator (6) Restrictions on deliveries by supplier. No Supplier shall deliver machinery, equipment, or repair parts to an Operator or another Supplier under any rating: assigned the same preference rating an that assigned to the delivery to the Operator. (i) Unless such Supplier has received from such Operator or such other Sup- make assigned may be applied by (1) An Operator, or (2) A Supplier to enable it to (d) Persona entitled to apply preference ratings. The preference ratings hereby plier all certificates and notifications required by paragraph (e), (li) If such Supplier knows or has reason to believe that such material is not property rated under the terms of this Order. tracts to an Operator or to another Supplier deliveries on purchase orders or con- endorsed or otherwise identified pursuant Lo paragraph (e), Regraded Unclassified SILVER 442 SILVER 443 must report forthwith to the War Production of the Board terms of the details of SCHEDULE A A any Supplier such attempt to apply any rating in violation The preference this Order. (f) Restrictions on application of rating. (1) ratings hereby As to all machines listed below, the rating provided herein likewise applies to assigned (i) Unless shall the not material be applied: to be delivered cannot be secured when required with- equipment items, accessories, and tools customarily sold with such machines. Aerial tramway equipment Air compressors for mine use out such rating; for an Operator in and essential to the operation of a Mining of the Enterprise; amount (ii) the operation, maintenance, or repair of the property or equipment used by To obtain deliveries greater in quantity or on dates earlier than required Air distribution equipment Assaying and testing laboratory equipment at the mine Ball-casting machines (iii) By a Supplier to obtain material in excess necessary to Boxcar loaders make rated deliveries. Cages and skips Restrictions on inventory. No Operator shall accept deliveries other (whether or Car dumpers-rotary or end (g) rated pursuant to this Order) of operating supplies or material which Equipment for Cleaning plants will not increase such Operator's inventory of such operating supplies or other material Equipment for concentrating plants amount greater than the minimum necessary for the efficient operation of Conveyore-shaking, belt, chain, or gravity type, including duckbills and other his to an business, and the ratio of inventory to current production shall in no event self-loading heads exceed the ratio of average inventory to average production for the years 1938, Cutting machines-cable reel and self-propelling transportation trucks therefor Diamond core drilling machines 1939, and 1940. (h) Resale of operating supplies and other material prohibited. Except with Dragline dredges, excavators, and scraper units specific permission of the Director of Industry Operations, no Operator shall Dredges-continuous bucket, including pumps resell any operating supplies or other materials (whether or not obtained pursuant to rating assigned by this Order) except to another Operator. Drills therefor and drilling machines, power driven, and reconditioning equipment (i) Conservation and standardization. Every person affected by this Order Dust control equipment shall use his best efforts to effectuate conservation of materials by elimination, Electrical equipment for mine transportation and power simplification, or standardization of types, sizes, or forms, or otherwise, and to Hoists-including room hoists and car pullers cooperate in any program developed for such purpose by the War Production Hydraulie monitors, with feed pipe and fittings Board. The Director of Industry Operations may from time to time issue Jacks for lifting and roof support specific directions as to conservation, elimination, and standardization. Lamps-mine, miners', safety, and ore-exploration types (j) Relief. In case the productivity or sound working condition of any Mining Locomotives for mine use Enterprise is adversely affected by any provision or application of this Order or Loaders, mobile, including mucking machines by inability to obtain essential operating supplies or other materials, the person Equipment for Milling plants operating such Mining Enterprise may apply for relief to the Director of Industry Mine cars, track or trackless Operations. The Director of Industry Operations may thereupon take such Pit-car loaders and elevating conveyors action as he deems appropriate. Equipment for Preparation plants (k) Records, audit, and reports, Each Operator and each Supplier shall keep Pumps, pipe and fittings for mine drainage or material transport and preservo for a period of not less than two years accurate and complete records Rock dusting equipment of all transactions affected by this Order and shall submit from time to time to Safety and defense equipment audit and inspection by duly authorized representatives of the War Production Sand dryers Board. Each Operator and each Supplier shall execute and file with the War Scraper loaders Production Board or other designated agency, such reports and questionnaires Sheaves and sheave blocks as the War Production Board shall from time to time require. Until otherwise Shovels, power directed, each Operator shall file with the designated State Agency on or before Shuttle cars, track or trackless the 10th day of each month & report on form PD-119 of purchases made during Slusher hoists and scrapers the preceding month pursuant to the ratings granted by this Order. Steel sections for support of mine openings (1) Violations. Any person affected by this Order who violates any of its pro- Storage batteries for mine use visions, or a provision of any other Order, regulation, or other directive of the War Tanks and bins for storage of mine products Production Board may be deprived of priorities assistance, or subjected to such Tipples and head frames other or further action as the Director of Industry Operations may deem Track and track accessories for mine transportation appropriate. Equipment for Treating plants (m) Revocation or modification. This Order may be revoked or modified by the Trucks, tractors, and trailers for mine use Director of Industry Operations at any time 88 to any Operator or Supplier. In Ventilation equipment the event of revoeation, or upon expiration of this Order, deliveries already rated Waste disposal equipment pursuant to this Order shall be completed in accordance with said rating, unless Weighing equipment, including automatic devices the rating has been specifically revoked with respect thereto, No additional Wire rope for haulage and hoisting applications of this rating to any other deliveries shall thereafter be made by the [F. IL Doc. 42-1800; Filed, March 2, 1042; 11:51 a. m.] Operator or Supplier affected by said revocation or expiration. (n) Amendment of prior order. The provisions of Preference Rating Orders The CHAIRMAN. While it is true that we will consider only one P-22 or P-100 shall not apply to deliveries to which a preference rating is assigned phase of the silver program in this hearing, I think it might be well to by this Order. place in the record some of the more important laws that are now on (o) Effective date. This Order shall take effect immediately and shall continue in effect until revoked. (P. D, Reg. 1, amended December 23, 1941, 6 F. R. 6680; the statute books, inasmuch as the hearing may be broadened later W. P. B. Reg. 1, Jan. 26, 1942, 7 F. R. 561, E. 0. 9024, Jan. 16, 1942, 7 F. R. 329; to take in other phases of the silver program. So, without objection, E. O. 9040, Jan. 24, 1942, 7 F. R. 527; sec. 2 (a), Pub. Law 671, 76th Cong., 3d I will ask that the record contain a portion of Public, No. 10, Seventy- Sess., ILH amended by Pub. Law 89, 77th Cong., 1st Sess.) third Congress, approved May 12, 1933. At that time we placed an Issued this 2d day of March 1942, amendment to the agricultural bill, giving the President vast powers J. 8. KNOWLSON, Director of Industry Operations. over money, both gold and silver, and paragraph 2 on page 151 of the Regraded Unclassified SILVER SILVER 444 445 Federal Reserve Act of 1913 with amendments contains the particular (g) The Secretary of the Treasury La authorised to make rules and regulations portion of this amendment that relates to silver. So, I will ask that for carrying out the provisions of this section. paragraph 2, appearing on pages 151, 152, and a portion of 153, be The CHAIRMAN. I might suggest that under this law we now have inserted in the hearings at this point. vast power over silver. The President is authorized to do practically (The matter referred to is as follows:) anything he sees fit with silver, BO far 0.9 money is concerned. He (2) By proclamation to fix the weight of the gold dollar in grains nine-teaths has the power under this statute to make the silver dollar of any size fine definite fixed ratio in relation to the gold dollar at such amounts M he finds and also to fix the weight of the silver dollar in grains nine-tenths fine at 8 he sees proper, and he has the power to open the mints to the free and unlimited coinage of silver. from his investigation to stabilize domestic prices or to protect the foreign sary commerce against the adverse effect of depreciated foreign currencies, and to I might say in passing that William Jennings Bryan made a national provide for the unlimited coinage of such gold and silver of the ratio 80 fixed, or in campaign on this particular issue and that while he failed to accom- the Government of the United States entere into an agreement with any plish the enactment of the law he had in mind, it is now a statute of government case or governments under the terms of which the ratio between the the United States, and all that the President has to do is prepare an value of gold and other currency issued by the United States and by any such order and sign it and the minte can be opened this afternoon to the government or governments is established, the President may fix the weight of the gold dollar in accordance with the ratio so agreed upon, and such gold dollar, free and unlimited coinage of silver in any ratio the President might the weight of which is 80 fixed, shall be the standard unit of value, and all forms of see fit to fix, either coining the present sized standard silver dollar money issued or coined by the United States shall be maintained at a parity with or a smaller dollar. this standard and it shall be the duty of the Secretary of the Treasury to maintain In addition to the statute I have just referred to, I will ask that the such parity, but in no event shall the weight of the gold dollar be fixed 50 M to reduce its present weight by more than 50 per centum. record contain at this point the text of the Silver Purchase Act of Sec. 44. The Secretary of the Treasury, with the approval of the President, is 1934. That is found on pages 227, 228, 229, 230, and 231 of the same hereby authorized to make and promulgate rules and regulations covering any book I have just referred to, namely, the Federal Reserve Act of 1913 action taken or to be taken by the President under subsection (a) or (b) of section with amendments. 43. Sec. 45. (a) The President is authorized, for 8 period of six months from the (The matter referred to is as follows:) date of the passage of this Act, to accept ailver in payment of the whole or any part of the principal or interest now due, or to become due within six months after [PUBLIC-No. 438-73p CONGRESS] such date, from any foreign government or governments on account of any (H. 0745) indebtedness to the United States, such silver to be accepted at not to exceed the price of 50 cents an ounce in United States currency. The aggregate value of the AN ACT To authorise the Secretary of the Treasury to purchase nilver, Issue silver certificates, and for silver accepted under this section shall not exceed $200,000,000. other purpose (b) The silver bullion accepted and received under the provisions of this section Be if enacted by the Senate and House of Representatives of the United States of shall be subject to the requirements of existing law and the regulations of the America in Congress assembled, That the short title of this Act shall be the "Silver mint service governing the methode of determining the amount of pure allver Purchase Act of 1934," contained, and the amount of the charges or deductions, If any, to be made; but SEC, 2. It is hereby declared to be the policy of the United States that the such silver bullion shall not be counted AB part of the silver bullion authorized or proportion of silver to gold in the monetary stocks of the United States should be required to be purchased and coined under the provisions of existing law. increased, with the ultimate objective of having and maintaining, one-fourth of (e) The silver accepted and received under the provisions of this section shall the monetary value of such stocks in silver, be deposited in the Treasury of the United States, to be held, used, and disposed SEC. 3. Whenever and BO long as the proportion of silver in the stocks of gold of as in this section provided. and silver of the United States is less than one-fourth of the monetary value of (d) The Secretary of the Treasury shall cause silver certificates to be issued in such stocks, the Secretary of the Treasury is authorized and directed to purchase such denominations as he deems advisable to the total number of dollars for which silver, at home or abroad, for present or future delivery with any direct obliga- such silver was accepted in payment of debte. Such silver certificates shall be tions, coin, or currency of the United States, authorized by law, or with any funds used by the Treasurer of the United States in payment of any obligations of the in the Treasury not otherwise appropriated, at such rates, at such times, and United States. upon such terms and conditions as he may deem reasonable and most advan- (e) The silver so accepted and received under this section shall be coined into tageous to the public interest: Provided, That no purchase of silver shall be made standard silver dollars and subsidiary coins sufficient, in the opinion of the Secre- hereunder at a price in excess of the monetary value thereof: And provided further, tary of the Treasury, to meet any demands for redemption of such ailver cortificates That no purchases of silver situated in the continental United States on May 1, issued under the provisions of this section, and such coins shall be retained in the 1934, shall be made bereunder at a price in excess of 50 centa a fine ounce. Treasury for the payment of such certificates on demand. The ailver 80 accepted Sec. 4. Whenever and 80 long as the market price of silver exceeds its monetary and received under this section, except 50 much thereof as is coined under the value or the monetary value of the stocks of silver is greater than 25 per centum provisions of this section, shall be held in the Treasury for the sole purpose of of the monetary value of the stocks of gold and silver, the Secretary of the Treasury aiding in maintaining the parity of such certificates as provided in existing law. may, with the approval of the President and subject to the provisions of section 5, Any such certificates or reissued certificates, when presented at the Treasury, sell any eilver acquired under the authority of this Act, at home or abroad, shall be redeemed in standard silver dollars, or in subsidiary silver coin, at the for present or future delivery, at such rates, at such times, and upon such terms option of the holder of the certificates: Provided, That, in the redemption of such silver certificates issued under this section, not to exceed one-third of the coin interest. and conditions as he may deem reasonable and most advantageous to the public required for such redemption may in the judgment of the Secretary of the Treas- SEC, 5. The Secretary of the Treasury is authorized and directed to issue silver ury be made in subsidiary coins, the balance to be made in standard silver dollars. certificates in such denominations as he may from time to time prescribe in & face (f) When any silver certificates issued under the provisions of this section are amount not less. than the cost of all silver purchased under the authority of redeemed or received into the Treasury from any source whatsoever, and belong section 3, and such certificates shall be placed in actual circulation. There shall to the United States, they shall not be retired, canceled, or destroyed, but shall be be maintained in the Treasury AS security for all silver certificates heretofore or reissued and paid out again and kept in circulation; but nothing herein shall hereafter issued and at the time outstanding an amount of silver in bullion and prevent the cancelation and destruction of mutilated certificates and the issue of standard silver dollare of a monetary value equal to the face amount of such other certificates of like denomination in their stead, as provided by law. silver certificates. All silver certificates heretofore or hereafter issued shall be Regraded Unclassified SILVER SILVER 446 447 legal tender for all debta, public and private, public charges, of the taxes, duties, and of the transferor's regular business of furnishing silver bullion for industrial, standard silver dollars; and the Secretary of the Treasury in authorized to coin dues, and shall be redeemable on demand at the Treasury United States in professional or artistic use and (a) not resulting from B change In the market price of silver bullion, or (b) offect by contemporaneous losses incurred in trans- standard silver dollars for such redemption. actions in interesta in silver bullion determined, in accordance with such regula- SEC. 6. Whenever in his judgment such action is necessary to effectuate the tions, to have been specifically related bedging transactions; or (2) offset by con- policy of this Act, the Secretary of the Treasury in authorized, with the approval temporaneous lossen attributable to changes in the market price of silver bullion of the President, to investigate, regulate, or prohibit, by means of licenses or and incurred in transactions in mlver foreign exchange determined, in accordance otherwise, the acquisition, importation, exportation, or transportation of silver with such regulations, to have been hedged specifically by the interest in silver and of contracts and other arrangements made with respect thereto; and to require bullion transferred. The provisions of this subdivision shall extend to all transfers the filing of reports deemed by him reasonably necessary in connection therewith. in the United States of any interest in silver bullion, and to all such transfers Whoever willfully violates the provisions of any license, order, rule, or regulation outside the United States if either party thereto is a resident of the United States issued pursuant to the authorization contained in this section shall, upon convie- or is a citizen of the United States who has been a resident thereof within three tion, be fined not more than 810,000 or, If A natural person, may be imprisoned for months before the date of the transfer or If such silver bullion or interest therein is not more than ten years, or both; and any officer, director, or agent of any corpo- situated in the United States; and shall extend to transfers to the United States ration who knowingly participates in such violation may be punished by & like Government (the tax in such cases to be payable by the transferor), but shall not fine, imprisonment, or both. extend to transfere of silver bullion by deposit or délivery at n United States mint SEC. 7. Whenever in the judgment of the President such action le necessary to under proclamation by the President or in compliance with any Executive order effectuate the policy of this Act, be may by Executive order require the delivery issued pursuant to section 7 of the Silver Purchase Act of 1934, The tax under this to the United States mints of any or all silver by whomever owned or possessed. subdivision on transfers enumerated in subdivision 4 shall be in addition to the The silver so delivered shall be coined into standard silver dollars or otherwise tax under such subdivision. This subdivision shall apply (1) with respect to all added to the monetary stocks of the United States as the President may deter- transfers of any interest in silver bullion after the enactment of the Silver Purchase mine; and there shall be returned therefor in standard silver dollars, or any other Act of 1934, and (2) with respect to all transfers of any interest in silver bullion on coin or currency of the United States, the monetary value of the silver no delivered or after May 15, 1934, and prior to the enactment of the Silver Purchase Act of less such deductions for seignlorage, brassage, coinage, and other mint charges 1934, except that in such cases it shall be paid by the transferor In such manners as the Secretary of the Treasury with the approval of the President shall have and at such time as the Commissioner, with the approval of the Secretary of the determined: Provided, That in no case shall the value of the amount returned reasury, may by regulations prescribe, and the requirement of 5 memorandum therefor be less than the fair value at the time of such order of the silver required of such transfer shall not apply. to be delivered as such value is determined by the market price over & reasonable "As used in this subdivision- period terminating at the time of such order. The Secretary of the Treasury "The term 'cost' means the cost of the interest in silver bullion to the trans- shall pay all necessary costa of the transportation of such silver and standard feror, except that (a) in case of silver bullion produced from materials containing silver dollars, coin, or currency, including the cost of insurance, protection, and silver which has not previously entered into industrial, commercial, or monetary such other incidental costs as may be reasonably necessary. Any silver withheld use, the post to a transferor who is the producer shall be deemed to be the market in violation of any Executive order issued under this section or of any regulations price at the time of production determined in accordance with regulations issued issued pursuant thereto shall be forfeited to the United States, and may be seized hereunder; (b) in the case of an interest in silver bullion acquired by the transferor and condemned by like proceedings ss those provided by law for the forfeiture, otherwise than for valuable consideration, the cost shall be deemed to be the cost meixure, and condemnation of property imported into the United States con- thereof to the last previous transferor by whom it was acquired for 8 valuable trary to law; and, in addition, any person failing to comply with the provisions of consideration: and (c) in the caso of any interest in silver bullion acquired by the any such Executive order or regulation shall be subject to a penalty equal to transferor (after April 15, 1934) in & wash sale, the cost shall be deemed to be the twice the monetary value of the silver in respect of which such failure occurred. cost to him of the interest transferred by him in such wash sale, but with proper Sgc. 8. Schedule A of title VIII of the Revenue Act of 1926, as amended adjustment, in accordance with regulations under this subdivision, when such (relating to stamp taxes), is amended by adding at the end thereof a new sub- interesta are in silver bullion for delivery at different times. division to read Ad follows: "The term 'transfer' means & sale, agreement of sale, agreement to sell, memo- "10. SILVER, AND so FORTH, SALES AND TRANSFERS.-On all transfers of any randum of sale or delivery of, or transfer, whether made by assignment in blank interest in silver bullion, if the price for which such interest in or is to be transferred or by any delivery, or by any paper or agreement or memorandum or any other exceeds the total of the east thereof and allowed expenses, 50 per centum of the evidence of transfer or sale: or means to make a transfer as 60 defined. amount of such excess. On every such transfer there shall be made and delivered "The term 'interest in silver bullion' means any title or claim to, or interest in, by the transferor to the transferee a memorandum to which there shall be affixed any silver bullion or contract therefor. lawful stamps in value equal to the tax thereon. Every such memorandum shall "The term 'allowed expenses' means usual and necessary expenses actually show the date thereof, the names and addresses of the transferor and transferee, incurred in bolding, processing, or transporting the interest in silver bullion as to the Interest in silver bullton to which it refers, the price for which such interest is which an interest is transferred (including storage, insurance, and transportation or is to be transferred and the cost thereof and the allowed expenses. Any person charges but not including interest, taxes, or charges in the nature of overhead), liable for payment of tax under this subdivision (or anyone who acts in the matter determined in accordance with regulations issued hereunder. ILA agent or broker for any such person) who is B party to any such transfer, or "The term 'memorandum' means B bill, memorandum, agreement, or other who in pursuance of any such transfer delivers any silver bullion or Interest evidence of a transfer. therein, without a memorandum stating truly and completely the information "The term 'wash sale' means a transaction involving the transfer of an interest herein required, or who delivers any each memorandum without having the proper in silver bullion and, within thirty days before or after such transfer, the acquisi- stamps affixed thereto, with intent to evade the foregoing provisions, shall be tion by the same person of an interest in silver bullion. Only 60 much of the inter- deemed guilty of a misdemeanor, and upon conviction thereof shall pay B fine of est 80 acquired 18 does not exceed the interest so transferred, and only 80 much of not exceeding $1,000 or be imprisoned not more than six months, or both. Stamps the interest 80 transferred se does not exceed the interest 80 acquired, shall be affixed under this subdivision shall be canceled (in lieu of the manner provided in deemed to be included in the wash sale. section 801) by such officers and in such manner as regulations under this subdivi- "The term 'silver bullion' means silver which has been melted, smelted, or sion shall prescribe. Such officers shall cancel such stamps only if it appears that refined and is in such state or condition that its value depends primarily upon the the proper tax is being paid, and when stamps with respect to any transfer are eo silver content and not upon its form." ranceled, the transferor and not the transferee shall be liable for any additional Ssc. 9. The Secretary of the Treasury is hereby authorized to issue, with the tax found due or penalty with respect to such transfer. The Commissioner shall approval of the President, such rules and regulations as the Secretary of the abate or refund, in accordance with regulations issued bereunder, such portion of Treasury may deem Decessary or proper to earry out the purposes of this Act, any tax hereunder na he finds to be attributable to profits (1) realized in the course or of any order issued hereunder. Regraded Unclassified SILVER 448 SILVER 449 BKc. 10. As used in this Act- The (erm "person" means an individual, partnership, association, or COD- Sec. 4. (a) Each United States coinage mint shall receive for coinage into stand- and silver dollars any silver which such mint, subject to regulations prescribed by poration: The term "the continental United States" means the States of the United the Secretary of the Treasury, is natisfied has been mined subsequently to July States, the District of Columbia, and the Territory of Alaska; the 1, 1939, from natural deposite in the United States or any place subject to the The term "monetary value" means & value calculated on basis of $1 for an jurisdiction thereof. amount of silver or gold equal to the amount at the time contained in the standard (b) The Director of such mint with the consent of the owner shall deduct and retain of such silver 80 received 45 per centum as seigniorage for services per- gilver dollar and the gold dollar, respectively; The term "stocks of silver" means the total amount of silver at the time owned formed by the Government of the United States relative to the coinage and de- by the United States (whether or not held as security for outstanding currency livery of silver dollars. The balance of such silver 80 received, that is, 55 per of the United States) and of silver contained in coins of the United States at the centum, shall be coined into standard silver dollars and the same or any equal number of other standard silver dollars shall be delivered to the owner or de- time outstanding; The term "stocks of gold". means the total amount of gold at the time owned positor of such silver, and no provisions of law taxing transfers of silver shall ex- tend or apply to any delivery of silver to & United States mint under this section. by the United States, whether or not held as a reserve or ne security for any The 45 per centum of such silver 80 deducted shall be retained as bullien by the outstanding currency of the United States. Treasury or coined into standard silver dollars and held or disposed of in the same Sec. 11. There is authorized to be appropriated, out of any money in the manner BE other bullion or silver dollars held in or belonging to the Treasury. Treasury not otherwise appropriated, the sum of $500,000, which shall be avail- (e) The Secretary of the Treasury is authorised to prescribe regulations to able for expenditure under the direction of the President and in his discretion, carry out the purposes of this section. Such regulations shall contain provisions for any purpose in connection with the carrying out of this Act; and there are substantially similar to the provisions contained in the regulations issued pur- hereby authorized to be appropriated annually such additional sums as may be suant to the Act of Congress approved April 23, 1918 (40 Stat. L., p. 535), known necessary for such purposes. as the Pittman Act, with such changes as he shall determine prescribing how silver Sec. 12. The right to alter, amend, or repeal this Act is hereby expressly tendered to such mints shall be identified as having been produced from natural reserved. If any provision of this Act, or the application thereof to any person deposita in the United States or any places subject to its jurisdiction subsequent or circumstances, is held invalid, the remainder of the Act, and the application to July 1, 1939. of such provision to other persons or circumstances, shall not be affected thereby. Sec. 13. All Acts and parts of Acts inconsistent with any of the provisions of Approved, July 6, 1939. this Act are hereby repealed, but the authority conferred in this Act upon the The CHAIRMAN, In addition to the statute 'that we have just President and the Secretary of the Treasury is declared to be supplemental to placed in the record, the secretary of the committee has communi- the authority heretofore conferred. cated with the Treasury Department, asking for data with regard Approved, June 19, 1934, 9 p. m, to silver. The Treasury has sent to us a vast amount of data which The CHAIRMAN. Third, I will place in the record without objection will be considered by the committee, and such parts as the committee & copy of the last act passed by the Congress giving domestically deems proper will be added to the record at this point, I do not mined silver its present status. The present status is that all silver desire to make any special request, but after the committee has had mined domestically can be turned over to the Treasury and sold for n. chance to consider this data, we will pick out that portion which 71 cents-plus per ounce, I will ask that that entire act, found on we think it might be advisable to add to the record. pages 307 and 308, be placed in the record. (The matter referred to is as follows:) (The matter referred to is as follows:) TREASURY DEPARTMENT, Washington, May 4. 1942. [Punic-No. 165-76rn Coxo.] Hon. ELMBR THOMAS, United States Senale, Washington, D. C. [Chapter 260-1st Session) MY DEAR SENATOR: This is in reply to your letter of April 14, 1942, requesting the Treasury Department to provide the Senate Special Silver Committee with (H. material relating to gold and silver, a chronology of legislative and Executive AN ACT To extend the time within which the powers relating to the stabilization fund and alteration of acts affecting monetary policy, and & statement setting forth policies of the the weight of the dollar may be exercised Government with respect to the purchases of gold and silver from March 4, 1933 Be it enacted by the Senate and House of Representatives of the United States of to date. America in Congress assembled, That subsection (a) of section 10 of the Gold There are enlosed herewith the following tables: Reserve Act of 1934, approved January 30, 1934, as amended, is further amended 1. Silver purchases under the act of June 10, 1934, showing new production by striking out the period at the end of such subsection and adding thereto the silver, trading silver, and inventory silver. words "and to the Congress." 2. Net imports, mint acquisitions, and Treasury purchases of foreign silver, Sec. 2. Subsection (e) of section 10 of the Gold Reserve Act of 1934, approved 1933 to date. (That portion of the table which refers to silver imports since January 30, 1934, as amended, is further amended to read as follows: October 1941, is confidential.) "(c) All the powers conferred by this section shall expire June 30, 1941, unless 3. Monetary stock of gold and silver, showing ratio of monetary stocks, 1934 to date. the President shall sooner declare the existing emergency ended and the operation of the stabilization fund terminated." 4. Foreign silver coins-price of silver at which it becomes profitable to melt Sec. 3. The second sentence added to paragraph (b) (2) of Section 43, title each coin for its silver bullion content, at its exchange rate. III, of the Act approved May 12, 1933, by section 12 of said Gold Reserve Act of 5. Newly mined domestic silver, nationalized silver, and foreign silver acquired 1934, as amended, is further amended to read as follows: "The powers of the since January 1, 1934. President specified in this paragraph shall be deemed to be separate, distinct, and 6, Silver seigniorage since January 1, 1934. continuing powers, and may be exercised by him, from time to time, severally or There is also enclosed a chronology of legislative and Executive acts affecting together, whenever and as the expressed objects of this section in his judgment the monetary policy of the United States from March 4, 1933, to date. may require: except that such powers shall expire June 30, 1941, unless the The policy of this Government with respect to purchases of gold and silver President shall sconer declare the existing emergency ended." from March 4, 1933, to date has been set forth in the speeches, messages, and I Regraded Unclassified SILVER 450 SILVER 451 of the President and the Secretary of the Treasury, of the embodied in the 2 217 $1,217 8 19 5 1,285 & 11 $ R Cost 6,456 54 statements legislation on gold and silver, and fulfilled in the practice Treasury in the If 808 457 77,025 651 772 165,772 51, 51,236 236 IRE 'VE THE "II 909 °F 786 33,786 ML purchases full understanding of gold and silver. of the Government's policy with respect to gold and silver A hardly possible without an examination of the selected statements is which are Total 3, 3,167 210 115 of 1771 ET 18 26 12 145 3 is enclosed. In brief, however, the gold and silver purchase one-fourth policy as follows: Ounces 16, 284 120 1,212 of 146, 146,463 123, 123,010 352,718 128, 128,281 $2.00 of 19,612 82,246 563,245 The Treasury purchases all gold at $35 & fine ounce less of 1 percent cent and regular mint charges, principally for the purpose settling international and regular mint charges and sells gold at the same price plus of one-fourth of 1 per- Cost balances. In the past 6 months, our sales of gold to foreign countries have sub- stantially exceeded our purchases of gold from foreign countries. have Our purchases of 1942 newly mined domestic gold have continued, although they not fully offset Ounos our net sales of gold to foreign countries, so that our gold monetary stocks have been declining. The Treasury aequires newly mined domestic silver at 71.11 cents per fine ounce Cost ISSS 1,054 2478 of 175 3,988 4,157 2.496 80 2, 2,576 10,712 in accordance with the provisions of the act of July 6, 1939. In acquiring silver, the objective of the Treasury is to minimize fluctuations in the open-market price TABLE 1.-Recapitulation of all silver purchases by sources from the enaciment of the Silver Purchase Act on June 19, 1934 to Apr. 18, 1948 [Figures are shown in thousands only. When 500 or under, the amount has been dropped, when over, it has been added. This applies to both the ounos and the dollars on this 1941 Ounces 805 900 °F 7,075 500 of silver while making progress toward attaining the objectives of the Silver 11,385 171 : 131 7,131 822 7,359 30, 30,615 Purchase Act. In pursuance of these objectives, the Treasury has temporarily ceased purchasing foreign silver because the domestic demand for silver for war and other industrial purposes is now absorbing all imports and is exerting upward Cost zers 35 1,249 4,690 169°F 11,012 14,112 4,085 085 1,213 30,422 pressure on the price of open-market silver. On the other hand, purchases of newly mined domestic silver are adding to our silver monetary stocks. 1940 Ounces 947 100 3, 3,565 Very truly yours, 13,414 13,410 of 31, 31,436 40, 285 40,285 11,672 194°C 15,135 86, 86,856 D. W. BELL, Acting Secretary of the Treasury. 43 9 $ 22 Cost 1,130 3, 3,719 452 10, 707 10,707 217 17,217 266 10,266 8189 106°C 6,809 1939 1,250 100 16 12 3 NEW-PRODUCTION SILVER Ouness 4,253 0.19 of 1,201 25, 25,395 484 41,484 25, 137 25,137 12.136 of 136 968 °F 100'21 83, 632 83,632 (Ounces 0.999 fine) US 8 IS 176 g 9 II 5 summary Cost 1,012 5, 5,492 12 12,441 26, 26,063 063 10, 10,031 6, 6,272 509'1 7,875 $3.96 d, 1938 165 210 115 400 12 15 26 2,329 655 12,655 11 Ounoss 28, 28,932 15, 15,001 128'00 128 2.11 al 14, 14,439 3,728 18,167 101,151 Cost $630 768 K 3,697 us 23, 23,491 913 28,913 7,026 4,360 119'1 6,037 976 41,976 1937 Ounces 706 OCT 8, 261 8,261 109 64,595 611 15,611 9,759 122°C of 13,485 269'08 269 'DS $351 3 Cost 643 164'8 48 24,935 29, 29,833 d A.418 3, 3,350 687 200% 39, 288 39,288 1936 Ounees 770 145 1,426 8.42 of DOT 55,464 66, 66,335 335 008'11 7,497 009°C 8,997 291'28 Cost $62 48, 684 48,684 48.76 $ 226 1,154 1,154 June 19. 1934 to 50,126 126 Dec. 31, 1935 Ounces 100 7,812 É 77, 612 77,612 434 2, 2,071 2, 2,071 80, 117 Source as reported Countries south of the United Argentina Argentina and Chile Argentina and others States: Bolivia Chile Cuba Cubs and others Ecuador Ecuador and others El Balvador Honduras Nicaragus Various Mexico Mexico by agreement Total countries south of United States Peru Total various countries not identified Under agreement Canada: Others Total Canada Total new production silver Regraded Unclassified SILVER 452 SILVER 453 Cost $154, 307 $3,167 167 301,917 917 15, 15,050 a 750 15,750 107 46,617 382,690 142 220,142 196'T 1,017 118'6 931 232,931 621 615,621 1, 020, 722 1,020,722 TABLE II.-Net imports, mint acquisitions, and Treasury purchases of foreign silver, 1933 to date Total 7,431 000 35,000 19G 402 35, 35,000 172 Ounos To, 75.495 646, 086 646,086 502, 297 502,297 of 2,687 2, 2,875 24,816 531,675 675 [In millions of ounces] 306, 1,177,761 of Year and month Treasury Mint no- Net Im- purchases quisitions ports I of foreign of foreign Cost silver silver 1942 1933 117.7 Ounces 1934 170.8 216. 172.5 1935 525.7 508.8 494.4 1936 393.7 186.1 $282 918 271.9 $001 1,200 1,200 12,612 1937 194. 288. 9 241.5 TABLE 1.-Recapitulation of all silver purchases by sources from the enactment of the Silver Purchase Act on June 19, 1934 to Apr. 18, 1918 Cost NOTE-The figures showing ounces and cost appearing in this statement represent the ounces and cost of the silver contracted to be purchased. Actual deliveries vary alightly in ounces and cost shown herein does not include expenses of shipping, insurance, handling or other charges. The total cost of the silver purchased, including shipping, Insurance, 1938 516.8 443.7 355.4 1939 177.4 158.9 282.8 1940-January 15.4 805 12.8 14.0 1941 Ounes 1, 1,974 2,620 3,425 3,425 36,014 February 10.9 13.0 20.9 March 14.4 15.3 11,8 April 13.0 11.7 17.4 May 12.6 17.6 12.7 232 $4.072 x 1,800 54 1,854 2,086 41,480 June 10.8 6.0 6.3 Cost July 15.3 6.6 13.4 August 11.2 4.7 10.4 September 129 6.7 10.3 1940 25, 613 25,613 663 DMB BIG 5, 155 Outioes 5, 5,298 5,961 118, 118,430 October 13.6 9.7 8.0 November 13.3 7.4 5.6 December 13.0 7.0 : 1041-January 12.1 9.2 $11,543 $13,787 6,156 19, 19,943 943 19,943 65, 65,778 778 February 7.1 3.2 4.8 March 9.8 3.6 Cost 6.0 April 8.9 26 3.9 May 7.8 4.3 4.7 1939 Ounces 27, 635 27,635 33,341 of 14, 14,317 317 47, 47,658 47, 47,658 158, 945 158,945 June 11.1 3.6 6.1 3.8 8.6 August 9.6 2.9 (Qunces 0.999 fine)-Continued TRADING AND INVENTORY SILVER July 12.3 OTHER PURCHASES OF SILVER 8.7 September 8.6 1,5 7.6 October 1.5 6.5 Cost $10, $10,516 $2, $2,875 856 15,050, 22 18,853 115,530 3,655 119,185 138,038 192,523 November is 3 4.1 December 3.7 1942-January 8.3 1938 24, 24,356 356 1,949 February Ounes 6,687 35,000 190 43,826 265,892 8,499 274,391 318, 318,217 3.4 724 443,724 March 28 Total 2,046.9 2,037,1 Cost $5, $5,059 15,750 750 20,809 512 58,512 A.S.I. of 321 79,321 129,586 I Based upon the Commerce statistics of monthly imports and exports of silver converted to ounces by & dividing by the average monthly price of silver in New York M given by the Bureau of the Mint. Bilver 1937 from the Philippine Islands received by the United States mints under the classification of newly mined Ounees 18,420 11,806 35, 35,000 46, 46,806 130,026 130,026 176,832 288,944 domestic silver is included in these figures of net Imports. Source: Treasury Department, Division of Monetary Research. $3,955 R Cost 3,988 '018 30,157 45 30, 30,202 34,190 83,910 910 TABLE III-Monetary stocks of gold and silver 1936 [In millions of dollars. on basis daily Treasury statements revised) 22,699 9,050 ES Ounes 9, 9,123 66, 975 66,975 100 075 67,075 198 76,198 186,059 Ratio of Gold ($35 Silver silver to Dec. 31, 1935 $103. 864 $60 June 19. 1934 to 057 292,057 107 46,584 338,808 = Cost 1,961 2,035 340,843 494,833 End of fiscal year or month per fine ($1.29+per gold and fine silver in ounce) ounce) monetary stocks Ounees 185, 336 185,336 81 993 469,993 172 75,422 545, 668 545,668 115 3, 3,687 3, 3,802 549, 549,470 923 814,923 1934 7,856.2 898.2 10. 3 1935 9,115.6 1,463.1 13.8 1936 10,608.4 2,249.5 17,5 1937 12,318.8 2,542.1 17.2 1938 12,963.0 3,066.4 19.1 1939 16,110.1 3,605.2 18.3 17,031.0 3,817.6 17.6 Source as reported New York: Total trading sil- 1940-January ver and inventory silver February 18,177.0 3,850.7 Dominican Republie Mexico, special purchase Banco de Mexico in New Kingdom of That (Siam) Total of other purchases of 17.5 March 18,433.1 3,873.1 17.4 April 18,769.9 3,901.6 17.2 May 19,208.9 3,924.6 17.0 Various countries: Canada London Others Grand total June 19,963.1 3,939.6 16.5 York Subtotal Subtotal handling and other charges is $1,026,292,000. July 20,462.5 3,963.7 16.2 August 20,912.8 3,982.6 16.0 Stain Far East: China India Japan September 21,244.4 4,002.2 15.9 Silver October 21,505.5 4,022.9 15.8 November 21,800.8 4,038.9 15.8 December 21,994.8 4,060.0 10.0 Regraded Unclassified SILVER 454 SILVER 455 TABLE III.-Monetary stocks of gold and silver-Continued TABLE IV.-Silver coins of foreign nations and the melting point of each-Con. Ratio of Gold ($35 Silver ailver to Country Bilver coin Fine silver Melting End of fiscal year or month per fine ($1.20+per gold and content point ounce) fine silver in ounce) monetary stocks Cente per Ounces 50 koruny - fine ounce Caschoslovakia 22,116.8 4,078.6 20 koruny ,324 15.0 211.66 1941-January 22, 22,231.9 4,092.5 15.5 Denmark None February 22,367.8 4,107.6 Dominican Republic 18.8 4,120.8 Ecundor 50 sucres March 22,505.8 580 60.49 15.5 2 sucres April of 22,574.9 4,135.8 232 60.49 15.5 Bucre May of 22,024.2 4,148.7 .116 00.49 15,5 50 centavos June 22,674.7 4,167.9 .058 60,49 15.8 July Egypt 20 plastres 22,719.4 4,188.1 750 127.97 15.6 August 10 plastres 22,760.9 22, 4,207.1 .375 127.97 15.6 September & plastres 22, 22,799.7 4,221.5 .188 127.97 15.6 October 2 plastres 22,785.3 4,232.7 .075 127.97 November 15.7 Half crown 22,730.6 of 4,244.8 Erie 340 147.90 15.7 December Florin 22,747.2 4,257.1 .272 147.90 15.8 1942-January Shilling .136 22,704.8 4,267.5 147.90 15,8 February 1 22,687.4 Estonia 2 krooni 14,272.4 .192 274.75 March 115.8 Kroon .096 274.75 Finland None France 20 france .437 121.23 I Preliminary. 10 france .218 121.23 Germany 5 relchamarks Bouroe: Treasury Department, Division of Monetary Research, Apr. 20, 1942. .402 497.65 2 reichsmarks .141 497.65 Greece None TABLE IV.-Silver coins of foreign nations and the melting point of each Gustemala 25 centavos .193 129.60 10 centavos .078 129.60 Because of the existence of foreign exchange controls, prohibitions upon the 5 centavos .039 129.60 Halti None export of coins, and emergency war legislation, and also because many of the coun- Honduras Lempira 362 138.24 tries of the world have been occupied by foreign powers, the representative melting 50 centavos .181 138.24 points for many of the world's coins are no longer available. Therefore, in the 20 centavos .072 138.24 Hungary 5 pengö .514 190.32 table below the melting points are shown as of August 1939, and are determined 2 pengo .206 190.32 on the basis of the coinage systems and exchange rates that existed on that date. Pengo .103 190.32 No allowance is made for the costs of melting or transporting the coins. Iran 5 rials .665 43.73 2 rials .266 43.73 Rial .183 43.73 16 rial .067 43.73 Silver coin Fine silver Melting Traq 200 fils 579 161.74 Country content point 50 fils .145 161.74 20 fils .058 161.74 Italy None Cente per Japan do Outsces fine ounce Latvia 5 lats .670 141.47 Argentina None 2 lats .268 141.47 Australia Florin 0.336 111.46 Lat 1.34 141.47 Shilling .168 111.46 Lithuanis 10 litu .430 391.70 Sixpence .084 111.46 5 lito .215 301.70 Threepence .042 111.46 2 litu .086 391.70 Belgium 50 franes .481 353.43 Lites ,043 391.70 20 france .240 283.10 Mexico Peso .385 53.39 Bolívia Boliviano .386 9.72 so centavos .193 43.39 50 centavos .193 9.72 20 centavos .077 53.39 20 centavos .077 9.72 Netherlands 235 florins .578 228.96 Brazil 100 milreis Florin .231 228.96 5 milreis so oents .115 228.96 2 milreis .129 86.20 25 centa .074 180.02 British India Rupee .344 87.28 10 cents .029 183.39 и rupee .172 87.28 New Zenland Half crown .228 206.88 34 rupee ,086 87.28 Florin .182 206.88 Bulgaria 100 leva .322 373.25 Shilling .091 206.88 50 leva .161 373.25 Sixpence .045 206.88 20 leva .064 373.25 Threepence .023 206.88 Canada .600 166.66 Niesragua Dollar 1 None 160.60 Norway 50 cents .300 do Panama 25 cents .150 166.66 Balboa 774 129.28 166.66 50 centesimos 362 138.24 10 cents .060 5 cents . .030 166.66 25 centesimos .181 138.24 Chile None 10 centesimos .072 138.24 Colombia Paraguay 50 centavos .362 79.48 Peru None 20 centavos .144 79.48 Sol 402 47.28 10 centavos .072 79.48 50 centavos .201 47.28 Costa Rica Cuba None - Silver Jublice commemorative coin. Peso ,774 124.11 No longer colned but still in circulation. 40 centavos .290 133.21 - I These have been withdrawn in both Crechia and Blovakia. 20 centavos .145 133.21 Equal in weight and fineness to United States coins. 10 centavos .072 133.21 I Withdrawn In 1940. . In 1940 the standard fineness was reduced to 0.500. Regraded Unclassified SILVER SILVER 456 457 TABLE IV.-Sileer coins of foreign nations and the melting point of each-Con. TABLE V.-Silver of specified classifications acquired by mjnts and assay officer-Con. Fine silver Melting Newly mined Silver coin domestic Nationalized Country content Foreign point Total Calendar year or month Cente per Ounces Dollars Ouness Dollars Ounces Dollars Ounres Dollars Ounces fine outice 10 slote .530 358.22 Poland 5 slote .265 358.22 1941-Continued. .106 September 7.2 358.22 A1 2 slote 7.6 29 14.8 8.0 .335 October 4.6 3.2 10 escudos 125.94 6.8 2.6 11.1 Portugal 5 escudos .146 November 4.5 3.2 8.8 145.60 4.1 1.6 8.6 234 escudos .073 145.80 December 5.8 4.8 17 3.7 L8 9.5 5.6 100 lel -145 497.68 1942: Rumania .386 January 6.0 124.42 4.3 2 kronor 3.3 1.4 9.3 4.7 5.7 Sweden 1 krona .198 124.42 February 3.4 3.4 1.4 8.1 4.8 .096 124.42 March 5.1 3.6 50 ore 28 1.2 7.9 4.8 25 ore .047 128.68 10 ore .019 128.08 & franca .403 279.29 I Acquired at 64.64+ cents per fine ounce until Apr. 9, 1935; at 71.11+ centa per fine ounce from that date Switzerland 2 francs .268 167.42 until Apr. 23, 1935; at 77.57+ cents from Apr. 23, 1935, to Dec. 31, 1937; at 61.64+ centa per fine ounce from 1 frane .134 167.42 Dec. 31, 1937, to July 1, 1939: and at 71.11+ cents since July 1. 1939. so contimes .067 167.42 - , Acquired at 50.01 cents per fine ounce. Executive proclamation of Aug. 9, 1934, repealed Apr. 28, 1938. 100 pissters .320 234.21 Acquired at various prices averaging approximately 52 cents per ounce. Turkey 50 pissters .160 234.21 .080 Treasury Department, Division of Monetary Research, Apr. 20, 1942. 25 plasters 234.21 United Kingdom Half crown .227 257.18 Florin .182 267.18 TABLE VI.-Seigniorage on silver (cumulative from Jan. 1, 1984) Shilling .091 257.18 Rixpence .045 267.18 [In millions of dollars] Threepence .023 257.18 Uniquay None Veneruela 5 bolivares. .723 217.72 Bouroes of seigniorage on silver bullion revalued I 2 bolivares .269 234.39 Bolivar .134 234.99 Potential 50 centimes .06/ 234.39 Seignior- Misoel- seignior- Newly 25 contimes .033 234.39 End of calendar year age on laneous silver and allver (in- mined Newly Silver National- age on Yugoslavia 50 dinari .580 219.00 mined Purchase ised silver Total silver bul- or month to dinari 207.11 minor cluding ailver .112 coins silver (act Act of (proela- selgnior- lion at silver bul- (procla- June 19, ation of are on cost in lion held mation July 4, Aug. 9, silver general June 14, Dec. 21, 1989) 1934 Source: Treasury Department, Division of Monetary Research, Apr. 21, 1942. 1934) revalued fund - 1934) 1933) TABLE V.-Silver of specified classifications acquired by mints and assay officer 1934 4.5 48.7 0.4 31,1 28.8 128.7 132.5 [In millions] 1935 18.5 48.7 16.8 226.2 34.5 326.2 274.6 1936 46.1 48.7 36.0 302.7 34.7 422.1 397.9 1937 63.7 48.7 58.0 366.7 34.7 508.1 541.6 Newly mined 1938 69.5 48.7 74.9 457.7 a domestie Foreign Total 34.7 616.0 758.8 1939 91.7 48.7 87.3 42 530.7 34.7 705.6 Calendar year or month 1940: 950.6 January 92.9 48.7 87.5 6.3 533.8 34.7 711.0 961,5 Ounces Dollars Ounces Dollars Ounces Dollars Ounces Dollars February 93.9 48.7 87.5 7.7 538.3 34.7 716.9 March 972.1 94.7 48.7 87.5 9.5 542.3 34.7 722.7 987.6 April 95.5 48.7 87.5 11.0 546.4 34.7 728.3 998.1 1934 21.8 14.1 110.6 55.3 172.5 86,5 304.9 155.9 May 97.2 48.7 87.5 12.6 549.2 34.7 534.3 345.5 June 732.7 1,009.6 1935 38.0 27.3 2.0 1.0 494.4 318.2 98.4 48.7 87.6 14.2 550.5 34.7 735.7 1,017.4 1936 61.1 47.3 .4 .2 271.9 150.8 333.4 197,9 July 99.8 48.7 87.6 15.9 553.4 34.7 740.3 1,025.0 1937 70.6 54.6 241.5 108.7 312,2 163.4 August 103,3 48.7 87.6 17.2 555.8 34.7 744.0 1,031.0 1938 61.6 42.2 September 355.4 156.9 417.1 199.1 107.3 48.7 87.0 18.5 557.2 34.7 746.7 1939 60.7 39,9 282.8 120.9 343.3 160.4 October 1,040.1 IILO 48.7 87.6 21.3 559.8 34.7 752.1 November 1,047.3 1940: 117.3 48.7 87.6 23.3 561.1 34.7 755.4 1,051.5 January 7.3 5.2 14.0 5.7 21.3 10.9 December 122.2 48.7 IMI: 87.6 25.7 562.7 34.7 709.4 1,055.8 February 4.5 3.2 20.9 7.8 25.4 ILO March 11.8 17.4 5.4 January 5.6 4.0 125.3 4.4 48.7 87.6 27.7 564.7 34.7 763.4 1,062.9 April 4.5 3.2 17.4 6.3 21.9 9.5 February 127.0 48.7 May March 87.6 29.6 565.9 34.7 766.5 1,069.8 5.1 3.6 12.7 4.5 17.8 &1 128.3 48.7 87.6 81.5 567.0 June 4.6 3,6 6.3 22 10.9 5.5 April 34.7 769.5 1,004.9 132.6 48.7 87.6 33.5 568,1 34.7 772.6 1,076.2 July 6.8 3.8 13.4 4.7 19.2 8.5 May 137.2 48.7 June 87.6 35.6 569.1 34.7 775.7 1,070.1 August 4.3 3.0 10.4 3.7 14.6 6,7 143.5 48.7 87.6 37.1 570.7 34.7 778.8 September July 1,079.5 4.7 3.4 10.3 3.6 15.0 7.0 149.4 48.7 87.6 39,1 572.7 34.7 782.8 1,079.8 October 7.9 5.6 8.0 28 8.4 August 15.9 155.1 48.7 87.6 41.0 574.9 34.7 786.9 1,087.3 November as September 6.8 4.8 2.0 124 162.0 5.6 48.7 October 87.6 43.5 576.5 34.7 791.0 1,080.8 December 7.2 5.1 9.0 3.2 16.2 8,3 109.2 November 48.7 87.6 45.1 578.3 34.7 794.4 1,085.5 1941: 176.4 48.7 December 87.6 46.4 579.4 34.7 796.8 1,090.7 January 6.5 4.6 7.9 28 14.4 7.4 1942: 182.1 48.7 87.6 48.3 580.4 34.7 799.7 1,089.0 February 5.9 4.2 4.8 1.7 10.7 5.9 March 4.1 6,2 January 5.7 21 11.7 188.5 48.7 87.6 50.2 581.3 34.7 802.5 1,094.2 April 6.0 5.9 February 6.3 192.4 48.7 57.6 51.6 582.1 34.7 804.7 1,096.3 4.5 May 3.9 1.4 10,2 March 6.5 4.6 4.7 1.7 IL2 6.3 195,3 48.7 87.6 53.3 582.9 34.7 807.2 1,097.8 June 4.3 3.1 July al 13 10.4 & 6.5 4.6 August 8.6 3.2 15.1 7.8 6.7 8.7 3.3 15.4 8.1 I These Items represent the difference between the cost value and the monetary value of silver bullion 4.8 revalued and held to secure allver certificates. , The figures in this column are not cumulative; as the amount of bullion held changes, the potential seignlorage thereon changes. Source: Treasury Department, Division of Monetary Research, Apr. 20, 1942. Regraded Unclassified 458 SILVER SILVER 459 EXTRACT FROM A RADIO ADDRESS OF PRESIDENT ROOSEVELT OCTOBER 22, 1938 But because, in terms of foreign currencies, our products had become BO much I repeat what I have said on many occasions, that ever since last March the more expensive, we were not able to obtain our fair share of the world's trade, definite policy of the Government has been to restore commodity price levels. It was, therefore, necessary to take measures which would result in bringing the industry once more to give work to the unemployed. It has the been to make possible The object has been the attainment of such a level as will enable agriculture and dollar back to the position where A fair amount of foreign currency could again buy our products; that is, to make the dollar cheaper in terms of pounds, francs, the payment of public and private debts more nearly at price level at which or marks. This was the process which commenced in March 1933 and which had they were Incurred. It has been gradually to restore a balance in the price to be continued until that level was reached. It was not desirable to make this structure 80 that farmers may exchange their products for the products of in- level too low, because then our own importers would find it difficult to buy for- dustry on a fairer exchange basis. It has been and is also the purpose to provent eign merchandise. But it was clear that the level had been too high, and we wanted to find the appropriate level. manent welfare and security of every class of our people ultimately depends on prices from rising beyond the point necessary to attain these ends. The per- By joint resolution (Public Res. 10, approved June 5, 1933), the Congress de- clared invalid all gold clauses contained in bonds already issued or thereafter to our attainment of these purposes. Obviously, and because hundreds of different kinds of crops and industrial be issued, and authorized the payment of these bonds in ordinary legal tender. occupations in the huge territory that makes up this Nation are involved, we This joint resolution was a necessary step in effectuating the Government's con- cannot reach the goal in only A few months. We may take 1 year or 2 years or trol of the monetary system. The preamble of the resolution itself contained the statement of policy, namely, that the holding of, or the dealing in, gold affects 3 years. No one who considers the plain facts of our situation believes that commodity the public interest, and is therefore subject to public regulation and restriction, prices, especially agricultural prices, are high enough yet. and that the gold clauses in bonds obstruct the power of Congress to regulate the value of the money of the United States. Some people are putting the cart before the horse. They want B. permanent revaluation of the dollar first. It is the Government's policy to rentore the price My message to the World Monetary and Economic Conference also stated the level first, I would not know, and no one else could tell, just what the perma- monetary objectives toward which we were working-"giving to those (national) nent valuation of the dollar will be. To guess at & permanent gold valuation now currencies a continuing purchasing power which does not greatly vary in terms would certainly require later changes caused by later facta. of the commodities and need of modern civilization." I there pointed out that When we have restored the price level, we shall seek to establish and maintain the important problem was not the temporary fixing of exchange, but etabiliza- a dollar which will not change Its purchasing and debt-paying power during the tion of each nation's currency, conservation of metallic reserves, and the restora succeeding generation. I said that in my message to the American delegation tion of world trade by removal of existing commercial embargoes. in London last July, and I say it now once more. There can be no doubt on the part of persons familiar with the facts that by Because of conditions in this country and because of events beyond our control the end of 1933 the more immediate emegrency goal of the administration, to in other parts of the world, it becomes increasingly important to develop and apply remedy the crisis which confronted it in March 1933, had been accomplished- the further measures which may be necessary from time to time to control the the restoration of public confidence. The sound banks of the country had been reopened and were functioning normally; money and gold which had been with- gold value of our own dollar at home. Our dollar is now altogether too greatly influenced by the accidents of Inter- drawn from hoarding had been redeposited. The dollar was functioning regularly national trade, by the internal policies of other nations, and by political dis- AS an instrument in international trade, and was gradually and soundly readjust- ing itself to the value of world ourrencies. turbance in other continents. Therefore the United States must take firmly in its own hands the control of the gold value of our dollar. This is necessary in Measures for permitting the dollar to find its proper place in relation to foreign order to prevent dollar disturbances from swinging us away from our ultimate currency had, as we have seen, taken two forms, First, the suspension of gold payments and the prohibition of shipments of gold to support the dollar abroad goal, namely, the continued recovery of our commodity prices. As a further effective means to this end, I am going to establish a Government had detached the value of the dollar in foreign exchange from its previous gold value. Second, the gradually increasing price paid for gold, in relation to which market for gold in the United States. Therefore, under the clearly defined authority of existing law, [ am authorizing the Reconstruction Finance Corpora- all currencies may be directly or Indirectly measured, likewise operated to change the foreign exchange value of the dollar. To illustrate, if today the price of gold tion to buy gold newly mined in the United States at prices to be determined in the London market were 7 English pounds for an ounce of gold, and the price from time to time after consultation with the Secretary of the Treasury and the paid by the United States were $35 for an ounce of gold, It would be easy Lo seo President. Whenever necessary to the end in view, we shall also buy or sell gold that the price of 1 English pound would be approximately $5. in the world market. In the foregoing address, I pointed out that this measure of improvement did My aim in taking this step is to establish and maintain continuous control. not mean that our work had ended but that it was becoming "increasingly im- This is a policy and not an expedient. portant to develop and apply the sound measures which may be necessary from It is not to be used merely to offset a temporary fall in prices. We are thus time to time to control the gold value of our own dollar at home. continuing to move toward B managed currency. Therefore, the United States must take firmly in its own hands the control of the You will recall the dire predictions made last spring by those who did not agree gold yalue of our dollar in order to prevent dollar disturbances from with our common policies of raising prices by direct means. What actually swinging us away from our ultimate goal, namely, the continued recovery of our happened stood out in sharp contrast with those predictions. Government commodity prices." credit is high; prices have risen in part. Doubtless prophets of evil still exist in By January 1934 these "sound measures" had been developed and were ready our midet, But Government credit will be maintained and B. sound currency will to be tried, We were ready "to take firmly in our own hands the control of the accompany & rise in the American commodity price level. gold value of our dollar," which was done by the Gold Reserve Act of 1934, which I recommended in my message of January 15, 1934. A NOTE ON THE PRESIDENT'S ADDRESS OF OCTOBER 22, 1933 428-129. Source: The Public Papers and Addresses of Franklin D. Roosevelt, vol. II, pp. The depreciation of foreign eurrencies, prior to 1933, had had the effect of mak- ing the dollar more expensive in terms of those foreign currencies. Thus it took ANNOUNCEMENT BY THE SECRETARY OF THE TREASURY, APRIL 19, 1938, OF THE more pounds, more franes, or more marks to buy A dollar than it had formerly and, DISCONTINUANCE OF THE INACTIVE GOLD ACCOUNT since the prices of our export products are determined in terms of dollars, it took more pounds, franca, and marks to buy our export products. The effect of this On December 22, 1936, the Secretary of the Treasury stated that, after confer- had been to contribute to the serious decrease in our foreign trade, not because ring with the Board of Governors of the Federal Reserve System, he proposed to our own prices, in terms of dollars, had risen, nor because our products were of take appropriate action with respect to net additional acquisitions or releases of an inferior quality, nor because we did not have sufficient products to export. gold by the Treasury Department whenever it was deemed advisable and in the public interest to do so. Regraded Unclassified SILVER 460 SILVER 461 the Board pursuance of Governors of the Federal Reserve System, today announces that the In of that policy, the Secretary of the Treasury, after conferring with I believe that you can supply more matisfactory answers to these questions than inactive gold account has been discontinued. anyone else and I should therefore appreciate your replying to them at your earliest convenience. Very sincerely yours, ROBERT F. WAGNER. ANNOUNCEMENT BY THE SECRETARY OF THE TREASURY, DECEMBER 22, 1936, WITH RESPECT TO NET ADDITIONAL ACQUISITIONS OR RELEASES OF GOLD BY March 22, 1939. THE TREASURY DEPARTMENT Hon. ROBERT L. WAGNER, The Secretary of the Treasury, after conferring with the Board of Governors of United States Senate, the Federal Reserve System, announces that he proposes, whenever it is deemed Mr DEAR SENATOR: In your letter of March 14 you ask several important advisable and in the public interest to do so, to take appropriate action with respect questions. These and similar questions, relating to gold and foreign exchange, to net additional acquisitions or releases of gold by the Treasury Department. have been asked so frequently that I welcome this opportunity to answer them This will be accomplished by the sale of additional public-debt obligations, the and to make clear the policy of the Government with respect to these matters. proceeds of which will be used for the purchase of gold, and by the purchase or As you say, the questions raised involve technical matters which cannot be redemption of outstanding obligations in the case of movements in the reverse adequately handled in & page or two. However, I shall be M brief as in possible direction. with materials of such complexity. 1. Who owne the gold now in the Treasury! For Immediate Release, Thursday, March 23, 1939. Press Service No. 16-83. Title to all gold held by the Treasury, now amounting to about $15,000,000,000, is vested in the United States. TREASURY DEPARTMENT A large part of this gold ($12,336,858,533 on March 15, 1939) is held as security for gold certificates (or credita payable in gold certificates) issued to and held by Washington the Federal Reserve banks pursuant to the Gold Reserve Act, Such gold cer- tificates may be redeemed in such amounts of gold bullion as, in the judgment of Secretary Morgenthau today made public the following letter from Senator the Secretary of the Treasury, are necessary to settle international balances or to Robert F. Wagner, chairman of the Banking and Currency Committee of the maintain the equal purchasing power of every kind of United States Senate, and his reply thereto: currency. UNITED STATES SENATE, The remainder of the gold held by the Treasury is accounted for as follows: COMMITTEE ON BANKING AND CURRENCY, March 14, 1939. Gold reserve, held pursuant to law 88 & reserve against United States notes and Treasury notes of 1890 $156, 039, 430 Hon. HENRY MORGENTHAU, Allocated to the stablisation fund 1,800,000,000 Secretary of the Treasury, Washington, D. C. Gold in general fund (against which gold certificates or credits MY DEAR Mr. SECRETARY: My interest in our monetary policy as chairman of have not as yet been issued): the Sonate Committee on Banking and Currency has, of course, been intensified (a) Balance of increment resulting from reduction in the by the committee's present consideration of my bill (S. 910) to extend certain weight of the gold dollar 142, 288, 196 monetary powers. I should like your help in answering a number of questions (b) In working balance 547, 899, 564 which have arisen both before and during our consideration of the bill. I ask these questions with no critical intent, but solely with the hope of clarifying The Treasury disposes of gold in the following ways: the whole subject. I realize that they relate to problems which are somewhat (a) For use in industry, profession, or art. Any person needing gold for any complex and technical and that any comprehensive answer may of necessity be such purpose can purchase gold from the Treasury. somewhat lengthy. Nevertheless, I feel that a satisfactory discussion of them (b) For the purpose of meeting the international balance of payments. To would be very helpful to the Congress and the public and I would appreciate this end the Treasury sells gold to the members of the Tripartite Accord and to your going into some detail. their stabilization funds and fiscal agencies. The Treasury also may sell gold The questions that seem to me most pertinent are these: to foreign central banks upon application and under special conditions. 1. Who owns the gold now in the Treasury? Neither Americans nor foreigners can obtain gold from the Treasury for the 2. How much of the gold in the Treasury has been purchased with funds purpose of hoarding. obtained from the sale of interest-bearing obligations of the Government? 2. How much of the gold in the Treasury was purchased with funds obtained from 3. Why has so much gold come to the United States in the past 5 years? the sale of interest-bearing obligations of the Government? 4. Is it true that gold comes here in large amounts because the Treasury is pay- The Treasury pays for gold with the cash assets in the general fund, specifically ing a higher price than other countries for gold and because it buys gold at & out of the Treasury's deposit account with the Federal Reserve Bank of New fixed price? York. The account is normally compensated by the deposit with the Federal 5. How much gold do you think we will get? Reserve bank of gold certificates or gold certificate credits issued against the 6. Why doesn't the Treasury stop buying gold? gold then acquired. 7. Of what use to us is this large stock of gold? Is there any likelihood that Up to December 22, 1936, it was the policy of the Treasury to issue to the we will get so much of the world's gold that we will "get stuck" with it? Federal Reserve bank gold certificates or gold certificate credits against the full 8. Isn't it true that foreigners are getting shares of our productive industries value of the gold acquired. Under this procedure the purchase of gold by the and giving us in return gold that we have no use for? Treasury did not involve any increase in the Federal debt either directly or 9. What action, if any, should be taken with respect to the gold situation? indirectly. Shortly after December 22, 1936, however, the Treasury Depart- Should we, for example, return to the gold standard of pre-1933? ment adopted & different procedure with respect to new gold purchases. Gold 10. Did devaluation of the dollar in 1934 have an unfavorable effect on our purchased was placed in an "inactive gold" account and paid for from the general imports? cash balance of the Treasury without issue of additional gold certificates against 11. Who in England and France has the power of altering the gold value of the new gold acquisitions. their currencies and what is the extent of that power? This procedure was departed from several times, however, by the issuance of 12. Is there any basis to the contention that the power to devalue operates to gold certificates against gold released from the "Inactive" account or against undermine the businessman's confidence so as to deter him from making loans and gold acquired but not placed in the "inactive" account. The "inactive" account investments in the United States? Regraded Unclassified 462 SILVER SILVER 463 discontinued in April 1938, and at that time the Treasury issued $1,400,000,000 The answer to the first of these two questions, together with & description of the was in gold certificate credits to the Federal Reserve banks against the gold released kinds of capital coming here, was given in some detail in my letter to Senator from the "inactive gold" account and thus increased its cash balance by that amount. Since that time the Treasury has followed a policy of Issuing gold Vandenberg of September 22, 1936, a copy of which is enclosed for your convenience. certificates periodically for additional gold acquired. Gold purchases are per- In section 3 of that letter the causes of capital importe into the United States mitted to accumulate in the general fund in varying amounts before gold certify. are set forth as follows: cates are issued against them. On March 15, 1939, there WAS in the general "(a) Capital withdrawn from abroad by American owners because of the greater fund $548,000,000 of gold purchases against which gold certificates had not yet security or the more attractive field for investment offered the capital at home. been issued but which had been paid for by checks drawn on the Treasury account The return of these funds to the United States-much of which left the country with the Federal Reserve Bank of New York. in 1030-32-in, of oourse, an indication of the relative strength of our recovery 3. Why has so much gold come to the United States in the past 5 years! and of the prevailing confidence in the future of American industry and American financial institutions. Gold comes into the United States in settlement of the balance of international payments arising out of all transactions between the United States and all foreign (b) Funds sent to this country by foreigners who likewise felt that American countries. These international transactions include exports, imports, shipping securities offered A more attractive or more secure investment opportunity than did investments available to them elsewhere. services, tourists' expenditures, capital movements, interest payments, etc. When the demand for dollar exchange increases more rapidly than the supply of "(c) Repurchase by foreigners of some of the foreign securities which Americans dollar exchange resulting from these transactions, the price of dollar exchange on had purchased during the post-war decade and were now glad to get rid of even at the foreign-exchange market rises. It may rise to & rate at which it becomes low prices. This was particularly true of the securities of certain countries where profitable for bankers and dealers, foreign and American, to ship gold to the United nominal high exchange rates were coupled with devices whereby the nationals of States, sell the gold to the Treasury for dollars, and then sell these dollars on the these countries were encouraged to repatriate these securities at an exchange profit to themselves, or where maintenance of debt service was provided for only foreign-exebange market. internally but not for foreign holders. Therefore, to answer the question why large amounts of gold flow to the United States it is necessary only to explain why United States dollar exchange is BO much "(d) Need created by increasing foreign trade for larger working dollar balances to be kept in American banks by foreign banks and traders. Our international in demand. A survey of our balance of payments for the last few years reveals at once that trade during 1984 and 1935 increased by one-third over the 2 years previous, the greatly increased demand for dollar exchange which has taken place during It is to be expected that this greater volume of foreign trade transactions would call for larger working dollar balances. the past 5 years is largely a consequênce of the huge flow of capital to the United States and, more recently, of the large "favorable" trade balance. None of the "(c) Fear prevailing in some countries abroad of confiscation of property or of other categories of Items in our international transactions can be held responsible loss through inflation of their local currencies led during this period to & flight of for the substantial net increase in the demand for dollar exchange during this capital from some of the countries whose economic and political situations have period. In fact, for several important categories the net demand for dollar ex- been threatened by disturbances with which you are doubtless familiar. change decreased. It is the flow of capital to this country, particularly before "(f) Lastly, funds sent to this country by speculators in the hope or expectation 1938, upon which our attention must be focused if we are to understand the chief that an exchange profit will be possible If and when the currencies of their coun- tries become depreciated in terms of the dollar. reason for the large gold inflow. The following figures show the contrast between the large recorded inflow of "These are the causes which account for most of the capital inflows. Yet capital in the past 5 years and the persistent and large outflow of capital in the these capital inflows would not have resulted in such large sums being due to the United States were it not for the virtual cessation of foreign investments by years preceding: Million outflow Million inform Americans. Wherens in the years prior to the depression, annual foreign Invest- 1928 -850 1934 +380 ments by Americans of more than a billion dollars were common, since 1931 the 1929 -217 1935 annual sums invested abroad have been negligible; nor does it appear that the +1,837 1930 -752 1936 +1,141 investment." United States will approach in the near future the predepression volume of foreign 1931 490 1937 +800 1932 192 1938 Since the above WILH written (September 1936) nothing has occurred to alter +369 substantially the trend of capital movemente or the reasons for them. With the 1933 -336 exception of one 9-month period, capital has continued to flow to the United The capital inflow in the years 1935 through 1937 was the major factor respon- States in large volume. During that 9-month period, October 1937, to June 1938, sible for the inflow of gold, for it amounted in total to $3,500,000,000 or 86 percent there was a new outflow of short-term capital of over $1,000,000,000, but the flow of the value of gold imported during that period. was reversed during the fall of 1938, and more than & billion of short-term capital The trade item did not become important from the point of view of gold inflows has since come to the United States. until the last quarter of 1937. From 1934 to 1937 the excess of our exports over Capital will continue to flow into the United States lo large amounts 80 long M: imports averaged only $250,000,000 & year. (Incidentally, if silver importa were (a) The opportunities for secure and profitable investment in foreign countries included in our merchandise imports, which is the procedure followed by many are not great enough to attract American capital abroad; countries in the world, our excess of exports over imports would have amounted (b) The prospects of continued recovery here appear satisfactory to foreigners; to only $80,000,000 a year in this period.) In 1938, however, the favorable trade (e) The political situation abroad remains disturbed; balance greatly increased and was the dominant factor inducing the large flow of (d) There is possibility of further depreciation of some foreign currencies. gold into the United States. The excess of exports over importe Whether the flow of capital into the United States will continue to take the form totaled $1,134,000,000-the largest we have had in 17 years. This increased of gold or whether it will gradually assume the form of goods and services rather "favorable" balance of trade, together with other items, was responsible for the than gold depends upon the rapidity with which the mechanism of adjustments of net inflow of gold in that year of $1,600,000,000 of gold. international accounts operates, In earlier decades this adjustment process Thus it in evident that because there was a large inflow of capital in recent operated tolerably well and with fair speed to transform international movements years, and in 1938 & large excess of exports over imports, there was a great increase of net balances Into movements of goods and services. This adjustment process in the net demand for dollar exchange; and because of this large increase in the served to keep gold movements between countries relatively small in volume. net demand for dollars there was a large inflow of gold. Therefore, in the final In recent years, however, this mechanism has operated badly and haltingly. analysis your question: "Why has NO much gold come into the United States" Moreover, it has had to operate under sudden and large capital and trade shifts reduces itself to the questions: "Why did so much capital come to this country which differed from those of earlier decades not only in magnitude but in character. during the past 5 years?" and "Why did we have 60 large a 'favorable' trade To put it graphically, the mechanism of adjustment has had a heavier load to balance in 1938?" carry, the road has been uphill, and the incline has grown steeper. Regraded Unclassified SILVER SILVER 465 464 The reasons and nature of this change taking place in the effectiveness of the To dispose briefly of another common misconeeption. It has been sometimes so-called adjustment process of international accounts are matters too technical claimed that gold comes here because the United States pays & fixed price for to warrant disouseing in this letter. Suffice to any that because the numerous gold, whereas other countries buy gold at varying prices. The mere fact of fixity obstacles to rapid adjustment still prevail in virtually all countries with free of the price of gold in terms of any given currency has little to do with the move- exchanges any large movement of capital to the United States in the near future ment of gold. For example, England does not have a fixed price of gold, and yet will doubtless take the form largely of an inflow of gold. her net imports of gold In some of the past few years were greater than ours. The significance of this fact as an explanation of the continuing flow of gold to Belgium has had & fixed price for gold for 2 years, yet her reported gold holdings the United States cannot be empahsised too strongly, As compared with the are no higher now than they were 8 years ago. Moreover, our gold price, although decades prior to 1930, there are now different relationships between international fixed in terms of dollars, is not fixed in terms of other currencies. When, for movements of capital and of gold, changes in domestic price levels, trade changes, example, ao Englishman sella gold to the United States, the number of dollars be contraction and expansion of credit, and changes in the volume of business geta may be fixed, but the amount of sterling be gets, if be converts the dollars activity. Realization of this basic economic change la necessary to appreciate into sterling. is not fixed; it fluctuates with every change in the sterling-dollar the need for treating present day problems of gold and the capital flows quite exchange rate. The amount in his own currency which an Englishman or a differently than was appropriate prior to 1920. Monetary experience of those Frenchman receives when he sells gold is not fixed whether he sells his gold in years, perficularly in its international aspects, does not auffice for safe guidance New York, London, or Paris. So far in answer to this question the discussion has been based on the interpre- for present day policy. tation of the phrase "higher price" (L) meaning a higher monetary price. If, 4. Is it (rue that gold comes here in large amounts because the Treasury is paying a however, the phrase is to be understood to mean-as is doubtless intended by higher price than other countries for gold, and because it buys gold at a fixed price many who put the question-a "higher price" in terms not of money but of goods This is a question we frequently hear. Unfortunately it is not wholly clear and services, then the question becomes A quite different DDE, It should then be just what it meant since the phrase a "higher price for gold" may be interpreted phrased as follows: "Is it not true that gold comes to the United States in large in two quite different ways, and the answer to each of the two interpretations amounts because we give more goods and services for a dollar (or its monetary would be arrived at through quite different lines of reasoning. equivalent in foreign currencies) than does any other country?" If the question be interpreted to mean that gold comes to the United States in The answer to this question le likewise "No," though less unqualifiedly NO because large amounts because we pay a higher price than other countries do in terms of adequate statistical data for a categorical answer are not available. a money price (L C,, in terms of dollars) then the abswer is definitely "no". The The purchasing power of the dollar in the United States in terms of goods can United States pays the same price for gold, allowing for arbitrage and transports- be compared with its purchasing power in other countries only very roughly and tion costs, that any other country does-no more and DO less. We do not pay any only with respect to those goods which do (or easily might) move from country higher prices for gold than does England or France or Belgium or India. to country, With respect to "service" comparison of the purchasing power of The price of gold that is permitted to move freely in international channels of the dollar in the United States and elsewhere relates chiefly to shipping services trade is (and must be) virtivally the same the world over. An Englishman who and the expenditures by tourists. sells gold in London geta the same return in pounds and shillings for it-with Now it is extremely difficult to measure the differences in purchasing power of small variations to be explained in a moment-as he would get were he to send the gold or currency as between different countries even with respect to such goods same gold to New York or to Amsterdam or to Paris or to Bombay to be sold. and services. Fortunately, for the purposes of the question we are examining, Right now, for example, he would get about 148 shillings for an ounce of gold in no such measurement is necessary. Were it true that an ounee of gold had a the London gold market. If he ships that gold and sells it to the United States, significantly higher purchasing power over American internationally traded goods he geta 835 an ounce (less one-fourth of 1 percent). When he converts the dollar than over foreign goods, indirect but definite evidence would be revesled In our proceeds of the sale of that ounce of gold back into sterling and deducts the ex- trade figures. Our export excess would have so increased since 1933 that either penses of shipping, he gets approximately the same amount of sterling as he would we would have drained the outside world of all its monetary gold or we would have obtained had he sold the gold at home-namely, about 148 shillings. In have foreed other countries to adopt strict exchange or import controls or much other words, when a foreigner translates the dollars he geta from the sale of his gold higher tariff schedules. No such developments have occurred. Foreign coun- back to his own currency, he finds that the price of gold in almost the same in tries still have large gold holdings; many of them have not significantly heightened London, Paris, Amsterdam, or Johannesburg. We pay dollars for gold, England their barriers against imports of the world. pays sterling, Holland pays guilders, etc., but when conversion from one currency Convincing evidence that we do not pay is higher price for gold than do other into another la made at the prevailing exchage rates we find that an ounce of gold countries in terms of goods and services is contained in the record of our balance brings approximately the same price in one country Be in another. of International payments on current account. For the years 1934 to 1937, I say approximately the same price. There are slight relative variations in the inclusive, the balance of payments with respect to the pertinent commodity and price AH between different countries, variations which inevitably result from service items was in the aggregate unfavorable by $1,200,000,000, as far as the changes in the supply of and demand for foreign exchange. Any change, no matter records show. Unfortunately, however, our international accounts, though more how slight, in the relationship of the supply of foreign exchange to the demand will complete and reliable than those of other countries, are still subject to a substan- bring about a change in the price for foreign exchange. The fluctuations of ex- tial margin of error. In each year there has been a substantial "residual" item change rates, together with the fluctuations in the price of gold in terms of foreign (i, unaccounted for) which during the 4 years in question totaled approximately currencies, result in the occurrence of relative fferences in the price of gold in 1½ billion dollars due the United States. Some portion of this favorable balance different national money markets when computed in terms of & single currency, must be allocated to trade and services-how much it is impossible to know. but these relative variations can occur only within narrow limits. But even if we allocated the whole residual item to commodity and service items- These slight relative variations in the price of gold as among various markets which would be an extravagant allowance-there would result only a small bal- which make possible a profit in shipping gold from one country to another would ance due the United States for those items during the 4 years in question- continue whether we paid $10 an ounce for gold, or $50, or $60. Slight variations $400,000,000 for the 4-year period. This constitutes too small a sum relative to in the dollar-sterling, dollar-frane, dollar-guilder rates, etc., do give dealers small the magnitudes involved in our balance of payments to justify the claim that an profita when selling gold in one market rather than another but those variations ounne of gold can buy more here than elsewhere. operate an among all countries and at all levels of prices for gold; they are not There is little basis, therefore, for the contention that an ounce of gold could peculiar to the United States alone, nor to the $35 price for gold. Exactly the in general buy more goods and services in the United States than elsewbere from same condition prevailed when the price of gold was $20.67 an ounce and when the years 1934 to 1937, inclusive. Or to put it in simpler and more accurate other countries had a fixed price of gold, It is the normal mechanism which has terms, the United States did not achieve any special competitive advantage in always prevailed and must inevitably prevail so long as gold is the International international markets as a consequence of its external monetary policy. The medium of exchange. change in the gold value of the dollar in 1933 merely helped the United States Regraded Unclassified SILVER 466 SILVER 467 to did experience 5 sharp increase in our trade balance. Exports, as pointed regain its earlier position. In 1938 the trade situation appeared to change. the public's confidence in the value of gold.) The leading gold producing areas out But most of this increase cannot be attributed to any changed relationship of We earlier, exceeded imports in 1938 by some $800,000,000 more than in 1937. would be hard hit and some might even be involved in a major economic arisis. A closely related question that has frequently been asked in: "Should not the the dollar to other currencies because the exporte excess arose The from a sharp de- price of gold be reduced? In not $35 an ounce too high & price for gold?" Pos- crease United States more marked and earlier than in other countries caused & tempo- in imports, and not from an increase in exports. recession in the elbly the simplest way to answer this question in to examine the consequences decrease in our purchases from abroad greater than the simultaneous decrease that would ensue from an increase in the gold content of the dollar (or, to phrase it another way, from a decrease in the monetary value of gold). rary in our exports. This gap may be expected to narrow BE recovery proceeds. A reduction by Congress in the monetary value of gold would probably not The only sense in which it might be said that we give more for gold than other be BE calamitous ne a complete embargo. It would limit the extent of possible countries is that in addition to $35 an ounce we also give peace, security, prospects depreciation of gold (or appreciation of the dollar in terms of foreign currencies) of higher returns on investment, and better speculative opportunities, with the and the paychological disturbance caused by the change would not be as potent, result that foreign espital funds flow here in the shape of gold. It in these values yet it would have disadvantages serious enough to render resort to any such that constitute the chief factor conducive to a flow of gold to the United States, action most unwise. If the reduction made in the price of gold were small, our 5. How much more gold do you think un will gar? trade-and-service balance would not be much affected over the next year or 80, How much we will get depends upon the extent and direction of changes In our nor would the inflow of capital cease. Once the drop in the price of gold was balance of trade and services, upon the output of new gold, and upon the trend regarded by the rest of the world 88 definitive, the subsequent effect in capital Imports would be virtually nll. Our securities would continue to be bought for of capital movements. Since capital movements are 80 sensitive to international political and economic the same reasons that they are bought now and dollar balances on foreign ac- developments, one can only hazard a guess 88 to their future trend. At this count would also continue to increase for the same reasons that they are increas- moment it looks pur though the European situation will remain BO disturbed the ing now. But, were a small deeline in the price of gold to be regarded by numerous to postpone for some time any substantial repatriation of foreign balances. It domestic and foreign investors and exchange speculators SMI being but the first of also appears as though early resumption of American lending abroad such full & series of drops, the result might well be to attract more, not less, funda to the would cause a gold outflow is extremely unlikely. United States, and to intensify the inflow of gold-the very thing it is designed As for our balance on commodity and service items, the fear of war and the to check. Speculators would rush to buy dollars and hold them here in anticipa- tion of the next appreciation. Thus the effect on capital movements, both preparation for war by foreign nations are likely to sustain our exports and reduce American tourist travel in Europe and Asia-both developments making for long-term and short-term, might more than offset the effect on trade and service items; Instead of getting less gold we would find ourselves getting more. additional gold inflows. On the other hand, continuance of our recovery here On the other hand, were the monetary value of gold to be cut with one stroke will tend 10 increase our imports and to increase American tourist travel in the substantially, and definitely-say, for example, to 825 an ounce-the effect would Western Hemisphre, I believe the latter trend will outweigh the other and be quite different from that described above. Such a step might reduce the that on commodity and srevice account the net balance due us will be less in 1930 than it was last year. On the other hand, capital inflows will probably be large volume of gold imports and perhaps give rise to an outflow of large dimensions; 80 that, on the whole, it appears that in the near future the United States will con- but, the economic effects on our economy of the change in the foreign exchange value of the dollar would be little short of disastrous. The 40 percent increase tinue to get gold, perhaps in as large volume as in recent years. in the price of American currencies to foreigners would constitute & severe handi- Current world gold production (outside the United States) now amounts to cap upon our exports. Our exports play a role in the level of business activity over $1,000,000,000 per year. The bulk of this newly-mined gold can go only much in excess of the magnitudes involved and so great an appreciation of our to a few countries. Most countries now utilize practically every available dollar curretley in terms of other currencies would be bound to curtail our exports seri- of foreign exchange to purchase imports or to make additional payments on ously. In the past 6 months the dollar has appreciated in terms of other leading outstanding foreign debte, Much as they would like to acquire gold, and much currencies by some 5 percent and price movements In the various countries have as they need it, they want to acquire additional imports even more. Therefore, not been such as to offset this competitive disadvantage to us. The appreciation it is to be expected that until current hostilities and intensive preparedness for of the dollar has not been due to A change in the dollar price for gold but rather wars cease, and until the world economic situation improves, the bulk of the to a depreciation of foreign currencies in terms of gold. You will note that our newly mined gold will be added to the monetary stocks of only a few countries exports during January 1939 were more than 40 percent less than they were in and the United States will get B substantial share of it. January 1938. Although it la too soon to ovaluate the full significance of the 6. Why doesn't the Treasury stop buying goldt decline, it is not unreasonable to assume that the less favorable position of the A simple way of stopping gold from coming into the United States would be for dollar in terms of other currency (i. e., higher prices of foreign currencies in terms of gold) contributed to the drop in exports. the Treasury to announce to the world that we will not buy any more gold for Our imports on the other hand would, in the event of a reduction in the price the time being. But, such a step, taken unilaterally, would have disastrous of gold to 825 an ounce, be 30 percent cheaper. Our domestic producers would effects on our economy. It would disrupt the foreign exchanges and gold bullion then be exposed to greatly sharpened competition in the American market from markets and would very soon cause such drastic disturbances in international foreign producers both because the prices in dollars of imports would be less, and trade and even in the domestic sphere ELH seriously to impede the recovery of also because the numerous ad valorem duties would constitute smaller protection. business, Foreigners would have & greater advantage in this market but unfortunately Present relationships among the various leading currencies would be upset. even this would be of dubious value to them. The ability of Americans to buy The dollar probably would appreciate immediately in terms of other leading our- goods, whether imports or domestic goods, depends chiefly upon the state of rencies. At present, when the demand for dollar exchange increases, foreigners business activity here. It is chiefly for that reason that our imports during the need only obtain gold (either at home or on the London market), ship it here and recession of 1938 dropped to to almost one-half and that our imports began to obtain dollars in exchange, Thus an increased demand for dollar exchange increase in the fall of 1938. Thus, though the sharp appreciation of the dollar relative to the supply is met. Tf, however, this means of securing dollar exchange would make foreign goods cheaper in this country, our imports might actually were removed, dollars would rise in value indefinitely in terma of other cur- be less than during the previous period and instead of benefiting the rost of the rencies, While it is impossible to know in advance what rates of exchange would world we would be hurting world business as well AS our own. finally emerge, we can be certain of at least one thing-that no country would Judging from past experience we could not expect the prices of domestic com- benefit from the ensuing international monetary disruption. modities and services to move either at home or abroad with sufficient rapidity Were the United States, moreover, to declare a complete embargo on gold to adjust quickly and fully to any substantial alteration in exchange rates. imports, it might deal IN serious blow to the value of gold as a monetary medium. For many months, perhaps for years, the economic position of large groups of (Such action coming at a period when there was discussion of the possibility of American producers, including farmers, would be worsened and there would be world overabundunnnce of gold might have repercussions which would disturb widespread unemployment. The combined effect on our domestic economy of a sharp drop in exports and of increasing competition in the domestic market Regraded Unclassified SILVER SILVER 469 468 keenly felt. Domestic prices would begin to fall. the Many corporations Small countries, which are not precluded by political and prestige considera- would be loss of business and profits. In times such as present these short- (lons from holding their reserves in the form of foreign-exchange assets, can get run importance. To brush aside, as some are prone adjustments to do these short- would effects-and suffer by short-run we mean from & few months to several years-are along more or less satisfactorily without gold. But they can do so only because the countries whose currencies they hold as reserve assets do have large amounts of paramount on the ground that in the long-run appropriate the real will take of gold reserves. run place effects is to ignore the unstable world in which we live and problems which Some countries (operating with very little gold or foreign-exchange assets) confront us from were day we to to reduce day. the price of gold and were it to result In an outflow have been pointed to BA illustrations of the phenomenon that countries can carry on foreign trade and settle international transactions without resort to gold, and of gold On the contrary, were gold to leave the United probably Moreover, there is no reason to believe that the countries who States most it need would gold would that gold is rapidly becoming obsolete even for this monetary role. Those who make this claim completely misread the experience of those countries. These get it. resting place in the very countries whose currencies would for the moment very countries do in fact need and prise gold more and seek It more anxiously, find B most secure, Certainly no gold would flow to Latin the Halkans American countries than do countries that use gold frooly to settle balances of international payments. appear substantial amount, nor would the Far East or obtain more It je their inability to obtain gold which forces them to adopt & far less satisfac- in any The loss of gold by the United States would not correct the serious mal- tory alternative method of adjusting their balance of international payments; gold. distribution. It would rather operate only to take away some from the United namely, the adoption of strict exchange control, of clearing agreements, of barter States which has too much and to add it to the holdings of other countrice which schemes, and the imposition of severe penalties against evasion and all the other likewise have too much. business and liberty destroying procedures necessary to make the system work. Thus we are confronted with the fact that though we should like to receive less There is no one thing which demonstrates more effectively the superiority of gold and even to get rid of substantial amounts of the gold we already have, there gold as a means for settling international balances than the experience of those is, under the existing circumstances, no acceptable alternative to the policy we countries that have tried to get along without it. have been pursuing. In the case of all the proposals we have examined, the Without either gold or exchange controls, exchange rates would be very unstable. remedy has always been worse than the disease, The best way to reduce our gold Any change in the balance of payments would have to be taken care of by inter- inflow on commodity and service account in for us to have full recovery so that our national borrowing or lending, or the exchange rates would have to move to the imports will rise more rapidly than our exporte. point where the sums to be paid and the sums to be received were equated. 7. Of what use to us is this large stock of gold! In there any likelshood that we will Because we have abundant gold reserves we do not have to apply exchange restrie- get ao much of the world's gold that we will "gel stuck" with ill tions, and broad changès in our balance of international payments can take place without interfering with the stability of the dollar exchange. Gold performa two monetary functions. First, it serves as a specie base for the All these points have been granted by some critics, but they maintain that to monetary system. Secondly, it serves as the medium for settling International fulfill both these functions much less than $15,000,000,000 worth of gold would balances, These are distinct and separate functions, The present gold stock of sufflce. There is some merit to that contention, yet the future of international the United States in about $15,000,000,000. The question you ask, therefore, is political and economic relationships is much too uncertain to justify our taking In $15,000,000,000 of gold more than enough to accomplish these two functions the steps which would be necessary if we were determined to reduce our gold which gold now performs in our economic system? holdings. It is doubtless true that we have more gold than we need to provide a specie base One important factor to bear in mind in considering our gold policy in the for our monetary system. Our laws require that a 40-percent reserve In gold cer- psychological reaction of the public to a continuing loss of gold. Should a tificates be held against Federal Reserve notes in circulation and A 35-pereent country be undergoing loss of gold over a considerable period of time, there is reserve in gold certificates or lawful money against deposits of Federal Reserve likely to result impaired confidence in that country's currency and in the stability banks. These legal reserve requirements are based on the assumption that gold- of its monetary system long before it has exhausted the gold it possessed in excess reserve requirements operate as A control of the volume of means of payment, as a of legal or traditional reserve requirements. This has happened time and again protection against excessive issue of notes, and expansion of bank credit. At throughout the world. Without greater ability to forecast future political and present, however, gold and gold-certificate holdings are so far in excess of these economic developmente than is vouchsafed us, it in impossible to say with certainty legal requirements that they can hardly be said to constitute a protection against that we have too much gold. We can say with some assurance, however, that we undue expansion of our currency and credit. We now have enough gold to permit have enough gold to meet all likely contingencies, and that we are in B. strong an enormous expansion of credit and currency even after generous allowance for position to defend the stability of our credit structure and of the dollar against the outflow of gold that might accompany such an expansion. Legal reserve 10- any quick change in our international balance of payments, including any largo quirements do not of themselves necessarily protect us against an undue expansion withdrawal of foreign capital. of the volume of money and the monetary authorities must be prepared, when and The danger that gold will no longer be used as a medium of international ex- if the ocrasion arises, to apply appropriate supplementary control. This is DE- change is so remote as not to merit serious consideration. Other countries will pocially likely to be true when gold holdings are as great as they now are. surely continue to accept gold in the settlement of favorable balances of pay- But it is desirable that the reserves be above the minimum required by law. ments, because gold is as important to them as it is to us. England has over Otherwise in n period of business recovery the limitations on the expansion of notes $3,000,000,000 of gold. France has almost as much; Holland, Switzerland, and and deposits which the gold reserve would impose would operate to curb the rise Belgium and many other countries have what are for them large holdings of gold. in business activity, or an outflow of gold would tend to initiate a contraction of It is in the interest of these countries B8 much as it is in our own interest to con- credit, Irrespective of the legitimate needs of business. It is clear, therefore, that tinue to rely on gold as an essential part of their monetary system. Moreover, some excess of gold above the legal minimum is needed to protect our domestie we must not overlook the fact that nations producing substantial quantities of economy against effects of fortuitous inflows and outflows of gold. We now, gold have important vested interesta in the continuation of gold as a monetary however, have more gold than is necessary to insure this protection. metal. The British Empire alone produces about half the world's gold. Even The second and more important monetary function of gold je its employment countries that produce relatively small amounts of gold find that those small as a means of settling international balances among nations. Gold has been amounts are an important source of national income to them. used for this purpose from time immemorial, and modern governmente have as yet found no satisfactory substitute; nor is there any sign that a satisfactory 8. Isn't il true that foreigners are getting shares of our productive industries and giving substitute will be found in the near future. us in return gold that we have no use for? Important commercial countries which carry little or no gold stocks have diffi- The amount of American securities which have been recently acquired by resi- culties in settling their international payments. They have to see to it that their dents of foreign countries has been much less than is generally supposed. During imports and exports are maintained in a certain relationship to each other. To the past 4 years the total of net foreign purchases of American securities amounted achieve that and to keep their foreign exchange rates from fluctuating wildly to only $1,200,000,000, as follows: they frequently have to maintain strict exchange controls so as to restrict met- 1935 $317, 000, 000 1937 $245,000,000 chandise imports and the movement of capital. 1936 601,000,000 1938 49,000,000 Regraded Unclassified 470 SILVER SILVER 471 There in addition, an increase in direct investments by foreigners as reported was, by the Department of Commerce of about $175,000,000 during this movements are not 50 general or so rapid as to adjust economic conditions quickly period. Altogether, the total amount of investments the by foreigners 4. In American to changes in erchange rates, and such movements AB would occur would take the securities or directly in American industry during past years has been less form of falling prices, particularly prices of agricultural products and raw mate- than one-fifth of the gold sent here during those years. rials. From experience we know that such price movemente have disastrous These sums do not, of course, represent the total of foreign capital which bas effects upon incomes, profits, and the level of business activity. We might be into the United States. Short-term funds owned by residents of foreign precipitated into & depression rivaling the 1930-33 experience. There can be come countries increased by $1,800,000,000. The bulk of these were demand deposits, DO question, therefore, of returning to & gold dollar with the pre-1933 content. which do not constitute acquisitions of shares in American industry and which The answer to question 6 above contains & full discussion of the foreseeable effects do not earn any interest. which would result from any substar tial increase in the gold content of the dollar. The acquisition of American securities by foreigners paid for with gold representa Even if what were proposed were & return not to the old gold value but to a & transaction which admittedly is, under existing circumstances, of dubious pre-1033 gold standard with the present gold content of $35 an ounce, such a advantage to the United States. Yet, given the relatively minor importance of the step would be unwise at this time. Our present monetary system differs from problem to date, we have not been able to convince ourselves that any of the the pre-1933 gold standard in three respects other than gold content. First, possible remedies which we have 60 far examined gave promise of sufficient benefit our currency in not convertible into gold coin, secondly, there are Government to the national economy to offset their disadvantages, controls over the movement of gold in and out of the country, and thirdly, there On the other hand, it should be pointed out that if foreign holders of American is Executive authority to change the gold content of the dollar, securities liquidate their holdings and withdraw the proceeds, either gold or goods Convertibility of currency would, in my opinion, have no substantial advantages. (and services), would necessarily be the resultant medium of withdrawal. If the Virtually every country in the world has recognized this fact and has withdrawn vehicle of transmission were gold, its loss, in view of our large gold holdings could, the privilege. For in normal times there is nothing to be gained by the right to con- of course, be regarded with equanimity. If the medium of transmission were vert currency into gold, whereas at all times conver.lhility have the potential dis- goods, either because of direct purchases with the proceeds of the funds or because advantage of creating a possible source of internal gold drain which would come of the operations of the adjustment process, the resultant increase to our exports into play at the very time when It would be most injurious, Internal hoarding at a time when there exists a large volume of unemployed labor and other idle of specie reserves has been, in the experience of many countries, one of the most resources would have favorable effects on our economy. important reasons for the weakening of currencies. Though the prospect of such a contingency in the United States seems at this time remote, it would neverthe- 9. What action, if any, should be taken with respect to the gold situation? Should time less always be A possibility under a convertible currency system. Moreover, for example, return to the gold standard of pre-19931 in the event that there should develop an emergency situation calling for a further The maldistribution of the world's gold is a reflection of the disturbed economic change in the gold content of the dollar, the existence of private gold holdings situation throughout the world and the chaotie international political situation. would create unnecessary difficulties. Redistribution can come only with progress toward the solution of the basie At present the movement of gold out of the country is in effect subject only problems confronting world international relations. to the restriction that it must be for the purpose of settling international balances. In our study of this matter we have examined literally scores of proposals Gold moves freely to satisfy legitimate commercial and financial needs, The directed toward possible action to redistribute the world's gold. The major present powers of control over the movement of gold provide a safeguard that eonclusion we have drawn is that any measure which would take the form of enn instantly be used in the contingency of an international crisis. restrictions on the flow of gold into this country would have, at this time, detri- The power to change the gold content of the dollar should be lodged in an mental effects upon our economy. authority which can, in case of necessity, act swiftly and in a manner which will What disadvantages may be associated with the gold inflow are fortunately minimize the disturbances resulting from any change, This power should only of minor magnitude, and should, moreover, be attributed to the factors caus- always be available; its existence contributes to the maintenance of stable exchange ing that inflow rather than to the inflow itself. Foreign ownership of American relationships, which make the exercise of the power unnecessary. securities may, however, serve as & source of disturbance to our security markets It is important to realize that rumors of an impending change in the value of in times of stress; similarly with short-term foreign capital sent here. On the a currency, or any public discussion by responsible officials that such a change other hand, the third factor responsible for the gold inflow to the United States- might be made, would in themselves be enough to induce large flows of capital our export excess-does yield a gain. either into the country or out of the country, depending upon whether the pros- The large inflow of gold in recent years has been a major factor in increasing peet is for an increase in the value of the dollar or for a decrease in the gold con- excess bank reserves. These reserves do in some degree operate to stimulate an tent of the dollar. Discussion in committees would be advance notice to specu- expansion of loans by banks and to keep the interest-rate structure lower-both latore that such setion might take place. The more fact that it might take developments helping somewhat to promote a higher level of business activity. place would be sufficient to induce the flow of capital, because if the change did Nonetheless, the prospect of continued large inflowe of gold has been B. cause of not actually occur, the speculation would have cost only the email charges at- some concern on the part of those who consider B large volume of excess reserves tending any exchange transaction. Indeed, congressional discussion would etim- as constituting a potential danger of inflation, though I do not regard this problem vilate speculators to engage in activities of a sort which would of themselves as one of immiediate import, tend to force Congress to take the action which had been in contemplation, even The only immediately disturbing aspeel of the gold problem is the loss of gold if on its own merits and in the absence of the situation created by the operations by foreign countries. The countries losing gold may be adversely affected by the of the speculators, a negative decision would have been in order. The liquida- loss and some of the adverse effects would impingo indirectly or us. This is to be tion of foreign holdings of American capital might, under such circumstances, deplored, but the factors producing this situation are external to us and beyond easily be powerful enough to disrupt the security exchanges and to introduce a our control, acting alone. chaotic situation in markets and in business generally. Since the prospect of With respect to the suggestion that the United States return to the gold stand- devaluation would arise only under circumstances which were disturbing in any ard of pre-1933, I must state definitely that such a move would be harmful to the case, the outflow of espital would simply make bad things worse. American people and of no value to the people of other countries. In the first It therefore appears desirable that the Executive should have the power to place, A return to the pre-1933 gold standard would mean & return to the $20.67 alter the gold content of the national currency unit, in the public interest, and an ounce price for gold. This, in the absence of similar changes in the gold value within clearly preseribed limits, as it is in most of the countries in the world, so of other currencies, would represent a depreciation of approximately 40 percent that If an emergency situation should require its exercise, it could be exercised in all foreign currencies in terms of the dollar. quickly, and without the necessity of prior publie discussion and its concomitant It is obvious that an increase in the cost of the dollar to the foreigner by 70 invitation to speculative activities. percent and a decrease in the cost of foreign currencies to the American importer by 40 percent would seriously disrupt our foreign and domestic trade. Price Regraded Unclassified SILVER SILVER 473 472 10. Did devoluation of the dollar in 1984 have an unfavorable effect on our imports? not be permitted to decline much or sharply in response to & marked depreciation Under one set of circumstances devaluation of a currency it will Induce an In- of foreign currencies. This added assurance of domestic price stability should crease ports. Devaluation of the dollar in 1934 did contribute to an in United in imports and under a different set of circumstances increase may decrease In- operate as an encouragement to investment. The present attitude of the owner of capital toward the prospective value of the dollar is one of full confidence. This is borne out by the eagerness of the States The imports. value of American imports varies, in the main, with domestic business public to invest In long-term fixed-interest bonds at almost the lowest Interest When business is good in the United States, our imports are high; rate in the history of this or any other country. The fact that people are willing activity. business is bad, our importe are low. For example, between 1929 and 1932 to invest hillions at low rates of interest, and run the risk of depreciation of the real value of the bonds which would accompany any sharp rise in the general imports two-thirds. Again in 1938, owing largely to the recession prevailed through when dropped from $4,400,000,000 to $1,300,000,000, a which decrease of more than price level, suggests that they have confidence in the way which counts most; namely, by their willingness to risk their capital. most of that year, our imports dropped more than one-third. On the other hand, The assertion that the continuance of the power to change the gold content during the years of recovery-1934, 1035, 1936, and 1937-our imports FORE from of the dollar generates lack of confidence and hesitation in the business world is the low of 1,3 billion dollars to over 3 billion dollars. Increases or decreases in not, T am convinced, based on factual considerations. Rather, it seems to me, the total value of a conntries imports are due to changes in prices as well as to it stema from an effort to reestablish the validity of monetary theories that are changes in quantity. A sharp drop in the prices of imported commodities which ill adapted to the circumstances prevailing in recent years. competitive with domestic products has economic repercussions which are Monetary disturbances in the world today arise from causes almost entirely are disturbing to the country receiving the imports. At a time when business outside our control. The effect of these disturbances on our monetary system netivity very is declining, any potent source of further price declines serves only to has been such as to reflect greater confidence in the American dollar than in any lower still further the level of business activity and to increase unemployment. other currency. This tribute to the soundness of the dollar, taking the form of The best way to Increase our imports is to increase our national income. Any huge transfers of funds in the United States, creates an unbalance which in the measure which serves to promote recovery increases our imports and contrariwise only factor in the situation which gives us any cause for real concern. The any measure which serves to reduce business activity operates to reduce our powers we possess have been sufficient to prevent any significant damaging effect imports. As a eonsequence of falling prices and declining business intensified by the on our domestic system. The monetary powers granted to the President by the Congress have been employed in such a way as to be powerful forces for widespread depreciation of other currencies in 1931-33, we bought less because stability rather than instability in the domestic economy and in the international our national income was less notwithstanding the greatly lowered cost of imported field alike. goods. Even though depreciation of the dollar made imported goods more Sincerely, expensive, the improvement in business activity which followed devaluation was HENRY MOBOENTHAU, Jr., one of the factors responsible for the rise in national income and the consequent Secretary of the Treasury, increase in imports. Whether or not depreciation of a currency will lead to In- creased or decreased imports depends upon the conditions which precede such depreciation, and upon other measures which accompany it, as well as upon the [For immediate release.] renction of other affected countries. GOLD, AND THE MONEY OF THE UNITED STATES 11. Who in England and France have the power of altering the gold value of their currencies and what is the extent of that power? An Address by Henry Morgenthau, Jr., Secretary of the Treasury, Washington, In England the British treasury has the power to alter the sterling price of gold D. C., Friday, May 3, 1940 through its operations in the gold market. There is no statutory restriction on One thing you will hardly need to be told about our mopetary system; that is, the extent to which the British treasury can change the sterling price of gold. that the American dollar is the soundest unit of currency in the world. Its value Similarly, the French treasury, through the mechanism of its foreign exchange is unquestioned here at home and it is not questioned any where etao in the work. and gold operations, can alter the frane price of gold without any statutory restric- It is a solid rock of strength and stability amid all the monetary pressed tions. In addition, the Council of Ministers is authorized to fix ultimately by by aggression and war. It is more than & domestic currency It base In decree the gold content of the frane. As yet, they have not done so, The Council the last few years more and more an international currency. People through Due of Ministers, in other words, can decide whether or not there should be any statu- the world who are driven by disaster and fear to hoard currency profer to Yoard tory gold value for their currency and under existing law can fix that value at the currency of the United States, when they can get it. any amount it. wishes. We have tried through many means to facilitate stability to the currencies of 18. In there any basis to the contention that the power to devalue operates to undermine the world. An outstanding example is the Tripartite Accord which we initalted the businessman's confidence ao as to deter him from making loans and invest- in September 1936. In all, six of the leading democracies of the world have ments in the United States? subscribed to the principles of that accord. Unfortunately, the progress we were making in the field of international finance and trade has been interrupted by the A factor that more than any other will increase the confidence of businessmen in eataclyam in Europe. the future is the assurance that business will improve; a development contributing One of the most striking developments of these recent years has been the substantially to that expectation would be the prospect of a stable or moderately universal confidence in the American dollar BE one of the very few certain things rising price level. What businessmen fear with regard to the dollar is not that the in a highly uncertain world. price level in the United States may remain stable or rise but that the price level Some of our citizens who admit the strength of the dollar and the world's in the United States may fall (i. e., that the purchasing power of the dollar may confidence in our currency now suggest that confidence in our dollar has resulted rise.) in this country receiving too much gold. From past experience we know that falling prices have disastrous effects upon During the last 6 years We have acquired about $10,000,000,000 of gold from our economic system. The national income declines, business profits disappear, abroad. the security of loans is undermined and the level of business activity falls. If the Why has so much gold come to the United States? businessman could be assured that price levels will not fall sharply, he would In the first place, we have exported many billions of dollars' worth of goods have greater confidence that business profits and the value of investments would and services in excess of the amounts we have imported. Secondly, large amounts be maintained and consequently be would be more willing to make investments of foreign funds have come to this country to be placed and kept on deposit with and loans. At no time in modern history have lenders hesitated to lend during our banks. Foreigners have sent their funds here for safekeeping because of the times of stable or moderately rising prices and at no time has their desire to lend peace, stability, and security which this country enjoys. increased during A period of substantially falling prices. The power to devalue Thirdly, foreigners have made large investments in American industries because should thus constitute for the businessman an added assurance that prices will they regard American business as a safe and profitable investment. Finally, Regraded Unclassified 474 SILVER SILVER 475 Americans have been withdrawing their funds from abroad and liquidating their foreign investments in large sums because they prefer the dollar to any other Of course, should basic conditions alter, should we be confronted with new and unforeseen economic and political developments, the Government will necessarily currency. It in for these reasons that we have had 50 large & favorable balance of pay- take such action as will best protect American interesta, It is to be prepared for ments; it is for these reasons that gold has come and is continuing to come to such contingencies that the powers with respect to gold operations have been the United States. kept flexible. The Treasury is constantly observing, analysing, and studying Gold moves from country to country not as a commodity but as a means of the course of events in their relation to monetary problems in which this country payment, the one final medium through which international settlements are made. is interested. But nothing has yet appeared which would warrant any change The continued acceptance of the gold that comes here la the only sound course in our gold policy. of action open to us. There are, it in true, other courses of action theoretically There is only one sound way in which we can work to reduce the inflow of gold possible, but they would all have disastrous consequences. and to promote the return of at least a part of the wealth it represents to useful Take, for example, the proposal so frequently made to 08 that we etop buying service in the lands from which it came. That way is to do everything in our gold. It has the charm of simplicity. All that we have to do is to lesue an appro- power to contribute to the return of peace to the world and to encourage recon- priate Treasury order. But let me tell you what I think would happen. Dollars struction and the restoration of normal trade, With the restoration of enduring abroad would instantly become very searce and more costly, and the foreigner peace and economic stability abroad the gold problem will solve itaelf. Our would find it much more expensive to buy American goods, For example, the great export surplus will drop-not because we shall sell less abroad but because British pound, the Canadian dollar, the French franc, the Dutch guilder would we shall buy more. Foreign capital will be gradually repatriated-not because at once sharply depreciate. A chain of forces would be set in motion which would we drive it out but because it is attracted home by the reemergence of security disrupt our trade, seriously discourage what remains of world commerce and re- abroad. Our investors will once again Invest their funds abroad-not because of move from world finance the strongest element of stability. the searcity of opportunity at home but because of greatly enhanced opportunities The cessation of gold purchases would have the following three immediate for sound and profitable investments in other lands. And finally our tourists effects of great importance to us: will spend hundreds of millions more in foreign countries. Firstly, the sale of American products in foreign markets would be made much These are the developments which will automatically and gradually direct the more difficult. This would not apply so much to war materials, which foreign flow of gold away from the United States. These are the developmente upon countries want 80 urgently, but it would hit hard our export of hundreds of agri- which we must concentrate. We must concentrate on the promotion of further cultural and industrial commodities not vital to the conduct of the war. Wo recovery here and pesce and security abroad not in order to correct the gold would lose heavily in the very markets we will badly need when the war is over. situation, but because prosperity, peace, and security are in themselves the supreme Secondly, there would result an immediate flood of imports of cheapened ends of governmental policy. That their attainment will also solve the world's foreign goods, which would deal an even more serious blow to labor, industry, gold problem is only & byproduct, but an important one. and agriculture in America, The very items which compete with our domestic I should like finally to turn to the question of the continued usefulness of the products would deluge our home markets. Meat and dairy products, textiles, gold we have and the gold we are going to get. This is a matter that is troubling and hundreds of other articles would at once be subjected to greatly intensified some people. competition from abroad. Let me reassure you once and for all. As long as there are independent nations, Thirdly, Americans who have investmente abroad would find that they had and as long as there is international trade in goods and services, so long will it be suffered substantial dollar losses overnight just as foreignera with investments necessary to settle International balances. Gold is the international medium of here would find that they had windfall gains overnight. exchange par excellence. Ita acceptability is universal; its utility as International So you see this eimple remedy is, in effect, a proposal that would completely money survives changes in economic systems. It is used and needed just as much disrupt our foreign exchange and our trade and greatly increase unemployment by the freest democracies (M) by the most rigid distatorshipa-as much by capitalist in this country. And eo with the other naive proposals which some well-meaning economies % by socialist economies, It la the refined instrument of international eitizene suggest B9 a remedy for our accumulating gold stocks. exchange of goods and services, M well ne an essential ingredient in the more Shall we follow their advice and cut the price for gold? A moderate cut would complex international financial transactiona-an Instrument that has functioned be ineffective, and a cut in price sufficiently large to have a significant effect on without challenge for hundreds of years. Every foreign country wishes it had the gold inflow would introduce the same conditions as would follow prohibition more of it; no foreign country likes to lose any of it; all countries accumulate it A8 of gold imports. This also would cause a serious decrease in our trade and a big soon as they can afford to do so. And the fact that some countries find it possible increase in unemployment. to conduct their international trade without gold does not mean that they prefer Shall we, as some have suggested, discriminate against certain countries in our to do so any more than people reading by candlelight do ao because they prefer purchases of gold? Such a policy would not even have the virtue of effectiveness. candles to electricity. The active cooperation of practically the entire world would be required to prevent Gold does not lose ita value because some countries are forced to resort to clear- any one country's gold from entering the world's markets and reaching the United ing arrangements, barter, import controls, and other substitutes. All these States. Obviously this would be impossible even in normal times, let alone at 5 substitutes are admittedly worse alternatives. They are methods of conducting time such as this. Besides, the value of gold is proportionate to its unqualified trade and finance which will only be adopted when & country does not possess ure and acceptance as an international medium of exchange, To limit its accept- adequate gold holdings. Governmenta resort wholly to these substitute methods ance would mean to reduce its usefulness. for keeping & country's balance of payments in equilibrium only during times of There is yet another alternative which has always been open to us. Instead of great and prolonged strees and instability, and only when for one reason or another taking gold we could have granted credit, Americans could again have accumu- they have been unable to prevent the loss of most of their gold holdings. All lated huge unsettled claims abroad. We have had experience with that system countries would like to have more gold, and the countries which have the least are, extensive experience-in the decade that ended with the economic collapse of you will find, countries which are striving most to add to their gold holdings. 1929. It is doubtful that Americans would want to repeat that experience. They do 80 because they know that an adequate supply of gold promotes economia For the excess of gooda we shipped and for the dollar credits we granted we strength and furthers financial stability. have taken gold in the last 6 years instead of promissory notes. The phrase To be sure, if the political picture of the world should undergo a drastic change "good as gold" still has real meaning in the world. I prefer the gold to pieces of in the future, no that instead of 50 or 60 independent nations there should exist foreign paper. I think most Americans agree with me. only one or two groups dominated by ruthless powers, then international trade Our gold policy in carefully adjusted to the realities of is complex world situation. and finance may assume the character of domestic trade. There would cease to There have been many glib suggestions for changing that policy. Examination of be independent monetary systems, as there would cease to be independent foreign each of these suggestions has revealed, as in the examples I have mentioned, that policies. Balances between countries would be settled as balances between our in the effort to remedy fancied evils they would bring on real disaster. States are now settled-that is, by transfers of deposita. Under such circum- stances it might well be that gold would no longer be needed. But under those eircumstances life would be 80 different that the possible loss In the value of gold would, I am sure, be the least of our troubles. Regraded Unclassified SILVER SILVER 477 476 Certain governments may boast of the day when independent be made democracies will proclamation of December 21, 1933, bringing our current domestic production of I, for one, have no fears that such boasts can medium good. I am silver into the Treasury, as well as placing this Nation among the first to carry disappear. confident that gold will continue to be used as the in of international out the agreement on eilver which we sought and secured at the London Confer- as as I am that the majority of nations will succeed economic maintaining their ence. We have since acquired other silver In the interest of stabilization of foreign payments With the return of peace and of normal and political exchange and the development of a broader metallic base for our currency. We relationships, independence. the present barriers to the free flow of goods, capital, and services seek to remedy a maladjustment of our currency. will be gradually fowered, and gold will inevitably play its indispensable role in In further aid of this policy, it would be helpful to have legislation broadening the authority for the further acquisition and monetary use of silver. making that result possible. One word more-the exchange we made and are making in return for gold is & I, therefore, recommend legislation at the present session declaring it to be the good bargain for us. It has enabled us to increase employment and recovery. policy of the United States to increase the amount of silver in our monetary stocks It has made possible the utilization of labor, capital, machinery, and resources with the ultimate objective of having and maintaining one-fourth of their mone- that would otherwise have been idle. We have expanded our exports and en- tary value in allver and three-fourths in gold. couraged our domestic industry. And, moreover, we have at the same time The Executive authority should be authorized and directed to make the pur- chases of silver necessary to attain this ultimate objective. acquired the safest physical asset in the world. There are some alneere people who have been disturbed by stores that this The authority to purchase present accumulations of silver in this country should be limited to purchases at not in excess of 50 cents per ounce. country had & monetary policy that threatens to cause loss to the Nation. If meet such people I hope you will reassure them. You may tell them that The Executive authority should be enabled, should circumstances require, to take over present surpluses of silver in this country not required for industrial you the greatest and richest country of the world has the best and soundest monetary system and that there is no reason to fear that it will not remain sound, uses on payment of just compensation, and to regulate imports, exports, and other dealings in monetary silver. We can feel entirely comfortable in the possession of B supply of gold with which we can meet future demands on our monetary system without any shock There should be a tax of at least 50 percent on the profits accruing from dealing in silver. to our economy. We can be prepared also to play the part we ought to play in We can proceed with this program of increasing our utore of silver for use as a the reconstruction of the world that must follow the sensoless destruction of part of the metallie reserves for our paper currency without seriously disturbing war. adjustments in world trade. However, because of the great world supply of silver and its use in varying forms by the world's population, concerted action by STATEMENT BY THE PRESIDENT ON THE PURPOSE OF THE PROCLAMATION ON all nations, or at least & large group of nations, is necessary if a permanent measure NEWLY MINED DOMESTIC SILVER of value, including both gold and silver, is eventually to be made a world standard. To arrive at that point, we must seek every possibility for world agreement, On December 21, 1933, the President issued a proclamation under authority of although it may turn out that this Nation will ultimately have to take such paragraph (2) of section 43, title III of the act of Congress approved May 12, independent action on this phase of the matter as its interests require. 1933 (Publie, No. 10). directing the coinage mints of the United States to accept The success of the London Conference in consummating an International for deposit newly mined domestic silver subsequent to the date of the proclams- agreement on silver, which has now been ratified by all the governments con- tion. retaining 50 percent of such silver as seigniorage. cerned, makes such further agreement worth secking. The ebb and flow of values The purpose of this proclamation was to raise and then stabilize the price of in almost all parte of the world have created many points of pressure for readjust- silver in order to help (a) increase and then stabilize the commodity price level; ments of internal and international standards. At no time since the efforts of this (b) protect our commerce further from the adverse effects of depreciated foreign Nation to secure international agreement on silver began in 1878 have conditions currencies; (e) augment the purchasing power of countries using silver; and (d) been more favorable for making progress along this line. carry out the undertaking made at the London Conference.-From the Public Accordingly, I have begun to confer with some of our neighbors in regard to the Papers and Addresses of Franklin D. Roosevelt, volume II, page 539. use of both silver and gold, preferably on a coordinated basis, as a standard of monetary value, Such an agreement would constitute an important step forward toward a monetary unit of value more equitable and stable in its purchasing and MESSAGE OF THE PRESIDENT ON THE SILVER PURCHASE ACT OF 1934 debt-paying power. FRANKLIN D. ROOSEVELT. To the Congress of the United States: THE WHITE House, May 32, 1934. On January 11, 1934, 1 recommended to the Congress legislation which WM promptly enacted under the title, "The Gold Reserve Act of 1934." This net vested in the United States Government the custody and control of our etocks of gold as a reserve for our paper curreney and as a medium of settling International MONEY AND CREDIT balances. It not up a stabilization fund for the control of foreign exchange in the interests of our people, and certain amendments were added to facilitate the Calendar of Important Regulatory Documents; Including Acts of Congress, International Agreements, Presidential Proclamations and Executive Orders, aequisition of silver. As stated in my message to the Congress, this legislation was recommended as Announcements, Regulations, and Instructions of the Secretary of the Treasury, B. step in improving our financial and monetary system. Its enactment has laid Supreme Court Opinions. Feb. 27, 1932-Mar. 31, 1942. (Office of the Treas- & foundation on which we are organizing & currency system that will be both ury Archivist, Apr. 18, 1942) sound and adequate. It is a long step forward, but only a step. Document Subject As & part of the larger objective, some things have been clear. One la that we Feb. 27, 1932: Act Extending eredit facilities to member should move forward as rapidly BB conditions permit in broadening the metallic amendment (72-44). banks, and making Government secu- base of our monetary system and in stabilizing the purchasing and debt-paying rities eligible to secure Federal reserve power of our money on a more equitable level. Another is that we should not notes until Mar. 3, 1933. neglect the value of an increased use of silver in improving our monetary system. Feb. 3. 1933: Act to Amend Federal Extending credit facilities to member Since 1929 that has been obvious. Reserve Aet amendment of Feb. 27, banks, and making Government secu- Some measures for making a greater time of silver in the public interest are 1932 (72-326). rities eligible to secure Federal reserve appropriate for Independent action by us. On others, International cooperation notes until Mar. 3, 1934. should be sought. Of the former class is that of increasing the proportion of silver in the abundant motallie reserves back to our paper currency. This policy was initiated by the Regraded Unclassified 478 SILVER SILVER 479 MONEY AND Caspir-Continued MONEY AND CREDIT-Continued Document Bubject Feb. 25, 1933: Act re national bank Authorizing the Comptroller of the Cur- Document Subject powers (72-58 Res.). rency to exercise with respect to Mar. 7, 1933-Continued. national banking association powers Emergency Banking Regulation Authorizing National or Stafe banking which State officials may have with No. 10. institutions to exercise their usual respect to State banks, savings banks, functions to such extent as shall be and/or trust companies under State necessary to meet the needs of the laws, for & 6-month period. community. Mar. 6, 1933: Emergency Banking Regulation Authorizing banking institutions hav- Proclamation No. 2039 Declaring a bank holiday, Mar. 6-9, No. 11. ing branches in foreign countries or 1933, inclusive, insular possessions to deposit col- Order of the Secretary of the Authorizing the banking institution in lateral in the United States to secure Treasury. the Canal Zone to perform its usual advances. banking functions during the bank Emergency Banking Regulation Authorizing the issuance of clearing- holiday. No. 12. house certificates against sound asseta: Do Authorizing banking institutions in the of banking institutions. island of Guam to perform their usual Emergency Banking Regulation Authorizing banking institutions acting banking functions during the bank No. 13. in & fiduciary capacity to transact holiday. such business (revoked by regulation Do Authorizing banking institutions in No. 31, Mar. 30, 1933). American Samoa to perform their Emergency Banking Regulation Authorizing Federal Reserve banks to usual banking functions during the No. 14. conduct fiscal agency functions for bank holiday. the United States, Do Authorizing banking institutions in the Emergency Banking Instructions Authorizing the banks to inform all Philippine Islands to perform their to Federal Reserve Banks-D. banking institutions that the term usual banking functions during the "food or food products" in regulation bank holiday. No. 6 may be interpreted to include Do Authorizing banking institutions in the livestock on the way to slaughter. Virgin Islands to perform their usual Emergency Banking Instructions Informing the banks that pawnbrokers banking functions during the bank to Federal Reserve Banks-E. or brokers making loans on collateral holiday. are to be considered banking institu- Emergency Banking Regulation Authorizing banking institutions to tions within the meaning of the term No. 1. make change. as used in the proclamation of Mar. 6, Emergency Banking Regulation Authorizing banking institutions to 1933. No. 2. allow access to safety deposit boxes. Emergency Banking Instructions Authorizing the banks to receive cash Emergency Banking Regulation Authorizing banking institutions to to Federal Reserve Banks-F. from collectors of public funds for No. 3. return items received after closing. deposit to the credit of the Treasurer Emergency Banking Regulation Authorizing banking institutions to cash of the United States. No. 4. checks drawn on the Treasurer of the Emergency Banking Instructions Authorizing the banks to cooperate United States. to Federal Reserve Banks-G. with their member banks to facilitate Emergency Banking Regulation Authorizing banking institutions to BC- certain limited banking operations. No. 5. cept payments for obligations. Emergency Banking Instructions Authorizing the banks to handle checks Emergency Banking Regulation Authorizing banking institutions to con- to Federal Reserve Banka-H. and collection items subject to cer- No. 6. duct operations to facilitate the deliv- tain conditions. ery of foods (revoked by regulation Emergency Banking Instructions Authorizing the banks to settle through No. 28 of Mar. 18, 1933). to Federal Reserve Banks-I. the gold settlement fund with other Emergency Banking Regulation Authorizing banking institutions to Federal Reserve banks for all author- No. 7. create special trust accounts for the (zed transactions. receipt of new deposits (amplified by Emergency Banking Instructions Authorizing the banks to continue their regulation No. 15, Mar. 8, 1933). to Federal Reserve Banks-J. usual functions pertaining to the Emergency Banking Instructions Informing the banks of authority given handling of collateral securing the to Federal Reserve Banks-A. the Treasurer of the United States to deposit of the public moneys of the make payments in gold only under United States. license, etc. Mar. 8, 1933: Emergency Banking Instructions to Federal Reserve Banks-B. Authorizing the banks to carry on cer- Emergency Banking Regulation Extending authority granted under No. 15, tain transactions affecting the gold regulation No. 7 to include redeposita. settlement fund. Emergency Banking Instructions Authorizing the banks to conduct cer- Emergency Banking Instructions to Federal Reserve Banks-C. Authorizing the banks to purchase gold to Federal Reserve Banks-K. tain transactions with regard to Mar. 7, 1933: or gold certificates. Mar. 9, 1933: foreign accounts. Emergency Banking Regulation Authorizing banking institutions to Proclamation No. 2040 Continuing in force the bank holiday No. 8. complete settlement for checks on the proclamation of Mar. 6, 1933. Emergency Banking books before Mar. 4, 1933. Regulation Order Treasury. of the Secretary of the Authorising banking institutions in the Authorizing banking institutions to de- Territory of Hawaii to perform their No. 9. liver documents and securities held usual banking functions during the for safekeeping. bank holiday. Emergency (73-1). Banking Act of 1933 Providing relief in the existing national emergency in banking. Regraded Unclassified 480 SILVER SILVER 481 MONEY AND Cummer-Continued MONEY AND Commed Document Bubject Document dubject Mar. 10, 1933: Executive Order No. 6073 Concerning the operation of banks. Mar. 18, 1933-Continued. Banking Emergency Regulation Authorizing unlicensed member banks Emergency Banking Regulation Extending regulation No. 10 to provide No. 27. to permit withdrawals (not exceeding No. 10 as amended. for cooperation between banks in 5 percent). different communities (revoked by Emergency Banking Regulation Rescinding regulations No. 6 and No. 10, regulation No. 28 of Mar. 18, 1033). No. 28. as amended. Emergency Banking Regulation Authorizing banking institutions to Emergency Banking Instructions Informing the banks that deposita of No. 16. complete transactions in regard to to Federal Reserve Banks-L. the kinds described in regulations Treasury bills for which payment was No. 7 and No. 15, are not subject to due on Mar. 6, 1933. the provisions of regulations No. 23. Emergency Banking Regulation Authorizing banking institutions to pay Mar. 21, 1933: Emergency Banking Authorizing unlicensed member banks No. 17. checks issued prior to Mar. 6, 1933, Regulation No. 29. to rediscount or pledge renewals of Mar. 11, 1933: notes. Emergency Banking Regulation Authorizing banking institutions to sub- Mar. 24, 1933: Act to amend Emer- Providing for direct loans by Federal No. 18, scribe and pay for U. 8. Government geney Banking Act (73-4). Reserve banks to State banks and obligations offered by the Treasury. trust companies in certain cases, and Emergency Banking Regulation Authorizing banking institutions to per- for other purposes. No. 19. mit the release or substitution of col- Mar. 28, 1933: Emergency Banking Authorizing member banks in the hands lateral, when collateral of equal value Regulation No. 30. of conservators or State officiale to is received. perform limited banking functions, Emergency Banking Regulation Authorizing Federal reserve banks to Mar. 30, 1933: No. 20. resume their normal banking fune- Emergency Banking Regulation Authorizing banking institutions acting tions. No. 31. in a fiduciary capacity to transact Emergency Banking Regulation Authorizing nonmember banks and such business, with certain provisions No. 21. banks not organized under the laws (superseding regulation No. 13, Mar. of the United States or under immedi- 7, 1933, which le hereby revoked). ate supervision of State authority to Emergency Banking Regulation Authorizing unlicensed member banks resume their normal banking fune- No. 32. to permit withdrawals of deposits tions. under certain conditions. Emergency Banking Regulation Authorizing Federal land banks, Fed- Apr. 5, 1933: Executive Order No. Forbidding the hoarding of gold coin, No. 22. eral intermediate credit banks, joint 6102. gold bullion and gold certificates stock land banks, Federal home loan (revoked by Executive order of Aug. banks, regional agricultural credit 28, 1933). corporations, and the Reconstruction Apr. 20, 1933: Executive Order No. Relating to foreign exchange and the Finance Corporation to resume their 6111. earmarking and export of gold coin normal banking functions. or bullion or currency (revoked by Mar. 12, 1933: Executive order of Aug. 28, 1933). Emergency Banking Regulation Prohibiting withdrawals from any bank- Apr. 29, 1933: Gold Regulations issued Relating to licensing the purchase and No. 23. ing institution for purposes of hoard- under the Executive Orders of Mar. export of gold (revokes emergency ing. 10, Apr. 5, and Apr. 20, 1933. banking regulation No. 25, Mar. 13, Emergency Banking Regulation Authorizing banking Institutions to 1933) (revoked by gold regulations of No. 24. cash official drafts drawn on the Sept. 12, 1933, pt. I). Secretary of State. May 12, 1933: Thomas amendment Providing for financing-and exercising Regulations of the New York Governing foreign exchange transae- (inflation act) (73-10, title III). power conferred by sec. 8 of article I Federal Reserve Bank (circular tions under the Executive or ier of of the Constitution: to coin money No. 1176). Mar. 10, 1933. and to coin money and to regulate the Mar. 13, 1933: value thereof. Emergency Banking Regulation Adding to the list of organizations that June 5, 1933: Gold Clause Resolution Assuring uniform value to the eoins and No. 22 (amendment). may resume their normal banking (73-10 Res.). currencies of the United States. functions, corporations organized un- June 26, 1933: Instructions from the Concerning gold for use in industry, der section 25 (a) of the Federal Acting Secretary of the Treasury to profession, or art. Reserve Act. all Federal Reserve banks. Emergency Banking Regulation Authorizing Federal reserve banks to July 22, 1933: Agreement entered into Concerning the mitigation of fluctu- No. 25. deliver gold required in trade, pro- between delegates of India, China, ations in the price of silver. fession, or art (revoked by regulations and Spain, as users of silver, and relating to licensing the purchase and Australia, Canada, the United States, export of gold, Apr. 29, 1933). Mexico, and Peru, as producers of Emergency Banking Regulation Authorizing banking institutions to silver, at the Monetary and Eco- No. 26. issue drafts transferring credits. nomie Conference in London. Mar. 18, 1933: July 26, 1933: Allotment agreement Concerning the amount of silver to be Executive Order No. 6080 Concerning appointment of conserva- signed by the United States in con- withdrawn from the market by the tors for State banks members of nection with the silver agreement of United States. Federal reserve system. July 22, 1933. 73052-42-pt. Regraded Unclassified 482 SILVER SILVER 483 MONEY AND Cummed MONEY AND Ommed Document Subject Document Bubject Aug. 28, 1933: Executive Order No. Relating to the hoarding, export, and 6260. earmarking of gold coin, bullion, or Jan. 15, 1934: Executive Order No. 6558 Relating to receipt of gold on consign- currency and to transactions in for- ment by the mints and assay offices. eign exchange (revokes Executive Executive Order No. 6559 Amending the Executive order of Mar. orders of Apr. 5, and Apr. 20, 1933). 10, 1933, and the proclamation of Aug. 29, 1933: Executive Order No. Relating to the sale and export of gold Dec. 30, 1933, concerning the oper- 6261. recovered from natural deposits (re- ation of banks, voked 1933). by Executive order of Oct. 25, Executive Order No. 6560 Regulating transactions in foreign ex- change, transfers of credit, and the Aug. 31, 1933: Temporary gold regu- Relating to general provisions and the export of coin and currency. lations issued under the Executive filing of returns (revoked by gold Order of the Secretary of the Supplementing the order of Dec. 28, orders of Aug. 28 and 29, 1933 regulations of Sept. 12, 1933). Treasury. 1933, requiring the delivery of gold (articles 1-10). coin, gold bullion, and gold certificates Sept. 1, 1933: Temporary gold regula- Relating to the acquisition of gold (re- to the Treasurer of the United States. tions issued under the Executive 1933). voked by gold regulations of Sept. 12, Announcement of the Secretary of That, beginning Jan. 16, 1934, the New orders of Aug. 28 and Aug. 29, 1933 the Treasury (Press Service No. York Federal Reserve Bank, instead (articles 11-15). 1-13). of the Reconstruction Finance Cor- Sept. 5, 1933: poration, will purchase all domestic Temporary gold regulations issued Relating to the holding and export of newly mined gold, and the Secretary under the Executive orders of gold (revoked by gold regulations of of the Treasury will purchase from the Aug. 28 and 29, 1933 (articles Sept. 12, 1933) (revokes gold regula- bank equivalent amounts of gold 16-28). tions of Apr. 29, 1933). coin. Temporary gold regulations issued Relating to the consignment for sale of Jan. 17, 1934: Instructions from the Concerning wrongfully withheld gold under the Executive orders of gold recovered from natural deposits Secretary of the Treasury to the coin, gold bullion, and gold certifi- Aug. 28 and 29, 1933 (articles in the United States (revoked by gold Treasurer of the United States, the cates delivered after Jan. 17, 1934. 29-35). regulations of Sept. 12, 1933). mints and assay offices, and the fiscal Sept. 12, 1933: Gold regulations issued Relating to transactions in gold (pt. I agents of the United States. under the Executive orders of Aug. revokes gold regulations of Apr. 29, Jan. 30, 1934: 28 and 29, 1933. 1933) (pt. III revokes temporary gold Gold Reserve Act (73-87) Providing for the protection of the cur- regulations of Aug. 31, Sept. 1 and rency system of the United States, 5, 1933) (pts. II and III revoked by for the better use of the monetary gold regulations of Oct. 25, 1933). gold stock of the United States, and Oct. 25, 1933: for other purposes. Executive Order No. 6359 Relating to gold recovered from natural Provisional gold regulations issued Relating to transactions in gold. deposits (revokes Executive order of under the Gold Reserve Act of Aug. 29, 1933). 1934. Gold regulations issued under the Relating to gold recovered from natural Jan. 31, 1934: Executive order of Oct. 25, 1933, deposits (revokes gold regulations of Proclamation No. 2072 Regarding the revaluation of the gold amending pts. II and III of the of Sept. 12, 1933, pts II and III). dollar. gold regulations of Sept. 12, Amendment to provisional gold Relating to transactions in gold. 1933. regulations of Jan. 30, 1934, Dec. 21, 1933: Proclamation No. 2067 Providing for the purchase of newly- issued under the Gold Reserve mined silver by the coinage mints for Act of 1934. coinage into standard silver dollars. Provisional gold regulations of Do, Dec. 28, 1933: Order of the Secretary of Requiring the delivery of gold coin, gold Jan. 30-31, 1934, issued under the Treasury. bullion, and gold certificates to the the Gold Reserve Act of 1934. Treasurer of the United States. Announcement of the Secretary of That, beginning Feb. 1, 1934, he will Dec. 30, 1933: the Treasury. buy imported fine gold bars through Proclamation No. 2070 Amending Proclamations of Mar. 6 and the New York Federal Reserve bank, Mar. 9, 1933, and the Executive order and other gold, foreign or domestic, of Mar. 10, 1933, and all orders and through mints and assay offices. regulations pursuant thereto. Announcement of the Secretary of That he will sell gold for export to for- Silver regulations issued under the Relating to newly mined silver (revoked the Treasury (Press Service No. eign central banks when our exchange proclamation of Dec. 31, 1933, by the newly mined domestic silver 1-24). rates reach gold export point. regulations of Apr. 16, 1935). Feb. 7, 1934: Announcement of the That, beginning Feb. 7, 1934, he will buy Jan. 11, 1934: Order of the Secretary of the Treasury. Amending the order of Dec. 28, 1933, Secretary of the Treasury. imported fine gold bars and certain requiring the delivery of gold coin, gold held in custody by Federal Re- gold bullion, and gold certificates to serve banks, through the New York Jan. 12, 1934: Executive Order No. the Treasurer of the United States. Federal Reserve bank; and other 6556, Amending Executive Order No. 6260 of gold, foreign or domestic, through Aug. 28, 1933, relating to the hoard- mints and assay offices. ing, export, and earmarking of gold Feb, 20, 1934: General ruling No. 1, Authorizing the mints and assay offices coin, bullion, or currency and to amplifying sec. 35 (d) of the provi- to purchase under certain conditions transactions in foreign exchange. sional 1934, gold regulations of Jan. 30-31, gold which was refined from imported gold-bearing materials. Regraded Unclassified 484 SILVER SILVER 485 MONEY AND Carpir-Continued MONEY AND Cummed Document Bubject Feb. 1934: Announcement of the That the Governor of the Federal Ro- Document Subject Secretary 21, of the Treasury (memo- serve bank of New York and the Aug. 9, 1934-Continued. randum for the press). superintendents of the mints and Executive Order No. 6814 Requiring the delivery of silver to the assay offices have been advised that United States mints. the price to be paid for gold in that Aug. 13, 1934: Release by the Secretary Giving the text of orders from the Pres- prevailing on the day of the deposit, of the Treasury (Press Service No. ident concerning the issue of silver Mar. 2, 1934: General ruling No. 2., Authorising the minta and assay offices 2-58). certificates. amplifying sec. 35 (d) of the pro- to purchase under certain conditions Aug. 17, 1934: Silver regulations issued Regulating transactions in silver (re- visional gold regulations of Jan. 30- gold imported before Jan. 31, 1934, under the Silver Purchase Act of vokes silver regulations of July 5, 31, 1934. and held in customs custody. 1934, the proclamation of Aug. 9, 1934). Mar. 6, 1934: Act to amend Federal Extending credit facilities to member 1934, the Executive order of Aug. 9, Reserve Act amendment of Feb. 27, banks, and making Government 80- 1934, and the order of the Secretary 1932 (73-115). curities eligible to secure Federal Re- of the Treasury of June 28, 1934. serve notes, until Mar. 3, 1935, and Aug. 27, 1934: Amendment to regula- Relating to tax on transfers of interest thereafter as the President may pre- tions No. 85, Bureau of Internal in silver bullion. scribe, not exceeding 2 years. Revenue (T. D. 4465). Mar. 8, 1934: Amendment to pro- Extending the time to May 1, 1934, Aug. 31, 1934: General ruling No. 3, Authorising the mints and assay offices visional gold regulations of Jan. 30- during which the transitory provisions amplifying sec. 35 (d) of the provi- to purchase under certain conditions 31, 1934. (secs. 45 and 46) shall be effective, sional gold regulations of Jan. 30-31, gold contained in deposits of silver. Apr. 20, 1934: Amendment to provi- Extending the time to June 1, 1934, 1934. sional gold regulations of Jan. 30- during which the transitory provisions Sept. 1, 1934: Amendment to silver reg- Relating to instruments of transfer, and 31, 1934. (secs. 45 and 46) shall be effective. ulations of Aug. 17, 1934. mixtures of "decree" and "non- May 8, 1934: Order of the Commis- Requiring consular invoices for all im- decree" silver. sioner of Customs, approved by the portations of gold exceeding $100 in Sept. 12, 1934: Instruction of the Sec- Providing for the transfer of title to the Secretary (T. D. 47056). value, with certain exceptions. retary of the Treasury. United States of newly mined silver June 19, 1934: in process, through instruments of Silver Purchase Act (73-438) Authorizing the Secretary of the Treas- transfer. ury to purchase silver, issue silver cer- Oct. 22, 1934: Amendment to provi- Relating to gold amalgam. tificates, and for other purposes. sional gold regulations of Jan. 30-31, Regulations issued under title Relating to tax on transfers of interest 1934. VIII, schedule A, subdivision 10 in silver bullion. Nov. 2, 1934: of the Revenue Act of 1926, as Executive Order No. 6895A Amending sec. 2A of Executive Order added by sec. 8, of the Silver No. 6814 of Aug. 9, 1934, regarding Purchase Act of 1934 (Bureau silver not required to be delivered. of Internal Revenue No. 85). Amendment to silver regulations of Regarding silver not required to be de- June 22, 1934: Treasury announcement Explaining the basis on which or the Aug. 17, 1934. livered, (memorandum for the press). ounceage of silver against which silver Amendment to Regulations No. Relating to tax on transfers of Interest certificates may be issued, on the one 85, Bureau of Internal Revenue in silver bullion. hand, and the dollar amount of silver (T. D. 4491). certificates to be issued, on the other Nov. 12, 1934: Regulations Relating to transactions in foreign ex- hand. change, transfers of credit, and the June 28, 1934: Order of the Secretary Relating to silver. export of coin and currency. of the Treasury. Nov. 13, 1934: Regulations of the New Governing foreign exchange transactions July 5, 1934: Regulations issued under Governing exportation of silver (revoked York Federal Reserve bank (Circular under the Executive order of Jan. 15, the order of the Secretary of the by silver regulations of Aug. 17, 1934). No, 1474). 1934 (superseding Circular No. 1176 Treasury, approved by the Presi- of Mar. 12, 1933). dent, June 28, 1934. Nov. 23, 1934: Regulations of the New Relating to foreign exchange reports (re- July 10, 1934: Amendment to regula- Relating to tax on transfers of interest York Federal Reserve bank (Circular ferring to circular No. 1474 of Nov. 13, tion No. 85, Bureau of Internal in silver bullion. No. 1480). 1934). Revenue (T. D. 4445). Nov. 26, 1934: General Ruling No. 4 Authorizing the mints and assay offices July 18, 1934: Amendment to regula- Do. amplifying sec. 35 (a) of the provis- to purchase under certain conditions tion No. 85, Bureau of Internal Revenue (T. D. 4450). ional 1934. gold regulations of Jan. 30-31, gold filings, elippings, pieces, etc., from certain persons engaged in indus- Aug. 1. 1934: Order of the Commis- Requiring consular invoices for all im- try, profession, or art. sioner of Customs, approved by the portations of gold exceeding $100 in Dec. 1, 1934: Instructions from the Regarding eligibility of silver contained Secretary (T. D. 47203, amending value, with certain exceptions. Secretary of the Treasury to Director in other materials. T. D. 47056). of the Mint. Aug. 8, 1934: Order of the Commis- Do. Dec. 31, 1934: sioner of Customs. approved by the Provisional gold regulations of Jan. Regulating transactions in gold. Secretary (T. D. 47214). 30-31, 1934, issued under the Aug. 9, 1934: Gold Reserve Act of 1934, as Proclamation No. 2092 Providing for the delivery of silver to amended. the mint for coinage or addition to General Ruling No. 5, amplifying Authorizing the mints and assay offices the monetary stocks. sec, 35 (d) of the provisional to purchase under certain conditions gold 1934, regulations of Jan. 30-31, gold refined from sweeps purchased from a United States mint or assay office. Regraded Unclassified 486 SILVER SILVIDE 487 MONEY AND Curprr-Continued MONEY AND Commed Document Subject Document Bullifect Feb. 14, 1935: Amendment to silver regulations Regarding silver salts. Aug. 28, 1935: Circular-letter (New Referring to circular No. 1474, Nov. York Federal Reserve Bank). of Aug. 17, 1934. 1934, re reports concerning transne- Proclamation No. 2117 Making Government securities eligible tions in foreign exchange. to secure Federal Reserve notes until Sept. 10, 1935: Mar. 3, 1937. Regulations (Department circular Governing the immediate payment of Feb. 18, 1935: Supreme Court Opinions. Concerning the validity of the gold No. 552). gold-clause securities, clause resolution of June 5, 1933, with Regulations (Department circular Governing the exchange of coins and respect tions, to the gold clause in obliga- No. 553). currencies of the United States. Nov. 14. 1935: Instructions of the Com- Relating to the importation and trans- Apr. 10, 1935: Proclamation No. 2124 Modifying the proclamation of Dec. missioner of Customs approved by portation of foreign silver coins 21, 1933, by providing for the dedue- the Acting Secretary of the Treasury (amended by Bureau of Customs cir- tion of 45 percent instead of 50 per- (Bureau of Customs circular letter cular letter No. 1524). cent for seigniorage and services No. 1473). performed by the Government, Nov. 20, 1935: Amendment to regula- Relating to tax on transfers of interest in Apr. 16, 1935: Newly mined domestic Relating to newly mined silver (revokes tions No. 85, Bureau of Internal Rev- silver bullion. silver regulations issued under the silver regulations of Dec. 30, 1933) enue (T. D. 4606). proclamation of Dec. 21, 1933, as (revoked by silver regulations of Dec. 12, 1935: Announcement of the Concerning the date on which the new amended by the proclamations of May 15, 1935). Secretary (Press Service No. 6-42). type S1 silver certificates will be made Aug. 9, 1934, and Apr. 10, 1935. available to the public. Apr. 24, 1935: Proclamation No. 2125 Further modifying tke proclamation of Dec. 24, 1935: Amendment to provi- Adding seca. 8a, 10a, and amending seca. Dec. 21, 1933, by providing for the sional gold regulations issued under 16, 18, 21, 26, 27, 36, 43, 44. deduction of 40 percent instead of the Gold Reserve Act of 1934. 50 percent for seigniorage and serv- Jan. 1, 1936: Provisional gold regula- Regulating transactions in gold. ices performed by the Government. tions of Jan. 30-31, 1934, issued May 15, 1935: Newly mined domestic Relating to newly-mined silver (revokes under the Gold Reserve Act of 1934, silver regulations issued under the newly mined domestic silver regula- as amended, Proclamation of Dec. 21, 1933, as tions of Apr. 16, 1935) (revoked by Jan. 10, 1936: Proclamation No. 2153. Extending powers conferred on the Pres- amended by the proclamations of newly mined domestic silver regula- ident by sec. 10 of the Gold Reservo Aug. 9, 1934, and Apr. 10 and Apr. tions of Jan. 10, 1938). Act of 1934, and sec, 43 of the act 24, 1935. approved May 12, 1933. May 20, 1935: Order of the Secretary Relating to silver. Mar. 6, 1936: Instructions of the Com- Relating to the importation and trans- of the Treasury, amending the order missioner of Customs approved by portation of foreign silver coins. of June 28, 1934. the Acting Secretary of the Treasury June 4, 1935: (Bureau of Customs circular letter Amendment to the silver regula- Amending secs. 2 and 103-105, and No. 1524). tions of Aug. 17, 1934, as adding secs. 110-116. May 18, 1936: Announcement of the That the United States would make amended. Secretary of the Treasury (Press purchases from the Central Bank of Instructions of the Acting Com- Relating to the importation and trans- Service No. 7-39). China of substantial amounts of missioner of Customs, approved portation of foreign silver coins silver, and would make available to by the Acting Secretary of the (amended by Bureau of Customs cir- the Central Bank of China dollar Treasury (Bureau of Customs cular letters Nos. 1473 and 1524.) exchange for currency stabilization circular letter No. 1390). purposes. June 5, 1935: Silver regulations of Aug. Sept. 25, 1936: Announcemnet of the Regulating transactions in silver. That the Governments of the United 17, 1934, as amended. Secretary of the Treasury (Press States, Great Britain, and France Aug. 15, 1935: Announcement of the Concerning the production of a new SI Service No. 8-53). have entered into a tripartite declara- Secretary of the Treasury (Press silver certificate with changes both in tion to maintain the greatest possible Service No. 5-59). the method of printing signatures and equilibrium in the system of inter- in design. national exchange and to avoid the Aug. 23, 1935: creation of any disturbance of that Banking Act of 1935 (74-305) Providing for the sound, effective and, system by monetary action. Oct. 8, 1936: Order of the Commis- uninterrupted operation of the bank- Dispensing with consular invoices for sioner of Customs, approved by the United States silver coins, August. 26, 1935: ing system, and for other purposes. Secretary (T. D. 48574, amending Amendment to provisional gold T. D. 47214). Amending secs. 28-35. Oct. 13, 1936: regulations of Jan. 30-31, 1934. Provisional gold regulations of Announcement of the Secretary of That he will sell gold for immediate Regulating transactions in gold. Jan. 30-31, 1934, issued under the Treasury (Press Service No. export to, or earmark for the account the Gold Reserve Act of 1934, 8-66). of, the exchange equalization or as amended, stabilization funds of certain countries Aug. 27, 1935: "Withdrawal of the under certain conditions. Right to Sue" resolution (74-63 res.). Authorizing exchange of coins and eur- rencies and immediate payment of Announcement of the Secretary of That Great Britain and France are the Treasury (Press Service No. gold-clause securities by the United complying with the conditions speci- 8-67). fied in the previous announcement of States; withdrawing the right to sue the United States thereon; limiting today. the use of certain appropriations; and for other purposes. Regraded Unclassified SILVER 488 SILVER 489 MONEY AND Cassir-Continued MONEY AND Subject Document Document Subject Nov. 24, 1936: Announcement of the Secretary of That the Governments of Belgium, the Oct. 25, 1937: Regulations (Depart- Governing the exchange of paper cur- the Treasury (Press Service No. Netherlands, and Switzerland have ment Circular No. 55 revised). rency and coin. made declarations of adherence to the Dec. 30, 1937: Proclamation No. 2268 Further modifying the proclamation of 8-93). principles of the tripartite declara- Dec. 21, 1933, A8 modified, by provid- tion of Sept. 25, 1936. ing that it shall remain in foree and Announcement of the Secretary of That the Secretary will sell gold for effect until Dec. 31, 1938, and by the Treasury, supplementing immediate export to, or earmark for providing for the deduction of 50 per- the announcement of Oct. 13, the account of, the treasuries of cent instead of 40 percent for seign- 1936, and withdrawing the state- those countries offering to sell gold iorage and services performed by the ment of Jan. 31, 1934 (Press to the United States. Government. Jan. 10, 1938: Newly mined domestic Relating to newly mined silver (revokes Service No. 8-94). Announcement of the Secretary of That Belgium, the Netherlands, and silver regulations issued under the newly mined domestic silver regula- Switzerland are complying with the proclamation of Dec. 30, 1937. tions of May 15, 1935). the Treasury (Press Service No. conditions specified in the statement Feb. 14, 1938: Announcement of the That gold acquired by the mints and 8-95). of Oct. 13, 1936, as supplemented by Secretary of the Treasury (Press assay offices after Jan. 1, 1938, will the previous statement of today. Service No. 12-51). be included in the Inactive gold That the Secretary will take appro- account only to the extent that such Dec. 22, 1936: Announcement of the Secretary of the Treasury (Press priate action with respect to net acquisitions in any one quarter exceed Service No. 9-20). additional acquisitions and releases $100,000,000. of gold by the Treasury Department Mar. 28, 1938: Announcement of the That the Treasury will defer continua- through the purchase and sale or Secretary of the Treasury (Press tion of the monthly silver purchase redemption of additional public debt Service No. 12-79). arrangements with Mexico until fur- ther notice. obligations. Jan. 23, 1937: Act to amend the Gold Extending the time within which the Apr. 19, 1938: Announcement of the That the inactive gold account has been President may exercise emergency Secretary of the Treasury (Press discontinued. Reserve Act (75-1), powers relating to the stabilization Service No. 13-1). fund and alteration of the weight of Apr. 28, 1938: the dollar. Proclamation No. 2282 Revoking Proclamation No. 2092 of Extending credit facilities to member Aug. 9, 1934, except as to the provi- Mar. 1, 1937: Act to amend Federal banks, and making Government sions thereof relating to settlement Reserve Act, B.S. amended (75-9). curities eligible to secure Federal for silver received by United States Reserve notes until June 30, 1039. coinage mints pursuant to proclama- tion No. 2067 of Dec. 21, 1933. Mar. 11, 1937: Instructions from the Regarding requirements for entry into Executive Order No. 7877 Revoking Executive Order No. 6814, Secretary of the Treasury to col- the United States of gold exported dated Aug. 9, 1934, and Executive lectors of customs. from Mexico. Order No. 6895-A, dated Nov. 2, June 1, 1937: Provisional gold regula- Regulating transactions in gold. 1934, relating to silver. tions of January 30-31, 1934, issued Order of the Secretary of the Revoking the orders of the Secretary of under the Gold Reserve Act of 1934, Treasury. the Treasury of June 28, 1934, and as amended. May 20, 1935, relating to silver, and July 9, 1937: Announcement of the That the Chinese Government will pur- the silver regulations of Aug. 17, 1934, Secretary, jointly with the Minister chase from the United States Treasury as amended. of Finance of China (Press Service & substantial amount of gold; that the Order of the Commissioner of Revoking T.D. 47214 requiring consular No. 10-71). U.S. Treasury will purchase from the Chinese Government an additional Customs, approved by the Sec- invoices for importations of silver, amount of silver; that the U. S. retary (T. D. 49535). with certain exceptions, as amended Treasury will broaden the scope of by T. D. 48574. May 25, 1938: Amendment to regula- Relating to tax on transfers of interest arrangements enabling the Central tions No. 85, Bureau of Internal in silver bullion. Bank of China to obtain dollar ex- Revenue (T. D. 4805). change for currency stabilization July 16, 1938: Memorandum for the Regarding the receipt of newly mined That purposes. the United States will sell gold to President from the Secretary of the domestic silver under the proclama- July 16, 1937: Announcement of the Treasury. tion of Dec. 21, 1933, as modified, Secretary of the Treasury, jointly Brazil and that the United States will after midnight of Dec. 31, 1938. with the Minister of Finance of Brazil make dollar exchange available to Dec. 19, 1938: Announcement of the That the arrangement announced on (Press Service No. 10-78). Brazil for the purpose of promoting Secretary of the Treasury (Press July 9, 1937, under which the Bank exchange equilibrium. Service No. 15-82). of China has been enabled to obtain Sept. 12, 1937: Statement by the Fed- That the Secretary of the Treasury has dollar exchange for stabilization pur- eral Open Market Committee. released approximately $300,000,000 poses has been extended for a further of gold from the Treasury's inactive period beyond Dec. 31, 1938. Regarding account. the receipt of newly mined Dee. 31, 1938: Proclamation No. 2317. Further modifying the proclamation of Sept. 14, 1937: Memorandum for the Dec. 21, 1933, as modified, by pro- President from the Secretary of the domestic silver under the proclams- viding that it shall remain in force Treasury. tion of Dec. 21, 193, as modified, and effect until June 30, 1939, and after midnight of Dec. 31, 1937. providing that silver to be eligible must be delivered to the mint by June 30, 1939. Regraded Unclassified 490 SILVER SILVER 491 MONEY AND Cummer-Continued MONEY AND Owner-Continged Document Subject Document Subject Jan. 16, 1939: Newly mined domestic Relating to newly mined allver (revokes 16, 1940: Announcement of the silver regulations issued under the newly mined domestic silver regula- Apr. Treasury Department (Press Service That the "official" rate for the British pound sterling as certified to the proclamation of Dec. 31, 1938. tions of Jan. 10, 1938). No. 20-75). Treasury Department by the New Feb. 10, 1939: Internal Revenue Code, Levying a tax on transfers of interest in York Federal Reserve Bank is to be sec. 1805 (76-1). silver bullion. used in the collection of estimated Feb. 11, 1939: Prescribing regulations Making regulation No. 85, concerning duties, appraisement of merchandise, under the Internal Revenue Code tax on transfers of interest in silver and the final liquidation of duties (T. D. 4887). bullion, applicable to sec. 1805 of the wherever the conversion of British Internal Revenue Code. pounds sterling into United States Apr. 5, 1939: Act to regulate banking Relating to banking, banks, and trust dollars is necessary for such pur- in the District of Columbia (76-20). companies in the District of Colum- poses. bia, and for other purposes, May 7, 1940: Resolution to amend see. Providing for the regulation of foreign June 20, 1939: Act to amend the Fed- Extending to June 16, 1942, the period 5 of the Trading with the Enemy Act, exchange transactions, etc. eral Reserve Act, as amended within which certain loans to execu- BS amended (76-69 res.). (76-135). tive officers of member banks of the June 11, 1940: Act to amend R. 8. To authorize charitable contributions by Federal Reserve System may be 5136, as amended (76-583), national banking associations. renewed or extended. July 19, 1940: Treasury announce- That Great Britain has resorted to ex- June 30, 1939: Act to amend the Fed- Extending to June 30, 1941, the period ment (Press Service No. 21-56). change control and has concluded eral Reserve Act, as amended during which Government securities arrangements between London and (76-162). are eligible to secure Federal Reserve New York for a system of registered notes. sterling accounts, which should tend July 6, 1939: toward stabilizing the sterling rate Act to amend Gold Reserve Act Extending the time within which the and protect the American market. of 1934, as amended (76-165). powers relating to the stabilization Dec. 27, 1940: Statement of the Secre- That an exchange stabilization agree- fund and alteration of the weight of tary of the Treasury and the repre- ment between the United States and the dollar may be exercised. sentatives from Argentina (Press Argentina has been completed. Newly mined domestic silver regu- Relating to receipt and coinage by Service No. 23-5). lations issued under the act of United States coinage mints of silver Apr. 7, 1941: Act to amend the Federal Relating to foreign accounts in Federal July 6, 1939. mined pursuant to the provisions of Reserve Act, as amended (77-31). Reserve banks and insured banks. seo. 4 of the act of July 6, 1939. Apr. 17, 1941: Treasury announcement Announcement of the purchase of July 18, 1939: Act to amend "An act Relating to foreign building and loan (Press Service No. 24-63). $132,000,000 of gold in South Africa to establish a code of law for the associations doing business in the from the British Treasury by the District of Columbia" and of any act District of Columbia. U. S. Treasury stabilization fund. or acts amendatory thereof (76-193). Apr. 25, 1941: Statement of the Secre- That exchange stabilization agreements July 25, 1939: tary of the Treasury and the repre- between the United States and China Proclamation No. 2342 Further modifying the proclamation sentative from the Republic of and between Great Britain and China of Dec. 21, 1933, as modified, pro- China (Press Sérvice No. 24-77). have been signed. viding that it shall remain in force June 21, 1941: Act to amend R. 8. Increasing the amount authorized to and effect until Dec. 31, 1939, with 3528, as amended (77-117). be used in the purchase of metal for respect to silver mined subsequently minor coins of the United States. to Dec. 21, 1933, and on or before June 30, 1941: July 1, 1939. Act to amend the Federal Reserve Extending the time during which direct Amendment to newly mined do- Amending secs. 1, 2, 20 (c), and 24. Act, as amended (77-141). obligations of the United States may mestic silver regulations of Jan. be used as collateral security for 16, 1939. Federal Reserve notes. July 26, 1939: An net to amend the act Amending sec. 6, as amended. Act to amend the Gold Reserve Extending the time during which the approved June 25, 1910, authorizing Act of 1934, as amended powers relating to the stabilization establishment of the Postal Savings (77-142). fund and alteration of the weight of System (76-229). the dollar may be authorized. Aug. 5, 1939: Nov. 19, 1941: Statement of the Secre- That an exchange stabilization agree- Act relating to commemorative Prohibiting the issuance and coinage tary of the Treasury and the Mexican ment and & silver purchase agreement coins (76-278). of certain commemorative coins and Secretary of the Treasury (Press between the United States and Mexico Act relating to building assoei- for other purposes. Service No. 28-56). have been signed. Providing for the abatement of per- Dec. 18, 1941: First War Powers Act, Amending sec. 5 of the Trading with the ations in the District of Colum- sonal taxes from insolvent building 1941, Title III (77-354). Enemy Act, as amended, providing bis (76-282), associations in the District of Colum- for the regulation of foreign exchange bia. transactions, etc. Sept. 11, 1939: Announcement of the Secretary of the Treasury (Press That the French Government as an Jan. 6, 1942: Announcement of the Sec- That the Treasury has purchased Service No. 18-72). emergency measure has set up a retary of the Treasury (Press Service $20,000,000 of gold from the Union system of exchange control in France No. 29-43). of Soviet Socialist Republics. and French territories and that the Feb. 27, 1942: Treasury announcement That the Secretary and the respresenta- tripartite declaration continues in (Press Service No. 30-50). tives from Ecuador have signed an effect. agreement for exchange stabilization. Mar. 27, 1942: Second War Powers Act, 1942, Title XII (77-507). Relating to the coinage of 5-cent pieces. Regraded Unclassified 492 SILVER SILVER 493 The CHAIRMAN: Further, Senator Hayden, of Arizona, has sub- mitted some data for the consideration of the committee, This While we hate to see any mines shut down, as we believe that we are going to need gold and silver very badly in the after-the-war adjustment, we do think that request will be given due consideration, and if the committee sees fit. if Washington and authorities believe that gold and silver should be eliminated at n later time, we will include some of these data, if not all, in the they should confine it to those producing gold from cyanide plants and allow all who ship to the smelters to continue operations. Even shutting down those with permanent record. (The matter referred to above follows:] cyanide plants would create & great deal of economic distress in certain parte of the State, and the quantity of materials which they consume is inconsequential UNITED STATES SENATE, in the total picture. COMMITTEE ON APPROPRIATIONS, I am trying to get together some additional data to send you, but, inasmuch May 5, 1948. as this news broke today, I thought we better pass along the above to you just Hon. ELMER THOMAS, as quickly as possible to see what you can do to help in the situation, Chairman, Senate Special Silver Committee, With kindest personal regards, 1 am, Washington, D. C. Yours very truly, My DEAR SENATOR THOMAS: I deeply regret that the work of the Senste CHARLES F. WILLIS, Committee on Appropriations will prevent me from attending the meeting of the State Secretary, Arizona Small Mine Operators Association. Senate Special Silver Committee scheduled to be held this morning at 10:30, in room 424 of the Senate Office Building, at which time the effect of preference MARCH 4, 1942. rating order P-56 in relation to the continued operation of our western mines will STATEMENT OF CHARLES F. WILLIS, STATE SECRETARY, ARIZONA SMALL MINE be discussed. However, I shall be greatly obliged if you will be good enough to allow me to OPERATORS ASSOCIATION; CHAIRMAN, BOARD OF GOVERNORS, ARIZONA DEPART- present herewith for inclusion in the record of this hearing before your committee MENT OF MINERAL RESOURCES the attached statement prepared by Mr. Charles F. Willis, State secretary of the Arizona Small Mine Operators Association, 528 Title and Trust Building, Phoenix, The War Production Board's erackdown on gold and silver mines by curtailing Arix, in which there is set forth in complete detail the reasons why the issuance the priority assistance available to them in purchasing essential supplies and of this order by the War Production Board will be detrimental not only to our equipment for the maintenance of their operations is a serious blow to small mine western mining industry but to the entire war effort of the United States. operators in Arizona and to the mining industry as & whole. The Board's order was based on a fallacious reasoning that gold and silver are Yours very sincerely, CARL HAYDEN, not important to the war effort because those two metals are not used in the United States Senator from Arizona, actual production of planes, tanks, guns, ships, trucks, ete. Analysis shows, however, that gold and silver production in Arizona and other Western States is MARCH 4, 1942. absolutely essential to base metal output. The Arizona Small Mine Operators Association is preparing a statement Senator CARL HAYDEN, appealing to the War Production Board to reconsider its action which virtually Senate Office Building, excludes gold and silver mining from priority assistance and will force a curtail- Washington, D. C. ment and gradual shut-down of the mines whose output is vital to maximum copper DEAR CARL: Newspaper releases this morning stated that the War Production production. Arizona is the leading copper-producing State in the Union, but to Board had cracked down upon gold and silver mining by denying priorities and maintain its position it must have suitable fluxing ores which are mined in the taking back serial numbers on gold and silver mines where the gold and silver was State's gold and silver properties. 30 percent or more of the dollar value of the ore. Gold and silver ores in Arizona are siliceous ores-they have a high silies con- This creates a very serious situation in Arizona and one that is in many ways tent-and silica is used by the smelters for flux. It is an essential element in the ridieulous. It seems very ridiculous that you may have an ore that has large smelting of base ores containing sulfides. How ridiculous it would be to force quantities of copper, lead, and zine and because there is an extra value on account the gold and silver mines to shut down and make the smelters aequire their silica of the gold and silver content you cannot get machinery and equipment. That, flux from sources which contain no values at all. however, is not the most serious Arizona situation, although some mines will be In 1941, small mines in Arizona shipped 110,361 tone of ore to copper smelters, harmed by it, as there are many mines producing base metals which are sweetened and of this 93,374 tons, or 84.6 percent of the total consisted of fluxing ores. by the gold and silver values which make possible the base metal production. Shipments of smelting ores and concentrates, which were purchased by the The serious situation in Arizona, however, is that copper smelters absolutely smelters primarily for their base-metal content amounted to only 16,987 tone or require siliceous or lime-fluxing ores. These ores are the gold and silver ores. 15.4 percent of the total. They must have them or they cannot produce copper. The big mines must have The smelters purchase fluxing ores, and in many cases pay good premiums for A sufficient quantity of silica and lime to make B. metallurgical mix and therefore them, in order to meintsin a proper metallurgical balance in their reduction the smelters have to buy the flux. It costs just as much money to mine silica or processes, Oftentimes, the metal content alone does not justify the purchase of lime having no value, but which uses just as much equipment, and If the smelters these ores, but their silica content make them suitable for mixing with ores which can get fluxing ores which have a value they thereby create an industry. are deficient in that requirement but have & substantial content of copper. With- In 1941 the small mines in Arizona shipped 110,361 tons of ore to copper smelters out the flux, the copper ores could not be smelted. and of this 93,374 tons, or 84.6 percent, of the total consisted of fluxing ores which The War Production Board's order curtails priority assistance to mines in which are ruled out of the priorities by this War Production Board order. Shipments the gold and silver content accounts for more than 30 percent of the dollar value of smelting ores and concentrates, which were purchased by the amelters primarily of the product, Such mines must apply for individual priority sesistance, which for their base-metal content amounted to only 16,987 tons, or 15.4 percent of the means long delays and that miles of red tape must be cut if any aid in to be ob- total. The 93,374 tons of Arizona fluxing ores, for which machinery and equipment tained at all. no longer can be obtained, contained gold with a market value of $413,525, silver The seriousness of this to small mines of Arizona is shown by smelter reports with a value of $376,510, and copper with a value of $272,762. which indicate that 74 percent of the dollar value of Arixona fluxing ores is in gold You can appreciate what this means, The copper mines have been combing and silver. The 93,374 tons of Arizona flusing ores shipped to smelters in 1941 the State for fluxing ores which have & metal content, and they must have them of contained gold with a market value of $413,525, silver with a value of $376,510, the production of copper will have to be curtailed, or the price increased to cover and copper with a value of $272,762. the cost of buying fluxes without value. The order will be a particularly heavy blow to mines in Mohave County, one of We have not had the opportunity nor the facilities for fully analyzing the State, Arizona's most important mining counties, because gold and silver accounted for but from the above you can see that the setting of an arbitrary 30 percent of the 74 percent of its production of gold, silver, copper, lead, and zine reported at base-metal production. dollar value is going to do a great deal of harm, not only to the State, but to the $3,141,236 in 1940. Yavapai County, with a 1940 output of nearly $13,000,000, Regraded Unclassified 494 SILVER SILVER 495 also will be seriously hurt because 30 percent of its output of the five major metals Fluxing ores in Arisons and undoubtedly in many other States come from consisted of gold and silver, large number of different sources. You will note from the report that in 1941 a Cochise County, which led the State in value of production of the five major there were 259 different shippers of fluxing ores to the Arisona copper emelters metals in 1940 by accounting for nearly $17,000,000 In value, also has A large gold and in addition there were another 64 smaller shippers, with values mainly in and silver output. These two metals accounted for 24 percent of its total value gold and eilver, but where information on the exact metal content was not that year and since this figure is an average it in obvious that gold and silver obtainable. content nt n. number of operations exceeded 30 percent. These shippers are continuously searching for and finding the ores that the smelters need. As the copper smelters increase their output, which they must do to fulfill the war demands, they are going to require more searching and to get DOUGLAS, ARIZ., March 9, 1942, the fluxes that they want they will have to take it in smaller quantities from a great number of sources. Mr. WILBUR A. NELSON, Administrator, War Production Board Mining Branch, It would not be possible to have these sources of fluxing ores developed without Washington, D. C. a definite knowledge that those who are developing them were going to be able to find a market for their production and to continue to get the necessary machinery The Arizona civilian defense emphatically protesta and urges reconsideration and supplies with which to keep going. There are many of them which could of recent orders amending P-56 and P-100 reducing priorities ratings to gold and never qualify under present limitations to get started, and yet, if the smelters are eilver mines having dollar value in excess of 30 percent of total value. This going to produce more copper, they must have the fluxes necessary. seriously affects production of fluxing ores necessary to copper smelting; makes The copper melters of Arizona have been continuously seeking more fluxing necessary mining of fluxes with no value, which will consume even more machinery ores than they have been able to get. When they find these additional fluxing and supplies, as they have to be equipped; cuts down available copper, lead, and ores they will produce more copper, but until they find them they are restricted. zine available from ores which could not be mined at all if gold and silver values The situation regarding fluxing ores has often been such that the smelters them- were not present and has other serious results. While order has very damaging selves, or the mining companies owning them, go out and help by leasing or effect on economy of State and ruins certain communities which have no alterna- financing to get the additional supplies that they must have. tive industries, at least distinction should be made to exempt from order those There la only one way that will satisfactorily solve this problem, and it is not mines containing any base metals. Believe order should be further modified to by making individual applications to the War Production Board for reinstatement permit new mines getting started, Bell the new mines being made today are the ones under P-56. The only way that it can be done is to give some kind of a blanket we may be heavily leaning upon a few years from now in the event the war carries rating which will assure these mines that when they start they can go ahead and on that long. Believe your objective can be worked out without the damage being keep on going. Many of them do not qualify even under the 10-men-employed done by order as now written. Heartily concur with features of order giving ruling but they make a very definite contribution to copper production. higher ratings to base metal production than that which they have had. Would It should be noted that the smelters will only buy the ores which they need to respectfully suggest cancelation of that part of order referring to gold, silver mines, make the proper metallurgical mix; therefore, the exemption from the recent order and conference with those concerned to order which will create less damaging should apply to all mines shipping to smelters regardless of gold and silver content. situation, yet attain objective you seek. It makes a rather ridiculous situation when any mine is cast aside and priorities P. G. BECKETT, are curtailed simply because they have high values in gold. and silver. Only State Chairman, Division Industrial Resources and Production, yesterday I had & letter from one of the members of our association asking me Arizona Civilian Defense Coordinating Council, what he should do regarding his mine in which he had recently opened up ore running $12.60 gold, 16 ounces in silver, and 15 percent copper. He had 300 pounds of copper BE against 16½ ounces of gold and silver in a ton of rock, and MARCH 10, 1942. yet under the recent ruling be is virtually prohibited from getting equipment and Dr. WILBUR A. NELSON, supplies even though he could make a splendid contribution to copper production. Administrator of Mining Branch, War Production Board, He has 15 times as much copper in a ton of rock as many of the large copper mines. Washington, D. C, Undoubtedly this man could qualify under your special application provision, DEAR MR. NELSON: The Arizona Small Mine Operators Association, con- but in order to do 60 he has to undertake a lot of expense, reports, delay, and other sisting of approximately 4,700 members, desires to register a most emphatic obstacles. He not alone has to hurdle those existing today, but, because of what protest against that portion of the recent amendment of preference rating order has happened in the last several months, he has the fear of new and impossible P-56 curtailing priorities' to gold and ellver mines. We can appreciate the handleaps being created against him in the future. He simply does not have the objective of your order but believe that it has been worked out in a most confused finances back of him to hurdle the obstacles even though he has a very valuable and complicated way and that the objective can be reached without causing the ore and a much-needed contribution to the war program, Hence he will not start damage and disturbances to the war industries that has been caused by this order. until be sees a reasonably clear road ahead. These various orders and changes are keeping the mine operators in such a The above is but one of many typical cases and it is to be hoped that this prob- state of confusion that they are just about ready to throw up their hands and my lem can be solved in a manner that is simple enough for these small mine operators "What's the use?" They have been anxious and ready to produce to help the war to operate under. They do not have the money with which to go to Washington program and find themselves so beset with obstacles and red tape that they do not to entangle their difficulties. They do not have the funds for financing them know where they are and cannot afford the expense of unraveling the red tape. during long delays. They do not have the ability to fill out the many reports I am enclosing a statement prepared by the Arizona Department of Mineral required or the cash to engage an engineer to do it for them, yet they do have Resources on this subject of curtailment of priorities to gold and ellver mines. copper, lead, and zine which the Government wants very badly. It does not include anything like a complete analysis of the subject, as it has been We believe that the cost in curtailment of the Nation's effort for an all-out-for bastily compiled with data readily available. It does not begin to show how victory program and the delay caused by the issuance of this gold-silver priorities damaging the situation really is, but I trust that you will read and absorb the order will prove to be of far more importance than the saving of the very small few points that it does bring out, amount of machinery and supplies used by gold and silver mining. In other The principal feature of this report is that which concerns us most in Arizona words the country would be better off, in our opinion, if the order had never been and that is the ability to continue mining fluxing ores under the revised order. issued for it has added to the confusion and uncertainty. This morning we have been informed that you have made the statement that Space or time does not permit of a complete discussion of this most important mines producing fluxing ores will be taken care of under the provision of the order subject, There are many other phases of almost equal importance but we believe which provides for special cases and appeal. This undoubtedly means that a that you will see that & mistake has been made and that it will be corrected. We mine producing fluxing ores can make individual applications to Washington for know that you have & huge problem and that you are approaching that problem reinstatement under P-56, but this in in no way A solution of the problem 168 we with a sincere and honest effort to solve it. Mistakes will be made because of see it here in the field. failure to appreciate the Intricacies and details of all industries which you are Regraded Unclassified SILVER 496 SILVER 497 required to act upon, but we feel that you will promptly make the changes "Not only that," be went on, "there is another point. It in because we have sary to fit the conditions. We hope that the serious mistake of issuing the gold-silver equitable priorities and less order will (bese high-grade silica fluxes available that we are able to treat a considerable be promptly rectified by setting it aside until a more damaging tonnage of low-grade siliceous ores containing values mainly in copper. Very frequently, good copper values are found in low silica ores which in themselves are plan can be worked out, uselese (MI flux. Mixed with clean flux, they can be handled." Yours sincerely, CHARLES F, WILLIS, Superintendents of other smelters express similar opinions and it is urged that State Secretary, Arizona Small Mine Operators Association. the War Production Board contact these men and verify for itself the accuracy of these observations. It is believed that the Board's recent order, which threatens to out off smelters' supplies of fluxing ores, should be modified and corrected STATEMENT TO Da. WILBUR A. NELSON, ADMINISTRATOR OF MINING BRANCH, before irreparable damage is done. Even delay would be serious to the base metal program. WAR PRODUCTION BOARD Table I, appended to this report, giving data on Arisona custom ore shipments (Prepared by the Arizona Department of Mineral Resources, Phoenix, Aria.) to smelters for the year 1941 emphasizes the importance of fluxing ores, Eighty- five percent of the custom ores shipped, or 93,374 tons out of a total of 110,361 The War Production Board's recent amendment of preference rating order tons, consisted of fluxing ores which contained & low copper content but high P-56, curtailing priority assistance to gold and silver mines, has caused serious values in gold and silver. apprehension among mine operators in Arizona and throughout the west, The The smelting oree and concentrates, which were shipped for their copper content misgivings that they feel and have expressed are by no means based solely on the and which carried minor values in gold and silver, amounted to only 15 percent of dismal outlook for gold and silver mining; they are alarmed na well over the effect the total shipments. These figures do not include the ores delivered to smelters that the new order may have on the production of such base metale as copper, by the major copper-producing mines in Arizona including those operated by lead, and aine, which are HO sorely needed in the war program. Phelps Dodge Corporation, Inspiration Consolidated Copper Co., Miami Copper While the granting of higher ratings to producers of the so-called essential war Co., Nevada Consolidated Copper Corporation, Magma Copper Co., and Shattuck minerals is recognised as a constructive step, the exclusion of gold and silver mines Denn Mining Co., but the custom ores shipped from the small mines played an from P-56 has caused concern and consternation because it in not felt that the important part in the reduction of the output of the large producers. A-10 rating, still open to producers of these two metals, is adequate under present Table II shows the metal content of the fluxing orea acquired by the smelters conditions to furnish them with needed supplies and equipment. If an A-10 last year and reveals that the gold and silver values of the fluxing ores shipped to rating were good enough, there would be no point in granting A-1-c ratings to smelters in 1941 contained gold with a market value of 8413,525, silver with & value producers of base metals. of $373,510. and copper worth only $272,762. Smelters obtained this material It is felt that the order barring gold and ailver mines from P-56 was due to from 259 different shippers and there were 64 still smaller shippers of fluxing misunderstanding and to a lack of appreciation of the importance of gold and material with values mainly in gold and silver. silver production to the mining and treatment of base metals. Gold and silver Since the Board's order curtails priority assistance under P-56 to any mine ores which contain a high silica content are essential to the smelting and reduction in which the combined gold and silver content equala or exceeds 30 percent of the of copper and high lime is necessary to lead smelting. total dollar value, it in clearly evident that producers of these fluxing ores would Smelters have essential requirements for maintaining & metallurgical balance not be entitled to better than an A-10 priority rating. Arizona is known as the in their operations. These are the proper relative proportions of lime or silies to leading copper-producing State in the Union and the general inclination is to sulfides and since the perfect ore that contains exactly the right proportions of minimize the importance of the State's gold and silver production. Nevertheless, these constituents does not usually occur in nature it is necessary for the smelters much of the copper mined could not be recovered if it were not for the gold and to acquire them from different locations. silver content, and reduction of the copper sulfides would not be possible without In Árizona, the great bulk of the copper ores are sulfide in character with con- fluxing material which is obtained in large quantities from the gold and silver centrates extra high and consequently there is A deficiency of silica. The alboa- producers. tion in Arizona regarding copper ores applies equally to other States where copper Table III gives data on gold and silver production in Arizona by counties in and lead are mined-it is necessary to purchase siliceous or lime ores for smelting 1940, gathered from the United States Bureau of Mines' Minerals Yearbook, purposes and if they can be obtained with something of value in them, no much the and shows that the production of gold and silver in certain counties far exceeds the 30 percent maximum value of gold and silver used by the War Production Board in better. As a result, the smelters often pay premiums for the siliceous orea produced by cutting off priority assistance to gold and silver producers under P-56. It is note- gold and silver properties or high lime ores in order to obtain proper fluxing ms- worthy that 18.7 percent of the total value of Arisona production of gold, silver, terials, and they must have them to smelt copper, lend, and other metals, It copper, lead, and zine in 1940 was accounted for by gold and silver. would seem to be absolutely ridiculous to force the gold and silver mines, which The order will be a particularly heavy blow to mines in Mohave County, one of have been providing these materials, to shut down and create either a curtailment the State's most important mining counties, because gold and silver values re- of the smelting of base metals or require the smelters to go out and develop new covered amounted to $2,329,217, or 74 percent of the total value of its output of sources of flux without value, but with cost and consumption of equipment gold, silver, copper, lead, and zine, which aggregated $3,141,236 in 1940. Yavapai County, with a 1940 output of nearly $13,000,000, also will be seriously hurt because equal to that which has value. As a matter of fact, if it becomes necessary to develop quartz mines in order to 30 percent of its output of the five major metals consisted of gold and silver. acquire alliceous ores, the cost will be greater and much additional equipment Cochise County, which led the State in value of production of the five major will be required. The gold and silver mines are already developed and equipped metals in 1940 by accounting for & total of nearly $17,000,000, also has a large and are on a producing basis. To start work in unexploited and unexplored de- gold and silver output. These two metals were responsible for 24 percent of the posits will require tremendous expenditures for new equipment and a considerable total value of the county's 1940 output and since this figure is an average it in delay. Furthermore, A-1-a priority ratings may well be needed to obtain the obvious that gold and silver content at a number of operations exceeded 30 percent. In order to bring out the serious effect that curtailment of gold production may new machinery, A superintendent of one of the Arizona copper emelters stated: "The gold-silver have on certain areas in Arisona, tables IV and V were prepared to show the Im- silleeous fluxing ores are very essential in the smelting of copper orea and COD- portance of mining in Mohave County, where gold and silver dominate mining centrates. We depend almost entirely on gold-silver ores, which rarely contain operations. Table IV was compiled from the employers' contribution reports to any copper, for use as flux in the converters in order to complete the production the Arizona Employment Security Commission and reveals that, of the industries covered by the Workmen's Compensation Act, mining in by far the most important of copper from the reverberatory matte." Another superintendent declared: "It would be & serious blow to us if our ship- providing 57 percent of the employment and 63 percent of the pay roll. ments of gold-silver siliceous ones were cut off. As far AS we are concerned, These figures cover only those employed directly by the industry while as & the bulk of our receipts of gold-silver ores are used strictly for fluxing purposes matter of fact A heavy percentage of those employed in trade, service, utilities, and without them we would be in a serious predicament." 73052 pt. Regraded Unclassified 498 SILVER SILVER 499 and other industries are indirectly dependent on mining and the pay rolls it provides for their livelihood. TABLE II.-Gold, silver, and copper content of Arizona fluzing oree, year 1941 Inasmuch as the Workmen's Compensation Act does not cover employees in the agricultural industry and & number of other occupations (see footnote at bottom of table IV) table V was compiled from the 1930 United States census figures on Metal Amount contained Value Percent of total value persons engaged in gainful occupations in Mohave County to show more clearly mining's relative importance to the county. It will be noted from the table that Gold 11,815 onness $413,825 silver 539, ounces 88.01 only two primary industries appear-mining and agriculture. 376,510 2,273,022 pounds 85.43 Therefore, the entire population of Mohave County is dependent on the new Copper 272,726 25.00 wealth provided by these industries and by the tourists on whom figures are not Total 1,062,797 available. Without these industries, there would be no need for service, trade, Gold and silver combined 100.00 790,035 74.84 construction, and utility industries. It is upon mining and agriculture that the county was built and if one of these two industries in withdrawn the effect will be almost disastrous. TABLE III.-Value of mine production of gold and nilver in Arizona compared with From the standpoint of the communities and counties dependent on gold and total value of gold, silver, copper, lead, and sine output by counties, year 1940 silver mining, every effort should be made to maintain their production and avoid a collapse of their economic structure. But even if it is felt that the war effort Gold, comes first and that it may be necessary to sacrifice communities to the victory Fine County Value Fine ouners Gold and Percentage Value silver, program, there still is no justification for clamping down on the gold and silver ounoss silver value of total-8 copper, metals lend, sine because of the importance of these metals to the Nation's financial structure and value to the production of war essential metals. Gold and silver are thought of as monetary metals and of relatively little Cochise 65,004 $3,277,240 2,074,564 $1,830,801 $4,108,041 24.21 importance today. However, in view of the tremendous expenditures that are Coconino 4 140 218 $15,968,111 155 295 & 01 Glla 4,961 173,635 144,336 102,639 9,767 being made and the always present threat of inflation due to the unprecedented 276,274 .17 Graham 48 1,680 2,333 16,332,698 1,659 3,330 56.62 and rapidly growing national debt, these metals are vital to the Nation's credit Greenlee 1,185 41,478 83,859 5,897 59,633 101,108 3.20 Maricopa 6,729 235,516 122,518 8,156,719 system. 87,124 322,639 91.08 Mohave 59,037 2,066,295 369,734 354,218 262,922 Moreover, silver is coming into greater prominence as a result of the war 2,329,217 74.15 Pima 33,525 1,173,375 394,581 8,141,236 280,501 1,453,966 10.97 Pinal 48,227 1,812,045 1,061,107 13,253,316 demand for other metals and the fields in which it can be used as a substitute, 754,565 2,267,510 15.94 Aside from its applications in photography and the drug industry, both of which Banta Crus 2,545 89,075 640,710 14,228,443 455,616 544,691 31.58 Yavapal 75,210 2,632,350 1,742,558 1,651,555 1,174,439 3,806,789 are vital in war, it is finding wider use in plating as & substitute for tin and in 20.69 Yuma 3,272 114,520 29,700 12,823,783 21,120 135,640 RU.83 150,996 electrical equipment as & substitute for copper. Total The most important reason for giving these mines whatever priority assistance 294,807 10,318,245 7,075,215 5,031,264 15,349,509 18.68 81,167,780 is necessary to permit continued and uninterrupted operations, however, is the need of the gold and silver ores by the smelters for fluxing purposes. If there TABLE IV.-Employment and wage payments in Mohave County, Arie., year 1940 were no other reason at all for the War Production Board to reconsider its hasty action in denying gold and silver mines priority assistance under P-56, this Average Percent of Industry Wage pay- Percent of would be sufficient because in this manner these mines are making a vital and number of total em- indispensable contribution to the victory program. ployees menta total wage employees payments Mining 668 Contract construction 57.05 $1,045,571.57 63.18 TABLE I.-Shipments of custom ores and concentrates to smelters by small lot shippers 6 Manufacturing .81 10,673.99 .65 19 Transportation 1.62 in Arizona, year 1941 23,531.50 1.42 19 Communication 1.62 20,589.68 1.24 Utilities 13 1.11 23,038.23 1.39 Trade 40 3.42 54,871.77 3.32 Copper content Gold content Silver content Real estate 241 20.58 325,701.76 19.60 Service 10 .85 12,281.76 .74 Percent of total shippers Percent of total shipped Professional service 144 12.30 127,811.05 7.72 Miscellaneous 5 .43 4,584.14 .28 Type of one or con- Number of shippers Tons of are shipped Percent of total copper 6 .51 6,111.25 .37 Total centrates Ounces Ounces per ton Ounes per ton 1,171 100.00 1,654,767.00 100.00 Source: Employers' contribution reports to Arisons Employment Security Commission. These figures Pounds Parcent Ounees include only workers covered by the Unemployment Compensation Act. Companies with less than 3 employees, nor the wage earners of certain nonprofts organizations. employees are not subject to the law. Neither are agricultural labor, domestic services, Government Fluxing 259 84.6 03,374 84.6 TABLE V.-Persona engaged in gainful occupations in Mohave County, year 1950 Smelting 2,273,022 1.22 31.4 11,815 0.1265 529,473 5.671 47 15.4 16,987 15.4 4,963,713 14.61 68.6 (1) (1) 3 3 206 Industry Number of Percent of 100.0 110,361 100.0 employees total em- Industry Number of Percent of Total 7,236,735 3.19 100.0 ployees employees total em- ployees a Not available. Agriculture Mining 542 22.16 Trade 285 11.68- Source: Complied by the Arizona Department of Mineral Resources from data submitted by the operators Construction 531 21.71 Real estate 16 .65 of smelters treating Arizona ores. Smelters submitting the dats from which the table was complied include Manufacturing M 3.43 Finance 24 ,95 Transportation 55 the Clarkdale and Dougles amelters of Phelps-Dodge Corporation, the Hayden and El Paso plants of 125 Government service 130 5.31 American Stnelting & Refining Co., the Miami smelter of International Amelting & Refining Co., and the Communication 196 7.07 Magma Copper Co. smelter at Superior. Utilities 67 2.74 Total 2,445 99.99 NOTE-In addition to the above there are also 64 still smaller shippers of fluxing ores with values mainly 55 1.80 in gold and silver, but metal content is not available. The above tabulation does not Include abipments of the major properties In Arizona operated by Philpe break-down Bonroe: United States osnsus figures for the year 1980 classified to correspond M closely an possible to the Dodge Corporation. Inspiration Consolidated Copper Co., Miami Copper Co., Nevada Consolidated Cop- player of employment used by the Arisona Employment Security Commission in Its reports of em- per Corporation, Magnia Copper Co., and Shattuck Denn Mining Co. of are much higher than those of the employment security persons commission which apply only to employees rally contributions, The consua figures, which include all engaged in estatul occupations nato- employees, domestic servants, nor the employees of certain nonproôt cover organizations. businesses where I or more individuals are working and does not agricultural workers, Government Regraded Unclassified SILVER SILVER 501 500 (From the Mining Journal, March 18, 1942] Even while one part of the particular order gives & highly improved and pre- DRIFTS AND CROSSCUTS recognizing mining BE being almost on the par with munitions, another section of ferred rating to some producers and to the manufacturers of mining machinery, While it has down" on priorities for gold and allver mines, or give them a low been expected for some time that the War Production Board same order gives a lowered rating to Those who produce fluxes. And fluxes are the just as essential to base-metal mining as machinery. would "crack than that occupied by copper, lead, drastic zine, and than other metals, the Flagrant ignorance of the mining industry was shown by those who wrote that preferred order that place finally came out was many times more even the most It would be laughable if it were not 50 serious, but the bottleneck of the order. whole production program is the shortage of raw materials. Sometimes it looks pessimiatic anticipated. A-10 granted sounds like a fair rating, the in way the that cold everything is though deliberate efforts were being made to sabotage the war program by being pushed will be obtainable under it. The drawing regardless of the which While the up ahead means that A-10 is being left out of the line at and mines that very restricting, as or making more difficult, raw-materials output. There possibly are some gold and silver mines that are not essential to the soon nothing 30 percent or more gold and silver in dollar value, ridiculous that it is base- effort, except from an economic point of view, and thus the steel and other contain metal content or the uses to which the ore is put, is so hard to war commodities which they consume might be used more effectively in other war industries. It in always A question of relative importance. However, these understand. admitting-which we do not-that the metals, gold the and silver, are non- the exceptional cases, and to "crack down" on a very large group, and then Even insofar no the defense program la concerned, copper, lead, sine, are make each one individually justify its own right to participate in the war effort essentials and other metals which are highly assential are 80 extra the important and is a mighty back-handed way of solving the problem. tungsten, more hi volume that we should be quite willing to permit in production Many necessary producing units will never qualify because they cannot afford 80 much little oilver and gold to get them. It is the silver and gold it many casos the expense and red tape involved. The number of producing units that can of a sweeten the value of copper, lead, and sine ores and make left in possible to qualify would be at least 50 to 1 as compared with those which would seek quali- which mine them. Without the ailver and gold, they would have to be the ground, fication on an economic basis. Likewise important are the minerals contained other than the base metals. If it is possible for the mining branch of the War Production Board to shut Copper silies available to offect the high sulfide concentrates they make. smelters need and must have silica and the large copper mines which seldom have down all gold and ailver mines and then determine, after individual application and consideration which ones are sufficiently important to the war program to enough scour the country for high silicious ores and hope to be able to find them be permitted to resume, a reverse procedure likewise should be possible; that is, with a ruled out, yet the copper smelters will have to find and mine fluxes. They gold-silver content that pays for the cost of handling them. Now these let all properties continue to operate and determine by individual examination of records which ones should be shut down, or which ones consume needed sup- ores The equipment are and supplies used in mining fluxes without value will likely be plice in excess of the importance of that which they produce. The plan being even greater than mining the same quantities with values as it will mean new used means delay and less ultimate production; the other means the speeding which is so highly desirable. Again we say that if there is an awkward and mines to get under way. Similarly, lime is an essential in lead smelting. Without lime flux we will not up complicated way of doing a thing, they seem to be able to find it in Washington, lead and we must have it. Just because you are unfortunate enough of to have It is far from soothing to receive suave assurance that everything will work get lime rock with some gold and silver values in it to help pay for the cost mining, out all right; that no mine producing appreciable quantities of copper, lead, or zine, will be denied priorities; that no mine producing needed fluxing ores will a you are prohibited from getting supplies and equipment. It is such a ridieulous ruling and definition that we feel it will be modified just be held back. They have been hurt and the whole program has been delayed. as to the base-metal production program. We know there are some capable quickly as its sponsors can be made to appreciate what damage they have mining done Unfortunately, Mr. Jap is not waiting until we get our house in order. We are engaged in & war that (s) costing many lives and much money, and every day that men connected with the War Production Board. That la what makes It 80 hard preparations are delayed costs additional lives and extends the financial burden to understand why they get so far off on the wrong foot. to new generations. The enemy must derive aid and comfort to see that the men in Washington who dominate the policies of the basic war industry-mining-know nothing about it, and that the men in Washington who do know mining-and there are [From The Mining Journal, April 15, 1042] many of them-seemingly lack the guts to tell their polley-making superiors just how harmful and far-reaching some of their actions are. DRIFTS AND CROSSCUTS We do believe that this and other wrinkles will be ironed out eventually, but Wars are not won with brave words and stirring bands. Wars are won with why cause the wrinkles in the first place? CHARLES F. WILLIS. deeds. promising cooperation of government, of labor, of industry, and of all the people. Wars are won with production. Wars are won through the full, uncom- Our war will be won or lost on the home front. Victory depends on whether we BELMONT COPPER MINING Co., can make and deliver the endless quantities of planes and shipe and guna and Superior, Aria,, March 10, 1942, ammunition that our troops and our allies 80 sorely need. And we are never going to make these planes and ships and guns and ammuni- Mr. CHARLES F. WILLIS, tjon until we first produce the raw materials with which to construct them. The Phoenix, Aris. basie raw materials are minerals and metals and we hope that Washington will DEAR Mn. WILLIS: With reference to the suggestion of the Office of Production Management that priorities be extended only to those mines where the copper soon learn that it must do something about getting them. production is at least 70 percent of the total value in the ore, this would work as & Nothing has happened in the mining industry in a long time which has stirred great hardship on companies that are endeavoring to open up new copper are so much wrath as the recent ill-advised and ridiculously written order which bodies. In the case of this company, the property was recently and very thoroughly "cracked up down" on mines simply because they happen to have gold and ellver of examined by engineers representing one of the large mining companies and values in excess of 30 percent of the dollar-value of their production, regardless serious consideration is being given to an extensive development program in the the use to which these ores are put. While one department of the Government belief that & rich copper mine will be developed at depth similar to the high-grade another department "cracks down" and says these metals cannot be produced it tells us how badly it needs copper, lead, and zine, and urges all-out production and deep-seated ore bodies in the nearby Magma Copper Co. The ores so far mined at and near to the surface on our property are thoroughly oxidized and without going through and keeping up B complicated procedure that makes leached, with silver and gold predominating. With greater depth the silver and almost impossible for the mines to produce. gold values decrease and the copper increases. In this district oxidation goes deep and the main ore body of the Magma Copper Co. has its apex between the Regraded Unclassified SILVER SILVER 503 502 500-foot level. At our property, the veins hundred near to feet the the surface 000- 4. This order will create widerpread unemployment at & time when employment 400- tain practically and DO copper, and at A depth of several ore rune is very important, both from the standpoint of economic necessity and of morale. 5. This order will automatically deprive the Government of a large cash income, between 1½ when and 2 copper percent mines copper, are to be found near the surface in long past and badly needed to purchase war supplies, that does not cost the taxpayers & penny. we should showings are favorable. This company for years which past has been The day look for them in proven districts where the several geological conditions and Now let us amplify these statements a little. I have said that this order will seriously interfere with the production of strategic metals. Here in how: The surface siliceous ores containing silver, copper, issue and gold in the cause are of required large producers of copper and other strategic metals all have ores that require the producing smelters for flux but the more important at national addition of fluxing ores for smelting. They buy these ores only when they serve by defense the is the excellent prospect of finding rich copper ore greater depth. this purpose. The ores they buy are produced, almost exclusively, by mines that Yours very truly, will be closed down by this order. It would cost more, take more machinery, sup- ARTHUR J. SMITH, Secretary. plies, and equipment, to provide other sources of these fluxes, than will be required to continue the operation of the present mines supplying them-and it would take months to develop them. [Radio address delivered by Col. station Charles KTAR H. Phoenix, Rutherford, Art., Civilian March Adde 14, to 1942] the Secretary of War, over ralla In addition, the actual facts are that & large percentage, B large majority in fact, of the mines producing strategic metals could not operate at all if their oren How MISTAKEN PRIORITIES POLICIES HANDICAP Our ALL-OUT WAR EFFORTS did not contain enough gold and silver to pay at least part of the cost of operation; and there are large numbers of them, whose production of strategic metals is I have said to you before, in this series of talks on national defense, and more important, that produce gold and silver far above this arbitrary ruling. recently in my talks on winning the war, that I consider it the duty of every citizen 1 have said that this order will prevent putting into production important call attention to what he believes to be mistakes made by our public officials; prospective producers of strategic metals; for instance, a few days ago, the State to I have told you that I consider it the duty of those with an intimate connection secretary of the Arisona Small Mine Operators Association notified Dr. Nelson, with and Washington officialdom to go to bat for the correction of such mistakes. who promulgated this absurd order, of a case in Arizona of & mine ready to go into about Strange a lawyer not trying his own suits. 1 went to bat on the matter of military to say, I follow my own advice in this matter, in spite of the old adages production with ore that runs 300 pounds of copper to the ton, 15 times what many of the large mines produce-yet because his ore has 16½ ounces of gold and defenses for our dame and utilities-and the guards are here. I helped in the silver, this order makes it impossible for him to operate. And what happened? campaign against the mistaken priorities ruling affecting irrigation equipment- Two days later the man who made the order declared that it would not be modified. and the mistakes have been corrected. That this order will make it increasingly difficult, if not impossible, to finance But now we have come up against a mistake in priorities rulings that taken the the development and operation of more mines to supply more of the needed grand prize for absolute lunacy. I refer to the recent order cutting down the strategic metals, This la almost self-evident, Why should anyone take a silver. There is no use mincing words, or polling punches, this is 80 absolutely priorities standing of mines having 30 percent or over of their values in gold and chance on investing money in mine development if they can anticipate that just such ridioulous orders BS this one are likely to destroy the development, close the absurd that those responsible for it automatically convict themselves of absolute mine, and lose their investment? and complete ignorance about mining in all its phases, and by this action convict That this order will create widespread unemployment, which is self-evident and themselves of not having the faintest idea about what-in connection with min- needs no elaboration. That this order will deprive the Government of a large cash income, badly ing or will not be helpful in winning the war. Now naturally, since it is obvious that this ruling-if not materially modified- needed to purchase war supplies, that does not cost the taxpayers anything. Here will have a direct and seriously bad effect upon winning the war; and since my is how and why: superior officer, the Secretary of War, has so tremendous & responsibility in our Under the Silver Remonetization Act of 1939 silver producers ship to the United war effort the first thing I did when this silly ruling threatened the mining industry States mint. The mint coins 55 percent into silver dollars and sends it as pay- as A whole, and strategic minerals in particular, was to sit down and write & letter ment, and retains 45 percent as payment for receiving, handling, coining, etc., most of which in clear profit to the Government. Last year this amounted to to the Secretary, Here is what I wrote: PHOENIX, ARIZ., March 11, 1048. nearly $40,000,000 the Government received, which did not cost the taxpayers anything, and which would buy quite & few planes our beleaguered forces in the Hon. BENRY L. STIMSON, South Pacific need 80 badly. And Dr. Nelson blithely proposes to stop this source Secretary of War, Washington, D. C. of revenue to the Government. DEAR Ma. SECRETARY: As your civilian aide in the important mining State Taken altogether, Mr. Secretary, this order reaches such heights of absurdity, of Arizona, I would be derolict in my duty if I did not call your attention to the and discloses such depths of ignorance regarding the actual facts in mining stra- inovitable handicaps to our war efforts that would follow the recent order of tegle metals, that the English language hardly contains strong enough terms to Dr. Wilbur A. Nelson, Administrator of the Mining Branch of the War Production denounce it. Board. This order, unless either revoked or greatly modified, will place a number I am fully aware, of course, that this order comes from a bureau over which of handicaps on our conduct of the war, and since you have such tremendous you have no control, just as other orders and rulings which interfere with the most responsibilities in carrying on the war you should be informed by persons who efficient functioning of your War Department. And, I am also fully aware that the people of the United States, whenever anybody of any bureau gets in your know. I have lived and practiced law in Arizona for over 36 yeare-most of it in way in earrying out the fine job you are doing in winning the war, will back you mining eamps, and much of it concerning mining. I am & past chairman of the up in demanding that the orders that interfere be revoked, and the persons who Arizona Small Mine Owners Association. I have studied the problems of national issue such orders be released where they can do no more harm. defense, and preached national preparedness, for more than 20 years, and I have I do not advocate the Japanese system of hari-kiri, for those who made major actively aided in the national preparedness efforts, as civilian aide to the Secretary mistakes, but I surely hope that something can be done to correct this major of War. for 12 years. error, and eliminate those responsible for It. We have no place in this Govern- I can assure you, oill of my long experience and observation of both mining ment, at this time when we are fighting with our backs to the wall, for the preserva- matters and of the problems of national defense, that this order, unless revoked, tion of human liberty, for people who make rash and absurd orders that actually will handicap our war program in all the following ways: damage our war efforts, and, I can promise you, Mr. Secretary, 100 percent support 1. This order will seriously interfere with the production of strategic matale- from the people of Arizona in whatever efforts you make to cure this situation. copper, lend, zine, manganese, tungsten, and others. Respectfully submitted. 2. This order will prevent putting into production large numbers of mines CHARLES H. RUTHERFORD, capable of producing strategie metals, now ready to produce, Colonel, Civilian Aide to the Secretary of War. 3. This order will make it increasingly difficult, if not impossible, to finance further mining development and production of strategic metals. Unclassified 504 SILVER SILVER 505 You might gather from this letter that I am & little "het up" an our "Old one 8 few days later dated March 4 explaining that the order does not mean that Roman" used to say, Well, I am. I have been in public life for more than a the mines will be cut off from priorities assistance, but that, "It la felt that each longer, and I know of no instance where such complete ineptitude, has led such abyamal generation, and have observed matters affecting governmental activities much such case should be dealt with on its merits in order to conserve scarce materials." Why in the name of reason should the War Production Board issue an order of ignorance of the actual facts and the inevitable results, to such an inex- this nature covering the mining industry which results in the throwing oute the already overburdened and overcomplicated and overorganised War Production cusable order. of importance in Washington, and protest against the continuance of this abourd I hope that every citizen within the sound of my voice will write to anybody Board the burden of considering every mining operation in this country as & special case. order, which if carried out, will close down our mines by the hundred, and make One of the earliest arrivals in Washington on this matter had the following it more difficult and expensive to produce strategle metals, and which will bank- experience: Having explained the position of his mine and its production of lead rupt many small mine owners and operators; that will throw thousands of men and zino coincident with the gold and silver in the ore which exceeded the 30 out of work and handicap mining development throughout the West. percent limit, he was informed that if be would go to Mr. X in temporary building Y, I hope that Representatives in Congress of every mining State will rise up wing Z, and be would certify that the alne production was necessary, and if he would and make the welkin ring with denunciation of this inexcusable example of then go to Mr. 8, in temporary building U, wing V, and he would certify that the lead production was necessary, he would récommend that the present high bureaucratic bungling. I hope that the newspapers and cartoonista of the Nettor will denounce this priority rating of the mine, which had been annulled by the order, should be order, and place the proper headgear on this pleture of the dunces who are restored and he held out hope to the operator that, inasmuch ne his recommenda- tions generally had been approved, that it was likely that this one also would be capable of such incompetance. The miners of the West are good Americans. They are working hard and approved. In the meantime, "They also serve who only stand and walt." fast. They are performing some of the most useful and necessary functions in This is in accord with the policy of the Department which in its last release connection with the war. They are producing the minerals without which we dated March 4, as mentioned above, has the following concluding paragraph: would be compelled to fold up and let the yellow termites of Japan eat up the "Border-line cases in which there in some question AS to whether the proportion foundations of our liberties. of gold and silver produced by a mine is high enough to remove it from the cover- We cannot and we will not permit some ignorant bureaucrat in Washington age of P-56 will be reviewed on appeal, and the right to use blanket ratings under to put our mining industry out of business, nor to make it impossible for our the terms of the order may be granted in specific cases." Then take the case of another mine producing lead and sinc. It operated for miners to do their share in winning the war. The excuse offered is that each case can be heard on ite own merita, This is AA a year and a half at a loss of $62,000 and shut down 30 days ago because under silly AM the original order. Each case would be heard by the same man who issued current conditions of cost of labor and supplies and taxes it could not operate the ridiculous order-and how far would they get? The small mine owners and except at a loss. If it could get & zero quota and operate under the new metals producers of the West cannot afford to go to Washington. They cannot afford reserve premium prices to stimulate production it could resume. It applied for B. to employ high-priced representatives to go there, to fight for their right to exist sero quota and was informed that it did not have to apply, that the quota would and serve their country, and they cannot afford to remain in Washington and wait in due time be issued automatically based on the 1941 production. The circum- their turn for IL hearing before people who have already made up their minds and stances being explained the operator was informed that an application could be filed and would be considered. The application was filed and its supporting made them up wrong, as the man did who issued this order. documents of statistics and operating data ran to 31 pages plus n. mine map. In closing, I appeal to you, the small mine owners and operators, to let out a roar which will be heard throughout the West, and pry this man loose from his The operator was then informed that 8 copies would have to be made and 6 members of a committee would study the matter that then they would have B underpinning. Write your Senators and Congressman for action and relief. conference and then would make their recommendation. In the meantime the Let no one interfere with your desire to do your part in winning the war. production of lead and aine from this mine is not forthcoming. Now some of the I thank you, and good night. men on this committee of 6 are known to be men who have been mining lead and sine all their lives, and have built large plants in this country and abroad. But they have no authority. They can only study and recommend. (From American Metal Market, March 7, 1942) Why is it necessary to issue orders which set up almost insuperable obstacles THE METALS LABYRINTH IN WASHINGTON to the smooth functioning of a necessary war industry only to have to concentrate the entire ingenuity of everybody concerned in finding legal ways and means, Our War Production Board has issued an order which denies the use of present bordered with red tape, in an effort to remove these obstacles? blanket priority ratings to mines whose production consists of gold and silver to The various metal offices of the War Production Board are now inhabited by more than 30 percent of the total dollar volume produced. the cream of the mining profession. At every turn one meets old friends from Immediately on promulgation of this order, Washington was deluged with Africa or South America or the various mining districts in this country. Private mine operators who could get to Washington overnight, by long distance telephone capital has trusted their judgment on the expenditure of literally hundreds of messages, and by telegrams protesting against this order and its inevitable results. millions of dollars in the development and operation of mines, That they have Without discussing the question as to when a mine in a gold mine or a base- justified this trust both in the way of integrity and professional ability in shown metal mine, and the fact that the average man would be inclined to say that it was by their rise to eminence in the mining profession. Why should they be put in a gold mine if more than 50 percent of its product was gold, let us see what has subordinate positions in Washington to recommend to someone higher up, who happened on the 30 percent basis of the order and what would happen on a 50- still has to be educated in the mining business, what should be done to get out percent basis. Take specifically the State of Utah where there are five smelters, war metals in the midst of this most terrible war? more than in any other one mining district in the country. To smelt these sulfide If such things can happen in an industry which is do closely related to our own oree of copper and lead, It is a metallurgical necessity that they have silicious flux. daily bread, it is a fair assumption that the same thing is transpiring with respect It 80 happens that there are mining camps in Utah, such for example as Tintle, to other industries we are not familiar with and it is also a fair assumption that which mine nothing but dry silieious ores of gold and silver. These dry silicious this in one of the reasons why President Roosevelt le distressed nt the number of ores are the absolutely indispensable fluxing ores needed by the smelters to pro- "parasites" whom he has ordered out of Washington and it is also a fair con- duen the copper and lead which the same War Production Board and Office of clusion that we do not know any more about running a war than George Washing- Price Administration tell us are very much short of war needs. ton knew about a Ford car. Under this order, therefore, every one of these mines producing dry silicious gold ores needed for flux would lose their priority ratings, and what would happen The chair recognizes Senator McCarran. to the smeltere? The uproar caused by this order resulted in the issue of another Regraded Unclassified SILVER SILVER 507 506 STATEMENT OF THE HONORABLE PAT McCARRAN, Senator McCaRRAN. I notice, Mr. Chairman, that Dr. Nelson has SENATOR FROM NEVADA very kindly consented to be with us this morning, pursuant to the request of this committee. I am wondering if Mr. Batt or Mr. Senator McCarran. Mr. Chairman, I think it might be well for Knowlson will be present. Dr. Nelson, can you tell us? us to approach this subject with a brief history of what has occasioned Mr. NELSON. Mr. Batt's office called me and said that, at the time this meeting, by reason of what has affected the mining industry in the request came to his office this morning, he had already left the the last few months. office for some appointment at the other end of town. They said On March 2 of this year there was issued what is known as the they would try to locate him, but they had been unable to locate him priority order of March 2-priority rating order P-56 ns amended on at the time I left. March 2, 1942, copy of which has already been inserted in the record. Senator McCarran. A very interesting article entitled "A Message Pursuant to that order, Mr. Chairman, a number of meetings were to Mine Operators and Manufacturers of Mining Machinery and held throughout the mining region, one especially at the Mackey Supplies," by Dr. Wilbur A. Nelson, has been published in the Engi- School of Mines in Reno, Nev., and one at Denver, Colo., at which neering and Mining Journal for April 1942. It B not lengthy, but it mining operators and miners attended quite liberally. Those hear- is full of exceedingly interesting matter. I respectfully suggest that ings were reported, and the record is available at this time, They are it be made & part of the record. somewhat voluminous and need not go into the record here, but I The CHAIRMAN. Without objection, the article will be placed in the think that they should be before the committee. record. Pursuant to the effecting of the order of March 2, 1942, and by (The article referred to is as follows:) reason of the effecting of that order in the mining States generally, it was my privilege to offer a resolution in the Senate of the United A MESSAGE TO MINE OPERATORS AND MANUFACTURERS OF MINING MACHINERY AND SUPPLIES States, known as Senate Resolution 232, of the legislative day of March 5 and calendar day of March 25, 1942. I think that that resolution By Wilbur A. Nelson, Administrator, Mining Branch, Materials Division, War might well appear in the record at this point. Production Board, Washington, D. C. The CHAIRMAN. Without objection, it is so ordered. In setting up the Mining Branch of the Materials Division of the War Produo- (S. Res. 232, legislative day of March 5, calendar day of March 25, tion Board, clear recognition was given to the fact that mining is No. 1 war In- 1942, is as follows:) dustry and that certain metals and nonmetallic minerals are prime essentials to 6 military victory. No other industry rivals mining in the essential character of (8. Res. 202, 77th Coug., 2d sess.) its products, nor can any other industry make ite full contribution to the war RESOLUTION without them. Planes, tanks, guns, ships, and all the implements and instru- ments of modern mechanized warfare call for metals in ever-Increasing quantities. Resolved, That the special committee crested pursuant to S. Res. 187, Seventy- The essential character of these raw materials is axiomatic. fourth Congress, agreed to August 16, 1935, or any duly authorized subcommittee To the mining industry this is at once a matter of pride and responsibility. thereof, is authorized and directed to make a full and complete investigation with The very importance of the industry entails an equal measure of obligation to seo respect to the origin of, and the necessity for, the amendment made on March 2, that minerals are produced in quantity-and in time-to insure victory. The 1942, to Preference Rating Order P-56 (relating to preference ratings for deliveries need was never so critical; the time was never 80 short. As President Roosevelt of materials for mining enterprises) under which mines are excluded from the has so well said: "Never before have we had 80 little time in which to do 80 much." benefits of such order if more than 30 per centum of their production in dollar A heavy duty and responsibility, thérefore, rests upon us who are associated in value consists of gold or silver, or both. In connection with such investigation, the mining industry to join forces 80 that maximum production will be made in the committee shall ascertain and determine the extent to which consideration minimum time. was given, in making the amendment to such order on March 2, 1942, to the effect This will call for extreme measures of cooperation to which we are not accus- of such amendment on (1) the mining industry in general; (2) the economy of tomed in normal times. It will entail sacrifice of self-interest and dislocation of hundreds of communities which are wholly dependent upon mines producing customary routine, But ordinary procedures will not meet the emergencies of gold or silver, or both; (3) the creation of additional unemployment in mining extraordinary times, so we must coordinate closely the efforts of all elements of communities; (4) the extent to which silver may be used in the war effort as & the industry if we are to function effectively. Mine operators, manufacturers, substitute for strategie minerals; (5) the activities of prospectors searching for new and the Mining Branch of the War Production Board must unite In & determined discoveries of strategie minerals needed for the war effort; and (6) the losses in effort to reach the goals set up for our armed forces. tax revenue to the Federal, State, and local governments resulting from the As Administrator of the Mining Branch I have felt for some time that, in closing of mining enterprises which are unable to secure materials for their con- establishing preference ratings, mine operators and makers of mining machinery tinued operation. The committee shall report to the Senate, at the earliest should be placed on a parity with makers of munitions. Recent amendments practicable date, the results of its investigation, together with its recommenda- to preference rating orders P-56 and P-56-a for mine operators and manufac- tions, if any, for necessary legislation. turers of mining machinery, respectively, Implement that policy. They give to For the purposes of this resolution, the committee, or any duly authorized those two important groups high ratings for essential repair parts, and provide subeommittee thereof, is authorized to hold such hearings, to sit and act at such for delivery of essential new machinery and equipment on advance application. times and places during the sessions, recesses, and adjourned periods of the Together with preference rating order P-73 for smelters and refiners of essential Seventy-seventh and succeeding Congresses, to employ such clerical and other metals they provide for the requirements of the mining industry from prospecting assistants, to require by subpena or otherwise the attendance of such witnesses to production of metal. and the production of such correspondence, books, papers, and documents, to But preference rating orders alone will not accomplish all that is desired. We administer such oaths, to take such testimony, and to make such expenditures, must enlist the self-interest of operators and machinery makers, if we are to insure as it deems advisable, The cost of stenographie services to report such hearings adequate supplies of repair parts and raw materials. The requirements of opera- shall not be in excess of 25 cents per hundred words. The expenses of the com- tors and manufacturers must be inventoried and know for in advance if raw mittee, which shall not exceed $5,000, shall be paid from the contingent fund of materials are to be earmarked and allocated for their use. Take a quick glance the Senate upon vouchers approved by the chairman. at the cold logie of the situation, and note the inevitable conclusion. Regraded Unclassified SILVER SILVER 509 508 I. Minerals are prime essentials in this war. They must be produced in over "We have already reinstated the serial numbers of certain mines, and will com- greater quantities. plete this reinstatement as promptly as individual mines furnish us the needed 2. This means double- and triple-shift days, and 6- and 7-day weeks, information. Only about 300 mines were notified by wire that their serial 3. Increased hours of operation add to the wear and tear of machinery, call for numbers under order P-56 had been withdrawn. May I point out that these more repair parts, and ultimately for new equipment. mines still had the priority rating of A-10 under P-100, and that the mine oper- 4. Manufacturers and suppliers cannot meet this abnormal demand unless ator could also use our PD-1A forms to apply for preference ratings on specific adequate supplies of critical raw materials for fabrication. (a) they have in advance 8 pretty fair idea of its magnitude, and (b) assurance of items from specific suppliers where such Items could not be obtained on an A-10 5. The mine operator holds an important key to the situation. He alone can rating. "May I also say that all public utilities, railroads, and newspapers are operating make A fair estimate of his own requirements under current operating conditions. on an Á-10 rating at this time. 6. The War Production Board holds the critical key; namely, the power to "If there were no shortage of mining machinery, there would be no need to earmark for use by manufacturers the necessary quantities of raw materials, take any action (o regard to mines producing nothing but gold and silver; but with once the primary information has been supplied by operators. The Mining such a shortage, and with the great demands on our country to produce the es- Branch is using all of its energies to see that this in done. sential and atrategio minerals for the building of the implements of warfare for 7. The inevitable conclusion is that operators must inventory their needs by us and for many of our Allies, we most know that each mining machine is going to quarters for the remainder of 1942 and early 1943 and notify their customary a mine which in part of our direct war effort." suppliers of their probable requirements. Being thus forearmed, manufacturers In a further effort to promote & clear understanding of the withdrawal of serial should inform the Mining Branch of their needa. The requisite quantities of numbers from gold and silver mines, I held an informal conference in Washington raw materials can then be earmarked for future use. Only in this manner, and with Members of Congress representing western mining States. Subsequently with the closest cooperation, can any reasonable estimate be made that will I met with operators and public officials in Reno, Nev., and Denver, Colo., where insure continuous mine operation at the peak of production. I explained the urgency of the situation and the necessity for conserving materials Another obvious duty remains to manufacturers in the interest of conserva- and supplies for production of critical and essential metals. tion and economy, and that is to simplify their lines of products, abandon- AH a result of the conference and meetings I feel quite sure that after the ing nonessential styles, sixes, and varietles, and concentrating their produc- operators have responded to my request for information and have been classified tion effort on the most essential. The opportunity for simplification prob- on the basis of their production of gold and silver and base metals, they will ably is not as great in the field of mining equipment and supplies as in some realize that no injustice was intended and that the amended order was necessary other lince of manufacture, but the possible economies should not be overlooked. to conserve scarce materials, Now is a good time to clean house and notify the mining industry of your decision. In conclusion I reiterate the desire and intent of the Mining Branch to be help- It is impossible to overestimate the importance of this matter of coordinat- ful to operators and manufacturers; but again I emphasize the point that their Ing the activities of the mine operator, the equipment manufacturer, and the hearty cooperation is imperative if the War Production Board is to carry out the Mining Branch of the War Production Board if mining is to make ita vital contri- victory program. bution to the war effort. I can assure all concerned that the Mining Branch will Senator McCarran. Mr. Chairman, I wonder if Dr. Nelson will exercise its power and authority in the interest of maximum production of essential metals and nonmetallic minerals; but we can be effective only if operators take kindly come forward to the table here. the trouble to tell manufacturers what they need. Most of the latter have Mr. NELSON. Yes, sir. already informed the Mining Branch of their requirementa. Senator McCarran. Mr. Chairman, it is the view of the author of Probably a further word is needed at this time in explanation of the amend- this resolution, pursuant to which this meeting was called, that much ments to preference rating orders P-56 and P-56-a. The principal changes are good might come of EL meeting with Dr. Nelson and with the other to the following effect. Complex ore mines, which produce amounts of copper, lead, or nine needed officials of the War Production Board, especially the branch of the in the war effort, will continue to receive the priority benefits of preference War Production Board headed by Mr. Batt, 80 that we might know rating order P-56, irrespective of the amount of gold or silver produced. The what are the full intentions and what is the purport of the order of same will be true for mines producing siliceous ores necessary for the continued March 2, 1942, and that are the intentions of the board with reference operation of smelters, The A-1-a rating for repair of actual break-downs is continued in effect. It to granting priorities to mines producing precious metal. can be applied only after advance approval by the Director of Industry Operations. In this respect, in order to open the discussion, let me say that We An A-1-c rating is given to deliveries to essential mines of repair parts for have reports from the various sections of the country, showing that the essential machines. An operator is restricted in applying this rating to a quota priority order of March 2 has tended to close down mines in the var- established quarterly by the Director of Industry Operations. An A-1-c rating is given to deliveries of other repair parte and to other minis 10UB sections of the country-and close them down for various reasons. when necessary to avert break-downs. This rating can be applied only after Some have suggested that these mining operations have closed down advance approval by the Director of Industry Operations. because of the lack of labor. An investigation into that phase of it Deliveries of essential machinery and equipment receive such preference ratings indicates that there is some cogency in that statement. But behind as may be assigned by the Director of Industry Operations after advance ap- that, Mr. Chairman, there comes another significant matter, namely, plications. Suppliers can extend at the same level the ratings received from operators. that mine labor throughout the mining sections of the country, cogni- The exclusion of gold and allver mines from the benefits of P-56 was naturally zant of the fact that the respective mines in which they are employed the cause of some disturbance and misunderstanding in the industry. In an can carry on for only B limited time, and noticing that there is oppor- effort to clarify the situation I made public a statement substantially as follows: "No mines producing copper, lead, or zine in amounts needed in our war tunity for employment at much better wages at other places, have not effort, irrespective of the amounts of gold or silver produced by such mines will waited for the closing down but have taken time by the forelock, 80 to be denied priority ratings under order P-56. Each case will be reviewed and, spenk, and have said to their employers, You are going to have to where it is found that the mine is producing needed amounts of copper, lead, or close down anyway within a reasonable time, so we are going to hunt zine. that mine's serial number will be reinstated. This will also apply to mines producing siliceous ores where such ores are needed by a smelter in order to other jobs where we can get better wages." maintain the smelter's production of copper and lead. Unclassified 510 SILVER BILVER 511 The result has been, Mr. Chairman, that those who were able to of his statement; I do not quote him exactly. With that in mind, move-the younger men of the mining-labor population-have in many applications for priorities, I am advised, have been made, and many instances left their places of employment and gone elsewhere to many have not been granted, while many have been granted. seek better wages, knowing that the mines in which they were em- My own State reflects a number of applications, and I have had the ployed could carry on but a short time thereafter. That has had two State mine inspector of Nevada come on here, and I am asking him very material effects. One was to move the mining population out now to bring his files forward, 80 that I may use them during the of the places where they had been and could be employed; the other course of this discussion. They show the mines in which priorities was to make certain to the mine operator that with the look of em- have been granted, the mines in which they have not been granted, and ployees, with the lack of labor, and confronted with the priority order the mines that have been closed down by reason of either an apprehen- of March 2, and knowing that his equipment and stock of supplies sion of failure to secure a priority order or the fact that the priority could last only a limited time, the mine itself would have to close down order had not come forward within a reasonable time, even before the priority order became effective against him, even Mr. Chairman, this whole affair comes about by reason of the con- before his equipment gave out. That has resulted in throwing out of dition that presents itself to the country-an all-out war condition, employment the older miners because of the closing down of the mines. demanding that all metal be curtailed in its use as much BS possible Then, again, Mr. Chairman, there has come to us, with whatever and allocated to war activity. But the production of strategic metals degree of cogency it may be expressed, many rumors and many reports and war essential metals has been encouraged by the War Production pertaining to the granting of priority orders. I think it will do no Board, and it was stated here at & meeting held some weeks ago that harm, in the presence of Dr. Nelson-and I wish all the board could be this priority order of March 2 was for the purpose of stimulating min- here-to discuss these matters. Though we have no evidence to ing rather than for the purpose of curtailing mining. support them, 1 think they might with propriety be discussed. The result, however, Mr. Chairman, has been to the contrary, Let me give one or two outstanding examples. Two men working because where silver or gold comes in combination with a war strategic on the same dump, handling the same class of ore, the same class of metal, and the operator of the mine, having no other basis than the rock, shipping to the same point, by the same method of shipment, priority order of March 2, 1940, sees that the producing of 30 percent both apply for priorities. One is granted, and the other is denied. or more of silver or gold, or silver and gold together, cannot get him a Naturally, the one denied queries, Why? Then the community priority order, he becomes immediately discouraged, and either his starts to query, Why? Then rumors pro and con. The imagina- financial backers announce to him that the backing will stop very tive individual sees a reason why, and he attributes the reason to shortly, or he, realizing that a danger presents itself, together with the divers and sundry causes, none of which reflect credit on the adminis- hazard of mining-the hazard that naturally attends mining-advises tration of the War Production Board. They may be wild and un- his financial backers that he sees danger ahead by reason of this priority warranted, but nevertheless arising from a condition. order; and the result is, first of all, a cessation of exploration and Then, again, we have a rumor that comes to us prevalently, which development; secondly, a closing down of the mine. I seek to bring out, because I think the War Production Board should The thought impresses itself upon me that if we are to encourage know these things: That if shipments are made to certain concerns the production of strategic metals, we should, first of all, encourage for treatment, priorities are granted. If they are not shipped to it at home here in America, where we know that we have strategic those certain concerns for treatment, priorities are denied. Incidents and war essential metals: First of all, because it does not then become are given relating that condition. Whether there be the least symp- subject to hazard on the sea, where so many sinkings are taking place tom of truth in the matter or not, it is enough, in my judgment, that and so much is being lost. We have it within our power, and we the Board and Dr. Nelson should be advised of the condition, so that know that we can treat it, and treat it much less expensively than we it may be relieved by positive action and positive statement. could if we were to ship it from foreign countries. We can treat it Taking the subject from another angle, the priority order of March with much more security here at home, because it would not, as I 2, 1942, states, among other things, have said, be subject to the hazard that attends shipping over the seas. Any plant actually engaged in the extraction by surface, open-pit, or under- ground methods, or in the beneficiation, concentration, or preparation for ship- But, Mr. Chairman, there has come to the attention of some of ment of the products of mining activity, but not including any plant more than us the fact that while we are repressing the miner at home by telling 30 percent of the production of which in dollar value consists of gold and/or him that he cannot have mine equipment, thus discouraging the ailver. development of war-essential metals and strategic metals, unhappily, That order in itself was threatening to the mining industry, where I say, the record shows that we are shipping and transporting across silver was what might be termed a byproduct of the production of & the seas those quantities of mine essentials in the way of machinery strategic metal, as, for instance, lead or zine or copper. and parts. One correspondent in writing to me put it rather vividly. True, the atmosphere was very much clarified by the statement of I think you will find it among the reports of the various mines of Ne- Dr. Nelson, both at Denver and at Reno, in which, among other vada that came into the hands of Mr. Murphy, the mine inspector of things, he said that each case would stand on its own footing and Nevada, wherein this correspondent said: that-in substance he said-the 30 percent of dollar value of the We are transporting mine machinery and equipment to South Africa and are product of a mine would not militate against its receiving a priority then buying South African gold in America at $35 an ounce. At the same time order if it was producing war strategic metal. That is the substance we are discouraging, if not destroying, mining activity here in America. Unclassified 512 SILVER SILVER 513 Dr. Nelson has heard all these things, and I want to say, Mr. STATEMENT OF WILBUR ARMISTEAD NELSON, ADMINISTRA- Chairman, that I, as the author of this resolution, express my sincere TOR, MINING BRANCH, MATERIALS DIVISION, WAR PRO- gratitude to Dr. Nelson for coming here, my thought being this: DUCTION BOARD, WASHINGTON, D. C. that now that the priority order has had a reasonable time in which to be tried out, and we find discouragement prevailing in our mining Mr. NELSON. My name is Wilbur Armistead Nelson. industry, prevailing among the muckers and miners, as we call them, The CHAIRMAN. What is your address, Doctor? and prevailing among the mine operators, it impressed me that per- Mr. NELSON. My Washington address is Temporary Building E, haps by a round-table discussion here among those who are so vitally War Production Board. interested in the mining activity, you, Dr. Nelson, and your board The CHAIRMAN. What position do you hold in cònnection with the could find a way to give greater assurance to our industry of mining Government at this time, if any? and to those who by their individual wealth hazard their all in specu- Mr. NELSON. I am administrator of the Mining Branch of the lation for the purpose of developing mining or to those wino have Materials Division of the W. P. B. given their lives to the industry of mining, with no other avenue in The CHAIRMAN. Would you state very briefly in what business you which to work, and that other element of the American life, known have been engaged during the last several years? This is for the pur- as the prospector, the fellow who goes out and hazards the hardships pose of the record, so that anybody who might want to read it will of the desert to discover strategic and war essential metal-that all have an understanding of your position. of this might, by an expression that we might develop here or some Mr. NELSON. At the present time I am on leave of absence from modification, if you please, of that priority order which has caused the University of Virginia, where I hold the position as head of the so much consternation, bring more comfort and indeed more support Corcoran School of Geology and Corcoran professor of geology. to the mining industry of America. Before that time I was State geologist of Virginia, brought to Now, that is the aim and object, Dr. Nelson, so far as the author Virginia to reorganize the State survey and also to head the School of of this resolution is concerned, of bringing about this meeting. I Geology at the University. believe from my discussions with you that you are a friend of the At the university the subjects I teach are economic geology and industry, and that your whole training and background indicate that. structural geology, dealing with ore deposits and the mining phases I believe that if these homely things are brought to your attention of geology. in a homely way by those who know them best, something can be Before that time I was State geologist of Tennessee, and before done to relieve the situation. I speak first-handedly of my own that I operated a coal mine in west Kentucky. During the last war State, not knowing the conditions in other States. There are those I operated manganese and barite mines in Georgia and Alabama. who will speak first-handedly of their respective communities. But The CHAIRMAN. I think that that is sufficient for the record. You there can be no gainsaying that in Nevada the priority order of may proceed and make such suggestions as you deem proper in reply March 2, 1942, has had n. most discouraging effect. to the suggestions made by Senator McCarran, doing 50 as fully 65 It has required the zeal and diligence of all of us to say to the miners you care to. of Nevada that it is not as harsh as it looks; that we will try to work Mr. NELSON. I believe that Senator McCarran and I are in con- it out for them. "Do not be discouraged. We will try to get a siderable agreement in the remarks he has made, that the primary priority order that will relieve the situation for you." object we must have in mind is to stimulate the production of essential Expressions of that kind have been essential in many instances, in and critical metals. I do feel our mining order has brought that about. order to keep, first of all, the investor sending on his investment to The 30 percent clause which he mentioned has, as far as we know, keep the mine going, in some instances in its primary stages; and not brought about any diminution in the output of critical materials. secondly, to keep the operator encouraged enough to go ahead; and We feel that the output of copper, lead, zinc, chrome, manganese, thirdly, and most essential and vital of all, to keep the actual mining tungsten, vanadium, molybdenum, and any other critical materials fellow who goes down into the earth at his place of employment has increased, due in part to the priority assistance which we have rather than have him seek employment at a greater wage. been able to give them under the preference rating order P-56 and Now, that is the initial expression of this meeting. Dr. Nelson, under the preference rating order P-56A, which takes care of the needs that we might have some views on your several months of opportun- of the makers of mining machinery. ity to see this order effected, we would like to have you discuss it in Whenever it is found necessary to give high priorities to any group your own way. in order that they may continue to operate, it is necessary to restrict The CHAIRMAN. Before doing that, will you please state your full these high priorities, or else they would be of very little value. So, name for the record? when we were able to get the high-priority ratings of order P-56, as amended on March 2, we got them for those industries essential for 73052-42-pt. 0-0 Regraded Unclassified SILVER SILVER 515 514 the effort. In order to make these priority ratings of the most I have not finished, but I would like to make a remark. The A-8 value, war they had to be restricted in their use; and as a gold or a silver rating is applicable to black powder and dynamite if any rating is mine producing only god or silver, and no strategic minerals, is B. mine needed. At the present time you can buy all the black powder and that does not fit as much into the war effort as a mine producing cop- dynamite you wish without any rating. To continue: per, lead, zine, or the other metals which I have mentioned, naturally Mines which do not operate under P-56 may use an A-10 rating under the they have to take lower priority ratings. general repair, maintenance, and operating supplies order, P-100, to obtain At no time have we denied priority ratings to any mines in the United States. We have just said that certain mines would have explosives. That is, if they need any rating at all. higher priority ratings than other mines, depending on where they fit The amendment to P-56 does not affect any existing priorities on explosives and into our over-all war picture. We have no information that any mine explosive equipment, nor does it prevent any mine operator from obtaining in the United States has shut down due to our priority action. We do explosives in the same way as before the amendment was issued. have information that many mine operators have turned to the getting I know that there was a widespread misconception throughout the out of strategic materials, where they were not producing strategic entire country on that amendment. The amendment was added to materials before March 2. the order to help mining people, so that they could get repairs or We have at all times since March 2 stimulated prospecting in every explosive equipment which they had had difficulty in obtaining before way that we could. We have placed in mining order P-56 IL clause that time. relating particularly to prospectors, where we can give a bona fide Senator McCARRAN. All right. In keeping with this, Doctor, it prospector a serial number and whatever priority assistance he needs might well be said-and I think you will probably concede this-that in order to go out and prospect for needed or strategic materials. We your order of March 2, which I have introduced into the record, has have given a number of such prospecting numbers. had a widespread effect by reason of the language used in the order, Senator McCarran. Right there, Doctor, do you mind an which apparently is not the interpretation to be given it. interruption? In other words, if I may express it in another way, the interpreta- Mr. NELSON. Not at all. tion that I have heard you give to that order is really not to be found Senator McCarnan. My attention has been drawn to an order in the language of the order, because it is specific, and there is no with reference to powder, wherein the use of powder will not be exception to the 30 percent rule, accorded unless the mine is in production. Mr. NELSON. If you will read the order-and I know you have, Mr. NELSON. That is an incorrect statement, Senator, that was so I should not have said, "If you will read the order"; I should have published by the newspapers. I do not know how it was given out said, "In the body of the order"-there is a clause permitting com- to the press. panies to apply for relief, and it is under that clause that any mine Senator McCARRAN. What is the language of the order, if you have operator who felt that on undue hardship was being worked upon that before you? him could apply for relief; and where he was producing any needed Mr. NELSON. The trouble came about because we added to schedule amounts of copper, lead, or zine, he was given that relief, and his of our mining order, under "Mining equipment and machinery," by an serial number was reinstated; or where he might be producing n. amendment, explosives and explosives equipment. siliceous ore, needed as a flux in a smelter, so that the smelter opera- Some of the press read into that amendment the fact that it meant tions would not be curtailed in any way, as we had no desire to cut that you had to have a priority rating in order to buy dynamite or down the production of metals from smelters, such a mine had its black powder. That misinformation has been corrected by a press serial number reinstated. release of Tuesday, April 28, 1942, which I would like to turn over to Senator JOHNSON of Colorado. Then, Dr. Nelson, giving relief in you to embody in the record. my specific case is not, in your understanding, a violation of your The CHAIRMAN. Without objection, it will be placed in the record. own order? Mr. NELSON. Would you like me to read the release? It might Mr. NELSON. No, sir. clarify the situation. Senator JOHNSON of Colorado. Some of our Colorado people seem Senator McCarran. Yes. It is short. to feel that the mere fact of your giving relief is a violation of your Mr. NELSON. It reads as follows: own order. An amendment to preference rating order P-56 issued April 18, 1942, added Mr. NELSON. Well, we have reinstated the serial numbers of a explosives and explosive equipment to the list of mining machinery and equipment great many mines throughout the United States, and we feel that we in schedule A of the order. This enables mine operators who have serial numbers have the right to do that. under the order to use an A-1-c rating in obtaining repair parts for such equipment. Senator JOHNSON of Colorado. Under the order? That means explosive equipment. Mr. NELSON. Yes, sir. To clear up some confusion which has arisen as a result of this amendment, Senator JOHNSON of Colorado. Át this time, Mr. Chairman, may Dr. Wilbur A. Nelson, Administrator of the Mining Branch, explained today that I have Mr. Palmer, who is secretary of the Colorado Mining Associa- the A-1-c rating is applicable for repairs to blasting machines and similar ma- tion, come to the table, where he may enter into the discussion? chinery and equipment, but that the rating may not be used for ordinary operating supplies such as black powder and dynamite, to which the A-8 rating remains The CHAIRMAN. Yes, indeed. applicable. Regraded Unclassified SILVER SILVER 517 516 Mr. NELSON. There are one or two of your items that I have not will added to the rapidly rising nomadie types, and the capitalist's fortune confiscated again be pumped out; whole communities thus being wiped out; the workers discussed. The CHAIRMAN, Yes, We have not finished with you, Doctor. without A hearing. This isn't war. When all the United Nations shut down Senator JOHNSON of Colorado, No. I just wanted Mr. Palmer their gold and silver mines (not on paper but in fact), we American miners are willing to shut down too-not before! to be here. The CHAIRMAN. The Members of the House, if they see fit, may That is dated April 24, 1942. occupy chairs around the table, if they care to. Mr. NELSON. As you read each one of those, may I make some Mr. NELSON. As I was saying, we have given every priority assis- remarks, Senator? tance possible to the prospectors who are prospecting for strategic Senator McCarran. Yes; that one is in minerlike fashion. and needed minerals. We have also used every effort to see that the Mr. NELSON. The Mining Branch has not approved any priority mines producing critical and needed material get 24-hour service on ratings to any of the gold mines of South Africa for several months. repair parts for break-downs, for emergency repair parts, and for If they have obtained any materials it has not been through the needed supplies under ratings which they are given under order P-56. Mining Branch. The mining industry is very fortunate, in that it has, I believe, some Senator THOMAS of Idaho. Have we exported mining machinery of the highest ratings that have been given to any industry in the to South Africa in the last few months? United States, to keep the necessary mines-necessary for our war Mr. NELSON. If it has been done, it has been done through the effort-in continuous production. The record of the mining materials Board of Economic Warfare, and it is the foreign policy of the Presi- produced by the mines in the United States shows that we have dent, and I endorse his foreign policy. Senator THOMAS of Idaho. Then, we are to assume that the expor- been able to do that in rather satisfactory manner. The CHAIRMAN. Are there any questions from the members of the tation is probably going on at the present time? Mr. NELSON. If it is going on, it is the foreign policy of the Presi- committee? Senator McCarran. While the doctor is here, I would like to go dent, and I endorse that policy; but the Mining Branch has not given over a sories of questionnaires answered by the industry in Nevada. any priorities. The questionnaires were sent out by the mine inspector of Nevada, Senator THOMAS of Idaho. That does not answer my question. My and the answers received are quite interesting along the line of your question is, Is it going on? Mr. NELSON. I cannot say, because I have nothing whatever to do discussion and my opening remarks. with the B. E. W. Mr. NELSON. Yes. Senator McCauran. This is a statement made by a partnership Senator THOMAS of Idaho. Are those facts available anywhere? known as Morrin & Steigmeyer, operating at Round Mountain, Mr. NELSON. You would have to get those from the Board of Nev. The former serial number under P-56 was the serial number Economic Warfare, which is not under the W.P.B. The CHAIRMAN. But it is a fact, is it not, that America-meaning 36-47. Rating A-8. the United States-produces and supplies the mines of the world What effect has the March 2 amendment to Preference Rating Order No. with a very large percentage of their necessary machinery with which P-56 had on your mining operations? to mine? This is an interesting answer, Doctor: Mr. NELSON. We are giving priority ratings at the present time to Capitalists contemplating money-advancements (for improvements and de- to copper mines, tin mines, and chrome mines in South Africa for velopment work) quit: miners foresaw a shut-down and several quit at once to materials shipped to the United States. seek stable positions, and "the drifting-away" has been going on ever since until We are giving priority ratings to copper mines in South America on now we have less than half a crew, and others are not available because miners have concluded their work has been condemned as unnecessary and "black-balled" which we are dependent for a large proportion of our copper, and and that any gold or silver mining job now offered them will at best be a "short without which our war effort would be seriously impaired. shift" only. They know we can not buy necessary parts for drilling machinery, The CHAIRMAN. What about Mexico and Canada? et cetera, to keep going. Mr. NELSON. We are giving priorities to the main source of tin Then he goes on: today, which is Bolivia. We are giving priorities to metal mines in Mexico and the nickel mines in Canada, Canada being our one source We are still operating on a greatly reduced scale. of supply, practically, of nickel, except for some that comes from New Then there is this question: Caledonia, and to the base-metal mines in Canada. Do you expect to shut down because of not having a serial number? We have never given a serial number to any gold mine in Canada, with one exception, if you wish to call the siliceous flux mine of the The answer is- Norrando Copper Co. a gold mine. It is where they get their flux for Yes, smelting their copper ore. If so, about what date? We have given priority ratings, under the foreign policy of our Within 60 days. Remarks: Steel under lend-lease for England so that South Africa, which pro- President, to mines in Central America-Nicaragua and Honduras- duces about 00 percent of the gold, can continue and sell its output to this Govern- and to mines in Venezuela and Colombia, all of them close to the ment for 835 per ounce: but no steel for native Americans on the deserts and in Panama Canal. the mountains of Nevada. Mines shutting down, works being flooded that never Senator McCARRAN. Their product is largely what? 2 Regraded Unclassified SILVER SILVER 519 518 Mr. NELSON. In those four countries they are gold mines, but they Mr. NELSON. In the explanation which I just made, I stated that have only been given items on PD-1-a forms, which are available to when you give high priority ratings to any group, you must restrict every gold mine operator in the United States today. We have told the number of miners that can get those ratings, or else your ratings every gold mine operator that he can operate under P-100 with an have little value. A-10 rating for what he could get on an A-10 rating. When he could In the beginning of the mining priority situation, the first time B. not get anything on an A-10 rating, he was to fill in a PD-1-8 form mining order was issued we restricted, right at the beginning, in the and send it in to Washington, and we would do what we could to see first order, placer gold mines, and they never received any of the that he got the repair parts he needed, if it did not interfere with our priority ratings under even the first order, P-56. But that did not war effort, and that is exactly the same thing we have done in the mean that the placer gold mines were put out of business. They Mining Branch with the mines, for instance, of the United States to continued to operate on P-100 and to use the PD-1-a. which we have given ratings on such forms. Senator MILLIKIN. I did not make my question clear, I think. The CHAIRMAN. Are there further questions? Prior to the date of the issuance of the orders, the mines were pro- Senator McCarran. I may say, Mr. Chairman, as a partial answer ceeding with certain production, they were proceeding under certain to Senator Thomas' question, that I have before me the record made at production machinery, and they were proceeding under certain Denver, Colo., at which place I had inserted in the record, pursuant anticipated requirements, so far as machinery was concerned. Now, to the chairman's order, certain factual matter coming to me from then, what was the reason for changing that? departments of the Government. When I say there probably was n factual reason, I hope there was. Partially answering Senator Thomas' question, it may be noted You intended to gain something. You intended to gain enhance- that during the months of October, November, and December of 1941 ment of strategic material, or you intended to restrict the manu- we exported mining machinery from the United States: In October to facture of certain types of machinery. There must have been a the value of $1,843,454; in November to the value of $1,236,186; and purpose for the order. I would like to get at the basic reason for in December to the value of $2,174,673. the order. The commodities or the parts or the machinery transported were Mr. NELSON. The order we were operating under before the amend- coal outters, rock drills, mine hoists and derricks, ore crushing and ment of March 2 was in existence before December 7. After De- sorting machinery, concentrating and smelting machinery, and other cember 7 our condition changed rather rapidly in regard to strategic mining machinery. materials. Then, in addition, and in further answer to Senator Thomas' query, We lost the source of supply of a large amount of our chrome, and the grand total of that for the 3 months named was $5,254,313. those of us who were looking forward could visualize that we would Iron and steel exported from the United States abroad: In Novem- rather soon lose the sources of supply of many other of our most ber we exported 410,242 gross tons. In December we exported strategic materials. Therefore, we amended this order to restrict 592,491 gross tons. high priority ratings to mines which produced critical materials. Iron and steel scrap exported from the United States in the calen- We also amended the order because we found it necessary to have dar years 1939, 1940, and 1941: In 1939, 3,558,551 gross tons; in 1940, high priority ratings if the mines producing other materials needed 2,791,419 gross tons; in 1941, 793,160 gross tons. in our war effort could get those materials. Ratings in the old order There is one other matter. If you do not mind our breaking in as were not high enough around the 1st of March to permit us to get we go along, I think it will facilitate the whole matter. for the United States mines what they needed. In order to get the Mr. NELSON. I am here at your service. higher ratings, it is necessary to restrict the use of those ratings. Senator McCarran. You are always very courteous in that way. Senator MILLIKIN. Now, on balance, were the mines of the United Mr. Chairman, would it be proper for you to say if you approve of States producing more critical minerals let us call them, than they anyone who is interested in this subject breaking in by way of a ques- were consuming? tion or a statement to the doctor? I just make that as & suggestion. Mr. NELSON. If the mines of the United States were not producing The CHAIRMAN. This committee is trying to get data on which we more critical minerals than they were consuming, it would have been can formulate some conclusions. This is an informal conference. foolish to give the mines any critical materials. Those interested are privileged at any time to break in and bring out Senator MILLIKIN. So that, on balance, the mines were holding up some point if they think it would add to the record. their end of the production needs? Senator MILLIKIN. May I ask the witness a question, Mr. Chair- Mr. NELSON. If it were not for the mines we could not have any man? war program. The CHAIRMAN. Yes, Senator Millikin. Senator MILLIKIN. In Colorado I understand we consume about Senator MILLIRIN. Dr. Nelson, I am glad to see you again. 2,500 tons of critical minerals in the process of mining, and we Mr. NELSON. Thank you. produce about 35,000 tons a year. Senator MILLIKIN. What was the factual basis for the orders? Mr. Nelson. Yes, What were you trying to get at? How much metal were you trving Senator MILLIRIN. That leaves us with a good picture on balance. to save? How much were you trying to divert? In other words. The point I am driving at is, What is the point of disturbing that sort why the orders? of situation? Regraded Unclassified SILVER SILVER 521 520 Mr. NELSON. We must look at the over-all picture. It is a ques- Mr. NELSON. The fact that they are complex ores means that each another vessel, by taking a critical material away & mine pro- tion of, Do you wish to make another tank, another from gun, part of mine is a particular problem all its own and generally differs from every other mine. Therefore, it is necessary for us to review in detail ducing something that is not essential in our war effort, by putting the situation of each individual mine, to seo what they produce and it into another product which is essential to winning the war and in how it affects the war effort, before we can consider the reinstatement that way ending the war that much sooner? of a number which has been withdrawn. Senator MILLIKIN. Let us take the case of complex ores which are Senator MILLIKIN. Well, now, let us take two mines. Both of producing more than 20 or 30 percent in silver or gold. In Colorado them produce over 30 cents on the dollar in silver or gold and produce the amounts on balance of the critical materials of complex ores other minerals with it. How do you proceed to choose between one exceed many times the amounts that are consumed. What is the and the other? point of disturbing a situation of that kind? Mr. NELSON. We send them a form, which they fill in, showing just Mr. NELSON. I do not quite understand your reasoning there. The 2nd they produce-copper, lead, zine, gold, and silver. Other data iron and steel furnaces use a certain amount of iron and steel in pro- that we ask for on that sheet are their known ore reserves, how long ducing iron and steel, but you would not expect to use up all the iron they have been in operation, and their full mining picture; and if that and steel in making them. There would not be any use in producing full mining picture shows that the mine can operate for a year or more iron and steel if that were so. and that the amount of copper, lead, or zine that they are producing Senator MILLIKIN. I am making the contrary point that, instead is needed in the war effort, we reinstate their serial number, irrespec- of using it up, they produce many times the amount that they use up. tive of the amount of gold and silver they are producing. Mr. NELSON. That is correct, but we want to conserve as much as Senator MILLIKIN. What is the test as to the amount? If the possible of the material that is used for direct war efforts; and if we amount they are producing aids the war effort, they are reinstated. can keep B few pounds, B. few hundred pounds, a few thousand pounds What is the amount? What is the test that is arrived at? of critical material out of a nonessential war use and put that amount, Mr. NELSON. It depends on each particular case. You cannot however small it may be, into the making of some direct war imple- give a figure of X number of hours, because X number of hours in one ments, we feel we have just carried the war along faster and into a mine might mean something and X number of hours in another mine better conclusion. might not mean anything. Senator MILLIKIN. These complex ores, copper, lead, and sine, are Senator MILLIKIN. I would like to have the factors that in one case what we call critical materials? mean something to you and in the other do not mean anything to you. Mr. NELSON. Copper, lead, and zinc are materials necessary for the Mr. NELSON. The only way we can answer that is by the individual sheet of each mine which we have gone over throughly. It is gone war effort. Senator MILLIKIN. Well, then, let us call them critical materials. over thoroughly by the mining engineers in our branch. If it is If we produce more of those than we consume in the process of pro- copper, we check with the Copper Branch of the W. P. B. and get duction, why disturb that situation? their opinion. If it is lead, we check with the Lead Branch of the Mr. NELSON. If those particular critical minerals are being pro- W. P. B. If it is zine, we check with the Zine Branch of the W. P. B. duced irrespective of the amount of gold and silver produced along We use our combined best judgment in each individual case. with them, they are still today having the priority advantages of the Senator MCCARRAN. Pardon an interruption, Senator. In n com- mining order we are discussing. They are not disturbed. bination of that kind, where zine and silver are being produced, how Senator MILLIKIN. But if they have over 30 percent in silver or does the amount of silver produced by that mine militate against the gold, then, under the terms of the order, they cannot get the preferred activity of the mine producing zinc? priority, under your interpretation of the terms of the order? De- Mr. NELSON. I did not understand your question. pending upon the state of your liver, you can restore them? Senator McCarran. Well, let us say we have a mine that produces Mr. NELSON. Well, Senator, I suppose you and I both have livers, zine and silver in combination. Now, under your order, if it was but I do not think mine would cause me to make or not make 8 producing 30 percent or more by dollar value of silver, it would not get decision. I have tried to base my decisions on the facts that have priority, but you say that that is to be modified or is modified in the been sent in by the mines-definite facts that can be checked and are way you exercise your judgment. How does the amount of silver checked by the mining engineers in my office. which that mine produces militate in any way against its production Senator MILLIKIN. Can you not get out & set of orders that will of the more strategic metal or essential metal, zinc? state it by classification, or by some sort of definition, in a way that B Mr. NELSON. May I use as an example a mine that we all know? man can tell whether it will receive a preferential priority or won't That is the Sunshine mine, which is the biggest producer of silver in the United States. It is producing antimony, or will be very shortly, receive it? Mr. NELSON. You have mentioned the fact that these are complex at the rate of about 70 or 80 tons a month. The Antimony Section told us that antimony is essential for the war effort. They cannot get ores. Senator MILLIRIN. 1 am speaking in the first instance of complex that antimony out unless the mine continues in operation. Therefore, that mine has a serial number and is operating, because the antimony ores. is needed in our war effort. Regraded Unclassified SILVER SILVER 523 522 Senator MILLIKIN. Pardon me, Senator. Mr. NELSON. Well, if one mine was working two shifts and the As to lead, zinc, or copper, where it is in combination with gold or other was working one shift, the two-shift mine would get the priority. silver of more than 30 cents value on the dollar, is the test quantitative? Senator JOHNSON of Colorado. Regardless of the amount of silver Mr. NELSON. If you just had copper or if you just had lead and silver produced or the amount of gold produced? and nothing else, we might be able to work out some definite X-plus-Y Mr. NELSON. Yes. figure, but the fact that you have copper, lead, zine, and you have Senator JOHNSON of Colorado. You ignore entirely the amount of antimony mixed with gold and silver makes it, as far as I can see the gold and silver produced? picture, impossible to use any formula on which you can reinstate a Mr. NELSON. That is correct, because the two-shift mine would be mine. Each mine has to be handled on its own merits. producing twice as much of the critical material per week, although it Senator Millikin. Do you arrive at any relationship between the had the same percentage of critical material in the ore. amount of zine, lead, or copper produced in complex ores by any The CHAIRMAN. Suppose a mine was working three shifts and pro- particular mine against the amount of critical metal that that mine duced the same amount of critical material as the mine working one consumes in the process of production? shift. Would the fact that a mine was working three shifts have any Mr. NELSON. We arrive at that under the provisions of the order. effect on the priority rating? We give the serial number back to the mine. We give them a quote Mr. NELSON. Perhaps I was misunderstood in what I said. Sena- for repair parts which they cannot exceed. We also have an inventory tor Johnson, as I understood, said that a man had an X percentage of restriction clause in the order that they cannot exceed their inventory copper, lead, and zinc and an X percentage of silver and gold, and that of the average of the end of the year of 1938, 1939, and 1940. They another mine had an X percentage of copper, lead, and zine and 2X make monthly reports to us that our field men check. percentage of silver and gold. Senator Johnson wanted to know who Senator MILLIKIN. Let me put it to you this way: Assume two would get the machine. I said the mine working two shifts would get mines, each one of which requires EL given piece of machinery, one of the machine, because, although the ore had the same percentage of which produces X quantity of zinc, lead, and copper, one of which critical materials, it would be producing twice as much as the other produces one-half of X. Does the difference in the amount of pro- mine, because it was working two shifts. duction against the requirement of each mine for the same piece of The CHAIRMAN. Let me ask my question again. Suppose X mine machinery weigh in your mind? works one shift and produced X amount of critical material. Another Mr. NELSON. If there was only one machine and both of the mines mine produces the same amount working with three shifts. Would wanted it, the mine producing the x amount would get the machine, the fact that it works three shifts have any influence in giving it the Senator MILLIKIN. Would you say that the most important single priority rating as against a mine working only one shift, when it pro- factor, then, is the amount of critical minerals that a given mine duces the same amount of critical material? Mr. NELSON. Both mines would probably have priority, but if the produces? Mr. NELSON. The amount of critical minerals that as mine pro- time came in the months to come when we had only one machine to duces naturally is the important factor, irrespective of the amount of go to the two mines, and it took three shifts in one mine to get out the gold and silver it produces. same amount of material that could be gotten out in one shift in the Senator MILLIKIN. So that, then, under the operation of these other mine, we would certainly see to it, if we were that hard up in orders, as far as I can see now-I am not raising the question now as this country, that the mine working on one shift would go on n two- to whether or not it should be done-in the course of time the tend- shift basis and get the machine, because it would then be producing ency of these orders will be to put all of the small producers out of twice as much of the critical material. business? Will that not result? Senator MILLIKIN. I should like to ask, Senator Thomas, if I may, Mr. NELSON. As materials get more and more critical we have to a question. give priority ratings on those materials or allocate them, when we Then, how did you arrive at 30 percent as the dividing line? come to allocation, which I think we will have to come to, to the mine Mr. NELSON. The 30 percent in the amendment of March 2 was where the particular machine will get out most of the critical material, the amount used in order that we could get complete information on and the mine that gets out less material, if there is only one machine, all the gold and silver mining operations in the West, so that we could will not get that machine. see which of those mines were essential for our war effort. Senator JOHNSON of Colorado. May I inject an illustration at that Senator MILLIKIN. It was merely B reference point? point, Senator Millikin? Mr. NELSON. It was just a reference. We might just as well have Senator MILLIKIN. Certainly. used 50 or 40 percent. Senator JOHNSON of Colorado. Suppose you had two mines, each Senator MILLIKIN. Do you have that order before you? producing X amount of vital or essential minerals, each of them pro- Mr. NELSON. No: I do not. ducing exactly the same quantity, but each of them producing a different Senator MILLIKIN. I should like to invite your attention, Doctor, quantity of silver or gold. In that case which mine would get the to the fact that nowhere in this order do these particular matters priority? Regraded Unclassified SILVER SILVER 525 524 that we have been discussing appear. The paragraph in question Senator McCarran. It was probably regarded then 88 largely academic, but since then it has become quite practical. says: "Mining enterprise" means (i) any plant actually engaged in the extraction by Mr. NELSON. Very good. surface, open-pit, or underground methods, or in the beneficiation, but concentration, Senator JOHNSON of Colorado. Because it has become practical or any plant more than 30 percent of the production of which value consists preparation for shipment of the products of mining activity, in dollar not including are you giving that consideration in the assignment of priorities? Has that had any affect on you? You say you refer zine to the Zine of gold and/or ailver. Section and copper to the Copper Section. Now, do you refer I should like to suggest, Doctor, that we have been talking about anything to the Silver Section to see whether they need the silver? something here that is entirely at variance with the absolute terms Mr. NELSON. Well, the mines that are using appreciable amounts of that order. of silver are also producing needed critical materials. They have had Mr. NELSON. You have a paragraph further on in the order that their serial numbers given back to them before this thing came out permits a person to get relief by applying to Washington for that publicly in the press. As I mentioned, the Sunshine mine, which is relief, and it can be granted, which means that that serial number one of the largest producers of silver, had their number reinstated can be reinstated, and it would be relief to him in that way. almost immediately, because the amount of antimony they produced Senator McCarran. Right there, Doctor, going back to the 30 was essential in our war effort. percent, would you say that that was a figure arrived at rather hap- Senator JOHNSON of Colorado. I have some other questions, but I hazardly or was there & specific reason for the 30 percent? did not want to interrupt Senator Millikin. He has a chain of thought Mr. NELSON. I do not think it would have made any difference there that he perhaps wanted to develop further. whether you had 30 percent, 40 percent, or 50 percent in the order. Senator MILLIKIN. Senator, there was one angle of the question My wish was 50 percent. The figure put in finally was 30 percent. that I wanted to develop a little further, but I shall gladly yield. I do not think it would have made any difference whatsoever whether Senator JOHNSON of Colorado. No. Go ahead. 50 or 30 percent was going into the order. Senator MILLIKIN. On mines that produce purely silver and gold, Senator McCarran. Who finally decided the difference in judg- not in combination with any of these critical minerals, has thought ment between you and somebody else? been given to the general economic consequences of closing down those Mr. NELSON. All orders that originate in a section go to the clear- mines through a lack of essential priorities? Take 8 community the ance committee. The clearance committee has on it the representa- whole of which lives around a mine and depends upon the mine, the tives of the Army, Navy, and Munitions Board and other Government schools of which and the hospitals of which and the facilities of which and the whole life of which is tied up with a pure gold mine or a pure agencies. Senator McCarran, Were you on that board? silver mine. Has thought been given to the effect of striking down a Mr. NELSON. No; I am not on that board. mine of that kind, which is to say to strike down a community by Senntor McCarran. I am trying to get at how that 30 percent denying it essential priorities? crept in and why silver and gold were penalized in the way in which Mr. NELSON. None of us have any desire to strike down a com- they were by the language of the order. munity. Senator MILLIKIN. Oh, I understand that, but what weight is given Mr. NELSON, Well, silver and gold as silver and gold are not to that factor in the problem? essential for our war effort. Senator McCarran. This is since the order was written, but the Mr. NELSON. We have human casualties and business casualties in Treasury has decided otherwise and has authorized some 40,000 tons every war. We abhor the whole thing, but if it is our duty to see that of silver to take the place of strategic metal only in the last week or so. critical minerals get into the war effort as quickly as possible, we Mr. NELSON. I made a suggestion at the Reno meeting that silver have to do everything we can in the little niche in which we are placed could be used for bus bar. That is not domestic silver but foreign to see that that takes place. Senator MILLIKIN. There is not the shadow of disagreement be- silver that was brought in at 35 cents an ounce. Senator McCarran. It is domestic silver, because it is silver that tween us on that, except in the over-all analysis it might be questioned whether it is wise to produce an extra tank to blitzkrieg a foreign com- has real seigniorage in the purchase of silver at 71.1 cents. Mr. NELSON. Well, then, part of it is domestic and part foreign. munity when by so doing we blitzkrieg a community of our own. Senator McCarran. Maybe part of it is foreign, but that brings Mr. NELSON. The priority ratings that were denied in the mining of silver in the amendment of March 2 did not shut down any mine. us down to this proposition. Since the writing of the order I think it may be well for you to consider that the commercial value of silver, It did not say that any mine would not get priority assistance, It just said that those mines would not get the high priority ratings that had the strategic value of silver, the essential element of silver, in war activity has now put it into a place where it should not be penalized just been put in order P-56 by amendment. They had never had them before, when they were working under the order before it was any longer. Mr. NELSON. I mentioned, as I said, at the Reno meeting that I amended, when it had lower ratings. thought we could put silver on a war basis by starting to use it in bus Those mines are operating under P-100 today, and as I said, I do not know of any mine that has shut down due to priority action or bars. No answer of any kind was made to my suggestion. It was under the use of PD-1-a's, which they can use when they cannot get dropped immediately. Regraded Unclassified SILVER SILVER 527 526 the repair part they want on an A-10 rating. So the fact that they Senator MILLIKEN. I have yet to find a businessman who agrees sending in PD-1-a's and we are processing shut them down for them I think with you. indicates are and shows that we have no desire to and destroy Mr. NELSON. I can show you a number of mine operators through- any community. out the United States who will tell you that the PD-1-a's that we Senator MILLIKIN. Well, I should suggest that when you take the have handled in the mining branch have helped them definitely. preferential priority and toss it out for a general blanket priority, Senator McCarran. May I interrupt to read a letter that I have where one business controls the life of a whole community, and that received from the Industrial Accident Commission? I will read it business is dependent upon that general priority, which we know is because it pertains to the mine you have mentioned, the Argonaut, not quickly available, if available at all, you are in fact granting no and the Grass Valley district: relief. What I am driving at, Doctor, is this: In the same sense that you In reply to your letter of recent date requesting information concerning the effect of the priority order of March 2, 1942, upon the mines of California, I may are construing this order and granting exceptions to this order, is it say that in a number of instances where mines had been struggliing along under not possible, where a community-the whole economic and social adverse labor conditions and low-priority classification, the March 2 decision life of a community-is stricken down by denial of a preferential undoubtodly influenced their decision to cease operations. In other instances that decision had been reached before March 2. In most cases however, the priority, even in the case of a silver or gold mine, to take a common- hreak-down of B piece of major equipment would have tied up the job indefinitely. sense view of that and arrive at some practical solution that will Among the larger mines of this State the following, due to a combination of keep these people going, rather than to dump them into & general eircumstances, are DOW idle, or practically so. It is impossible to say to what extent priorities are 8 factor in their closing: The Argonaut Mine; the Kennedy category which means no relief? Mine Mr. NELSON. There has been no community entirely stricken down Mr. NELSON. May I interrupt you a minute with reference to the yet. Senator MILLIKIN. It is slow paralysis. Argonaut mine? Mr. NELSON. You are anticipating something that has not hap- Senator McCARRAN. Yes. Mr. NELSON. I would like to insert in the record the financial report pened. Senator MILLIKIN. Every businessman, as you know, Doctor, must for the year ending December 31, 1941, of the Argonaut Mining Co., look to the future in his budget, in his future plans, in his employment Ltd., showing they had a net operating loss of $38,036.34, as the plans. These communities that are dependent upon these single answer to the reason why the Argonaut mine was shut down. mines must make their hospital arrangements, their school arrange- (The document referred to is as follows:) ments, their whole municipal budget arrangements. When they are Argonaut Mining Co., Ltd., income account for the year ended Dec. 31, 1941 confronted with an order which is not strangling them today, but will in 6 months or 8 year from now, the practical businessman looks to Per ton milled Amount the end effect and tries to avert it. (87,800 toms) Mr. NELSON. We are living under war conditions, which are very abnormal conditions. My reports from the West indicate that the Argonaut mine operating Income: Gross production $624,774.80 $7.10 major problems of the mines of the West today are labor problems Less: Refining and treatment charges 14,958.08 17 and not so much priority problems. 609,816.48 6.99 Let us take as a pure example of a gold district the mother lode of Argonant mine operating expenses: California. There are roughly 50 mines operating in the mother lode. Mining (Including development) 498,299.62 5.71 Milling 77,254.65 .89 Only 9 of those ever had a serial number under P-56. Yet they were Depreciation 14,214.37 .16 all operating on March 2, and they are all operating today, except the Taxes (other than Federal Income) 31,500.30 ,36 General and administrative expenses (Including mine office overhead Inco overhead charged to Plymouth talls operation) 26,482.88 .30 Argonaut mine, which was shut down not forpriority reasons. Senator MILLIKIN. That is in the same sense that every automobile 647,852.82 7.42 is still operating on its rubber, but every prudent operator of an auto- Argonaut mine net operating income (loss) 88,066.34 -45 mobile knows that that rubber is going to wear out. lymouth tails operating net Income 18,807.21 Mr. NELSON. Oh, no, You cannot get another rubber tire. You 19,829.13 do not have any PD-1-a's you can fill out and get another rubber l'iymouth (Empire) mine development expenses 33,314.26 tire. You are not permitted to fill one out for a rubber tire. Total net operating Income (loss) 68,549.39 Senator MILLIKIN. I am saying to you that the last priority order Other Income: Dividends received 54,075.00 is so uncertain that it amounts to nothing tangible. Interest on bonds 1,530.00 Mr. NELSON. If you saw the thousands of PD-1-a's which come Miscellaneous 2,970.85 through the W.P.B. and which are processed and on which ratings are 68,578.85 given and on which industries are operating successfully today, I 6,032.46 believe I could convince you that 8. PD-1-a is a very tangible thing Other deductions: Federal Income tax 292.00 for getting a good priority. Net Income before depletion 4,739.85 Regraded Unclassified SILVER SILVER 528 529 Senator McCarran. I doubt that that is the reason, however, You are undoubtedly familiar with that problem of the Mother because the Argonaut mine is in a peculiar belt where they produce Lode mines? spasmodically. The next month they may have Mr. NELSON. Yes. Mr. NELSON. That is their year's operating loss. Senator McCARRAN, It presents a serious problem in that, just BA Senator McCabran, That may be true. Senator Millikin and Senator Johnson have referred to, whole com- Mr. NELSON. And I think they were glad, maybe, to have an excuse munities, where for many, many years they have depended on the to shut down. activities of these mines, although some of them were working at is Mr. ENCLEBRIGHT (Congressman from California). I do not want loss, will be blacked out, if I may use B. very homely expression. to dispute the doctor, because I know he is well versed in his facts and Mr. NELSON. As I said, only nine of the fifty-odd mines have ever figures and has studied this matter very thoroughly. I have had the had serial numbers under P-56, and they were operating without serial pleasure of discussing it with him on many occasions, but I would like numbers before March 2. That means that they were operating under somewhat to add to what Senator McCarran has said. Many of the P-100 with an A-10 rating and used a PD-1-a form and were operat- mines in our State, such as the Mother Lode, for a number of years, in ing satistactor) Remember, just nine out of the fifty-odd mines different periods of our history, have operated with an absolute net had any serial numbers under P-56. Forty-one of those mines were loss to the extent perhaps of several million dollars, but operations operating without the priority benefits of P-56 and had never had have been continued. New ore bodies have been discovered and they them, and yet they had not shut down and were operating along have entered into periods of very profitable operations. Of course, satisfactorily. that has to be under conditions when the operator knows he is going Senator McCarran. That emphasizes the point that I tried to to be able to follow up his operations, so that he can do his exploration touch on, Doctor, in my brief opening statement. I do not believe that your board, and even you, with your wide grasp of the subject, work. Mr. NELSON. But you do not believe that is true of the Argonaut? fully catch the significance or the psychology of this problem. Here Mr. ENGLEBRIGHT. I could not say, Doctor, whether that is true or in various places throughout the United States are offers made to the not. The Argonaut has had many periods of depression; it has had workers to go to work at very enticing wages, and here is a mine in many periods of profitable operations. which perhaps the worker has been engaged for many years, but he Senator McCarran. This letter continues: has been advised that there is B. threat over that mine, and perhaps The Argonaut mine, Jackson; the Kennedy mine, Jackson; the Keystone mine, he reads the language that we have in this order of March 2, and he Amador City: the Sheepranch mine, Sheepranch; the Walker mine, Walker- says, "Well, this is not going to last very long. They have supplies mine; the Scotia mine, Grass Valley; the Murchie mine, Nevada City; on hand for only a few months. I am going to the coast while the the Zeibright mine, Emigrant Gap; the Pennsylvania mine, Browns Valley; going is good." the Virgilia mine, Virgilia; Le Roi mine, Mokelumne Hill; the Mountain That is what is referred to in this letter from California, where it Copper mine, Iron Mountain, Calif. has fallen back on the 55- and 60-year-old men to carry on, and they The New Brunswick mine at Grass Valley is reported to be shutting down and the Central Eureka at Sutter Creek in greatly curtailed. cannot demand the big wages. The young fellows have gone, and You are, undoubtedly, familiar with the situation with regard to California hence there is a curtailment of the supply of labor. mining districts. A number of mines are very deep. The Argonaut and the Therefore, Doctor, those two elements-your priority. order of Kennedy being over 5,000 feet in depth. If one of these closes, it means that the other will be faced with the problem of maintaining both mines to keep the water March 2, which in turn had its influence on reducing labor, and the out and provide an emergency exit. Most California mines do not have large reduction of labor itself or the scarcity of labor-have in many in- financial reserves to tide them over periods of protracted idleness BO the result stances brought about the shutting down not alone of precious-metal will be that if they be allowed to fill with water, they may never reopen due to the mines but also mines having precious metals and strategic materials terrific cost of unwatering and rehabilitation of the property. On the Mother Lode and in the Grass Valley district, a shut-down of major in combination. operators would create a very serious condition. There are many miners, and Mr. NELSON. May I answer? good ones, in these districts who are between 50 and 65 years of age who know Senator McCarran. Yes, indeed. only mining and who would be thrown out of employment. Speaking, generally, Mr. NELSON. I had a long-distance call from the Governor of that class would not fit into the program for war industries that might easily absorb a group of younger men. Also, such wholesale shut-downs would create Idaho a few days ago. Seventy miners had left their mines to go to ghost towns of a good many elties like Grass Valley, Jackson, Nevada City, and the coast, where high wages were paid. Those mines had their others. While the production of gold for the sake of the metal can easily be serial numbers; priority could not have entered into the question at all. dispensed with for the "duration," the problem is bigger than that and should The over-all labor question of men leaving mines to go to the coast receive every consideration consistent with our chief aim at this time-à quick it does not seem to me should be confused in any way with whether 8 and decisive victory. This information is necessarily sketchy. Lack of time precludes a more exten- mine had a serial number taken away from it and had it reinstated. sive inquiry into the subject. However, if I can be of further assistance, let It is just a general movement which is going to result in a shortage of me know. labor in the mines producing materials that we need the most, if Very truly yours, something is not done. C. H. FRY, Chief, Industrial Accident Prevention Bureau, Senator McCarran. I am afraid you are looking at it from a brief circumspect; you are not looking at it from the broad field. 73052-42-pt. SILVER 530 SILVER 531 Mr. NELSON. I am looking at it from the broad field. There is á statement from the Governor of Idaho of miners leaving mining carry out the duties they are supposed to have imposed upon them. We have to be sympathetic, but we have to hew to the line and do districts. Senator THOMAS of Idaho. The statement you made is not only what is best to the war effort. true of mines but of farms. The dairymen and the farmers are Senator JOHNSON of Colorado. Of course, priority takes in the losing their help. It is curtailing production. It is a terrible element of preference just naturally, but you weigh your priority against their performance? situation. Mr. NELSON. We should not mix up the labor problem with Mr. NELSON. Yes; we do. Senator JOHNSON of Colorado: Now, we have, as Senator Millikin priorities. They are two different problems. Senator THOMAS of Idaho. It should be taken care of. pointed out, exclusively gold operations in Colorado. There are very Senator McCarran. You won't get mining management to agree few of them. I was quite pleased to hear you say a moment ago that you had not shut the door on any kind of mining operation as with your last statement that priorities have nothing to do with yet. Did you mean where only gold is mined? migration of labor, because all the letters I get are to the contrary. Mr. NELSON. I mean that any operator operating a 100-percent Senator JOHNSON of Colorado. Dr. Nelson, I am quite interested gold mine is still operating under P-100 and has the privilege of send- in the experience that you have had since March 2 with relief and ing in PD-1-a ratings for items that need a higher priority rating with the granting of priorities. I mentioned that the March 2 order than he can get under P-100. withdrew priorities of 66 mines in Colorado; that since that time 28 Senator JOHNSON of Colorado. Is he actually able to get priority of them have been granted relief; that 38 have not been granted assignments? relief; that only 7 of them are strictly gold-mine operations. Mr. NELSON. They have in the past, but remember this: that if Now, I do not know that any of the 38 have been denied relief. they were operating under P-56 they could buy, in a blanket way, 1 notice you said B. moment ago that priorities had not been refused repair parts without having them scrutinized and clearing them to anyone as yet. But what are the prospects of those 38 mining through Washington. Today they have to come in to us for each operations in Colorado being granted relief? item they need as they need it, and they have to show that they Mr. NELSON. I would first like to know how many of the 38 that actually need it, have not been granted relief have furnished us complete information We have got to know that the pooled resources of a gold-mining on what they are producing. Then I could answer your question. district cannot take care of a needed part when it is needed. I have But until I knew that, I would not be in a position to answer your a list here of items bought by a number of gold mines in the West question. The reason 1 say that, Senator, is that a fair number of mines in before their numbers were taken away, and practically everything they bought is of a most critical nature today. For instance, here the West that have never replied when we have written to them to are machine bolts, chains, key stock, files, pipe dies, fuse links, fuse- send in the data we requested to see whether or not we could give plugs, a large amount of wire, bushings, lock nuts, cable, and lead. them relief. Until we do get that information, we cannot act. Things of that type are very critical. Senator JOHNSON of Colorado. Of course, until you get the infor- Senator JOHNSON of Colorado. When were these purchases made? mation you have requested and until they apply, why, quite naturally, Mr. NELSON. These were purchased in January and February. you cannot afford them relief. They had a right to purchase them, but in going over the list of Mr. NELSON. I was hunting for this sheet while you were talking. things purchased by those mines when they could purchase them My figures for Colorado are these: There were 61 withdrawn. There directly from their supplier and just report to us each month what were 27 reinstated. There were 39 not reinstated. There were 5 they purchased, they were purchasing critical materials; and we have whose numbers were not withdrawn, because we had information on a definite feeling that if a mine operator has to come in to Washington them to start with. on a PD-1-a form for each repair part he needs, he is going to be much Senator JOHNSON of Colorado. Your number 61 is not correct, more careful in the amount of critical materials he uses. because you had 27 and 39, which would bring the number to 66, I feel that we have made great strides in California since March 2, which is the number I gave, due to the fact that the gold-mine operators have gotten together and Mr. NELSON. The 61 withdrawn plus the 5 not withdrawn make 66. pooled their resources, have made available their repair shops to Senator JOHNSON of Colorado. I would like to have you develop each other, and I think they are doing a fine job of conserving critical something along the lines of what these other mines may expect if material and still keeping their mines going. they do apply for relief. Senator JOHNSON of Colorado. That is very pertinent information, Mr. NELSON. We will be glad to review each case very critically and it is information that we want very badly in Colorado. We want and very fully and very sympathetically. to cooperate, of course, and our gold operations want to cooperate. Senator Johnson of Colorado. Are you acting sympathetically and They realize the situation we are in, and it is not a spirit of just opposi- generously with these applications where they produce vital and tion and contrariness on their part, but they would like to have some essential and critical materials? ray of hope that they can get just a few drops. They do not ask for Mr. NELSON. We are acting sympathetically with everyone. A n. whole bucketful, but they would like to have a few drops or 8 few person cannot act generously during a war effort if they are going to Regraded Unclassified SILVER SILVER 532 533 crumbs of assurance that they are going to be able that to get if them. Their Mr. NELSON. I would have to look into the specifications. I needs renewal are of cable and other more or less articles to their not going to be great. They tell me essential they can get imagine they have safety laws in South Africa, as well as they have here. some operations they will get along some way, but they want to know that Senator JOHNBON of Colorado. I have one thought I wanted to the door is not going to be shut to them. develop, if you are through, Congressman White. the West, and particularly the men who made the I West feel possible Mr. NELSON. Senator, I admire very greatly the mine operators of Mr. WHITE. Go ahead. Senator THOMAS of Idaho. You are dealing now with gold opera- through the development of the gold and silver mines. their that they tions, Senator Johnson. Could I inject one question? can wheel and show the ability which 1 know they have and ability that come through an emergency if they will put shoulder the to the Senator JOHNSON of Colorado. Go ahead. Senator THOMAS of Idaho. Could I ask one question as to what they their ancestors had. are doing with dredges and how they are caring for gold dredges? Senator JOHNSON of Colorado. You really think a gold-mine opera- Mr. NELSON. Gold dredges are considered as placer operations and tor can do that? have never come into the provisions of the mining orders since the Mr. NELSON. I say, I feel they can. first one issued in September. Those gold dredges that are operating Senator JOHNSON of Colorado. You feel that? today have been operating continuously since September 22 under in the West and offer them a large shipment of drill steel that was Mr. NELSON. But when 1 write to two of the lending gold operators P-100 and by the use of PD-1-a ratings where they needed a priority higher than A-10. consigned to South Africa, and which I held up to see if they could use Senator THOMAS of Idaho. You think they will be able to continue it, and receive negative replies from every gold operator that I sent with their operations? this telegram to, 1 feel a little sad, because I wonder if they are willing Mr. NELSON. I cannot say what the critical material situation will to change their methods of operation in an emergency in order to carry be from month to month, but, as I understand it, most of those dredges are still operating. on. 1 realize that that would call for a change in many things that they Senator THOMAS of Idaho. Thank you. doing, because drill steel is of a different size than used in this Senator JOHNSON of Colorado. Dr. Nelson, I simply wanted to call are country, but there was a lot of critical material that had been made up your attention to the fact that in the mining industry often one hand for shipment to South Africa, which was held up in this country at my has to wash the other and that there would be a very small amount of request to see if any gold-mine opertor in this country was willing to vital and essential and critical ores mined today if it were not for the or could change his operation so that he could use it. They all of one silver and gold that have financed the operations. The mining accord, after a thorough investigation, wired me back and said that industry is financed and its financing is all interwoven. We may have they regretted very much, but they could not modify their operations a gold operation at Cripple Creek that is financing a gold operation in and uso this equipment. some other part of our State. Senator Millikin. Is it not a fair assumption, Doctor, that they It seems to me that there is a feeling, and I want to find out whether knew what they were talking about? it is justified or not, that the War Production Board has a prejudice Mr. NELSON. 1 suppose they did, but that equipment I think is against the mining of silver and gold, instead of realizing that the going to South Africa. silver that happens in these complex ores is not a curse, but a great Mr. WHITE (Congressman from Idaho). May I ask a question, Mr. advantage, and makes it possible to produce quantities, and important Chairman? quantities, of these vital, critical, and essential minerals. The CHAIRMAN. Congressman White. My question is, Do you have a prejudice against silver? Are you Mr. WHITE. Dr. Nelson, you appreciate that these machine drills trying to reduce the quantity of silver mined? Are you trying to cost about $400 npiece that you are talking about. Do you mean reduce the amount of gold mined? Is there some economic factor in you want them to junk all those steel drills and machine drills? this picture that has not been disclosed? Mr. NELSON. No: I did not say that they would junk them. 1 Mr. NELSON. I am only in charge of the mining branch of the was hoping that by some ingenuity they could use it. W. P.B. The W. P. B. has no thought except to see that the critical Mr. WRITE. I do not know the type of machinery you are talking materials go to those mines that are producing the largest amounts of about. They might change some chuck in a drill, but when you essential war minerals. want to change the whole equipment in a drill, that may be irreplace- Senator JOHNSON of Colorado. There is no effort whatever to curtail able, it might cost more to put the new type of machine drills in opera- gold and silver? tion than it would to use steel that was off shape. Mr. NELSON. If a gold mine needs critical materials and there are Mr. NELSON. I realize it was a hard problem. I realize that they not enough critical materials to go around to the metal mine and the would have loved to use that equipment. But I just want to bring gold mine, the gold mine naturally will have to take what is left, not out the fact that we are attempting to help the gold miners where because it is gold but because it does not help to make & tank or a gun or an implement of warfare. we can. use hollow steel. Wns that steel hollow? Could they comply with Mr. WHITE. You know, there is a law that provides that miners Senator JOHNSON of Colorado. Do you take into consideration the contribution that is made by silver and gold to the production of zine, the law and use the steel that you offered? Regraded Unclassified SILVER SILVER 534 535 lead, copper, and other vital minerals? Do you take that into Mr. NELSON. I have figures to show that the gold production in consideration? Mr. NELSON. We in the mining branch are looking purely at the South Africa is going along about the same. I suppose those figures are correct. material viewpoint, the material produced and the critical materials Mr. WHITE. Are they getting a considerable percentage of their used in producing it, and nothing else. machinery from us? Senator JOHNSON of Colorado. In other words, if a mine was pro- Mr. NELSON. I do not believe they are getting very much of any- ducing silver and sufficient silver to finance the operation, you would thing from the United States, because the members of the South wipe it out simply because it was producing silver? African Purchasing Commission come in to see me regularly about Mr. NELSON. If it is producing silver and nothing once n. week, wanting to know when they are going to get something. Senator JOHNSON of Colorado. No. It is producing something else, Mr. WHITE. But they are getting it from the United Nations supply but not great quantities of it. It is keeping a mine open. house somewhere, whether it is from England or from us? Mr. NELSON. If it is producing enough of some other material that Mr. NELSON. I cannot answer that. Their mines are operating. is needed in our war effort, the mine will be kept going with the I know that. priorities he can get. Mr. WHITE. You think they are going along at the same rate they Senator McCahran, Right there, Doctor, going back to the subject have been going in the past? we touched on a while ago, about your statement made in Reno, Mr. NELSON. They state to me that they have no backlog of sup- have not recent developments established the fact that silver itself plies to work on any more, and that they are running rather close is a strategic metal? against the wind. Mr. Nelson. Well, ns I said, I had B feeling in Reno that silver Senator McCarran, I was going to ask, pertaining to that subject, could be used in fair amounts, but I seem to have been alone in that Is it not possible that a shipment of machinery that we send to South feeling at that time. 1 hope that silver can be considered as B metal America may be transsbipped to South Africa? Is there anything of that can be used in winning the war from a material standpoint. that kind going on? Senator McCaRRAN. It has won so many wars, there is no reason Mr. NELSON. I cannot answer. I do not know. why it should not be considered as essential to the winning of this Senator McCarran. You do not know whether the practice of war. In the Civil War and every other war that I ever read of it shipping mine machinery to South Africa will continue? was by the production of silver that the war was won. In fact, it Mr. NELSON. I will say that when we give a PD-1-a to a particular was by the production of silver and gold that we have been able to mine in South America I am pretty certain that that mine needs what- finance our wars. If we do not produce silver and gold, I am wonder- ever it can get so badly that it is not going to transship it to some ing how we are going to finance this war. other mine somewhere else in the world; and the only material which Mr. NELSON. I am from a Southern State, and although it has we have approved for shipment to South America has been material nothing to do with the record, 1 do not think that was the reason to individual mines, and I am pretty certain that an individual mine that the Civil War ended up the way it did. is going to keep the material if and when it gets it. Senator McCarran. Doctor, we will not go into that subject. The CHAIRMAN. Dr. Nelson, we are going to have to close at the Mr. WHITE. Mr. Chairman, may I ask another question? present time, I want to make one suggestion. The CHAIRMAN. Congressman White. It is now apparent that the national debt will be around $200,- Mr. WHITE. You spoke of the policy of the Government in giving 000,000,000. It is likewise apparent, I think, to those who have priorities to gold mines. We more or less cooperate with the British made any computations, that the Federal Budget after this emer- We call ourselves the United Nations. Is that same principle being gency is over will be from fifteen to twenty billion dollars. applied to the gold mines of South Africa? We are told that 50 With those two figures being approximately correct, is it not percent of the gold is produced in South Africa. The Senator told proper for your Board and you as an individual, 88 an official of the us a while ago that they sent a warship to South Africa to bring Government, to give consideration to the problem of permitting away the gold. Is that same principle being applied in South Africa? somebody to make some money to pay these expenses or help pay Mr. NELSON. I must have made the statement before you came these expenses of not only the present time but from this time hence- in that the mining branch has not given any priority ratings on any forth? Have you given consideration to that problem in proposing PD-1-a forms to South African gold mines in recent months. orders that will have the probable effect of stopping or retarding the Mr. WHITE. You mentioned a large shipment of steel going to production of gold and silver, which are our most valuable metals? South Africa. Mr. NELSON. Well, Senator, the Mining Branch has nothing to do Mr. NELSON. I said that we held up the shipment of this drill steel with the price policy paid for any metals. That is established in the that had been manufactured for some company operating South R. F. C. We in the Mining Branch have only one duty that has African mines until we contacted our mines to see if they could use been assigned to us, and I am a great believer in, if you are operating it in the United States. a branch, sticking to the duties that are assigned to you, and that is Mr. WHITE. Does the Priorities Division know of any curtailment to get the materials to the mines. in gold production in South Africa due to any essential machinery The CHAIRMAN. Then, it is your policy to get copper, lead, and zine even though the country goes bankrupt in trying to get it? not being supplied? Regraded Unclassified SILVER SILVER 537 536 Mr. NELSON. I did not hear your question. Senator Millikin, A man would wake up some morning and say zine and other strategic materials without reference to the economic The CHAIRMAN. I say, it is your policy to get copper, lead, and that we need such and such of this, that, or the other in such a quan- tity. Therefore, in order to get such and such of this, that, or the effect the country in getting those materials? has other in such a quantity, we have to put out a certain kind of order. Mr. upon NELSON. Senator Thomas, my branch nothing in to do with That would be a somewhat logical approach to an order of that kind, the policy making of W. P.B. I am sorry. I am not who that position. would it not? Senator MILLIKIN. I should like to ask, Dr. Nelson, that sat in on Mr. NELSON. That is just what I said. the determination of the policy behind this order we are talking Senator MILLIKIN. What I am getting at is, where is the factual data basic to this order? How can we get it? How can we look at about. Mr. NELSON. I would have to give you the entire membership of the it? It was not just a circulation of talk among the members, like a Board before which it came, and I cannot give you that offhand. college bull session, was it? Senator MILLIKIN. Was it taken up in a formal hearing or a series Mr. NELSON. No: not at all. of meetings? Who was the dominating personality in the policy Senator MILLIKIN. There must have been some basis for it. behind this order? I assume you are acting mechanically, under the Mr. NELSON. I am afraid we are so busy down there that we do position you have just mentioned. It is not entirely mechanical, but not have time for some of the bull sessions that we would like to have. using your judgment within the sphere of action you have been Senator MILLIKIN. I do not deny their proper place, but I do not confined to, But who decided the policy? think we are getting out orders on bull sessions. I do think, however, Mr. NELSON. You are bringing up the question of order P-56, and it would be n good thing if we would get at the why of this order. Senator Thomas was bringing up the question of affecting the price Mr. NELSON. I mentioned it several times, Senator. structure of the metals, which are two different things entirely. Senator MILLIKIN. You told me it is because of this war need. Senator MILLIKIN. They do not have to follow each other. I am Mr. NELSON. I said we have lost our sources of supply of many of asking who decided the policy basie to this order. the critical metals that go into alloy steel, that go into the making of Mr. NELSON. Well, as I said, the fact that an amendment was mining machinery, and so forth. Mining machinery is essential for needed to the old order P-56 was naturally known in the Mining carrying on the war. The makers of mining machines have to have Branch, and the Mining Branch drew up a draft of the first amend- critical materials to make the machines. The makers of mining ment to the order. machinery have the best machine shops in the United States, and they In drawing up an amendment the branch chief gets in touch with are using from over 50 percent of their plant capacity down to lesser his attorney, he gets in touch with a representative of Research and amounts in the making of direct munitions for the Army and Navy. Statistics, and they jointly draw the amendment. The amendment They are limited in the use of critical materials in the making of those then has to be approved by a half dozen different people. All this materials. Therefore, we are limiting it to the mines that are pro- is on a form that is attached to the front of it. Any of those people ducing the critical minerals. who do not like any item in that amendment make notations in regard The CHAIRMAN. It is obvious we cannot complete the hearings this to what they do not like. Then you try to prove your point. If you morning, and some of our Members have another meeting at 2 o'clock. cannot, you compromise and modify the order, until it is passed by the We cannot go any further now. clearance committee, and then signed by Mr. Knowlson. If agreeable, we would like to have you come back tomorrow nt 10 Senator MILLIRIN. Is there a factual memorandum available that o'clock, Doctor, if you can. Mr. NELSON. I will be here, sir. went into these discussions? Mr. NELSON. I think there are memoranda attached to this order The CHAIRMAN. There will be some other questions to be sub- as it went through the committee and as it was issued. mitted. Senator MILLIKIN. I am going back to my first question of the Mr. NELSON. Will the hearing close tomorrow? day. What was the necessity for the orders? Can we get a factual The CHAIRMAN. I cannot say anything about that. I do not know showing into the record as to the necessity for it? when it will close. Mr. NELSON. I have already mentioned that the necessity was We appreciate the attendance we have had this morning, especially that we needed higher priorities for the mines producing critical from the Members of the House, and you are invited to come back minerals in order to see that they get the raw materials that they and sit with us and participate with us so long as the hearings last. We will meet tomorrow morning nt 10 o'clock. needed in order to operate. Senator MILLIKIN. There must be something below that. You (Thereupon, at 12:45 p. m., an adjournment was had until Wednes- just do not wake up in the morning and say there must be this, that, day, May 6, 1942, at 10 a. m.) or the other order. There must be a factual basis for that. Mr. NELSON. The factual basis was that a war broke out and we were cut off from our supplies of chrome, tin, manganese, and certain other ore deposits. We were cut off from most of our critical minerals. Regraded Unclassified PREFERENCE RATINGS FOR MINING MACHINERY AND EQUIPMENT WEDNESDAY, MAY 6, 1942 UNITED STATES SENATE, SPECIAL COMMITTEE ON SILVER, Washington, D. C. The special committee met at 10 a. m., pursuant to adjournment on Tuesday, May 5, 1942, in room 424, Senate Office Building, Senator Elmer Thomas of Oklahoma (chairman) presiding. Present: Senators Thomas of Oklahoma (chairman), Johnson of Colorado, McCarran, Thomas of Idaho, Downey, and Murray; and Albert A. Grorud, secretary to the committee. Present also: Senators Millikin and Bunker. Present also: The following Members of the House of Representa- tives: Hon. Harry L. Inglebright (California), Hon. Lawrence Lewis (Colorado), Hon. William S. Hill (Colorado), Hon. J. Edgar Cheno- weth (Colorado), Hon. James G. Scrugham (Nevada), Hon. Compton I. White (Idaho), and Hon. John R. Murdock (Arizona). Present also: Gov. Ralph L. Carr (Colorado). Present also: Mr. William L. Batt, Director of Materials, Materials Division and Chairman of Requirements, accompanied by James Cooley, Jr., Esq., attorney, Mining Branch, Materials Division; Dr. Wilbur A. Nelson, Administrator; Dr. Marcellus H. Stow, Deputy Ad- ministrator; and F. L. Eaton, attorney, Materials Division: Shaw Livermore, principal industry economist, Office of Progress Reports Division, War Production Board; Mr. Julian D. Conover, secretary American Mining Congress, Washington, D. C., Mr. A. W. Dick- inson, the American Mining Congress, Washington, D. C.; Mr. Albert F. Knorp, secretary, California chapter, American Mining Congress, San Francisco, Calif.; Mr. James A. White, director, Rocky Mountain Metals Foundation, Washington, D. C.; Mr. Robert S. Palmer, secre- tary, Colorado Mining Association, Denver, Colo.; Mr. George W. Malone, managing director, Industrial West Foundation, Washington, D. C., and San Francisco, Calif.; Mr. Errol MacBoyle, chairman, State Mining Board, California; Mr. J. C. Kemprance, Mining Asso- ciation of California, San Francisco, Calif.; Mr. Matt Murphy, in- spector of mines, State of Nevada; Mr. Charles L. Bradbury, presi- dent, New Mexico Miners and Prospectors Association, Albuquerque, N. Mex.; Mr. R. E. Whitten, Boise, Idaho; Mr. David P. Strickler, president, Cripple Creek Development Co., Colorado Springs, Colo.; Mr. Thomas A. Copeland, Cripple Creek, Colo;. Mr. Merrill E. Shoop, Colorado Springs, Colo.; Mr. Edward D. Dickerman, Leadville, Colo., and Mr. H. M. Bratter, Washington, D. C. The CHAIRMAN. The committee will be in order. When we recessed on yesterday, Dr. Nelson was in the midst of his statement. We will proceed this morning from where we left off yesterday. 539 SILVER 541 SILVER 540 STATEMENT OF WILBUR ARMISTEAD NELSON, ADMINISTRA- The CHAIRMAN, This will be off the record. TOR, MINING BRANCH, MATERIALS DIVISION, WAR PRO- (Senator McCarran then made a statement which, by direction of the chairman, was not recorded. The following then occurred:) DUCTION BOARD, WASHINGTON, D. C.-Resumed Senator McCarran, Now, Mr. Chairman, I want to take just a of interrupting you in the first instance, and later on other interrup- Senator McCarran. Dr. Nelson, on yesterday I think I was guilty little different tack, which will later come back to Dr. Nelson's state- ments made here yesterday. I have here a clipping from the Wall Street Journal of the date of May 6, 1942, and I would like to read it. tions followed. Mr. NELSON, Yes, sir. SILVER PUT ON INFORMAL RATION LIST; GOVERNMENT FREEZES PRICE AT 35% Senator McCarran. I noticed that during the making of my pre- CENTS-WAR INDUSTRIES GET NECESSARY QUANTITIES But SUPPLIES FOR liminary statement you took notes of my remarks, some I of which you JEWELRY MAKERS Ann LIMITED started to reply to, and I then interrupted you. But which think you still Silver, one of the last of the priority-free metals, is being rationed. have some notes growing out of my statement be perhaps you Handy & Harman, the leading bullion dealers, now are doling out supplies, it might wish to speak upon. If you have, we would very glad to was learned last night. Industrial companies using the white metal in war work get what they need; supplies for other consumers, including jewelry and table- have you do so. wear manufactures, are being strictly limited. Mr. NELSON. Senator, I think I answered you on all the notes Silver available for industrial use also has been price-fixed, the Government freezing the quotation at the ruling 35% cents a fine ounce (35% cents, including I had. commission, to the consumer). Senator McCarran. Very well. Mr. NELSON. However, if you feel that there is something I did LONG EXPECTED BY TRADE not answer, I will be very glad to try to answer it. Senator McCarran. I want to touch on this just a little, because The eriala in allver supplies had been long expected in the trade. The only white metal available for industrial and commercial use is imported. All United I think you would perhaps like to answer it, and I would like to have States mined silver is bought by the Treasury at 71.1 cents an ounce. Current demand, the trade estimates, is running neck and neck with a potential your reaction. foreign supply which may be as small as 100,000,000 ounces this year. But Mr. NELSON. Yes, sir. Senator McCarran. Please understand that there are things that industrial use is expanding rapidly. Silver is an expensive but desirable substitute for even searcer metals. It can be used in solders, wire, electrical and chemical I mention to you here during the hearings that have come to me equipment. It has direct armament uses in ship equipment, gunfire control and but may that may have nothing particularly of significance behind them; recoil mechanisms. The aircraft industry uses silver in radiators, aircraft engine nevertheless, if they grow out of an atmosphere, so to speak, that is bearings, etc. This war-borne industrial demand has been piled on top of expanding use by out in the field, it might be well for us to bring them up, so that you the arts and crafts, traditional market for the precious metals, in turn might explode them, if I may use that expression. I dwell now on the incident illustrative of expressions that are BUSINESS TURNED DOWN abroad that there is a line of demarcation somewhere, whereby some A considerable volume of business is being turned down by bullion dealers can get priorities and others cannot. I gave yesterday an illustration. because of the inability to acquire sufficient supplies of silver with which to meet of two miners working on the same dump, both applying for priorities, this demand. The situation has been aggravated by the fact that some com- both working on the same class of ore. One gets a priority; the other mercial users are attempting to build up supplies now against anticipated future needs and hence are trying to buy more silver than they are entitled to at the does not. The inference is that somebody has a pull somewhere. moment. Mr. NELSON. Senator, if I remember, you made that statement 8o far, the informal rationing is being carried out on the basis of & certain per- under n heading, in your opening remarks, of rumors that you had centage of the amount of silver a customer used last year. But even the com- pulation of the pereentage is difficult, it was explained, because of the uncertainty heard. regarding available supplies of foreign silver. Senator McCahran. Yes. Mr. NELSON. I just supposed, as they were rumors, that you did TRANSPORTED BY RAIL not want me to answer them, because I do not know just how to The shipping situation has complicated deliveries of metal from Mexico and answer rumors. all silver DOW la being sent to the United States from Mexico by rail express rather Senator McCarran. Notwithstanding this, it is my belief-and than by water, you know better than I-but it is my belief that there is not any If supplies remain inadequate it may become necessary to seek Government relief through the release of some of the huge silver hoard acquired by the United pull, so-called, anywhere in your board; that you are dealing with States Treasury as the result of the silver purchase program. Treasury officials this subject fairly and squarely and are acting on the up-and-up. have announced willingness to release 40,000 tons of ailver for bus bars to offset Mr. NELSON. Well, Senator, if there is any pull being exercised by the shortage of copper. The ailver market may seek to have a portion of this anyone, anywhere, in my own branch, I know nothing about it. tonnage diverted to commercial uses. Every case is handled purely on its own merits. I make mention of that, Mr. Chairman, in the presence of the Senator McCarran, That, of course, is what I wanted. members of the Board here in furtherance of my thought, that I tried to get Dr. Nelson to acquiesce in, and which I think he does Senator McCarran. There is one other thing, while we are on the Mr. NELSON. Yes, sir. acquiesce in, if I interpret his statements correction-I may be wrong, subject, that hsa come to my attention. With your permission, Mr. though-that there should not be any act on the part of the Board Chairman, I will ask that this be off the record. Unclassified SILVER SILVER 543 542 would curtail the production of domestic silver, because domes- supplies, if they are needed for the war effort, will, I believed taken which silver is not only valuable from a monetary standpoint, and but it is by my superiors. tic is disclosed by this article here, the becoming arts and more sciences more The CHAIRAN. Doctor, on yesterday you made the statement that essential also, as as a commercial commodity in with every mine stood on its own foundation. which are dealing today in our war activity. Mr. NELSON. Yes, air. will be I did not get the full significance of his statement; but later, Dr. frank with him and say that when he made mention of it in we Nelson touched upon that in one brief statement in Reno. I The CHAIRMAN. That meant that the facts surrounding that mine would be governing in relation to an application for priorities and the issuance of granting of priorities? when the lend-lease law to release 40,000 tons of silver, turn in his release Reno, the Treasury became active, and I saw that they to in were about to Mr. NELSON. Yes. The CHAIRMAN. Now, this morning you have made the statement use a similar quantity of copper, I saw that he had something mind that any mine that produces a required or satisfactory amount orf when he made the statement in Reno. necessary war material, such as copper, lead, or zine, would have its I bringing this to his attention now with the hope that his board number reinstated if it had been withdrawn. am fit to say to the silver miners of this country and those of whose Mr. NELSON. Yes. may mines see produce a greater quantity of silver, that the mine order March The CHAIRMAN. With those two statements before the committee, which limits it to 30 percent, and says that if the produces more of what use is any order whatever with respect to the production of than 30 percent of silver in dollar value it cannot have a priority, that silver, if every mine stands on ita own foundation. Mr. NELSON. If you feel that my two statements are con- is not the rule. little am bit, so that the fellow who lives on the prairie and has a mine I anxious that your Board may see fit to modify that rule a tradictory The CHAIRMAN (interposing). I did not say that, but the two state- the side of & hill may know that he will not have to come here to ments lead me to believe that, inasmuch as every mine stands on its on get a priority. If you would discuss that a little, I would appreciate it. own foundation, there is no occasion for an order affecting silver or fact that any mine producing needed amounts of copper, lead, or zinc, Mr. NELSON. Senator, 1 have already discussed, yesterday, the anything else, because if a mine needed a priority for any purpose, it would make application to show its necessity for it; then it would be irrespective of the amount of silver or gold it will produce, will have up to your board to consider the application and do what you thought its number reinstated if it was withdrawn. was best in the case, having in mind, of course, our need for strategic 1 supposé what you wish me to discuss is not that phase of the materials. matter but the industrial side of silver or the industrial use side of Mr. NELSON. The amended mine order of March 2 gives various degrees of priorities to various types of mines. In addition to the fact silver. Senator McCarran. That phase of it; yes, Doctor; together with that gold and silver mines were limited in their priorities, We also took this thing; that those of us who are interested in silver mining are out of the higher brackets of priorities sand and gravel operations and trying to get over to you, with the idea of affirmative action, a change aggregate operations-building stone, gypsum, and certain other of the language of the order of March 2. The reason why we are commodities. In other words, we were not discriminating against trying to get that over to you, to get it modified, is that it has & any particular type of mine; we were trying to evaluate the different deterrent effect on mining all over the country. No matter what you mines producing different materials as they affected the war effort. may say here, as you have just made the statement, which I under- The CHAIRMAN. You stated on yesterday that the largest silver- stand perfectly, there are hundreds who do not understand it. producing mine was Sunshine. They say, "There is the order. How can you change it?" Mr. NELSON. I said it was one of the largest. Mr. NELSON. Senator, I also made the statement yesterday that The CHAIRMAN. One of the largest, then. You said that because we have no information in the Mining Branch showing that any mine that mine produced a very large amount of antimony, which was has shut down due to priority action; furthermore, we have informa- needed, you would permit that mine, as I understood you to say, to tion showing that certain mines have changed to strategic mineral get whatever material was necessary to operate the mine. Mr. NELSON. That is correct. Their serial number was reinstated. production. We also all know that the metals essential for winning the war are The CHAIRMAN. You might have the largest silver mine in the being produced in larger amounts this year than they were heretofore, same condition, or you might have the largest gold-producing mine so our priorities have been used to increase the production of strategic in the same condition. If a gold-producing mine was primarily used for the production of gold, yet that mine produced a by-product in and critical minerals. Senator McCarran. Right there, Doctor, if I may interrupt. I substantial quantities that was needed for the war effort, you, as I read this article and I have made my statement with the idea of trying understand the force of your statement, would go ahead and issue the to emphasize the fact that silver has now become a metal necessary priorities necessary to keep that mine in operation? Mr. NELSON. Irrespective of the amount of gold and silver that a to win the war, just the same as copper or lead or zinc. Mr. NELSON. I would say that if additional supplies of silver are mine produces, as I said yesterday, if that mine is producing needed needed and that can be shown in the months to come to be true, amounts of any critical or essential minerals, and it can substantiate naturally whatever steps are necessary to get out those additional that fact by furnishing us detailed information of the operations, we Regraded Unclassified SILVER SILVER 544 545 review all that information, and if these critical materials that that Mr. NELSON. I do know, however, that a mill is being built, to take mine is also producing are needed in the war effort, the serial number care of these ores from the mines you are mentioning, and that, is reinstated. instead of producing about 150 tons of antimony, as they did last year, The CHAIRMAN. I can see in your orders a very powerful and due to their interest in the war effort they will produce between 70 and psychological influence against the mining industry in those western 75 tons of antimony a month starting in September, or probably a States, with respect to both gold and silver. Now, with my present little sooner, and will acquire ores from nearby properties from which understanding, as I interpret your statement, that each mine stands they will separate antimony. So, their production per month starting on its own basis of facts, I can see no good purpose whatever that can this fall will be around 100 tons a month. Antimony is very essential be served by keeping this order in the active files. in our war effort. Mr. NELSON. If it were not for this mining order, the mine oper- Representative WHITE. I appreciate that, but is the process you ations of the country would have no way in which, when they suffered have been discussing-the metallurgical process-one where they & break-down, and get the highest priority rating needed 80 they could separate antimony in a mill or in n smelter? get from their supplier the equipment they need to start operations Mr. NELSON. I am not familiar with the details of how it is sepa- again. We are able to do that on 24 hours notice. rated, because I am not a smelter expert. The CHAIRMAN. You must know all the facts surrounding and have Representative WHITE. I want to come now to this priority matter. in mind all the facts upon which the priority orders are requested, You said that blanket priorities are given to these mining companies. and then you not, independently of everything else, on the facts as I understand that when they make special requests for needed replace- presented as H basis for this order, so still I cannot see how the order ments, they must conform to certain rules and regulations. They itself does any good whatever. must name their supplier, state whether the stuff is available, and go Mr. NELSON. There are about 16,000 mines in the United States. through the provisions of your formula. There are only between 8,000 and 9,000 of those mines that have Just what plan do you have in mind to take care of these mines? serial numbers under this order, and those are the mines that are Do you have a blanket formula by which they can make application, given high priority ratings for break-downsor anticipated break-downs, or do they have to make specific clearance or obtain specific approval are given quotas or a release on their repair parts, or are given special for every instrument they order? Just how do you handle it? ratings on new machines, when they need those machines to expand Mr. NELSON. I can go into details in the operation, if you want or to maintain their tonnage. me to, Congressman. The CHAIRMAN. I think I see your viewpoint: that this order and Representative WRITE. I just want to know the difference between this activity on behalf of your board is really in the interest of the the two plans you discussed yesterday. mines rather than against them. Mr. NELSON. Under the mining order we asked the Governor of Mr. NELSON. Absolutely. each State to designate a State official as the Emergency Coordinator The CHAIRMAN. Well, I am trying to see that a little more clearly. of Mines for that State. That State official sent into our office the Mr. NELSON. Did 1 make that clear? names of the mines in his State which he felt should be given serial The CHAIRMAN. I see your viewpoint, but I am not convinced numbers, as a serial number was necessary before a mine could par- that it is in the interest of the mining States. ticipate in the priorities granted under the mining order. Mr. NELSON. The fact that we are trying to get production out is We reviewed those lists and wrote back in many cases for additional prima facie evidence that the mines are being taken care of from the information. Since September 22 we have issued serial numbers to priority standpoint, because they would be unable to increase their between 8,000 and 9,000 mines in the United States. production if it were not for the use of priorities. When a mine has a serial number, it is entitled to the priorities Representative WHITE, Mr. Chairman, I would like to make an given in Order P-56. There are four or five different types of priori- inquiry, in order to clear up a matter. ties in that order. The A-1-a rating for break-down must be cleared The CHAIRMAN. Congressman White. by the mine having a serial through the Mining Branch in Washington. Representative WHITE. You mentioned, Dr. Nelson, the Sunshine An A-1-c rating for repair parts on a quota basis by quarters is Mine as a source of antimony. handled by the mine direct with its supplier, by stamping on the Mr. NELSON. Correct. order to its supplier B. clause carrying the mines' serial number and Representative WHITE. As a matter of fact, antimony is a metal the A-1-c rating under his quota, in accordance with the provisions that is deleterious, and the mine owners are penalized for having it of order P-56. They do not have to come into Washington for their in the ore. How do you take care of that situation? repair parts under those quotas. The quotas are, however, estab- Mr. NELSON. I know that the past smelter practice in regard to lished in Washington. certain metals being associated with other metals when they go to We also have an A-8 rating that the mine operator can use in the the smelter has resulted in certain penalties being charged by the same way on his supplier for other operating supplies. smelter against the shipper. Finally We have an A-10 rating that can be used for office supplies, Representative WHITE. It has been long the custom and practice to penalize the shipper for having antimony in his ore. 73052-42-pt.9- - SILVER SILVER 547 546 other items of that type, not directly connected with the mining or activity; again the mine orders under the A-10 rating directly on his Representative WHITE. I beg your pardon. It is not my intention to bring in a controversy here. I just want to clarify this thing. You stated yesterday, I think, that a very great number of Cali- supplier. Leaving that side of priorities and going to new it machines, a mine fornia gold mines had not availed themselves of any application. wanting a new mining machine can get and only by writing Do those companies have the knowledge that they have the privilege operator wiring to the Mining Branch in Washington That furnishing us all and that they can avail themselves of it? Do you get that infor- or the information about its need for that machine. is reviewed mation to them? carefully. If the mine operator has proved his case, a rating is given Mr. NELSON. We have attempted, through our State coordinators, which will permit the mine operator to purchase that machine, to see that every mine operator was informed of the fact that he had Those are the priorities that are available to a mine operator having the privilege of applying for a serial number. The reason we asked n serial number under order P-56. the Governor of each State to designate a State official familiar with outlined, have there been any general rules or general instructions Representative WHITE. Going into this detailed plan you have just the mining industry of his State was so that every mine operator in the State could know, through the State coordinator, that he had the issued to the mining industry to put them on notice or to give them an privilege of applying for a number. opportunity to take advantage of these provisions that you have just Representative WHITE. Just a number. But what about the information of his privileges and rights and the rules and regulations enumerated? Mr. NELSON. Yes, sir. Every mine operator when he gets his that went with that number? What about them? serial number is told to read the certificate, on which there is stamped Mr. NELSON. He got the number and he got that information from all this information. In addition to that, we send out additional us. If he did not get the number, the information was not necessary. instructions as conditions change. Representative WHITE. In other words, it boils down to the fact Representative WHITE. That mine number is given only upon that there have been no general rules or general instructions made application. But the information I would like to have is whether available to the mining industry. general information has been furnished the mining industry, to have Mr. NELSON. There have been rules or general instructions given them avail themselves of the rules and regulations you now prescribe. to the mining industry in many ways: Through our office, through Has that now been done in a general way? State coordinators, through trade journals of the country that cover Mr. NELSON. We have in each State in the union an emergency the mining industry, and by word of mouth. coordinator of mines, and I am certain that in every case those State Representative WHITE. You stated awhile ago that the coordinators coordinators have seen to it that the mine operators in their State of the several States had listed all the mines that they thought were know that they can apply for serial numbers. entitled to this information; that were listed as mines that merited this Mr. Palmer is our coordinator in the State of Colorado and has been procedure. very active. 1 am quite certain that there is not a mine operator in Mr. NELSON. Yes. Colorado who has not been informed that he could get a serial number. Representative WHITE. Has that list you mentioned been given to I also ani quite certain and know to be quite true that a number of these people in any way direct? mine operators who have asked for serial numbers have not been Mr. NELSON. The mines on that list which were granted serial given them because we thought their operations did not justify them. numbers have been given all information in regard to the priority Representative WHITE. Have you furnished those coordinators in the several States with blanket, comprehensive instructions as to what actions. Representative WHITE. Mr. Chairman, I thank you very much, and B. mine is entitled to have and can have, and do you know if the mines I thank Mr. Nelson for his information. Senator McCahran. At this point, Mr. Chairman, while these have received such information? Mr. NELSON. Each mine operator himself, when he has B serial gentlemen are before the committee, I desire to read another extract number, has the information and knows how to apply that infor- from the Wall Street Journal of today, May 6, 1942. Perhaps it has already come to your attention, but I would like to have it brought to mation. Representative WHITE. 1 would assume that. Well, judging from your attention again as a basis for one or two more questions. This the hundreds of telegrams reaching my office from miners asking for article reads as follows: help, it is quite apparent to me that they do not have such infor- mation and have to go through a very tedious routine to acquire it. SILVER EXPORTS TO EUROPE ARE BANNED TO KEEP METAL FROM AXIS INDUSTRIES Mr. NELSON. We have sent out these certificates with serial num- bers to mine operators. In one or two cases we have had the mine operator, when he made his monthly report to us, return his certificate nouneed embargo because it has been found that even though shipped to neutrals WASHINGTON-Exports of silver to Europe have been stopped by an unan- to us as his monthly report. If the mine operator does not under- the silver finds its way to the Axis for industrial uses. The new embargo covers Spain, Portugal, Switzerland. Sweden. Vichy France, stand the certificate and does not understand, by reading it, the Turkey, and French Africa. priorities that he can get, we cannot go to between 8,000 and 9,000 redure is to withdraw all silver coins. This was done by the Axis in It was found that when European countries are occupied by the Axis the France pro- mines and read the certificate over to them and explain the details. where 5-, 10-, and 20-franc silver coins were taken up by Germany. Regraded Unclassified SILVER 548 SILVER 549 using Germany sine, aluminum, and iron coins in place of centers more white metal. and Italy have long since withdrawn the their silver valuable coins and are how Senator McCAHBAN. Yes; that is true, Doctor, but the production large It quantities of coin for the account of the is shown that Switzerland and Portugal Axis. are through which flow of silver in combination with what you term strictly war essential Considerable tonnage of silver was actually en route to Portugal and Spain metals does two things. First of all, it enourages the production of before it. was stopped and brought back to this country. war essential metals; second, it keeps the price of war essential weeks, this Government has been negotiating with the representatives metals down, because silver at 71 cents aids the miner in producing of to in this country. Sweden owns some 15 to 20 tons being in this country, In neutral recent European governments for the purchase of silver held which they hold title war essential metals, and today, except in one instance, you have no Officials of State, Treasury, and other Government agencies, however, have straight mines of silver. Every bit of silver is a byproduct, almost been getting tougher about silver exports to any of the European countries and altogether. The only one outstanding exception to that, that I were finally forced to clamp down completely. know anything about, is the Sunshine mine, to which you have made Silver is a searce metal in Europe because the occupled countries are being reference. urged to use substitute metals for coins and this action coins has caused has civilian hoard- With that in mind, I still insist, with all these other facts I have ing. which with the confiscation by the Axis of silver produced a diffi- brought before you here, which are today current, that the clause in cult silver situation. Silver production in Axis-held Europe in 1939 was about 5½ percent of total your order of March 2, being a penalizing clause-and it cannot be world output. This output has probably been stepped up silver some by the pressure considered in any other way-should be removed from that order in of war demands, but officials believe that the embargo on from this country order that your war essential metals, that you hold highest, should will hinder the Axis A little and create some discomfort. have greater production by being encouraged and will cost the Govern- Dr. Nelson, 1 read that extract ns a preliminary to this question. ment B. lesser price, because silver costs the Government nothing. Undoubtedly whoever put into the order of March 2 the provision as Mr. NELSON. As I brought out yesterday, we must always remem- to 30 percent of silver and gold or silver or gold must have had the ber that the machines which are being made for our mines must be idea or motive of reducing the production of silver, or at least must used in the mines producing the largest amounts of critical material. have had the idea that silver was not a war essential metal, because I think that that answers the silver question. that order as worded in the priority rule of March 2 penalized the Senator McCarran. It would answer it, Doctor, if it were not for production of silver if it was in excess of 30 percent. the fact that it is disclosed that silver is a critical material just as well With that in mind, and with the doctrine that is announced here as the metals you have mentioned. in these articles that I have read, I am asking you gentlemen now why Mr. NELSON. If you use silver to replace copper, and you have one IL war essential metal, manifestly a war essential metal, because by machine here that mines 100 pounds of copper, and that can mine this action it has been barred from export; manifestly a war essential X pounds of silver, it is certainly better economy to mine copper. metal because our enemies are gathering it up wherever they can, The silver we have been mining has been accumulating over a long because it is so treasured in war activities-why should any phrase period of years, and we are just taking advantage in this emergency be in the priority order which by its general terms would penalize of the accumulated silver which was not being used as critical material the production of silver in this country? I would like to have your in war effort. views on it, gentlemen. Senator McCabran. That part would be true and your analysis Mr. NELSON, Well, we certainly consider that silver and gold- would be correct were it not for the fact that a small quantity of silver those two motals-are not in the class of copper, lead, and zine, and outbalances and overweighs a large quantity or tonnage of the war the critical minerals like chrome, manganese, vanadium, molybdenum essential metal. In other words, if you have a mine that produces, tungsten, and others. say, 20 ounces of silver or 10 ounces of silver and 10 tons of war Senator McCarran. But is it not rapidly, according, to the best essential metals, and you penalize the production of the tonnage of information we can get, taking its place as a war essential alongside war essentials because of the production of more than 30 percent of those metals you have mentioned? silver, then you have not carried out your formula. Mr. NELSON. It is certainly playing a small part at the present Mr. NELSON, We are not penalizing them. We are considering time, and until it can be proved that the amount of silver that is each mine from the standpoint of copper, lead, or zine which it pro- being produced under the present priority actions is not sufficient to duces, irrespective of the amount of gold or silver it produces. We take care of these new uses of silver, I see no reason for changing our are thinking first of the copper, lead, and zine. We have to under the present priority set-up. I think it would have to be proved first. present methods of warfare. Senator McCarran. You will concede, however, Doctor, that the The CHAIRMAN. Congressman Murdock, have you some questions provision in that order does act to penalize the production of silver. that you desire to propound? Mr. NELSON. The raw materials going into the making of mine Representative MURDOCK. They have been partly answered, Mr. machines and equipment is one of the controlling factors in mining. Chairman, by the latest anwsers to Senator McCarran. These mining machines and mining equipment and repair parts will I would like to ask this question: Are there not B good many mines produce a much larger amount of copper, lead, or zine than they can silver? throughout the country that produce mixed ores, including gold and of silver or gold for the same amount of critical materials. We have got to use our critical equipment where it will produce the largest Mr. NELSON. Yes; there are mines that produce copper, lead, zine, gold, and silver. amount of the metals needed in the war effort. Unclassified SILVER SILVER 550 551 Representative MURDOCK, 1 find in the mines State of Arizona, for INTRODUCTION instance, that some of our largest copper are I heavy producers of gold and silver-chiefly silver-as a byproduct. which the Senator wanted to bring The present world conflict has been aptly described as & war of metals and those nations which possiess the greatent resources of metalliferous orea and the the fact that the order of March 2, believe has been facilities to turn them into finished products should eventually be victorious. out referring to, does restrict the output of copper-I that that is true While nearly all metals are essential in conducting modern warfare, their in the State of Arizona, because of the fact copper, gold, and degree of importance varies considerably both from the standpoint of tonnage required and the practicability of employing substitutes, silver are produced in the same mine. Since our monetary system is founded on gold and silver, the chief function of In one mine that I think of, at Superior, Ariz., the output of these so-called precious metals is buying power. Gold has very few essential gold and silver is rather heavy, and I can would see how limit the the order of March industrial applications, and Its high price and scarcity further limita its uses, 2, unless modified in individual cases, production of Silver, on the other hand, plays an important role in Industry and while the quan- titles normally required for essential purposes represents less than 50 percent of our annual output, it could be substituted advantageously for other metals were copper. Mr. NELSON. It has not actually limited the production of copper it available in large quantities. anywhere, because where any appreciable amounts mines of copper were Outstanding nonferrous metals: Practically all of the metals have been placed being produced, the serial numbers of those were reinstated, on the strategic and critical lista of materials, but from the standpoint of tonnages produced, aluminum, copper, lead, and sine are the most essential of the Dob- irrespective of the amount of gold and silver present. ferrous group. Representative MURDOCK. I am glad to bear that. In the case of aluminum, we are dependent to some extent on outside sources Senator JOHNSON of Colorado. If it has not restricted it, it has for our supplies of aluminum ore (bauxite), but the bulk of our copper, lead, and greatly stimulated the production of these critical minerals every. sine is derived from domestic sources. During the past 2 years our output of these metals has been stepped up sharply, where? yet the demand has increased to such an extent that we cannot adequately supply Senator JOHNSON of Colorado. Why you do not recognize that fact Mr. NELSON. It has. both military and civilian needs. Proposals made by Government agencies to meet expanding need for copper, is the thing I do not understand. Silver certainly has made A great lead, and nine: To meet the expanding need for copper, lead, and sine, the two following suggestions have been made: contribution to the production of copper, lead, and zinc. It has kept 1. Substitute available silver supplies for copper, lead, or zino and thus release the mines open. It kept them going prior to the war, when the prices some of these other metals for essential uses. 2. Mine and smelt only those copper, lead, and nine orea which contain less came up. Mr. NELSON. Prior to the war we did not need priorities of any than 30 percent of their metal value in the form of gold or silver. The object of the first suggestion is to utilise silver which In not employed for kind. When the war broke out we started living under war conditions essential purposes and aubstitute it for those metals which can be advantageously and under n. set of circumstances that are entirely different from any used elsewhere. set of circumstances that any of us ever dreamed we would have to The announced objective of the second suggestion in to step up the production of copper, lead, and sine by employing ores containing higher percentages of these live under. metals and thus save the time and expense required in separating the gold and Senator JOHNSON of Colorado. If silver made this contribution silver from ores carrying substantial quantities of the precious metals. prior to the war and it has been continuing to make it since the was The object of this report is to show the practicability and effect of these two started, for the reason that it makes it possible for the mines to oper- schemes. Comparison of prices: The two outstanding objections to the industrial use of ate, you might consider the silver you get as a stimulus or a price gold and silver are: (1) The high price of these metals; (2) the limited supplies paid as n bonus for the production of copper, lead, and zine, because available. it is exactly that, and that is also true of gold, wherever gold is found In the case of gold, these two objections outweigh most of the advantages of this metal and only when small quantities are required has this metal any impor- in complex ores. It is a bonus, a stimulus. tant industrial application. Mr. NELSON. Senator Johnson, if it were not for the fact that we In the case of silver, however, neither the limited quantity nor relatively high have a shortage of capacity in plants of makers of mining machinery price precludes its industrial use, and hence it plays an important, if not essential and is shortage of the materials which go into the making of mining role in commercial processes. machinery and repair parts, we would not have to restrict the use of While the price of silver is nearly ninety times greater than that of copper, the suggestion has been made that because of its high conductivity, it might be tem- mining machinery and repair parts to mines that are producing those porarily used (in lieu of copper) for certain types of electrical equipment. This things which we need first in the war effort, and those things which silver could later be released and again be replaced by copper when the present we need first in the war effort are not gold and silver. emergency has passed. Senator JOHNSON of Colorado. At this point, Mr. Chairman, I Free allver: In addition to the silver which "backs" the paper currency, there in a relatively large quantity of this metal held in reserve by the Government. should like to place in the record a statement with respect to the Such metal is termed "free silver" and it has been proposed to use this idle metal contribution that has been made end is being made to the mining to replace an equivalent quantity of copper which in turn could be employed for industry by gold and silver, particularly silver. It is as follows essential purposes. The quantity of free silver on hand according to the Treasury Department is [reading]: 46,740 short tons, an amount equivalent (by weight) to 4.77 percent of our Relation between the domestic production of silver, gold, and certain critical output of copper in 1941. metals essential for national defense, Industrial West Foundation, San Francisco- The use of this surplus silver for purposes which involved no permanent loss of the metal would release at least 46,740 tone of copper for those uses wherein Reno-Washington, D. C. the latter is essential. Regraded Unclassified SILVER SILVER 553 552 scheme would have to be carefully safeguarded and the silver employed Senator McCabran. 1 took your own expressions made on two or protected quite helpful in offsetting a temporary shortage of the annual Such a against possible loss; but the tonnage of copper this metal. thus released would be three occasions here. In other words, one applying for 8 serial num- Possible available silver: As shown in figure 3, this silver production of nilver ber or one applying to get repair parts is but a the tounage of the latter metal released be for released other purposes because would be fraction of the copper output so even If all was substituted for Mr. NELSON (interposing). Until n mine has & serial number, it is not in the favored position of being able to wire in for a high priority relatively copper, small, But all of this silver could not this metal certain essential uses for which there are no adequate substitutes, Its im- rating in case of a break-down. has in photography is such that the quantities required for this purpose Senator McCarran. Then, to get the serial number, they do wire portance could not be diverted. Moreover, photography is playing for silver an increasingly to Im- in or write in for priorities? portant role in nerial warfare and hence the demand in certain chemical meet military Mr. NELSON. To get the serial number, they first clear through the needs is growing. The silver used in solder and of the processes State coordinator, and he sends the name of the mine operator and could not be released for other purposes so only a portion annual output pertinent information in regard to the mine in to the Mining Branch. would be available as a substitute for copper. Since silver is a better conductor of electricity than copper, is given quantity of We then review it. the former would go further when used in certain types of electrical equipment. In certain cases we grant serial numbers. In certain cases WAS This additional conductivity of silver, however, is not sufficient to make any great for further information. In certain cases the information on immd is difference in the actual quantity of copper replaced. such that we do not feel the mine is justified in having a serial number The estimated quantities of copper replaceable by silver on the basis of the 1941 production of these two metals in shown diagrammatically in figures 6 and 7. granted. Figure 6 gives the saving of copper when replaced by an equivalent weight of Senator McCarran. How many cases of that kind have you had? silver and figure 7 gives the saving when advantage is taken of the additional Do you recall, Doctor? conductivity of silver. Mr. NELSON, Well, there are 16,000 mines in the United States, From siliceous gold and silver ofes (which can only be probably worked If the precious metals are marketed), there were recovered in 1940 the following quan- and we have granted only between 8,000 and 9,000 serial numbers. tities and values of copper, lead, and sine: Senator McCarran. Do the others all fall under the ban of not Copper, 37,379 tons valued at $7,475,853. measuring up? Lead, 107,502 tons, valued at $11,202,768. Mr. NELSON. In most cases I would say that is true. There are Zine, 48,858 tons, valued at $6,156,144. This means that by eliminating ores of this type, our domestie production of probably a few mines in the United States that should have serial these all-important metals in 1940 would have been reduced by the amounts numbers that have not yet applied for them. They are mostly of shown above. In terms of percentages of our total annual production of these the category of mines which are nonmetallic, which are sand and metals from domestic ores, the reduction in output in 1940 would have been as gravel operations and aggregate operations, and in many cases they are follows: Copper, 4.25 percent; lead, 24.80 percent; zine, 8.28 percent. The above reduction in the output of copper and zine may appear relatively large operations, and that type has just been operating on PB-1-a small but in terms of work performed by these metals, such a reduction would be and P-100 and have not bothered to apply for serial numbers. very serious, For instance, the above quantity of copper is more than equivalent Senator McCARRAN. Then, I would gather from your answer that to that used in all the radio seta manufactured in 1940; the lead recovered from there are but few metal-producing mines that have been denied such ores was sufficient to cover all the electric cables produced, and the yield serial numbers, that have applied for them? of metallie zine was more than enough for all the galvanized wire and screen Mr. NELSON. I would say that our State coordinators in the min- manufactured in 1940. Unless, therefore, we are assured of making up this deficit in such metals from ing States of the West and in other parts of the country where metal other sources, a curtailment in the production of the ores containing more than mines exist have sent in to us a complete list of practically everyone 30 percent of their total metal value in the form of gold and silver would be & who is producing anything, even though the mine consist of & hole erious matter and one which requires careful analysis. in the ground, with two men operating it. The CHAIRMAN. Have you some further statement you want to In many cases small operators have not been given serial numbers. make, Dr. Nelson? In many cases the State coordinator has been given erroneous in- Mr. NELSON. No, sir. formation by the mine operator, which he has later on corrected, or Senator McCARBAN. I should like to query the doctor on a state- which in some cases they found was erroneous and so notified him. ment he made to Congressman White. Where that erroneous information would seem to justify a serial num- Doctor, you used this expression in answer to my own questions on ber, We found out when the correct information was obtained that & one or two occasions. It comes out of your answer about how 6 mine of that type often did not justify the serial number. priority is acquired by a mine that is threatened with a shutdown or Representative ENGLEBRIGHT. Mr. Chairman, I should like to has lost its serial number. address the speaker. You have stated that the application is sent in to Washington, The CHAIRMAN. Congressman Englebright. and then you say that if the mine proves its case, it will be granted Representative ENGLEBRIGHT. Dr. Nelson, was it the purpose of a priority or a release, or its serial number will be returned. the order of March 2 to eliminate from production mines that are Mr. NELSON. You have two things mixed up there. The break- producing primarily gold or silver? I think the silver question has down clause is entirely different and would have to be discussed apart been answered pretty well, but I shall ask about mines producing from the clause relating to the return of n serial number to B. mine. primarily gold. Mr. NELSON. Congressman Englebright, when the first mine order was issued on September 22, we excepted from all the provisions of Regraded Unclassified SILVER SILVER 555 554 that order all placer gold operations, showing that right from the conserving these one percents in those phases of our industrial life beginning and back in last September we felt order that gold mining was that do not enter first into our war effort that we can accumulate, essential in our war effort. So, when the was amended on in our laborious way, many of these critical materials that we can no not March 2, the taking of further high priorities away from & larger longer get from abroad and that we must get for our direct armament of gold mine operations was just a logical extension of the group thought which was expressed in the original order on September 22. program. Senator MILLIRIN, Dr. Nelson, pursuing the factual basis for the Representative ENGLEBRIGHT. Was any consideration given to the order theme, if you can give us any further enlightenment on it I am fact or the condition that surrounds gold mines in many portions of the sure it will be very much appreciated. country, inasmuch as large portions of the population depend wholly Mr. NELSON. The manufacturers of mining machinery were flock- or largely on the operation of gold mines, and the economic welfare of ing into Washington one after the other, saying that they could not large communities and populations was dependent on gold mining? keep their plants going if they did not get higher ratings from the Did you take that phase of the question into consideration when you mines to whom they were selling their repair parts and machinery. made such IL decision? It was therefore necessary to revise this order 80 as to give higher rat- Mr. NELSON. We realized that in all war of the type we are waging ings for repair parts and new machines to miners, and when you give there are business casualties as well as human casualties. They are higher ratings you have to restrict the mines to which those ratings casualties we regret. But if we have only a limited amount of material are given. to around, we have to see that that material is used in producing If you will remember, when on September 22 the first mining order items go that will make the most tanks and guns and implements of was issued, all gold placer mines were excepted from the provisions of the order, so you can see that right from the beginning we felt that gold warfare. Of course, we all have a very sympathetic feeling about anything was not essential in our war effort. that happens to any community that affects it adversely during war- When we came to the revision of the order on March 2, made neces- time, and we naturally do not want to do anything to disrupt any sary by the fact that we had to get higher priorities from the mine community through priority action any more than has to be done ne operator to the maker of mining machinery, we further restricted the the war gets tighter and tighter. number of mines to which these high priorities would apply. We took Representative ENGLEBRIGHT. Well, at that time did you consider out all sand, gravel, aggregates, building stone, gypsum, and opera- the fact as to what methods would be taken or what procedure would tions of that type from certain phases of the amended order. be followed to take care of large portions of our population that are We did not permit them to have an A-1-0 quota for repair parts. destitute or are partially destitute by reason of the discontinuance They had to come in to Washington every time they wanted a repair of gold mining, or to take care of the trading of skilled miners who are part. They could not buy it direct from their supplier. We left the necessary in other portions of your war effort? That is a double metal mines and the strategic mineral mines in the top class, where question, but if you can answer those points separately, I will appre- they could handle their quota of repair parts direct with every sup- plier without coming in to Washington, and fixed it 80 that we could cinte it. Mr. NELSON. None of the gold mines that we are discussing have give them the highest ratings for the new machines where they needed shut down due to priority action to date. Though they are still them. operating, they are operating under labor difficulties, as is shown by While that was being done, following the thought that we had from reports that I have obtained from all the mining districts in the West, the 22d of September in regard to gold, we restricted still further the in that they have all lost many of their laborers who have gone to the higher priorities that were to be given to gold and silver mines. Pacific coast, where they have received higher wages. As I brought Senator MILLIKIN. That may be responsive to my question, but if out yesterday, that was true of metal mines 88 well as of gold mines. so, I have not made my question clear, Doctor. I will take another So, I do not think that we can tie into priorities many of the losses hitch at it. that undoubtedly will befall certain of the mining districts of the West. Mr. NELSON. All right, sir. Representative ENGLEBRIGHT. Well, at the time your policy was Senator MILLIKIN. Let us take ourselves back to March 1. Let formulated, was consideration given to the amount of critical materials 118 assume that a situation developed which came to your attention that might be necessary to keep in operation the gold mines upon that required an additional store of defensive minerals or metals, and that I assume was the situation. That is the whole war theme. which large communities depend for their economic welfare? Mr. NELSON. We certainly did, and we realized that the story of Well, the mining end of industry would be called upon to meet an the gold mines is the story of every industry in the United States. allocation of that need, would it not? On an over-all basis, I assume The gold mines will use n. small amount of steel. They will use n. small that certain units of that expected gain in strategic minerals or metals amount of lead. They will use a small amount of tin. They will use would be assigned to the mining industry. We would sit down and we would commence to assemble statistics a small amount of chrome and nickel. Taken by itself, that dões not seem very much, but if you add up, on what the mining industry is consuming in the way of defense min- erals in ita process of mining; and we would put that on one side of from industry after industry, the 1 or 2 percent that you do not see, you won't have anything left for the war effort; and it is only by the ledger sheet, and on the other side of the ledger sheet we would say, "Now, this is what it is producing." Regraded Unclassified SILVER SILVER 557 556 trying to put some rational basis behind would this thing. On that because the mines that were essential for our war effort have cleared 1 am view of the balance of the thing, we say, "Well, we have their cases with us and had their numbers reinstated. sort of and so and so and so." Now, I am trying to get at those Senator MILLIKIN. That is a matter of your personal judgment. to factors do 80 which on March 1 and prior to that day brought about this I am not disparaging your personal judgment, but we have a notion in this country that we would like to have a government by law and order. NELSON. When you do not have enough mining machines to not a government by men. Can we not have a government by law Mr. around to all of the mines that are producing the even of the critical by having regulations which any miner can read and know whether or go naturally you have got to restrict use the your mining not he falls under those regulations? materials, machines to those mines that are not essential for their war effort. At Mr. NELSON. You have the clause in the order permitting the mine time the makers of mining machinery had plant capacity, operator to come back in and ask for relief, and where the war effort which that was left to them, outside of that which they were for using for the demands that, they will be given relief. Army cases 12 months, for some of the most essential types of mining and Navy or direct munitions work, taken up 6, 9, and in Senator MILLIKIN. Well, that is merely in the nature of an appeal nfter you have been sentenced. That is all it amounts to. some machinery that was needed in the mines producing the most critical Mr. NELSON. Most of our limitation orders that have been issued in recent months might be classified somewhat in the same way; but war materials. It not a question of saying that if we cut out gold and silver when you have an emergency and you have to start conserving, you will was have enough critical materials for the rest of the mines. It have to start to conserve before the barn door is open. we just a question that if we cut out gold and silver, we will have Senator MILLIKIN. I heartily approve of that relief clause in the was more materials for the critical mines, but not even as much as we order. Without it the order would be absclutely deadly. But it should be unnecessary if the other part of the order were clear and want for them. Senator Millikin. All right. Now, we have gone on with that meant what it said. between ourselves, and we now come to the terms of an order. How I think at one time Senator Johnson wrote to you and said, "For did bring in that 30-cent clause in relation to that need? God's sake, put these orders in plain English, so that people can Mr. you NELSON. I explained to you yesterday that in drawing the understand them." order, my thought was that 50 percent was A good starting point. Was Dr. Nelson the object of that, Senator Johnson? Senator MILLIKIN. Who overruled your thought on that? Senator JOHNSON of Colorado. Donald Nelson. Mr. NELSON, I was not overruled. In drawing any order, the Senator MILLIKIN, I take up the thought of Senator Johnson: Let order goes before your attorney, it goes before the Bureau of Sta- us get up an order that people can understand and that will not leave tisties and Research, and then it goes before a clearance committee, it to an individual appraisal of each case. in which you discuss all of these things, and the majority opinion is Dr. Nelson, while we are all entranced with your graciousness, and followed. I do not call that overruling; that is democracy. we know you want to be fair about the matter, you may not be here Senator Millikin. Now, then, why did they set up any reference all the time, you may wake up in a bad humor some morning, and all point like that, in view of your testimony here? What WHS the point of those factors enter into it, and no man's business or no man's liveli- hood in this country-not yet-should have to depend on that sort of it? Mr. NELSON. We had to know and get all of the information we of thing. could about the different mines in the country producing gold and Representative ENGLEBRIGHT. May I have a. word, Mr. Chairman? silver. The 30 percent was an arbitrary figure, just like 50 percent The CHAIRMAN. Mr. Englebright. would have been an arbitrary figure; and, in any case, you would Representative ENGLEBRIGHT. Mr. Nelson, I am sure we are all have had to review all of the mines that fell above or below that very much impressed, and I am particularly, with your desire to be point, and where such mines produced needed amounts of copper, fair and assist all phases of the mining industry. I have discussed the lead, and zine, naturally such mines would have to have their numbers matter with you, and I feel very confident that you want to assist in keeping the gold-mining industry operating and functioning, par- reinstated. Senator MILLIRIN. So that from the beginning there was not any ticularly in localities where the community welfare depended upon that point to the 30 cents except as some place to start thinking on? Mr. NELSON. The 30 cents was arrived at at the time that the order activity. Speaking as the representative of a large mining territory, I think I can with confidence state that, due to the 30-percent clause, there is was drawn in its final form. Senator MILLIKIN. Would you not agree with us, Doctor, that it somewhat of a pall over the entire mining industry. They do not would be much better if that order were tossed out and a more know what they are going to be able to do, as to whether or not they definitive order put out which meant what it said and which would are going to be able to proceed with & particular activity, and I am enable a man reading it to know whether or not he came under its frank when I state that if it were not for the Government financing of critical materials and other lines of mining activities, there would terms? Mr. NELSON. I have been administering this order for several have been a very dilatory effect on the entire industry through your months, and I cannot see, from the administrative standpoint, that order with the 30-pereent clause. We have held up in any way the production of any oritical material, Regraded Unclassified SILVER SILVER 559 558 believe it is the Government financing that has saved the situation, A UNITED STATES DENIAL and I not particularly any encouragement that intentions that order may have In Washington on Thursday night Mr. Sumner Welles said there was no intended, no matter how well meaning the were to the already has an engineer in South Africa working to increase the production of question at present of sending & mission to South Africa. The United States industry. I represent territories that produce, as you and know, there chrome, man- strategic raw materials in the Dominion, he revealed. These denials follow a report by the Washington correspondent of the New tungsten, and other critical materials, indefinite is a jittery York Times that preparations were being made to send an American mission to ganese, feeling in the mining industry, and there is an time and feeling, and South Africa to arrange for increased production. It was hoped, the report there is a feeling that they may be eliminated at any affecting added, that South Africa could be induced to reduce her gold production and employ some of the machinery and labor for turning out more_needed war any particular mine, no matter what it is producing. metals. They say, "I do not know how long I am going to be able to run. BRITISH GOVERNMENT'S REQUEST It depends on what those fellows in Washington decide to do." Mr. NELSON. There should be no jittery feeling among the mining It will be observed that Colonel Stallard reemphasizes his previous statement, quoted in the E insurial Times yesterday, that there was no intention of restricting industry where they are producing chrome, vanadium, molybdenum, South Africa's gold output. In this connection the mining editor of the Rand tungsten, manganese, copper, lead, or zinc, because they have been Daily Mail recently wrote that he understood "a request had been made by the given every assistance even in the prospector stage, British Government that the gold output of South África should be maintained In this mining order we have a provision where we can give priorities at the maximum so that post-war Britain may be able to discharge her commit- ments to the United States incurred before the introduction of the Lease- to bona fide prospector if we know he is a good prospector and feel Lend Act, and to help in stabilizing the sterling group of currencies in post-war he any is going on a claim that will develop critical minerals. reconstruction." Senator McCARRAN. May I interrupt there? You have made at 1 draw that to your attention to show you that Great Britain is not very a miner is producing chrome, copper, lead, zine, and the other metals emphatic statement: There should be no misapprehension where curtailing production of either gold or silver, but, on the other hand, is encouraging it for the purpose of stabilizing, as it says, the post-war you mentioned. Now, that brings to me an implication- currencies. Now, that brings to mind the very thought that I tried Mr. NELSON. There was an implication. to put over to you yesterday, that I hoped you might adopt: that we, Senator McCARRAN (continuing). That a miner who is producing too, should have these metals, basic to our economy even now, be- silver may have an apprehension. Is that true? cause they are just as essential now for post-war economy as is the Mr. NELSON. As our war effort gets tighter and tighter and our production of gold in South Africa for post-war economy in Great critical materials become scarcer and scarcer, the mines that are less Britain. ossential to our war effort are the first mines that are going to feel a Especially is that true-and you might think I make a hackneyed shortage of the necessary materials to operate, and they should all phrase out of silver, but it is in my mind and in my heart-when realize that. silver, being basic to our American currency and basic to our post-war Senator McCarran. Why should that be true when the very economy, is also a war essential metal as it goes on. articles that I read into the record this morning show that more and I bring that out because your last expression to me cannot be con- more silver is becoming a war essential? strued in any other light than that you will penalize the mine producing Mr. NELSON. There has never been a world war in civilized times silver. That is just exactly what we are trying to prevent, if it is when the production of silver throughout the world has not fallen off. You can go right back through your statistics. possible. Mr. NELSON. Senator McCarran, I stated yesterday that the Senator McCarran, That is because it does become an essential Mining Branch had not approved priorities for any items to the and is put into use more. South African gold mines for several months. If they are getting Mr. NELSON. The mining falls off. The total amount of gold material, they are not getting it through the Mining Branch. mined, year by year, as you check through the ages and mark off your Senator McCARRAN. I do not quite catch that, Doctor. I beg war periods, shows a depression during the war periods. your pardon. Senator McCarran. May I at this point, Mr. Chairman, read a Mr. NELSON. The Board of Economic Warfare is the board that short article appropos of what the doctor has said, from The Financial should be contacted. Times, of Saturday, the 7th of March 1942? This is n London pub- Senator JOHNSON of Colorado. Does Russia get any priorities? I lication, under the caption: wanted to ask you that yesterday. SOUTH AFRICAN GOLD AND REPORTED UNITED STATES MISSION-OFFICIAL Mr. NELSON. Russia, as I understand it, is on lend-lease. Senator JOHNSON of Colorado. On lend-lease, but your Division DEMIAL-CURTAILMENT Nor NECESSARY CAPE TOWN, March 6.-Commenting on the report from New York that an does not approve that? American economic mission was going to South Africa to arrange for an increase Mr. NELSON. We do not approve items on lend-lease. in the production of essential mine products, Mr. Stallard, minister of mines, said of Senator JOHNSON of Colorado. Is South Africa on lend-lease also? that he had no knowledge of a visit of an American mission having the object Mr. NELSON. Not as I understand it. curtailing gold production. "Apart from the fact that curtailment of gold production is not necessary South for Senator JOHNSON of Colorado. Is South America? Mr. NELBON. I am not familiar with all the ramifications of lend- the expanded production of war metals. production of gold is the basis of the lease, I know that we are approving priority ratings to certain of African war effort," he said. "It is South Africa's economic lifeblood, and therefore in the first rank of key war industries," he added.-Reuter. SILVER 561 SILVER 560 the gold mines around the Panama Canal and adjacent South American either side he had part of his plant capacity working with A-1-A countries in limited amounts. ratings on an Army contract or a Navy contract. Senator McCARRAN. Do they produce gold and gold alone? It was thorough, logical that pressure be put on that maker of Mr. NELSON. I said gold mines; yes. That is under the foreign mining machinery by the Army and Navy to take on orders, and when policy of the Government as relayed to us with the statement that he took on an order, in a few months the Army and the Navy would we should take care of their needs in a limited way. say, "Double that order." Senator McCarran. Is it possible to ship mining machinery under It was only with the greatest difficulty that we were able to get the the Lend-Lease Act? makers of mining machinery to fight on with these low priorities and Mr. NELSON, Definitely, yes. struggle to continue to make mining machinery, and that was recti- Senator McCarran. And that is undoubtedly where South Africa fied by order P-56 as amended on March 2, as the first step, and finally is getting mining machinery, if she is getting it at all? rectified in April by a determination of Mr. Batt's Requirements Mr. NELSON. If she is getting it at all, it must be indirectly. Of Committee. So that today the makers of mining machinery have course, we are undoubtedly shipping mine machinery to Russia an A-1-A rating for their raw materials for the making of mining under lend-lease, and it is very advisable for us to do so. machines, which puts them on a parity with that part fo their plant Senator MILLIKIN. Why; if I may ask? used in the making of munitions. Mr. NELSON. Russia is bearing the brunt of the war for us today, In other words, we have been able, by restricting the use of mining and if they can use the mining machinery that we send them to make machinery, to get the makers of mining machinery put on a parity more machines with which to fight, it is helping us. with makers of munitions. We have done everything that we could Senator MILLIKIN. What about their other mining activities? possibly do to help the mining industry in every way. We have Mr. NELSON. I must take it for a fact that Russia is going to use the obtained for them higher ratings as a whole industry than I think mining machinery we ship them for the one ultimate purpose of any other industry has as a whole. I have often wondered why some of the big manufacturers of the winning the war. Senator MILLIKIN. Are we not shipping mining machinery for gold mining machinery continued for several months to make mining ma- chines when they could have taken their whole plant's capacity and and other precious metals? Mr. NELSON. Mining machinery that is shipped to a country can made Army and Navy munitions on n. high rating, and they would have be used either in gold mines or strategic mines, but, as I said, I cannot known that whenever they had a shortage of any raw material the conceive that Russia would be using any machines under this present Army and Navy would have it in that plant the next day. Yet they emergency except for one thing, and that is to get strategic metals continued, because they loved mining and loved the mining industry. Senator MILLIRIN. One good reason why they should continue to out of the ground. Senator Millikin. Well, South Africa is mining gold. make mining machinery is that, under your own testimony, strategic Mr. NELSON. I do not consider South Africa and Russia in the same minerals are essential to winning the war. That is what prompted my question with respect to the difference between the machine that category. Senator MILLIKIN. South Africa is in the war. She has been makes the essential minerals and the machine that makes the fighting engaged in battles in the Mediterranean area. She is definitely in machines or the tools. There has to be a balance, and I assume that someone passed judgment on it. the war. Mr. NELSON. No one passed judgment on it. Mr. NELSON. She is in the war, but not in the same category as Senator MILLIKIN. It grew up like Topsy? Russia. Senator Millikin. Well, I do not see much difference between a Mr. NELSON. It grew up like Topsy, but they did maintain part man spilling blood in Russia and spilling blood on the south shore of of their plant capacity for the making of mining machinery. That is all I can say, the Mediterranean, but that is beside the point. I should like to ask you one more question, Dr. Nelson. Who Senator JOHNSON of Colorado. Dr. Nelson, I concur fully in what made the decision as to what part of mining machinery factories my collengue has said about the unfortunate formula, the 30 percent or the 30-cent clause. I want also to express appreciation for your should go to the manufacturer of articles other than mining ma- exercise of the relief clause insofar as Colorado is concerned, because chinery? Whose decision was that? Mr. NELSON. The makers of mining machinery month after month you have been most helpful in your exercise of that clause. attempted to get high priorities from Washington to make mining In my judgment, the whole situation would be greatly improved if that 30 percent clause could be taken out of the picture. 1 agree machinery. They could not get that. At the same time, the repre- sentatives of the Army and the Navy, knowing they had the finest with everything that Senator McCarran has said-that it is a sort of precision tools of any manufacturing shops in the United States, went wet blanket over the whole industry. I am wondering how many mining operations were eliminated from to them and demanded that they take on certain orders and gave review by the 30 percent clause. I presume that the reason that you them an A-1-A rating for this order. Therefore, you had a maker of mining machinery with EL superb put that screen in there was to sift out certain mining operations that plant, attempting to manufacture mining machinery on ratings of A-3 or lower, for which he could not get the raw materials. On 7002-42-42- - Regraded Unclassified SILVER 562 SILVER 563 you would not have to review, operations that might possibly be pro- ducing tungsten, molybdenum, lead, zine, and copper, and no silver or and the situation as created by the priority-order publicity has absolutely pre- cluded obtaining capital for these purposes. gold. I presume you wanted to sift them out. How many operations I shall be glad at any time to furnish any further information 1 have that you were eliminated from review by the 30 percent clause? may require. Mr. NELSON. Between three and four hundred mines had their Very sincerely yours, (Signed) EDWARD P. ARTHUR, Commissioner of Mines. numbers withdrawn. Senator JOHNSON of Colorado. And how many did not have their I draw that to your attention to emphasize what I tried to bring to numbers withdrawn? attention the other day-that the publicity given to this has had Mr. NELSON. We have between eight and nine thousand mines in your detrimental effect. Of course, you enswered by saying that your the United States working under serial numbers under this order, but they are not all metal mines; over half of them are coal mines. & production was greater, but the answer to that is that you have made it greater by giving out the money of the Treasury to increase the pro- A large additional number are quarries producing stone, sand and duction of this war effort, which was a commendable feature, but then, gravel, and nonmetallic materials. again, the price has increased. I cannot give you the exact number of metal mines having serial Mr. NELSON. We were not responsible for the large amount of numbers, but I can say that slightly over 300 such numbers were publicity which came out with regard to this order. withdrawn from mines producing gold and silver and over 200 were Senator McCARRAN. The consternation that was created gave the reinstated. Senator McCarran. Apropos Senator Johnson's question and Dr. publicity, to be frank with you. Mr. NELSON. Furthermore, the letter you have read gives me the Nelson's answer, some time ago I wrote to mine divisions and mine impression that the small operator is just going to sit down and use up departments of various States, and I have here A very comprehensive his supplies and not attempt to use any PD-1-a or use the P-100 to answer, 1 think, from the Bureau of Mines of the State of Colorado, get additional materials. dated May 2, 1942, in which Mr. Arthur, Commissioner of Mines, Remember that there have been many mines operating in this coun- states: try since September 22 on P-100's and PD-1-a's, and they have Replying to your letter of April 21, 1942, regarding the question of the priority worked successfully in getting repair parte on PD-1-a forms. order of March 2, will say as follows: If these small operators need an occasional repair part that will not The time is rather short to get actual facts on the workings of the priority interfere with our war effort, there is no reason why they should not situation. I am adopting a plan at the present time of having my inspectors, receive such a repair part or receive is rating from us that would permit when they report on a mining property, give a general idea of how the priority situation is affecting it. This is not for publication but just for the purpose of them to get such a repair part. getting at the actual facts. It will probably bring out some very fair information I feel that the letter you read definitely gives the impression that but it will take some time to get & line on what we want. 1 am personally quite they are going to use up their supplies and not attempt to get any- familiar with a large number of the properties throughout the State and have made thing else. some study of the matter. Your first question is: "How many properties, if any, have shut down as the Senator McCARRAN. I wish to say to you, Doctor, right on that result of the priority order of March 2?" The number of properties shut down subject, that I have before me, furnished me by the mine inspector of as a result of this order is unknown BE some of the mines had small supplies of the State of Nevada, a number of replies to his questionnaire. I shall repairs, steel and other necessary equipment on hand, although most of the small read some of them: mines carry very few supplies. Until the supplies are exhausted, we cannot tell just how far reaching the order has been. We will try to keep going as long BH we have tools and equipment on hand or that The second question as to what properties may shut down on account of this we can get, but will have to close down for lack of any vital repair part, or the priority order will be hard to answer. It will depend, as I said before, on the wearing out of what we are now using. amount of supplies on hand by the various properties, but there is no doubt at Mr. NELSON. From what mine was that? all that if the priority order as given out on March 2 is made to stand, a large number of the smaller properties will be compelled to suspend operations. Senator McCARRAN. That comes from W. W. Hartman, Wall The publicity given the priority situation has had a very serious effect on the Street Mine, Nelson, Nev. labor question on many properties. A number of men, especially the smaller Here is another one from P. A. Simon, president of the Diamond lessees, have felt that they would probably have difficulty in obtaining the materials needed and have decided to close down and go where they can get Gold Mining Co. This is addressed to the State Mine Inspector: apparently better wages working in the arms plants or other places of that nature. Replying to your circular letter of the 23d Instant, relative to the effect of the This publicity has also had a very serious effect on obtaining capital for de- cancelation of preference rating order P-56, 80 far as gold and silver mines are veloping new properties, especially those that produce silver and gold, even concerned, we had sufficient supplies and repair parts on hand on March 2, 1942, so though the lead, zine, and other war minerals predominate in quantity. that said cancelation has not affected us as yet. It may be said that the foreing of priority conditions on & number of mining districts came as a very great shock to them and, if not remedied, will undoubtedly Then I have one from Austin Bros. Gold Mining Co. The effect of cause a number of the mining operations in Colorado to cease entirely. Many it is that they will shut down when their machinery has broken down or men who are getting on in ye. re and have no experience in anything else except they have run out of parts. the particular class of mining in which they have been employed will be thrown Here is another from Central Comstock Mines Corporation: out of employment, and many will lose their homes and everything they OWN. It is impossible to estimate the number of mines that have been prevented from This company is not yet in production but has spent 1 year in rehabilitating beginning operations. These mines require capital for commencing operations, and reconditioning the mine and mill, much of the material used having been on Regraded Unclassified SILVER SILVER 565 564 the property. Lack of the necessary priority rating the will cause difficulties in Senator McCarran. This one from the Consolidated Virginia securing the small amount of material necessary to alone. put plant again in operation. We have expended more than $40,000 on labor Mining Co., Virginia City, Nev., says: Here is another one from the Summit King Mines, Ltd., at Fallon, While the order of March 2 has not shut us down, it certainly has not stimulated and our future is as uncertain as it is unpredictable. the gold and silver mining industry. The mining stock market has been depressed Nev., which says: We expect that when our present supplies are exhausted we will have to that Mr. NELSON. My information from that company is that there has down. Labor is also very scarce and this may be & factor in closing us down, been no curtailment in purchases, although it has been necessary to The El Dorado Rover Mining Co. of Nelson, Clark County, Nev., anticipate requirements further in advance. Senator McCARRAN. Now the Northumberland Mining Co., Tono- says: Because of some inventory stored up many months ago and prior to Office of pah, Nev., says: lack of labor has caused us to lose daily production of about 25 percent of normal, Price Administration, we are now able to continue operating. At present time We are using up our inventory and are not able to get replacements on necessary parts. Rock-drill parts are becoming exceedingly hard to get. Here is one from Desert Silver, Inc., at Nivloe, Nev.: The Consolidated Chollar Gould & Savage Mining Co., of Gold Hill, Our essential supplies, such as grinding balls and zine dust will be exhausted Nev., says: about September 1, If we are unable to replenish them with the existing priority The immediate effect of the March 2 amendment to preference rating order status we will be forced to shut down about that time. No. P-56 was to deprive us of our tire supply, and therefore to make impossible Mr. NELSON. Didn't they say that if priorities would not shut continuance of our method of mining with power shovel and motor trucks, which method was carried on by & contractor and his equipment. them down, labor would? Senator McCarran (reading): Mr. NELSON. We are not responsible for the tire supply. Senator McCarran. No. That is true. I notice you always get We do not know whether or not we will be able to replenish these supplies with out from under responsibility. I do not blame you. our A-10 priority rating. Mr. NELSON. I wish I were, because I would see that some of the He says this about labor: strategic mines would get what they need in the way of rubber, because To date no effect as far as supplies is concerned. it is affecting vanadium and one or two very essential mining opera- In other words, he explains that he had supplies. tions. I am always ready to accept responsibility when I am given the authority to do so. Labor believes, however, as we do, that we will not be able to replenish some of Senator McCarran. That is true. our necessary supplies when exhausted, and many of them expect we will close Those are some of the reports that have come in here from the State down in three or four months and are therefore leaving BH fast as they can find other jobs. Thus & labor shortage is resulting. of Nevada, and I take it that if similar questionnaires had been sent out in other States-and I make this statement based on the Colorado In other words, labor knows how much of a supply they have, and Bureau of Mines statement-they would have reflected somewhat the labor interpreta your order in the language in which it is drawn, and they simply say, Well, this thing is going to shut down, and I am same condition, perhaps on a larger scale. The CHAIRMAN. Are there any further questions to be submitted going to go while the going is good." Here is one from the Black Mamoth Consolidated Mining Co., to Dr. Nelson? Prescott lease, James R. Fyfe, manager, at Silver Peak, Nev., which Representative ENGLEBRIGHT. Just one question. Doctor, 1 dis- like to come back to this question of policy again, but in drawing your says: order with the 30 percent clause for gold and silver mines, was any On account of the statement that Mr. Wilbur Nelson made at the meeting at consideration given to the fact that gold and silver mining activities Reno, Nev., March 15, 1942, and on account of the fact that a large number of items necessary for maintenance and repairs could not be obtained under an A-10 aside from copper, have been the backbone of the mining industry in rating, we decided to discontinue operations and put our plant and equipment the West and that continuance of gold and silver mining activities on & strategic mineral property if possible. We are endeavoring to put our kept in order an organization skilled in mining, an organization that equipment back into A-1 shape in order that we may do this. could divert its funds into the development of strategic minerals, and They moved their equipment, as I recall it, to Arizona. also supply miners and skilled men for strategic mineral activity, and Mr. NELSON. That is right. They have gone to producing stra- that if you eliminated your gold and silver mine activities you would tegic materials. eliminate practically all the mining organization of the West? Would Senator McCarran. The Standard Cyaniding Co., Box 357, you consider that? Mr. NELSON. I am afraid I cannot follow you that far, and, further- Lovelock, Nev., says: more, I have to realize that we are fighting a war different from any Will probably be able to run until supply of grinding rods is used up. war that we have ever been engaged in, and what may have been true Mr. NELSON. They estimate that their grinding rods will be used in the past does not necessarily remain true under present conditions. up December 1. Representative ENGLEBRIGHT. But you have stated that you want to stimulate the production of strategic minerals. To do that you have to have miners, you have to have geologists, you have to have men skilled in the industry; and if you kill the source of such supply Regraded Unclassified SILVER SILVER 567 566 and such people and such finances, I cannot follow you to the extent [The matters above referred to follow:] that you are helping the strategic minerals industry, unless you go to WAR PRODUCTION BOARD, Government financing. Washington, D. C., June 1, 1948. Mr. NELSON. Today there are many more miners being trained SPECIAL SILVER COMMITTEE OF THE SENATE, in mines that are not gold mines than there are in gold mines, because Washington, D. C. gold mining is not the major part of the mining industry the of the West. (Attention Mr. Albert Grorud, Secretary.) Representative ENGLEBRIGHT. It has supplied financing of the GENTLEMEN: I am attaching two lista requested by Senator Patrick McCarran major part of the mining industry in the West. the time of the recent silver hearing. List No. 1 includes the names, dates, Mr. NELSON. It has in the past, but, as I said, conditions in this at and types of mines to which serial numbers have been granted between March war are different from any conditions that this country has ever been 2, and May 15, 1942. List No. 2 includes the names of persons or organisations that were not granted faced with. serial numbers, but that were advised to operate under order P-100. Representative ENGLEBRIGHT. Do you not think that if some Very truly yours, WILBUR A. NELSON, encouragement were given or of the 30 percent clause had not been Administrator of Mining Branch, placed in the order you would have had less Government financing to aid the situation than you have at the present time? List No. 1 includes the names, dates, and types of mines to which serial numbera Mr. NELSON. I do not think that would have changed the picture have been granted between Mar. # and May 15, 1948 ALABAMA-PREFACE NO. 22 in any way. Representative ENGLEBRIGHT. I am sorry I cannot agree with you on that, Doctor, but I wanted your reaction to that. Serial Name Date Type of mine Senator McCarran. Mr. Chairman, I respectfully request that the No. committee request of Dr. Nelson and his Board to furnish to the com- Elmore Billen Co., Elmore, Als Maf. 10, 1942 Nonmetallin. 272 mittee an inventory of the mines in America that have applied for Wilkinson Ore Co. (Thagord, Golson Mooren), Greenville, Als Apr. 8, 1942 Metallic. 273 Alabama Clay Products Co. (plant at Beasemer, Ala.), Birmingham, May 6, 1942 Nonmetallic priorities and the mines that have been granted priorities since the 274 2d of March 1942, and those that have not been granted priorities, Republic Ala. Steel Corporation (Defense Plant Corporation), Bayre May 13, 1942 Coal. 275 mine at Birmingham, Als. and the reasons why priorities were granted on occasions when they were granted and the reasons for their denial when they were denied. ARIZONA-PREFACE NO. 48 Would that take long to furnish? Mr. NELSON. I would have to read over carefully that statement, 153 Helvetia Mining & Milling Co. (Leader & Copper World Mines), Mar. 16, 1942 Metallic. but it impresses me that it might take a good many of the people in Tucson, Arit. Hooten, William A. (Republic mine at Dragoon, Aris.), Tucson, Mar. 10, 1942 Do. 134 my organization off their work which they are carrying on to keep the Consolidated Arls. Feldspar Corporation (Kingman Feldspar Co.), do Nonmetaille. LSS mines operating. That is a rather large order you give us, and we Kingman, Aris. Pine Mountain Mereury Mines (mines in Sunflower, Arts.), Phoenix, Mar. 31, 1942 Metallic. would prefer much more to have all of our productive efforts in keeping 156 the mines of the United States going than in getting up statistical 157 Manganese Arit. Ore Co. (M. A. Hanna Co., Artillery Peak mine). post do Do. office Congress Junetion, Aris. data, although we naturally will defer to your wishes. de 158 Bullivan Machinery Co., Michigan City, Ind. (drilling operations at Drillers. Senator MCCARRAN. Well, I do not think, with the increase of Mohave County, Aris.). 159 Henry W. Berger (Berger and Phillips mine), Kingman, Arit Apr. 3, 1942 Metallic. clerical help that is coming into the city of Washington, at the rate 100 Shattuck Denn Mining Corporation (Shattuck mine), Bisbee, Aris Apr. 7, 1942 Do. Orizaba Mining Co., Phoenix, Aris do Do. 161 of about 10,000 a week, that you will be deprived of any activity to 162 Asbestos Mines of Arizona (group of 6 claims). Globe, Aris Apr. D, 1942 Nonmetalle. 153 N. Burson, Los Angeles, Callf., mine in Pinal County, Aria Apr. 11, 1942 Metallic. keep the mines going. 154 Rob Roy Development Co. (Chicago lead claims). Yuma, Aria Apr. 14, 1942 Do. 165 Arizona Lead Co. (Castle Dome lead mine), Yums. Aris do Do. I respectfully suggest, Mr. Chairman, that the request be made and 166 Grand Canyon Lime & Cement Co. of Arizona (Nelson Quarry). Apr. 15. 1942 Nonmetallie. the doctor can let us know whether or not it is a hardship to him. I Nelson, Aris. think it would be most interesting to this committee, and I think it 167 Paul Ducker (Little Butte mine), Bouse, Aris Apr. 22, 1942 Metallic, 168 American Smelting & Refining Co. (Chief mine), Tucson, Aris Apr. 23, 1942 Do. would give this committee a full view of all the doctor has tried to put 169 Storm Cloud Lease (Storm Cloud mine at Prescott, Arit.), Phoenix. May 8, 1942 Do. Aris. 170 Castle Dome lead mine, Arizona Lead Co., Yuma, Arts May 9, 1942 Do. before us. The CHAIRMAN. I suggest that the reporter furnish the secretary with a copy of Senator McCarran's request, that the secretary send ARKANSAS-PREFACE NO. 25 that to Dr. Nelson, and then he can advise the secretary for the 182 Quachita Minerals, Inc. (East Grant mine), Mena, Ark Mar. 9, 1943 Metallic. committee his reaction to the request. 183 Arkansas Siste Manufacturing Do., Inc., Glenwood, Ark. do Nonmetalle. Mr. NELSON. And the time it will take to get it up. American Cyanamid & Chemical Corporation, New York, N. Y.: Do, IM Pulaski County, Ark., mines Do. The CHAIRMAN. And such pertinent facts as you see are proper. 185 Saline County, Ark., mines 186 Wann Mercury Mining Co., Murfressboro, Ark Mar. 31, 1942 Metallic. Then when we get your answer, we will take it up. 187 Arkansas Coal Co. (mine In Clarksville, Ark) Apr. 14, 1942 Coal. 188 Paris Purity Coal Co. (Paris Purity No. 5), Paris, Ark Apt. 21. 1942 Do. Mr. NELSON. Very good, sir. 189 Horey & Rogers Manganese Co. (W. A. Chinn, Mary Tate, Bell May 13, 1942 Metallio. Hill, Marcus Miller mines), Cushman, Ark. SILVER 569 SILVER 568 List No. 1 includes the names, dates, and types of mines to which serial numbers List No. I includes the names, dates, and types of mines to which serial numbers have been granted between Mar. 2 and May 15, 1948-Continued have been granted between Mar. 2 and May 15, 1942-Continued FLORIDA-PREFACE NO. 27 CALIFORNIA-PREFACE NO. 31 Serial Name Date Type of mine Date Type of No. Serial Name mine No. Ris Mineral Co. (Palm Bay mine), West Palm Beach, Fls Mar. 16, 1043 Nonmetalle. TI Mar. 2, 1042 Tigertall Quarries, Inc., Dania, Fla Apr. 1, 1942 Do. Pacific Minerals Co., LAd. (Chill-Bar sinte quarty and mine), Rich- Nonmetalle. as Bradenton Dredging Co,, Inc. (dredging oyster shell in Manatee May 15, 1942 Do. 365 T3 mond, Calif. Mar. 10, 1942 River, Fin.). 266 Spring Merrury, Inc., Skages Springs, Calif Metallie Star Boyles Bros. Drilling Co., Salt Lake City, Utah (drilling at Descrt Mar. 6, 1942 Drillers. GEORGIA-PREFACE NO. 4 367 Center, Callf.). Mar. 11, 1942 Nonmetalle, 368 Telsa Industrial Minerals & Chemical Co. (Spanish mine, Berkeley, Clay & Sand Co. (Telsa Pit), San Francisco, Calif. Mar. 21, 1942 Do. Dellinger, Brown & Duckett, Carteraville, Ga Mar. 10, 1942 Nonmetallic. 389 $ Mar. 26, 1942 89 Burgess Battery Co. (plant in Cartersville, Ga.), Freeport, ni., Mar. 26, 1042 Metallic. 370 Sharp Calif.). & Fellows Contracting Co. (Oro Grande crushing plant, Los Do. do Cedartown office. Iron Ore Co., Cedartown, On Apr. 21, 1942 Do. Angeles, B. Bishop (Stoney Creek sand and gravel plant), Orland, Calif Calif.). Do. su 371 Metallic. 91 Merry Bros. Brick & Tile Co., Augusta, Gs Apr. 30, 1942 Nonmetallic, E. Mineral Reduction Co. (custom mill), Laws, Callf Mar. 31, 1942 G. A. Moore, 712 Main St., Cedartown, Ga May 8, 1942 Metallic. 372 May 6, 1042 02 W. P. Buckner, Barnesville, Ga do Nonmetallie. 373 Canceled Bishop Antimony Mining Co. (Bishop antimony mine), Bishop, Apr. 9, 1942 Do. 93 94 Joe A. Mosteller, Cartersville, Ga May 9. 1942 Metallic. 374 Skilton Construction Co. (Inmann mine at Canton, (Fa.) Louis- May 14, 1942 Do. Frank Calif W. Royer (Kelly mine lease), Red Mountain, Callf do Do. 95 375 Apr. 17, 1942 ville, Ky. C. & H. Mining Co. (for tungsten mill only), Weldon, Calif Do, do Oconee Clay Products Co.: 376 Refractories Corporation (fire brick plant), Los Angeles, Calif Nonmetalle. Clay mine, Milledgeville, Ga do Nonmetallie. 377 Graham Bros., Inc. (Orange plant), Orange, Calif Apr. 21, 1942 Do. 96 07 Shale mine, Milledgeville, Gs do Do. 378 379 Calavera Materials Co. (Calavers), Oceanside, Calif do Do, 380 17. B. Flare Corporation (Hipeak tungsten mine), Los Angeles, Calif M. & N. Tungsten Mines Co. (gold wash claim), Burbank, Calif do Metallic. May 4, 1942 Do. IDAHO-PREFACE NO. 43 881 382 Symons Bros. Mine Co. (custom mill), Hollywood. Calif May 5, 1942 Tia. Pacific Portland Cement Co. (San Juan Bautista, San Benito May 6, 1942 Nonmetalis. Nonmetallic. 883 71 Idaho Fire Brick & Clay Co., Troy, Idabo Apr. D, 1942 E. B. Bishop (Keswick sing job at Shasta, Calif.), Orland, Callf do Do. T2 Crystal Lead Mines Co., Wallace, Idaho do Metallic. County, Calif.). 384 May 9, 1942 Metallie, Hereules Mining Co. (Hercules mill), Wallace, Idaho do Nonmetallic. 385 National Tungsten Co. (Bruce group of mines), Long Beach, Calif 73 May 13, 1942 Do. 74 Federal Mining & Smelting Co. (Frisco mine), Wallace, Idaho May a, 1942 Metallie. 356 Victory Chrome Co. (Victory mine), Auburn. Callf Mitchell Diamond Drill Co. (drilling operations in Merood, Calif.). May 15, 1942 Drillers 75 Associated Engineers Co., Inc. (Nugent antimony property), Boise, May 9, 1942 Do. 587 Chandler's Palos Verdes Sand & Gravel Co., Lomita, Calif May 15, 1942 Nonmitalle. Idaho. sss J. K. Remsen (Three Sisters and all other mines), Slakiyou and Del May 16. 1942 Metallic. 589 INDIANA-PREFACE NO. 19 Panaminas, Inc. (Adamson mine, Pine Creek area, Bishop, Callf.) Norte Countirs, Calif. May 18, 1942 Do. 500 Bullivan Machinery Co.: 332 Michigan City, Ind Mar. 0, 1942 Metallic. COLORADO-PREFACE NO. 38 do do Do. 333 do Do. 334 do Boyles Bros, Drilling Co., Salt Lake City, Utah (drilling at Climax, Mar. 6, 1942 Drillers. 335 Standard Materials Corporation, 610 Illinois Bldg., Indianapolis, Mar. 25, 1042 Nonmetallic. 224 Ind. (Montexuma). Fordyce Colo.). Gravel Co. (for Colorado pit), San Antonio, Ter., office 330 Pell Coal Corporation (Pell mine), Brazil, Ind Apr. 23, 1942 Coal. Apr. 9, 1942 Nonmetalls, 225 337 Hill Crest Mining Ca., Boonville, Ind. do Do. W. E. Gibson, Nederland Star Route, Boulder, Colo Apr. 13. 1942 Metaille. 338 Enkoff Coal Co. (Enkoff mine) Montgomery, Ind do Do. 226 227 The Taylor Coal Mining Co. (Rouse mine), Walsenburg, Colo Apr. 14. 1942 Coal. 339 Black Diamond Mining Co. (blnck diamond). Booneville, Ind do Do. Nonmetallic. 228 Double Dick Coals (for mine only). Florence, Colo Apr. 16, 1942 Do. 229 Vansdlum Corporation of America's Associates (mining operations Apr. 17, 1942 Metallie. 340 American Aggregates Corporation (mine in Indianspolis, Ind.), Apr. 28, 1942 Greenville, Ohfo. in Boulder, Colo.) Nonmetalle. 341 Hoorier Moulding Sand Co. (mine in Martinsville, Ind.), Mattoon, May 5, 1942 Do. 230 Geo. R. Rogers, Salida Limerock Co. (limerock quarry at Wells- Apr. 22, 1942 ville, Coln.). 342 Indiana 111. Sing & Ballast Co. (slag dump of Inland Steel Co.), East do Do. 231 The Coltax Premed Brick Co. (for pits only). Denver, Colo Apr. 24. 1942 Do. Chicago, III. 232 Hurrfano Coal Co. (Ludlow mine, Ludiow, Colo,), Denver, Colo Apr. 28, 1942 Cosl. 343 Pell Coal Corporation (Pell pit at Brazil, Ind). Brail. Ind May 8, 1942 Coal. 233 C. Ryan & Son (mine in Climar, Colo.). Lakewood, Colo Apr. 29, 1942 Nonmetalle. 234 Molybdenum Corporation of America (the Urad mine at Clear May 5, 1942 Metallic. ILLINOIS-PREFACE NO. 21 Creek County, Colo.). W. E. Gilson (Sunny Side mill), Boulder, Colo May 12, 1942 Do. 235 May 14, 1942 Nonmetalle. 236 Denver Mortar & Materials Co., Denver Colo Mar. 9, 1942 Metallic Metallic. 433 May 15, 1942 Sunnyside Mining Co., Inc., Care In Rock, III 237 Roy Lee, Trustee (Yokon Tunnel, Cement Creek, Silverton, Colo.), Mar. 11, 1943 Nonmetallic. 434 Canfield & Clark, Dallas City, Ill Dallas, Tex. 435 The Alsey Brink & Tile Co. (MeLaughlin mine). Alsey, Ill Mar. 12. 1942 Do. 436 Geo. M. Pendergust & Co., Inc. (Silles plant 2 miles east of Utics. Mar. 13, 1942 Do. III) CONNECTICUT-PREFACE NO. a 437 Mar. 25, 1942 Do. France Stone Co., Chicago, m 438 Geo. H. Chandellier Sand Co. (Utica crude pit), Ottawa, Ill Apr. 8, 1042 Do. 439 F.C. Beltrose Sand & Co. (Ottawa crude pit), Ottawa, Ill do Do. Apr. 25, 1942 Nonmetallic. 40 The Iron Ledge Co., Bridgeport, Conn 440 Beecher Williams (Humm mine). Herod, III Apr. 1942 Do. 441 do Coal. The Mine "B" Coal Co. ("A" mine), Springfield, Ill 442 Concrete Materials Co. (mine in Byron, III.), Waterico, Towa, office. Apr. IA, 1042 Nonmetallie. Mar. 23, 1942 Do. 443 DELAWARE-PREFACE NO. 1 Chieago Fire Brick Co. (yard No. 30, Chiengo, Ill 444 Apr. 21, 1942 Coal. Green Valley Cost Co., Marion, III 445 Standard Materials Corporation (plant in Amboy, III.), Indian- Apr. 23, 1942 Nonmetallic. a The Pyrites Co. (tron sintering plant), Wilmington, Del Apr. 7. 1942 Metallic. apolis, Ind., office. 445 H. R. Ameling Prospecting Co. (drilling operations at Rosiciare, Apr. 28, 1942 Metaille. III.). 447 May 4. 1942 Nonmetallic. Coogan Gravel Co. (mine In Chillicothe, III.), Peoris, III DISTRICT OF COLUMBIA-PREFACE NO. 40 468 Pilbrico Jointiess Firebrick Co. (Illinois plant), Chicago, Ill May 6, 1942 Do. 449 Ottawa Hydraulie Silica Corporation (Bull Island, III, plant), May 13, 1042 Do. United Brick Products (United Brick Corporation), Bladensburg Mar. 31, 1942 Nonmetallic. Chicago, Ill, 2 Rd. and New York Ave. NE, Washington, D. C. Regraded Unclassified SILVER SILVER 571 570 List No. includes the names, dates, and types of mines 1948-Continued to which serial numbers have 1 been granted between Mar. ! and May 15, List No. I includes the names, dates, and types of mines to which serial numbers have been granted between Mar. 8 and May 15, 194$-Continued IOWA-PREFACE NO. 29 MISSISSIPI-PREFACE NO. 20 Date Typed Bertal Name mine Berial Name Date Type of mine No. No. Apr. 1942 183 Coon Des Moines Valley Graval Band & Co., Fuel Des Cooperative Moines, Iowa Association, Den Moines, Apr. 21, 1912 Do. 32 Flaming Gravel Co., Columbus, Miss Apr. 21, 1942 Nonmetallin. 184 Iowa. Ash Mining Co., Inc. (white ash No. Iowa 2), Albla, Iowa May 13, 1942 Coal. 185 White Mason City Brick & Tile Co., Mason City, May 19, 1942 Nonmatallie MISSOURI-PREFACE NO. 24 186 Superior Mineral Co. (Charryvallay Mine) Cadet, Mo Mar. a 1943 Nonmetallic, KANSAS-PREFACE NO. 34 562 563 Irvin Bethel (Nosh Bethel mins), New Florence, Mo Mar. 11, 1943 Do. 564 Arrow Tiff Mine, Potal, Mo. Mar. 21, 1942 Metallic. Hydraulic Cement Co., Fort Scott, Kans Mar. 25, 1942 Nonmestalle Aluminum Flake Co. (Dillon pits in St. James, Mo.), Akron, Obio, do Nonmetallia. 565 140 Fort Consolidated Scott Cement Corporation (Fredonia mine at Fredonia, Apr. 18, 1942 Do. LacLede-Christy nillice. Clay Products Co. (mine No. 42 at Wellsville, Apr. 3, 1042 Do. 141 506 The Kans), Centerville Coal Co., Inc. (new No. 0 mine), Cherokee, Kans Chicago, III. Apr. 21, 1142 Coal. Mo.), 8t. Louis, Mo. 142 do Nonmetallic 567 Louis Heldel & Buns (Heldel big pit), Hossbud, Mo Apr. 7. 1943 Do. 143 Stuart Simpson, McPherson, Kans Pre Cote Co. (quarry in Parsons, Kans.) Apr. 28, 1942 Do, Obed Hall (Obed Hall mine), Whiteside, Mo Apr. 8, 1942 Do. 568 144 Midwest MeArthur Mining Co. Kansas Corporation (Grantham lease), May 4, 1942 Metallis, 509 Lemons Bros. (drilling operations for La Motte Corporation at La de Metallie. 145 Motte, Mo). Barter Springs, Kans. May 11, 1942 De. Mineral Products Co., Pittsburg, Kans 570 Forest Johnson (sand quarries in Gasconade County, Mo.), New Apr. 14, 1943 Nonmetallia. 146 Florence, Mo. 571 C, R. Logan (Thoroughman pit), New Florence, Mo Apr. 16, 1942 Do. 572 Missouri Irun Mining Co. (Christy, Merimac, Pioneer Nos. 1 and 2 Apr. 28, 1942 Metallic. KENTUCKY-PREFACE NO. 15 mines), Steelville, Mo. 573 Centropolis Crusher Co., Kansas City, Mo. May 4, 1942 Nonmetallic Kentucky Fire Brick Co. (Nos. 9, 10, 12, 13 mine, Nos. 1 and 2 plant), Mar. 6, 1942 Nonmetalle 574 Missouri- Illinois Material Co. (pit at Pactfic, Mo., plant at St. Louis, May 6, 1942 Do. 491 Haldoman, Ky. do Coal. 575 W.K. Mo.). Holland (W. K. Holland pit), Steedman, Mo. May 13, 1042 Do. 403 Belfry Coal Co. (Oronaca mine), Belfry, Ky Mar. IA, 1943 576 Carrabine Sand & Gravel Co., Webster Groves, Mo do Do. De. 493 Dixie Blue Gem Coal Co., Neviadale, Ky Myron Baker, contractor (Kaboks quarry at Kahoka, Mo.), Inde- do Do. Vincent Mining Co. (mine No. 1). Soldier, Ky Mar. 30, 1942 Nonmestalle 577 494 de Do, pendence, Town. 495 Bipple Brick Co. (pita only), Stannton, Ky Mar. 26. 1942 Cosl. 578 Flustsch Bros. (Oak Hill Fire Clay Co.), Maplewood, Mo do Do. 496 Saxton R. Coal Corporation (mine in Kentucky), Williamsburg, Ky L. Brown Coal Mine (R. L. Brown mine), Providence, Ky Apr. a, 1942 Do. 579 Kansas Explorations Inc., Jasper mine, Post office Box 195, Joptin, May 1A, 1942 Metallic. 497 do Metaille. Cumberland Fluirspar Co. (mine at Mexico, Ky) Apr. 7, 1942 Drillers. 580 American Mo. Zine, Lend & Smelting Co. (Davey Chst loading plant), do Do. 496 499 Hoffman Bros. Drfiling Co. (drill operations in Kentucky) Apr. 9, 1943 Coal. St. Louis, Mo. 500 Phillips & White (Baker mine), Hims, Ky. 601 Evans Elkhorn Coal Co. (Jones Fork mine, Estill, Ky.) do De. 502 Feds Creek Coal Co. (Feds Creek mine), Feds Creek, Ky do Do. Manchester Coal Co., Inc. (Paw Paw mine), Hims, Ky Apr. 14, 1942 Do. MONTANA-PREPACE NO. 41 503 do Do. 504 Elkhorn Ferguson Coal Co. (Epoonn mine), Pikeville, Ky Bonanza Mines, Inc. (Bonansa mines), Marion, Ky. do Nonmetalle, 505 Chice Elkhorn Coal Co. (Thompson mine), Pikeville, Ky Apr. 21, 1942 Coal. 132 Minmont Co. (East Pacific mine), Helena, Mont Mar. 31, 1942 Metallic. 506 do Do. 133 Minmont Co. (Carlasu mine), Helena, Mont do Do. 507 Maddox Coal Cn. (Maddox mine), Beaver Dam, Ky. Apr. 24. 1943 Do. 134 Domestic Managanese & Development Co. (Trarens mine), Butte, Apr. 23, 1942 Do. 508 Elkborn Mining Co. (Lower Elkhorn mines), Praise, Ky Stone Products Co. (open face quarry north of Marion, Ky) May 6, 1942 Nonmetalis. Mont. Coal. 135 Sullivan Machinery Co., Michigan City, Inc. (drilling operator for May 4, 1942 Drillers. 509 Lenisa River Coal Co. (Leniss River mine), Fed Creek, Ky May 7, 1942 510 do. Do. the United States Vanadium Corporation of Red Lodge, Mont.). 811 Smith Cost Co., Lothair, Ky. May 14, 1942 Nonmetallia 136 Bunshine Mining Co., agents for Metals Reserve Co. (mill and mines May 7, 1942 Metallic, 512 Crider, W. H. (W. H. Crider fluorsper mill), Mexico, Ky do Coal. in Phillipsburg, Mont.). 513 Buthord & Phillips (Auston City mines), Nortonville, Ky NEVADA-PREFACE NO. as MINNESOTA-PREFACE NO. 33 132 Boyles Bros. Drilling Co., Salt Lake City, Utah (drilling at Las Mar. 6, 1943 Driller. 8. E. Atkins., Co., Duluth, Minn: May & 1942 Metallic Vegas, Nev.). 118 Drilling st Coleraine, Minn Do. 133 U.S. Distom mine), Mount Montgomery, New Mar. 26, 1942 Nonmetallie, Drilling at Trommald, Minn do 134 Getchell Mine, Inc., Reno, Nev Mar. 27, 1942 Metallic. 119 135 Desert sheelite mine, 1. L. Warner, Mins, New do Do. 120 L. Hultgren & Sons, Kerrick, Minn Feb. 24, 1942 Nonmetalle. 121 Feb. 25, 1942 Metailit. 136 Ely Valley Mines Co. (Ely Valley group), Pioche, Nev Apr. 6, 1942 Do. 122 Henry J. Kruse, Altkin, Minn Do. 137 Nevada Pacific Minerals Co., Inc., Jean, Nev. de Nonmetallic. 123 Hanna Iron Ore Co. (Draper annex mine at Marble, Minn.), Cleve- Apr. 21, 1942 138 F.A. Reid and A. V. Nelson (Shanandosh mill, Sbensndosh, Hooster Apr. 7, 1942 Metallic. land, Oblo, do Nonmetalis. and Root Hill and IXL mines, Goodspring, Nev.). Hedberg- Freidheim & Co. (Hedberg-Freidheim Co. pit), Minne- 139 Bly Gold Mining Co. (Taylor mine), Ely, Nov. Apr. 9, 1942 Do. 124 apolis, Minn. do Metallic. 140 Dunlap Copper Co. (Dunisp mine), Mins, Nev Apr. 14. 1942 125 Clement K. Quinn Ore Co. (Shada mine, open pit and washing 141 Washington Hill Quicksllver Co., Inc. (Washington Hm quicksflver de Do. plant), Nashwauk, Minn. mine), Reno, Nev. Do. Evergreen Mines Co.: Do. 142 A. & B. quicksilver mine, Tunopah, Net Apr. 21. 1942 125 Greenway wash mine, Crosby, Minn Apr. 37, 1942 143 Do. R. 6. McClintock Diamond Drill Co. (drilling operator for Mount- May 4. 1942 Drillers. 127 Weebing mines, Crosty, Minn Apr. 30, 1042 Nonmatalle. ain City Cooper Co., in the State of Nevada). 128 Closrwater Gravel Co. (Biwabik, sand and gravel plant) Duluth, May 6, 1663 144 Co. (Golconds division of Noveda-Massa- do Motailic. Minn. Motallic. chusetta Ca., at Goloonda, Nov.). Great Northern Ry. Co. St. Paul, Mind. May 14, 1943 129 130 Winona Band & Gravel Co. (plit 4A), Winons, Minn May 15, 1942 Nonmatalle. do De. 131 Standard Building Materials Co. (Standard pit No. 3), South St. NEW HAMPSHIRE-PREFACE NO. 9 Paul, Mino. 13 Northern Feldspar Corporation (Speulding HII and Balley Hill Mar. 20, 1943 Noumetallic. mine), West Rumney, N. H. Regraded Unclassified SILVER 572 SILVER 573 List No. I includes the names, dates, and types of mines 1948-Continued to which serial numbers have been granted between Mar. 2 and May 15, List No. I includes the names, dates, and types of. mines to which serial numbers have been granted between Mar. 8 and May 15, 1948-Continued NEW JEHSEY-PREFACE NO. a OHIO-PREFACE NO. 17-Continued Date Typed Borial Name mine Berial Name Date Type of mine No. No. 81 Brimfield Bros. (pita and plants at Cedar Lake, N.J., and Hayville, Apr. 15, 1942 Nonmetallic (84 The Robinson Clay Product Co. (Wright mine), Akron, Ohio Apr. 7, 1942 Nonmetallie, J.). Titanium Corporation (plant at Carteret, N. J.) Apr. 30, 1913 Do. Hoffman Bros. Drilling Co. (drilling operations in State of Ohio), do Driller. 82 May & 1942 685 International Noreross Bros. (South Pemberton plant and Birmingbam pit), Do, Punkrutawney, Pa. The Cleveland Builders Supply Co. (sand plant known M dock No. Apr. 9, 1942 Nonmetallic 83 680 Pemberton, N.J. Downer (Downer mine), Glassboro, N. I do Do. 84 B. Plibrico W. Jointless Firebrick Co. (New Jersey factory at Trenton, do Do. Black Creek Coal Co. (Ohlo No. 3 mine), Zanesville, Ohio, 10), Cleveland, Ohio. Apr. 14, 1942 Cosl. 687 85 Robert Raney (New Venture mine), Byesville, Chio da Do. 688 Warren N. J.). Band & Stone Co. (quarry operator only), Carpentersville, May 13, 1942 Do, 589 American Sintering Co. (plant at Hubbard, Ohio), Chicago, III Apr. 15, 1942 Metallic. 86 The Standard Blag Co., Youngstown, Ohio: N.J. 000 Republic plant Apr. 17, 1942 Noumetalle. Brier HIN plant do De. eut Hubbard plant do NEW MRXICO-PREFACE NO. 47 692 Do. Warren plant do nux Do. 104 Ironton plant do Do. Jackson plant do Nonmetalite 695 Do. Products Co., Grantes, N. Mex Mar. 25, 1942 Mingo Junction plant do Lineoln Mineral Ore & Metal Co. (Gallinas Mountain Iron deposits), Albu- Metallic. 696 Do. e Mar. 26, 1942 OUT Steubenville plant do Do. 63 Do. Massillon plant do Do. New querque, Mexico N. Consolidated Mex. Mining Co. (Kearney mine, care of Peru do 698 tH 699 American Drilling Co. (drilling operations in the State of Ohio), Apr. 21, 1943 Driller. P. L. Orattan (Sadler No. 2 nt Deming, N. Mex.), El Paso, Tex., Mining Co., Hanover, N. Mex.). do Nonmetaile Orvensburg, Pa. 700 Transue & Williams Steel Forging Corporation (Transue & Williams Apr. 22, 1942 Coal. 65 Sharp office. & Fellows Contracting Co. (mine in Sais, N. Mex.), Los Apr. 7;1942 Do. mine), Alliance, Ohio. do 701 The Thompson Billica Co., Thompson, Ohio Nonmetallia. (x) Standard Angeles, Minerals Corporation (Velarde claims), Hatch, N. Mex Calif., office. Apr. 1942 Do. 702 The Malvern Clay Co., Malvero Ohio (for pit only) Apr. 24, 1942 Do. Apr. 13, 1942 Metaile. TOS Wahl Refractory Products Co., Fremont. Ohio Apr. 25, 1942 Do. 67 Black Hange Development Co. (Columbia mine), Hurley, N. Mex. Mex. Kneyer Mines, Inc. (N. 8. L.), Kneyer mines, Lordsburg, N. Nonmetallic 7M The United Band & Gravel Co., Canton, Ohio Apr. 2), 1942 Do. 68 Apr. 14,1942 69 May 4, 1942 Do. 705 H. W. Koeh & Sons Gravel Co., Wapakoneta. Ohio May & 1942 Do. 70 The Patsen Mica Products Co. (N. 8. L.), Ajax & Capitana, former- 70) Southern Hills Sand, Gravel, & Exeavation Co. (Southern Hills plt), May 6. 1942 Do. Madelyn ly Fischbach, trustee, Montirello Canyon Development, known as the Cribbinville mine, Pataca, N. Mex. May 8,1942 Metallic, Dayton, Ohio. 707 David Z. Norton Co. (Norton mine), Cleveland, Ohio do Coal. E Hot Springs, N. Mex. May 12, 1942 Do. 708 The Metropolitan Paving Brick Co. (Minerva plt al Minerva, May 7, 1942 Nonmetalle. 72 J. D. Torres, Kelly mine, Kelly, N. Mex May 14, 1942 Do. Ohio), Canton, Ohio. Maurior di Autrement (Pastura oupper mine, at Guadalupe County, 209 Bellaire Coel Co. (No. 1 and No. 2 mines), Bellsire, Ohio. May & 1942 Coal. R 710 River Transportation Co. (preparation and sereening plant), Cin- May 14, 1942 Do. N. Mex.). cinnati, Ohio. NEW YORK-PREFACE NO. 11 OKLAHOMA-PREFACE NO. 46 W.J. Dyer (W. J. Dyer molding sand pit), Jonesville, N. Y Mar. 21, 1942 Nonmetalle. 140 Opeida Lake sand mines, Cleveland, New York State, N. Y Apr. 15, 1942 Do. 141 Gravel Products Corporation (steamer Niagara, pumping sand and Apr. 21, 1942 Do. 193 Sullivan Machinery Co., Michigan City, Ind. (drilling at McAlester, Mar. o, 1042 Drillers. 142 Okla.). gravel), Buffalo, N. Y. Leavell Coal Co. (Silvererest mine), Tulsa, Okla Mar. 12, 1942 Coal. do De. 194 143 The Hutton Co. (Hutton mine), Kingston, N. Y North Shore Sand & Gravel Co., Port Washington, N. Y Apr. 22, 1942 De. 195 Dixie R. Mining Co. (Dixie R), Picker, Okla Mar. 14, 1942 Metallic. 144 May 5, 1942 Do. 196 Southwest Stone Co. (No. 3 plant, Stringtown, Atoka County, Apr. 14, 1942 Nonmetallic 143 Rosoff Sand & Gravel Corporation, Kerhonkson, N. Y The Valley Sand & Gravel Corporation (Wadsworth plant No. 2, do Do. Oklahoma), Dallas, Tex. 146 Engle-Picher Mining & Smelting Co., Picher, Okla.: Soottaville, N. Y.). May & 1942 Do. 197 Netta Mine Apr. 15, 1942 Metallic 147 Hornell Gravel Corporation (Cohocton plant at Cobocton, N. Y.), 198 McKihben mine do Do. Salamanca, N. Y. May 8. 1942 Do. 199 B. & R. operation Apr. 27, 1942 Do. 148 The Kelley Island Lime & Transport Co. (Buffalo, N. Y., plant) Metailic. 20) Trenthem Milling Co., Picher, Okla May & 1942 Do. Wah Chang Trading Corporation (plant: National Reconditioning May 15, 1942 149 201 Eagle-Picher Mining & Smelting Co. (South Side mine), Picher, May 12, 1942 Do. Co., Inc., Staten Island, N. Y.). Okla. 22 Miami Rock Products Co. (Bird Dog plant, also Central Mill plant), May 18, 1942 Nonmetallic. Miami, Okla. NORTH CAROLINA-PREFACE NO. 12 OREGON-PREFACE NO. 33 90 Franklin Mineral Products Co. (Burr Knob mies mine), Franklin, Mar. 16, 1942 Nonmetalle. N.C. 91 Colonial Mies Co. (mines in North Carolina), agents for Metals Re- Apr. 27, 1042 Do. M) Krome Corporation (Krome mine), Port Orford, Oreg Mar. 4, 1942 Metallic. 57 Kilkey Bros. (a partnership), Mother Lode mine, Prineville, Oreg Apr. IL 1942 Do. serve Company), New York, N. Y. Charlie Ridge mine (Slippery Elm mine), Newland, N. C Apr. 29, 1942 Do. M Independence Sand & Gravel Co. (Independence pit), Independ- Apr. 17, 1942 Nonmetalle. 92 de Do. Bryson Tale Co. (Worth, Peppers Creek, Hennessee, and Bates ence, Oreg. is 50 Pactfie Portland Cement Co. (Marble Mountain and Colvig Gulch May 6, 1942 Do. mines), Marion, N.C. 94 Macon Mica Mining Co. (Lyle Knob mine), Franklin, N. C May 16, 1942 Do. quarries, at Gold Hill, Oreg.), Ban Francisco, Calif. 60 Metals Reserve Co. (sampling plant, at Grants Pass, Oreg.), Part- May 8, 1942 Metallic. land, Oreg. OHIO-PREFACE NO. 17 Mar. 11, 1942 Nonmetalic 078 Sharon Billes Co. (Jackson pit, Seurlock pit), Jackson, Ohio Do. 679 Hope Fire Clay Co. (Hope mine), Jackson, Ohio do 680 Oak HIII Clay Products & Mining Co. (Pyro mind, Oak Hill, Ohio. Mar. 20, 1942 Do. Inter-State Construction Co. (Erskine quarry), Youngstown, Ohio Mar. 25, 1942 Do. 681 Corundite Refractories, Inc., Massillon, Ohio: Apr. 7, 1942 Do. 682 Massillon plant Do. 683 Zoar plant do. Regraded Unclassified SILVER SILVER 575 574 List No. I includes the names, dates, and types of mines to which serial numbers have been granted between Mar. to and May 15, 1942-Continued List No. I includes the names, dates, and types of mines to which serial numbers have been granted between Mar. ! and May 15, 1940-Continued PENNSYLVANIA-PREFACE NO. 2 PENNSYLVANIA-PREFACE NO. 2-Continned Date Type of Name mine Bertal Name Date Type of Berial mine No. No. Union Collieries Co., Oakmont, Pa.: Mar. of 1942 1709 The Areadia Co. (Wilgus & Smithport mine), Indians. Pa Apr. 27, 1942 Coal. Renton No. 6, North Bessemer, Pa Cost. da Bigelow Run Coal Mining Co. (Blgelow run No. 1), Bellefonts, Pa. de Do. 1705 1706 Renton No. 8, Rural Ridge, Pa Do. 1770 Shenton State Co., Inc., Statedale, Ps Apr. If, 1943 Nonmatalle, Mar. & 1942 Nonmetallic 1771 W. Eills Johnson, Devan, Pa. Mar. 6, 1942 1772 Continental-Archbald Cost Co. (Archbald colliery), Scranton, Pa do Coal. 1707 A. Coal Co. (Keys mine), Dubois, Pa Cost. J. F. Eiswerth (Schupp mine and Klatneback mine), Lucinda, Pa do Nonmetallic. 1706 do Do. 1773 Richard W. C. Remmey Son Co., Philadelphia, Ps Penn Retractories Co., Bollvar, Pa. da 11709 do Do, 1774 Do. St. Clair, Rinn & Co. (Twollck mine), Indiana, Pa do 1775 Sarman Coal & Coke Co. (Harrison mine), Philadelphia. Ps May 4, 1942 Coal. 1710 Do. 1711 D. John Coal Crow Co., Coke New Co. Derry, (Brownsfield Pa mine), Unlentown, Pa. Mar. 10, 1942 1776 J. o. Clark heirs partnership (Superior No. 1 mine), Glen Campbell, do Do. De. 1712 Parshall Lehigh River & Steam Coal Co. (Packers Dam operation), Reading, do Da. M. Pa. B. Stewart, West Fairview, Pa.: 1713 Nonmetallie 1777 Dredging A coal from Busquehanna River in Bieelton, Pa May 5, 1942 Do. Lesp Pa. Ganister Rock Co. (Leap No. 1), Hyndman, Bedford County, Mar. 11, 1042 1778 Dredging A coal from Susquehanns River la Millersburg, Pa do Do. 1714 1779 Phoenix Coal Co. (John Veith, property, Liewellyn, Pa.), Scrapton, May 1942 Do. Welch-Bright Pa. Co., Atlantic Ave. extended, Monaca, Pa do De. 1715 do Keystone Portland Cement Co., Phliadelphia, Pa De, Domestic Pa. Gas Coal Co. (Stephenson mine). Resore, Pa Mar. 16, 1942 Coal 1780 do De. 1710 Kenbrook Cost Co., (No. 1 mine), Sligo, Pa 1781 M. & M. Coal Co. (Boschwood No. 2 mine), Dunlevy, Pa do Do. 1717 1718 Smith Material Co. (Letterkenny quarry), Camp Hill, Pa Mar. 21, 1042 The Funkhouser Co., Hagerstown, Md.: MacFariane, Robert (MacFarlane mine), Houston, Pa do Coal. 782 Mine at Charmian, Pa May 12, 1942 Nonmetallin. 1719 David 0. Davis & Son (Shupe mine, Index No. 2160), Dravosburg, do Do. 1783 Mine at Delta. Pa do De. 1720 1784 Frod L. Bilhol (No. 2 mine), Bridgeville, Pa May 13, 1942 Coal. Calumet Pa. Coal & Coke Co. (Mammoth mine), Scottdale, Pa do Do. Da. 1785 Benjamin Franklin Graphite Co., Ins. (Graphite mine, Chester do Nonmetallia. 1721 Ploneer Fuel Co. (Ploneer mine), Latrobe, Pa do Springs, Pa.), Milltown, N.J. 1722 Kinston Brick Co., R. D. No. 1, Latrobe, Pa Mar. 26, 1942 Nemmetalle, 1786 The Bessemer Limestone & Cement Co. (Enon mine), Bessemer, Pa. May 14, 1942 De. 1723 do Alliance Sand Co., Inc, Northampton, Pa Do. 1787 Penowa Coal Co. (Waverly mine at Avella, Pa.), Pittsburgh, Pa de Coal. 1724 Eastvale Clay Products Co., Beaver Falls, Pa do Da. 1788 Ellwood Stone Co. (Koppel and Rockford plants), Ellwood City, Pa. May 18, 1942 Nonmetallie. 1724 1726 Hanley Co. (Summerville plant), Bradford, Pa do Da, Otte Collierion, Pottsville, Pa.: do Coal. SOUTH CAROLINA-PREFACE NO. 8 1727 Eagle Hill strip do Do, 1728 Rausch Creek strip Woodbury Clay Co., Hollidaysburg, Pa. Mar. 25, 1942 Nonunstalls 1729 1730 George F. Pottinos, Inc. (Honeybrook sand plant), Philadelphia, Pa. do Do. 27 Camlins Refractories Co., Hartsville, 8. C. Apr. 25, 1943 Nonmetallic. Whiteball Cement Manufacturing Co., Cementon, Pa. du Do. No Southern Sillen Mining & Mfg. Co., Columbia, 8. C. Apr. 28, 1942 Do. 1731 The James H. McCrady Band Co. (mine at Harmerville, Pa.), Spring- Apr. d, 1942 Do. 1732 General Refractories Co. (Sandy Ridge plant), Philadelphia, Pa date, Pa. do De. SOUTH DAKOTA-PREFACE NO. 40 1733 Helen Jennings Coal Co., Johnstown, Pa.: Apr. H, 1942 Coal. 1734 Jennings No. $ mine do Do. 1735 Jennings No. I mine do Do. 36 Gladys Wells (Warren Draw, No. 1 and No. 2), Custer, 8. Dak Apr. 15, 1942 Nonmetalle. 1730 Jennings No. 4 mine Hill Bros, (Ashman No. 4 and Hm No. D. Morrisdale, Pa do Do. 1737 do Dd. 1738 Corsy Slope Cost Co., Pittston, Pa da Nonmetalle TENNESSEE-PREFACE NO. 16 1739 H. F. Bigler (Salt Lick mine), Clearfield, Pa 1740 H. N. Hough (Hough mine), Uniontown, Pa da Cost. do De. 1741 Marie Coal Co. (Marie mine), Fairchance, Pa Cost Hollow Cost Co. (Marrsceini mine), West Newton, Pa de Da. 171 Hicks Brus., Camden, Tenn Mar. 6. 1042 Nonmetalle, 1742 Do. 172 Lambert Bros. Inc., Knoxville, Tenn.: Pennsylvania Refining Co. (Brunt Strip mine), Butler, Pa. Apr. 14, 1942 1743 do Do. 173 Fordtown quarry Mar. 1942 Do. 1744 Abrussi Cost Co. (Bruceton mine), Bruceton, Pa do Da, 174 Dale Hollow quarry do Do. 1745 Carpenteriown Coal & Coke Co. (Carpentertown mine). Union- 178 Memphis Stone & Gravel Co., Camden, Term Do, town, Pa. Corter Steam Coal Co. (No. I silt plant), Seranton, Pa do Do. *170 1740 do Do. *177 1747 Aeme Coal Cleaning Co., Avello, Pa Apr. 15, 1942 Nonmetaille. *178 1748 W. D. Little Clay Co. (Bigler mine and quarry), Philipsburg, Pa. 1749 Hoffman Bros. Drilling Co. (drilling operations in the State of do Driller. *179 *180 Pennsylvania), Punisutawney, Pa. The Philadelphia Clay Co., Carilisle, Pa Apr. 1042 Nonmatalls *181 1750 Cost. 182 Southern Mics Co. (Johnson City plant), Johnson City, Tenn Mar. 13, 1942 Do. National Mining Co. (Hazel mine). Pittsburgh, Ps Apr. 20, 1942 1751 Nonmetalle 183 Imperial Mining On. (Bunch's Hollow mine), Fountain City, Tenn. Mar. 1942 Metallic. McCleary Bros. (Pinola quarry), Chambersburg, Pa do 1752 Da. 184 Birmingham Slag Co. (Calhoun plant in Charleston, Tenn.), Bir- Mar. 1942 Nonmetalle. American Banger Blate Co., Inc., Hangor, Pa. do 1753 Do. mingham, Als. Highspire Sand & Gravel Co. (Highspire sand and gravel plant), do 185 1754 Hoffman Bros. Drilling Co. (drilling operations in State of Ten- Apr. 7. 1942 Drillers. Harrisburg, Pa. Apr. 21, 1942 Driller. nessee), Punesutawney, Ps. American Drilling Co., Greensburg, Pa Dd. 166 II. R. Ameling Prospecting Co. (drilling operations for the American Apr. 8. 1942 Da. 1755 de 1756 do Da. Zine Co. of Tennessee, at Monroe, Tenn.), St. Louis, Mo. de 187 1757 do Butler Mining & Development Co. (Taylor Valley mine), Ellta- Apr. 11, 1942 Metallic. 1708 bethton, Tenn. 188 Cumberland Coal Corporation (Cartwright mine), South Pitta- Apr. 21, 1942 Coal. 1759 1760 do Nonmetallia burgh. Pa. 1761 National Slag Co., Riegelaville, Ps 189 Do Williams Lime Manufacturing Co., Knoxville, Tenn Apr. 23, 1942 Nonmetallie, Beatty & Soillina Clay Mining Co. (Lumber City clay mines No. do 190 Gllbreath & Pressnell (Soria mine), Columbia, Tenn May 6, 1942 Do. 1762 1 and No. 2), Houtsdale, Pa. do Do. 1763 Bottleld Refractories Co., Philadelphia, Pa Willard Kittanning Brick Manufacturing Co do Do Do. *Blank ipsoss indicate numbers landed in December, January, and February. 1764 1765 Firestone Products Co., Inc. (quarry in Edge Hill, Pa.), North do HII, Pa. New Castle Refractories Co., New Castle, Pa.: Darlington plant at Darlington, Ps Apr. 23, 1942 Do. 1766 New Galilee plant at New Galline, Pa do. Do. 1767 1768 New Castle Refractories Co. (New Castle plant at New Castle, Pa.), Apr. 28, 1942 Do. New Castle, Pa. Regraded Unclassified SILVER SILVER 576 577 List No. 1 includes the names, dates, and types of mines to which serial numbers have been granted between Mar. 2 and May 15, 1948-Continued List No. 1 includes the names, dates, and types of mines to which serial numbers have been granted between Mar. # and May 15, 1948-Continued TEXAS-PREFACE NO. 28 WASHINGTON-PREFACE NO. 42 Name Date Type: of Serial mine Serial Name Date Type of No. No. mine 107 Hamlin Band & Gravel Co., Inc. (Flattop gravel plant), Vernon, Mar. 9, 1942 Nonmetallic. 59 Buyles Bros. Drilling Ca,, Salt Lake City, Utah (drilling operations Mar. 4. 1942 Drillers. DuPre Tex. Band & Gravel Co., and Road Gravel Co. (DuPre Sand & do De, at Halden, Wash.). 108 as Magnetic Mining Co., Colville, Wash. Mar. IL 1942 Metallic. Gravel 8. pis, Hoyt (Columbus, Tex., Flint Gravel pita) Van Horn, Tex and DuPre Road Oravel pit), Victoria, Tex. Mar. 2), 1942 Do, 41 Pacific Coast Coal Co. (Black Diamond mine), Seattle, Wash Mar. 13, 1942 Coal. 109 Bullivan Philip Machinery Co., Michigan City, Ind. (drilling operations Apr. 6, 1942 Driller. 12 Boche Harbor Lime & Cement Co. (quarry operations at Roche Mar. 31, 1942 Nonmetallie. Harbor, Wash.), Roche Harbor, Wash. 110 at Grant (Ascarate Grant), El Paso, Tex New Braunfels, Tex.). Apr. 7, 1942 Nonmetallie na Knob Hill Mines, Inc., Walter Lyman Brown, Republic, Wash Apr. 7, 1942 Metallie. 111 Ascarate Southwest Stobe Co. (No. 2 plant-Lone Star Spur (Chico) Texas, Apr. 14, 1942 Do. 04 Mas J. Kuney Co. (Pomons quarry). Spokane, Wash Apr. 17, 1042 Nonmetallic. 65 General Construction Co. (Mata Mats quarry), Sesttle, Wash Apr. 27, 1942 Do. 112 113 Thermo Fire Brick Co. (Thermo and Troup pita), Sulphur Springs, Wise Co.), Dallas, Tex. Apr. 15, 1942 Do. Mi Pioneer Sand & Gravel Co. (plant at Point Deflance, Wash.), Apr. 30, 1942 Do. Seattle, Wash. The Tex. Milwhite Co., Inc. (plant, Houston, Harris Co., Texas), Hous- do 67 Majestic Coal & Mining Co., Inc. (Nonpariel mine), Centralia, de Coal. Do, 114 Minerals Production Co. (Spiller mine), Liano, Tex ton, Tes. Apr. 17, 1942 Metallie. no James Wash. Keeth (Reeth Tungsten mine) Spokane, Wash May 5. 1942 Metallic. 115 do Nonmetalle es E.J. Longyear (drilling operator at Glacier Peak, Wash.), Minneap- do Driller, 116 Texas Chann Mica & Feldspar Co. (Mics mine property). Van Horn, Tes. Sand & Gravel Co., Inc, Fort Worth, Tex. Apr. 22, 1942 Do. olls, Minn. 117 Vivianna Mining Co. (Vivianna mine), Alpine, Tex Apr. 25, 1942 Metallie. F. M. A. Hanna (prospecting for copper at Glacier Peak, Wash.), Dar- do Metallic (D). rington, Wash. 118 119 Trinity Portland Cement Co., Dallas, Tex.: May 14, 1942 Nonmetalle 71 Zenlth Mines, Inc., Cleveland mine, Fruitland, Wash May 9, 1042 Metailic Mine st Fort Worth, Tex. do Do. 72 Germania Consolidated Mines, Inc., Spokane, Wash de Do. 120 Mine at Dallas, Tex UTAH-PREFACE NO. 45 WEST VIRGINIA-PREFACE NO. 35 109 Continental Coal Co. (Maple Creek Cost Co.), Salt Lake City, Mar. 2, 1942 Coal. 618 Alsted Coal Co., Flemington, W. Va Mar. 11, 1942 Coal. (19 Cornell Coke Co. (Yale mine), Morgantown, W. Va Mar. 27. 1942 Do. Pyramid Utah. Gypsum Co. (Pyramid plant). Salt Lake City, Utah do Nonmetallis. (2) North Vein Coal Co. (Cork No. 2 mine), Clarksburg, W. Va Apt. 1, 1042 Do. 110 Mar. 6, 1942 Drillers. 621 Hoffman Bros. Drilling Co. (drilling operator In State of West Vir- Apr. 7, 1942 Driller. 111 Boyles Bros. Drilling Co., Salt Lake City, Utah do Do. ginin), Punisutawney, Pa. 112 do do Do. 622 Shinnston Coal Co. (Hood mine), Shinnston, W. Va Apr. 9, 1942 Cost. 113 do do Do. 623 Rock Forge Coal Co., Inc. (MeDonald mine), Morgantown, W. Va do Do. 114 do do Do. 624 Big Branch Winifreled Cost Co., Williamson, W. Va Apr. 14, 1942 Do. 118 do 625 Christopher Nat'l Coal Co. (mine No. 5), Morgantown, W. Va Apr. 16, 1942 Do Do. 116 (26 Carter Coal Co. (Thelman mine at Sie, W. Va.), New York, N. Y Apr. 21, 1942 117 627 American Drilling Co. (drilling operator in the State of West Vir- do Driller. 118 ginia), Greensburg, Pa. 119 425 New Castle Refractories Co. (Newell plant at Newell, W. Va.), Apr. 23, 1942 Nonmetallic. 120 Rock Asphalt Co. of Utah (Utah rock asphalt), Sunnyside, Utah Mar. 9, 1942 Nonmetallie New Castle, Pa. 121 Apes Tungsten Mining Co., Traut Creek, Utah Mar. 10, 1942 Metailie. 129 Case Cost Co. (Case mine), Camden on Gauley, W. Va. Apr. 24, 1942 Coal. 122 Apr. 14, 1942 Coal. 630 J.Q. Dickinson & Co. (plant at Malden, W. Va.), Malden, W, Va do Nonmetallic. 123 Grass Creek Fuel Co., Cosiville, Utah Sullivan Machinery Co., Michigan City, Ind. (drilling operations Apr. 10. 1042 Driller. 631 West Fork Collieries, Inc., Fairmont, W. Vs. Apr. 27, 1942 Cost. 124 632 Triangle Coal Co. (Arthur mine), Lost Creek, W. Vs do Do. May 12, 1942 Nonmetallo The Colorado Purl & Iron Corporation (deposits st Iron Mountain, in Cedar City, Utah). Apr. 21, 1942 Metallic 633 The General Crushed Stone Co. (quarry operations at Fort Springs, 125 W. Va.). Fort Springs, W. Va. Utah), Cedar City, Utah. Do. Consolidation Coal Co., Pairmont, W. Va.: 126 Vanadium Corporation of America's Associates' (mining operations Apr. 30, 1942 (34 Consolidation mine 22-A May 13, 1942 Coal. in Monticello, Utah), New York, N. Y. Do, nas Consolidation mine 40-A do Do. Drury D. Turner Co. (Turner group, including Last Chance. May 12, 1942 127 536 Consolidation mine 84-B do Do Raven, Canjon Lode, Black Diamond, Oreen River mining 637 Consolidation mine 10-A do Do. district). Utah May 14, 1942 Do. as The Home Construction Co. (Vuncan mine at Sardis, W. Va.), New May 14, 1942 Do. 128 Apex Mining Co. (Apex mine), St. George, Utah Martinsville, Va. (UB Britton Coal Co. (Britian mine), Webster Springs, W. Va de Da. 640 Williams Coal Co. (Swamp Run mine), Junior, W. Va May 18. 1942 Do. VERMONT-PREFACE No. 14 Nonmetaile. WISCONSIN-PREFACE NO. 30 R Green Mountain Mies Corporation, Gassetts, Vt Mar. 11, 1942 White Pigment Corporation (mine in Finrence, Vt.), Proctor, Vt Apr. 3, 1942 Do. 24 Vermareo Lime Ca., Proctor, VL Apr. 23, 1942 De to Coughlin Mining Co. (tine mine at Shullsburg, Wis.), Chicago, III Mar. 10, 1042 Metallic. 25 31 Waukesha Lime & Stone Co., Wankesha, Wis Apr. 24. 1942 Nonmetallic. 52 Eau Claire Sand & Gravel Co. (plant No. 1), Esu Claire, Wis Apr. 27, 1942 Do. VIRGINIA-PREFACE No. 10 a Vinegar Hill Associates, care of Vinegar Hill Zine Co., Cubs City, May A, 1942 Metallic. Wis. Nonmetallir. M Elkhart Moraine Band & Gravel Co., Elkhart Lake, Wis May 14. 1942 Nonmetalle. Riverton Lime & Stone Co., Inc., Riverton, Va. Mar. 11. 1042 33 W, E. Faithorn (Champlon mine), New Diggins, Wa. May 15, 1942 Metallic. 244 245 Hoffruan Bros. Drilling Co, (drilling operations in State of Virginia), Apr. 7, 1942 Driller. Punisutawney, Ps. Cost. 246 Margaret Ann Cost Co., Conaway, Va Apr. 14, 1942 WYOMING-PREFACE NO. 44 247 Apr. 17. 1942 Metallio Glad Mountain Corporation (Glad Mountain mine), Marion, Va 248 The American Rutile Corporation (deposit located at Ashland, Va.), Apr. 28, 1942 Nonmetallis. New York, N.Y. 40 Boyles Bres. Drilling Co., Hall Lake City, Utah (drilling at Rock Mar 6, 1042 Driller. 249 May A. 1942 Drillam Sollivan Machinery Co., Michigan City, Ind. (drilling operations Springs and Superior, W30). for Bethlehem Steel Co., st Cornwall, Va.). MI Do. Sullivan Machinery Co., Michigan City, Ind. (drilling at Bunrise, Mar. 9, 1942 Do. 250 Bullivan Machinery Co., Michigan City, Ind. (drilling operations do Wyo.). for the Maryland Burreu of Mines at Lynchburg, Va.). Nonmetalité as Casper Chrome, 713 National Bank Bldg., Denver, Colo. (mine at Mar. 23, 1942 Metallic. 251 Limestone Dust Corporation, Pombontas, Va May 7, 1042 May 8, 1942 Motallie. Casper, Wyo.). 252 Blue Mountain Operating Corporation (Mount Torry mine), Staunton, Vs. 73052-42-pt. 9-10 Regraded Unclassified 578 SILVER SILVER 579 List No. 1 includes the names, dates, and types of mines to which serial numbers have been granted between Mar. to and May 15, 1948-Continued List No. # includes the names of persons or organisations that were not granted serial numbers, but that were advised to operate under order P-100-Continued ALASKA-PREFACE NO. 50 MAR. 2 TO 31, 1942-Continued Serial Name Date Type of Person or organization Date City and State mine No. Earl Flamion Mar. 10, 1942 Bristow, Ind. do Middleton, Calif. Buffaio Coal Co. (Buffalo mine) Anchorage, Alaska Mar. 21, 1042 Coal. Zack Anderson Kulu Zine Mines, Inc, (Keku Lode claims), Juneau, Alaska Mar. 23, 1942 Metallic. American Distomite Co do Clermont, Fis. 34 Apr. 14, 1942 Coal 8. D. Alexander do Vanenuver, Wash, 55 Anchorage Coal Co., Inc. (Premier mine), Anchorage, Alaska Metallic Valley Agricultural Oypsum Co. Mar. 11, 1942 Shafter, Callf. 36 Red Mountain Chromite, Inc. (Kenal Peninsula chromite deposits, Apr. 15, 1942 17 Standard Asphalt Paving Co., Inc do Spokane, Wash, Seldovis, Alaska), Portland, Oreg. Smith & Sayder do Austin, Nev. Lynch Bros., Seattle, Wash.: do Salt Lake City, Utah. Nickle on Yakobi Island, Alaska Apr. 28, 1942 Do, Silver Rock Mines Co., Inc Chrome on Kenal Peninsula, Alaska Do. Mr. H. B. Senior do Bethel, Coon. 38 do Mr. Harry E. Jacoba do Custar, Ohio. 29 Pike Stone Products Ca., Inc. do Petersburg, Ind. Oscar Dunagan Band & Gravel do Port Washington, N. Y. List No. 8 includes the names of persons or organizations that were not granted serial Newburgh Sand, Stone & Gravel Corporation de Newburgh, N. Y. numbers, but that were advised to operate under order P-100 F. W. Millard & Bon do Ely, Nev. Hedbeng Friedheim & Co do Minneapolis, Minn. Mr. D. E. Flood do Mogolion, N. Mex. MAR. 2 TO 31, 1942 Estill Ice Co do Irvine, Ky. Elkhorn Limestone Co do Georgetown, Ky. Mr. Joe Dudek do Fairpoint, Ohio. Person or organization Date City and State Dixwell Quarries, Inc do Hamden, Conn. Mr. E. 0. Stengel do Milbank, 8. Dak. Kaboka, Mo. Cittadino Quarries do Utics, N.Y. Mr. W. P. Stevensin Mar. 2, 1942 Bryan Monroe Co do Raleigh, N. C. Mr. Louie Ewarts, Sliver Queen mine do Smelterville, Idaho. Mr. N. L. Brown do Sllver City, N. Mex. Mario Pendell Co., Ine do Needham Heights, Mas. Baltimore Brick Co do Baltimore, Md. Yemms Bros do Haverhill, Mass. The Western Limestone Products Co Mar. 12, 1942 Omaha, Nebr. Superior Lumber Co do Detroit, Mich. Mr. Garret Van Decker do Fairlawn, N. J. Mr. C. E. Neuenachwander do Deepwater, Mo. Mr. Carl B. Temple do Kingsville, Md. Laddsdale Cost Co do Eldon, Iown. Stroup Bros do Warren, Obio. F. & B. Coal Co do Blackwood, Va. Standard Flint & Spar Corporation do Trenton, N. J. Walter Pitman Mining Co Mar. 5. 1042 Spruce Pine, N. o. Porter Brown Limestone Co do SpringBeld, Tenn. United States Quarry Tile Co do Canton, Ohio. D. W. Overocker, Inc do Burlington, Vt. Rohm, Bros. Cost Co do Blx Mile Run. Pa. North Shore Sand & Gravel Corporation do Port Washington, N. Y. National Chemical Products Co do Rapid City, 8. Date Northern Feldspars Corporation do West Rumney, N. H. Mr. James E. Kinney do Scranton, Pa. McKinney & Whitlow Sand Co du Stephenson, W. Va. Mr. Harold Jennings do Coshocton, Ohio. Mr. Leslie Mohr do Bellefontaine, Ohio. Harrison Bros. Co do Tacoma. Wash. Martin & Elrod do Smith Grove, Ky. Mr. R. C. Fjeldsted do Salt Lake City, Utsh. Lutesville Sand & Gravel Co. do Cape Girardosu, Mo. Mr. John J. Cable do Holsopple, Pa. Little Rock Stone Products Co do Heber Springs, Ark. Berkeley L. Bunker do Reno. Nev. Indiana Gravel Co., Inc do Indianspolis, Ind. Badger Coal Co do Douglas, Wyo. Grand Canyon Lime & Cement Co do Los Angeles, Calif. Oakwood Mining Co Mar. 6, 1942 Dellroy, Ohio. M. J. Gllpatrick Construction Co do Riverton, Wyo. Moorefield Township Gravel Co do New Moorefield, Ohio. H. E. Fletcher Co. do West Chalmsford, Mas. Maudlin Construction Ce do Webster City, lows. Elkhart-Moraine Sand & Oravel Co do Elkhart Lake, Wis. Kiss Coal Co do New Lexington. Ohio. The Crystal River Rock Co do Leesburg. Fls. Green Township Gravel Co do Cedarville, Ohio. Crushed Rock Products, Inc do Schenectady, N. Y. Godoway Bros. Coal Co do Barton, Ohio. Mr. R.J. Cremen do Curtis Bay, Md. Ollmour & Joties Coal Co do Somerset, Pa. Colonna & Co., Ine do New York, N. Y. Durango Chamber of Commerce do Durango, Colo. Berube Bros de Fall River, Maas. Buck Road Coal Co. do Edwardsville, ni. Baugh Cost Co do Mendota, Mo. M. P. Brochetti Coal Co do Benesette, Pa. Mr. W. 0. Watson do St. Clairsville, Ohio. Culbert L. Olson Mar. 7, 1942 Sacrameuto, Calif. Volo Mining Co do Placerville, Calif. Norris Coal Co do Peckville, Pa. Steiners Washed Hand & Gravel Co Mar. 18, 1942 Laura, Ohio. Manufacturers and distributors de Pueblo, Colo, Standard Paving Co do Tulsa, Okla. El Dorado Mine Operators Association do Las Vegas, Nev. Soldier Canyon Mine do Price, Utah. Mr. John C. Davis, president do Denver, Colo. Smith Material Co do Camp Hill, Pa. Southern Products & Silies Co Mar. 9, 1942 Lilesville, N. C. Richardson Cost Co do Greenwood, Ark, Baxon Coal Corporation do Williamsburg, Ky. Mr. c. Wübert Roeder do Muncy, Pa. Royal Development Co do Leavenworth, Wash. Red Rock Quarries, Ltd do Vallejo, Calif. Lytle Brus do Cleveland, Ohio. Albert Partion Salt Co do Redmond, Utah. C. F. Lester Fluorgar Co Princeton, Ky. Nelson & Blonn do Chula Vista, Calif. do Nash Brick Co de Rocky Mount, N. C, Jackson di McCue do Mt. Pleasant, Ohio. Hairbager Coal Co. do Wampum, Pa. Frederick Link Sons do Halethorpe, Md. Gravel Products Corporation do Buffalo, N. Y. Kohler Bros. Band & Gravel Co. do Waukesha, Wis. Garretts Mine de Pennington Gap, Va. The Junetion City Clay Co do Junetion City, Ohio. Fairview Coal Co de Bellaire, Ohio, Gorza Bros. Blaine Coal Co do St. Clairsville, Ohio. Blandburg Coal & Supply Ce do Gill & Wood do Norristown, Pa. Altoona, Pa. Aisted Coal Co do Flemington, W. Va. Dennis Materials Co do Kirkwood, Mo. Woodworth Gravel Co Woodworth, La Mr. Eugene L. Campbell do Summersville, W. Va. Mar. 10, 1942 Wilbert M Ining Co., Ltd Salt Lake City, Utah Brown Cost Co do Nowata, Okla. do Vermont Marble Co. Proctor, Vt. Blandburg Cost & Supply Co do Altoona, Pa. do do Amyaste, Mo. M. C, State do Albany, Oreg. Auxvasse Quarry Co Silver Horn Mine do Wendover, Utah. Mr. Fred Simmering Mar, 14. 1942 South Webster, Ohio. Saleway Cost Co Bokosbe, Okls. Mid-Continent Mercury Producers do. Hot Springs, Ark. do Mr. W. H. Romine do Geyser Marion Gold Mining Co din Halt Lake City, Utah. Davenport, Iown. Randolph Valley Cost Co Goshocton, Ohio. D. L. Bradley Coal Co do Moberty, Me. de Parsons Brns Berghols, Ohio, Mr. Morbert Wolbert Mar. 16, 1942 Snydersburg, Pa. do H. L. McKinney Wilkinson Bros. Coal Co do, New Philadelphia, Ohio. de Squib, Ky. Miller & Schock Whittaker & Gooding Co do Plymouth, Mich, do Tamaqua, Pa Hulman & Co. Terre Haute, Ind. Westfield Clay Products Ce do Westfield, Mass. do Houston & Bank Sand Co Houston, Tes. West Lake Quarry & Material Co de Hobertson, Mo. do 580 SILVER SILVER 581 List No. ! includes the names of persons or organizations that were not granted serial List No. 2 includes the names of persons or organizations that were not granted serial numbers, but that were advised to operate under order P-100-Continued numbers, but that were advised to operate under order P-100-Continued MAR. 2 TO 31, 1942-Continued MAR. 2 TO 11, 1942-Continued Person or organization Date City and State Person or organization Date City and State Waukesha Lime & Stone Co Mar. 16, 1942 Waukesha, Wis. Mr. Clayton Wisseman Mar. 20, 1942 NorthFork, Calif. do Coalton, W. Va. Siventer Bros do Boswell, Pa. Welbern Stone Co. do Evanaville, Ind. Mr. Edward H. Shaulis de Howard Tackett & Sons do Flat Woods, Ky. Walsenburg, Colo. Sampson Coal Mining Co Sobleskie Coal Co do Jessup, Pa. de Nobbstown, Pa. Gene Riccardo do Mr. James Roy, owner Dunmors, Pa. do Burkesville, Ky. Pace Crushed Stone Co. do Compton, Calif. Regro Bros. Coal Co do Worthington, Pa. Own Truck A Materials Co Castle Date, Utah. Merritt Coal Ce do Drakasboro, Ky. do Ollphant Coal Co Jones Cost Co. do Old Forge, Fa. do Johnstown, Pa. Neatrour & Knipple Gianforcaro Coal Ce do Archbald, Pa. de Jackson, Ohio. Wesley MeKitterick Co. Dorton Elkborn Coal Co do Dorton, Ky. do Mr. Lester Moore East Fultonham, Ohio, The Consumers Sand Co. do Topeks, Kans, do Montgomery Lime Co Christiansburg, Va. San Francisco, Calif. Bartley Coal Co. de Hellier, Ky. do Mission Quarry Chi Albanesi Coal Co do Dunmore, Pa. do Mr. Willis E. Miller Clarksburg, Pa. Morraro Coal Co Mar. 21. 1942 McNees, Pa. do Melcher, Iowa, Melcher Fuel Ce Williams Lime Manufacturing Co Mar. 24, 1942 Knoxville, Tenn. Maple Lane Coal Co do Steubenville, Ohio, Roche Harbor Lime & Cement Co do Roche Harbor, Wash M. & M. Mining Co do Simpson, Pa. New England Lime Co do Adams, Mass. The Lorsin Washed Sand Co do Lorain, Ohio. The Gulf Dolomite Co do Haines City, Fla. Lilly Valley Cost Co do Lilly, Pa. M. A. Gammino Construction Co do Providence, R. I. Mr. Malt 8. Holbert do Gebo, yo. Franklin Mineral Product Co do Franklin, N. C. Lawton Glass Sand Co do Lawton, Ky. Fernald & Gray Quarrier. Inc do Tarpon Springs, Fls. Holly Mines do Rush, Ky. Cougar Hill Mine de Ibopah, Utah. Hagerty Coal Co do Uniontown, Pa. Mr. Harold F. Colvin de Blossburg, Pa. Gilmore Coal Co do Jackson, Ohio. Bennett-Clark Co., Inc do Maongdoches, Ter. Fort Scott Hydraulic Cement Co do Fort Scott, Kans. Athletic Mining & Smalting Co. do Ft. Smith, Ark. Economy Cost Co do Harrisburg, Pa. Wichita Flint Gravel Co Mar. 25, 1942 Wichita, Kans. Corbin Cost Co. do Canton, Ohio. Susquehanna Sand & Gravel Co., Inc do Highspire, Ps. Central Cost Co do Fairmont, III. Smith Petersen & Co do Reno, Nev. Carbonate King Zine Mine do Mountain Pass, via Nipton, Calif. E. F. Schultz and H. E. Brunson do Gold Hill, Nov. Cape Girardeau Sand Co de Cape Girardeau, Mo. Rockaway Quarry, Inc. do Rocksway Beach, Calif. Mr. E. P. Butler de Ada, Okla. Mr. z. Ristr do Douglas, Arit. Buckley Sand & Gravel Ce do Chiengo, III. McKenney Drilling Co do Black Rock, Ark. Brunn Construction Ca do Kansas City, Mo. Mr. À. H. McCreary do Albuquerque, N. Met. Mr. K. H. Baxter do Brisbin, Pa. Millers Creek Colleries do Paintiville, Ky, Wm. Bambi & Sons do Norristown, Pa. Mr. James Keeth do Spokane, Wash. 8. C. Yingling Mar. 17, 1942 Evansville, Ind. Johnson Sand & Gravel Co do Vandalia, Ohio. Tri-State Minerals Co do Los Angeles, Callf. Mr. Charles F. Hensel do Ubricheville, Ohio, 81. Jude Mining Co do San Francisco, Callf, John Granger & Sons Coal Co do Glassport, Pa. Scotin Mining Co do Sunbury, Pa. Gabbert Coal Co. do Morgantown, W. Va. George L. Rock, Inc do Cincinnati, Ohio. Engle & Albright do Salisbury, Ps. O'Connor Coal Co do Cambria County, Pa. The Diamond Grit Co do Baltimore, Md. Mr. C. G. MeCormick do Chicora, Pa. A. Aindi & Bons do New Britain, Conn Maneguld Stone Co do Milwaukee, Wis. Emmet Q. Yates, special Mar 26, 1942 Carson City, Nev. Lesmer & Hunter do Dunlo, Pa. Three Fork Coal Co. do Ellamore, W. Va. Langhorne & Langhorne Co do Huntington, W. Va. Steel Service & Bales Co do Chicago, III. Kinney Coal Mine do Albuquerque, N. Mex. Pacific Sulphur Co do Los Angeles, Calif. Connolly Coal Co de Luterne, Pa. The Murphy Coal Co do Birmingham, Als. Buffalo Band Ca., Ine do Buffalo, N. Y. Imperial Salt Co do Loi Angeles, Callf. Blackhawk Coal Co do Darlington, Pa. Mr. E. c. Guy do Newland, N. C. Geo. F. Bevil Gravel Co do McAllen, Tex. George Coal Co do Gallup, N. Mex. The Aluminum Flake Co do Barberton, Ohio. Ducey & Attwood Rock Co do E. Pasadena, Calif. Alabama California Gold Mines Co. do Auburn, Calif. Dixon Construction Co do Centerville, Town. The Whiteball Cement Manufacturing Co Mar. 18, 1942 Philadelphis, Ps. Mr. A. J. Deters do Bowling Green, Mo. Woodbury Trap Bock Co., Inc do Torrington, Conn. Condor Mine do Waxhsw, N. C. Lawrence B. Vollmer do St. Marys, Pa. City of Burbank do Burbank, Calif. Tygart Limestone Co do Lawton, Ky. Cherokee Octire Co do Carterrville, Gs. Skelton & Wiecks do Toledo, Oreg. Chapman Gravel Co do Durand, Mich. St. Mary's Sewer Pipe Co do St. Marys, Pa. C& H Mining & Milling Co do Weldon. Callf. Mr. John McDowell de Palisade, Colo. Bingle Brick Co do Waussu, Wh. Neuman Sand & Supply Co do York, Pa. L. M. Baur Mining Co do Montgomery City, Mo. Mr. 0. B. McSorley do Newark, Mo. Acme Brick Co do Fort Worth, Tex. C. T. Wheeling & Bon do Franklin, Pa. West Branch Sand & Gravel Co., Ine Mar. 27, 1942 Williamsport, Pa. K & M Coal Co do Bronaugh, Mo. Superior Coal Mine do Linton, Ind. Horton Stone Co. do Springfield, Mo. Southern Mines & Minerals Co de Chicago, III. Colonial Clay Products Co New Brighton, Pa. Sillica Sand Co. do Knoxville, Tenn. do Roy Coulon & Richard Coulon do Oasis, Calif. A. Songivanni & Sons do Meriden, Conn. Brookdale Coal Co Mineral Point, Ps. Pine Valley Coal Co do do 81. Marys, Pa. Mr. John Boyle do Tamaqua, Pa. Page Cooperative Lime Association do Lursy, Va. Mrs. J. Breen Gravel Co Grand Rapids, Mich. Norfolk Supply Co., Inc do Onley, Va. do Yokom Line Quarry Mar. 19, 1942 Jonesville, lows. Newburgh Cost Co do New burgh, Ind. Southern Brick Co Pontotoc, Miss. Magle City Coal Co do Tulsa, Okla. de Roy 8. Imbrie Shackelford Coal Co de Barwick, Ky. do Butler, Pa. A.W. Hudson Pioneer Quarry & Supply Co do Los Angeles, Calif. do Vigus, Mo. Abram Clesson Pike Stone Products Co Petersburg, Ind. do Palmyrs. N. Y. do Peekskill Mason's Supply Co., Inc Peekskill, N. Y, Cushing Stone Co., Inc do Schenectady, N. Y. do Crown Coal Co Gelstown, Pa. do LA Follette, Tenn. Mr. 1. E. Paul (Paul mine) do Buckeye Mining Co High Test OII & Gas Co do Lone Plon, Calif. do Paintaville, Ky. W. G, Brown & Sons Gerwing Coal Co Exchange, W. Va. do Crooksville, Ohio. do Bonded Coal & Fuel Co DI Laura Stone Co do Allentown, Pa. do Albion, N, Y. Colonial Band & Stone Co New York City, N. Y. Alfred Atlas Gravel & Sand Corporation do Alfred, N. Y. do Mr. M. A. Wright Mar. 28, 1942 Berkeley, Calif. Mr. Edwin Bebermeyer do New Haven, Mo. SILVER SILVER 583 582 List No. / includes the names of persons or organizations that were not granted serial List No. 15 includes the names of persons or organizations that were not granted serial numbers, but that were advised to operate under order P-100-Continued numbers, but that were advised to operate under order P-100-Continued MAR. 2 TO 31, 1949-Continued MAR. 2 TO 31, 1943-Continued Date City and State Person or organization Date City and State Person or organization Mar. 28, 1942 Oursy, Colo. Beverly Hills, Callf. Bird Mining Ce., Ine Mar. 31, 1942 Big Spring, Ter. Mr. Ralph B. Wright do Belmont Load Mines do Kly, Nov. Whedon Manganese Mines do Las Cruces, N. Mex. do Frank Vallakin and Associstes Hornitas, Calif. Mr. F. A. Bachleb Bt. Helena, Callf. do Red Cloud Mines, Inc Antolini Coal Co do Harding, W. Va. do Culver City, Calif. do Mr. N. C. Aldo Bishop, Calif. Mr. A. B. Miner de Ban Francisco, Calif. Lone Tree Manganeso Mining Co do Tarentum, Pa. Kutsch Coal Mine Ka-Mi-Tin Consentrating Corporation do Lincolnton, N. c. APR. 1 TO 30, 1942 do Nogales, Ariz. Jefferson Mines, Inc do Butler, Pa. Mr. Roy S. Imbrie do Oglestown, Pa. Southern Mining Co Apr. 1942 Picher, Okla. Mr. John Desort do Yatesville, Pa. Smith Crane Mine do Winston, N. Mer. Angelo & Lombardi Coal Co do Denver, Colo. Mr. W. H. Richards do Overland Park, Kans. Base Metal Corporation Mar. 30, 1042 Osceola Mills, Pa. Pelican Mining Co. do Picher, Okla. Wilks Coal Co do Butler, Pa. Osk Clif Band & Graval Co. do Dallas, Ter. Tuck & Miller do Challis, Idaho. Needmore Mining Co. do Picher, Okla. Mr. W. B. Sweigart Michigan City, Ind. Mahoning Mining Co do Rosiclare, III. do Sullivan Machinery Co do Sturgeon Bay, Wis. Leman Machine Co do Portage, Pa. Sturgeon Bay Co do Oakland, Calif. Lavrion Mining Co do Joplin, Mo. Smith & McCollum do Forty Fort, Pa. Jones & Oldham Stone Co do Georgetown, Ky. Frank B. Sgoriots' estate do Sugarcreek, Ohio. Iowa-Missouri Mining Co do Webb City, Mo. Service Coal Mine Nevada City, Callf. Haughton Bros do Banger, Callf. Mr. Frank Finnigan, Santa Francisca Mining Co do do Baton Ronge, La. Hawthorne Studge Co do Albs, Mo. Bandy Creek Gravel Co Seattle, Wash. V. Cye Cox do Fallon, Nev. Priestley Mining & Milling Co do do Houston, Tex. Cowboy Coal Mine do Rockville, Ind. Parkers Bros. & Co., Inc do Three Springs, Pa. Calleo Tungsten Co. do Bboebone, Nev. Painter & Dell. Long Beach, Cabl. Brisco Mining Co do Webb City, Mo. do Mr. Geo. W. MeIntyre Ban Francisco, Cellf. Apex Mining Co do St. George, Utah. Mountain Copper Co., Ltd do do Coshocton, Ohio, A. & C. Mining Co. do Picher, Okla. Arthur Mobley do Blythe, Calif. Pascock Mining Co., Inc. Apr. of 1942 Ashland, Ky. Mine Development Co do Lewistown, Pa. Madelyn Fischbsch, trustee Mifflin Band Co. de Baltimore, Md. Monticello Canyon Development do Hot Springs, N. Mer. William Meyer & Bons do Opelika, Als. The Lincoln Coal Mining Co do North Lawrence, Ohio. Meadwell Lime Corporation Pínos Altos, N. Mer. Black Range Development Co do Sante Fe, N. Mer. Manhattan Leve do do Grundy, Va. Mr. John P. Herndon do Silver City, N. Mex. Lynn Camp Coal Corporation do Benton, Wis. Dominio Lombardi do Avoca. Pa. Little Tom Mining Co Abbie E. Lanaberry & Bon do Woodland, Pa. Stram & Domestic Coal do Wellsboro, Pa. Kay Cosl Mining Co do Everett, Pa. Minnie Moore Mine Development Co Apr. 3, 1942 Botse, Idaho. Mr. Lynn W. Smith, Box 81, care of Howe Sand Co do Holden, Wash. Bouthwest Lead & Zine Co do Los Angeles, Callf. do Morgantown, W. Va. Smith & McDonald de Alpine, Tenn. Hall Coal Co., Mr. Guy A. Hall Los Angeles, Calif. Small Lessing Co. do Wallace, Idaho. T. J. Hargerty Mining Co., Inc do do Payette, Idaho. New Verde Mines Co do New York, N. Y. Mr. John Glass Kellogg, Idaho. Blue Bucket Mine do Winnemuces, Nev. Mr. John B. George de Fernold Quarries, Inc de Tarpon Springs. Fla. Midwest Mines, Inc do Monterumms, Summit Co. Ean Claire Sand & Gravel Co do Eau Claire, Wis. Locarno & Simon Mines do Callente, Calif. do Los Angeles, Calif. Hilarity Mining Co do Kellogg. Idabo. Defense Metals Co do Cleveland, Ohio. Engineers Gold & Silver Mining Co do Carritoxo, N. Mer. The Cuyahoga Sand & Gravel Co Alderpoint, Callf. Bouth Peacock Mine, John A. and L. A. Dorland do Cuprum, Idaho. The Crossman Co do Carolina Mien Mine, Mr. James Edwards Kingsport, Tenn. Mr. V. Cye Cor do Fallon, Nev. do do Zanesville, Ohio, Mr. Geo. Blow do New York, N. Y. Black Creek Cost Co do Fair Oaks, Calif Birchfield & Dunagan do Deming, N. Mer. Mr. Cheo. H. Beers Whitley City, Ky, Belmont Cinnabar Mining Co do Tenopah, Nev. Barren Fork Fuel Co do Mar. 31, 1042 Plattesville, Wis. Mr. Henry Arneson do Great Falls, Mont. Victory Mine Carson City, Nev. Mr. Wm. Wardman Apr. 4, 1942 Wanpum, Ps. Valley View Mines Co do Utah Alloy Ores, Inc Columbus, Ohio. Mr. W. A. Stansberg do Dennison, Ohio. do Los Angeles, Calif. Howard Coal Co do Ottomws, Iowa. Tungsten Mill do Toronto, Ohio. Mr. V. E. Beck do Kelly Station R. D. 1, Pa. Starkey Coal Co do Alexander & Wise, Inc do Los Angeles, Callf. Mr. James E. Small do Wallace, Idaho. Mr. Chas. H. Segenstrum Honors, Calif. World's Fair Mines Co Apr. 6, 1942 Harshaw, Via Patagonia, Arts. do Goodsprings, Nev. Williams Mining Co do Idaho Springs, Colo. Root Zine Mine do Connellsville, Pa. Penman Mines Corporation do Owgrande, Idaho. Mr. Wm. Piccolomini do San Francisco, Callf. Oro Fino Consolidated Mines do Auburn, Callf. Pettigrew, Stafford & Co do Oro Mining Co. Sandpoint, Idaho. Kern Mines, Inc do Ban Francisco, Callf. do Clas-San Francisco County,"Ca Jefferson Mines, Inc do Nogales, Arit. New Trail Mining Co do Harrison-Croesus Mining Co. do Idaho Springs, Colo. New Eldorado Mining Co do Mins, Nov. Los Angeles, Callf, Golden Conqueror Mines, Inc do Manitou Springs, Colo. J. Jerome McLaughlin, lessee do Pacific Palisades, Calif. Consolidated Chollar Gould do San Francisco, Calif. McCloskey Mines, Ine do Money Lease Mine do Currant P. O., Nev. Conqueror Operating Co do Idaho Springs, Colo. Come Back Mining Co do Pioneerville, Idaho. Karpen Coal Co do Lovilia, Iown. Calistoga Mining & Development Co do Los Angeles, Callf. Independent Gravel Co do Joplin, Mo. Bokoshe, Okla. 2. M. Copper Industries, Inc Apr. 7, 1942 Deadwood, B. Dak. Hy-Orade Coal Co do Straitsville Brick Co do New Straitsville, Ohio. N.F. Haren Co. do Beatty, Nev. Fonter Bros. Dixiana Band Co do Hayes Mine (D. F. Paine estate) do Ely, Nev. Winnemuca, Nev. Ruby Gulch Mining Co do Zortman, Mont. Grayson Mercury Mine do Postmaster Mine do Prescott, Aris. Mr. A. J. Gard do Terlingus, Tex. Mr. T. B. Petersen do Ransburg. Calif. Fields Branch Coal Co do Grayson, Ky. Pacific Quigsliver Mines do Avenal, Calif. Ely Gold Mining Co do Ely, Nev. Pace Crushed Stone Co da Burkerville, Ky. Dorris & Cuddeback do BakeraBald, Callf. Overlook Mining Co do Salmon, Idabo. Mr. V. Cyp Cor do Fallon, Nev. North Mocossin Mines Syndicate do Lewistown, Mont. Mr. Tom Christensen do Fairbanks, Alasks. The McLaren Gold Mines Co do Dayton, Ohio Burton, Wessel Clark do East Ely, Nev. 584 SILVER SILVER 585 List No. ! includes the Names of persons or organizations that were not granted serial numbers, but that were advised to operate under order P-100-Continued List No. e includes the names of persona or organisations that were not granted serial APR. 1 TO 30, 1942-Continued numbers, but that were advised to operate under order P-100-Continued APR. 1 TO 30, 1949-Continued Person or organization Date City and State Person or organization Date City and State Apr. 7, 1942 Milroy, Ind. McCorkle Stone Co. do Oakland, Calif. Mr. Albert B. Long do Fresno, Calif. Fanny Rawlings Mining Co Apr. 10, 1942 Leadville, Colo. Kings River Mining Co do Cleveland, Ohio. Monumental Mines do San Francisco, Calif. Kalser-Nelson Co do Engene, Oreg. Leader Manganese Mining Corporation do Logan, Utah. Inter-City Sand & Gravel Co do Tecumseb, Kani. Lansing Ellver Lend Mining Co do Wallace, Idaho, Howard Henry Quarries do Sacramento, Calif. H. Hurbes-Roberts do Ban Antonio, Tex. Holfling Bros do Los Angeles, Calif. Hilarity Mining Co do Wallare, Idahe. Mr. W. W. Hartman do Butte, Mont. Mi- D. Funberg do Ht. Louis. Mo. Grubstake Mine do Phoenix, Aris. Helle Eldridge Gold Mines Apr. 7, 1942 Canton. 8. Dsk. Greenhorn Mining Co do Silver Star, Mont. Do Apr. 10, 1942 Deadwood, 8. Dak. Green Campbell Mining Co do Spokane, Wash. Trentham Mülling Co Apr. 11, 1942 Picher, Okla. Golden Red Mining Co do Seattle, Wash. Mr. Jacques K. Stanland do Los Cruces, N. Mex. Gilmore, Mines, Inc do Denver, Colo. Bilver Horn Mine do Wendover, Utah. Mr. John B. Furstenberg: do Neihart, Mont. Mr. Sherman 8. Smith do Giants Pass, Oreg. The Florence Co Exploration Synidcate, Inc do Salt Lake City, Utah. William F. Schwarz & Son do Baltimore, Md. do Dillon, Mont. Mr. John Ross do Custer, 8. Dak. Ermont Mines, Ine do De Lamar, Idaho. Richmond Coal Co do North, Va. De Lamar Milling Corporation do El Dorado County, Calif. Nichaus Coal Co do Lamar, Mo. Consumers Mines. Inc do Pleasant View, Ky. The Cleveland Builders Supply Co. do Cleveland, Ohio. Moses & Gorman do San Francisco, Callf. The Hamilton-Trenper Coal Co do Cambridge, Ohio. Cherokee Mine do Marion, Ky. Griffs & Morrow do Greenwood, Ky. Mr. Chas. L. Cassady The California Hidden Treasury Mines Co Denver, Colo. James N. Ford Coal Co. do Hartford, Ark. do do Portland, Oreg. Dorton Elkborn Coal Co do Dorton, Ky. Buffalo Mine do Mr. Donald E. Clementa do Denver, Colo. Englewood, Colo. The Argo Mining, Drainage do Georgetown, Colo. Frank Busheks do North Adams, Mass Anglo Saxon Mines, Inc Alabama-California Gold Mines Co do Seattle, Wash. White Coal Co Apr. 13, 1942 Hima, Ky. Acme Fireproof Hlock Co Lima, Ohio. United Coke Co de Scottdale, Pa. do Accord Lime Industry do Accord, N. Y. Troy Coal Co do Crooksville, Ohio Milton. Pa. Simpson Coal Co do Ottumwa, lows. Geo. J. Yocum Apr. 8, 1942 M. R. Shank. Inc do Lineolnton, Gs. Van Patten Bros do Bonaparte, Iowa. Pond Creek Mining Co., Inc do Stone, Ky. Whitaker's Mines do Norton, Va. Oben Mining Co. do Tulsa, Okia. Troy Gravel Co do Troy, Ohio. New Oren Briar Coal Co do Hime, Ky, Standard Gravel Co do Lexington, Miss. Maple Ridge Mining Corporation do Maple Rideo, Pa. Staley Coal do Rangely, Colo. M. & H. Mining Co do Potosi, Wis. Sims Coal Co de Perry, Mo. Linwood Stone Products Co do Davenport, lows. Joe Simnson Coal Mine de Ozark, Ark. Abbie E. Lansberry & Bon do Woodland, PA. J. H. Scott Co do San Francisco, Calif. Port Washington, N. Y. Humphreys Coal Corporation do Denver, Colo, North Shore Sand & Gravel Co do Hammack Coal Co do Sullivan, Ky. Mr. 0. L. Neyland do San Antonio, Tex. Osear M. Gray & Son do Butler, Md. Napeo, Ine do Burbank, Callf. Gray Engle Mining Co do Evergreen, Colo. Mo. Limestone & Pertilizer Co do Sedalia, Mo. Glm Coal Co. do Plains, Pa. Miller & Schook do Tamaqua, Pa. Dunlevy Coal Co. do Dunlevy, Pa. Mr. Sa ford B. Meyerson do Cleveland, Ohio. Del Carbo Mining Co do New Marshöeld, Ohio, Merred Sand & Gravel Aggregate Co. do Winton, Callf. Mr. Ralph Davis do Leadpoint, Wash. Lawrence County Limestone Co do Black Rock, Ark. Davis Fork Co do Shinnston, W. Va. Leger Blue Gem Cost Co do Williamsburg, Ky. Dandy Coal Co do Jessup, Pa. Landa Coal Corporation do Delbarton, W. Va. Crown Point Spar Co., Inc do Crown Point, N. Y. Lanwehr Stone Co. do Ottowa, Ohio. Boyles Coal & Supply Co. do New Castle, Pa. Kennedy Mining & Milling Co do San Francisco, Calif. Absecon Sand & Gravel Co do Atlantic City, N. J. Thomas West & Son do Ashland, Ky. Wash Sand & Gravel Co., Inc Apr. 14. 1942 New Orleans, LA. Jay Kay Mining Co do Henderson, Ky. Veango Limestone & Coal Co do Emlenton, Pa. Jackson Stone & Coal Co do Jackson, Ohio. Tyson Chrome Mines, Ltd do Ban Francisco, Callf. Golden West Quarry do San Francisco, Calif. Trafford Coal Co de Trafford, Ps. Gianfonence Coal Co do Archbald, Pa. Sweeney Coal Co de Hopewell, Pa. East Steubenville Coal Co do Collier, W. Va. Surmi Mines, Ine do Grest Falls, Mont. Cunningham Coal Co do Columbiana, Ohio. Steam Fuels Co. do New York, N. Y. Clifford J. Cox do Angola, Ind. Spring Run Coal Ca do Wilkinsburg, Pa. City of Chatranooga do Chattanooga, Tenn. Somserset Crushing Co do Bernardaville, N. Y. Mr. A. A. Childress do Picher, Okla. Sand & Gravel Co do Lesington, Min. Century Granite Co do Bnyder, Okls. The Prince Manufacturing Co do Howmanstown, Pa. Boardman Coal Mine do Gallup, N. Mex. Pine Top Mine do Globe, Arit. Belma Corporation do Fort Wayne, Ind. Wm. Piccolomini do Connellsville, Ps. Balsu Mining Co. do Wellsville, Ohio. Joe Perkins do Davy, W. Vs. Ari-Butte Operating Co do Sombrero Butte, Art. Old Hemer Mine do Lakeview, Idaho. Wukrlie Bros. Coal Co Apr. 9, 1942 Stubenville, Ohio, Meramae Minerals, Ine do Cleveland, Ohio. Statesville Brick Co. do Statesville, N. C. Frank Jones & Co. Coal Co. do Brasil, Ind. Smicksburg Lime Co do Smicksburg, Pa. Von B. Johnson do Snow Shoe, Pa. Lee 0. Shaw do West Lafayette, Ohio. Jahncke Service, Inc do New Orleans, La. Rellance Whiting Co do Alton, III. Mr. Ismes O. Greenan do Reno, Nev. D. P. Mather & Son Sand Co. do East Hartford. Conn. Craig Coal Co do De Boto, III. Logan County Quarry do Russellville, Ky. Cinel Coal Co. do Masontown, Pa. Kish Coal Co do Powhatan Point, Ohio. Chester Granite Quarries Co. da Chester, Mass. Halquist Lannon Stone Co do Bussex, Wis. Mr. C. C. Carter do Ashtsbula, Oble. Courtney & Plummer do Neenah, Wis. Black Star Coal Co do Sherrodaville, Ohio City of Burlington do Burlington, N. C. F. H. Bailey & Bons do Kenton, Ohio L. A. Wilson Engineering Works Apr. 10, 1942 Veyo. Utah. Anthony Posquarette do Strattanville, Pa. Taber Parker Mining Co do Winnemuces, Nev. C.T. W Wheeling & Son Apr. 15, 1942 Franklin, Ps. Silver Circle Mining Co do Spokane, Wash. Tipton Gravel PR de Nashville, Ohio Mr. J. G. Sawyer do Hoise, Idaho. Talmadge Haynes do Charleston, W. Vs. Sandoro Mining Co Los Angeles, Calif. Stiles A Son do Lebanon, Mo. do Mr. James B. Pell do Coursegold, Calif. SILVER SILVER 587 586 List No. / includes the names of persona or organisations that were not granted terial List No. la includes the names of persons or organizations that were not granted serial numbers, but that were advised to operate under order P-100-Continued numbers, but that were advised to operate under order P-100-Continued APR. 1 TO 30, 1942-Continued MAY 1 TO 18, 1042-Continued Person or organization Date City and State Person or organization Date City and State Apr. 15, 1942 Marysville, Tonn. Mercer County Road Department May 1, 1942 Harrodsburg, Ky, Sam Lambert & Sons do Flomaton, Als. Disle Band & Gravel Co Tracy, Town Lupper Coal Co do Salem, Ohio. do Waukon, Town Mr. Edwin H. Kriege do Union, Mo. Crow Coal Co do Cartersville, Ga. Grainger Stone Quarry do Weahington o. H., Ohio. Mr. Andrew Bremshn Apr. 16, 1942 L. 1. Boott & Co Edwards Bros. Coal Co do New Philadelphia, Ohio, do Do. Mr. Fred B. Zelmore May 2, 1942 Mount Pleasant, Pa. Frank T. Jackson do Greenville, Ky. Harpe Hill Coal Co C. B. Wilkerson do Philipsburg, Pa. do Rockwood, Tenn. Walnut Run Coal Co, do Barnesboro, Pa. Givens & MeCullen do Dixon, Mo. Lemon Cove, Call). J. W. Starck Coal Co. do Philipsburg, Pa. Mr. J. E. Beydler Apr. 17, 1042 Owl Cost Co do Hollsopple, Pa. Sequvia Rock Co do Altavista, Va. New England Lime Co do Adams, Mass. Mr. Geo. M. Rowen de Norten, Va. Gillett Coal Co do Carbondale, Pa. Reed Coal Co do Bedalia, Mo. Crocket Coal Co: do Denbo, Pa. Mr. J. c. Orender do Westminster, Obio Mr. 8. C. Vingling May 4, 1942 Evanaville, Ind. Loy, Creps & Hall do Mystic, Conn. Years Coal Co do Hollsopple, Fa. Lantern Hill Billies Co., Inc do Kinston, N. Y. H. E. Tickhill Cost Co. do Harnesville, Obio. The Hutton Co The Frank Flinn Construction Co., Inc do Dodson, Mo. Mrs. Chas. Smallfield do Kent, Ohio, do Sacramento, Callf. Pete Pettinato do Baltimore, Md. Del Paso Rock Products Co do Portland, Mains. Oswald Bros do Los Angeles, Calif. Cumberland Sand & Gravel Co do Chicago, m. Mr. W. T. Musser do Rural Retreat, Va. Carey Brick Co de Rumellville, Mo. Manley Cooperative Mining Co de Neffs, Ohio. Campbell Bros do Han Francisco, Calif. Lichty Construction Ce de Rawlins, Wyo. California Pent Co do Wickenburg, Aris. Leasing from Wolf Tongue Mining Co do Nederland, Cale. Alos Mine do Corpus Christi, Tex. Mr. Donald 0. Kopecky do Inglewood, Calif. Alamo Band & Gravel Co Casey, III. King Horse Creek Coal Co do Manchester, Ky, do A. & E. Stone Co The Windsor Building Supplies Co., Inc Newburgh, N. Y. Mr. Henry Harris do Depoy, Ky. Apr. 18, 1942 Apr. 20, 1942 Marville, Mont. Hardy Co., Marl Co do Moorefield, W. Va. Moonlight Mining Co Eshbsugh & Sweetzer Coal Co do Mayport, Pa. Oilt Edge Mines, Inc do Deadwood, 8. Dak. do Bristol, Va. do Casey, III. Carico Coal Co Casey Lime & Stone Ce do Red Lodge, Mont. Francis Brennan do Lectonia. Ohio. Burns Coal Mine do Ashcamp, Ky. Wells Coal Co. May & 1942 Bergholy, Ohie. John E. Bartley Leechburg, Pa. W. M. P. Coal Co do Melcher, Town. Andrew and Marie Balbo do Apr. 21, 1942 Batavia, N. Y. Twin City Cost Co. do Do. Western New York Washed Sand & Gravel Co do Seattle, Wash. Southern Elurospar Co do Harrisburg, III. West Cosst Coal Mines, Inc Apr. 22, 1942 Salt Lake City, Utah. Mr. A.J. Raisch do Ban Jose, Callf. Mr. John E. Dooley New Standard Coal Co do Dallas, Iowa. do Yellville, Ark. Mr. Lather H. Cavanter Apr. 23, 1942 Pineville, Ky. Morris Limestone Co do Morris, m. Walland Coal Co New Albany, Ind. Mr. L. T. Long do Perry, Mo. River Coal & Supply Co do Canaan. Conn. Lote Mountain Development Co do Goldfield, Nev. Mr. C. C. Loomis do Glenallen Mo. Mr. C. A. Langford do Gallatin, Tenn. Glenallen (Mo.) plant do Mr. James Keeth Spokane, Wash. Hi-Grit Stone Co do Morgantown, W. Va. do Mr. L. L. Hayes do Washington, Iowa. Mr. Robery Conner do Cambridge, Ohio. Pineville, Ky. Mr. H. W. Gifford do Little Lake, Calif. Weller Fuel Co Apr. 24, 1942 San Francisco, Callf. Gale Creek Cole Co do Wilkeson, Wash- Collier Mine do Feldman Fuel & Supply Co do Baler ville, Ohio. The Standard Sing Co do Youngstown, Ohio, Mr. John E. Dooley do Salt Lake City, Utah. E. L. Bayers Coke Co do Anniston, Als. Dane- Poteau Smokeless Coal Co do Potenu, Okla. The Saleway Rock Co do Tamps, Fla. Bowerston, Ohio. Columbia Foundation Co do Columbia, Tenn. Relehman Cost Co do Blue Star Mines, Ltd. do Los Angeles, Calif. N. R. Garrett, doing business M City Quarry do Columbia, Mo. Blue Ridge Coal Co do Eynon, Pa. Colonial Mining Co. do Joplin, Mo. Blackcreek Limestone Co do Black Creek, Wis. Buckeye Coal & Limestone Co. do Ironton, Obio. W. N. Birchfield do Hellier, Ky. Union City Tile Co Apr. 25, 1942 Union City, Tenn. Mr. Hillard Hartley do Biz Branch, Ky. Miller Cost Co. do Regina, Ky. Alberton & Son Coal Co. do Orrick, Mo. Hardlog Coal Co do Spadra, Ark. Sullivan Machinery Co. May 6, 1942 Michigan City, Ind. Melvin Stone Co do Melvin, Ohio. Agricultural Lime Stone Co do Jackson, Mich. Joseph C. Sgariot Apr. 26, 1942 Luzerne, Pa. River Band & Gravel Co do Pawtucket, R. L Benter & Bartley Coal Co Apr. 27, 1942 Ashramp, Ky. Richton Investment Co do Richton, Miss. Cardinal Gold Mining Co do Tusearors, Nev. Mines Plains Coal Co do Plymouth, Pa. Mr. Adulph Chanceky do Fort Worth, Tex. Jefferson County Quarry do Leuisville, Ky. Varney & Rose Apr. 28, 1942 Road Fork, Ky. Jackson Silles Gravel & Sand Co do Jackson, Ohio. Sheldman Broa do Bloomsburg, Ps. Hornell Gravel Corporation do Springville plant, Salamance, Mike Serge do Franklin, Ps. N.Y. Henry Porter & Co do Allen, Ky. Do do Irving plant, Salamance, N. Y. Oro Mining Co Apr. 28, 1942 Sandpoint, Idabo. Do do Alfred plant, Salamanca, N. Y. Columbia Lead & Zine Mining Co do Spokane, Wash. Hanley Co do Bradford, Pa. Darby Coal Mines do Cumberland, Ky. Donley Brick Co. do Washington, Pa. Seneca Petroleum Co., Ine Apr. 30, 1942 Chicago, III. Crawford Sand & Gravel Co do Meadville, Pa. Mr. Elmer N. Learner do Tuscarawas, Ohio Wm, M. Bronk Coal & Lumber Co., Inc do Hudson Falls, N. Y. Great Northern Iron Ore Properties de St. Paul, Minn Mr. R. 8. Blanton do Altoona, Als. Kern Mines, Ine do Ban Francisco, Calif. Black Dismond Coal Co. do St. Charles, Va. Donors Mining Co., Inc do Nederland, Colo. Hurnell Oravel Corporation do Allegany plant, Salamanca, N. Y. Coalville Coal Co do Streator, 111. Anchor Stone & Materials Co May 7, 1942 Tula, Okla. Cape Fear Contracting Co do Manchester, N. c. American Mineral Co do Cantil, Callf. Alasks-California Gold Mines Co do Auburn, Calif. Woodward Coal Co do Greensburg, Pa. Windber High Grade Coal Co do Windber, Pa. Mr. Forest Warner May s, 1942 Newton, Iowa. MAY 1 TO 15, 1942 Vallecito Mining Co., Inc do Angels Camp, Calif. United States Quarry Tile Co do Parkersburg, W. Va. Twin Buttes Mining Byndicate do San Francisco, Callf. Worlock Stone Co May 1, 1942 Canastota,N.Y. Term Alta Lime Co do Terra Alta, W, Vs. Wagoner Coal Co do Porter, Okia. Shelton Crusher Co do Versailles, Ky. Regraded Unclassified SILVER 589 SILVER 588 List No. is includes the names of persons or organizations that were not granted serial List No. includes the names of persons or organizations order that P-100-Continued were not granted serial numbers, but that were advised to operate under order P-100-Continued numbers, S but that were advised to operate under MAY I TO 15, 1942-Continued MAY 1 TO 15, 1942-Continued Person or organization Date City and State Date City and State Person or organization Tri County Agriculture Lime Co May 12, 1942 Frenchburg, Ky. May 8, 1942 Watson, W. Va. Ragena Coal Co do Centerville, Iown. Stavens & Sons do Opekiska, W. Va. Nastiville Lime & Stone Quarries Co do Glenmont, Obio. Smallwood Stone Co do Do. The Liston Cement Co do Lisbon, Ohio. Smallwood Low Stone Co do Wapakoneta, Ohio, A. M. Hobbs Cost Ce do Hartford, Ark. The Quality Sand & Gravel Co do South Fork, Pa. Mr. Eddie Mae Webb do Central City, Ky. Priscills Coal Co do Bergholz, Ohio. Mr. Garnet M. Wasson May 13, 1942 Sedalis, Mo. Parsons Bros do Lovelock, Nev. Red Wing Sewer Piper Corporation do Red Wing, Minn. Oreana Extension, Inc de Knox Dale, Pa. Carpenter Mining Co de Picher, Okla. William Miller do Mountain City, Nev. Mr. Frank Berner de Washington, Mo. Mill Creek Copper Co do Inloy, Nev. Barfield Sand & Gravel Co do Blytheville, Ark. Mr. Joe E. Mil criting do Bowden, W. Va. Athens Lime & Coal Co do Rupert, W. Va. Monongah Construction Co do Cleveland, Ohio. Gauley Coal Land Co May 14, 1942 Warwick, Mass. Meeco, Inc do Jackson, Ohio. Warwiek Mining Co May 15, 1942 Do. Limerick Mineral Corporation do Salt Lake City, Utah, Richland Peat Mines do Castine, Maine. Lime Mountain Consolidated Tunnelton, W. Va. Mr. B. W. Richardson do do Pouderly, Ky, Whitemore Quality Concrete & Quarry Products Krow Coal Co. May 7. 1942 Staunton, Va. The Melva Cost Co. do Drift, Ky. do Los Angeles, Callf. Disne Construction Ce do Centerville, lows. Western Lime Products Co do Fruita. Cola. Burtons Ford Coal Co do St. Paul, Va. Vidmar Bros do Greenville, Ky, Mr. Harvey Tichenor do Virginia City, Vs. C. W. Rose Coal Co de Mandan, N. Dak. Riverdale Gravel Co do Nucla, Colo. Senator McCarran. Growing out of what has been related here as Nix & Nix do Kansas City, Mo. Midwest Pre Cote Co de West Olive, Mich. to your Board not in anywise controlling the exportation of mine Mr. Ralph Meyers de Nerwood, Colo. Keck Cost Co do Princeton, Ky. machinery, I am going to ask you, would it not be well that your Board Hughett Mining Co do Treeco, Kans. have control over the exportation of mine machinery from this H. D. Sand Co do Ellzabethtown, III. Mr. E. C. Galnes do Silver City, N. Mex, country to foreign countries, in order that you might look with Carl Frymire. do Terre Haute, Ind. Mr. Ralph C. Everson do Goldbar, Wash propriety on the situation and view the situation as you view the Consumers Lime Co do Dungannon, Va. situation at home, as to whether or not the exportation was essential Childress Coal Co do Walsenburg, Colo. Ben Archuleta & Wm. Lotters do Wilkison, Wash. as against the home demands? Apex Cont Co May R, 1042 Hot Springs, N. Mer. Gold Cup Mining Corporation Tunnelton, W. Va. Mr. NELSON. Senator, can I speak off the record? do Preeport Coal Co do East Brady, Pa. The CHAIRMAN. This is off the record. Frazer Coal Mine do Elkton, Vs. Elkton Lime & Stone Co Nelson, Nev. (There was a discussion off the record, after which the following do Diamond Cield Mining Co do Spiro, Okla. Big Four Coal Co Smithfield, Ps. occurred:) do Betchy Coal Co do Six Mile Run, Pa. Mr. NELSON. I would like to state that, naturally, the mining F. Bartela & A. Waits do Reno, Nev. Antimony Producers Co do Colorado Springs, Coin, branch of the Materials Division will be very glad to look after any- Warden Mining Co do Salt Lake City, Utab. thing relating to mining activity when that duty is assigned to them Waid Leasing Co Bouthside Mining Co May 9, 1942 Joplin, Mo. do Milford, Utah. by the War Production Board. Prosper Mining Co Pike Mining Co do Glenwood. Ark. Miller Manganese Mining Co do Emory, Va. Representative WHITE. It is unthinkable that any advantages do Anniston, Ala. John W. Mallory Ore Co that might be obtained in a business or trade standpoint in some Hunt-Craig Mining Co do Baxter Springs, Kans Humphreys Gold Corporation do Denver, Colo. foreign country would be permitted to outweigh the procurement or do Versailles, Mo. J. E. Herndon Flagstaff Bonanza Mining Co do Park City, Utah. production of strategic metals in our own country. You would not do San Francisco, Calif. Mr. E. John Eriksson think that would be possible, would you? Engineers Gold & Bilver Mining Co do Carrizozo, N. Mex. Pagosa Springs, Colo. Mr. Nelson. I do not think it is. C. Tests Dautriger and Associates do Columbus Mining Co. de Columbus, Kans. Carl Junction, Me. Representative WHITE. You are talking now abcut economic war- Carson Mining & Milling Co do Brighter Days Mining Corporation do Chloride, Atis. fare and capturing foreign trade by competing with foreign production. do La Fayette, Gi. Booker & Tucker do Treece, Kans. Now, you would not think that we, for fl. minute, would tolerate a Big Four Mining Co Mr. Anson G. Betts do West Cunningham, Mass. condition that would take advantage of some trade arrangement and W. C. K. Berlin do Denver, Colo. Yarbrough & Hatley do Providence, Ky. curtail the production of strategic materials in this country in order Mr. J, W. Stewart May 11. 1942 Creekside, Pa. to do that? George A. Stoele and Calvin R. Reed do Wellston, Ohio. do Bellefontsine. Ohio. Mr. Lestin Mohr Mr. NELSON. I- do not quite follow you. I think the statement Mellott Bros. Coal Co do Mineral Hidge, Ohio. L. & 8. Coal Co. de London Mills, III. you are making deals with questions that the mining branch has Kolob Manganese Co de Salt Lake City, Utah. nothing to do with. The John W. Karch Stone Co do Celina, Ohio. Jones Gravel & Coal do Newark, Ohio. Representative WHITE. As a policy of the Government, we would Jones Cut Stone Co., Ine do Syracuse, N. Y, B. M. Higginson do Newburgh, N.Y. not want to starve our mining industry at home in producing strategic Hall Hawkins & Son do Richlands, Va. Mr. H. H. Hanenkratt do Kansas City, Mo. materials, to export machinery and equipment in an economic wer, to Mr. Cyril L. Garvey do Osceola Mills, Pa. have a trade advantage in some foreign country, and put some com- Blackwater Mining Co do Blackwater, Mo. Barbour, Smith & Co do Los Angeles, Calif. A. A. Arluck do Vanadium, N. Mex. Regraded Unclassified SILVER SILVER 591 590 petitor out of business that is supplying the same kind of machinery? of those plants, see whether or not they are making things that are Is that not the object? more important than mining machinery? Mr. NELSON. That is 8 very involved question. I am sorry. I Mr. NELSON. If B part of your mining machine plant is engaged in making certain compicated machinery for a battleship, the question can't follow you. Senator THOMAS of Idaho. Doctor, yesterday I raised this question. to be decided is whether that equipment should be made or more I raised it because I wondered how you were able to arrive in order at priorities mining equipment should be made. If a part of & plant is making and the supply and demand of mine machinery of to make parts for tanks, the question arises whether it is more important to priorities possible, when you had another branch the Government make those additional tank parts or make more mining machinery. exporting this machinery to everybody, without your did knowing ask about Senator MILLIKIN. Exactly. I wondered how you would arrive at it. I not it to be Mr. NELSON. I cannot answer the question. it. critical. I asked it to clear up the subject in my own mind. I asked Senator MILLIKIN. But it might also occur in & number of factories what method you used, if you have one department of information the Government that they were making things which your agency might conclude were that is exporting this machinery and you have no about not as important as mining machinery, and in that event, by a diver- sion of their energy, might add to the store of mining machinery? that at all. Senator McCARRAN, The situation presents itself this way to me, Mr. NELSON. But in each case these plants are making munitions in poor way of looking at it, Doctor: That one Federal authority is directly for the Army or Navy or making mine machinery. creating my a scarcity of a commodity by permitting or is allowing its Senator MILLIRIN. Eighty-three thousand items are included in exportation, and the other Federal agency, your own, confronted the subject of munitions, and out of those 83,000 items there is with the scarcity created by the other board and reflecting that probably B large category of items that is not nearly as important as searcity onto the industry that you are fostering. mining machinery. I am merely making B suggestion to you as to Mr. NELSON. 1 cannot say whether that statement is correct. how you might increase your store of mining machinery. Senator McCarran. I would not expect you to. I am making that Mr. NELSON. I can say that I have visited personally the plants of the three largest makers of mining machinery in the United States statement of my own accord. Senator MILLIKIN. Dr. Nelson, how many milling-machinery and that the part of the plant of each one of those makers that is not engaged in making mining machinery is engaged in making direct manufacturers are there in this country? Mr. NELSON. The great majority of mining machinery is made munitions-parts of tanks or items of that type. by somewhere between one hundred and one hundred and fifty Senator MILLIRIN. I most respectfully urge that you think on that subject of whether you can store up more mining machinery by divert- companies. Senator MILLIKIN. Has your agency made any survey of those min- ing such things not as important as mining machinery, if such A situ- ation exists. ing-machinery manufacturers to determine exactly what they are The CHAIRMAN. Are there any further questions of Dr. Nelson? making that is not mining machinery? Mr. NELSON. The makers of mining machinery in most cases are Senator McCarran. I want to say that I do hope you will be pres- either making nothing but mining machinery or mining machinery ent at the next meeting of the committee, Doctor, not that I have any further questions to propound to you, but I would like to have and direct munitions for the Army and Navy. you here to listen to those who will make their statements, because Senator MILLIKIN, That is what I am getting at. Mr. NELSON. The direct munitions that they are making for the they know more about this subject than those of us who are members of the committee. Army and Navy I think are more or less military secrets. Senator MILLIKIN. Then, you have not made a survey of what you term munitions, because "munitions" covers the whole category of STATEMENT OF WILLIAM L. BATT, DIRECTOR OF MATERIALS, WAR PRODUCTION BOARD; CHAIRMAN OF THE REQUIREMENTS the war-supply effort. Mr. NELSON. I am speaking of direct war munitions, such as parts COMMITTEE of tanks, and parts of battleships, and so on. Senator MILLIKIN. Has your Board made a survey? Do you know The CHAIRMAN. State your full name. Mr. BATT. William L. Batt. that that is a fact? Mr. NELSON. We know what most of mining-machinery companies to The CHAIRMAN. Where do you reside? are making. That part of their plants which are not turned over and Mr. BATT. Washington. the making of mining machinery, are being used by the Army The CHAIRMAN, What is your present office? Navy in making munitions, or in the making of machine tools. Mr. BATT. Director of Materials, War Production Board, Chairman Senator MILLIKIN, Could you form your judgment on whether of the Requirements Committee. what they are making, other than mining machinery, is more im- The CHAIRMAN. Just in a sentence or two, give us the background of your experience of the last few years. portant to the war effort than mining machinery? Mr. NELSON. I would say it is a very complicated problem. Mr. BATT. Well, I am an engineer, Senator. Senator MILLIKIN. 1 wonder if you could not, perhaps by a survey The CHAIRMAN. What kind? Mr. BATT. Mechanical engineer and a manufacturer. Regraded Unclassified SILVER SILVER 593 592 The Chairman. What products do you manufacture? Research Council, have appointed & very considerable number of Mr. BATT. I have spent all my life in the ball-roller-bearing busi- technological committees to report specially to us on what can be ness, but I have no detailed knowledge of the mining industry, and done with new processes to beneficiate low-grade ores that have my experience with these problems has been more directly gained as otherwise not heretofore been practical, and we have had some sixty- result of the way in which the Materials Division has come in contact odd reports from them, just on ore extraction processes alone, many with the war program. of which have been used. I am here this morning, I think, at Senator McCarran's suggestion, We have coordinated and consolidated, as far as was practicable, not that I have any statement to make, because I know very little private capital, and there has been a good deal of it spent in the about it. I am very glad to meet with the committee. I have had a development of the mineral resources of the West. rather liberal education in some of the aspects of this situation which There are 40 major mineral projects now going forward under I never had before. Government auspices, and there is $400,000,000 of Government As I say, I have no formal statement, but I have two or three com- money being spent to develop the mineral resources of the West; and ments 1 would like to make, and they arise out of some of the state- 20 depots, I think in 18 States, for picking up certain minerals ments I have heard around this table. I have noted them here. from the little fellow have been established, and those are being ex- One of them is: Prejudice against the mining industry as indicated panded just as fast as it is possible to expand them. by the action of the War Production Board. Next: Not in the inter- Senator McCarran. Do you mind an interruption at that point? est of those Western States. Now, I wish it could be clear to everyone Mr. BATT. Not at all, because you and I have discussed this, and that the War Production Board attempts to take a completely I know you are very much interested in it. dispassionate interest in everything except one, and that is, What can Senator McCarran. What I want to say now is to impress upon be done more quickly to win the war? While we try to avoid all you, if I can-and that is the object of this entire meeting-that if prejudices and try to be as completely dispassionate as we can be, there be something in an order which you have made, which we know we have no feelings about any industry except as to its contribution as the order of March 2, which is retarding further production of the toward winning the war. war essential metals and minerals, would it not be well to eliminate Now, the thing that is not understood by the public is the shortness that from the order, if it can do no injury by being climinated? of these critical materials out of which, for example, mining machinery Mr. BATT. Senator, I have listened to that with great interest, and if there is anything in that order that can be made clear that will is made. When Mr. Nelson puts up to the Requirements Committee of the bring in more of the critical materials which we need, certainly we War Production Board a total of his material needs to maintain such would be the last people to urge the existence of language just because part of the mining industry as is to be maintained, we find there an it happened to be drawn up that way. impressive total of aluminum, amongst other things, copper, various Senator McCarran. I will give you my view, and my view is in & forms of steel, and we find at the same time that to make those parts homely way the expression of others, and I believe it will be corrobo- and that machinery is taking manufacturing space which the Navy rated by those who listen to me. There is in that order as it is now and the Army are more anxious to have. couched in language an element which discourages the discoverer or So it is a positive effort on the part of the War Production Board producer of war essential minerals. If a discoverer of a mining prop- against great opposition to maintain the support which the mining crty finds that on an analysis taken or an analysis made of his product industry has had-not that the War Production Board has made an he would produce more than 30 percent per dollar value of silver or effort to discriminate against the mining industry. Indeed, I think, gold or silver and gold together, he immediately says to himself, "There Senators, that when the history of this effort is written, we will find is no use in my going forward with this, because if I do I will have to that there has been a greater development of natural resources in the go through a labyrinth of red tape before I can get anywhere, and I West than ever before in the history of the country in the same length am not going any further, because the rule says that if it produces of time. The figures are rather impressive to me. more than 30 percent in dollar value of gold or silver, my other product [ do not know that they have ever been adequately put together, is lost. So far as I am concerned, I am not going to waste my time but I am sure that what has been done in the West in the last couple on it." of years arising out of the determination of the War Production Now, that is a serious situation, and not a mythical situation. It is Board and other government agencies to get the most critical materials not like some of the rumors I have talked about here. It is a reality. has not been told in full. I was reading through a record 1 had last While your production may have increased, let me draw your atten- night in my office, and if you do not mind my taking a minute, I tion to the fact that it may not be due to your Board's activities as much as it is to the increase in price and the assurance that there would like to give you that picture. The War Production Board has 300 mineral and metal specialists. would be n price for the commodity which has grown out of the war; It works steadily with the Geological Survey and the Bureau of Mines and I make the assertion, without fear of contradiction, that if you will on the development of new properties. Those two agencies have eliminate the 30-percent penalty on gold and silver or on gold or silver, right now, I am informed, between 50 and 60 parties out in the field you will produce more war essential metals than you are producing now, looking for new properties. The National Academy of Science and its subordinate, the National 9-11 Regraded Unclassified SILVER 594 SILVER 595 Mr. BATT. Now, that may be. I have listened to that with great interest, and I was certainly not intending to infer that the increase 1 have to emphasize, however, that the objective of the War was solely from what the War Production Board has done, not at'all. Production Board is the control of materials at that point where they What it has done has been to attempt to focus the best brains over the will serve the war effort best. As this order operates, the effect of country, in Government agencies and without Government agencies, it is not to keep somebody from having something, but it is to pick to the end that that expansion shall be driven forward at the rate out somebody and put him in a high priority position, rank him right that it is being driven forward. up with the manufacturer of guns and tanks, to enable him to get I looked over a list of expected production of various materials these spare parts. In that sense it may be construed to be discrimination, but actually metals, as between 1939 and 1942, and also planned and expected it is an extraordinary help which will benefit him. Those people are for 1944 and 1945. I am not going to give the specific items, I think it might not be put up above a great part of the civilian economy, ns indeed they to the public interest. However, I should like very much for the should be. Representative ENGLEBRIGHT. Mr. Chairman, would the gentleman Senators to see them at any time. Some of these items run up to mind yielding right there? 7½ times as much material expected in 1942 as was produced in 1939, This objective that you are speaking of, Mr. Batt, sounds very and 20 times as much in 1943, 1944, and 1945. I look at two items attractive, I am sure. Is that through Government finance or is it here, and I see that 20 times as much is expected in 1944 in one and in through the ingenuity and development of the prospectors and miners 1945 in the other. Senator JOHNSON of Colorado. Is that domestic production, Mr. themselves? Mr. BATT. No; these two items are entirely the result of Govern-, BATT? Mr. BATT. This is domestic production: Twenty times as much, ment financing. Representative MURDOCK. Mr. Chairman, may I ask a question? 20% times as much, 20.8 times as much. That is production that is The CHAIRMAN. Mr. Murdock. expected in 1944 and 1945 as compared with 1939. Representative MURDOCK. It is heartening to hear the statement These other increases for 1942 as against 1939 run 150, 150, 180, we have just heard. I would like to ask this question: Have your 340, 720, 270, 507, 900, and so on, There has been tremendous efforts been directed toward a few large companies, or are you trying development. Senator JOHNSON of Colorado. Is that just wishful thinking, a mere to bring in & larger number of small mine operators, perhaps? We know that our West is full of minerals, much of which have been undis- hope, or is that an objective? If it is an objective, it is important. covered, and if we are going to get the maximum we ought to get Mr. BATT. It is a specific objective, Senator, given me by the best many small operators to find and develop these small mines into technical authorities. I hope it is right. bigger mines. Gentlemen, as no representative from the State of Senator JOHNSON of Colorado. I am not questioning the estimates, Arizona other than myself is here, I want to take this opportunity to and that is nothing more than an estimate, of course; but is it some- comment briefly and to summarize the opinion and sentiment often thing that you are shooting at? Is it a goal? Is it something you expressed to me by small mining men in the great mining State of are trying to realize? Are you sincerely trying to get that production? Arizona. We feel sure that there is vast untouched, unlocated mineral Mr. BATT. The goal we have is to get every pound of essential wealth in our State. We feel that the mining industry should not be critical material we can in 1942, 1943, and 1944. discouraged, but that it should be fostered in peacetime, and much Senator JOHNSON of Colorado. Is that your goal? If that is, God more particularly in wartime. In Arizona, as elsewhere throughout help you, is my wish. the West, some of our greatest copper mines began as silver mines or Mr. BATT. You asked me if that is a specific goal. We definitely gold mines. From that fact alone gold and silver mining should not can and expect that in 1944 and 1945 one of those will produce 2,180 be discouraged, even if gold and silver did not in themselves constitute percent of what it produced in 1939. Another will produce 2,050 sinews of war and bases of peace economics. Ever since I have been a Member of Congress the smáll mine percent. Now, there has been a tremendous effort, as Congressman White operators' associations of Arizona have urged me to call attention to knows, on the development of public roads, access roads, and the our potential wealth, to interest the Government more thoroughly in War Production Board has used every pressure at its command to its development, and to lend every possible encouragement financially increase the development of access roads, because many of these and otherwise. You may think ours is but a selfish interest, but these western resources can only come in through the construction of new men know the basic importance of mining in human economy. I am roads. not here today to put in an argument or to speak for these mining The War Production Board has gone before the Congress. It has men, but to put in n. plea to all Government officials to give them more urged the War Department for special funds. It has taken it up and better consideration. with the Budget Bureau. Wherever an opportunity affords itself for Mr. BATT. We are trying to get the maximum we can with the us to put our pressure behind new roads, we have done it. This has minimum utilization of critical materials to bring it in. In other been a joint effort of all the agencies of Government, and I think it is words, we want the most net result with the least expended in mining one that is going to bulk up very large when we are looking into the machinery. history of this war effort in the future. There is no discrimination'on our part as to the place it comes from. Unclassified 596 SILVER SILVER 597 We have wiped out the dollar sign in the War Production Board as Senator MILLIKIN. Yes; and I would like to develop that before determining factor in the bringing in of raw materials. We have just Mr. Batt gets away. one cost factor over there: What is the cost in machinery and other The question is: Is that material available? Could we see it in critical materials to bring in this product? order to see what your judgment was operating on when you promul- Senator McCarran. Well, the cost in machinery, Mr. Batt, to gated that? bring in a product would not be lessened by the fact that the product Mr. BATT. I will have to turn to Dr. Nelson. I was generally which you desired produced was intermingled with a precious metal, familiar with the discussions that took place incident to it, but there Mr. BATT. That may be. I think that certainly would have to be is n great mass of problems that pass over and are discussed in the weighed, and that is the purpose of this order. If I understand cor- War Production Board. I do not know what factual data we have, rectly, the basis on which the serial numbers are granted, you weigh what the mine has to contribute in the way of copper, lead, and zine, Senator. Mr. NELSON. I was discussing that with you at the time the meet- and if what they contribute is sufficient to justify the use of the ma- ing adjourned yesterday, and I think I could have developed it to chinery they ask for and the high priority treatment to give it to them, your satisfaction had we not adjourned. Senator MILLIKIN. Then may I go into that with you a little Inter? they get it. Senator McCARRAN. Why do you not amend that and say, "copper, Mr. NELSON. I will be glad to. Senator MILLIXIN. While Mr. Batt is here, I would like to ask this lead, zine, and silver"? Representative ENGLEBRIGHT. And gold, Senator. question, It has developed at the hearing, Mr. Batt, that the 30 Mr. BATT. I am no authority on this. There are newspaper people cents feature of this order of a dollar value does not mean what it here, and I am sure I would get myself in deep water. If may make says, that it is a sort of reference point, a commencing point, that a comment or two off the record, I think it would be better. starts the cogitations going in your Board to determine whether a mine The CHAIRMAN. This is off the record. shall be given a preferential priority or not. It has been developed (There was 8. discussion off the record, after which the following that that part of the order which excludes n preferential priority, if you have 30 centa or more on dollar value of gold or silver, does not occurred:) Senator MILLIKIN. Mr. Chairman, I would like to ask a question. mean what it says. Mr. Batt, yesterday I was exploring the factual basis for this order. Well, as Senator McCarran has pointed out, that is an alarming The net conclusion in my own mind at the close of the day was that order to go out to the mining industry, not only the gold and silver I had not found any part of that factual basis. I assume that the end of it, but the complex-ore end of it. Now, we find out that it does not mean what it says, that each case is considered separately, order was not arrived at arbitrarily; that it was designed to produce and that there are no definite standards which n man may take out of calculated results in the way of developing critical minerals or metals an order and say, "I do come under it," or "I do not come under it." which would not be developed were it not for the order. That in itself creates great confusion in the mining industry, and I I asked Dr. Nelson to let me have that factual basis, and the doctor did not have it. As close as I could get to it, it resulted from a sort of am pleading, as Senator McCarran has been pleading, "For goodness' informal circulation of memoranda among various men in the Board sakes, issue an order on this thing that does not put the future of the mining industry," as I vulgarly put it yesterday, "on the state of any who are interested in the metal business. 1 should like to ask you, is there factual datum in the form of a man's liver." memorandum or in the form of a report which will show the necessity Let us set up categories which the industry may look at and say, "We come within it," or "We do not come within it," and strike out for the order? The reason I pursue that line of inquiry, Mr. Batt, is that deceptive or false-I do not mean that in nn invidious sense-30 that many people in the United States have the feeling that many percent provision of the order, because it is admitted that it does not orders that come out of Washington are arbitrary and are not neces- sary. That hurts the morale of the country. It makes a man who mean anything. It is things of that kind that confuse an industry and destroy con- has to close up as is result of one of those orders feel that he has been fidence in the administrative branches of our Government. 1 urge arbitrarily destroyed rather than destroyed on B true basis of war that you give that very careful consideration, Mr. Batt. necessity. Now, I should like to see developed at this hearing the factual basis Mr. BATT. Yes; that will have very careful consideration. for this order, the necessity for it, in other words, what you expected I have nothing else to add. I am glad to have appeared before you. The CHAIRMAN. Are there questions to be submitted to Mr. Batt? we have to do this. That kind of argument does not spell anything, to gain. We do not want the answer that because we are in B war If not, we are very glad to have had you come before us. (There was a discussion off. the record, after which the following unless you were proceeding arbitrarily, which 1 do not presume for a moment. You must have set up some sort of balance sheet of what you would occurred:) The CHAIRMAN. Without objection, we will meet on Friday morning at 10 o'clock. gain and what you would lose by these orders, and I would like very (Thereupon, at 12:25 p. m., an adjournment was had until Friday, much to see that. I think the committee would, too. Senator McCarran. I take it what you mean is by that one phase May 8, 1942, at 10 a. m.) in that order, and that is pertaining to the 30 percent. Unclassified PREFERENCE RATINGS FOR MINING MACHINERY AND EQUIPMENT FRIDAY, MAY 8, 1942 UNITED STATES SENATE, SPECIAL COMMITTEE ON SILVER, Washington, D. C. The special committee met at 10 a. m., pursuant to adjournment on Wednesday, May 6, 1942, in room 424 Senate Office Building, Senator Elmer Thomas of Oklahoma (chairman) presiding. Present: Senators Thomas of Oklahoma (chairman), Johnson of Colorado, McCarran, Thomas of Idaho, Downey, and Murray; and Albert A. Grorud, secretary to the committee. Present also: Senators Millikin and Bunker. Present also: The following Members of the House of Representa- tives: Hon. Harry L. Englebright, Hon. Lawrence Lewis, Hon. William S. Hill of Colorado, Hon. J. Edgar Chenoweth, Hon. James G. Serug- ham, Hon. Compton I. White, and Hon. John R. Murdock. Present also: Gov. Ralph L. Carr of Colorado. Present also: Mr. J. S. Knowlson, Chief, Division of Industry Operations; Dr. Wilbur A. Nelson, Administrator, Dr. Marcellus H. Stow, Deputy Administrator, and F. L. Eaton, attorney, Materials Division; and Shaw Livermore, principal industry economist, Office of Progress Reports Division, War Production Board; Mr. Julian D. Conovor, secretary American Mining Congress, Washington, D. C.; Mr. A. W. Dickinson, the American Mining Congress, Washington, D. C.; Mr. Albert F. Knorp, secretary, California Chapter, American Mining Congress, 300 Montgomery Street, San Francisco, Calif.; Mr. James A. White, director, Rocky Mountain Metals Foundation, Washington, D. C., Mr. Robert S. Palmer, secretary, Colorado Min- ing Association, 204 State Office Building, Denver, Colo.; Mr. George W. Malone, managing director, Industrial West Foundation, Wash- ington, D. C., and San Francisco, Calif.; Mr. Errol MacBoyle, chair- man, State Mining Board, California; Mr. J. C. Kempance, Mining Association of California, 381 Bush Street, San Francisco, Calif.; Mr. Matt Murphy, inspector of mines, State of Nevada; Mr. Charles L. Bradbury, president, New Mexico Miners and Prospectors Associ- ation, 912 Ridgewest Drive, Albuquerque, N. Mex.; Mr. R. E. Whitten, care of Owyhee Hotel, Boise, Idaho; Mr. David P. Strickler, president, Cripple Creek Development Co., Colorado Springs, Colo.; Mr. Thomas A. Copeland, Cripple Creek, Colo.; Mr. Merrill E. Shoop, Colorado Springs, Colo.; Mr. Edward D. Dickerman, Lead- ville, Colo., and Mr. H. M. Bretter, Washington, D. C. The CHAIRMAN. The committee will be in order. Dr. Nelson desires to make a supplemental statement for the record. We will hear him at this time. You may proceed, Dr. Nelson. 599 600 SILVER SILVER 601 STATEMENT OF WILBUR ARMISTEAD NELSON, ADMINISTRATOR, MINING BRANCH, MATERIALS DIVISION, WAR PRODUCTION Mr. CONOVER. I did not hear all of it. Mr. White has advised me of the gist of it, BOARD, WASHINGTON, D. C.-Resumed. Senator McCARRAN. Did you hear the statement that I just made? Mr. CONOVER. No, sir; I have just come in. Mr. NELSON. Mr. Chairman, I am authorized by Mr. Batt to state, after his conferring, as I understand it, with Mr. Knowlson, that they Senator McCarran. Did it impress you that I have about correctly will recommend to Mr. Donald Nelson that the 30 percent clause in expressed what would happen to the mining industry by reason of the action of eliminating the 30 percent clause? order P-56 be taken out of it by amendment. At least, that will be their recommendation to Mr. Donald Nelson. The administration of Mr. Conover. I am sorry I did not hear what you said, Senator. the order, however, will be carried on in exactly the same way as in Senator McCARRAN. I made the statement that, in my judgment, it would eliminate much of the confusion and remove much of the the past. I want to make it clear that we cannot change our method of giving priority assistance to gold and silver mines. psychological depression, so to speak, that has prevailed with refer- ence to mining in the West, by having that clause eliminated. Do The CHAIRMAN. If you eliminate from the order any statement you agree with that? that might have a psychological influence of being a deterrent to the Mr. CONOVER. I think that is a very fair statement, Senator. I continued operation of these mines, I am sure that will be helpful. think we should certainly remove all the uncertainties that we, can. As I understood you on a former occasion, you said that each case The mining industry has enough hazards and uneertainties, as it is, stood on its own foundation. and if we can remove any of the additional difficulties that beset it Mr. NELSON. Yes. here in Washington, that should certainly be done. The CHAIRMAN. Then, there is really no oceasion for any kind of Senator McCARRAN. Will you come forward, please, Mr. Conover? order, if they understand that. But I am not telling you what to do; Mr. CONOVER. Yes. I am just speaking from my viewpoint. I think it will be helpful. Senator McCARRAN. Do you have a statement that you wish to Senator McCarran. If I may at this time do so with propriety, make? Mr. Chairman, I should like to express my sincere appreciation and Mr. CONOVER. I have a few remarks that I would be glad to gratitude for the announcement made by Dr. Nelson. I feel that present. with that clause eliminated, much of the apprehension that has, in Senator McCarran. Do you wish to discuss them? my judgment, acted psychologically as, if I may say so, a wet blanket Mr. CONOVER. Yes; if you please. on mining activity will have been eliminated. The CHAIRMAN. Governor Carr, did you have a question you I can also see where there is ample reason for Dr. Nelson's further wished to ask? statement-that is, that the rule will be administered as it has been Governor CARR. Is there to be something substituted for the 30- in the past-but I am confident that with that clause eliminated, percent clause that is to be removed, or what is to be the procedure mining will take an upward trend; and with the policy that has been in place of the quantity under the 30 percent? carried out as regards precious metals, under the statements made by Mr. NELSON. A mine having & serial number will participate in Dr. Nelson from time to time, if that policy is still continued, I have the benefits of this order, and a mine that does not have a serial great hope that mines of precious metals-that is, that predominate number will not participate in the benefits of the order. As I stated, in precious metals-will be permitted to go on as each case is pre- we shall administer the order according to the same general principles sented. I take it that they will deal with the individual case in each we have used in the past as affects gold and silver mines; that gold instance. and silver mines not producing material necessary to the war effort I want to say again that I am grateful for the broad view that has would operate without the priority benefits of this order. been taken by the authorities on this subject. Governor CARR. Will you bear with me for just one moment, Mr. Now, that is all that you had to say, Doctor? Chairman? Mr. NELSON. Yes, sir. The CHAIRMAN. Proceed, Governor. Senator McCarran. Thank you very much. With that in mind, Governor CARR. You say that mines having priorities will benefit. I think that much that would have been presented to this committee Do you mean by that mines which had priorities before the order of may be eliminated, and we may save a lot of time here. March 2? Chairman. I am going to ask a general question, with your permission, Mr. Mr. NELSON. I mean those that have serial numbers at the present time. The CHAIRMAN. Very well. Governor CARR. Only those which have been, to use the term, Senator McCarran. Is Mr. Conover bere? reinstated since the March 2 order will benefit? Mr. CONOVER. I am right here. Mr. NELSON. And those who had their orders and did not have them The CHAIRMAN. Mr. Knowlson is present, Senator McCarran, if taken away. We will still review each case on its merits as it is pre- you want to question him. sented to us. Senator McCarran. I would just like to have Mr. Knowlson Governor CARR. There were 64 in Colorado which received the listen in. notices that they had lost their priority ratings, as I understand it. Did you hear the statement made by Dr. Nelson, Mr. Conover? I do not know how many have been reinstated. Do those which have Regraded Unclassified SILVER 602 SILVER 603 not been reinstated have the right to come to you and ask for priority it caused a lot of confusion, not to say consternation. I think that ratings? Mr. NELSON. They have the right to present their case, but that confusion has been or will be largely eliminated by the explana- tions which have since been made. The restoration of their serial Governor CARR. But that does not mean that they will benefit numbers and the action announced by Dr. Nelson this morning will under this attitude now? Mr. NELSON. Not until their number is reinstated. do a great deal to clarify the situation, and to make clear just what was the intent of the order. Those mines whose serial numbers have been Governor CARR. It does not give them a right to a priority rating? restored and others which may secure serial numbers will be able to Mr. NELSON. That is correct. Senator McCARHAN. Let me follow along that line of inquiry for go ahead just as they did previously, with the anticipation that they will continue to receive these high priority ratings. just one or two questions. I believe that is correct, is it not, Dr. Nelson? Nothing pertaining to this change will militate against them in Mr. NELSON. Yes. any way if they have a meritorious case to present? Mr. CONOVER. That is the first aspect of the situation. As I have Mr. NELSON. It they enter into our war picture. said, we feel it is very important that this order should be made just The CHAIRMAN. What have they to do now to enter into the war as clear as possible, because we know that the men who are actually picture? Mr. NELSON. The same thing they were doing before, Senator; mining out in the bills are not priority experts. They have enough uncertainties and hazards in the mining business anyhow, and if we that is, producing needed amounts of essential or strategic material in Washington can in any way remove some of these additional The CHAIRMAN. Then, as I understand it, this statement of yours difficulties, it is very much to the benefit of the men who are trying with respect to the face of the order, does not in any way materially to produce these materials that are needed for the war program. affect the procedure that will be followed in the future? Senator McCarran. It is my feeling, from my conversation and Mr. NELSON. It does not affect it in any way. contact with the miners of the West, that they are anxious and willing The CHAIRMAN. Except in relieving mines from discrimination to cooperate in any way for the success of this country in the war effort. in the event that such mines produce more than 30 percent of gold All that they want is the opportunity to cooperate. Do you agree and silver? with that? Mr. NELSON. That is a correct statement. Mr. CONOVER. I agree with that, Senator. I think that there is The CHAIRMAN. Now, Mr. Conover, you may make your state no more patriotic group of men than the miners of the West. ment for the record. The second aspect of this order is not touched in the removal of the 30-percent clause, and that is the situation of the straight gold and STATEMENT OF JULIAN D. CONOVER, MINING ENGINEER SECRE- silver mines which are not producing copper, lead, zinc, or other so- TARY OF AMERICAN MINING CONGRESS called strategic metals and are not producing fluxing ores for the smelters. They still do not receive these high priority ratings, but The CHAIRMAN. Mr. Conover, please state your name and position are dependent on order P-100 with its A-10 rating; to get a higher for the record. rating on any item, they must apply to Washington on form PD-1A. Mr. CONOVER. My name is Julian D. Conover. I am a mining Our feeling with respect to these mines is that they have always engineer and am secretary of the American Mining Congress. been and always will be an extremely important part of the economy At the outset, I should like to express the appreciation of mining of our country. Their product is the basis of our currency, the basis people generally throughout the country and of manufacturers of of our world trade and foreign exchange, and we are going to need mining machinery to Dr. Nelson for his fairness and bis consistent their continued production in the future as we have in the past. efforts to help the industry. Senator McCarran. May I interpose right there? I hope that I Dr. Nelson, we know, has been working very long hours, very correctly interpret Dr. Nelson's statement. If I do not, I hope that arduously, and under very difficult conditions for a good many months I will be corrected while you gentlemen are here. in n. very sincere effort to keep our mines going, and we do appreciate As I understand the attitude of Dr. Nelson and those with him, it very much his efforts. We feel that we are fortunate to have a man is not their intention to entirely eliminate the operation of mines pro- like Dr. Nelson as the head of the Mining Branch of the War Produc- ducing only-straight gold or straight silver but, rather, to put them tion Board. in a deferred position ns regards their having a priority order for With reference to this March 2 amendment to order P-56, it has mining equipment or mining essentials. just been brought out in the discussion of the last 5 minutes here that Is that a fair interpretation of your attitude, Dr. Nelson? Mr. NELSON. I think so, Senator. I might say that there are two there are really two principal problems involved. The first one relates to the mines producing copper, lead, zine, or problems involved-two material problems involved-that I think other critical materials, including fluxing ores for the smelters, which have not been definitely separated in the minds of all of us. One is are fortunate enough to have small quantities of gold and silver the material produced by the mine when it is essential for our war present in their ores, which simply help to meet the pay roll and of effort. The other is the material consumed by the makers of mining machinery, which is critical material and limited in amount and, there- course do not detract in any way from the production of the base metals. The 30 percent clause was quite a jar to these mines, and fore, should be used, first, only in a mine producing strategic and crit- Regraded Unclassified 604 SILVER SILVER 605 ical minerals essential for our war effort. If after the needs of the Army, the Navy, and those mines are met there is anything left, employment and the creation of new wealth. I wish to make IL very naturally we would not want to prohibit its use by gold and silver sincere and earnest plea that the War Production Board continue to mines. I doubt if that will be the case. give just as much consideration to the needs of these mines ns can Senator DOWNEY. I do not quite understand that last remark. possibly be given consistent with our supreme objective today, namely, Mr. NELSON. I doubt that things will be 80 critical that your gold winning this war at the earliest possible date. and silver mines will not get & limited amount of material, but I 1 do want to point out-and other witnesses can bring it out in more cannot make B positive statement to that effect. detail-the fact that the quantities of material required to keep these Senator DOWNEY. You are speaking now of those mines that are mines in operation are extremely small; also, that they are responding very patriotically. They realize that they must make the best pos- exclusively gold and silver mines? sible use of materials that are available to them. They are patching Mr. NELSON. I am, yes. Representative ENGLEBRIGHT. Mr. Chairman- up old equipment, they are pooling their stocks of repair parts and critical materials, and they are providing that there shall be a mini- The CHAIRMAN. Congressman Englebright. mum drain on steel and all the other materials which are critical to Representative ENGLEBRIGHT. Doctor, with the cooperation of the the war. gold miners and the silver miners with reference to the pooling of Senator McCarran. In that respect, Mr. Conover, I am wondering equipment and material that may be necessary for replacements, under if you would join in the expression that I tried in a homely way to the present situation do you anticipate that it will be necessary to make the other day in the presence of the gentlemen who have this deprive the gold mines or silver mines that have over 30 percent gold matter in hand. or silver of necessary repair parts and equipment so as to continue We have here a situation, as you have heard related, where certain their operations? amounts of mining machinery and mining equipment are being Mr. NELSON. That can only be answered from month to month exported from the country. The thought I tried to express the other and week to week. At the present time I certainly feel that they day, and which I hope you might dwell on for a moment, was that if should be able to get a limited number of repair parts and material. the exportation of mining equipment and mining essentials was placed Representative ENGLEBRIGHT. That is, with their cooperation? in the hands of this War Production Board, having this whole industry Mr. NELSON. With their cooperation. But each individual Case in hand, there would not be transported out of this country mining will have to be handled through Washington. equipment and mining machinery to the irreparable loss of our own Senator McCarran. I should like to make a statement off the home production. record, Mr. Chairman. 1 wondered if you cared to dwell on that, as to your recommendation The CHAIRMAN. This will be off the record. that the matter of exportation of mining machinery and mining (Senator McCarran then made a statement which, by direction of equipment be handed over to this Board for administration. the chairman, was not recorded. The following then occurred:) Mr. CONOVER. So far as I can see the situation, Senator, that would Senator McCabran. All right, Mr. Conover. be a very constructive step. We have confidence in those in the Mr. CONOVER. Speaking of the position of these straight gold and War Production Board who are handling this problem. We would silver mines, I wish to record the fact that these mines are generally like to see their arm strengthened to handle the problem in the best in isolated localities and are generally the sole means of support of the possible manner for all interests concerned. We think it would make communities in which they are located. A very large number of sub- for coordination and tend to prevent overlapping or conflict in the stantial communities with an important part of the population of our method of handling this extremely important supply of mining Western States is dependent upon them. Not only the mine workers machinery and equipment. and their families but also the tradesmen and farmers in nearby areas, Senator MILLIKIN. Mr. Conover, has the Mining Congress made the railroads, and the local, county, and State governments and any studies on the relation of gold and silver to the fiscal systems of school systems are largely or completely dependent upon their con- other countries after the war? tinued operation. They mean a great deal to the economy of our Mr. CONOVER. That situation is changing 80 rapidly, Senator, that Western States. I am afraid we are not in B. position to produce any studies at this In previous depressions, the gold and silver mining areas have been session which would be of any real help. the "white spots" on the business map. Gold and silver mining com- Senator MILLIKIN. Might I ask whether it is your personal judg- munities have been those areas which showed up with the highest ment that after the war we will have the job, in addition to furnishing levels of employment, pay rolls, and business activity when most of food, clothing, and any other items of reconstruction for foreign the rest of the country was in the dumps. We feel that the time will countries, of furnishing gold and silver as the basis for their fiscal come when they will again occupy that position, and that they will be systems in a world that will have to be reorganized along sound eco- of the highest value to our Nation in the readjustment period that we nomic lines? I am asking really for your personal opinion. are bound to go through when this war is over. Mr. CONOVER. We feel that hard money is the only sound basia of We are glad to have the assurance of Dr. Nelson that all possible a currency and that naturally there will have to be some means worked efforts will be made to keep these mines going. We feel that we out, whereby, for value received, the stocks of precious metals may should certainly make every effort to preserve them as sources of Regraded Unclassified 606 BILVER BILVER 607 be suitably distributed among the other nations as a basis for their not only to the mining industry but to our country, both now and in currency systems. Senator MILLIKIN. If that be true, it then follows, of course, that the future. Senator MILLIRIN. Has the congress made any estimate as to the these, let us call them, large supplies of silver and gold that We have actual quantity of critical materials that are normally consumed in stored in this country will find their way out of the country in the gold and silver mines? same way that our surplus food will find its way out of the country. Mr. CONOVER. I would refer you for that, Senator Millikin, to some Then, if that be true, that which may appear as excessive from some of the witnesses who are present from various mining districts. Those monetary viewpoints at the present time will disappear very rapidly. who are here from the California and Cripple Creek areas, for example, The gold and silver that we might accumulate during the war period have made very careful estimates of their requirements. would serve a very useful function not only for our own domestic They are, as I have said, very small in amount, and the mines are fiscal system but in aid of a stabilized world economy. Would you doing all they can to get along by patching up and welding old equip- say that that follows? ment, and making things go as far as possible. The consumption is A Mr. CONOVER. I think that is a fair statement, Senator. We have very, very smail quantity of steel and other critical materials. never been impressed with statements that there was too much gold Senator McCarran. Mr. Chairman, at this point I desire to offer or too much silver in the world. for the record a very comprehensive statement put out by the Cali- Senator MILLIKIN. I took a careful hedge on that to accommodate fornin Chapter of the American Mining Congress, of date May 1, 1942. varying views on that point; but no matter how you look at it, it To my mind, it goes into many of the things that we would not care seems to me that the accumulated gold and silver stores, whether or to hold these committee hearings for, but it is so comprehensively and not we consider them excessive at the present time, will perform a so logically stated that I think it is worth while to have it go into the very essential function in the reconstruction of the world after the record, and I ask permission to have it inserted in the record. war and that, therefore, it is a sound policy to continue to produce The CHAIRMAN. Without objection it may be included in the record. gold and silver during the war. (Booklet entitled "California Gold Mining Industry" is as follows:) Mr. CONOVER. I think I would agree with that, Senator. We realize that there are B. great many industries in our country CALIFORNIA GOLD MINING INDUSTRY-FACTS JUSTIFYING PRIORITIES that are suffering today and necessarily must suffer from shortages Submitted by California Chapter, American Mining Congress, May 1, 1942 of material because there is not enough to go around. We do wish to point out for the record, however, that gold and silver mines are CALIFORNIA CHAPTER, THE AMERICAN MININO CONGRESS, different in this respect from a manufacturing plant. Many of our San Francisco, Calif., May 1, 1948. gold mines are very deep. They require constant pumping in order To THE PRIORITIES DIVISION OF THE UNITED STATES WAB PRODUCTION BOARD: to keep the water out and constant retimbering to keep the workings In accordance with resolutions adopted at a meeting held in Sacramento, open. If they are closed and fill with water and the workings cave Calif., on Friday, March 27, 1942, by over 200 representatives of the gold mining in, it may be impossible ever to reopen them. industry in California, the California Chapter of the American Mining Congress In many cases the reserves of ore are not large. They are ample was authorized and instructed to compile and present to your honorable Board a statement of the position and needs of the California gold mines for minimum to justify continued operations, and additional reserves are being priority allocations of necessary mining supplies, together with such arguments developed as mining goes on. But if they were now to shut down, ILS exist for consideration of these needs by your Board in the light of the present the amount of ore actually proved or which could be depended upon, national war emergency. in many cases, would not be sufficient to justify the very great ex- In accordance with this authorization, the following brief of facts and argu- ments is respectfully submitted-not with the request or anticipation that your pense of reopening. Hence, we feel that we should exert every effort Board accord to the members of this industry any undue priority in the matter to keep these mines operating at this time and not lose a source of of materials where a great national emergency is involved, but with the idea that wealth to this country in the years to come. it will assist your Board in determining meritorious cases for the allocation of Might I emphasize also the desirability of providing prompt de- those materials which must be set aside for civilian consumption if our domestic economy is to survive. We hope to convince you that, although your recent livery of repair parts which may be required in emergency cases, priority orders indicate that the production of gold is not considered BA an essential and without which the mines might be flooded or operations seriously industry to the war, nevertheless the maintenance and the preservation of the disrupted. We have discussed this with Dr. Nelson, and hope that gold mining industry in California from utter destruction, by the award of neces- means will be worked out to secure the quickest possible action on sary priorities for a minimum operation, is necessary to the national welfare and to the domestic economy of a large area of this State. We expect to further show priority applications in such cases. that these minimum priorities can be awarded without any substantial drain I know that Dr. Nelson and his associates understand these situa- being made on the national stocks of strategic materials. tions, but I wish to record these views in the hope that what we say With these points in mind, the brief is respectfully submitted for your consider- here may lend some strength to their arm and perhaps be of some alton and reference in determining your minimum allocations to this industry. help to them in the efforts which we feel confident they are going CALIFORNIA CHAPTER OF THE AMERICAN MININO CONGRESS, By WORTHEN BRADLEY, President. to make to try to keep our mines going. By ALBERT F. KNORP, Secretary. I want to add that we in the Mining Congress are glad to help this committee and to help the officials of the War Production Board in any way we can. We do feel that these matters mean a great deal Regraded Unclassified 608 SILVER SILVER 609 APPLICATION OF THE CALIFORNIA GOLD MINING INDUSTRY FOR Liberalivation OF PRIORITY ALLOCATIONS TO GOLD MINES AND SUMMARY OF THE FACTS for about $100,000,000 in currency each year. Attached hereto MI exhibit E la A SUPPORTING THE APPLICATION compilation of statistics (taken from records of the State Industrial Accident Commission and State Division of Mines) showing the employment of men In In behalf of the gold mines and dredger operators of California, the California gold mining. During the past depression the gold mines of California furnished Chapter of the American Mining Congress respectfully submite its application steady employment to over 10,000 men and kept them and their families off for such modification of revised order P-56, as will permit of the allocation to relief rolls. During the present emergency these mines have sent thousands of these gold mines and dredgers of the minimum quantities of strategic metals trained miners Into the defense industries, aiding in the construction of under- and materials essential to the maintenance of existing operations on the various ground storage facilities in Hawaii and elsewhere and in the construction of mill- properties involved, and in support of this application sets forth the following tary fortifications in this country. Due to the higher wages paid in war Industries the labor turn-over has in the past year been very rapid, and is becoming in- facts: (1) APPLICANT AND ITS AUTHORITY creasingly rapid. But this in all to the national benefit. The mines are con- stantly accepting a supply of untrained labor and are training and developing this The applicant is an unincorporated organization of the gold-mining and dredg. type of labor into skilled miners whose services will be needed by the Nation in Its ing operators in California, and represents through its membership all of the gold war efforts. All of this has been done without in any way impeding the military dredging operations and practically all of the gold-mining operations in the State draft or naval recruiting program. The industry in obviously not one in which It was authorized by resolution of these operators to present this application. industrial deferment for military service has been granted or should be granted. A copy of this resolution is attached hereto and marked "Exhibit A." Some of the younger miners trained in the gold mining industry also later trans- forred to employment in mines engaged in the development of strategic minerals (2) REASON FOR APPLICATION and are of use to their country in that respect. Were it not for the training they received in their home mining neighborhoods, it is probable that they would not Revised order P-56 of the Priorities Division revoked all general priority voluntarily migrate to other mining communities where even greater need for numbers heretofore accorded to the gold-mining industry, and it has already their services may exist. The gold-mining industry contributes an important become apparent to the members of this industry that unless some consideration increment to the national tax roll, both in the form of Income taxes and excise be given by the Priorities Division to its minimum needs, all of its members will taxes. have to close down operations for lack of essential materials within a relatively We understand that representations have already been made to your honorable short period of time, with disastrous consequences to be hereafter noted. The Division by representatives of the smelter industry that the operation of A sufficient applicant feels that a fair and reasonably accurate presentation of the facta to number of gold mines to furnish siliccous concentrates as a flux for the smelting the Division may justify an improvement in this situation which will save no of various strategic metals, is an absolute necessity to the continuance of their important industry from practical destruction. smelting operations. Practically all of the gold mines of California extract and mill siliceous ores, Their continuance in operation will enable an adequate (3) HISTORY AND IMPORTANCE OF THE GOLD MINING AND DREDGING INDUSTRY IN quantity of siliceous concentrates to be regularly delivered to the smelters at CALIFORNIA Selby, Calif., and Tacoma, Wash. Without any desire to elaborate upon the background of the industry repre (A) PROBLEM OF THE OLDER WORRERS sented by applicant, it is respectfully pointed out to the Division that gold mining is the pioneer industry of California, and is the industry upon which this State's In the older mining districts of California like Alleghany, Grase Valley, and earliest development was founded. Over the years since 1850 the industry has Jackson, a decidedly human problem is involved in keeping the older men-those added to the national gold stocks over $2,212,800,000 (figures from Minerals Year- of nonmilitary age-employed in their home communities. These men have been book, U. S. Bureau of Mines). It furnished a financial and industrial basis for miners for 50 long that they are not suited to other types of employment. They the development of west-coast civilization in the United States, It made vitally own their own homes in these little mining communities, and they and their necessary contributions to the Union Treasury during the Civil War. It has fathers before them have resided there since pioneer days. They are not the type supported the domestic economy of some 19 counties of this State, and constitutes of labor which normally migrate to new fields or more highly paid industries. the major, if not the sole, basis for economic support of these areas, Attached It would create is decided hardship for these men if they were thrown out of em- hereto as exhibit B is B. map of California correctly showing in colors (exhibit B ployment and foreed to move to other communities. Their homes would be unsal- not printed but on file with committee), with the exception of the counties n able, and they would suffer A financial loss, heavy for them. Furthermore, their district 3, district 5, and district 6, the areas in which gold mining and dredging presence in these communities la of importance ILA a defense reserve for com- constitute the sole or major economic support. As to the excepted counties, gold batting various fires in the adjacent national forests, and for the maintenance of mining and dredging is (L very important factor in their domestic economy, but local defense organizations. If the mines closo down the communities will dis- perhaps not the major one, integrate because they have no other source of support, and a large area of Cali- In support of this statement there is submitted as exhibit C hereto, a compila- fornia would be left without men of the type that are hadly needed for local tion based on answers to questionnaires sent out to the mine operators and series defense organizations. It will be seen that these workers are in a different class of certificates from the county officials of these various counties, showing the names from those referred to in paragraph 4 of this brief. of mines, men employed, pay rolls, and State, county, and Federal taxes paid by gold-mine operators in the several districts, The total pay rolls of different mines (6) NECESSITY FOR CONTINUANCE OF THE MINING INDUSTRY TO AVOID give an Idea of the importance of the business brought by these mines to local DESTRUCTION merchants, farmers, and residents. The tax payments show their contribution It is of course possible that some of the smaller and shallower properties now to the cost of gov ernment-Federal, State, and local. From this data it may being operated in California might be closed down, allowed to fill with water (which readily be ascertained that IL destruction of gold mining would be economically is uniformly the result of closure), and after the war be pumped out and reopened. as effective B8 a hostile bombing raid in these mountain counties. This is not the case, however, with the more important unite of the industry. There is also submitted a compilation (exhibit D) showing the latest available Attached hereto as exhibit F is a table showing the depth of the more important figures of gold production in California (1940), subtotaled by counties and die lode mines in California. In each of these deep mines many miles of underground tricts. While the 1941 figures are not yet published, it is our information and workings exist. For example, in the Empire-North Star group of interconnected belief that they will not vary substantially from those shown on exhibit D. mines at Grass Valley, having a maximum depth of 10,600 feet on the incline, there are over 500 miles of underground workings. A shut-down of these proper- (4) NATIONAL IMPORTANCE OF THE INDUSTRY ties permitting the workings to fill with water and to cave in through lack of repair The production of gold in California during the past few years has approximated would result in irreparable damage to the properties, and undoubtedly their total $50,000,000 worth of gold bullion each year. All of this bullion has been added permanent abandonment. An example supporting this conclusion may be noted in the Treasury supply and under existing currency lawa furnishes & metal backing 73062-42-pt.9-12 Regraded Unclassified 610 SILVER SILVER 611 in the case of the Utica mine at Angela Camp, which was closed for war TeMopa about the time of the last World War, was permitted to 611 with water, and has from the Priorities Division, its own house must be at all times net in order. It never since been operated, although it is believed still to contain valuable and must be in a position to convince the local representative of the Priorities Division minable are, The community in which it in located has never recovered from the that waste is being eliminated; that maximum economies in the utilization of blow, in population, in business, or industry. materials on hand is being made, and that only minimum requirements to keep In further support of this conclusion, we attach to exhibit F copy of a letter properties operating and in minimum safe repair condition are being asked for. received from Dean D. H. McLaughlin of the University of California College of In short, the California gold mining industry believes that the maximum utiliza- (loo of what it has in just an important a factor ln its preservation as the allowance Mines. On the other hand, the allocation of priorities for & minimum amount of material of any priorities for deficiencies which the industry cannot supply. necessary to keep these mines in operation would avoid this type of irremediable disaster. It la economically nonfessible and in some cases physically impossible (9) CURRENT UTILISATION OF STRATEGIC MATERIALS to reopen these old properties which have been worked for more than half A ceb- On the basis of questionnaires supplied and answered by individual operators tury when once they are allowed to close and fill with water. The same state- over the signatures of their responsible officials, and from conservative estimates ment may be made with respect to practically every mine listed in exhibit F, And made as to the requirements of one or two operators who failed for some reason they constitute the largest producers of the State, employing the greatest number of other to answer these questionnaires, We are able to present to the Priorities of men. Division a composite picture of the current monthly utilization of etrategie (7) NECESSITY FOR CONTINUANCE OF DREDGER OPERATIONS materials in the industry as & whole, in each of the various districts, and by the lode mines ne distinguished from the placer and operations. We have The gold dredgers of California, as shown by exhibit D, have produced almost also compiled separately the current requirements for these materials in each half of the gold output of the State, and have given continuous employment to of a number of mines which we have characterized AR "deep mines." These 1,800 men (exhibit E). Even more than the mines, the dredging industry de- figures are attached to this memorandum as exhibit G (on file with the Committee, pends upon machinery for its operation, and it is a type of machinery which but not printed). The totals of these figures do not present a very heavy demand deteriorates very rapidly if operations are long suspended. The great flonting on the stocks of critical materials of the country. Furthermore, we nak the dredgers, the dragline equipment, and the chains of buckets must be maintained Division to remember that these totals will be reduced by all of the savings, and kept in operation partly because they are situated entirely in the open, subject economies, and exchanges which the industry in able to make. They represent to all of the effects of the elements, and if left idle will rapidly rust, silt up, and an average monthly utilization. It is the intent of the industry through coopera- become practically unusable; also the placer ground in which they work often has tive efforts in the various districts to 80 arrange the purchase of needed new ma- to be stripped well in advance of actual operations, and unless these operations terials or equipment that in spread out and averaged, as much B/F possible, thus are permitted to follow the stripping which has already been done, the effect of avoiding peaks in demand. Each operating manager is required to nak himself this work would be lost through erosion and the operators would have to do it all before placing an order: "Do we really need this, or can we get along with what over again. The great hulls into which the dredgers are built also require the we have? Can I repair the equipment which it is suggested we replace? Can I maintenance of ponds to keep them afloat, and if through shut-downs these ponds use over again any of the supplies which we have heretofore been consuming? dry up and the hulls are exposed to the air, the effect would be much the same M How will my demand for these items fit in with the total demand from my die- leaving the hull of a wooden ship exposed to the air for a long period of time. trict this month?" The dredgers do not use as much labor in proportion to the work done BS the lode Only after answering these questions and ascertaining the Immediate indis- mines because of this use of machinery, and their continued operation can be pensability of the items sought to be purchased will an order be placed. permitted without any noticeable interference with labor supply for defense (10) OUR RECUEST TO THE DIVISION OF PRIORITIES purposes. (5) THE MAXIMUM UTILIZATION OF AVAILABLE SUPPLIES Based on the foregoing factors and assumptions, the gold-mining industry of California urgently requests the Division of Priorities to place It on the list of The gold mining industry of California is in the fullest accord with the program industries which are entitled to exist: to take into account the minimum amounts of the Division of Priorities for the utmost utilisation of available supplies of of materials necessary for the maintenance of that existence in determining the strategie materials and serap before drawing upon any portion of the national allocations as between war industries, military and naval needa, and civilian stork of these materials for operating purposes. We desire to outline to the Divi- requirements; to consider requests for priorities on orders for these strategic sion the stepe which have been taken to carry this program into effect. The State materials as having been made only after the exhaustion of all local sources and of California has been divided into six districts, as indicated on the map, exhibit B means of avoiding the request for priority; to give these requests prompt and (on file with the committee). Districts Nos. 1, 3, and 5 contain practically all sympathetle consideration; and to make an award consistent with the premise the dredging and placer operations in the State; districts Nos. 2, 4, and 6, the lode that, even in wartime, and notwithstanding the general national shortage of operations. In each of these districts there is an organization through which the materials, there are some civilian industries that the national Interest requires to operators can cooperate locally. Each operator has taken a careful Inventory of be kept alive, and that the gold mines are in that category, We particularly his supplies and materials, and of scrap on hand, and has exchanged the informa- ask this consideration for requesta from those members of the industry who are tion shown therefor with the other operators in his district, operating what may be termed the "deep mines," which must be kept operating in Due to the great distances between the northern and southern parts of Call- order to avoid flooding, caving, and permanent irreparable damage, as well as for fornis it is not practicable for the operators in the State to cooperate as a whole in minimum requirements of the dredging industry which will prevent irreparable the exchange of facilities, but within each of the districts mentioned & serious loss and deterioration to valuable equipment. attempt is being made to trade, exchange, or make available to any operator who We feel that our request is not a selfish one, that it does take into account the needs an item of material or equipment which another operator can spare, so M interests of the nation as a whole and that in the interest of preserving & substan- to provide for the utilization of every item which is not presently in use or not tial portion of the national territory from irreparable loss, in the interest of required for the immediate future. Cooperative efforts are made also toward preserving the local economies of a large section of the State of California from repairing broken equipment. An operator who has A machine shop will cooperate unnecessary destruction, with consequent injury to both public and private credit, in repairing equipment for one who does not. Surplus mill capacity is being made and in the interesta of giving a fair deal and fair consideration to the welfare of the available for handling the ores of operators who do not have mills, thus avoiding thousands of citizens engaged in the gold-mining industry in California, our re- the necessity of any new construction. Scrap piles are being overhauled, and after quest should be granted. segregating material which will be needed in the immediate future for working over Respectfully submitted. into needed parts, the maximum possible disposal of this scrap to the national CALIFORNIA CHAPTER OF THE AMERICAN MINING CONGRESS, defense pile is being made. Both formal and informal meetings of the operators By WORTHEN BEADLEY, President. in each district take place at which ideas can be exchanged, and the principle By ALBERT F. KNORP, Secretary. carried out that if the gold mining industry expects any serious consideration Dated: May 1, 1942. Regraded Unclassified 612 SILVER SILVER 613 EXHIBIT A EXHIBIT € RESOLUTION ADOPTED AT A MEETING OF CALIFORNIA GOLD MINE OPERATORS IND AT SACRAMENTO, CALIF., ON FRIDAY, MARCH 27, 1942 LODE MINES WHEREAS it has been brought to the attention of the responsible operators of Number the California gold mining industry through the issuance of war priority order Name of property Location, county Depth of men Estimated County P-100 that the priorities heretofore accorded the industry under order No. P-56 (feet) em- total pay roll taxes paid have been revoked and that the purchase of all allocated materials which are ployed in 1941 essential to the operation and maintenance of our mines can be made only on A-10 priorities or by special application under Form PD-1-A; and Empire Novada 8,000 566 North Star do 10,650 276 $1,636,859.37 $18,729.73 WHEREAS the rapidly accruing shortage of these materials indicates that it Zeibright de 1,759 25 48,000.00 shortly will be impossible to acquire any of them under an A-10 priority, And Brown's Valley Yubs 2,111.00 1,300 65 Nevada 168,000.00 542.00 inability to acquire minimum requirements of such materials and will inevitably Idaho-Maryland 4,600 500 New Brunawick do 4,500 400 1,293,006.00 40,468.13 and result in the closing down of all gold mines and dredging operations in California; Gulden Center do 2,000 150 292,100.00 Spanish do 3,685.80 , 1,000 30 51,000.00 WHEREAS it is the unanimous opinion of the industry representatives gathered Spring Hill do 353.91 1,200 20 34,000.00 Sierra 785.91 Original Sixteen to One 3,000 100 here that such & closing of the gold mines would be an unnecessary and irreparable 196,329.06 do 5,324.06 Oriental 1,000 o 10,500.00 Plumbago do 1,048.27 injury to the State and Nation for the following, among other reasons: 1,320 15 24,905.40 do 1,600.00 1. Many of the mines are very deep and must be operated in order to prevent Ruby 850 25 42,485.00 do 1,500.00 Sierra Buttes 1,125 20 caving and filling of workings with water, rendering it virtually impossible to ever 33,943.65 11,152.45 Argussut Amador 6,400 240 388,000.00 K,038.00 work them again. Kronedy do 5,900 97 174,871.87 5,650.00 2. These mines constitute the sole or major domestic economy in 19 out of the Old Eureka do 3,750 200 350,000.00 6,782.44 Keystone do 1,600 95 165,415.30 58 counties in this State, supplying the pay rolls, paying the taxes, and buying 1,890.02 Belma do 500 20 33,599.18 162.87 materials which enable these communities to exist. Their destruction will cause Carson BM Calaveras 3,500 190 359,564.53 4,756.84 untold private economic injury and will be destructive to local public credit, Le Hol do 1,600 20 33,403.75 1,021.65 Jumbo do 1,000 40 50,250.00 3. The gold produced from these mines is an important contribution to public Royal do 1,850 18 30,485.60 1,147.80 wealth and furnishes the basis for large increments of State and Federal taxes. Sheep Ranch do 3,250 150 262,498.45 13,754.60 4. Destruction of these mines by priority deprivation and the resulting loss Heslep-App-Sweeney Tuolumne 2,500 30 55,116.20 1,000.00 Engle Shawmut do 2,200 58 103,557.00 993.00 and unemployment will be a severe blow to public morale at a time when the Loblensa do 1,600 20 33,500.00 246.65 National Government is seeking to foster courage and industry on the part of the Pine Tree and Josephine Mariposa 2,500 2 118,500.00 3,571.64 public and will tend to destroy public confidence in gold as an essential element of Mount Galnes do 1,200 54 55,352.08 1,020.68 Maivina do 1,000 is 30,512.00 1,380.21 our monetary system, and Alsbama-Shamway El Dorado 500 10 16,500.00 202.02 WHEREAS the operators here present and the communities from which they Alabama-California Placer 1,100 135 222,750.00 533.07 Oro Fino do come are more than anxious to support the national war effort in every respect 1,350 40 62,732.24 700.00 Rawhide do 600 16 26,389.50 1305.65 and at any sacrifice necessary therefor, but believe that the minimum amounts Charokee Plumas 850 150 71,948.51 1,296.00 of strategic materials necessary to keep their mines open and running, without Virgilia do 500 40 62,698.65 1652.40 extension of existing operations, is so small that with the conservation measures Standard do 725 50 78,522.00 1850.00 Iron Mountain Shasta (#) 50 85,147.00 4,195.97 hereinafter resolved upon, the same could be allocated to the industry without Montesuma do 800 20 35,100.00 217.80 noticeable effect on the country's war needs: Now, therefore, be it Quartz HIII Slaklyou 350 10 17,498.65 391.00 Resolved: First. We are unalterably opposed to the destruction of the gold Oro Grande do 675 7 11,901.00 129.95 Gelden Queen: Kern 1,100 165 366,400.00 9,627.00 mines of California due to entire withdrawal of priorities necessary to give them Kern Mines de 1,250 50 94,737.78 887.10 minimum supplies of strategic materials which are required for present operations Cactus Mines do 1,100 100 199,674.43 2,151.38 Governor and to any Government policy which would enforce such priority withdrawals; do 650 so 73,253.17 1,075.00 Monsroh Rand do 700 12 18,000.00 280.00 Second. We pledge ourselves to form community units, pooling supplies of Gold Crown do 900 as 51,896.00 1750.00 salvagable materials, repairing every possible item of equipment, cooperating Standard do 1,000 to 14,900.00 285.00 in the use of machines and endeavoring in every way to work with the local Kelly San Bernardino ROO 33 24,394.05 $560.00 Bagdsd-Chase do 1,200 20 29,865.40 1730.00 representative of the War Priority Administrator; Old Gold Inyo 500 16 27,952.00 1852.00 Third. We request the associations and operators here present to cooperate in Margiret do 650 is 26,250.00 1275.00 the compilation of facts showing the soundness of the position we have here taken and the justification for definite allocations of priority materials to our PLACERS mines and dredges so as to make continuation of existing operations possible and to Insure preservation of these mines; and further through appropriate representa- tives to be selected by the associations present at this meeting, to present these Name of property Location, county Type facts and the merits of our proposal without delay to proper Federal officials for action thereon. Arata-Van Sandt Amador Dredge (bucket line). Fourth. We recommend that the cost of presenting such a case to the Govern- Arroyo Seco do Dragline. Arroye Seco Ranch do Do. ment be imposed upon the entire gold-mining industry through appropriate action Buena Vista do Dredge (bucket line). to that end to be taken by said several associations present after conference Butte Operating Co Butte Dragline. between their respective executives. Butte Unit do Dreder (bucket line). Farnham Ranch do Dragline, Feather River do Do. Ginella Ranch do Do. Kister do Do. semreb do Do. Peters Ranch do Do. Prombe do Da. Placer Development Co do Do. Figures not available, estimate only. Operations suspended at date of this brief. Surface. Estimated total (Including figures shown and estimate of missing figures). Regraded Unclassified 614 SILVER SILVER 615 EXHIBIT C-Continued Examism C-Continued PLACERS-Continued PLACERS-Continued Name of property Location, county Type Name of property Location, county Type Butte Dragline. Chinese Camp Unit Tuolumne William Richter & Sons Dragline. do Do. Jacknes do Do. Weymans Ravine do Wm. Kister Dredge Dragline. (bucket line), Kent do Do. Calaveras McCormick Ranch do Do. Genochio do Do. Big Ravine Yubs Do. R. & M do Do, Far West do Do. Ban Andreas do Do. Princess Pine do Do. Stagan do Do, Summar. do Do. Stockton Gregory do Stockton Reservoir Do. Yubs Unit do Dredge (bucket line). do Do. Wolhall El Dorado Do. Arroyo Carson Creek do Do. do Do. EXHIBIT D Dunlap Ranch do Do. El Dorado Frank Kipp do Do, Lemroh do Do. 1940 California gold production by counties and districts I Operation No. 2 do Do. Baker Mariposa Do. County District Chase Ranch do Do. P.H. Bottoms Merced Do. total total Type of mining Merced Dredge No. I do Dredge (bucket line), Merced Unit do Do. Robinson Bros do Dragline. District 1: Ban Joaquin Dredge No. I do Drodgo (bucket line), Sisklyou 2,068,815 do Do. Shasta 1,679,135 5,478,105 Snelling Practically all placers. Champion Fist Nevada Dragine. Trinity 1,730,155 Coleburn do Do. District 2: do Do. Plumas 1,302,070 Beotts Flat Creek do Do. Sierra 958,685 W yandotte Placer Do, Nevada 10,064,415 15,038,380 Practically all lodo mines. El Oro 1 Gladding Ranch do Do. Placer 1,813,210 Guilford Ranch do Do. District 3: Innis I Do. Butte do 2,543,835 do Do. Yuba 3,885,875 6,439,710 Practically all dredgers. Midland Reealp do Do. District 4: Innis Do. El Dorado Plumas 1,341,585 Amador Capital Sacramento Dredge (bucket line). 4, 4,122,160 Calaveras do Do. 3,036,390 10,217,445 Practically all lode mines. Consumnes Tuolumne Fassett-Parker Hanlon do Dragline. 767,620 Do. Mariposa General Drodge No. I do 949,690 District 5: Hoosier Gulch do Do. Sacramento Martin Quian Estate do Do. 5,538,295 San Joaquin Do. 327,175 McQueen & Downing do Stanislaus Dredge (bucket/lise). 1,276,240 8,060,455 Practically all dredgers. Natomas do Merced Vincent do Dragline. 1,816,745 District 6: California San Joaquin Dredge (bucket line). Kern Lucas & Putnsm do Do. 2,887,255 Inyo 415,555 3,818,220 Practically all lode mines. MeGurk do Dragline. San Bernardino Watkins Do. 515,410 do Miscellaneous, outside above districts 996,171 Champion Gulch Shasta Do. China Gulch do Do. State total 50,948,486 Clear Creek do Do. Cow Creek do Do. Daly Guleh do Do. 1 Figures from Bulletin 123, California Division of Mines. French Gulch do Dredge (bucket 11ne).b Happy Valley do Dragline. or this total $26,275,265 comes from the lode mines and $24,673,320 comes from placers and dredgers. Lost Channel do Do. Pioneer do Do. Happy Camp do Do. EXHIBIT E Humbag Creek do Do. Kangaroo do Do. Employment in California gold mines Klamath River do Do. Larsen & Harms do Do. [Includes only persons employed by operators and excludes prospectors, snipers, leasers, and Independent Snechi-Spellenberg do Do. workers] Sisklyou Unit do Dredge (bucket line). Yreks do Do. Number of Number of C.& E Stanislaus do Dragline, Dredge (bucket line). men men California Calendar year: employed I Calendar year-Con. employed I La Grange do Do. 1930 Placer Properties Dragline. 4, 411 1936 12, 499 do Triboli & Sophy 1931 do 4, 760 1937 12,871 Tuolumne do Dredge Do. (bucket line)- 1932 5, 104 1938 12,147 B. H. K Trinity Dragline. Dredge (bucket line)- 1933 Carrville 7, 333 1939 , 10,000 do Hayfork 1934 do Junction City Dragline. Dredge (bucket line). 9, 443 1940 : 9,200 do 1935 13,710 1941 $8,800 Lincoln do Dragline. Weaver do Do. . 1 Figures from State division of mines. Weaverville do Do. Figures not available-estimated. # Operations suspended at date of this brief. Regraded Unclassified 616 SILVER SIL/VER 617 EXHIBIT F Deep gold mines of California said before me, particularly ne to the fairness We have found on the part of Dr. Nelson. There is one thought, however, that I should Name of mine Loration Depth of Inclue like to leave with you, and we are not begging this thought with the idea of placing gold mining in the strategic-metals class, Jackson 6,700 feet, all Incline shafts. Argensut The figures that I have received on a not too independent survey Kennedy do 5,000 feet, vertical shaft 4,500 feet in depth 4d 1,400 feet incline. in California indicate that there are over 600,000 new arrivals in Central Eureka do 4,000 feet, all Incline. California since the last census was taken. Empire Grass Valley 8,000 foot, all incline. North Star do 10,650 Incline. feet, vertical shaft 4,200 feet in depth, balsas The CHAIRMAN. Do you mean since 1940? Original Bixteen to One mine Alleghany 3,000 feet, all Incline. Mr. KNOHP. I mean since 1940. My understanding of that figure New Brunawick Grass Valley 4,500 feet, vertical and Incline. 4,000 feet, all Incline. is that those people have been attracted there because of the defense Idaho-Maryland do Lava Cap Nevada City 1,500 feet. jobs. Our airplane factories, our shipyards, and our other facilities Golden Center Grass Valley 2,000 feet. that are devoted to defense work have been tremendously expanded. That presents the possibilities of a terrible relief situation when this Operations suspended at date of this brief. defense buying is over. NOTE.-Above data obtained from Carl Johnson, mine Inspector for the Industial Accident Comminios of California. I mention that because during the last depression the mining camps EXHIBIT G in California were what were known as the white spots of America. UNIVERSITY OF CALIFORNIA, Their production was up high. Therefore, they present to this Nation DEPARTMENT OF MINING AND METALLURGY, only perhaps a small percentage, but, Doctor, these percentages mount Berkeley, Calif., April 17, 1948. to absorb the unemployment that is inevitable. It would be n rather Mr. A. F. KNOBP, substantial pereentage in California, Secretary, California Chapter American Mining Congress, San Francisco, Calif. I do not think we should overlook the possibilities that the gold mines DEAR MR. KNORP: In balancing the gains and losses that might be expected present to this Nation when the boys are knocked from the defense from restricting the supplies of critical materials required to keep the gold mines pay rolls. Of course, We all realize that as soon as the war is over, of California in operation, the damage and in some cases the complete loss that they will be shot off them rather abruptly. Unfortunately, Cali- would result from shut-down should not be overlooked. fornia's climate keeps most of the people in the State, even after a Under ordinary conditions, the majority of the mines now active on the Mother boom is over. I have been told by some of the chamber of commerce Lode and in the northern districts could reasonably anticipate a fairly long life, with steady benefits to the many communities dependent on them, even though boys-I do not know how true it is-that of 100 newcomers to Cali- the profits to the owners might not be large. A prolonged shut-down, however, fornia, only about 15 leave the State during a depression. That may would practically end the industry, for only a few of the larger companies could be due to our weather; I do not know. stand the expense of dewatering flooded workings and reopening caved ground. One other thought, touching on the matter that Senator Millikin The region undoubtedly contains large tonnages of ore that are still to be re- brought out, covered, but very few of the mines have more than nominal reserves that are definitely blocked out, and the profits that could be positively estimated from them I think it should be stressed a little bit more thoroughly. That is, would hardly be enough in most cases to justify the heavy expense of reopening that while gold does not go into tanks or ships or planes today, never- mine once the pumps had been pulled. theless, when this war is over gold and silver, I think, will be the On the Mother Lode in particular, where many of the mines are deep and where strategic metals of the world. Certainly it would be futile to win the the ground is notoriously heavy, it is unlikely that the industry could ever recover from such n. shut-down, and this probable result should surely be kept in mind war from a military angle only to lose it at the peace table, I believe when decisions with regard to priorities for the gold mines are made. that that happened after the last war. Yours very truly, Gold and silver can be used to rehabilitate many of the stricken DONALD H. McLAUGHLIN, nations of the world, and the $50,000,000 that California is annually Dean, College of Mining. producing in gold would go a long way toward helping, let us say, Senator McCarran. Mr. Knorp, if you care to be heard, we will Greece back onto her feet. I make this statement without asking that We be classified as manufacturers of tanks, We realize that we hear you. are not a defense industry, strictly speaking, but we believe that we Mr. KNORP. I shall speak briefly, Senator. come very close to being a defense industry if people will only project STATEMENT OF ALBERT KNORP, SECRETARY, CALIFORNIA CHAP- their views beyond the present day, which I think we should do. Those are the only thoughts I have to offer, in addition to what have TER, AMERICAN MINING CONGRESS, SAN FRANCISCO, CALIF. already been offered by others. Our brief has been filed. Senator McCARRAN. Please state your name, your residence, and Representative WHITE. Your reasoning is governed by the fact that your official position, if any, Mr. Knorp. history shows that every war has been prosecuted with what they Mr. KNOHP. My name is Albert Knorp. I am secretary of the called a war chest. Napoleon, Bismarck, and all the others who fought California Chapter of the American Mining Congress. My office is really successfully accumulated vast amounts of treasure, precious in San Francisco, metals, and money metals. I do not want to take up any more of your time than is absolutely Mr. KNORP. Yes, I believe that even the man in deep, dark Africa necessary. I can only reiterate to B. great degree that which has been understands gold, though he would not understand paper money. Regraded Unclassified 618 BILVER SH/VER 619 Representative WHITE. We read in the papers this morning that the French have now voted to send $1,000,000,000 from Martinique to CURRENT ASSFTS AND LIABILITIES-Continued Strees Venezuela. Mr. KNORP. Yes; and I am mindful also of the fact that despite ASSETS LIABILITIES Hitler's statements that he does not need gold, wherever he occupied Bilver (com 1,157,775,993.0) $1,496,022,496.03 Silver dellars (OR 372,581,024.0) Bliver certificates outstanding a country the first thing he did was to get the gold out of it. 482,720,920.00 Treasury Ing. notes of INDO outstand- $1,967,998,210.00 I might further state that I believe that President Roosevelt's Bliver in general fund 1,158,522.00 0,488,684.03 judgment in accumulating a gold supply was a very far-sighted policy Total 1,978,643,416.03 Total that none of us appreciated at the time, because I feel that he has 1,978,643,410.00 given us now the sinews of peace. The gold that we hold in Fort Mr. ENGLEBRIGHT. Senator; does that give the amount of car- Knox is going to be very valuable to us as soon as the war is over- not only that gold but all the gold we can produce. silver? marked gold we may also have and also the amount of earmarked Representative WHITE. I have heard it said that the gold in the The CHAIRMAN. The statement, appearing in detail in the record, Western States was what saved the credit of the American Nation will show. and made possible the winning of the Civil War. Senator MURRAY. Mr. Chairman- Mr. KNOHP. I think that is an established fact. The CHAIRMAN. Senator Murray. The CHAIRMAN. I think it might be well, in view of the suggestion Senator MURRAY. Doctor, if you find it necessary to restrict just made, to place in the record at this time the amount of gold radically these scarce materials or machinery to the silver mines, that which the United States has. would affect largely only the small operators, would it not? According to the Daily Statement of the United States Treasury of Mr. NELSON. I cannot say. It might affect a large operator sooner date May 2, 1942, we have gold to the value of $22,690,513,844.19. than it would a small operator. I might state also in this connection that on the same date we had Senator MURRAY. For instance, in some States, like in my State of silver certificates outstanding in the total sum of $1,967,998,210. Montana, the larger operators that produce silver and gold are the Without objection I will ask that the detailed statement put out by big corporations, like the Anaconda Copper Co., which, I suppose, the Treasury on the bulletin just referred to be placed in the record at produces 90 percent of the silver that is produced in the entire State. this point. Would not the effect of your regulations be to destroy the small (The Treasury statement referred to is as follows:) independent operators and leave the big corporations in complete control of the field? OFFICE OF THE SECRETARY OF THE TREASURY Mr. NELSON. Senator, I like to look at the mining picture from the positive and not the negative side. It is not that we are destroying DAILY STATEMENT OF THE UNITED STATES TREASURY things; we are helping everyone in the mining industry. Compiled from latest proved reports from Treasury offices and depositaries, If it had not been for this first mining order, which came out on May 2, 1942 September 22, and the revisions of that order made at certain stated intervals after that, which raised in each case the priority ratings CURRENT ASSETS AND LIABILITIES granted to mines, many mines in the United States would have Gotn probably shut down long ago, I mean mines of every type. We are ASSETS LIABILITIES Gold certificates: just giving varying degrees of priority to mines, depending upon how Gold (as. 648,300,305.5) $22,090,513,844.19 Outstanding (outside of important they are to the war effort. The small gold or silver mine Treasury) $2,875,405,519.00 Gold certificate fund-Board can operate, we feel, under P-100 and by the use of P-D-1A when of Governors, Federal Re- serve System 17,678,967,612.74 they need a particular repair part or particular item, if they will just Redemption fund-Pederal anticipate their needs and not attempt to do business as usual. Reserve notes 14,870,002.50 Gold reserve 154,030,430.64 Now, many of these small mines have never even requested a serial NOTE-Reserve against $346,- £81,016 of United States notes and mentioned. number under P-56 but have been operating under the basis I have $1,158,522 of Treasury notes of 1890 outstanding. Treasury notes of 1870 are also secured by Senator MURRAY. You have found no difficulty, then? silver dollars In the Treasury. 1,800,000,000.00 Mr. NELSON. Of course, occasionally there may be some difficulty, Exchange stabilization fund because a small mine may wish something that is so critical it will not be easy to furnish it to them. Gold In general fund: Balance of In- Senator Murray. Well, so far you have not found it necessary to crement re- miting from cause the shut-down of any small operator? reduction in Mr. NELSON. As I stated in B. meeting earlier this week, we have the weight of the gold dol- had no information to show that any mine in the United States has lar $143,425,358.24 In working bal- shut down due to any priority action that has been taken by the ance 21.805.319.89 165,230,677.63 mining branch. Senator MURRAY. You do not anticipate that conditions will de- Total 22,000,513,844.19 Total Regraded Unclassified 620 SILVER SILVER 621 velop that will make it necessary for you to adopt any radical policy with reference to supplving materials to those smaller companies? STATEMENT OF ROBERT S. PALMER, SECRETARY, COLORADO Mr. NELSON. We will not adopt any radical policy at any time, MINING ASSOCIATION, AND SECRETARY, STATE MINERAL but if we do not have enough material to go around, We may be un- RESOURCES BOARD, DENVER, COLO, able to ship any mines, that do not enter into the war effort, critical repair parts that they may need. I cannot say what the condition Senator McCARRAN. Please state your name and official position, of critical materials will be month by month. Mr. Palmer. Mr. PALMER. My name is Robert 8. Palmer. Senator MURRAY. At the present time you do not anticipate that The CHAIRMAN. What is your address? there is going to be such a serious shortage as to make it necessary Mr. PALMER. My address is Denver, Colo. for you to adopt any stringent regulations now? The CHAIRMAN. What is your present position and business? Mr. NELSON. We do not need to adopt those regulations at the Mr. PALMER. My present position is secretary of the Colorado present moment, Senator, but I am sorry that I cannot see into the Mining Association, and secretary of the State Mineral Resources future. I wish ! could. Board; and also I am attempting to assist Dr. Nelson in Colorado as Senator MURRAY. If, for instance, as in my State, the great pro- State Emergency Coordinator of Mines. duction of these minerals comes from the large corporations, it would First, I should like to explain, so that it will be a matter of record, not be a very large amount of material or machinery that would be that our position throughout this alleged controversy has been one of necessary to operate the smaller concerns, would it? the utmost cooperation. The mining people of our State are very Mr. NELSON. That is true, Senator, but, as I have been told by BO anxious to cooperate with Dr. Nelson and the War Production Board many people in the W. P. B., and as I likewise have told many people, and to assist in every possible way in bringing about a complete under- if you save 1 percent here or a fraction of 1 percent here and do that standing of the problems of our industry, and I wish to assure the in a hundred different industries, you have saved enough to put over Senate committee that we are just as anxious to win the war and do the war effort: while if you dissipate those fractions of 1 percent of everything that we possibly can to win the war as any other group of critical materials in 8. hundred industries, you may affect our war people. effort very adversely. Colorado, of course, is a mining State. It is primarily known for Senator MILLIKIN. Might I put reverse English on that? If you its gold and silver. Since the beginning of our Commonwealth we destroy the gold camp, the silver camp, the tire man, the radio man, have produced $1,843,294,915 in gold, silver, copper, lead, and zinc. the ice-box man, and the filling-station man 1 percent at a time, The dollar value of the gold and silver was $1,382,552,191. But the pretty soon this economy that must keep this war effort going has important point that we wish to bring out is that without the gold been destroyed. and silver content of our ores we could not have produced $1,843,000,- Mr. NELSON. Those people working on the over-all war effort, I 000-plus worth of copper, lead, and zinc. think, know the picture more thoroughly than anyone else, and I am The CHAIRMAN. At this point it would be interesting for the record willing to follow their leadership. to show the relative production of gold, silver, and other metals with Senator MURRAY. I do not think they know it quite as well as those relation to former times. I'mean by that, Is the production of gold who are being put out of business and destroyed completely. I think and silver increasing constantly; is it stationary; or is it decreasing? they have a more vivid understanding of what is happening than some In other words, are your mines playing out, with no prospect of new of these people who are providing regulations. ones being found? Mr. NELSON. They may have a vivid understanding of their own Mr. PALMER. The mining people of our State are curtailing pro- problem; I will admit that-and it is a very serious problem to each duction of gold and silver at the present time and are increasing pro- individual. duction of copper, lead, and zine. In many of the districts there is Senator MILLIRIN. Senator Murray's committee, under his dis- no evidence of a playing out of ore bodies; in some, of course, the tinguished leadership, has developed many facts which go to show that reverse is true. there is not entirely the infallibility that Dr. Nelson suggests about Just before coming to this hearing, we made a study of the priorities many parts of our war direction. situation. These are figures which we compiled just before I left The CHAIRMAN. Senator Murray. have you finished? Denver. Senator MURRAY. I have finished. Senator McCarran. Mr. Chairman, right here may I interrupt? The CHAIRMAN. Mr. Conover, have you finished? I think that an additional statement in answer to the chairman's Mr. CONOVER. That is all I have to say. inquiry would not be out of place here. The CHAIRMAN. We thank you for your statement. I think it will be conceded that the mines that produce straight Senator McCARRAN. Mr. Palmer, will you come forward, please? silver, for instance, are not as prevalent and are not as much in existence today as they were in times past. Today silver-and I dwell on silver first-is to the largest extent produced as a byproduct of certain nonprecious metals and minerals, as, for instance, copper, lead, zine, and so forth. The mine that was in the class of the Com- stock Lode, for instance, which was practically straight silver, exists Regraded Unclassified 622 SILVER SILVER 623 in only one instance today, of which I have any knowledge, within the United States. That is the Sunshine Mine, of Idaho. That comes received favorable action on their applications. It is interesting to nearest to being & second Comstock or Virginia City. As to the note that none of the coal mines have had their serial numbers Virginia City mines, whether or not they are played out, which is rescinded. always a moot question, suffice it to say that they have been worked A comparative study of metal production with the metal needs of so that conditions now exist which make the mining of silver non- the industry was presented to Dr. Nelson- at the Denver hearing. It profitable because of a vast volume of hot water that had to be was shown that 70,134,000 pounds of lead, zine, and copper were handled in the lower levels of the Comstock Lode. produced in Colorado in conjunction with gold and silver, and that all I think that the production of silver-dealing, now, with silver these mines required only 350 tons of manganese steel, 250 tons of alone-is much less today, coming as straight silver, than it was in carbon-treated steel, 1,400 tons of mild steel, and 500 tons of alloy times past. That is a partial answer to your question. steel, or a total of 2,500 tons. Senator McCARRAN. As against what production? Then, again, I cannot permit the statement of my good friend, Mr. Palmer, to go by without comparisons, which are also very interesting, Mr. PALMER. Seventy million-plus pounds, Mr. Dickerman, stat- in keeping with the chairman's question, and that is the amount of istician for the State mineral resources board, has made a study of the precious metal produced by the State of Colorado. needs of the industry. The results give a clear picture of 79 percent Let it be noted that while Colorado was producing a billion and IL of the production of the State. I desire to offer this statement for half dollars in precious and nonprecious metals, the State of Nevada the perusal of the committee. It shows how small our needs are, but how important our production is to the welfare of Colorado. took out of just one small hole in the ground a billion dollars, and at The CHAIRMAN. Do you wish to have it placed in the record? a. very important time in the history of this country. Mr. PALMER. Yes. Representative ENGLEBRIGHT. I may add, Senator, if you will The CHAIRMAN. Without objection it is so ordered. permit, that the State of California, prior to the time you took that (Paper entitled "Priorities Information" is ns follows:) out of the hole, produced another billion dollars. Senator MURRAY. Mr. Chairman, while We are on this subject, Priorities information I want to say that we have produced two billion dollars out of the Butte Hill, which is the richest camp on earth. Estimated Mr. NELSON. Mr. Chairman, might I also inject a remark? Before Material consump- Estimated Net con- tion salvage sumption the California gold rush, the gold center of the United States was in Virginia and North Carolina, and Thomas Jefferson described one of Drill steel toms 607.19 230.29 376.90 the first gold nuggest ever found in the United States. Stéel plates do 791.75 307.15 484.00 Ball mill liners do 364.85 106.25 The CHAIRMAN. All of which leads me to wonder what would have 262.00 Balls do 1,044.88 3.60 1,041.28 Rails happened to a number of these States had it not been for gold and do 609.45 64.95 541.50 Chrome moly do 121.13 20.47 91.06 silver, Abrasive res. (screen plates) da 26 8.25 17.78 114-inch wire rope feet 7,000 Mr. PALMER. Mr. Chairman, I think it is quite evident that when li- and 4-Inch wire rope do 0,500 4,000 12,500 Blabbitt there was a rumor that our mining industry, which is the basic indus- pounds 7,169 782 Brass 6,416 do 3,893 097 3,196 try of our western section, was being threatened by an ill advised Bronze welding rod do 6,826 50 Solder 6,770 do 2,101 0 2,101 order, published without proper consideration of the mining industry, Mercury, 3,845.4 (flasks) do 49.3 0 49.3 Sodium carbonate it was only natural that not only those directly interested in mining, do 58,630 o 88,030 Anetylene euble feet 706,517 o 700,017 but people generally, were very much disturbed, and still are. The Oxygen do 2,483,930 e 2,485,930 Hot-rolled bars tons 141.87 27.42 114.45 reassurance of Dr. Nelson in rescinding the 30 percent clause will Pipe (carbon) do 203.20 25.20 178 Wire rods (alloy) have a far reaching effect on future mining activities in our State. do 16.85 25 16.00 Air luse pounda 28,139 4,715 23,424 Our study shows two classifications under the priorities system in 4-ply rubber hose do 4,456 140 4.316 Cyanide do 397,115 0 397,115 Colorado, namely metal mines and coal mines. There were 242 Xanthate (copper sulfate) do 222,382 o 222,342 Hydrochlorio acid do 292,313 0 different concerns requesting preference rating numbers. Of these, 292,313 Sulturio acid do Nitrie seld 4,235,225 o 4,235,223 135 received them; 107 were either turned down or, at least, have not Borax do 16,407 o 16,407 do 13,850 o 13,550 been given numbers, for reasons unknown to the applicants. Ther Soda bicarbonate do 770,155 e 770,155 were 66 companies notified that their serial numbers had been with- drawn as of March 2. Of these, 28 have been reinstated, and 38 companies have not been reinstated. Of the total number under Mr. PALMER Some mention has been made by the Senator from this classification, 67 have not been withdrawn. These consist largely Montana of the small mines. Our situation in Colorado is largely & of tungsten, molybdenum, and vanadium mines and the nonmetallics. question of small operators and small mines. The individual produe- Including all of the varied types of mines, there are only 95 operating tion of strategic metals from each individual mine perhaps is small with serial numbers in Colorado. and may not be given proper recognition by some of the war agencies, A study of the coal mines show that 156 separate operators requested but the sum total of the production of all of these little mines is a serial numbers. Eighty-three were given ratings, and 73 have not very vital part of our production of metals. We have in Colorado the leasing system as well as the other systems. Regraded Unclassified 624 SILVER SILVER 625 If a man decides to develop B. particular property, having been assured by the Price Administration that he is to be given a promium program of the War Production Board; but the small operators, who on lead, zine, and copper, on a marginal operation, he usually takes go to the local merchants to buy particular pieces of equipment which the property on a lease. Under the terms and conditions of the lease, may be necessary to keep their operation going, are not able to main- he is required to work a certain number of shifts per month. Now, tain an inventory even over a 3-month period. many of these operators find themselves in this predicament. If they As far as allocating materials to a particular camp is concerned, I don't work the shifts they lose their holdings, How can they work want to point out that one company in our State, in the Cripple Creek without tools. This is true in the strictly gold-mining areas as well area, has done a marvelous job in helping these smaller operators by as in the complex ore areas of the State. They have everything that keeping a small stock available for their use prior to the priorities they own invested in these mines. If they don't live up to the terms and conditions set out in the leases, they will lose not only the leases system. So, we want this clearly understood; that the mining industry wants but also such property as has been affixed to the mines, to do everything that it possibly can to cooperate with you men in the These people have their homes in these mining communities. War Production Board and to assist you. We are indeed grateful to Many of the men who have called at my office tell me that their sons Dr. Nelson and the others who have seen fit to modify this order, are in the armed forces. In some instances they are actually working which has done 80 much harm to our section of the country. in the mines although their age is such that they should not be engaged I will gladly answer any questions. in active mining operations; but they are taking the places of their The CHAIRMAN. Are there any questions from any member of the sons in order to keep the mines working. They are buying their committee or others interested? If not, We certainly thank you, Mr. percentage of War Bonds, they are helping to carry the tax load of our Plamer, for your statement. Senator McCARRAN. Thank you, Mr. Palmer. State, and they have no desire to go on relief. These men tell me that they cannot work in high-speed industries. Mr. PALMER. May I introduce, Senator, the statement which was made at the Denver hearing, as showing some additional facts? They would be of no value whatever to the war effort, for example, The CHAIRMAN. That is, as a part of your statement? in an arms plant. They know their districts, because they have Mr. PALMER, As a part of my statement. gained their livelihood in those districts. They know the forma- The CHAIRMAN. Without objection, it may be received. tions of those districts, and they know how to mine those districts. (The statement referred to is as follows:) It may seem a simple matter to try to transfer these people to other mining areas. But we might ask the question: Where? An exact COLORADO A GOLD AND SILVER STATE study of our situation would indicate that that is not possible. These Colorado is well known as & gold and silver State. In total value gold was the men have asked me in all sincerity to offer the plea here to the Senate leading metal produced in Colorado from 1858 to the present, but in annual value committee and to the members of the War Production Board to help it was surpassed by silver from 1874 to 1896. them stay in the districts in which they gain their livelihood and al- MINING 15 ONE OF COLORADO'S MOST IMPORTANT BASIC INDUSTRIES low them to continue in their operations and permit them to help the war effort, if in no other way than by the purchase of War Bonds. Mining is one of Colorado's most important basic industries. Mineral- As to cooperation in the use of steel and other equipment, I wish producing activities are carried on in 47 counties. The recent order issued by the War Production Board would, in our opinion, affect mining activities in 42 of these to call your attention to the original P-56 order. Section G, which counties. Numerous taxes are paid by those operating these mining concerns, provides for restrictions on inventory, as follows: including real property taxes, production taxes, corporation taxes, income taxes, No operator shall accept deliveries (whether or not rated pursuant to this sales and service taxes, social security taxes, workmen's compensation costa, etc. As an illustration of our situation in Colorado, one county has not & single acre of order) of operating supplies or other material which will increase such operator's inventory of such operating supplies or other material to an amount greater than agricultural land in the county. Farm products are bought locally, and the the minimum necessary for the efficient operation of his business, and the ratio closing of the mines not only affects the miners themselves and their numerous dependente but all of those who supply the mines with materials used in them as of inventory to current production shall in no event exceed the ratio of average well as the supplies necessary for the men who run the mines. The far-reaching inventory to average production for the years 1938, 1930, and 1940. effect on the counties, the State, and the Nation can only be referred to here. The mining men with whom I have come in contact in our section have told me that when they received this order, they did their ut- ORES COMPLEX most to cooperate; and after all, it is our feeling that the operator of The large majority of Colorado mines produce gold, silver, copper, lead, and n mine, when he gives you his cooperation, can save more than any zine from complex ores in which all or a part of the five metals mentioned are arbitrary ruling which may or may not be made here in Washington. present. From 1859 through 1941 the dollar value of Colorado's production of gold, silver, copper, lead, and zine was $1,831,304,935. The total value of the If you have the whole-hearted cooperation of the superintendent of gold and silver production was $1,382,552,191. Subtracting the second figure the mine, the foremen, and the workmen, you are going to save all from the first, we have $448,752,744 as the total figure for the production of the equipment possible. They are not going to use any more supplies copper, lead, and sine in Colorado. These figures show us that 75.2 percent in in the operation of the mine than is absolutely necessary. value of gold and silver and 24.8 percent in value of copper, lead, and sino were produced. These figures are introduced here only to show us that if we take into I have made mention of the small operators. These men are not account the total production of our State from 1859 to the present we can readily wealthy men; they are generally poor men. They are mining marginal see that none of the production could have possibly taken place had the present ore. They are not able to maintain large inventories. Many of the priority classification existed. larger operators tell me that they can comply with the inventory 75052-42-pt. ID Regraded Unclassified 626 SILVER SILVER 627 1940 FIGURES The third governmental agency to announce publicly the policy of the United Taking the 1940 production figures in value for all gold, ailver, copper, lead, and States Government was the Secretary of the Interior, Harold L. Ickee, who in 1940 was $10,762,153. In the same year the total copper, lead, and sine sine producers in Colorado we find the following: Total gold and silver production stated over B. national broadonat: "The Interior Department is for a greater use of mineral resources of the Nation than has yet been made." The policy then BJF duction was $4,531,512, the total of the two being $24,293,665, The perment pro- announced by our Government is quite clear that the mining men of Colorado value of gold and silver was 81.4 percent and the percent value of copper, lead, and and of the West are called upon to increase the production of copper, lead, and zine was 18.6 percent. Thus we see that the production during 1940 le far is sinc. excess of the 30 percent set out in the order. We know from experience in Colo- WAR PRODUCTION BOARD BULINGS rado that when the gold and silver production is up, copper, lead, and sime pro- duction is up, taking into consideration all economic factors. Under Preference Rating Order P-56, under which we have recently been operating up until March 2, we find the following definition of a mining enterprise: PROCEDURE "(a) (2) (i) Any plant actually engaged in the extraction by surface, open-pit, or underground methods, or in the beneficiation, concentration, or preparation Two points should be made clear before we proceed any further with the pres. for shipment of the products of mining activity, but not including that form of entation of the facts and reasons why we believe you are justified in extending mining known as gold placer mining.' the provisions of Preference Rating Order P-56, amended March 2, 1942, to the Under Preference Rating Order P-56, as amended on March 2, 1942, we find metal mines of Colorado, in addition to the former definition of a mine the following exclusion: "Any plant First, The mining people of Colorado are as patriotic as any group of oitizens more than 30 percent of the production of which in dollar value consists of gold in the United States, As evidence of this fact miners from Colorado were name and/or silver." the first listed in the notices of casualties in the Far East. We have oversub- We feel that discussion here OIL preference ratings should be restricted primarily scribed our allotments for Defense bonds: we have curtailed the use of materials to the reasons why this peculiar yardstick was used in granting serial numbers vital to the national defense and made substitutions where practicable: we have or rights to obtain materials with which to mine. Preference Rating Order P-100 replenished steel plants with our scrap metal and have kept inventories at a bare was issued on December 18, 1941, and in A blanket order under which the mining minimum for continued operation; we are endeavoring now to increase the pro- industry can qualify but in numerous instances has been unable to get materials duction of the metals which are vital to our national security, and have piedged and supplies for repair and maintenance. our cooperation in every other way consistent with sound policy at our recent While we realize that discussion of PD-1-a forms will creep into this hearing, convention in Denver on January 24. we point out that this order was made optional last February 2 and was required Second. We are not criticizing Dr. Wilbur Nelson, Administrator of the Mintng after March 1. We were, therefore, operating until the recent order largely under Branch, Materials Division of the War Production Board, for we feel that he is Preference Rating Order P-56 BS amended December 2, 1941, and were trying capable, efficient, conscientious, and courteous, We fully appreciate the prob- our best to produce the metals which our Government has announced it needs to win this war. lems which are confronting the Mining Branch for we have visited the offices of the Branch in Washington and know all too well of the crowded conditions under We are at B loss to understand why in the order of March 2, 1942, we were which Dr. Nelson and his assistants are working, and of the confusion which of excluded simply because the values of our ore in dollar value in in excess of 30 necessity must exist with the assumption of such B. tremendous task as handling percent and that we are restricted from using this particular order unless we go the requirements of the mining industry. With as new staff the difficulties are through the procedure which you have described at this hearing. You have doubly apparent. We only wish that Dr. Nelson had more authority and more sent to all of those companies who formerly had serial numbers a questionnaire facilities, (LS well BS a larger staff with which to work. We feel that with the clari- in which you have asked them to state the dollar values of the different metals fication of the facts here presented, and the portrayal of the exact conditions which in their ore. One might well ask "What difference does this make AS long as the exist in the mining industry in Colorado, based on past relations with Dr. Nelson metals needed by our Government are being produced? What value should we and others in this governmental agency, the proper corrections will be made; and use? The value of the ore at the collar of the shaft or at the portal of the tunnel, or at the point of origin? Shall we use the New York, St. Louis, or Leavdille that instead of placing obstacles in the way of progress and increased production the War Production Board will see its way clear to assist the Industry produce price? Shall we use the analysis given by the smelter or shall we use the assay value taken at the mine of all of the metals produced? those metale for victory which the mining industry of Colorado can produce. We feel fully justified in objecting to discrimination against Colorado's mines. We call your attention to the fact that the actual amounts received in final RELEASE OF EMERGENCY MANAGEMENT ON PREMIUM PRICES settlements for copper, lead, and zine in Colorado are, in many instances, much On February 1, 1942, the Office for Emergency Management released informa- lower than in some of the other States. Are we to pay additional penalties by being tion explaining that on that date premium prices of 17 centa for copper, 11 cente deprived of priorities simply because we are at the present time penalized more for zine, and 014 cents for load would be paid to producers of these metals in excess than they are in some sections to which we will refer? of 1941 production for a period of 2½ years, ending July 31; 1944, with the pro- What logical basis is there for this 30 percent figure? We have shown that it vision that should the emergency end before July 31, 1944, the Metals Reserve certainly was not the result of an analysis of the ore values produced in the State Company reserves the right to terminate this arrangement on equitable terms to be in any year from 1859 to the present; or using the total figures of the entire period announced at a later date. While it is true that as far as we are informed none of this was not the case. our producers have yet received this premium for metale produced in this State, Since the order has been released you tell us that while we are excluded from we desire to call your attention to the first paragraph of this rolease which we take the order you intend to take care of us one by one after we have made application to be the announced policy of William L. Batt, Director of Materials Division to Washington, and you have referred our individual cases to the proper metal of the War Production Board, and Leon Henderson, Administrator of the Office divisions. For example, copper to the copper division, lead to the lead division, and so forth. of Price Administration: "The expansion of the armament program following the entry of the United We submit in all fairness that it in much easier to examine the production of the States into the war has made it imperative that unusual steps be taken to increase metais in our State and of the different mines in the State and to tell us whether further the output of copper, lead, and zine because of their prime importance ⑉ you want the total amount of lead, sine, and copper we are now producing and the production of armaments." whether you are sincere in your announced policy and are In line with the other In the first paragraph of Preference Rating Order P-56, as amended to March departments of Government which seem to think that we need these metals for our war effort, 2, 1942, We find in section 982.1, the following: "For the purpose of facilitating the acquisition of material for continued and expanded operation of mining When you examine our smelter schedules submitted here for your convenience enterprises in the public interest and to promote the national defense, preference we believe that any fair-minded person would see the inconsistency of the dollar rating orders are hereby assigned to deliverice of such material upon the terms value basis in & district such as ours, We again hear your answer: "We have- hereinafter set forth." nothing to fear." We realise that you are A square-shooter and that you mean, Regraded Unclassified 628 SILVER SILVER 629 just what you any, but as pointed out by Senator McCarran in Novada, you not glued to your job and there is always the possibility that we might have in provisions the mines of Colorado and not exclude those mines which produce deal with someone other than yourself. We know from past. experience In dealing to more than 30 percent of their dollar value in gold and silver. with offices located at any distance-whether they be in Washington or elsewhere- We have called your attention to our smelter eituation-one lead smelter in on the same basis regardless of personalities. that it is far better to have a ruling made specifically 80 that all will be treated Leadville. The manager of this plant states that less than 10 percent of the shippers to that plant could qualify under this order. If 90 percent of the shippers We might well ask, Do you want the 0,134,000 pounds of lead, zine, and copper were cut off, you know the smelter would close down. Since the order has been and the additional production we can make in Colorado if you but put your (ssued you have told us that you have no intention of shutting down these mines orders in writing 50 that the industry will know exactly where It stands? Mining or the smelter; that you intend to take care of us by some other method; that we operations cannot be conducted with fairness to all on such & proposition as you might use an A-10 rating under P-100; that we might have our rights reeatab- submit to us. We were given assurances by other departments of the Federal lished after our applications have been referred to Washington on an individual Government, but we are sorry to say that experience has taught us that them basis and individual action taken after recommendations have been made by the assurances have never materialized. different metals sections of the War Production Board. MATERIAL 15 SHORT TIME IS SHORT-RED TAPE SHOULD BE ELIMINATED understand that there is a shortage of many of the materials used by the It requires effort both at the mine and in Washington to handle these orders. mining industry in producing the metals necessary for war, but in examining the Someone pointed out that the orders themselves are printed with type made figures in Colorado of steel, for example, we do not think that our demands are from lead. We can do away with a great many of these orders and simplify them great enough to justify you in closing down entire communities and In disrupting and enable many of the men employed in Washington to help in some of the our way of life and the economic well-being of the people who will stay at home essential industries, and by the same token enable the miners to spend more time and fight the battles here on the home front while their sons are fighting in the in the mine getting out the metals we 50 desperately need. front lines. Our figures show only 350 tons of manganese steel were used in 1941, Boats earrying ore to this country are being sunk. We must produce these only 250 tons of the carbon drill steels, only 1,400 tons of mild steel, and 500 tone metals and we submit in all fairness that Individual applications, based on the of alloy steels, or & total of 2,500 tons. Surely the production of the lead, nine, theory that all items purchased from one company be Included on an individual and copper justifies the use of this small amount of steel in Colorado. Had you application but separate applications must be made where purchases are made used the requirements of the industry in the form of steel as A basis on which from different suppliers, complications too numerous to mention will creep In. We priorities might be granted, there might be some logic to your position. want the industry classified as an industry and not on an individual and possibly a personal basis. We even go further. We state that In many districts in Colorado the scrap Ore bodies in Colorado may be smaller and may change from time to time In metal finding its way back to the steel plants is much greater than at any former period; therefore, the figures of the amount of steel used in the industry are a metal values, but we are able to get by and produce the metals you ask us to cessive for we returned part of this steel to the steel plants to be used for processing produce because of the gold and silver values. Gold and silver have made many of our other industries possible. Many of these mining organizations are today in making new equipment. financing additional development work in districts which have heretofore, and FD-1-A FORMS possibly will in the future be known for the strategic metal values. We think that PD-1-A forms might be used by some companies where they We are all in this war together; we want to win; we want all of the mines to have efficient bookkeeping methods, clerical help, etc., and where the operations work; we want all of the people in all of the mining districts to do their part. are large enough to justify the keeping of stocks of supplies. We call your We will pay back in taxes a large part of the values of the gold and silver. We attention to the fact that under the old order P-56 we agreed to keep our stocks will build up and strengthen our economic welfare. We will do the things for at & minimum and that we would not use priority ratings except where they which we are fighting this war and you can count on the Colorado miners to deliver. were needed, and then you will recall each plant agreed to file each month es The people of this State are aroused, and justly so; they are indignant to think form PD-119 & list of those items which it has purchased during the prior month that such an order as yours would be thrust upon us at this time. We count on on which it had used preference ratings. You have a constant check nn these our public officials to get the job done-not penalize the mining industry by companies, and not only that but you have the full cooperation of the mining making such ridiculous orders as P-56 as amended March 2, 1942. men of this State and you can easily cut off any mining company which exceeds its quota fixed in the former order, as well as the present order, by your own Senator McCARBAN. Mr. MacBoyle, will you please come to the table? yardstick, If you want to make a survey of the amount of material used under these higher preference retings, we will be most happy to make this survey and show you how small the demands of the industry are in comparison with its STATEMENT OF ERROL MacBOYLE, MINING ENGINEER AND value to our economic welfare and to the national war effort. Surely there must be some balance in the issuance of such orders. Objectives must be 000- CHAIRMAN, STATE MINING BOARD OF CALIFORNIA sidered with results, and the morale of our people, as well as the livelihood of those of us who must stay put during this emergency, need your consideration. Senator McCahran. Mr. MacBoyle, will you kindly state your Our little mines keep very small inventories; in fact it can be proven that name, address, and position or occupation for the record? large companies use more material per ton of ore produced than little miners. Mr. MACBOYLE. My name is Errol MacBoyle. I am a mining Little miners must conserve their capital; they must receive prompt payments for their shipments of ore; and they also need supplies promptly in order to engineer and am chairman of the State Mining Board of California. survive. It in the well known problem of little business which has been before the public considerably recently, but the sum of the production of metals of all here. I am representing Governor Olson, who has asked me to represent him of these little mines is our one hope of increased metal production in this country. I do not have any notes or any data; that will be covered very com- Many of the larger operations are at capacity, thanks to your department's efficient classification of their priority needs, We only ask for the same COD- prehensively in Mr. Knorp's report, which I think you have, that was sideration for the small mines. It is silly to say that we are misrepresenting compiled by the California Chapter of the American Mining Congress. your order, Your order means exactly what it says. The order should be All of us operators-I am a gold-mining operator myself-supplied changed to include the situation which we have in Colorado. The mining men of the State of Colorado, after careful consideration, 5 great that data, which I think will give any information which the War deal of deliberation, concerted discussion, and numerous conferences with st Production Board or the committee may need. torneys, engineers, technicians, operators, prospectors, and miners recommend The CHAIRMAN, For the record, would you please state whether or to you that you amend your Order P-56, dated March 2, 1942, and include in (to Regraded Unclassified 630 SILVER SILVER 631 not the order as it existed 10 days ago was having a harmful effect on the industry in your State? Mr. NELSON. That publicity was just a misinterpretation of 8 Mr. MACBOYLE, I would say that the order, when it came out of a priority order. It was misinterpreted by the press. clear sky, caused great consternation, to say the least. The Governor Mr. MACBOYLE. I appreciate that, Dr. Nelson. The unfortunate of California was very much disturbed over that, because it meant, part of it is that some of the press will jump at conclusions. the way the order read, practically the closing of all our gold mines But I think that Congressman Englebright will back me up when on the mother lode, some of which had operated without stopping I say that all the gold miners, if they felt in any way that their oper- ations were interfering in the least with the winning of this war, since 1850. would close down and let the mines fill. As to the mine which I represent, the Idaho-Maryland, which is But as to the amount of this material and whether a lot of these probably the second largest gold mine in the United States, it would orders are really necessary, we think it can be cleared up and shown have meant ultimately the closing down of the property, and that to the War Production Board and shown to the people of California means destruction of the communities. For instance, in Nevada and the other mining States. I think it is going to take quite & County there are about 20,000 people, of whom probably 18,000 are burden off the shoulders of Dr. Nelson and the War Production Board. dependent upon the gold mines. I do not want to tell them how to run their business, but that is just At that time we did not know whether the taking over of the mines the opinion of an observer. We feel that the gold mines can be kept in the Philippines by the Japs was any worse than what the War in operation with the use of very little material. The larger mines Production Board was going to do with the gold mines of California. have supplies on hand that will last for some time. But Dr. Nelson in his administration is, I think, trying to do the best But the thing that was uppermost in our minds was the fact that he can under very adverse circumstances. the gold mines would be closed down without any chance afforded to The CHAIRMAN. That gives the influence that the order had when try to keep alive. We feel that if the gold mines can be kept alive it was first promulgated. For the record, if you will, state whether or through this period of stress, ultimately the gold mines are going to not the execution or the administration of that örder has been harmful help save the United States after this is over, because we all feel-we to your mines, may be prejudiced-that gold and also silver will be badly needed Mr. MACBOYLE. Well, in 8 few cases it has. Of course, Dr. Nelson after the expenditure of these, shall I say, astronomical figures is over mentioned here the other day the Argonaut mine and said that the with. Dr. Nelson in his administration has, I feel, given every con- mine was really closed because it was making a small losa. But that sideration he could. For instance, I asked him at Reno whether if a mine, if I may disagree a little, has a large fund behind it. Probably pump broke down we would have to close our mine. Since then, the loss of $30,000 or so would not have made any difference under under his administration, we feel that we can go ahead, operate, and normal conditions; but under the conditions of uncertainty and the keep our mines out of water. lack of labor that now exists it does make a difference. For instance, The mine I represent has about a hundred miles of working-as Mr. our mine which a year ago was operating with 1,000 men has, Conover said, heavy ground, and the rest of it. If that mine should according to the last report, probably 600 left. I want to make fill up, it would probably cost us a million dollars to reopen it, if it mention, too, of the rather unfortunate publicity that goes out on ever was reopened, because these deep mines are difficult to reopen. some of these things, which, I have been assured by Dr. Nelson, The Idaho-Maryland was filled up and was reopened a few years ago is being taken care of. However, the last order about the powder at & cost of a million dollars, That is mentioned just to give you a came out in the headlines of the Wall Street Journal as Gold Mines picture of what it means. Denied Powder." Well, immediately there was great consternation The CHAIRMAN. What is your reaction to the istatement made by in California, because you cannot dig holes without dynamite. Dr. Nelson this morning as to the clause about the 30 percent? What Representative ENCLEBRIGHT. If I may interrupt, on that powder effect will that have upon your industry? order, I might say out of deference to Dr. Nelson, I got in touch Mr. MACBOYLE. I think that that will all be from the psychological with Dr. Nelson the day he arrived in Washington from a trip out of end. The men have felt that they have got to move out of the gold town and spoke to him with reference to that particular situation, and mine areas because of the uncertainty of what the future will be. he assured me that it was an error in publication, and I told him at They all feel from the publicity that has been put out that the War that time that I intended to communicate with all the northern Production Board was ultimately going to close down the gold mines, California papers in order to correct the situation. It was very They were looking for some place to mine, unfortunate. Would you tell us just what effect it had with reference I know what has been said-that these men could be put to better to labor right in our home community, because we both live in the work in the strategic minerals. But we feel that if these gold mines same community? can be kept in operation-I am speaking now for our own mine-our Mr. MACBOYLE. I can say that within 2 days we had lost 75 directors have said, "Go ahead into strategic minerals, even at a men. It would have been all right if those men had gone into war loss, in order to produce," and that is what Governor Olson has production, but unfortunately that was not the case. Quite a number wanted, too. went down to that camp at Marysville and immediately became We have out there R fund to stimulate the production of strategic carpenters. minerals. But to do that, gold mines will have to have some source of income, because none of us have such large reserves that we can Regraded Unclassified SILVER 632 SILVER 633 go in. But we want to keep our geological staffs and our mining men together. That can be done by turning part of the income from the Mr. MURPHY. But they didn't know it. They said, "We cannot gold mines into the transfer to strategic minerals, which we are per- get it. There is the order from Washington." They had a copy of fectly willing to do. We are now working along that line with Dr. it. So, they were kind of confused about the matter. I was just Nelson, the Metals Reserve Company, and the rest of them, trying thinking that if Dr. Nelson would write me a letter to the effect that you do not need a serial number in order to get powder, I would to do that. The CHAIRMAN. It seems to me, under the developments brought have it published in all the papers of the State, and it would be out by this hearing, that every mining camp and every mine, in effect, helpful. Mr. NELSON. I will give you that letter before you leave. is an individual problem. Mr. MURPHY. I heard Dr. Nelson make the statement that he did Mr. MACBOYLE. I think it is. The CHAIRMAN. It has to be considered by the Board, on the one not know of any mines that had been shut down on account of pri- orities. I sent out a lot of questionnaires to the mines, and quite a hand, or the mine or the community on the other. Then you will few of them have been returned. We have had mines in Nevada come to some agreement, and that agreement will be presumed to be that shut down, as the statements will bear out, because they cannot in the best interest of our war effort. go on. They have stated, also, in some cases, that they can run only Mr. MACBOYLE. I agree entirely with that. As I say, Dr. Nelson from 60 to 90 days, and not later than the 1st of August, on account has been very fair in all his rulings. I think that if it is left in hands of a lack of supplies. The reason they are working now is that they like that as to the future, the gold mines can get by until better times, had supplies on hand that will carry them over until that time. The CHAIRMAN. We thank you for your statement, unless there are Senator McCARRAN. Are the mines you are now mentioning mines some questions. that are producing strategic or war-essential metals? Mr. NELSON. Might I just state that I do not doubt at all any of Mr. MURPHY. No; the ones producing strategic or war-essential the statements made by Mr. MacBoyle, but I would like to call metals have got serial numbers. It is gold and silver mines I am attention to the fact that at the time this amendment was made on speaking of. March 2 there were only 9 of the 50 mines of the Mother Lode that Senator McCARRAN. Are they straight gold or silver mines? were operating under this order. Mr. MURPHY. Some are gold and silver, and some are straight Mr. MACBOYLE. Yes; I appreciate that. Of course, nobody wants silver. For instance, the Nevlock, near Silver Peak, is purely silver; to get under regulations until it is absolutely necessary. nothing else. They are working 150 men there, and his question- Senator McCARRAN. Mr. Matt Murphy is the next speaker. naire, returned, said that about the 1st of August he would have to shut down. STATEMENT OF MATT MURPHY, INSPECTOR OF MINES, STATE Senator McCARRAN. Is that Mr. Chord? OF NEVADA, CARSON CITY, NEV. Mr. MURPHY. No, Mr. Chord's is Silver Peak. This is Desert Silver, of Nevlock. Mr. Chord is the one that shut down. Senator McCARRAN. Will you please state your name, your official Senator McCARRAN. Mr. Chord's is what? position, and your residence for the record? Mr. MURPHY. Mary Mines. Mr. MURPHY. My name is Matt Murphy. I am State Mine In- Senator McCARRAN. That has closed down? spector for the State of Nevada, and I am located at Carson City, Mr. MURPHY. That has closed down. Nev. I am also Emergency Coordinator of Mines of the State of Senator McCARRAN. Was that straight silver? Nevada. Mr. MURPHY. Gold and silver. Senator McCARRAN. Any statement you care to make we will be Senator McCARRAN. And no war essential metal? glad to have, Mr. Murphy. Mr. MURPHY. None whatever. The camp at Silver Peak was Mr. MURPHY. Well, I was very well pleased when I heard Dr. depending on that particular mine, and there is nobody at all there Nelson say this morning that the 30 percent of gold and silver was now. cut out, and I am sure it will have a very good effect in our State as Senator McCARRAN. I wonder what the record is, if the doctor has well as in all the other Western States. that? What is the record, if you have it with you, as to whether or Now, there is one thing I would like to ask Dr. Nelson to do. not the Mary Mine of Mr. Chord made application? The CHAIRMAN. Will you spenk a little louder, please? Mr. NELSON. They stated that they were voluntarily closing down Mr. MURPHY. There is one thing I would like to ask Dr. Nelson to go into the mining of strategic materials. to do, and I think it would help out a lot in our State as well as the Senator McCarran. That is what his written statement says? others. Mr. NELSON. That is what his written statement says. A lot of the miners back there, when that order came out about Senator McCARRAN. So, he did not make application for a serial the powder, that they had to have a serial number under P-56, A-8, number? to get powder at all, came into my office and said they tried to get Mr. NELSON. No, he said he was going to try to go into the mining powder from the dealers and couldn't get it; they bad to have serial of strategic minerals and was shutting his mine down. numbers. They had been telling them that under instructions from Mr. MURPHY. His questionnaire reads differently. He shut down Dr. Nelson they could not get any powder without a serial number. on account of not being able to get supplies. Mr. NELSON. They can. Regraded Unclassified 634 SILVER SILVER 635 Senator McCarran. Yes. Mr. MURPHY. Now, the conditions that existed in our State before the present priority rating for gold and silver mines so that they can the seriel numbers were taken away were that several of the gold continue to work and not be forced to shut down. mines in our State had engineers out looking over properties containing That exists today in our State, and there is a lot of dissatisfaction, strategic materials and were financing their inspections and develop- especially since this powder order came out, We all appreciate what ment work with money deriv from their gold mines, having no money Dr. Nelson has done since the meeting in Reno. I have heard a lot available from other sources. If they cannot operate their gold minea, of people speak highly ef Dr. Nelson and they believe that his heart and soul is with the mining people; at the same time they do not I am informed, they will have to stop their exploration and develop- think that they should be out out of powder; that they have to do ment work. development work even in looking for strategic materials. Because of the uncertainty of getting material with which to work, Mr. NELSON. They were never cut out of powder. That was most of our gold mines are not at present doing any development work, and when the ore they have in sight is exhausted they will not have just a misstatement made in the press. Mr. MURPHY. The miners in our country do not know anything any reserves to fall back on. Consequently they will be forced to different from what Will Rogers said: They know only what they close, as the overhead expenses would be as great for a smell crew of read in the papers. men as for a full force mining ore and also doing development work. Mr. NELSON. I do not believe that anyone supplying powder to a We have many miners working the gold and silver mines who are miner can stop supplying him on the basis of a newspaper story, do now past 50 and 60 years of age and have never done any other work you? but mining. Put them in a mine, and they are just as good men at Mr. MURPHY. He might not be able to stop supplying him, but this work 05 they were 20 years ago, but take them out of a mine and when a miner goes up and looks for powder and is told, "You can't they would be lost. have it," it is like the story of the man who was in jail and was told At the present time the majority of the miners employed in the gold by his friend, "They can't put you there." But the man said, "I mines are past the draft age, most of the younger men having been am here." It is the same story exactly. called in the draft. I know of a number of instances where these elderly Mr. NELSON. I do not think we can be blamed for that. miners have sons that have been called to duty with the armed forces. Mr. MURPHY. If we can clarify that situation, I think it would Most miners have families, own their own homes, are regular investors help a lot; and if you, Dr. Nelson, will give me that letter, as you say, in war bonds, and are in general good, substantial citizens. If they I will see to it that the miners in the State of Nevada all get it. are compelled to leave their homes because of the mines shutting down, Mr. NELSON. We have already put out a number of releases on that and have to go out and look for some other kind of work, it will work subject to clarify the whole thing, and We understood it went to all n great hardship on them and their familis. These men are past the the Western papers. age where they can secure employment in defense work, and even if Mr. MURPHY. Well, there are 8. lot of prospectors and men doing they could, I am doubtful if they could hold down such jobs, because small operating who do not get those papers except once a month or of the difficulty of learning a new trade after a lifetime spent in mining. once every 2 months. They are a long distance from the railroad, Not only would there be a great deal of personal hardships if the they have no automobile tires, and they have to walk, and the walking gold mines should shut down, but it would have serious effects eco- in parts of Nevada is pretty rough. That is the reason. But I can nomically. The standard of living of this large group of people would write to each one, after I get it from you. be greatly reduced, and hence their ability to buy bonds and stamps. Mr. NELSON. Allright. I will furnish you with that. Because of their lack of skill in a new type of work, they could not Representative ENGLEBRIGHT. Just taking into consideration the command as high wages as they had earned mining. Also, many more or less consternation that resulted from the unfortunate press communities in Western States are almost wholly dependent upon a release, I wonder if it would be possible for Dr. Nelson to send to the nearby mine or mines for their livelihood. They would be seriously Representatives in Congress who come from these localities where affected and their very existence threatened if those mines were closed critical conditions exist and where gold and silver mines are located, down. copies of the press releases. In other words, we do not get that news Nearly all of our gold mines are fully equipped with machinery, until we read it in the newspapers. Then, as in this case, the damage but in case of a break-down they should have a higher rating than the has been done. If we can pick it up at the same time the press does, A-10 rating provided by Order P-100. Form PD-1A, which they perhaps we may be able to eliminate the difficulties. I wonder if can use to apply for IL higher rating, would have to be filled in, sent to that would be possible. Washington, and approved by the War Production Board before Mr. NELSON. Congressman Englebright, I will be delighted to send needed equipment could be purchased to mend the break-down. In any press release or any information we have in our office at any time my opinion the amount of material the gold mines use in their opera- to any list that will be furnished me. tions would not work any great hardship on the need for such material The CHAIRMAN. Again, that is an individual proposition, and those for national defense. While in Nevada and all the Western States Members of the Congress who desire to socure the releases should, I the first thought of all our people is to win the war and win it as suggest, take the matter up with the Department and make that quickly as possible, still I believe there should be a. change made in request, and no doubt it will be granted. Regraded Unclassified 636 SILVER SILVER 637 STATEMENT OF CHARLES L. BRADBURY, PRESIDENT, NEW MEXICO MINERS AND PROSPECTORS ASSOCIATION, ALBU. from markets that it is just impossible to bring this stuff out and get it to a smelter. QUERQUE, N. MEX. It has been mentioned here several times that every mine is an Senator McCarran. Mr. Bradbury, will you state your full name' individual problem, which is certainly true-almost as human beings your residence, and your position, if any? are individuals. Of course, we are just going into this war now and Mr. BRADBURY. My name is Charles L. Bradbury. I come from must look forward to a long period of cooperation and help from the Albuquerque, N. Mex. I am president of the New Mexico Miners War Production Board and the miners in doing everything in their and Prospectors Association. I am a mining engineer operating lead, power to help insure the maximum production of all the metals. That zine, and copper mines in New Mexico. goes without saying. When we had this friendly rivalry among the Western States about I am sure that the War Production Board was organized very production a while back, I believe Montana got first prize with suddenly and very recently, but it is of the utmost importance, to $2,000,000,000. I think it might be of interest to note that the Butte my mind, that the management and administration problems through mines were originally sirver mines, with hardly a trace of copper, and which they control the entire metal-mining industry be capably that only by working those silver mines did they eventually come into handled. Of course, it is essentially true that the personnel of the the copper mines, which became the richest hill in the world. Board should be composed of the most capable, most experienced Mr. NELSON. Gold and silver. producers of metals available in the country. Of course, also, it is Mr. BRADBURY. Also, I think it is a known fact that a great many hard to say who is and who is not. But I think it might be of great assistance to the mining men if 8. record of, say, the top 25 men in the prospectors who are panning streams for gold have found a lot of alluvial tin deposits in various places in the world. Materials Division of the War Production Board, their experience record, and so forth, were made available, so that we may understand About this silver, which has been so kindly settled for the time being, our principal silver mine in New Mexico is the Mogollan. each other and talk the same language. Mining men are, you might That is one of the few mines in our State that we have worked con- well. say, micronisms in their own little world and know one another very tinually for almost 60 years. In the Apache country in the early In the most recent edition of the Mining Journal, for instance, there years it was a very dangerous place to be, and the man who dis- appears EL full-page diagram showing the personnel. It has on one covered the district was killed by the Apaches on the place, page here 25 names of top men in the Materials Division. I have been It was only due to the fact that the Mogollan was working that the mining for more than 20 years, and I was rather surprised-I think very big copper deposits of Morenci, in Arizona, 30 miles away, were perhaps I am getting out of circulation, becoming an old fogey-that discovered and opened up. The fact that the Mogollan was the I did not recognize a single name on the paper. spearhead of civilization permitted that to be done. That mine is So I undertook to inform myself and look them up in a volume one of the mines that has gold and silver and is under a cloud on entitled "Who's Who in Engineering," a very large, catholic document account of this matter which we are discussing. that has thousands of engineers listed, and I was able to find only 4 I happened to work in this mine as mine shift boss some years ago, of those 25 listed. so I have some personal recollection of the situation there. They Now, this is the directory of the American Institute of Mining and have about a 100-ton operation, and I would assume that the principal Metallurgical Engineers. It has the names of 12,000 men who are item of consumption of iron and steel is in grinding media-grinding mining engineers or are engaged in allied branches. I could find the balls and crushing surfaces-and the consumption is probably about names of only 5 of the 25 in that. Of the 5, 4 were college professors 100 tons n year. That is A very small amount of steel or iron, and I and I was a geologist. There is nothing in this record to show that am sure that there must be thousands of tons of scrap on the property any of these gentlemen have operated a mine. at Mogollan. The CHAIRMAN. What do you want the committee to conclude as & I have in mind for the mines the idea that has been adopted for result of your statement? swapping an empty toothpaste tube in order to get a full one. Why Mr. BRADBURY. Why, I have no suggestion whatever to make in cannot the mines do that, working on the same basis? The only thing that respect. I might add that, unfortunately, Dr. Nelson is not in scarce is the metal-the iron and steel. What stops that is that this either one of these. particular scrap around this mine is 75 miles away from a railroad, and Mr. EATON. Just as in a mine all the work is done underground, BO the price at which scrap iron is now pegged makes it impossible to in the War Production Board the work is done below the level of the bring that scrap steel 75 miles by truck and railroad and then many top 25 who get their pictures in the paper. more miles to the nearest smelter, at Pueblo, Colo. So what is actu- Mr. BRADBURY. This is just overhead, then, ally causing that shortage is, apparently, the price peg on scrap iron Mr. NELSON. In qualifying myself to speak on the first day of the and steel. hearings, I stated what my mining experience was. I think that that is true also of a great many other mining properties The CHAIRMAN. I am afraid that that is a matter this committee in the remote places of the West. I think there are enormous quan- cannot do very much about. tities of scrap iron and steel on the properties, but they are so remote Senator McCABRAN. We might have you listed in Who's Who. Mr. NELSON. I have been in Who's Who for over 20 years, and I Regraded Unclassified 638 SILVER SHAER 639 belonged to the Association of Mining and Metallurgical Engineers until I resigned several years ago. mining machinery. Dr. Nelson developed yesterday or the day be- Representative ENGLEBRIGHT. I might say that when I first that fore that many of these mining-machinery plants, because of the fine Dr. Nelson, 15 or 16 years ago, he was, I believe, operating mines, I quality of their equipment and the expertness of their workmen, have been converted, in whole or in part, to making munitions. I think knew him as a mining operator. The CHAIRMAN. I do not believe it would be profitable to go very it was also developed that there are probably 83,000 items of munitions far back into the records of all of you. and that perhaps it is a subject of speculation whether some of those are more important than mining machinery. Gentlemen, Mr. Knowlson is with us, and he desires to make a Would it be a practical thing, for the benefit of the committee, to statement. have a survey made of the 183 plants that formerly made mining machinery and that have, in whole or in part, been converted into STATEMENT OF J. S. KNOWLSON, CHIEF, DIVISION OF INDUSTRIAL the making of munitions, to find out exactly what those plants are OPERATIONS, WAR PRODUCTION BOARD making and what percentage of their pay roll, or any other standards Mr. KNOWLSON. My name is J. S. Knowlson. I am Chief of the you want to take for judgment, is used in making mining machinery Division of Industrial Operations, War Production Board. and what percentage is used in making munitions, and also the type of munitions, so that this committee can judge whether there is the I simply want to take this opportunity of expressing my apprecia- bottleneck which in part might be removed? tion for being asked to come here and for having the opportunity of My point is that I suspect that out of the 183 manufacturers some listening to and learning something about the problems of the industry. are probably making munitions, let us call them munitions, if you I am in the Materials Division of the Board, and I have the misfor- please, that are not PS important as mining machinery, but they are tune to be n manufacturer rather than a mining man. Therefore, it making those munitions because there is more profit in them than is particularly advantageous to me to have this chance to be here with there is in making mining machinery. If that is not developed as a you. fact, then we shall have witnessed a revolution in human nature. I want to say that from the operating point of this picture, because Would it be & practical, feasible thing to make such a survey? the general supervision of priorities comes in under the supervision Mr. KNOWLSON. I would think it might be perfectly feasible to of my division, we have always felt that the mining interesta received make at least a sample survey of that. It may be that we have at very sympathetic and intelligent treatment under Dr. Nelson. We this time available enough information on a survey we made in the think that he appreciated the problems and fought the battles of that last quarter to give a certain picture of that situation. With your group or industry as well as any other was taken care of in the Board. permission, I will have that checked up and give whatever information One statement announced by Dr. Nelson created the impression we have to Dr. Nelson at once. that perhaps members of the staff of the War Production Board felt Senator MILLIKIN. Mr. Chairman, I would most respectfully ask that they were superminds. For myself and the other members, I am that the committee receive such a report and consider it, because I sure I can speak to say that we are far from feeling that we are super- think it goes to the heart of one-half of our problem here. intelligences. I think that we, more than any other group, are Mr. KNOWLSON. We will only be able to tell you, I think, from the conscious of how we do stumble and of how much too large for any of rated pattern of their orders, which I have an idea we can do, how us these jobs are that we are trying to do. Time hangs over us all important their munitions work is. like a vulture, and we are trying to rush to do this work. We are Senator MILLIRIN. But it would be possible, if the committee conscious that we make many, many mistakes. The only thing 1 can wanted more details, to get them? say is that we are willing to correct them as soon as possible. I think Mr. KNOWLSON. Oh, yes. you have evidence of that today in this removal of the 30 percent Representative MURDOCK. Mr. Chairman, I have here a statement limitation. from one small mine operator in Arizona. I am wondering if it I am very much interested in the comments about the scrap situa- might be submitted for the record. This is just one statement from tion. I think perhaps we can do something about that. I will take a small mine operator in my State. I thought it might be substituted here for the record. it up at once with the proper authorities. Once again I want to thank you and tell you how much I appreciate The CHAIRMAN. Is it in the nature of a letter? the opportunity of being here. Representative MURDOCK. Yes, Senator. It is from the owner of Senator MILLIKIN, May I ask a question of Mr. Knowlson, Mr. State. A small gold mine who has attempted to get help from outside the Chairman? The CHAIRMAN. Certainly, Senator Millikin. The letter indicates that the effect of the order of March 2 has been Senator MILLIKIN. I am delighted to ask you, Mr. Knowlson, to stop such development, and quotes three replies made by business because you are a manufacturer. firms showing that effect. Their statements were that due to the I think that two points have been developed here very clearly. order of March 2 they would not be interested for some time to come. One is that the mining industry more than carries its weight in the I felt that this would give some indication of the detrimental influence boat, so far as production of critical materials is concerned. upon the mining industry, as it worked out in this case. This is one Then, we are confronted with the problem of the manufacturer of of several communications I have received from Arizona complaining Regraded Unclassified 640 SILVER BILVER 641 of the harmful effects of the uncertainty occusioned by some of these necessary wartime regulations. somewhat. I do not know to what extent; perhaps Dr. Nelson does. The CHAIRMAN. Without objection the letter or the statement will Mr. NELSON. The procedure is that you first apply to your county be placed in the record. board, and if you cannot get relief from your county board, you (The letter referred to is as follows:) apply to your State board, which has an 8-percent State quota, as I MESA, ARIE., May 4, 1948. understand it. If your State board does not give you relief, you SENATE COMMITTEE ON MINES AND MINING, apply to the national board, that has & 2-percent national quota for Washington, D. C. such purposes. DEAR SIRS: While you are studying proposed legislation to give exemption If you do not get relief from any of those agencies, I do not know from assessment work to owners of mining claims, please permit me to present what your next step would be. picture of the predicament of the small gold-silver claim holder by citing my * Mr. MURPHY. Mr. Chairman, that was rectified to quite an extent own case. After 8 years of hard work and putting all the money I could raise into my some time back. We could not get tires, but there was an order that group of six claims, I now have them developed to the point where I have ship- came out from the rationing boards that the mine inspectors can get ping ore and should, in normal times, interest capital to work them. I have tires, and they went. Three or four months ago we were not able to advertised to no avail and have written to everyone I know of who mines for get them in Nevada. gold, and here are samples of the answers which I am receiving: From the Ohio Mines Corporation, Goldpoint, Nev.: One of the mine inspectors applied for a new tire. He wanted to "With the increased restrictions on gold-silver mines imposed by the War get R spare tire. So, the board ruled that he would have to turn in Production Board we think it best to forego any examinations of new properties. 8 tire before he could get one. If he turned in one, that left only If, at some future date, things should once more return to normal, we will be three, so he told them, "If you give me one back, I will still have the only too glad to contact you concerning the property." same number as before." From the Bald Mountain Mining Co., Trojan, 8. Dak.: "It is becoming increasingly more difficult to obtain supplies for a gold and The CHAIRMAN. I think that overybody has already observed that silver operation and it is practically impossible to secure equipment to open 5 the conversion of a peacetime nation of 130,000,000 people into a war new property, to place an old one in operation, or to expand production. unit has occasioned not only delay but embarrassment. However, "Under normal conditions we would be interested in A property having the my own observation is that we are making rapid progress and that apparent value of yours, but until the war in over it does not seem practical for us to even consider making an examination." these problems are being worked out as rapidly 85 we could reasonably From Burton Bros., Inc., Rosamond, Calif.: expect, and I think we are doing a fine job. "From your description of the property it should be attractive in normal Senator McCARRAN. The next speaker will be Mr. Dave Strickler. times. However, under the present conditions, and with gold mines not having a priority for supplies it would be unwise for anyone to try to open up & DEW STATEMENT OF DAVE P. STRICKLER, PRESIDENT, CRIPPLE property." Such letters ILS these, coupled with the fact that the largest gold operators in CREEK DEVELOPMENT CO., COLORADO SPRINGS, COLO. the country are shutting down for the duration of the war, are conclusive proof to U.S. owners of gold-silver claims that we have been forced out of business for the Senator McCARRAN. Please state your full name, residence, and duration. Of course, you know that gold-silver claims have been excluded from the position you hold. the priority rating for equipment and supplies with which to mine. Mr. STRICKLER. My name is Dave P. Strickler. I live at Colorado In view of this situation, we feel that We are justly entitled to exemption from our annual assessment work for as long as this condition shall exist, namely, the Springs, Colo. I am president of the Cripple Creek Development duration of the war, In the past, exemption was granted yearly about this time Co., which operates in the Cripple Creek district. of year after everyone had either made sacrifices to get his work done, or WM I am attorney for the Midland Terminal Railroad, which hauls all beside himself with worry because he was unable to do it. I hope that you will the ore from the Cripple Creek district to the Golden Cycle mill. I not give us the same treatment in this crisis. Sincerely yours, am also attorney for the Golden Cycle Corporation, which produces ETHEL 8. CAPPE. about five and a half million a year, and 90 percent of this comes Representative MURDOCK. Senator, may I nsk a question that I am from the Cripple Creek district. I have been familiar with the not sure has a bearing on this? What about tires for the work of mine Cripple Creek district for about 35 years. inspectors, and that sort of thing? Has that been gone into? I want to say, first, that I am greatly pleased with the statement The CHAIRMAN. That has not been touched, as I remember. made by Dr. Nelson this morning. I think it is going to clear up, I Representative MURDOCK. It occurs to me that it is a vital matter am satisfied, a great many people who were very much disturbed to furnish tires for mine inspectors in their work of safety, lifesaving, before that announcement. Perhaps they did not understand it, and that sort of thing. nevertheless, that will clear it up. The CHAIRMAN. That gets back to the observation I made here Another thing, Doctor, that I want to say to you is that your admin- this morning: That each of these communities and each of the mines istration of this order, worded particularly as it is, is certainly con- presents an individual proposition. That is an individual proposition clusive evidence to my mind of a most profound and sympathetic to each inspector, and if these inspectors do not have the right to interest that. in the mining industry. I do not think anybody can deny priorities, then, of course, there is a place to which they can appeal to try to make their case. In the event they are entitled to priorities, I like Senator McCarran's suggestion, too, that the matter of ship- no doubt they will be afforded tires by the proper authorities. ping mining machinery to foreign countries be turned over to this Representative MURDOCK. Perhaps the situation has been alleviated board. I think that is where it should be. 7305242-pt.9-14 Regraded Unclassified 642 SILVER SILVER 643 Mr. Bradbury brought up & matter here that has not been mentioned by anyone else. It has surprised me that it was not mentioned before. Now, how can we support our county form of Government and how That is the price of scrap metal. There is no question that there is & can we support our school districts if we are deprived of that tax? lot of scrap metal, that is produced in the operation of gold and silver It is impossible for us to function. mines, and other mines, too, as far as that is concerned, in very romote Another thing: That camp has been in existence since 1891. It sections of the country, where the present selling price is insufficient has been there so long that the people who live there are people who to pay the cost of gathering and transporting that to the mill or the are devoted to the gold-mining industry. They own their homes. smelter, where it could be used. It seems to me that it would be an I took & survey not long ago, and I found that the average age of the advantage to the Government to have that scrap metal price increased. miners of the district was about 48 years. To talk about transporting It may not be fair to increase it flatly, but there ought to be some pro- those people and putting them in to some other industry is just out vision somewhere that will enable people who are mining in remote of the cards. sections to gather together that scrap metal and get it where it can be I think I know gold miners perfectly well. I think it can be fairly used in the war effort. stated as a general proposition that once a gold miner, always & gold Our production is limited solely to gold. We have just a little bit miner. They are a good deal like firemen and policemen. By the of silver. We do not like it to be thought that we are not engaged in very nature of their work they have disqualified themselves from an industry that is useful in the war effort. becoming efficient in any other occupation. You cannot transport The other day, in response to a question by Senator McCarran, in them. So, it is serious. which Senator McCarran intimated that he thought gold in the West I know of only one other place in the country where it is any more helped to enable the North to win the war, Dr. Nelson said he did serious than in my county, and that is at Homestake. Homestake not think so. Well, Dr. Nelson, that is contrary to the history of my has the same situation. There is nothing at the Homestake except State. General Sibley came up from Texas with one object in mind, that mine. There is nothing up there in Cripple Creek except our and that was to get the gold at Central City, and he was then going gold mines. Now, Mr. Palmer mentioned a thing I should like to touch upon. on to California for the same purpose, because the South considered that it needed that gold in the war effort. We are trying the best we can up there to cooperate in every way we can. Even before the war, as Mr. Palmer said, there was one We fellows up North thought they were right about it. Now we interest in the Cripple Creek district that, as he put it, did a fine job are fighting-rather, disagreeing-about everything in the world, in helping out everybody. That is the Carlton interests. I am except that both sides agreed that we needed that gold to lick the attorney for them. I have not a dollar of interest in them, but the other fellow. Carlton interests are the largest operators there. They own the Mr. NELSON. No; we needed the gold not to lick the other fellow Midland Railroad, and they own the Golden Cycle Corporation. but perhaps to buy some things that we would have had to get by You can 500 readily how it is to their interest. other means if we had not had the gold. We are fortunately situated to have an interest whose interest is Mr. STRICKLER. Well, they had & big fight about it; I know that. to keep that railroad going and to keep that mill going. The Carlton I think that gold and silver are necessary to the war effort. I think interests cannot keep the railroad going and cannot keep the mill that hard money is an absolute necessity to any economy. I remember going on their own production. So, they are interested in assisting when I was a boy we had the greenback or fist currency craze. I all the little fellows and, further, the operators, the lessors, the aplit- remember hearing Colonel Ingersoll make a speech in which he said check lessors, and everybody else, and they always have been, even he had a silver certificate and a gold certificate in his hand. He made before this war came on. an argument against greenback or fist money. We are continuing to do that now. We are trying to substitute as He said, "The reason I am in favor of gold and silver certificates is much as we can. For instance, instead of using our hose, we are that when I look upon them, I know that their redeemer liveth." using pipe and are doing everything we know how in order to rescue I am an old-time Democrat, and Bob was a Republican, but I think every bit of scrap we can. We are using it and are sending to the that was perhaps one time when Bob was right. smelter everything that we cannot use, The CHAIRMAN. As far as that is concerned, that was the only I mentioned awhile ago about that thirteen dollars and 8. half not redeemer that Mr. Ingersoll recognized, was it not? [Laughter.] being sufficient. It is sufficient so far as we personally are concerned, Mr. STRICKLER. That is right. That is probably why he thought but there is a peculiar condition existing that makes it sufficient. so much of it. There are some coal mines down at Canyon City, and those fellows Gentlemen, if we have to close down our gold mines in the Cripple haul coal up to Cripple Creek. They do not have anything to carry Creek district, I do not know what is to become of our community. back, 80 we are unable to get a cheap haul. So, the $13.50 is sufficient. In the first place, mines in Colorado that have a production of more But I am talking about the fellows-and there are a great number of than $5,000 annually are taxed upon production. In some States them-for whom it is not sufficient, and it is certainly to the interest they call it a severance tax. We call it a production tax. Fifty-seven of the Government to get that into the mill or the smelter. percent of the entire revenue of Teller County, Colo., which embraces Now, there is another thing that I want to bring up here. I do not the Cripple Creek district, arises from the production tax, and 95 know whether it would be unpopular in my State or not, but I do not percent of the total revenue of Teller County comes either directly or like it. You take anybody in the position we are in up in Cripple indirectly from gold mining. Regraded Unclassified 644 SILVER SILVER 645 Creek and tell him that he has to close down because of our small amount of steel needed. I do not think, Doctor, that we need for the Governor Carr, would you care to make a statement at this time? entire district-that we can get along on-any more than about 150 Governor CARR. Yes, Mr. Chairman. tons of steel a year. That will see us through. For us to be told that we cannot have that steel, in order to save it for the Government in its STATEMENT OF THE HONORABLE RALPH L. CARR, GOVERNOR war effort, that is necessary, and at the same time know that the OF THE STATE OF COLORADO Government is driving a 15-mile tunnel through the Rocky Mountains right now as a Government project, for only one purpose, namely, Governor CARR. My name is Ralph L. Carr. I live at Antonito, to transport water from one side of the mountain range to the other Colo. I am & lawyer. side of the mountain range, and to be doing it during these wartimes, I am interposing here for the purpose of trying to placate some we just do not understand it, because we do not think we can lick the evident difficulties which may be arising between my own brothers. Japs by throwing water at them. I think it is about time for the Mr. Strickler just suggested that it was unfair to continue the con- Government itself to be governed by some of its own restrictions. struction of the tunnel through the Continental Divide, taking water Another reason why I think 80 is that after Mylewar is over we have out of the Colorado River over into northeastern Colorado, and got to have some jobs for these soldiers to come back to-some honor- suggested that we cannot lick the Japs with water. I am sorry that able jobs, some jobs that have some proper compensation for them. he has put that interpretation on the activities in connection with the We cannot give them any reward by having them rake leaves, as was driving of that tunnel and that he would suggest that we can take done in the last depression. We have to think about our reconstrue- care of our mining industries at the expense of the power and agri- tion period. cultural industries in Colorado. I think gold and silver are necessary to this war effort. I think The tunnel in question is being driven for two definite purposes, they are going to be useful after this war is over. one to make it possible to furnish a supply of irrigation water, which Just as Mr. Knorp, of California, said, I know that after the war is needed in northeastern Colorado, and the other to answer definitely between the States President Lincoln said that our war debt would be the power problem in that portion of Colorado which is east of the paid by the gold from California and Colorado. I know also from Continental Divide and is perhaps the most essential project which newspaper accounts that every time Hitler goes into a country, he Colorado may be able to offer in the solution of the war problem. grabs all the gold that country has and takes it up to Berlin. He There is no direct conflict possible between that activity in northern must think that it is necessary. Colorado, which has to do with agriculture and power, and the As I understand it, during the last World War Australia put a $10 mining industry in Cripple Creek. For the record, I may suggest premium on gold to assist in their war effort. I understand that that I not only love the farms of northeastern Colorado, but 1 was Great Britain right now is doing the best it can to aid South Africa reared in the Cripple Creek district and spent all of my younger life in the production of gold. It seems to me that both our Allies and our there. I am here because of my interest in the mining situation. I want to confirm before I close the statements which have been enemies are agreed upon that one proposition, just 88 we in the West and you southerners agreed on the same proposition during the Civil made by Mr. Palmer and also by Mr. Murphy of Nevada as to the War. I think that the nation that has the largest amount of gold and conditions which are existing with respect to the order which has this silver at hand when this war is over is going to have the loudest voice morning been modified. A great deal of our mining activity has & at the conference table, I think that the nation that has the largest psychological result. Rather, it is based on faith in the industry and the hope that we may be able to get ores out of our mines. amount of hard money when this war is over is going to have the most solid economy on which to rebuild the nation from the distress caused Dr. Nelson has suggested that, as far 88 they know, no mines have by the war. shut down as & result of the order regarding the 30 percent gold and I am not quarreling with Dr. Nelson's administration of this act. silver. While the mines may not have shut down, the Honorable J. Price Briscoe, State Senator from Colorado and chairman of the I think he has been more liberal than anybody under the terms of the act could possibly expect from the nature of that order. That is Committee on Mines of the Council of Defense, was in to tell me last simply because of his sympathy with the mining industry. week and to supplement what I already knew of the conditions that Doctor, you mentioned once or twice or asked the question, "Has are existing in the mining camps of Colorado. The people are de- anybody been deprived of any priority order? Has anybody closed pressed as they have not been in many, many years and are looking down?" I think when I called on you you asked me, or you did not for places to go to with no hope that they may be able to find places deny it. At any rate, I answered, "No." and I answer "No" now. where they can work profitably. The situation is as difficult, I might I think the consideration that has been given is remarkable, assuming say, Doctor, as the one we experienced in the early years of the depression in Colorado as the result of the uncertainty from this you give it to everbody else as well as you give it to us, in view of the effect of that order and in view of what I disagree with you on-that order that has this morning been modified. is, that you do not think that gold and hard money are necessary to I want to say that I am as happy as Mr. Strickler or anyone else the war economy. about that announcement, but I deplore the fact that it was not made 2 months ago, when we were at Reno or at Denver. There has not The CHAIRMAN. We thank you for your statement, Mr. Strickler. been a fact or an argument suggested in this hearing to add to our sum total about the situation which existed at Reno and Denver 2 Regraded Unclassified 646 SILVER SILVER 647 months ago, and the 60 days just past have caused a great deal of hardship, suffering, and loss in Colorado and the rest of the mining It was with that in mind, Mr. Chairman, that I sought to bring States because this was not modified then. about the meeting which has taken place here and that I sought to I am not satisfied with the fact that you have modified your state- have Mr. Batt and the others of the board present. ment by taking out the 30 percent order. I think that there will be I only make mention of this, Mr. Chairman, to emphasize the some more definite understanding of the status of the mining industry proposition that sometimes in dealing with groups it is much more in connection with the activities of your organization, so that men who difficult and much more slow to bring about results, the happiness of will grubstake these lessees, whom Mr. Palmer talked about, men who which came to us this morning when there was a modification of this will be willing to put the capital into the operation of the mines, may order. I think, as you do, that the knowledge of this modification know that they have some definite basis upon which to function beyond going out to the mining communities of America will bring about a the idea that their request for the right to operate by securing priority rejoicing that has not been there for a long time. numbers is dependent upon some judgment that may be reached by There is just one other thing I want to bring to your attention before Mr. Malone comes on. some human being. If it was necessary in the first place to issue an order which restricted Dr. Nelson, I have before me what purports to be a Priorities them, I say that there is some way in which we can say that a produc- Bulletin under date of April 20, 1942. I take it you are familiar with that? tion of a certain percentage or a certain quality or a certain quantity of strategic and base metals can be laid down, and then people with Mr. NELSON. I will have to see what you are referring to. money will have something definite on which to make competition in Senator McCarran. It is put out by the American Mining Congress. determining whether or not they will back miners and lessees. It seems to me there should be some substitute for the order which has Re Interpretation of Quota Items as Related to Preference Rating Order P-56, Amended March 2, 1942. been withdrawn, something which will say to the mining industry, definitely, "If you produce n certain percentage of zine, lead, copper, I notice there all the ratings and your reference to A-10 as being or what have you, or if you produce in proportion to some fixed stand- the one under which certain priorities could be secured. Rating A-10 ard-this, that, or the other-then you will have a priority." does not appear in this list at all. I join with the others, Doctor, in my attitude toward you and your Mr. NELSON, I think that Mr. Conover had better reply to that, fairness toward our problem; but, Doctor, you possess along with us that is something he published. the frailties of other human beings, and men who do not know you Mr. CONOVER. Senator, that has reference to the order P-56 as and who have the money which might be put into mining do not issued on March 2. On March 4 the announcement was made by Mr. share with us that confidence in you. I think it would be a protec- Knowlson that the gold and silver mines that had been excluded from tien to you to have some definite standard by which they can put the order would be permitted to operate under order P-100, which their money on the line and go. I say in support of that fact that provides for A-10. We issued a subsequent bulletin which covered my one bit of unhappiness in connection with this is that this was the A-10 rating. not modified when you were called upon repeatedly at Reno and Senator McCarran. You have a later bulletin than this? Mr. CONNER. Yes.' thereafter at Denver to do what you have done today, and which has been proved by your act today as good and wise. It should Mr. PALMER. The thing our men out our way would like to know, have been done at that time, and we would have been saved a lot of Dr. Nelson-and I am sure everyone else here would like to know, trouble. too-is: Are these ratings on this order essential to get those particular I feel that there is not any reason why that cannot be done, and I items, or are those simply for quota purposes? In other words, as to think that the attendant psychological boost that the mining industry each item you have listed officially from your office, is it necessary to would get throughout the West would show very quickly. have those ratings in order to get those particular items? You are I thank you, familiar with the order, if I may hand it to you, I am sure. Is it simply The CHAIRMAN. We thank you, Governor Carr. a quota basis on this A-1? I want Mr. George Malone to have a chance to make a statement Mr. NELSON. That is B. list of items about which there might be some before the committee adjourns. controversy as to whether they would come under the mine's repair Senator McCarran. Before that is done I should like to make a parts quota, where the mine has a serial number, or whether they brief statement, Mr. Chairman. should be purchased only after receiving permission direct from the The CHAIRMAN. Proceed. Mining Branch. As there were a number of such items, we stated Senator McCarran. It is brought about by the expressions of my that certain of those items could be bought under that quota with an good friend Governor Carr of Colorado. I, too, wish that the order A-1 rating by buying them directly from the supplier without clearing through Washington. could have been modified at Reno or at Denver, but the Governor will join with me in a recollection that both at Reno and at Denver, Mr. PALMER. My question was, Doctor, Can any of those items, in Dr. Nelson was confronted with the situation wherein he had to say your judgment, be obtained under an A-10 rating? Mr. NELSON. I would have to check each item in order to answer to us that he was only one and that he had his superiors that he was that question. compelled to fall back on. Mr. PALMER. That is for quota basis and not for priorities? Regraded Unclassified 648 SILVER SILVER 649 Mr. NELSON. This is purely for quota basis, for & mine operator to use as 8 guide when he is making purchases under order P-56 and to but does not determine it and when it is fixed, he is the administrator. tell him what things he shall charge up against his quota. However, this committee is in & position to investigate policy, it seems Mr. PALMER. Thank you. to me, as to whether or not out of all the material that is available, The CHAIRMAN. Mr. Malone, will you come to the table, please? speaking of iron and steel, which is made up from the strategic minerals and other raw materials, the mining industry as a whole is getting its STATEMENT OF GEORGE W. MALONE, DIRECTOR, INDUSTRIAL just share. Now, there must be an over-all picture somewhere by which some- WEST FOUNDATION one establishes policy. When that is done and the mining industry assigned its share, they divide it as best they can between the mines Mr. MALONE. My name is George W. Malone, of Reno, Nev., that are in operation and people that are trying to find mines in accord- my Washington address is National Press Building. I am director ance with any policy adopted. The thing is then-and that is where of the Industrial West Foundation, a fact-finding and research I mean the incentive price is necessary-that we must get more of these organization dealing with the resources of 11 Western States. materials. We have been 18 months on the job, and have not yet The CHAIRMAN. Mr. Malone, you have been present at these adopted principles and policies that will bring out the maximum of hearings, and you have heard the discussion. As a result of our these raw materials. I am speaking of manganese, chromite, tungsten, discussion and the deliberations of the conference, the War Production mereury, antimony, zine, lead, and copper. However, the ones famil- Board has seen fit to modify the text of & certain order. I should iar with this production knew that they were going to be short of these like to have you discuss that as it affects States in which you are inter- materials a year and a half ago. The West can and will produce a ested, and to have you make such comments as you may care to make. large increased amount of these minerals when the unit price is right. Mr. MALONE. Mr. Chairman, it seems to me from listening to the This is beyond Dr. Nelson, but I have discussed it with him, and questioning of Dr. Nelson and his answers that the situation, in fact, 1 know that he agrees with me. Take manganese, for example. is not changed but the impression to the country will be entirely Nearly every State in the West can produce manganese, and some different. States in the East, in the Appalachian range. South Dakota and If I get his answer correctly, he did in the beginning and is going to Minnesota also have large low-grade deposits. But most of it will continue to decide each individual case on its merits as it comes before have to come from the West. On large contracts a good job is being him. But he has clarified this thing, and I agree with Senator done, I think, on the large, low-grade deposits; but to bring out small McCarran and all the rest of the witnesses that it will have a tremen- deposits and to get the smaller miners and prospectors looking for dous psychological effect. these minerals, there is no adopted policy at this time that will bring One of the things apparently forgotten by a good many people, and this material out. maybe, as indicated by one of the witnesses, not everyone knows it, is There are two types of potential producers that must be reached: that in order to get a mine, you have first to find a prospect. After 1. The hundreds of small miners and producers who must dispose you find the prospect, maybe one out of a hundred of them may of their ore in small lots-do not ask for Government funds, outside produce some ore. In order to develop a prospect after it is found, of a possible development loan-but must have a definite market at someone must do a lot of digging without pay. That is the history of designated rail or terminal stations-and must be paid promptly on the whole mining industry. In order to get them to do that, there A unit price basis that will pay the necessary wages and sorting, or must be some incentive. In other words, there must be an incentive processing costs, leaving B. reasonable margin, with a price guaranty price, so that these men out in the hills know they can sell the ore over a period of time which will provide an opportunity for the return when they find it. of development and plant investments. These are the men who There was a tendency in the War Production Board and other organ- discover new occurrences of ore in their widespread operations, and izations to assume that they knew where all the minerals were located develop "prospects" to a point where the Federal Bureau of Mines and that they must conserve those minerals. I am speaking now of is justified in further exploration. the strategic minerals-manganese, chromite, zinc, lead, copper, and 2. The larger investor in processing plants and development opera- tungsten. As a matter of fact, that is far from the facts. A prospect tions, requires Government financing-these can be handled through today may be a mine tomorrow, and they find new prospects when a negotiated unit price in the customary and established procedure enough people are looking for them. of your organization. In order to keep these thousands of men in the hills looking for the There are six principles that must be recognized in any practicable prospects, digging, there has to be an incentive price for the product set-up to increase this Nation's production of its strategic minerals: to assure an adequate reward for their work. 1. Adjusted unit price that will pay American wages, and the I wanted to bring out two or three points that I do not think were necessary sorting and processing costa. touched upon in previous statements. Most of the rest of it has been 2. Designated points of acceptance of ore or concentrates. adequately covered by Mr. MacBoyle, Mr. Conover, Mr. Palmer, 3. Prompt payment to the producer on the assay returns. Governor Carr, and others. I want to endorse their statements. 4. Guaranty of such adjusted unit price over A period sufficient First, we understand that Dr. Nelson carries out only what the to return development and plant investments-a minimum of 2 Board decides to do. In other words, he may assist in fixing a policy, years following notification. Regraded Unclassified 650 SILVER SILVER 651 providing for the construction of "access roads 5. Liberal use of the provision of the National Highway Act, the 48 percent grade is academic, and of no practical effect, since this to soumes of raw materials." (This smendment was sponsored by the Senate grade of material is simply not available in large quantities in this Military Affairs Subcommittee on Strategic and Critical Minerals country. and Materials.) TUNGSTEN 6. Establish the grade of acceptable material in each case to con- form to the available mineral and the requirements of industry. A. Establish the minimum base unit price at $35 for 60 percent The recent announcements on chromite, manganess, and tungsten WO2 with a premium on higher grades, with suggestions under numbers 3 and 4 under chromite applying, and number 2 as far as each contain elements of the above factors, but in none of them is the procedure complete-chromite is accepted in truckload lots-35 per- applicable in getting ore to existing processing plants. The Metals Reserve Co. has guaranteed the present price of $24 cent manganese will be accepted-and the unit price for tungsten is guaranteed until December 1943. Suggestions included in this per unit until December 1943 which adopts the principle recom- mended, but the price will not bring the necessary marginal properties Memorandum follow substantially the principle outlined in May 1941, and included in the hearings by the Senate Military Affairs into production, and valuable time is being lost. Subcommittee on Strategic and Critical Minerals and Materials. GENERAL CHROMITE The remainder of the list should be handled on the same general principle, of establishing a stable market at adequate unit prices with In the announcement dated March 5, 1942, the price of $50.70 a guarantee over a period of time long enough to return investments per long ton (2,240 pounds) is established for 48 percent Cr₂O₂, 3 to 1 in plants and developments. chrome-iron ratio; $40.50 is the base price for high-grade-45 percent The higher unit price on lead and zipe should be available to the Cr₂O₂, with a chrome-iron ratio of 2.5 to 1. There is practically none established producer when shown that he has invested a reasonable of the first grade available, and very little of the second. percentage of the added price in new development and exploration The price then immediately drops to a $28 base price per long work. The dual price is not a satisfactory method, but would be ton for low-grade-40 percent Cr₂O₂ with no limit on iron content. more workable if arranged to stimulate exploration for new ore bodies. No product under 40 percent Cr₂O₂ is accepted. A large tonnage of The total amount of funds involved in the necessary adjusted unit this ore can be secured but not at $28 per long ton. prices to bring in the maximum amount of these materials is relatively The following suggestions are made to facilitate procurement of the small, considering that they are the basic raw materials for the entire minerals: war production effort and is shown in the accompanying table. A. A minimum unit price of $1 per 100 percent ($40 per ton for 40 The regular 2,000-pound ton should be adopted in dealing with percent Cr₂O₂)-acceptance of a 35 percent Cr₂O₂ product, with & American purchases-the 2,240-pound, or long ton, is a throw-back premium on the higher grades, above 40 percent, and lower chrome- to the old British shipping days, allowing for shrinkage in wet ship- iron ratio. ments-in this country it is only confusing and serves no good purpose, B. Establish additional purchasing depots at rail stations in any since the moisture content is handled in the specifications. area presenting evidence of substantial annual production-continue By establishing a market at & specified adequate unit price, and to accept the material in truckload lots-paying the producer almost point of acceptance, the Government assumes no responsibility in immediately upon the assay returns. development operations, thereby avoiding any possibility of claims C. Guarantee such established unit price for a minimum period of for adjustments following the war, that proved so troublesome after 2 years following date of official notification, that purchases by your World War I. company will cease. This takes care of investments, and gives the All of the chromite, tungsten, and mercury-and most of the Congress an opportunity to determine policy. manganese, antimony, lead, and copper is found in the 11 Western D. Accelerate clearance of requests for construction of necessary States. They do not understand why priorities in these materials roads to such chromite deposits under the National Highway Act. are being cut to the bone, with many marginal properties available These deposits are, for the most part, in the higher altitudes-the for added production. operating season is short. The top price for domestic chromium (Cr₂O₂) was reached in 1918- MANGANESE $84 per ton, with an average price of $44.99-83,240 tons, or 45 percent of our consumption, was delivered that year. The all-time A. A minimum unit price of $1 per unit for the 35 percent man- low was $10.28, reached in 1921. ganese with a premium on the grades over 40 percent, and lower The top price for domestic manganese (50 percent Mn) was also alumina, iron and silica content-accept it in truckload lots at desig- reached that year (1918) $68.50, and 305,861 tons were produced. nated stations, and pay the producer immediately on the assay The top price paid for antimony was 45 cents per pound. returns-with suggestions, numbers 2, 3, and 4, for chromite, applying equally to manganese. The recent announcement of $1 per unit for Regraded Unclassified 652 SILVER SILVER 653 High- and low-price domestic production beyond official notification that they will cease buying such minerals, Percent supplied so that investments would be protected. Then the incentive price Wartime high domastic mines Prim would bring out investments, because they could be reasonably certain Mineral of repaying the capital investment. Date High Average 1918 1940 1913 THE Mr. Chairman, I have prepared some data for Dr. Nelson at his request, and with his permission I will submit it for the record. It 1918 $84.00 $44.99 45.0 20 $11.19 Chrome 1915 68.50 63.63 35.0 6.0 shows, for example, the relationship between the production of zine, 12.50 Manganese 1918 .45 :12 .14 10.0 4a .07 lead, and copper and the production of silver and lead in the Western Antimony 1916 300.00 125.12 82.0 100.0 40.07 Mercury 1910 105.00 22.27 81.0 100.0 18g 7,24 States. For instance, you will find on inspection that the amount of Tungsten 1918 .46 .42 20 ,2 Re .41 Nickel 1.10 .85 is silver and gold in the ores many times helped just enough in the 1918 a is 44 Tin ID mining operations of the companies to keep the mines running. Nors.-Mercury went to 100 percent production, in fact & small amount was exported. Tunnistes In these tables, you will find the amount of gold and silver, lead, listed at 100 percent in view of recent performance, and on account of recent Idaho discoveries of - " zine, and copper produced through the siliceous ores-more than 30 grade ore, percent in dollar value of gold and silver-by State for the 11 western The top price per pound during World War I was-lead, 11 cents; States, together with & summary, and the amount of money returned from the sale of these ores. In other words, it was predicated on the zine, 18 cents; and copper, 31 cents. We were getting these materials when this war started from 30 percent order, but it is still pertinent in any discussion as to what about 32 foreign nations, widely scattered throughout the world, effect silver and gold mines have upon the production of strategic where the low-wage policy prevailed and where in the main, material minerals. I submit the brief containing tables and charts for the record. like manganese and chromite were of a high grade. You could get The CHAIRMAN. The committee will be very glad to have them. your manganese from Russia and lay it down here at the ports or Are there any questions to be submitted to Mr. Malone? If not, even in Pittsburgh for $17 ot $18 a ton-44 to 48 percent manganese. we thank you again, Mr. Malone. You could get chromite from New Caledonia or Turkey for about the (The above-referred-to document follows:) same price and grade. It had been a matter of economic policy, up to the time of the decla- BRIEF SUBMITTED FOR THE RECORD BY GEOBOE W. MALONE, FRIDAY, MAY 8 ration of war, where you got those materials. Many of us, accused of trying to develop the western States, since we lived in the mining WASHINGTON, D. C., May 5, 1948. Dr. WILBUR NELSON, country, thought we should develop strategic minerals in peacetime, Director Mining Division, War Production Board, so that we would not be off balance when war was declared. Never- Washington, D. C. theless, it is n matter of necessity now and they can get them in this DEAR DR. NELSON: Pursuant to your request, I am submitting herewith an country. Therefore, it must now be determined what unit price and line of factual material, including the necessary charts and tables, showingout what conditions of acceptance will bring out the maximum of these the relation between the domestic production of silver and gold, and certain critical metals essential for national defense. minerals. The data and information contain charts showing the effect of drafting available I believe that in order to bring out the maximum of chromite and "free silver" in the United States Treasury, to replace copper in industry, and the manganese that you will have to establish at least a dollar a unit for tables show the possible effect on the production of copper, lead, and sine, of manganese and a dollar per 1.00 percent for chromite accepting retarding the operation of mines producing ores containing in excess of 30 percent of their total dollar value in gold and silver, or gold, or silver. 35 percent with a premium on the higher grades. The Metals Reserve The report simply presents the factual material, with no attempt to interpret Company is now accepting as low as 40 percent in these materials the many ramifications, or indirect effects of any economic rearrangement. but at the price being offered the small operator cannot produce and Sincerely, GEORGE W. MALONE, Managing Director, deliver the ore, But if a price is offered that will pay American wages and necessary processing costs-thousands of additional miners and RELATION BETWEEN THE DOMESTIC PRODUCTION OF SILVER, GOLD, AND CERTAIN prospectors will go to the hills and get these minerals out of the ground CRITICAL METALS ESSENTIAL FOR NATIONAL DEFENSE besides keeping such men who are already in the hills at work who INTRODUCTION otherwise would go to other work. Buy the lower grades, below 40 percent, you use lower grades in industry, but even if it must be The present world conflict has been aptly described as a war of metals and those stock-piled alongside the high grade, and processed later it is good nations which possess the greatest resources of metalliferous ores and the facilities to turn them into finished products should eventually be victorious. insurance. In other words, if the war is over right away, you may not While nearly all metals are essential In conducting modern warfare, their degree need it, by the same token if the fire never hits your house, you do not of importance varies considerably both from the standpoint of tonnage required need your insurance; but if it does, it is well worth it. and the practicability of employing substitutes. Therefore, there is n lot to be done where this committee could be Since our monetary system is founded on gold and silver, the chief function of these so-called precious metals is buying power. Gold has very few essential very helpful in getting the information before the proper people, industrial applications, and its high price and searcity further limits its uses. members of the War Production Board and the Metals Reserve Silver, on the other hand, plays an important role in Industry and while the Company-the proposition of purchasing lower grades, paying higher quantities normally required for essential purposes represente less than 50 percent unit prices, and guaranteeing them over a period of, say, two years, Regraded Unclassified. SILVER 654 SILVER 655 of our annual output, It could be substituted advantageously for other metals DOMESTIC PRODUCTION OF GOLD, SILVER, COPPER, LEAD, AND ZINC were it available in large quantities. The domestic production of gold, silver, copper, lead, and sine in 1940 and 1941 OUTSTANDING NONFERROUS METALS is given in tables 1 and 2. These tables were compiled from the figures of the Practically all of the metals have been placed on the strategic and critical lista of materials, but from the standpoint of tonnages produced, aluminum, copper, lead, and zine are the most essential of the nonferrous group. In the case of aluminum, we are dependent to some extent on outside sources for our supplies of aluminum ore (bauxite), but the bulk of our copper, lead, and sine is derived from domestic sources. During the past 2 years our output of these metals has been stepped up sharply, yet the demand has increased to such an extent that we cannot adequately supply both military and civilian needs. Out of scale PROPOSALS MADE BY GOVERNMENT AGENCIES TO MEET EXPANDING NEED FOR COPPER, LEAD, AND ZINC To meet the expanding need for copper, lead, and sine, the two following sug- gestions have been made: 1. Substitute available silver supplies for copper, lead, or zine and thus release some of these other metals for essential uses. GOLD 2. Mine and smelt only those copper, lead, and zine ores which contain less than $510.41 30 percent of their metal value in the form of gold and silver.¹ Por Avol The object of the first suggestion is to utilize silver which is not employed for Pound essential purposes and substitute it for those metals which can be advantageously used elsewhere. The announced objection of the second suggestion is to step up the production of copper, lead, and zine by employing ores containing higher percentages of these metals and thus save the time and expense required in separating the gold and silver from ores carrying substantial quantities of the precious metals. The object of this report is to show the practicability and effect of these two schemes. SILVER COMPARISON OF PRICES $10.37 The two outstanding objections to the industrial use of gold and silver are: Per Avoil Pound (1) The high price of these metals; (2) the limited supplies available. In the case of gold, these two objections outweigh most of the advantages of this metal and only when small quantities are required has this metal any important industrial application. In the case of silver, however, neither the limited quantity nor relatively high price precludes its industrial use, and hence it plays an important, if not essential, role in commercial processes. While the price of silver is nearly 90 times greater than that of copper, the sug- gestion has been made that because of its high conductivity, it might be tempo- rarily used (in lieu of copper) for certain types of electrical equipment. This silver could later be released and again be replaced by copper when the present emergency has passed. The relative prices of gold, silver, lead, and sine are shown diagrammatically in figure 1. FREE SILVER In addition to the silver which "backs" the paper currency, there is a relatively large quantity of this metal held in reserve by the Government. Such metal to termed "free silver" and it has been proposed to use this idle metal to replace as equivalent quantity of copper which in turn, would be employed for essential COPPER LEAD ZINC $0.116 $0.073 80.083 purposes. The quantity of free silver on hand according to the Treasury Department la Per Pound Per Pound Per Pound 46,740 short tons, an amount equivalent (by weight) to 4.77 percent of our output ////////// - <<<<<<<<<< of copper in 1941. The use of this surplus silver for purposes which involved no permanent loss SCALE: 0.10 of the metal, would release at least 46,740 tons of copper for those uses wherein FIGURE 1. the latter is essential. Such a scheme would have to be carefully safeguarded and the silver employed United States Bureau of Mines and while the data for 1941 are preliminary, they protected against possible loss; but, the tonnage of copper thus released would be show the upward trend in domestic production. The output of copper in 1941 quite helpful in offsetting a temporary shortage of this metal. increased 9 percent, the production of lead 0.5 percent, and the output of zine The relation of free silver on hand to our production of copper in 1941 is shown about 11 percent over 1940. Gold and silver production, however, fell off slightly diagrammatically in figure 2. in 1941. 1 Preserence Rating Order P-56 and P-M-A, War Production Board (1042). Regraded Unclassified SILVER 656 SILVER 657 The tonnage and value of these metals produced in 1941 are shown diagram- POSSIBLE AVAILABLE SILVER matically in figures 3 and 4. Figure 3 brings out rather foreibly the fact that our annual production of the As shown in figure 3, the annual production of silver is but & fraction of the precious metals is extremely small as compared all with of this our output of copper, lead, copper output, so even if all this silver was substituted for copper the tonnage of and zinc. It is clear, therefore, that even if gold and silver were sub- PROPORTION REPLACABLE BY FREE SILVER 46,740 tons 735,860 SHORT Toms Other States Western States 5,000 Tons ZINC $111,851,680 loos (4.77%) ZING $3.1% 369% Scale: SCALE LEAD 46,740 $51,492,672 TONS 4.11% LEAD 459,756 SHORT TOMS Other States 46.6% Western States 53.4% FIGURE 3- Domestic Output of various Metals in 1941 (Short tons) COPPER $225,466,287 Other States COPPER PRODUCTION 1941 COPPER 957,394 SHORT TONS Western States 93.7% 979,500 SILVER tons $47,674.305 Figure 4--Value of domestic output of various metals in 1941 (dellars) . Over 99.4% of our silver and gold is produced in Alasks, tax Philippines and the SILVER 2299 SHORT TOMS GOLD 201 SHORT TOND GOLD $205,060.485 Western States. FIGURE 2. stituted for any one of the other nonferrous metals the quantity of the latter released would represent only & fraction of 1 percent of the annual production. In figure 4 the total relative values of these metals produced in 1941 are shown. the latter metal released for other purposes would be relatively small. But all By comparing figures 3 and 4, the great cost of substituting gold and silver for of this silver could not be released because this metal has certain essential uses copper, lead, and zine can be readily visualized. As a concrete example, the for which there are no adequate substitutes. Its importance in photography in amount of copper produced in 1941 was nearly 307 times greater than the silver such that the quantities required for this purpose could not be diverted. More- production yet the total value of all this copper was less than 5 times that of the over, photography is playing an increasingly important role in aerial warfare and silver produced. hence the demand for silver to meet military needs is growing. The silver used 73052-12-pt. 9-15 Regraded Unclassified 658 SILVER BILVER 659 80 only a portion of the annual output would be available as a substitute for copper. in solder and in certain chemical processes could not be released for other purposes The normal distribution of silver according to uses is given in table 3 and this same data is shown diagrammatically in figure 5. The shaded portion of this diagram represents the nonessential uses of silver, amounting to about 62 percent of the normal annual consumption. This portion available of from the our silver annual consumption production. therefore the Assuming would that available probably the production be the maximum of silver pro- in 1941 was distributed on this basis, supply as & substitute for copper would be 1,732 short tons, an amount less than one-half of that required for the clocks and watches produced each year. 1941 PRODUCTION of COPPER 957.394 Short tons FIGURE 7. Sterlings Silver 4% 36 1583 short tons 0.17% Photographic /DENTAL SUPPLIES 1,9% Industry 25.4% COPPER 'v Jewelery Optical Novelties 8 %2°9 Chemical REPLACABLE BY SILVER Goods %9`8 218 %9'9 199105 Silver 1420 short tons 0.15% FIGURE 5. Since silver is a better conductor of electricity than copper, a given quantity of 1941 the former would go further when used in certain types of electrical equipment. PRODUCTION of COPPER 957.394 Short tons Froom 9. This additional conductivity of silver, however, is not sufficient to make any great difference in the actual quantity of copper replaced. The estimated quantities of copper replaceable by silver on the basis of the 1941 production of these two metals is shown diagrammatically in figures 6 and 7. Figure 6 gives the saving of copper when replaced by an equivalent weight of silver, and figure 7 gives the saving when advantage is taken of the additional conductivity of silver, EFFECT ON COPPER, LEAD, AND ZINC PRODUCTION OF LIMITING MINING AND SMELTING OPERATIONS TO ORES CONTAINING LESS THAN 30 PERCENT OF THEIR VALUE IN FORM OF SILVER AND GOLD With a view to encouraging the production of copper, lead, and zine without greatly increasing our output of gold and silver, an order was recently issued by Regraded Unclassified 660 SILVER SILVER 661 the War Production Board I denying equipment priorities to all operating proper- ties producing more than 30 percent in dollar value of gold or silver or both. Companies and operators which come within this classification must present their cases to the War Production Board. In order to show what effect strict adherence to this regulation would have on ZINC PRODUCTION 1940 Zinc Gold & Silver Ores our annual output of copper, lead, and sine from the 11 Western States the fol- Derived from lowing tables and chart have been prepared:3 589,988 Table 4 is & summary showing the quantity and value (by States) of copper, tons lead. and zine recovered from sillceous gold and silver ores in 1940 and the pro- portions of our total domestic production of copper, lead, and sine which these tonnages represent. In figure 8 these same data are given in diagrammatic form. In tables 5 to 14, inclusive, the quantities and value of all the metals in each type of ore (coming within the classification mentioned above) are given for the individual States. These tables also show what proportion of the total metal value in such ores is represented by the gold and silver content. These date may be briefly summarized as follows: From these siliceous gold and (which can only be probably worked if the precious metals are marketed), there were recovered in 1940 the following quantities and values of copper, lead, and zine: Copper, 37,379 tons, valued at $7,475,853; lead, 107,502 tons. valued at $11,262,768; zine, 48,858 tons, valued at $6,156,144. This means that by eliminating ores of this type, our domestic production of these all-important metals in 1940 would have been reduced by the amountsshown above. In terms of percentages of our total annual production of these metals from domestic ores, the reduction in output in 1940 would have been as follows: Copper, 4.25 percent; lead, 24.80 percent; sine, 8.28 percent. TABLE I.-Production of gold, silver, copper, lead, and sine (by States) in 1940 States Gold Sllver Copper 1 Lead Zine Fine ounces Fine ounces Short tons Short fass LEAD PRODUCTION 433,065 Derived from Gold & Silver Ores Short done Ficture 8. 5 1940 tons Alabama 3 TONS Alaska 756,964 173,141 55 779 Lead Arizona 299,345 6,129,788 281,169 13,266 15,456 205'L01 Arkansas 55 440 California 1,443,889 2,224,590 6,438 1,772 79 Colorado 369,075 9,378,408 12,152 11,476 5,060 Georgia 966 632 13 Idaho 144,080 17,477,054 3,349 104,834 70,601 Illnois 544 1,508 4,818 Indiana 5 Kansas 11,927 57,032 Kentucky 350 1,278 Michigan 90,218 45,198 Missouri 145,190 685 172,052 12,703 Montana 273,369 12,152,044 126,391 23,036 52,587 Nevada 379,868 5,102,102 78,454 11,833 New Jersey 91,406 New Mexico 39,210 1,876,102 60,848 3,822 30,313 New York 35,743 1,973 35,686 North Carolina 1,683 6,390 Oklahoma 21,240 162,935 Orema 113,715 191,820 88 35 Pennsylvania 1,977 14,077 Philippines 1,140,126 1,299,199 South Carolina 12,872 7,907 South Dakota 587,100 170,680 6 7 Tennessee 177 38,947 573 Texas 303 1,294,966 30 205 Utah 352,331 11,686,321 231,864 75,688 43,788 Virginia 494 313 2,285 Gold & Silver Ores Washington 83,880 389,481 9,612 2,555 11,560 Wisconsin 445 5,770 COPPER PRODUCTION 878,086 Copper Derived from Wyoming 711 = Undistributed 12,732 1940 tons smoll ole Total 6,003,105 *69,585,734 878,056 457,392 665,068 Mine returns. Silver production-0.3 percent of weight of copper produced. # Preference Ratings orders P-56 and P-55-A, War Production Board (1942). I Wyoming is not included because of its almost negligible production of such ores. Regraded Unclassified 662 SILVER SILVER 663 small, but in terms of work performed by these metals such a reduction would be The above reduction in the output of copper and sine may appear relatively TABLE III.-Normal distribution of ailver consumption by industrial uses (percent very serious. For instance, the above quantity of copper is more than equivalent of weight) to that used in all the radio sets manufactured in 1940; the lead recovered from Percent such ores was sufficient to cover all the electrio cables produced, and the yield of Sterling silver industry 36. 4 metallic zine was more than enough for all the galvanized wire and screen mans. Photographie industry 25. 4 factured in 1940. Electroplating industry 14. 9 Unless, therefore, we are assured of making up this deficit in such metals from Jewelry, optical goods and novelty industry 8.6 other sources, & curtailment in the production of the ores containing more than Chemical industry (exclusive of electroplating) 6.0 30 percent or their total metal value in the form of gold and silver would be 1 Silver solder and other industrial uses 6.6 serious matter and one which requires careful analysis. Dental suppliers 1.9 Miscellaneous consumption 0.2 TABLE II.-Production of gold, silver, copper, lead, and sine (by States) in 1941 Total 100. o (preliminary figures, U. 8. Bureau of Mines) TABLE IV.-Summary showing quantity and value of lead, copper, and zine re- States Gold Bilver Copper Lead Zipe covered in 1940 from orea containing 30 percent or more of their total metal value in form of gold and silver WESTERN STATES, ALASKA, PHILIPPINES Fine Fine ounces ounces Short loss Short tons Short loss 690,649 Copper Lead Alaska 191,800 92 Zine 696 Arizona 315,000 7,551,000 332,750 Total 10,275 15,000 California 1,411,800 2,147,000 905 value 8,305 If Pounds Value Pounds Value Pounds Value Colorado 377, 7,234,487 6,501 12,607 15,98 Idaho 150,000 16,605,000 3,900 3, 108,500 77,500 Montana 246,500 11,304,000 127,500 21,750 55,900 Nevada 372,300 78,810 Arizona 098,773 $98,877 5,118,178 $255,909 $354,788 6,786,000 9,490 14,01 California 12,874,300 1,287.420 3,502,600 175,310 52,000 $3,276 1,465,826 New Mexico 28,469 1,359,308 71,562 4,565 37,548 8 Colorado 24,304,000 2, 2,430,401 22,952,000 1,147,601 10,113,481 637,149 4,215,151 Oregon 94,600 276,000 68 Philippines 1,109,667 Idaho 5,407,838 540,785 24,211.642 1,210,582 1,751,367 1,207,307 Montana 1,235,671 123,567 14,380,055 731,202 854,769 South Dakota 010,223 166,202 Nevada 456,900 45,690 2,692,100 692, 134,605 180,295 Texas 325 1,105,913 5 175 New Mexico 101,766 10,177 713,769 35,688 45,868 Utah 347,784 11,203,733 262,577 69,435 39,630 Oregon 176,000 17,600 70.000 3,500 21,100 Washington 81,509 385,290 8,612 3,660 13,987 Utah 9,990.393 999,039 141,337,357 7,566,862 87,551.100 5,515,719 14,081,620 Wyoming 482 80 a Washington 19,222,977 1,922,297 26,836 1,689 1,923,986 Total 5,836,871 66,523,216 896,346 245,526 271,943 Total 74,758,618 7,475,853 215,004,537 11,262,768 97,716,581 6,156,144 24,894,765 EASTERN STATES Alabama 35 4 Percent Georgia 300 34 Proportion of copper from domestic ore thus affected 4.25 New Jersey 90,300 Proportion of lead from domestic ore thus affected 34.80 New York 36,000 2,100 38,200 Proportion of tine from domestic ore thus affected 8.28 North Carolina 3,117 6,861 Pennsylvania 2,675 17,000 Copoer at $0.10 per pound; lead at $0.05 per pound; sine at $0,063 por pound. South Carolina 15,400 6,051 Propared by Industrial West Foundation from data by U. 8. Geological Survey, U. 8. Bureau of Mines, Tennessee 228 39,177 19 $5,000 and State bureaus of mines. Virginia 245 135 3,381 Total 22,000 105,282 13,453 5,500 190,000 CENTRAL STATES Arkansas 4 190 Illinois 18,990 2,250 7,580 Indiana Kansas 13,975 67,037 Kentucky 280 or Michigan 54,000 Missouri 351,000 166,271 20,985 Oklahoma 25,200 159,000 Wisconsin 750 7,820 Total 423,990 47,595 208,730 273,92 Grand total 5,858,871 67,052,469 957,394 459,756 735,860 Regraded Unclassified TABLE V.-Arizona: Ore sold or treated in Arizona in 1940, with content in terms of recovered metals 664 Gold Silver Copper Lead Zine Gold and Total value silver- of metal in propor- tion of each type total Ounees Value Ounees Value Pounds Value Pounds Value Pounds Value of ore value (percent) Dry and siliceous- Gold ore 129,938 $4,547.830 210,312 $149,322 344,107 $33,411 3,979,458 $198,973 $4,929,536 95 Gold and silver ore 478,100 570,363 404,958 433,072 43,307 998,109 49,905 976,270 90 13,660 Silver ore 863 30,205 597,643 424.327 221,594 22,159 140,611 7,031 483,752 94 Total 144,461 5,056,135 1,378,318 978,607 988,773 98,877 5,118,178 255,909 6,389,528 94 Gold, $35 per ounce; silver, $0.71 per ounee; copper, $0.10 per pound: lead, $0.05 per pound; rine, $0.063 per pound. Prepared by Industrial West Foundation from data of U.S. Geological Survey, U.S. Bureau of Mines, and State bureaus of mines. TABLE VI.-California: Ore and old tailings sold or treated in California in 1940, with content in terms of recovered metals Gold Silver Copper Lead Gold and SILVER Zine Total value silver- of metal in propor- tion of each type Ounces Value Ounes Value Pounds Value Pounds Value Pounds Value total of ore value (percent) Dry and siliceous- Gold ore 712,395 $3,561,975 1,211,052 $859,847 344,900 $34,490 111,600 $5,880 $4,461,892 98.8 Gold-silver ore 19,519 683,165 591,651 420,092 14,500 1,450 4,200 210 1,104,917 99.8 Silver ore 274 9,590 106,572 75,666 123,700 12,370 163,700 8,185 52,000 $3,276 109,087 78. 1 Copper ore 16,669 583,415 291,914 207,259 12,326,100 1,232,610 81,000 4,050 2,027,334 39.0 Lend ore 1,860 65,100 93,739 66,555 65,100 6,500 3,142,100 157,105 295,260 44.6 Total 750,717 4,903,245 2,294,928 1,629,419 12,874,300 1,287,420 3,502,600 175,130 52,000 3,276 7,998,490 8L7 Gold, $35 per ounce; silver, $0.71 per ounce; copper, $0.10 per pound; lead, $0.05 per pound; sine, 80.063 per pound. Prepared by Industrial West Foundation from data of U.S. Geological Survey, D. 8. Bureau of Mines, and State bureaus of mines, TABLE VII.-Colorado: Ore sold or treated in Colorado in 1940 with content in terms of recovered metal Gold Silver Cripper Lead Zine Gold and Total value silver- of metal in propor- tion of each type Ounces Value Ounces Value Pounds Value Pounds Value Pounds Value total of ore value (pereont) Dry and sillceous- Gold ore 292,830 $10,249,050 736,298 $522,772 1,059,775 $105,978 4,912,272 $245,614 $11,123,414 96.8 Gold and silver ore 7,196 251,860 252,554 179,313 145,635 14,564 1,204,779 60,239 505,976 85.0 Silver ore 1,020 35,700 918,320 652,007 43,673 4,367 1,691,921 84,596 776,670 88.5 Copper ore 30,331 1,061,585 6,765,877 4,803,730 21,254,198 2,125,420 2,822,982 141,142 8,131,877 72.0 Lead ore 1,854 64,890 291,905 207,252 12,780 1,278 2,095,766 104,788 378,208 7L 9 Lead-copper ore 45 1,575 16,630 11,827 56,469 5,647 295,734 14,787 33,836 60.0 Zino-lead ore 17,000 397,100 725,487 515,096 1,731,470 173,147 9,928,696 496,435 10,113,481 113, $637,149 2,218,927 41.1 Total 350,336 12,061,760 9,707,071 6,891,997 24,304,000 2,430,401 22,962.000 000 1,147,001 10,113,481 637,149 23,168,908 81.8 Gold, $35 per ounce; silver, $0.71 per ounce; copper, $0.10 per pound; lead, $0.05 per pound; zine, $0.063 per pound. Prepared by Industrial West Foundation from data of U.S. Geological Survey, U. B. Bureau of Mines, and State bureaus of mines. SILVER TABLE VIII.-Idaho: Ore sold or treated in Idaho in 1940 with content in terms of recovered metal Gold Silver Copper Lend Zine Gold and Total value silver- of metal in propor- each type tion of Ounces Value Ounoes Value Pounds Value Pounds Value Pounds Value of are total value (percent) Dry and Regraded Unclassified Gold ore 67,243 $2,353,505 217,516 $154,436 156,896 $15,690 264,721 $13,236 $1,536,867 98.8 Gold and silver ore 6,226 217,910 264,201 187,583 13,388 1,339 95,929 929 4,797 411,629 98.5 Silver ore 652 22,820 10,787,758 7,659,308 4,432,055 443, 443,206 1,666,140 83,307 5,208,641 03.5 Copper are 597 20,890 17,762 12,611 695,365 69,537 69, 1,549 77 103,115 325 Lead are 658 23,030 23, 867,066 615,617 110,134 11,013 22,183,303 1,109,165 1,758,825 36.3 Total 75,376 2,638,155 12,154,303 8,629,555 5,407,838 540,785 24,211,642 1,210,582 13,019,077 86.5 Gold. $35 per ounee; silver, $0.71 per ounce; copper, $0.10 per pound; lead, $0.05 per pound; zine, $0,063 per pound. Prepared by Industrial West Foundation from data of U.S. Geological Survey, U. 8, Bureau of Mines, and State burenus of mines. 999 TABLE IX.-Montana: Ore sold or treated in Montana in 1940 with content in terms of recovered metal 999 Gold Silver Copper Lead Zine Gold and Total value silver- of metal in propor- tion of each ton total Ounees Value Ounces Value Pounds Value Pounds Value Pounds Value of ore value (percent) Dry and siliceous: Gold ore 167,186 $5,851,510 459,052 $325,926 215,113 $21,511 617,767 $43,088 $6,242,035 98. 9 Gold and silver ore 11,230 393,050 881,541 625,894 244,959 24,496 633,521 31,676 1,075,116 94. 7 Silver ore 3,053 106,855 1,571,060 1,115,452 745,514 74,551 1,892,280 94,614 1,301,472 80.8 Lead ore 3,036 106,260 262,996 186,727 30,085 3,009 11,236,487 561,824 857,820 34. 2 Total 185,205 6,457,675 3,174,649 2,253,999 1,235,671 123,567 14,380,055 731,202 9,566,443 91. 1 Gold, $35 per ounce; silver, $0.71 per ounce: copper, $0.10 per pound; lead, $0.05 per pound; zinc, $0.063 per pound. Prepared by Industrial West Foundation from data of U.S. Geological Survey, U.S. Bureau of Mines, and State bureaus of mines. TABLE X.-Nevada: Ore and old tailings sold or treated in Nevada in 1940, with content in terms of recovered metal SILVER Gold Silver Copper Lead Zine Gold and Total value silver- of metal in propor- each ton tion of Ounces Value Ounees Value Pounds Value Pounds Value Pounds Value of ore total value (percent) Dry and siliceous: Gold ore 238,220 $8,337,700 678,255 $481,561 73,200 $7,320 65,500 $3,275 $8,829,856 99.8 Gold and silver ore 39,342 1,376,970 1,910,417 1,356,396 334,900 33,490 33, 391,400 19,570 2,786,426 98. 9 Silver ore 5,716 200,060 1,274,948 905,213 16,400 1,640 219,100 10,955 1,117,868 98.0 Lead ore 1,118 39,130 235,396 167,131 32,400 3,240 2,016,100 100,805 310,306 06.4 Total 284,396 9,953,860 4,099,016 2,910,301 456,900 45,690 2,692,100 134,605 13,044,456 98.6 Gold, $35 per ounce; silver, $0.71 per ounce; copper, $0.10 per pound; lead, $0.05 per pound; zine, $0.003 per pound. Prepared by Industrial West Foundation from data of U.S. Geological Survey, U. B. Bureso of Mines, and State bureaus of mines. TABLE XI.-New Mexico: Ore sold or treated in New Merico in 1940 with content in terms of recovered metals Gold Silver Copper Lead Zine Gold and Total value silver- of metal In propor- each type tion of Ounoss Value Ounces Value Pounds Value Pounds Value Pounds Value of ore total value (percent) Dry and sillceous- Gold ore 4,895 $171,325 15,951 $11,325 59,975 $5,998 67,710 $3,386 $192,034 95. 1 Gold and aftver ore 14,245 498,575 775,228 550,412 10,048 1, 1,005 78,867 3,943 1,053,935 99.0 Silver ore 12 420 13,156 9,340 5,226 522 50,000 2,500 12,782 76.4 Lead ore 505 17,675 13,404 13, 9,517 9, 26,517 2,652 517,192 25,859 55,703 48.8 Total 19,657 687,995 817,739 580,594 101,766 10,177 713,769 35,688 1,314,454 96. Gold, $35 per ounce; silver, $0.71 per ounce; copper, $0.10 per pound; lead, $0.05 per pound; zine, $0.063 per pound. Prepared by Industrial West FoundationJrom data of U. 8, Geological Survey, U. B. Bureau of Mines, and State bureaus of mines. TABLE XII.-Oregon: Ore and old trailings sold or treated in Oregon in 1940, with content in terms of recovered metals SILVER Gold Silver Copper Lead Zine Gold and Total value aliver- of metal in propor- Ounces Value each type tion of Ounces Value Pounds Value Pounds Value Pounds Value of ore total value (percent) Dry and Gold ore 40,620 $1,421,700 140,487 $99,745 131,800 $13,180 25,700 $1,285 Gold and silver ore $1,535,911 1,193 99.0 41, 41,755 62,965 44,705 44, 14,000 1,400 43,000 Copper ore 2,150 90,010 6 190 95. 1 Regraded Unclassified 2,696 1,914 30,100 3,010 Lead ore 6 190 169 4,104 41. 120 100 10 1,300 65 385 75. 4 Total 41,825 1,463,835 206,817 146,485 176,000 17,600 70,000 3,500 1,611,410 26, 7 Gold, $35 per ounes; silver, $0.71 per ounce; copper, $0.10 per pound; lead, $0.05 per pound, rino, $0.063 per pound, Prepared by Industrial West Foundation from data of U.8. Geological Survey, U. 8. Bureau of Mines, and State bureaus of mines. 667 668 SILVER SILVER 669 Gold and (percent) & 62. 31.3 31.6 45.5 allver- propor- tion of total value Gold and silver- propor- tion of total value (percent) SML BL ar.2 THE CHAIRMAN. The committee will not adjourn; it will stand in recess subject to the call of the chairman. I cannot now say when it will be reconvened, but it will be reconvened at any time the com- mittee has some business to transact. Total value of metal in each type of ore 089, 060 $2,089,060 1,913,261 YOU of 1,871,689 396, 399 17,425,399 25, 25,831,900 Total value of metal In each type of ore 11, 083, 180 10, 193 16, 84A, 3,845,381 4. 955, CGM Senator MUCARRAN. May I express my personal sincere gratitude to Dr. Nelson, Mr. Batt, Mr. Knowlson, and the others who have come here with them for their attendance at these meetings and for the happy manner in which they have cooperated in the meetings Value 719 $5,515,719 Value and for their general attitude toward the problems which we have tried to present. Zine Zine Representative CHENOWETH. May 1 inquire if there will be a time Pounds 87,551,100 87,551,100 Pounds when persons who desire to make statements but cannot appear may submit briefs? The CHAIRMAN. Yes. I will-say now that if anyone who is present would like to submit something for the consideration of the com- Value $17,860 214 193,214 388,759 803,036 221, 221,931 931 5,042,062 7, 7,566,862 $60 195 Value 1,425 1,689 mittee, we will welcome it. Send it to either Senator McCarran or myself. TABLE XIII.-Utah: Ore sold or treated in Utah, with content in terms of recovered metal Lead Lead Representative CHENOWITH. You are not fixing any time limit Pounds 357, 194 357,194 3, 864, 286 3,864,286 175 7,775,175 16, 16,060,728 4,438,625 841, 118,841,249 952 141,337,357 200 °C 813 If 178 26,836 on that? Pounds The CHAIRMAN. Well, like this war, this matter will probably run for a good while. Like the Government, it will probably go on for a good while. So, this committee, as long as the Senate sees fit to Value $66, 397 $66,397 130,465 254,461 45,643 219 50,219 451,854 999,039 TABLE XIV.-Washington: Ores sold or treated in Washington in 1940, with content in terma of recovered metals 138 693 886, 1,886,466 Gold, $35 per ounes; silver, $0.71 por ounce, copper, $0.10 per pound; load, $0.05 per pound; zine, $0.053 per pound. Prepared by Industrial West Foundation from data of U. Geological Survey, U. 8. Bureau of Mines, and State bureaus of mines. $35, 000 $35,000 297 1,922,297 Gold, BUS per other, silver, $0.71 per ounre; copper, an. se per pound; lead, $0.05 per pound: sine. 80,063 per pound. Prepared by Industrial West Foundation from data of U. B. Geological Survey, B. Bureau of Mines, and State bureeus of mines. keep it alive, will remain alive. Value Representative ENGLEBRIGHT. I should like to file a statement for the record. Copper Copper The CHAIRMAN. Without objection I will state for the committee Pounds 974 663,974 304, 1,304,653 2,544,605 456,425 502,193 4,518,543 9,990,393 Pounds 350, 000 350,000 188'1 6,934 18,854,662 19, 222, 977 that the committee will welcome your statements and suggestions. Representative ENGLEBRIGHT. May I add just a further word? I take Dr. Nelson's statement in his modification of the order of March 2 to mean this: that the gold-mining industry is an industry Value $83,968 750,947 947 1,318,362 753,860 121,869 4,099,069 7,128,075 Value $79, 250 $79,250 4,430 13,452 155, 155,391 3 252, that is entitled to survive; that he is now placing it in the category of industries that have that right-an industry that can survive. Silver Silver Representative WHITE. Is there any limit to the time in which a Ounces 118, 265 118,265 1,057,672 848 1,856,848 1,061,774 645 171,645 A. 5,773,336 10,030,541 Ounces 619 111,619 6, 6,239 18,946 218,861 355, 665 statement may be submitted for printing in the hearings? The CHAIRMAN. Well of course, there would be n. limit, Congress- man White, but a reasonable time will be allowed before the state- ments are made ready for the printer. Value 835 $1,920,835 83.03 BY, 174, 174,860 269, 269,150 2,030 1,416,695 205 Value $968, 870 1,803,515 778, 515 What disposition will be made of the transcript when it is prepared will be subject to the decision of the committee. I do not know what Gold Gold the committee will see fit to do with it, but I will say, speaking for myself and, I am sure, for the committee, that we will welcome state- Ounces 54,881 961 23,961 4,990 7,690 28 E 46, Cunces 27.80 882 158 20 132,063 51,529 888 ments made by those who are interested, and they will be placed in the record and considered in connection with the printed transcript. I want to reiterate the statement made by Senator McCarran: that we thank all of you gentlemen for attending and participating in this conference. I am sure all of us will agree it has been most helpful, and I am glad we have made the progress we have. The committeee will stand in recess subject to the call of the chairman. Dry and silleeous- Gold ore Gold and silver one Silver ore. Lead-copper ore 09 Zine-lead-copper ore Total Dry and siliceous- Gold and silver ore (At 12:42 p. m. the hearing was concluded, and the committee stood in recess subject to the call of the chairman.) Lend ore Gold ore Bilver ore Copper ore Total Regraded Unclassified INDUSTRIAL USE OF SILVER THURSDAY, MAY 28, 1942 UNITED STATES SENATE, SPECIAL SILVER COMMITTEE, Washington, D. O. The Special Silver Committee met at 10:30 a. m., pursuant to call, in room 424, Senate Office Building, Senator Pat McCarran presiding. Present: Senators McCarran (presiding), Johnson of Colorado, and Thomas of Idaho; and Albert A. Grorud, secretary to the committee. Present also: Senators Wheeler, Hayden, Murdock, Clark of Idaho, Bulow, Wiley, Langer, Holman and Millikin; Representatives White, Chenowith, Lewis, and Murdock. Present also: Hon. Henry Morganthau, Jr., Secretary of the Treas ury, accompanied by Edward H. Foley, Esq., General Counsel, and Dr. Harry D. White, Director of Monetary Research; Hon. Jesse H. Jones, Secretary of Commerce; Hon. Donald M. Nelson, Chairman, War Production Board; Mr. James A. White, Director, Rocky Moun- tain Metals Foundation, Washington, D. C.; and Mr. William Broad- gate, representing Small Mine Operators' Association of the State of Arizona. Senator McCARRAN (presiding). The committee will come to order. For the benefit of those who came in after I made my preliminary statement, it may be said that this group was called together pur- suant to a telephonic call that I had from Secretary Morgenthau, in which he stated that, in keeping with an understanding that We had when we last met, he would like to discuss again with us the matter of silver and silver legislation. With that in mind, I called together all those who are or might be interested in this particular subject. Mr. Morgenthau, we will be glad to hear from you. STATEMENT OF HON. HENRY MORGENTHAU, JR., SECRETARY OF THE TREASURY Mr. MORGENTHAU. Mr. Chairman and gentlemen: The reason I am here is this: Mr. Nelson feels that he needs more silver than the amount that we feel we can give him under the existing laws. He will explain why he wants it and for what purposes he wants to use it. As I explained to you when I was here the last time, we were about to conclude an arrangement through the Defense Plant Corporation, under Mr. Jones, to lend up to some 40,000 tons of silver. I use tons because that is the language that is now used in talking about silver. Mr. Nelson wants an amount over and above that. We have in the Treasury, in round figures, about 100,000 tons. There are about 47,000 tons of so-called free silver, leaving the balance of the silver behind outstanding currency. That is a very brief picture of the Treasury's position. I think Mr. 671 Regraded Unclassified 672 SILVER SILVER 673 Nelson will explain to you why he wants this, and the picture will "hen unfold itself. hear Mr. Nelson, first, and then to discuss the subject at large. I Senator WHEELER. You propose to lend the 40,000 tons? think perhaps the story would unfold better. Mr. MORGENTHAU. That is, as I understand it, our arrangement Mr. Nelson, will you kindly give us your statement on this? with the Defense Plant Corporation, of which Mr. Jones is the head. We lent to the Defense Plant Corporation, under a ruling of the STATEMENT OF DONALD M. NELSON, CHAIRMAN, WAR PRODUC- Attorney General, some 40,000 tons, which the Defense Plant Cor- TION BOARD poration guarantees the Treasury it will return to us. Senator WHEELER. Why could you not lend 80,000 tons, or an Mr. NELSON. Mr. Chairman, our present production of war ma- tériel is, in my opinion, limited only by the materials that we have to extra 40,000? Mr. MORGENTHAU. My general counsel feels that we cannot, That make things out of. We have plenty of facilities in the United States is why we are here. to produce practically anything we want and in practically any Senator WHEELER. Why not? quantity, limited only by our materials, and that goes today down Mr. MORGANTHAU. May Mr. Foley explain that? even to wood. Wood is scarce at the present time. But of the items Senator McCarran. Certainly. that are most important, copper is one of the most important single Mr. FOLEY. Senator Wheeler, what We propose to lend Mr. Jones items of which we are limited in quantity, We are, of course, sup- calls for the use of the free silver; the rest of the silver is behind the plying copper to all of the United Nations. Copper is used for a wide variety of things, the principal one being ammunition; and in silver certificates. We feel that without some authority from Con- this war, with so many airplanes, so many machine guns, and so gress we should not take the silver that is behind the circulating many rapid-firing rifles, the quantities of ammunition that we need certificates. are perfectly staggering and take an immense amount of copper, Senator McCarran. What do you mean by "free silver"? Also, of course, we use copper for producing some of the other Mr. FOLEY. I mean silver that has not been put behind the cer- very important things we need, such as aluminum, chlorine, or tificates. magnesium. A great amount of copper is used in bus bars for the Senator McCARRAN. You have not much of that, have you, in the conduction of electricity. It occurred to us that we could borrow Treasury? silver from the Treasury in order to replace the copper and have Mr. FOLEY. There are approximately 47,000 tons of that. the copper to use for ammunition. We took the matter up with Senator McCarran. Against which currency has not been issued? the Secretary, and he worked it out so that we could use free silver, Mr. FOLEY. That is right. which we have loaned to Mr. Jesse Jones to put into the defense Senator McCarran. You have other silver besides that, do you plants as bus bars, therefore replacing more than an equivalent not? What you are speaking of is really the seigniorage silver? amount of copper, because silver is a better conductor. Mr. FOLEY. That is silver that has not been monetized. It could Senator WILEY. You will put it into defense plants for what? be called the seigniorage silver. We feel that. to take the silver that Mr. NELSON. As bus bars. I think we will use up in that way the has been put behind the certificates that are circulating as money whole 40,000 or 45,000 tons that the Secretary has in the Treasury. and to lend it to Mr. Jones for nonconsumption uses would require Indeed, that silver will be comparatively safe, with about 30,000 volts some affirmative grant of power from Congress, since it is part of our of electricity going through it; and being in the form of very large bars money. hanging from the ceiling, it can readily be guarded. There will be Senator WHEELER. You have not anything behind the rest of the very little trouble about its return when this war is over and it can be money, have you? replaced with copper. Mr. FOLEY. Well, I think that this is a rather novel use for the Senator McCarran, It is not likely to be taken with high voltage silver that is behind the certificates that we are circulating as money passing through it. and that Congress should tell us to what use it should be put. Mr. NELSON. No, sir; it is not likely to be taken when 30,000 Senator WHEELER. Then, what I understand you to want is some volts are going through it. law that will permit you to use the silver that is behind the silver We have another problem facing us, and that is in connection with certificates for lending to the Defense Plant Corporation? the making of synthetic rubber. We are keenly and eagerly following Mr. FOLEY. That, as I understand it, is part of Mr. Nelson's every process for making butadiene, which is one of the principal proposal. constituents of synthetic rubber. In making butadiene from grain, Senator MURDOCK. Mr. Chairman- you catalyze alcohol. You make alcohol from the grain, run it through Senator McCarran. Yes, Senator Murdock, il catalyzer, and then through a condenser made of rubber. It may Senator MURDOCK. If that is the only question confronting the take large amounts of copper in order that this thing may be done Treasury, the War Production Board, and the Defense Plant Corpora- quickly. We should like, if possible, to get from the Secretary more tion, why could it not be handled by merely suspending redemption silver in case we need it. We are investigating all methods of making in silver during the period of the emergency? synthetic rubber. As you know, it can be made from petroleum, Senator McCarran. I worder if it would not be well for us to it can be made from grain alcohol, which is ethyl alcohol, it can be 73052-42-pt. 0-10 Regraded Unclassified 674 SILVER SILVER 675 made from butyl alcohol, and it can be made from various other that I am very jealous in watching anything that will attempt to processes. You spoke about Seagram's. We are authorizing for them a pilot disturb the existing monetary system or the existing laws on silver. plant for them to make butadiene out of ethyl glycol under a method STATEMENT OF MR. MORGENTHAU-Resumed worked up by the Department of Agriculture in conjunction with Seagram's. That is a few months away. But that may also be & Mr. MORGENTHAU. We estimate the production of U. S. silver to good or better or cheaper way of making it. be 62,000,000 ounces, or an equivalent of 2,123 tons, and our imports Of course, it is time that is the principal element in this whole will be, we estimate, 120,000,000 ounces, or the equivalent of 4,110 synthetic rubber picture. We want to use the process that will get it tons for the year 1942. for us the quickest. If it becomes necessary to use ethyl alcohol and Senator JOHNSON of Colorado. The last figure is for the imports? to use copper in connection with the conversion of ethyl alcohol into Mr. MORGENTHAU. The last figure is for the imports. butadiene, we should like permission to borrow this silver again for Senator JOHNSON of Colorado. The first was domestic? making these coils out of it. We are making experiments to see if Mr. MORGENTHAU. Yes, sir. there is any reaction of heated gases to silver. It looks entirely Senator HAYDEN. The imports are about twice the domestic pro- possible at the present moment, but we are not entirely sure of it. duction? But we want to have permission, if we need copper, to substitute Mr. MORGENTHAU. Yes, sir. silver for the copper in these condensing tubes in the conversion of Senator THOMAS of Idaho. Is that the maximum amount of im- grain alcohol into butadiene. ports you might be able to acquire? That, sir, is the story. Mr. MORGENTHAU. I would not say that, but I think we are getting Senator McCarran. At the present time, as I understand it, about all that we can get, because in the silver purchase program that tentative permission has been granted by an opinion of the Attorney we have followed, now, since 1934 we have, I think, mopped up most General by which 40,000 tons could be turned over to you by the of the silver of the world that is salable or for sale. Treasury? Representative WHITE. Mr. Chairman, may I ask the Secretary a Mr. NELSON. That is right, sir. few questions? Senator McCarran. Of which only about 13,000 tons have been Senator McCARRAN. Yes, Congressman White. turned over up to date? Representative WHITE. Secretary Morgenthau, in operating the Mr. NELSON. That is right, sir. Treasury's fiscal policy in dealing with silver, it averages out that the Senator McCarran. Leaving a balance of some 20,000 tons yet to total volume of silver costs about 50 cents an ounce, averaging the price be turned over? paid for foreign silver and domestic silver? Mr. NELSON. That is right, sir. Mr. MORGENTHAU. Over what period, Mr. White? Senator McCarran. Is it in excess of that? Representative WHITE. Since you started purchasing under the act Mr. NELSON. It is in excess of the 40,000 tons; sir. of 1934. I have the seigniorage figures before me, taken from the Senator McCarran. The minimum requirements of the United bulletin of March. States in all lines, both manufacturing and arts and sciences, are Mr. MORGENTHAU. I understand my men to say that that is approx- about 230,000,000 ounces of silver. That is the average annual imately correct. You most likely have it. requirement. The over-all maximum requirements are about Representative WHITE. Could you give the committee just about 445,000,000 ounces of silver, that being for the currency and for the the average cost of all the silver you have bought, that is now on hand, arts and sciences, both for the silver certificates outstanding and the silver that you call My recollection of our intake, Mr. Secretary-and will your experts free silver over in the Treasury? check me on this, please?-of silver from all sources for the last year Mr. MORGENTHAU. Yes, I have that right here. Had I better talk or so has not been in excess of something like 140,000,000 or 150,000,000 in ounces? ounces? Am I correct or nearly correct in that? Senator McCARRAN. I think it would be more understandable. Mr. NELSON. I have 6,200 tons. Mr. MORGENTHAU. I can give it in both ways. The silver in the Senator McCarhan. You are dealing in tons; I was dealing in Treasury as of April 30 was 2,900,000,000 ounces, or 99,438 short tons, ounces. The question is, Are we acquiring silver as rapidly as we Silver coinage in circulation outside the Treasury, like silver dollars could acquire silver under existing law? Can we not acquire more and subsidiary silver coin, was 409,000,000 ounces, the equivalent of domestic silver, for instance, by a more encouraging and conducive 14,018 tons, price for domestic silver and thus produce more silver domestically? That made a total of silver owned by the Treasury and coinage in Again, can We acquire more silver from abroad if we purchase more circulation of 3,309,500,000 ounces, the equivalent of 113,456 tons. silver? Can we raise the world price of silver? It is 35 now, In Senator McCarran. That is the total amount of silver owned by place of freezing it at 35, as Mr. Henderson has-or at approximately the Treasury, both in and out? 35-can we take off that ceiling and thus find silver coming to us and Mr. MORGENTHAU. Yes. not have to disturb the existing laws? Representative WHITE. But under date of April 30, 1942, according Let me say to you frankly-and I am now speaking personally- to your circulation statement, you had outstanding in silver certificates Regraded Unclassified 676 SILVER SILVER 677 $1,964,527,420. Also, you had silver dollars to the amount of $63,465,132. That was at the rate of $1.29 cents an ounce? Mr. MORGENTHAU. Yes. Mr. MORGENTHAU. Yes. Representative WHITE. There is nothing in the law to prevent it? Representative WHITE. You had on hand this silver that you Mr. MORGENTHAU. No. mentioned, and if you balance what you received for sílver in circula- Representative WHITE. Has the Treasury any definite reason for tion and silver dollars with what you have on hand, it averages about not using that silver? 50 cents an ounce? Mr. MORGENTHAU. Mr. Chairman, if you want to go into the whole Mr. MORGENTHAU. I agreed with you; yes. Treasury policy on silver and why we have not issued silver certifi- Representative WHITE. You have on hand quite a volume of free cates, I shall be delighted to do it, while I am here. We are not silver. According to your statement which came in this morning, I hiding 4,000,000 ounces by taking it from one pocket and placing it find that it is carried as 1,360,000,000 ounces. Going back to in another; it is all accounted for. If you want to go into the whole April 20, I found the amount WBS 1,364,000,000. So, as against the monetary policy on silver, I will stay here until I can, at least, answer 1,360,000,000 ounces, there is a decrease there. Is that accounted every question that every member of the committee has. for by the 13,000 tons you have disposed of? But if you are interested in the terrible situation that are up Mr. MORGENTHAU. No; there is a little misunderstanding some- against and why we cannot assist Mr. Nelson in prosecuting the war, where. We actually have not yet turned over any silver. by lending to him, through Mr. Jones, the silver that he needs as a Representative WHITE. Well, you have moved out of the Treasury substitute for copper, then, if you do not mind my saying so, 1 think stocks, silver to the amount of 4,000,000 ounces, according to your that is another proposition. Senator McCarran. May I state what my views are? own figure. Mr. MORGENTHAU. Whatever it is, we shall be glad to furnish it Mr. NELSON. I have one more thing that I should like to say. to the committee; but, to my mind, that has nothing to do with silver Representative WHITE. At this juncture, I should like to make going to the Defense Plant Corporation. apology to the Secretary for having put a question that may be dis- Representative WHITE. I believe you are asking for legislation turbing; but the question is, as I understand it, the disposition of authorizing you to move certain idle stocks of silver. The figures in this silver, because we have idle silver, all of which has been acquired your statements coming out from time to time develop that you are under provisions of the Silver Purchase Act of 1935 and the Silver Act of 1939. moving it. It fluctuates, and I was told 3 months ago that the dimin- ishing figures indicated the quantity of silver revalued in the general Mr. MORGENTHAU. You do not owe me any apology, Congressman White. fund represented that you had moved or disposed of. If you take the two figures, the figures for April 20 and those in this morning's state- Representative WHITE. I will ask a direct question: Is it a fear of ment, they show a difference of 4,000,000 ounces that you have dis- inflation that causes the failure to use the silver as money? Mr. MORGENTHAU. No. We have never done it. We have never posed of or by which you have reduced stocks. issued these extra silver certificates. Mr. MORGENTHAU. The slight movement of silver from one cate- Representative WHITE. You just have not done it, but there is gory to another is due to the fact that more coinage is required. nothing to prevent your doing it? When coinage is required for a quantity of silver quarters, that will Mr. MORGENTHAU. There is nothing to prevent our doing it; but take the silver from one category and place it in another. it has been our policy since the Silver Purchase Act not to do it. Representative WHITE. Would the coinage of minor coins account There is nothing new about it. Since 1934 we have not done it. for that reduction of stocks? Senator McCarran. Mr. Nelson wished to make a further and Mr. MORGENTHAU. I am sure that you will find, after we have concluding statement, as I understand it. I should like to have him given you an explanation of these items, that there has not been any make it now. diminution in the monetary situation. Am I correct in that understanding, Mr. Nelson? Senator JOHNSON of Colorado. Why can we not go ahead and get Mr. NELSON. That is right. I had not finished when you asked the statements from our guests this morning, first. Senator McCarran. I understood that Mr. Nelson had not finished. about the purchase price. If we can replace the copper that will be needed for making other Representative WHITE. I am a member of the Coinage and Weights things, such as aluminum, chlorine, or magnesium, or butadiene, and Committee of the House. I had quite a little to do with the passage use this silver instead, the silver will have only 8. very nominal amount of the Gold Revaluation Act. I think that this is pertinent to the issue. of wear. I mean we are not talking about using up thesilver; although, frankly, if it meant making ammunition, and we had to have the Senator JOHNSON of Colorado, I should like to know what the pro- ammunition, and silver would do, we probably should use it up as posal is. ammunition, if that is the thing we need to prosecute this war. Representative WHITE. Well, I should like to ask one or two more Senator WILEY. Will it be determined by chemical or engineering questions; then I will yield. experts whether silver can be used? Senator McCarran. Go ahead. Mr. NELSON. Oh, yes. Representative WHITE. Could not this idle silver be used as money Senator WILEY. That has not been tried out? by issuing silver certificates against it? Regraded Unclassified 678 SILVER SILVER 679 Mr. NELSON. In the case of butadiene it has not; in the case of bus Mr. MORGENTHAU. I stand just where I did before. I am here bars it has been. Senator WHEELER. You can use silver instead of copper in the simply backing up Mr. Nelson's request that we be given the legal authority to do what he needs to have done. stills, can you not? Senator WHEELER. I am speaking only for myself. As far as I am Mr. NELSON. Oh, yes. It is a good conductor, an excellent con- concerned, I feel that if it is necessary to use this silver under these ductor, of electricity. circumstances, in order to conserve other needed war materials, those Why we came before you, sir, was to ask if we could not find some of us who are interested in silver could not very well take the position way to use this silver to replace copper, because of the deficit of that we were not going to permit the use of that silver or of any other copper; and this deficit of copper will come right out of our ammuni- material, no matter what it was. If we needed to use the gold that tion requirements. I think it would be B great pity if we had to is in the Treasury in order to carry on the war, I would say to use close down any one of our ammunition plants for a lack of copper if the gold-or the silver or anything else that we have. we could substitute another metal which we have on hand and are Senator MURDOCK. Mr. Chairman- not using, and thereby make more ammunition out of the copper Senator McCarran (presiding). Senator Murdock. which we have. Senator MURDOCK. My question is based on a statement made to Senator WHEELER. If this is done, would it affect the financial me that we are not only taking care of our own country but are also policy of the Treasury at the present time with reference to the silver furnishing a large amount of copper to the United Nations. situation? You are not seeking to change the silver law with refer- Mr. NELSON. Yes, sir. ence to the purchase of silver, as to prices, in any way, shape, or form? Senator MURDOCK. I cm wondering if you have made or if anyone Mr. MORGENTHAU. I do not know if Mr. Nelson has told his whole else has made an investigation of any kind to determine whether or story. not any of the other United Nations are utilizing silver in place of Mr. NELSON. Yes, I have. I wish, if I may, to make one request, copper in order to make copper readily available. and that is that the amounts of these deficits be kept off the record; Mr. NELSON. Well, as far as I know, I do not know of any case I only wanted the committee to have a picture of what our copper where the United Nations-unless Russia is doing it, and we have no requirements really are. information on that-are doing the same kind of job of increasing their Senator McCarran. Have you now, Mr. Nelson, concluded your supply of other things as we are, such as in the case of aluminum and statement or gone as far as you want to go? Have you now con- synthetic rubber. cluded such statement as you think you should preliminarily make? In the case of synthetic rubber, we are the only one that has increased Mr. NELSON. At this time, sir. the production of synthetic rubber. We have grain over here and Mr. MORGENTHAU. Senator Wheeler, in answer to your question we have the petroleum to make synthetic rubber. We will have to just now, Mr. Nelson tells me that that is all he is asking for. supply synthetic rubber for the United Nations. If this committee feels that this is a worthwhile project-and I Senator MURDOCK. It seems to me, Mr. Chairman, that certainly hope that they will, and will give us the legal authority, or that this the Congress and the officials of this Government should be informed committee will recommend to Congress that we be given the legal on that question. If it is necessary here in the United States to utilize authority, then, to answer your question, we have, as far as I am silver in place of copper in nonconsumptive uses, it seems to me that concerned, no idea of disturbing the silver legislation, other than, we should certainly ask our Allies, before sending copper over there to with your authority, to lend to Mr. Jones' Corporation the balance them-and I am wholeheartedly in favor of doing that-What are of the silver in the Treasury if Mr. Nelson says he needs it for war you doing along this same line? purposes. have asked that question, because it seemed an important question, Senator WHEELER. That is the thing that seems important to me for this reason: That when the war comes to & conclusion-and I think at the present time, I mean the fact that we passed this law would it will come to a victorious conclusion for the United Nations-the not change the silver policy as enunciated by Congress heretofore? United States is going to find at the peace conference that its large Mr. MORGENTHAU. Well, from what Mr. Nelson has told you, I stocks of gold and silver are going to be very important factors. So, do not see why it would be necessary. while I agree with Senator Wheeler, I have no objection, coming from Senator WHEELER. I could not see why it would be necessary either, a big silver-producing State, to the utilization of every ounce of silver but I wanted to get your own view upon it. and every ounce of gold, if necessary, in nonconsumptive uses for Mr. MORGENTHAU. But We in the Treasury do feel that we need the winning of this war. But, as the chairman of the committee has legislation to give him the balance of the silver. stated, I do not want to see at this time any material change made Senator WHEELER. I understand that; but if we pass the legisla- with reference to the monetary use of silver. However, I can see no tion that you have suggested, it will not change the silver policy with damage or no harm to the silver program if the Treasury is allowed to respect to the price of silver? safeguards. use the silver or to lend it for nonconsumptive uses under proper Mr. MORGENTHAU. It could not. Senator WHEELER. That is what I thought. Senator McCABRAN. Mr. Secretary, do you care to comment. Mr. MORGENTHAU. You want the assurance? Mr. MORGENTHAU. I can answer Senator Murdock's question. Senator WHEELER. I wanted that assurance. As far as I know-if I am wrong, I will correct it-none of the United Regraded Unclassified 680 SILVER SILVER 681 Nations has any substantial stock of silver. In the case of England, we have had an official request asking if we could assist her by selling or Senator McCarran. Boiled down to the last analysis, as I gather lease-lending some silver for industrial uses. England is short of the whole question here-and I will express this in my own homely silver; in fact it has not enough silver now for its own coins. That is way-the bus bars, or the silver that is in the bus bars, being in such the situation as far as England goes. condition as not to be deteriorated, may be regarded, as I view it, na Senator MURDOCK. Is that true with reference to China? silver backing for certificates that might be issued. Am I correct in Mr. MORGENTHAU. As far as I know, I think we bought about all that? the silver that China had to sell. Mr. MORGENTHAU. You are perfectly correct in that, but you Senator MURDOCK. What about India? know, certainly as well as I do, Mr. Chairman, that as we buy silver Mr. MORGENTHAU. Well, I do not know offhand how large their it has been the policy of the Treasury to issue silver certificates up to the cost of the silver. We have done that consistently. We have silver stocks are or whether they would be readily available for indus- not issued silver certificates against what you call free silver or trial purposes. Senator MURDOCK. There is an inflow of silver into this country? seigniorage but purely up to the cost, and that has been our policy. As far as I know, by and large, with the exception of a few individuals, Mr. MORGENTHAU. But certainly as far as England is concerned, there has not been any criticism. That is the policy we have followed England is asking us now for silver for industrial use. since 1934. Representative WHITE. Mr. Chairman, may I ask a question? Senator McCARRAN. Following that policy out, suppose you turned Senator McCARRAN. Yes. over to Mr. Nelson for his use all the silver, we will say-47,000 tons- Representative WHITE. Mr. Secretary, in your opinion, which do that you have and that you then continued to acquire silver, as you you think would be more beneficial to the American people: to take naturally would in the annual purchasing. That newly acquired this silver and issue it in circulation under silver certificates to pay silver could in turn have certificates issued against it and also could running expenses of the Government or to use it industrially, as you be turned over to Mr. Nelson for his use; is that correct? propose? Mr. MORGENTHAU. Just a minute. You are asking me a very Mr. MORGENTHAU. I do not see how you can compare the two important question; I want to be sure I am right. things. Representative WHITE. Then, by this scheme we have the dual use Representative WHITE. I am just asking for your opinion. of silver. We use it industrially and at the same time use it as Mr. MORGENTHAU. I could not compare them. In one situation security for silver certificates? we have a gun at our belly, and we need copper bullets. Issuing the Senator CLARK of Idaho. It could be put into a bar of the type that maximum amount of silver certificates is not going to help us one bit electricity flows through. at the front. I do not see how you can compare the two things. Mr. MORGENTHAU. That is right. Representative WHITE. There are a great many metals that can Representative WHITE. To do this, you will have to get away from be substituted for copper. One of them is aluminum. Do you think the old redemption provision, because you could not very well say that it would be more advantageous to the American people to use this "on presentation of this certificate, you can demand $1 in silver." silver industrially than to turn it into money or to issue silver certifi- Senator WILEY. Well, a person could go down and take a piece off cates against it, just as you have been doing all the time in buying 8 bus bar. silver and putting out silver certificates? Senator McCaRRAN. Let us have the Secretary's answer. Mr. MORGENTHAU. I do not think the two things are comparable, Mr. MORGENTHAU. The answer to your question is just about the Mr. White. way you put it. We would continue the same policy, but 08 we Senator JOHNSON of Colorado. You are doing both under your plan. acquired new silver, we would continue to issue silver certificates Senator CLARK of Idaho. There is no reason why you cannot issue against the cost. If Congress enacted the legislation, we would con- silver certificates against these bus bars, as long as they are properly tinue to issue silver certificates against newly acquired silver and policed. then turn around and lend it on arrangement with Mr. Jones, who Mr. MORGENTHAU: We could. Thank you. would turn it over to the plants that Mr. Nelson designated. Senator JOHNSON of Colorado. That would be doing two things: It Senator WHEELER. By doing that, you would help to pay for the war. would be doing what Congressman White would have you do and what Representative WHITE. In the event all the silver was now used as Mr. Nelson would have you do. coverage for the issuance of silver certificates and you had no free Mr. Morgenthau. We could do that. silver, would it be possible to put silver to dual use-to use it indus- Representative WHITE. I was just trying to get at the policy of the trially and still have it available for coverage of your silver currency? Treasury as to the use of this silver: Whether it should be used as Mr. MORGENTHAU. Well, Mr. White, we in the Treasury like to money or whether it is better to keep it idle. I am wondering why it live up to both the spirit and the letter of the law. My legal counsel has not been used as money before. advises me that we can lend to the Defense Plant Corporation the Mr. MORGENTHAU. Well, it has. so-called free silver, but the silver which is in the Treasury, backing Representative WHITE. You have the mechanics for creating silver up the outstanding silver certificates, we feel we cannot lend out unless money and are using silver all the time. It is not my purpose to em- We get additional legislation from the Congress, and that is why we barrass the Secretary; it is simply my purpose to get at the policy of are here today. the Treasury in the use of this silver. Regraded Unclassified 682 SILVER SILVER 683 Representative WHITE. Well, Mr. Secretary, since June 30 of last year there has been $2,000,000,000 of new Federal Reserve money return to the usual storage place of the Treasury of this silver follow- placed in circulation, more than the equivalent of all the idle silver. ing the conclusion of the war? Is not that a fact? Mr. NELSON. The proposal I am making to you today, sir, does Mr. MORGENTHAU. I think that is correct. involve just that. Representative WHITE. Since June 30, 1941, there has been placed Senator MILLIKIN. The contracts would cover that feature? Mr. NELSON. That is right. in circulation more Federal Reserve currency than the equivalent of all the silver. In other words, the currency of this country has been Senator MILLIKIN. So it simply amounts to changing the usual expanded or inflated to an extent far larger than the utilization of all place of storage of the silver? the idle silver? That is a fact? Mr. NELSON. Yes, sir; and putting it to IL useful purpose. Mr. WHITE. The increase in the Federal Reserve notes is more than Senator MILLIKIN. It would simply be stored in another place? Mr. NELSON. That is right. the increase in the silver certificates. Senator McCARRAN, Let me see if I express the views of all here. Senator MILLIKIN. There is no consumptive use being contemplated at the present time? If I do not, someone may take issue with me. I will speak now for myself. It would be my view that no group in this country could Mr. NELSON. No, sir; not at the present time on this proposal we are making. afford-and certainly I would not think that I could afford-to Senator McCARRAN. Secretary Morgenthau, I do not want to be oppose any policy or plan for the successful prosecution of this war, captious, but I did not quite like your answer to Senator Wheeler's If there is in the Treasury of the United States metal essential for the question; in other words, I did not think you were quite clear or successful prosecution of the war, and the value of that metal in its emphatic enough. Maybe I want you to be more emphatic than you place in the monetary system of this country can still be retained, and would be, but I want to ask you this: Is there now in contemplation it is integrated while retained in the monetary system, then personally any plan or scheme whereby through this legislation you would I would try to work out n law that would afford the Treasury and impair the integrity and value of silver in the monetary system of this Mr. Nelson on opportunity to utilize that silver in industrial uses, country? but always remembering that it is integrated as a part of the mone- Mr. MORGENTHAU. I am glad you asked me that question, because tary system and the economic plan of our country, which must be it gives me a chance to ask one. retained, I believe that that can be worked out. My answer to you is emphatically No. At the same, time what I Is there anyone who is here and is interested in this subject who should like to have an expression from this committee on is this: As I takes issue with me? understand it, by my saying emphatically to you No, it establishes Senator JOHNSON of Colorado. I concur completely, Senator. Iam what I shall call, for want of B better name, a friendly truce. I sorry that I must now leave to go to another meeting. should like to have from this committee an expression that if legislation Representative WHITE. I might observe that the question resolves is introduced to make it legally possible for us to lend through Mr. itself into a simple proposition, whether it is more beneficial to the Jones' Defense Corporation this silver, at the same time there will people of the United States to utilize silver as money by issuing it in not be any legislation making it mandatory upon the Treasury to the form of silver certificates, to pay the Government's running ex- issue certificates up to the full amount of the silver; in other words, penses, just as is being done now, or whether it should be used indus- changing our policy to issue silver certificates against the seigniorage, trially as a substitute for copper. the thing evidently that Mr. White has in mind. In other words, I It occurs to me that there is a possibility in framing this law that should like to keep the status quo, you have in mind the putting of this silver to a dual use. Will Senator McCarran. That comes back again to my thought, perhaps it be held as coverage for this currency, and available for that pur- poorly expressed, that the silver, if I understand the proposal fairly pose, and at the same time used industrially but checked and held in well, can be utilized in two ways. It stands as a backing for the control by the Treasury in that industrial use? issuance of certificates, and it also serves an industrial use. Is that I should like to point out at this juncture that the currency of Hong your conception of it? Kong was good money until something upset the government over Mr. MORGENTHAU. That is perfectly correct. But may I restate there; then the Hong Kong dollars were flying around the street, not my position again? What I should like to see, if you gentlemen agree, worth picking up. Had that been silver, those dollars would have is a law that will make it legally possible for us to lend all of the silver been good in any country at the bullion value of the silver. that we have in the Treasury to plants designated by Mr. Nelson, the Senator McCarran. You are entirely right on that, Congressman. silver to be used as a substitute for copper. Senator Millikin, Mr. Nelson, during the course of your explana- But in this proposed legislation, you are asking me if we are going to tion of the proposition, you made some reference to possible con- ask for anything which will change the silver picture. I say No. sumptive use of silver. That is not contemplated in your proposal? I think, in fairness, that I might say that I hope you gentlemen, if Mr. NELSON, No, sir; not in the proposal I am presenting. this legislation goes through, will not change the silver picture or the Senator MILLIKIN. Such a proposal would call for more legislation? monetary picture as far as the Treasury goes. Is that fair? Mr. NELSON. That would call for logislation different from this. Senator McCARRAN. It looks fair, but I want to protect it a little Senator MILLIKIN. Your proposal, of course, contemplates the Regraded Unclassified 684 BILVER SILVER 685 bit. You are not looking beyond the emergency or the war, are you? Mr. MORGENTHAU. No. sir. Senator CLARK of Idaho. That is clear enough, and I think you Senator McCARRAN. In other words, any legislation that you would are right. ask for would terminate with the war? Senator MURDOCK. You say you do not want to disturb the silver- Mr. MORGENTHAU. Or 6 months after the war, in order to give monetary policy, but am I not right in this: that you will have to those plants a chance ask, or we will have to ask, if we go along with you on this policy, Mr. NELSON (interposing). That is right; in order to give those for at least a suspension of redemption of silver certificates during plants a chance to replace the silver with copper. the emergency? You cannot redeem silver certificates if there is Senator CLARK of Idaho. My own view, Mr. Secretary, is that nothing in the Treasury with which to redeem them. It would seem whatever legislation is enacted here should be enacted, on both sides, to me that if we from the beginning would suspend the redemption entirely apart from the silver policy, you for your part to go ahead of silver certificates during the period of the emergency, the question would practically be solved. exactly as you have been under the Silver Purchase Act, and this Mr. MORGENTHAU. That is the way you write legislation. legislation to be confined to a war use of silver, 80 that we will not Senator MURDOCK. That is the point I have been making, or have get into the silver question as an outgrowth of this legislation. Mr. MORGENTHAU. That is what I am asking for, and that is what tried to make a time or two, that we must, if we follow your policy, suspend redemption during the period of the emergency and for 6 the chairman has asked me. Yes; for my part, if this is introduced, months thereafter, and at the same time authorize you to lend to the I, speaking for the Treasury, will not ask for anything else than to war effort the silver in the Treasury. make it legally possible; but I think that in return- Mr. MORGENTHAU. I think you are right. Senator CLARK of Idaho. I do not think we should clutter it up. Representative WHITE. You stated that there were 100,000 tons That is my offhand opinion. of silver on hand. Of those 100,000 tons, 47,000 tons are free silver Mr. MORGENTHAU. If this committee says it will not be, it will not not obligated for redemption into anything. You are only proposing be. today to get a law that will permit you to move 47,000 tons? Senator McCarran. One other question, Mr. Secretary. You Senator McCARRAN. No, he is going to go the whole road. have in circulation how much in silver dollars? What is the amount Mr. NELSON. If necessary. of your metal silver, both in the Treasury and out? Representative WHITE. You propose to take the entire 100,000 Mr. WHITE. Do you want to know how much silver there is in tons? circulation at this time? Mr. MORGENTHAU. If Mr. Nelson certifies it as a necessity, yes. Senator McCarran. In and out of the Treasury. Representative WHITE. Does Mr. Nelson contemplate using more Mr. WHITE. In ounces, if you would like it that way, there are than 47,000 tons of free silver? 2,900,000,000 ounces held in the Treasury, either against silver Mr. NELSON. That is what I am here for. certificates or as free silver. Representative WHITE. You want the whole 100,000 tons? Senator McCarran. I am speaking of coined silver. Mr. NELSON. We may need or we may not need the whole 100,000 Representative WHITE. In the Treasury, in standard silver dollars, tons. there are $481,741,220. That is money that is in the Treasury but Representative WHITE. In other words, you would do exactly as not in circulation, as of April 30, 1942. Canada has recently done. You would suspend coverage of your In circulation, ns of April 30, in silver dollars, there are $63,465,132. currency, and we would have, as far as silver certificates are concerned, Senator MURDOCK. Does that include your subsidiary coins? a fiat money basis? Representative WHITE. No, just coined silver dollars. Senator MURDOCK. You would be in the same position as on gold. Senator MURDOCK. Is it intended to do away with subsidiary coins You cannot redeem gold certificates, but you know the gold is there. BS well as silver dollars? If it is necessary in the war effort, as Senator Clark has said, what Senator McCarran. That is what I was just going to follow up. difference does it make to the silver people whether it is buried in the Does this plan propose to interfere with the silver money, as I choose vaults or whether it has 30,000, 40,000, or 60,000 volts of electricity to term the coins in circulation and in the Treasury? In other words, going through it in the form of a bus bar? would that be a withdrawal of your circulating medium? Representative WHITE. It is a question of whether you have Mr. MORGENTHAU. No, I have nothing in mind today like that. coverage-redemption of your silver-certificate currency. As I told you before, if I do, I will tell you here. I do not want to Senator MURDOCK. But the gold is buried, and you cannot redeem disturb the status quo of the silver-monetary situation at all in com- gold certificates. As I understand it, this would be only during the ing up here and asking on behalf of the Treasury to make it legally emergency. possible to lend silver. We will continue in the same way we have Representative WHITE. Referring to the law of 1939, you are since 1934. To use the vernacular, what I should like to say to this working under subsection (b) of section 4. We are in effect re- committee thing. is that we won't start anything if you won't start any- monetizing silver. That section reads as follows: The Director of such mint with the consent of the owner shall deduct and retain Senator CLARK of Idaho. I think you are right. of such silver so received 45 per centum as seigniorage for services performed by Mr. MORGENTHAU. That is clear enough. the Government of the United States relative to the coinage and delivery of silver dollars. The balance of such silver 80 received, that is 55 per centum, shall be Regraded Unclassified 686 SILVER SILVER 687 standard silver dollars shall be delivered to the owner or depositor of such ailver, coined into standard silver dollars and the same or any equal number of other in the thought that you have expressed several times during the hour. and no provisions of law taxing transfers of silver shall extend or apply to I want to ask Mr. Nelson a question which seems to me to have a delivery of silver to & United States mint under this section. The 45 per centum Any bearing on this matter. of such silver so deducted shall be retained as bullion by the Treasury or coined into standard silver dollars and held or disposed of in the same manner As other Your request now is based on the assumption that you need so bullion or silver dollars held in or belonging to the Treasury. many additional tons of copper over and above what we are now Is it proposed in any way to disturb that present existing law that getting. You are not able to obtain that extra tonnage apparently from any source; therefore, you ask for this substitution? has in effect remonetized silver? Mr. NELSON. That is right. Mr. MORGENTHAU. May I ask one of my attorneys to answer that? Mr. FOLEY. The answer, Congressman White, I would say, is no. Representative MURDOCK. May I ask how many tons of copper Representative WHITE. Silver has in effect after 77 years been you think we might need but will be short of? remonetized with seigniorage to the Government of 45 percent Mr. NELSON. I would not like this information to go into the record. You are not proposing to disturb that at all? You are just going to Senator McCARRAN. Very well. This will be off the record. use the silver you have taken in for industrial purposes? (Mr. Nelson then made B. statement which, at the direction of Mr. FOLEY. For nonconsumptive purposes. Senator McCarran, was not recorded.) Senator MURDOCK. I think that has been emphasized. What is wanted this morning is the nonconsumptive industrial use of idle silver Representative MURDOCK. This request is based on the assumption that you are inevitably going to be short that much? in the Treasury. Mr. NELSON. Yes. Senator CLARK of Idaho. Let us get that clear. The Secretary Representative MURDOCK. You see no possibility of increasing the told us at our previous meeting his personal views on silver, which are output of copper in order to meet that need? Arizona is the greatest definitely in disagreement with the views of this committee. On the copper producing State and we want to go the limit. other hand, he told us that he was trying as best he could to follow the Mr. NELSON. I think we are doing everything we can to increase it. law as Congress had written it in the Silver Pnrchase Act. As I If anybody can suggest additional things to do in order to increase it, understand his proposal now, it is that neither side, as he puts it, will we, of course, will be glad to know about them. start anything; that Mr. Nelson needs some metallic silver in order to Representative MURDOCK. As a Congressman from a silver-produc- conduct electricity and perhaps to be used in stills; and that if we will ing State, I am tremendously interested, and I want to make that broaden his authority, he can get that silver into something useful in clear. One of the gentlemen here said that he would be willing to see the war effort. not only silver used in a double capacity, but gold, too, and so would Mr. NELSON. In place of copper. I, for the winning of this war. Senator CLARK of Idaho. The Secretary and his staff will not Senator MURDOCK. I made that statement, and I am very emphatic undertake in any way to let that policy interfere with the established init. monetary policy of purchasing under the Silver Purchase Act, and we Representative MURDOCK. I feel exactly the same way. I would on our side should not undertake to clutter up this law with any be willing to see the gold taken from the ground at Fort Knox and further silver legislation looking toward the benefiting of silver mines used to fill the teeth of soldiers, if necessary, or to be make into bullets, or looking toward any other general policy legislation. Is that if it is necessary, in order to win this war. correct? Representative WHITE. Has the cost of guarding that gold ever Mr. MORGENTHAU. You have put it much better than I could. occurred to the gentleman? Senator CLARK of Idaho. Oh, no. Representative MURDOCK. With this understanding, I concur Senator McCarran. Let me amend that. If that policy is carried especially in your statement, Senator McCarran, that we must main- out, the Secretary will then go forward with the silver program in the tain the integrity of silver in our monetary system. I believe that full spirit of the law. the moment we put it to industrial use, even to nonconsumptive bus Senator CLARK of Idaho. Yes: as he has. bar use, there will be a psychological undermining of that integrity. Mr. MORGENTHAU. As I have since 1934. I mean I will not change Silver may become thought less a precious metal and more an indus- anything in the Treasury as to the policy of carrying out the Silver trial metal. However, this is an offhand opinion and may not Act of 1934, and I will not change the policy of the Treasury in carry- necessarily be correct. Jealous 88 I am of its previous value in our ing out the Silver Purchase Act in the future in any way. If at any monetary system, I am willing to have it jeopardized, to whatever time I feel that I should want to do that, I will come before you extent it will become jeopardized, in order that it may be used in the gentlemen. But you have my word that we in the Treasury will war purposes. continue carrying out the Silver Purchase Act in exactly the same way Representative WHITE. In taking over this silver, Mr. Nelson, is as we have from 1934 to date. If there is any time when 1 want to it proposed that the title remain in the Treasury of the United States? change that, I will come before you gentlemen. Mr. NELSON. By whatever mechanism they lend silver for defense Representative MURDOCK. Mr. Chairman- plants-by whatever lending process- Senator McCARRAN. Congressman Murdock. Representative WHITE. Title will remain in the Treasury, and the Representative MURDOCK. I want to any at the outset that I concur silver will be returned to the Treasury? Regraded Unclassified 688 SILVER SILVER 689 Mr. NELSON. It will be returned to the Treasury. Senator McCABRAN. Very well. They will be inserted in the Senator McCarran. May I ask one more question while this group record. is here? My understanding is that this legislation, if it is worked out, (The matter referred to is 88 follows:) will affect only bullion silver and not coined silver. In other words, we have silver in the Treasury that is coined into subsidiary coins and TREASURY DEPARTMENT, Washington, May 85, 1940. into dollars, and we have in circulation silver dollars and silver sub- Hon. COMPTON I. WHITE, sidiary coins. None of them would be affected, and there would not House of Representatives, Washington, D. C. be-and this is one question that I wish the experts from the Treasury Mr DEAR MR. WHITE: In accordance with your telephonie request of Mr. would listen to-there would not be such curtailment of coining as Southard of a few days ago, I am enclosing herewith for your information A short memorandum on Note-issuing Powers and Regulations in Canada, would affect the circulating medium of silver in the United States and Very truly yours, the commercial transactions of the country? D. W. BELL, Mr. MORGENTHAU. I am sure that the answer is "No," as far as" Under Secretary of the Treasury. circulating coinage is concerned. NOTE-ISSUING Powers AND REQULATIONS IN CANADA Mr. WHITE. With one exception. There are silver dollars which have been gathered into the Treasury and are the backing of the silver The right to issue notes payable to bearer on demand and intended for circula- certificates. If the legislation is written in such general terms as are tion in Canada is vested in the Bank of Canada by section 24, of the Bank of Canada Act of 1934. This act authorizes the Bank of Canada to issue notes to suggested here, it would include not only the silver bullion, but it any amount subject to the condition that it maintain & gold reserve equal to an would also include silver dollars which are now the backing for out- amount not less than 25 percent of its total notes and deposit liabilities, Under standing silver certificates. the Order in Council of April 30, 1940, authorizing the transfer of the bank's Senator McCabran. Do you mean outstanding silver certificates in gold holdings to the Foreign Exchange Control Board, the minimum gold reserve requirement has been temporarily suspended. circulation? Bank of Canada notes are legal tender and are the first charge upon the assets Mr. WHITE. Yes. of the bank. The Bank of Canada Act of 1934 provided for their redemption to Senator McCarran. Why should we have to go that far? gold bullion, but it also provided that this provision could be suspended by the Canadian Government, and this was done immediately. Mr. WHITE. I say that it all depends on how your legislation is Prior to the establishment of the Bank of Canada in March 1935, notes issued by written. If it is written in the general terms you were speaking of, Canadian chartered banks were the chief circulating medium in the hands of the it will include not only bullion but also silver dollars which have come public. The provisions regarding these notes were immediately changed, with the back into the Treasury and which had been minted earlier as a reserve establishment of the Bank of Canada, under section 24 of the Bank Act of 1934. Under this act Canadian chartered banks are required to reduce the issue of their behind the silver certificates now held in the Treasury amounting to own bank notes gradually during the 10-year period, 1935-45, by 5 percent 481,627,820 silver dollars. So, they would be subject to the same gen- annually during each of the first 5 years, and by 10 percent during each of the latter eral principle as bullion. 5 years, to an amount not in excess of 25 percent of their unimpaired paid-up capital on March 11, 1935. With respect to the coins outstanding, that, as I gather, is a matter Chartered bank notes are not legal tender but they are convertible into Bank not mentioned herein. of Canada notes which are legal tender. Chartered banks are obliged to accept Senator McCahran. I would hesitate to concur in a policy that payment in their own notes, which are & first charge on the asseta of these banks, would take the silver dollar, that Americans know today 88 the Each chartered bank is required to keep a deposit with the Minister of Finance equal to 5 percent of the amount of its notes in circulation. This "eirculation American silver dollar, out of free circulation in the business transac- redemption fund" is held solely for redeeming the notes of banks which have failed, tions of the country. I think it would be exceedingly depressing to In the event of failure of any bank the others may be called upon to make further the people of this country if that were done. contributions to the fund 80 that in this way each bank is partly responsible for Representative WHITE. The gentleman knows that only $63,000,000 the redemption of the notes of all other banks, Ever since the passage of the Silver Purchase Act of 1934, silver has proven to of those are in circulation, according to the Treasury statement. be a practical and satisfactory backing for 8 substantial amount of the national Senator McCarhan. There are more than that in the Treasury. eurrency now amounting to around $2,000,000,000. A fist currency has always Representative WHITE. Mr. Nelson, if this legislation is drafted 60 been abhorrent to our banks and business interests. In explanation of the opera- that it affects only the free silver, which is 47,000 tons, do you not tion of the Treasury's fiscal operations in creating and circulating our present silver currency, the following article was written for publication by Congressinan think that that would be a good start? Compton I. White of Idaho: Mr. NELSON. That would not be enough. We do not need any "Not many people know it but Uncle Sam, which is another way of saying the legislation for that. United States, is making a tidy profit on the Treasury silver-purchase program in Senator McCarran. All bullion silver will be affected. Let that meeting the monthly pay rolls of the Members of Congress and Capitol employees. Stacks of newly engraved silver certificates, costing the Government about 50 be understood. Let no one have any misconception about that. centa on the dollar are being put out by the Sergeant of Arma of the House of Representative WHITE. I want to propound a unanimous-consent Representatives and the Senate disbursing office in meeting pay rolls. question at this time. 1 have a letter from Mr. Bell, the Secretary "Our dollar, it may be explained, contains B little less than seven-eighths of an ounce of silver, or to be exact 412½ grains standard silver which makes a full of the Treasury's assistant, giving factual data concerning monetary ounce of silver worth $1.29%; if a dollar was an even ounce of silver, all allver operations with reference to silver in Canada. I should like to know money calculations would be much simpler. if I may have that included in the record at this point and also have "For many months the currency sent over from the Treasury has been brand included at this point a statement I have recently written, for publica- new money in denominations of $1, $5, $10, and $20 bills. The $1, $5, and $10- tion, on the Silver Purchase Act. 78052-42-pt. 0-17 Regraded Unclassified 690 SILVER SILVER 691 bills are exclusively new silver certificates redeemable in silver dollars, The [From the Congresional Record, February 2, INC. p. AMN) only Federal Reserve notes being paid out by these Government offices are the 1920's. This money flows into general circulation very quickly-the well-known MONEY spending propensity of Federal employees takes care of that. "From the money making standpoint (literally and figuratively) the plan has Extension of Remarks of Hon. Compton 1. White of Idaho, in the House of two advantages; the Government saves the difference between the cost of the Representatives, Monday, February 2, 1942 silver this paper money represents and the face value of the certificates (billa) which amounts to about 50 cente on each dollar when you average the price of LETTER BY non, COMPTON 1. WHITE, OF IDAHO domestic and foreign silver the Government is buying all the time and check on the silver seigniorage figures in the Treasury statement, The other advantage Mr. WHITE. Mr. Speaker, under leave to extend my remarks in the Record is the saving in interest to business, realized In using this kind of money la place I submit an analysis of the development of our monetary system Bd I have out- lined it in a letter replying to & treatise on the subject: of bank currency. "The sticker in the plan is that for some unexplained reason the Secretary of Mr. CABL SCHMIDT, the Treasury will not put all of the silver the Government in buying to work M Daylon, Ohio. money, putting out only about one-half of what he buys in issuing silver dollars and silver certificates (or an amount 'up to the cost of the eilver') and piles up DEAR MR. SCHMIDT: In appreciation of your interest in the money question, the other half that really represents the Government's profit in a stock surplus the subject of the treatise which accompanied your letter recently received, I wish to commend your bringing this vitally important subject to the attention that could just as well be used like the first half is being used as money, In of the Members of Congress. reality the only cost of this so-called surplus silver to the Government is the Any medium of exchange to be real money must be legal tender established by administration expenses in acquiring this money material that could be turned law. Other things may function as n medium of exchange but they are not real into a profit at a time when everyone seems to think the Government really money, We must not confuse the function of money with money itself. needs the money, Under the system of money adopted when our Government was established, "The fact is that the gains made by the Treasury in revaluing both gold and both gold and silver, of standard fineness and quantity, were made money by wilver is about even, the increment on gold being & little more than the increment statute and the unit of value was fixed by law. Section 314 of the United States on silver. Code provides: "Both of these figures show up every day in the Treasury statement. The "The dollar consisting of 25.8 grains of gold 0.09 fine shall be the standard of gold increment is set aside in the stabilization fund carried now at $1,800,000,000 value." and silver increment is put in the general fund in terms of ounces (unrevalued) Section 316 of the United States Code provides that: and carried at the original cost of the silver before the seigniorage is taken into "The weight of the dollar shall be 412½ grains troy of standard silver." account. "This is B bookkeeping entry that may be compared to the transaction of a 80, we see that the two metals, gold and silver, of standard fineness are made money by law which fixes the weight of our monetary unit-the dollar-and other whent buyer purchasing wheat for 70 centa a bushel and selling it for 51 a bushel forms of money were established on this foundation. and keeping his working capital in hand by selling up to the cost of his wheat The Government has the prerogative and can exercise a monopoly in the as fast as it comes in. When he has bought up to a thousand busbels for $700 creation of money; however, our Government has always maintained a position and sold 700 bushels for $1 a bushel and has 300 busbels on hand, his bookkeep- as an entity that deals with money BM an individual raising its Income by taxation ing entry would show his 300 bushels representing an investment of $210 when and paying its obligation by money obtained from taxable sources of public in fact he has his money all back and the 300 bushels of wheat to show as a proût. borrowing. "Bo it is with surplus silver in the Treasury carried at $664,421,302.93 in the The effect of the law establishing our money medium was to make the metal Treasury statement but when we come to analyze this situation, if the seigniorage gold and the metal silver of definite weight and fineness wherever they existed. in taken into account, this surplus silver did not actually cost anything and M The prospector roaming the mountains that came upon a gravel bar containing to the seigniorage item, it is either one thing or another. If it is entered as a muggets of gold, when be mined this gold, dug lawful money out of the ground. profit to the Government, then the surplus silver represents what it cost. If The silver minor, mining and crushing his ore to extract the silver from a vein, in the selgniorage is not carried on the Trensury books as a profit, then the total effect dug lawful money from the ground, and his Government removed the dross surplus silver represents a profit which may account for the Secretary's sidestep- by refining the metal and coining it for the convenience of the miner and the ping the question recently when he Was asked as to the extent of the loss the people who used money. Government might sustain in disposing of its surplus silver. Trade and business put this money in circulation, a circulation the Government "Some think that the fear of inflation has prevented the United States Treasury accelerated by levying taxes and imports and accepting this silver and gold in from making a profit and a big saving at the same time by using our idle silver as payment. paying out the silver and gold again in meeting the expenses of con- money but B lot more Federal Reserve money than all of our surplus silver would ducting the Government. make has been put in circulation in the last 9 months. The record discloses In pursuing the subject of money further some have asked why not use other that we had most of the idle silver on the last day of last June when the total metals for money-copper, aluminum, tin, or platinum, as well as gold and silver. Federal Reserve notes stood at $7,001,580,625; just 9 months later on March These other metals mentioned are too unstable for use as money when we consider 31, this figure stood at $9,056,131,000, an increase of over $2,000,000,000; and the basic principles of economic law affecting the function of money. Any money now when the April statement comes along we find another big jump in the to be stable in value must increase of itself or by substitutes evenly in volume with circulation of Federal Reserve notes which have increased to $9,230,843,390. the growth of population or the expansion of business, an increase which is esti- Evidently inflation is not the answer to our surplus silver problem. mated by economists at a rate of 3 percent annually. The requirement for A "With these facts 80 obvious and easily understood and the patriotism of our money medium of stable value has been met from the beginning of civilization until leading publications being constantly proclaimed, it is difficult to understand the very recently by the production and use of gold and silver. barrage of propaganda and innuendo appearing in these high-class publications Statistics disclose that on the average about 14½ times by weight of silver is against silver. The interest income the banks would get if this form of cash produced to that of gold, with the result that a ratio of value has been established was retired and replaced with Federal Reserve currency is well understood between the two metale of 16 to 1. Over a long period of time we find from although it is difficult to believe that the patriotism of our bankers would permit statistics that the average of gold increases in volume by I percent annually and a profit motive to outweigh their interest in the welfare of the American people silver by 2 percent. When taken together the production of these metals make the struggling under the overburden of an interest load; as for our leading publica- 3-percent increase in volume that keeps pace with the growth of population. tions, it is difficult to understand their motive in putting out all this flood of If we consider copper, we find that the production of this metal far exceeds the misleading propaganda against silver." growth of population and would, if the mints were open for copper coinage, HOOD become no plentiful that it would steadily lose value an money. On the other hand, if we were to use platinum for money alone, the production of the metal in 80 Regraded Unclassified 692 SILVER far short of keeping pace with the growth of population that the continued demand SILVER 693 for money and the resulting appreciation of this coinage would bring unstable and services to obtain the necessary money to meet their obligations. business conditions and a continued fall in prices, as people sacrificed their goods market transactions-dealing in Government bonds. the loans are controlled by this device. And then e third provision in the open By discarding the use of silver as money, the world governments have Upset the When the Federal Reserve banking authorities deem It expedient to reduce the equilibrium between money and the value of the things exchanged for money. amount of money in circulation they go into the market and sell Government As & result of the financial disturbances of the Civil War period in this country, bonds and the money paid for the bonds la withdrawn from circulation; on the & new kind of money was invented based on government credit and regulated as to other hand, if they want more money In circulation, they go into the market and quantity by the ability of people to borrow and pay interest on bank loans. This buy Government bonds and the money paid for the bonds flows out to be in- currency is the national bank note (made legal tender by law) which up to recent vested and put to use by the people selling the bonds. years circulated in our currency system and got into circulation by being losned managed currency, a system that is largely dependent for its normal function on & So you see we are today conducting all the business of this country with out at interest by the national banks. This kind of money after the Civil War supplemented the use of silver and gold coins and silver and gold certificates and confidence. its use as money in trade and business yielded an Income to the issuing banks in If a banker to whom an application is made for & loan lacks confidence concern- the form of an interest charge in & system which also operated to increase the ing any conditions affecting the repayment of principal and interest the loan is banks' income by the interest received from the Government bonde deposited with not made. It may be his apprehension of the effect of legislative or administra- the United States Treasury as security for the repayment of the national bank- tive policies of the Government; it may be due to his uncertainty of local busi- note currency. ness situations, but in all events, confidence is a controlling factor. The cash With this kind of money in circulation, the American people soon saw legiala- element in the hands or ownership of the average business organization or indi- tion enacted to discontinue the use of any new silver as money; & plan which natu- vidual is a email factor and a decreasing element. rally increased the demand for and the use of national bank-note currency and We find the Government handles its financial dealings on practically the same precipitated the struggle between the free-coinage champions of silver and the basis of individuality as any other corporation. We also find that weareusing gold-standard advocates, who supported a plan which would work for the wider and depending upon a managed currency controlled principally by the ability of use of national bank-note currency. This struggle resulted in the adoption of the people to borrow money and repay the principal with interest and that the several monetary expedients directed to stabilizing the price of silver but never interest on business borrowings that supports the circulation of our currency is in restoring the metal to its former status as money of Itself but leaving it to remain reality an income to the members of the Federal Reserve banking system and we a commodity to be bought and sold by the Government on & commodity basis. are further confronted with the fact that if all business could be placed on a cash and when new silver was used after demonetization in connection with the national basis and was out of debt and the Government paid off the national debt, na it currency system, its use was based on its commodity value, did when Andrew Jackson was President, business would be paralyzed because The principle that the stability of money value rests on the control of the we would not have a cent of money under our present system, except the small volume in circulation is generally recognized. change, our subsidiary coinage-the halves, quarters, dimes, nickels, and pennies, In the past the stabilization of the volume of the money medium has been 000- a few silver dollars and silver certificates, trolled automatically by the natural limitation of the production of precious You are to be commended upon your interest in this subject and your efforts to metals, gold and silver, After silver was demonetized, there came into operation help devise and put into operation a good workable, adequate money system with a mixed control, one, the natural limitation of production of gold; the other, which to transact the business of this country. governing national bank note currency (a substitute for silver money) was limited Sincerely yours, in volume by gold reserve and redemption restrictions and the ability of the people COMPTON I. WHITE. to borrow and repay the principal with interest, based in a large measure on the element confidence, or rather the confidence of the banker which operated as & Senator McCarran. Mr. Secretary, would you care to have in- large factor in regulating the volume of national bank note currency in circulation. serted in the record the statement that you used? Would it be use- During the period from demonetization of silver in 1873 and the nationalization ful in giving us light on this? of gold in 1933, this country had a dual control on the creation of money exercised Mr. MORGENTHAU. I have it available. by the natural limitation of the production of gold on one hand and the ability of the people to borrow money and repay the principal with interest on the other Senator McCarran. It will be inserted in the record, with your hand, a scheme which functioned for A time, until commercial and bank credit, permission. which had largely replaced money (cash) in the transaction of business, collapeed Mr. Morgenthau. It is just statistics. with almost total failure of the element of confidence. In this emergency, due Senator McCARRAN. Yes. to the shortage of the only money metal in use, gold, it developed that the cur- rency system based on gold and gold redemption could not fulfill the money re- Mr. MORGENTHAU. Surely. quirements of the several nations and gold in turn was demonetized and our Senator McCarran. As of today? monetary system shifted to & managed currency. In this system gold is na- Mr. MORGENTHAU. Yes. That is available. tionalized and held on deposit as & 40-percent coverage for the outstanding Federal reserve notes which were controlled in volume by the component organization (The matter referred to is as follows:) in the Federal Reserve Bank System, the main control being the ability of the people to borrow money and repay the principal with interest which was supple- TABLE I.-United States monetary stocks of ailver (Apr. so, 1942) mented with special devices to regulate the flow of money in the channels of trade and business. These devices were also under the control of the Federal Reserve Millions of Banking System. The first of these adjustable controls is the discount rale Short tons ounces whereby the lending operations of the lending banks is stimulated or depressed by the rediscount rate charged by the Federal Reserve bank, 1. B,, the division of Bilver held in Treasury Silver outside the Treasury 2,000.6 00,438 the interest between the Federal Reserve bank and the member bank who is 408.9 14,018 responsible for the collection of the note which is offered for the security of the Total issuance of currency by the Federal Reserve bank. If the lending bank taken 3,709.5 113,450 all the risk and the Federal Reserve bank gets the bulk of the interest, naturally the lending bank will be more conservative in making loans. The next regulation is the bank reserve requirements. The more cash the banks are required to keep in their vaults, the less they will have to lend their customers, 80 the volume of Regraded Unclassified 694 SILVER SILVER 695 TABLE II.-Estimated monetary stocks of vilver of other countries (Jan. 1, 1941). Senator McCarran. I would not want anything to happen to pre- vent the continual replacement that keeps this silver money in circula- Millions of ounces Short loss tion. I think it would be very depressing for the people. Senator MILLIKIN. There would have to be some reserve kept. China 480 I,ta Mr. MORGENTHAU. We would have to keep some reserve on hand India 950 1,530 AN at all times to keep, at least, the number of silver coins in circula- Other countries 4,201 Total 2,960 tion; and as the volume of business increases, we are constantly adding 10,10 to the number of silver coins in circulation. I Includes coin held by the public. Does not Include 890 million ounoss not allocated to monetary or No. Senator McCARRAN. I am going to make this suggestion, and if monetary uses. there is any objection to it, I should like to hear it. It is quite ap- TABLE III.-Classification of Treasury holdings of silver (May 21, 1942) parent that those who are interested in this subject should be in very close contact with the officials and the experts of the Treasury in the original drafting of this legislation. I for one look upon this with a Millions of ounces Short loss great deal of anxiety, to be very frank with you. I say anxiety, and I use the word advisedly. I would be very jealous of the language that Silver bullion held for silver certificates 1,160.4 36,7% is to be used. Silver dollars held against silver certificates 371.8 12,70 Bullion at cost 1,360.5 40,640 I want to know if it would be in keeping with the spirit of those Subsidiary coin in the general fund 9.8 236 Bullion in the general fund at recolnage value .001 present here if a group or a committee of, say, three or five, as you may see fit, were selected from among this group that is present to confer Total Treasury holdings of ailver 2,902.5 90,200 with the experts of the Treasury and the Secretary of the Treasury and others interested along that line in the drafting of the proposed TABLE IV.-Sources of Treasury holdings of silver bullion at cost (Apr. 30, 1945) legislation, and that following the action of this group in working with the Treasury, the chairman be again authorized to call your group Millions of together for study of the legislation. ounors Short tona Does that meet with general approbation? Mr. Secretary, what do you think of it? Bilver Purchase Act silver 1,246.1 43,719 Proclamation silver 35.5 1,217 Mr. MORGENTHAU. I think it is an excellent suggestion, but before Act of July d. 1030 78.3 2,6M Bilver, ordinary 4.9 100 the legislation goes to the floor of Congress I should like to have a sort of general understanding that I have declared myself, so to speak, Total silver bullion at cost 1,364.8 46,788 by saying that we are not going to start anything other than what we have been here to ask for, and I should like to have the same sort of I Disposable by the Treasury. expression from this committee, namely, that it is not going to start TABLE V.-Estimated production, 1942 anything such as adding any riders of a monetary nature to this legislation. I think that is a fair request. Millions of Bhort tone Senator McCarran. I will speak for myself. if I may. ounces Mr. MORGENTHAU. Certainly. World production 245 ase Senator McCARRAN. My policy would be just as you have expressed United States production 62 112 it. United States imports 120 4,119 Senator CLARK of Idaho. And it would be mine, Mr. Chairman. Senator McCarran. I am not trying to bind anybody, but I think TABLE VI.-Estimated demand, including military that I may, with a reasonable degree of propriety, say that I think that is the spirit of this meeting. Millions of Short total Mr. MORGENTHAU. If something like that should happen-and I ounces hope it will not-we should want to feel free to protect ourselves in the matter; that is all. Bearing materials 14.6 500 Chemical industry 20.0 08 Representative WHITE. With the cooperation of the Treasury, I Containers (returnable) 102.1 1,500 Dental and medical 2.9 100 prepared an analysis from the earlier statement of the Treasury, and Electrical Industry 58.3 1000 2,300 it has been extended in the Congressionel Record. I should like to Solder 67.1 Miscellaneous 14.6 300 include that and another extension in this record. Decorative arts (silverware, Jewelry, etc.) 49.6 L700 Senator McCarran. Very well. Total 329.2 11,365 Nonconsuming uses, bus bars 1,166.8 40,000 Other nonconsuming uses 583.4 20,000 Regraded Unclassified 696 SILVER SHAVER 697 (The matter referred to is as follows:) TREASURY DEPARTMENT, enclosed circulation statement of United States money shows the amounts of ailver certificates and Federal Reserve notes outstanding and in circulation. The Washington, April 27, 1940. circulation of gilver certificates la governed by the provisions of section 5 of the Hon. COMPTON I. WHITE, Silver Purchase Act of 1934 and section 821 (b) (2) of title 31, United States Code. House of Representatives, 10. (a) Q. Who has control of the $2,000,000,000 of idle, unused silver Washington, D. C. seigniorage now in the Treasury vaults, Congress or the Secretary of the Treas- MY DEAR MR. WHITE: In further reply to your letter of March 2, 1942, the ury!-A An shown on page 1 of the enclosed Daily Treasury Statement, there are Treasury is glad to submit the following replies to the 12 questions concerning over 1.362,000,000 ounces of silver bullion at cost value in the general fund of the silver which you quote from one of your constituents: Treasury, valued at over $663,000,000. This silver is administered in accordance 1, Q. Is foreign silver coming into this country In exchange for goods in the with the enactments of Congress. As of possible interest, copies are enclosed of form of bullion?-A. The foreign silver imported into this country is chiefly in extracts from Annual Reports of the Secretary of the Treasury for various years. the form of coin, bars, ore, and concentrates. Pages 42 and 43 of the report for 1935 set forth the policy concerning monetization The dollar proceeds from silver imports are credit Items in the international of newly acquired silver, and pages 130-135 of the report for 1940 review silver balance of payments of the countries which sell silver and B8 such, offset the policy and seigniorage on silver. various debit items, which include payments for imports, transfers of capital, (b) Q. And how can Congress claim there is no moneyfor old-age pensions service of foreign debts, and other international transactions, with $2,000,000,000 of idle silver on hand?-A. It has been the Government's 2. Q. Does our Government ever actually buy silver, either domestic or policy, as explained in full in the Secretary's annual report of 1035, to issue silver foreign, or just coin and issue It as money for the owners?-A. Bilver is acquired certificates only up to the cost of the silver acquired under the silver purchase by the Treasury pursuant to the provisions of section 3 of the Silver Purchase program. Certificates have been issued up to that amount. Act of 1934. Silver certificates are Issued against such silver in an amount 11. Q. Are new silver certificates based upon bullion out of these "profits"?- equal to its cost. Of the newly mined domestic silver eligible for acceptance by A. Silver certificates are issued against eilver held in the account entitled "Silver" the mints and delivered to them, in keeping with the terms of the act of July 6, on page I of the Daily Treasury Statement. No silver certificates are issued 1939, and the regulations issued thereunder, 45 percent is retained by the mints against the silver in the general fund. 12. Q. How are the Government-owned silver certificates paid into circulation and 55 percent, in allver dollars, or its equivalent in value, is returned to the and who has the "say" as to what silver shall lie idle, or what proportion shall be depositor. 3. Q. At what value is foreign silver rated? Domestic silver?-A. Silver pur- used as money!-A. New silver certificates which are not paid out at the office of the Treasurer of the United States are deposited in Federal Reserve banks in chased pursuant to the Silver Purchase Act of 1934 is carried on the Daily State- exchange for deposit credits where they are paid out by the Federal Reserve banks ment of the United States Treasury at its cost value, except that silver against BP required by the demands of the public for additional paper currency. The which silver certificates have been issued in carried at its monetary value ($1.29 Sceretary of the Treasury has authority to issue silver certificates against silver per fine ounce). By the terms of the Act of July 6, 1939, domestic silver mined purchased under section 3 of the Silver Purchase Act of 1934 (see, 5 of the act of since July 1, 1939, and eligible for delivery to the coinage mints is aettled for at 5 June 19, 1934, 48 Stat. 1178, U.S. C. title 31, sec. 405 a). return to the depositor of 71.11 cents per fine ounce. This silver, too, is valued The President has authority to issue silver certificates against any silver bullion, at cost or, when made the basis of outstanding silver certificates, at $1.29 per eilver, or standard silver dollars in the Treasury not then held for redemption fine ounce. of any outstanding silver certificates (see. 12 of the act of January 30, 1934, 48 4. Q. What nations use silver for money? Is the silver certificate issued by Stat. 342, U. 8. C. title 31, BOO, 821 (b) (2)). our Nation only?-A. Aa shown in the enclosed extract from the annual report Very truly yours, of the Director of the Mint entitled "The World's Monetary Stocks," many D. W. BELL, countries have stocks of monetary silver. The United States silver certificate is Under Secretary of the Treasury. United States currency and is issued only by the United States. Certain other countries have issued paper currencies which are redeemable in silver coins and against which reserves of silver coins are held, among such countries being Brtiish India, Mexico, and Cuba. TREASURY DEPARTMENT, 5. Q. Since when have silver certificates been used as money in the United Washington, May 8, 1948. States?-A. Silver certificates were first authorized by the act of February 28, Hon. COMPTON I. WHITE, 1878. House of Representatives, 6. Q. Are our silver certificates acceptable at face value in other nations?-A. Washington, D. C. So far as is known silver certificates are accepted everywhere on the same basis MY DEAR Ma. WHITE: Reference is made to your letter of May 4 to the Sec- as other United States paper currency. retary of the Treasury requesting information relative to the amounts of gold 7. Q. When did our Government first begin coining silver at a profit?-A. The certificates, silver certificates, national bank notes, and Federal Reserve notes act of February 21, 1853, authorized the coinage of fractional silver coins con- of the large size outstanding at the present time. taining about 7 percent less silver than the proportional weight of the silver The amounts of these kinds of the old series or large size paper currency out- dollar. Silver dollars were first coined out of silver costing less than the mone- standing on April 30, 1942, were as follows: tary value of the coin In pursuance of the act of February 28, 1875. Gold certificates $28, 136, 224. 00 8. (a) Q. Is all profit on the coinage of silver termed seigniorage?-A. Broadly Silver certificates 31, 305, 427. 00 speaking, all "profit" on the coinage of silver is termed seigniorage. National bank notes 34,360,061.50 (b) Q. What has been the total profit on the eoinage of silver since the Bilver Federal Reserve notes 58, 699, 170. Purchase Act was passed in 1034?-A. The enclosed extract from the Treasury Bulletin contains B table entitled "Seigniorage on silver" on B. cumulative basia Very truly yours, since January 1, 1934. D. W. BELL, (c) Q. What becomes of this 45 percent profit?-A. Seigniorage on silver is Under Secretary of the Treasury. entered on the Treasury's books as receipts under two headings, as shown on pages 2 and 3 of the enclosed Daily Statement of the United States Treasury. Seignior- age on newly mined domestic silver is included in the seigniorage on page 2 along with certain other Items. Seigniorage on foreign silver is shown on page 3. eral Reserve banks allowed to take silver certificates out of circulation?-A. The Federal Reserve notes in existence? Is the Secretary of 9. Q. What ratio do silver certificates in circulation bear to printing the Form Regraded Unclassified 698 SILVER SILVER 699 (From the Congressional Record, February 12, 1942, p. 9572) THE PRESENT Use OF GOLD AND SILVER IN OUR MONETARY SYSTEM Office of the Secretary of the Treasury-Daily Statement of the United States Treasury, compiled from latest proved reports from Treasury offices and depositaries, June 12, 1941-Continued Extension of Remarks of Hon. Compton I. White of Idaho in the House of Rep. CURRENT ASSETS AND LIABILITIES-Continued resentatives, Thursday, February 12, 1942 HENERAL FUNDS STATEMENT AND LETTER SUBMITTED BY HON. COMPTON 1. WHITE, OF IDAHO ASSETS LIABILITIES Mr. WHITE. Mr. Speaker, many inquiries are being made as to the ownership of the gold stored in this country and its relation to our national currency system. Gold (as above) $257,021,962.19 Treasurer's checks outstanding $28,365,349.18 Deposita of Government offleers: To clear up any existing misunderstanding concerning the status of this gold in Silver: Al monetary value (as Post Office Department 12,556,574.13 our monetary system and the status of silver and the profits made by the Treasury above) H,778,704.65 Board of trustees, Postal Savings in the form of silver seigniorage I have prepared a statement analyzing the gold Subsidiary coin (oz. 2,218,- System: 804.2) 3,067,294.50 5-percent reserve, lawful and silver items appearing on the Treasury statement of June 12, 1941, printed Bullion: money 50,300,000.00 herewith in answer to & letter I have received and which I submit for inclusion in At recoinage value (oz. Other deposita 4,689,242.18 the RECORD under permission to revise and extend my remarks, 236,851.8) 327,426.03 Postmasters, cireks of courts, dis- At cost value (oz. 1.350,- bursing officers, etc 87,944,680.54 The Treasury statement follows: 317,670.8) 066,354,764.20 Uncollected Items, exchanges, etc 15,948,493.09 Minor coin 2,581,689.53 Office of the Secretary of the Treasury-Daily Statement of the United States Treasury, United States notes 1,993,181.00 200,001,339.12 Federal Reserve notes 12,885,362.50 Balance today: compiled from latest proved reports from Treasury offices and depositaries, June 12, Federal Reserve bank notes 228,135.00 Increment on 1941 National bank notes 271,595.00 gold e Unciastfed-Collections, etc 22,092,325.38 above) $143,161,553.72 CURRENT ASSETS AND LIABILITIES Deposits in: Seigniorage on- Federal Reserve banks 993,877,884.10 ver) see note COLD Special depositaries account 604,760,956.10 of sales of Government Working bal- securities 654,004,000.00 snoe 1,799,550,962.48 ASSETS LIABILITIES National and other bank Gold certificates: depositaries: $22,599,331,246.28 Outstanding (outside of Treas- To credit of Treasurer Gold (or. 045.695.178.5) ury) United States 69,662,477.80 Gold rertificate fund- Hoard of To credit of other Gov- emment officers Governors, Federal Reserve 61,444,268.37 system Foreign depositaries: 17,498,287,508.00 To credit of other Gov- Redemption fund-Federal Re- ernment officers 213,160.58 serve 5% notos 9,506,153.26 Gold reserve Philippine treasury: 150,039,430.00 To credit of Treasurer Nore.-Reserve against $146,- United States 1,970,579.09 2,547,473,472.30 681,016 of United States notes and $1.100,822 of Treasury notes of Total 2,756,474,811.42 Total 2,736,474,811.42 1890outstanding. Treasury notes of 1890 are also secured by silver dollars in the Treasury. Exchange stabilization fund 1,800,000,000.00 MISS FLORENCE SELBY, 22,342,309,254.00 Eagle, Idaho: Gold to general fund: In answering your communication of June 11, I wish more of the people of this Balance of Incre- country would give their attention to the principles and the workings of our ment resulting from reduction monetary system. I am very pleased to give you such information as I can on in the weight of this subject, a subject which I feel is paramount to all other issues affecting the the gold dollar. $143,161,563.72 welfare of our country and the American people. In working bal- anos 113,860,408.47 Answering your question as to who owns the gold stored in this country, there is 257,023,962.19 enclosed a copy of the daily statement of the United States Treasury for June 12, Total the day following the date of your card. Under the heading "Gold" on the credit 22,509,331,246.28 Total 22,599,331,246.29 side, you will find the first item, $2,878,476,189 represents the gold for which gold certificates (warehouse receipts) have been issued and delivered to the Federal SILVER Reserve banks, to be held in the reserve fund of the Federal Reserve Banking System. The item also includes gold held in a fund set aside to redeem out- ASSETS LIABILITIES standing gold certificates called in for redemption under the provisions of the Gold Silver (ost. 1,108,735,993.1) Silver certificates outstanding $1,916,433,191.00 Reserve Act of 1936, amounting to $60,000,000 of old series of certificates that for $1,433,517,243.65 Billver dollars(or. 381,192,905.7) 492,855,474.00 Treasury notes of 1890 outstanding 1,160,822.00 some reason have never been returned for redemption. Total Silver in general fund 8,778,784.85 The next item of $17,498,287,510.80 represents the gold held as security for gold 1,926,372,717.65 1,926,372,717.66 certificates (warehouse receipts) in the possession and ownership of the Federal Total Reserve Banking System. The next item, $9,506,153.36 (redemption fund), is held as security for the redemption of outstanding Federal Reserve notes, and to all intents and purposes is the property of the holder of the several denominations of the paper dollar (Federal Reserve notes) bills circulating against the gold. The next item, $156,039,430.93, as explained by the note just below the item on the balance sheet, is held as security against the United States notes and Treasury notes outstanding (in circulation), to all intents and purposes the property of the holder of the paper dollar bills now in circulation or being hoarded some place. The next item of $1,800,000,000 represents the famous stabilization fund which came into being by changing the gold in the dollar from 25.8 to 15.5/21 grains; Regraded Unclassified SILVER 700 SILVER 701 thereby increasing the number of dollars as represented by the gold taken would be $1,745,865,267.64. This silver was obtained by buying silver at the into nominal ownership of the Government under the provisions of the Gold over market price in the domestic and foreign market, with enough of the ailver NO Reserve Act of 1934, which increased the dollar value to a little over $2,000.- purchased revalued by the Treasury up to its coinage value equal in an amount to equal the total cost of the silver acquired. This revalued silver la then set 000,000. This increment was set aside at the time of the change as a fund to be aside in a reserve fund against which its dollar value equivalent is issued and put used by the Secretary of the Treasury to stabilize (manipulate) the value of the in circulation as money in the form of silver certificates (legal tender currency United States money in relation to foreign money by the process of buying or redeemable in silver dollars). This idle silver, like the gold in the stabilization selling our money or their money Be the exigency might require, fund, represents an increment without actual cost to the Government and the The next item of $257,021,962.19 includes $143,161,553.72, the balance of the entry io the statement in equivalent to the item carried representing the gold in increment of gold subsequently acquired which has not been used or include in the stabilization fund. other items, It also includes gold delivered to the Treasury by Federal Reserve By way of explanation of the financial status of the unused silver, we find that banks for which gold certificates have not been issued. while the Treasury carries a cost value of this idle silver at $666,354,764.20 in So you see, reduced to fundamental principles, the only gold actually owned by fact, it has issued and its creditors have accepted ellver certificate currency up the United States Treasury is the gold in the stabilization fund of $1,800,000,000, to the total cost of all the eilver bought, this item represents the allocation of which will not be spent in paying Government expenses or put in circulation in our that part of the cost of purchasing this silver, based on the actual cost of all the regular currency system, except the item of $143,161,553.72, "the balance of the gilver purchased from any source by the Government before any part of the gold increment resulting from the reduction in the weight of the gold dollar" ailver was revalued for use M money in the national currency system. (see note on Treasury statement), which can only be spent by being transferred On the other side of the statement (liabilities) as an offect there is the item to the gold certificate fund of the Federal Reserve banks in exchange for bank $604,760,956.10 seigniorage (silver) but this.is not the total profit on the silver credit, All gold enumerated in the other items is stored by the Government and that has been purchased. On page 2 of this same statement we find in the gon- in really owned by the banks, as represented by the Federal Reserve Banking eral and special accounts another item seigniorage $63,692,754.44 for the fiscal System, just as wheat that the farmer delivers to a grain elevator, for which be year 1941, representing another profit made in minting and placing in circulation receives a warehouse receipt, is the property of the farmer or the firm to which be the subsidiary silver coins (half dollars, quarters, and dimes) between the post of sells the wheat as represented by the warehouse receipt; with the difference, of the silver and the face value of the coins. course, that the farmer must pay the taxes and storage charges on his whent. In considering the total actual profit made on silver since the Silver Purchase Act while the gold in nominally the property of the Treasury, and the banks, the real went into operation, in consulting the bulletin of the Treasury Department of owners or its equivalent in gold certificates, escapes storage, insurance charge, January 1942 we find on page 79 that the seigniorage (profits) on silver dollars and and taxes, and silver certificates amounts to $580,400,000 and the seigniorage (profits) on As this is Sunday afternoon with no one else about the office and I sm on an subsidiary coins (half dollars, quarters, and dimes) amounts to $182,100,000. interesting subject, I might explain the item of silver In the Treasury statement Taken together, the seigniorage totals $799,700,000. The Treasury statement BB I understand it. For a more extensive discussion of silver, see my answer to goes further and gives the potential seigniorage on the idle silver in the general 68 eminent economists made in the March 10, 1939, issue of the Congressional fund at $1,089,000,000. Record, a copy of which is enclosed, The continued use of the silver money now in circulation and utilization of the The silver items represent all the silver owned and in the possession of the idle silver as money is the subject of considerable controversy. When we consider United States Treasury. The Treasury is buying ailver all the time. The silver the function of money and the present state of our country's finances in relation to mined in the United States la bought at the price fixed by law, 71.11 cents per our national indebtedness, and the stimulating effect of n new gold discovery on ounee, The foreign silver is bought at the world market price of somewhere business and the national income, it appears the idle silver should be put to use as around 35 centa, the last time [ noticed the quotation. money to service business in the form of eilver certificates, currency of small In taking up the silver Items as shown on the Treasury statement, we find on denominations, the same kind of money that in now flowing in the channels of trade the debit side assets of two items. The first (1,108,735,993.1 ounces) valued at and business in the form of 81, $5, and 810 bills, money that is eagerly accepted $1,433,517,243.65. The second item in silver dollars on deposit in the Amount of through the country, the kind of money that in created and paid out by the Gov- $492,855,474, making & total of almost $2,000,000,000, or exactly $1,926,372,717.65. ernment in paying current expenses, a currency that circulates continuously (A dollar is roughly seven-eighths of an ounce of silver, of 417½ grains of standard minus the interest charge inherent to the issuance and circulation of Federal allver, which is equal to 3711/4 grains of pure silver with 10-percent copper added Reserve bank note currency. when coined.) Trusting I have answered your question, I am, On the credit side we find the account balanced with $1,916,433,191, represented Sincerely yours, by silver certificates in circulation in the form of $1, $5, and $10 bills, money that COMPTON I. WHITE, is in circulation and is being handled every day in every community in the United Member of Congress, States, The next item, $1,160,822, represents silver held as security for redemption of (From the Congressional Record, May 14. 1942, p. 1929] Treasury notes of 1890, These notes are, in fact, 8 reissue of the famous green- backs of Civil War days. The item of $8,778,704.65 represente silver money that THE CASE FOR SILVER has flowed back to the Treasury and its several branches throughout the country in its transaction of Government business. Extension of Remarks of Hon. Compton I. White, of Idaho, in the House of So you see, the three items just mentioned on the credit side balances with the Representatives, Wednesday, May 13, 1942 two items on the debit side, which represents the money value of silver currency. But there in more silver owned by the Treasury. Mr. WHITE. Mr. Speaker, In reading current newspapers and many of the Coming down to the items in the general fund, you find the first silver item of leading publications, it is very evident the real facta concerning the place of $8,778,704.65 on the debit side is the same item as the last Item on the eredit eide silver in our monetary system and the profit the Government is making on its above under the heading of "Silver" coins (or certificates) reserved and on hand silver-purchase program in not understood by the public in general, and for for transacting Government business, The next silver item of $3,067,204.50 some reason in belog purposely misrepresented to the average reader. representa subsidiary coins (half dollars, quarters, and dimes) on hand. The In an endeavor to correct this situation and present factual information con- Item of $327,426.03, expressed in the terms of ounces (236,851.8) represente, I cerning silver, the records of the Treasury Department have been consulted, am told, defective, abraded, and mutilated coins on hand waiting to be reminted. and I have endeavored to present these facts in a radio address in a Nation-wide The next item as carried on the statement of $666,354,764.20 represents gilver broadeast which I submit for printing in the Record: on hand and owned by the Government not in use as money in any form. This "With 80 much being said about silver and the Government's ailver purchasing item of silver represents neither its actual cost to the Treasury nor ita coinage program and the cost of this program to the American people, I am sure everybody value ILS money. listening in will be interested to learn the facts about silver and the way the The statement shows it to be 1,350,317,670.8 ounces of silver, which if coined Regraded Unclassified 702 SILVER SILVER 703 Government finances the purchase of silver and the use of this metal in our tary system. There is much to be said about the fundamental principles of "The papers persist in telling us how useless the ellver in and how we should money and the use of gold and silver as money, but I desire to address myself to get rid of it. Make electric bare of it. make anything out of it, anything to get stating the facts concerning the present-day purchase and use of silver as money rid of it. They might just as well talk about retiring the silver certificates and and to avoid a todious recitation of figures. 1 shall use M far AS practical round melting down the silver reserves now being held for their redemption. The one numbers in stating these facts. would reduce the monetary metal reserve as much as the other; the only difference "The figures presented in the Treasury statement from day to day and the would be that one lot of silver is in vise as money and the other is available and compilation of figures in the Treasury bulletin issued every month contains the ready to be put to the same use. There le not & line of law to prevent it-and record of the Government's fiscal operations in buying and using silver an money, I'm sure all of us agree that the Government needs the money just now, even the The profits the Government has actually made in buying and using silver under Defense-bond salesmen will tell you that, the Silver Purchase Act now stands, or did on the 20th day of April, at $997,000,000. "The best answer to this barrage of propaganda against silver in the figures in This money, or the profit on silver, is now invested in the unrevalued silver which the printed tables on silver selgniorage appearing regularly in the monthly bulletin amounts to one and a third billion ounces and is carried in the Treasury secoint of the Treasury Department, and for your information there is submitted the Bd an item in the general fund. figures of three totals taken from the columns of the table appearing on page 80 "How has the Government made the profit that le represented by this surplus of the March bulletin under the heading, 'Seigniorage on gilver." The total of and unused silver? Simply by purchasing domestic and foreign silver at the the first column is $192,400,000; this is seigniorage (profit) made in buying silver prevailing market patoes and then revaluing the metal that is used for monetary and minting the subsidiary coins, half dollars, quarters, and dimes; the next purposes. The Treasury statements disclose that the Government bas revalued figure important for our consideration in the total shown in column of $804,700,000. and put in circulation as money enough silver to evenly balance with all the money This is the seigniorage or profit on silver that has already been revalued and put that has been spent in buying silver-and in doing this has placed in circulation in circulation as dollars and silver certificates: add these two figures together and silver money amounting to $2,024,000,000 in silver dollars and silver certificates. you get the actual profit the Government has made up to the present on the silver These certificates are redeemable in silver dollars. The silver money in circula- that the Government has bought and put into circulation, but there in A larger tion is chiefly silver certificates in the form of 81, $5, and $10 bills, as you will fund figure to take into account, the seigniorage on the silver that has been obtained and laid aside and is not as yet in use as money; whenever this extra silver is in checking the daily Treasury statement. "To give you an example of how the plan has worked, we can compare it to the revalued and put into circulation in the form of silver certificates, the Govern- transaction of a miller in taking toll when the farmer brings In his grain to the ment will realize the full amount of the profit on its silver-purchase program. mill to have it ground into flour or meal; the farmer's grist is measured and The seigniorage on this unused silver remainder has been taken into account by the Treasury and appears in the total in this table under the heading, Potential dumped into the receiving bin; the miller takes ont the toll (his share) and pula seigniorage on silver bullion at cost in the general fund,' I give you the exact it into the toll bin, and then grinds the farmer's grist and delivere it back to him figure amounting to $1,096,300,000. without further costs. In the case of domestic silver the miner brings his bullion "I know that I have promised not to tire you with e tedious recital of figures but to the mint and gets for every ounce 71.11 cents in silver certificates (paper money), to get the facts and determine the full amount the Government has made on ita by which the Government pute a value on the silver the miner brings in of $1.20% silver-purchase program, it will be necessary to add the three silver seigniorage per ounce. The silver left over is put in the Treasury toll bin, general fund. items shown in the Treasury statement which makes a grand total of $2,093,- Under this plan the Treasury has piled up-and here I'm going to give you the 000,000. In the face of these figures and the incontrovertible facts, what becomes exact figures-1,364,566,900.1 ounces of unrevalued silver, as shown on the of all this barrage of propaganda concerning the loss the Government is taking Treasury statement of April 20 this year. in buying silver? "This plan has worked 80 well and made such & big profit for the Government us "The fact is that the gains made by the Treasury in revaluing both gold and wonder why the Treasury doesn't use the balance of its silver the same way, just silver are about even, the increment on gold being a little more than the increment as it is doing with the first half, revalue it and issue its equivalent in silver etc- on silver. Both of these figures show up every day in the Treasury statement. tificates, cash money, in paying some of the Government's running expenses. The gold increment is set aside in the stabilization fund carried now at $1,800,- 1 do not believe anybody would say Uncle Sam doce not need this money, especially 000,000 and silver increment put in the general fund in terms of ounces (unre- when we have unused in the Treasury a billion and one-third ounces of silver valued) is carried at the original cost of the silver before the seigniorage is taken bullion ready to be revalued which would bring its money value up to one and into account. three-fourths billion dollars that can be kept on hand to redeem the new crisp "This in a bookkeeping entry that may be compared to the transaction of & paper bills, the kind of money that is being engraved by the Treasury every day. wheat buyer purchasing wheat for 70 cents & bushel and selling it for $1 a bushel "There is nothing in the law to prevent it. Section 5 of the Silver Purchase and keeping his working capital in hand by selling up to the cost of his wheat M Act provides: fast IMI it comes in. When he has bought up to a thousand bushels for $700 and The Secretary of the Treasury is authorized and directed to issue ollver sold 700 bushels for $1 a bushel and has 300 bushels on hand, his bookkeeping certificates in such denominations as he may from time to time prescribe in à face entry would show his 300 bushels representing an investment of $210 when in fact amount of not less than the cost of all silver purchased under the authority of he has his money all back and the 300 bushels of wheat to show a profit. section 3. and such certificates shall be placed in actual circulation." "So it is with surplus silver in the Treasury carried at $664,421,302.95 in the "Please note the provision just quoted 'not less than the cost of all silver pur- Treasury statement but when we come to analyze this situation, if the seigniorage chased.' There is nothing anywhere in the language of the law itself or in the is taken into account, this surplus silver did not actually cost anything and as to ameudment of July 6, 1939, that prevents the Secretary of the Treasury from the seigniorage item, it is either one thing or another. If it is entered BH a profit putting the surplus silver owned by the Government into circulation na money. to the Government, then the surplus silver represents what it cost. If the seignior- It may be that the Secretary is afraid of inflation-evidently this fear has failed age is not carried on the Treasury books as & profit, then the total surplus silver to influence the policy of the Federal Reserve banks. represents a profit which may account for the Secretary's sidestepping the question "In checking the record we find that we had most of this idle silver OR June R recently when be was asked as to the extent of the loss the Government might a year ago-when the Federal Reserve money in circulation was a little over sustain in disposing of its surplus silver. $7,000,000,000. and now, according to the circulation statement of the Treasury. "With these facts so obvious and easily understood and the patriotism of our regardless of inflation, the Federal Reserve banks have put another $2,000,000,000 leading publications being constantly proclaimed, it in difficult to understand the of this kind of bank-note money in circulation and are stendily increasing the barrage of propaganda and innuendo appearing in these high-class publications amount. The Treasury circulation statement for March shows the Federal Re- against silver. The interest income the banks would get if this form of cash was serve money in circulation has been increased to $9,056,000,000, and now comes retired and replaced with Federal Reserve currency is well understood although along the April circulation statement showing a further increase of $200,000,000. it in difficult to believe that the patriotism of our bankers would permit a profit And we, you and I, and the rest of the good American people, still have OUT idle motive to outweigh their interest in the welfare of the American people struggling silver. under the overburden of an interest load; as for our leading publications, it. Le Regraded Unclassified 704 SILVER SILVER difficult to understand their motive in putting out all this flood of misleading 705 propaganda against silver. "In closing let me quote the immortal words of one of America's greatest states tables giving the selgulorage on silver, taken from page so, March Bulletin of nen, James G. Blaine, Speaker of the House of Representatives, when be enid, the Treasury Department. If, therefore, silver has been demonetised, I am in favor of ordering it to be The SPEAKER pro tempore. la there objection to the request of the gentleman resumed. If it has been restricted, I am in favor of having It enlarged. The from Idaho? two metals have existed side by side in harmonious, honorable companionship M There was no objection. money, ever since intelligent trade was known among men. It in well-nigh 40 Mr. WHITE. Mr. Speaker, the statement of the Economists' National Com- centuries since "Abraham weighed to Ephron the silver which he had named in mittee on Monetary Policy la MI follows: the audience of the sons of Heth-400 shekels of ailver current money with the merchant." Since that time nations have risen and fallen, races have disep- "SIXTY-FIVE MEMBERS URGE CONGRESS TO REPEAL THE SILVER PURCHASE ACT peared, dialects and languages have been forgotten, arte have been lost, treasures OF JUNE 19, 1934, AND TUE DOMESTIC SILVER PURCHASE LAW OF JULY 6, 1939 have perished, continente have been discovered, Islands have been sunk in the APRIL 20, 1942. sea, and through all these ages and through all these changes, ailver and gold "We the undersigned members of the Economists' National Committee on reigned supreme, as the representative of value, as the media of exchange. The Monetary Policy, again urge Congress to repeal the Silver Purchase Act of June dethronement of each has been attempted in turn and sometimes the dethrone- 19, 1934. and the domestic silver purchase law of July 6, 1939, emtn of both: but always in vain. And here we are today, deliberating allow "The former has never been sound in principal or practice, the common argu- over the problem which comes down to us from Abraham's time-the weight of ments for it were neither valid nor admirable, and its results have in the main ailver-that shall be "current money with the merchant.' been harmful to both the United States and certain foreign countries. "The latter act has been an indefensible subsidy to the domestic producers of silver and has forced the Treasury to pay approximately twice the world market [From the Congressional Record, April 30, p. 3978) price for this domestic silver with the consequence that the Treasury has greatly overvalued the silver which it holds. MONETARY POLICY "Both neta have disturbed the silver markets of the world, have drained silver The SPEAKER pro tempore. Under a previous order of the House, the gentle- from industry and other countries' treasuries to our Treasury vaulta, and have man from Idaho (Mr. White) is recognized for 20 minutes. been important factors in the expansion of our money supply at a time when such Mr. WHITE, Mr. Speaker, today le pay day in the Capitol of the United States. expansion has been unnecessary and undesirable. It in very interesting to go into the office of the Sergeant at Arms of the House "It is gratifying to note that both Secretary of the Treasury Morgenthau and and then go over to the disbursing office of the Senate and see all the young follo, Chairman Eccles of the Board of Governors of the Federal Reserve System are the clerical help employed about the Capitol, lined up and drawing down their recommending the repeal of these laws. In January of this year, Secretary pay, cashing their Government checks, and being handed out cash for those checks. Morgenthau stated to the House Appropriations Committee that "So far as I am When we stop to think of the operations of the Treasury's fiscal policy, it is concerned, I will be glad to see Congress strike all of the silver legislation off the interesting to see that most of the money that is being paid to these folks, being books.' In the hearings before the Committee on Ways and Means of the House paid to the Senators, and being paid to the Members of the House, in silver cer- in March and at a press conference in February he again made similar statements. lificates, in $1, $5, and $10 denominations, that are redeemable in silver dollars, Chairman Eccles, in n letter to Senator Arthur H. Vandenberg on March 30, this silver that is costing the Government, so the magazine Time said in an article I year, stated that his views on this matter are generally in accord with those have just read, and that is borne out by the record of the Treasury, about 50 expressed by Secretary Morgenthau. Chairman Eccles pointed out in this letter that he had held these views for several years, and added: 'In view of the cents. In other words, instead of its costing the Government $10,000 & year to war situation, it is all the more urgent that the inflationary effects of the silver maintain one Congrossman in Washington, it costs the Government in actual program be removed and that 80 far as possible the materials, machinery, and eash about $5,000 a year. That is a very interesting situation. labor now devoted to silver production be utilized in the war effort.' Today when the Sergeant at Arms was himself on hand I took occasion to draw "On April 20, 1934, the executive committee of the Economists' National Com- a little check in the amount of $16 in drawing down some of the pay that inder mittee on Monetary Policy issued a statement opposing the enactment of the me for serving here in this capacity. The Sergeant at Arms handed me a brand- pending Silver Purchase Act of 1934. spanking-new $1 bill, a 85 bill, and A $10 bill. On each one of these bills is is- "Substantial majorities of the full committee signed pronouncements in oppo- seribed "Redeomable in silver." sition to the Government's silver program as follows: It was such an interesting fact, and no well refutes the constant harrage of 'May 25, 1936: Recommending abandonment of the silver-purchase policy propaganda put out against the Government's silver policy, that I took occasion and that Treasury silver be disposed of as advantageously as possible;' to have a photographer on hand, a gentleman with a flash bulb and & camera, "June 14, 1937: Advocating repeal of the silver-purchase program; to take a picture and give ocular evidence that there WAR such a policy in opent- "December 28, 1937: Urging, among other things, repeal of the Silver Purchase tion by the Government, and that we are being paid with money "as good as Act of 1934; gold,' these silver certificates, flowing through the channels of trade and business, "December 23, 1938: Urging that Government subsidy to silver interesta be in every pocket and every till in this country where money is handled, certifi- ended and that the Silver Purchase Act be repealed; cates on which the Government is making a profit and on which the good people "May 15, 1939: Urging enactment of the Townsend bill repealing the Rilver of the United States are making & big saving every day in the form of interest Purchase Act of 1934; and that they would have to pay if this money were retired and replaced by Federal "September 30, 1941: Recommending, among other things, repeal of the Silver Reserve notes. Purchase Act of 1934 and of the act of July 6, 1939, providing for the purchase of Mr. Speaker, I want to refute this specious propaganda that is being put out domestic silver at 71.11 cents per ounce-spproximately twice the market price. against one of the best pieces of money ever invented, the American eilver dollar. "We agree with Secretary Morgenthau's statement of January that If the A monetary unit which we got from the good people of Poland, as I mentioned in Government's silver program were repealed it would be helpful at this my remarks a few minutes ago, I take this occasion to answer B pronouncement time, I think it would be well received.' by 65 members of the Economists' National Committee on Monetary Policy. "Signed: Eugene E. Agger, Rutgers University: Benjamin M. Ander- They have just made a pronouncement under date of April 20 against the gilver- son, Jr., University of California in L. A.; Charles C. Arbuthnot, purchase program of the Government and against this kind of money, on which Western Reserve University: Don C. Barrett, Haverford College: the Government is making & profit and on which the people are making a huge Benjamin H. Beckhart, Columbia University: James Washington saving in interest. Bell, Northwestern University: Ernest L. Bogart, University of Mr. Speaker, I ask unanimous consent that in connection with my remarks Illinois; Frederick A. Bradford, Lehigh University: William A. there may appear In toto, with all the signatures attached, this communication Brown. Jr., Brown University; J. Ray Cable, Washington Un. from the Economists' National Committee on Monetary Policy, and also the versity; Wilbur P. Calhoun, University of Cincinnati: N 73002-42-pt. 9-18 Regraded Unclassified 706 SILVER SILVER 707 Herald Tribune; Garfield V. Cox, The University of Colongo: Carothers, Lehigh University; Edward H. Collins, New York Mr. Speaker, what I want to know is, what is it worth to the banks to keep William W Cumberland, Wellington & Co., New York: Charles silver money out of circulation? And in connection with that I should like to A. Dice, the Ohio State University; D. W. Ellsworth, E. W. know what is the profit to the Government and the saving to the American & Co., Inc., New York;, William D. Ennis, Stevens Institute AR people in using silver money In transacting business? Technology; Fred R. Fairchild, Yale University: Clyde Olla of Now I am going to read you my reply to these eminent economists of the lead- Fisher, Wesleyan University; J. Anderson Fitagerald, The Unk ing institutions of higher education in this country, analyzing and making TO- versity of Texas; Herbert F. Fraser, Swarthmore College; Roy L sponse to this communication put out to the country, the President, and the Harry D. Gideonse, Brooklyn College; Earl J. Hamilton, Duko Garis Vanderbilt University; Arthur D. Gayer, Queens College: Congress for their guidance: To the Members of the Economists' National Committee on Monetary Policy: University, with reservations as to second paragraph; Lewis H, Haney, New York University; E. C. Harwood, American Institute "GENTLEMEN: In considering the recommendations of your committee of 65 for Economic Research; Hudson B, Hastings, Yale University: economists to repeal the Silver Purchase Act of June 19, 1934, and the domestic William F. Hauhart, Southern Methodist University: Frederick silver-purchase law of July 6, 1939, made in your communication of April 20, C. Hicks, University of Cincinnati; John Thom Holdsworth, The presumably addressed to the President, the Congress, and the country, you University of Miami; Edwin W. Kommerer, Princeton University: state: 'Its results have been harmful to both the United States and certain William H. Kiekhofer, The University of Wisconsin: David foreign countries.' How has it been harmful? Do you seek to imply that Kinley, University of Illinois; William H. Kniffin, Bank of $2,024,000,000 in the form of silver dollars and silver certificates, $1, $5, and $10 Rockville Centre Trust Co., Long Island; Frederic E. Lee, hills, redeemable in silver dollars now in circulation in the channels of trade and University of Illinois; J. F. Leonard, University of Bouthern business, is harmful to our national economy or to the American people? California: James D. Magee, New York University; Arthur W. "For fear that some of the details of the Treasury fiscal operations may have escaped the notice of the members of your economists' committee, and, to be Marget, University of Minnesota; A. Wilfred May, New York more specific, let me point out to you, gentlemen, first, that on the day your City; Mark C, Mills, Indiana University; Margaret G. Myers, communication was issued, April 20, there were $1,962,101,367 In silver cer- Vassar College; Melchior Palyl, The University of Wisconsin: tificatoe outstanding, which, as you know, are redeemable in silver dollars (April Ernest Minor Patterson, University of Penneylvania; Clyde W. 20 daily statement, U.S. Treasury), and in addition there were 62,327,405 silver Phelps, University of Chattanooga; Charles L. Prather, Syracuse dollars in circulation (March 31 Treasury Statement, United States money in University; Howard H. Preston, University of Washington: circulation)-money issued by the Government interest free and in use through- Leland Rex Robinson, 76 Beaver Street, New York; R. G. Rod. out the country in handling the Nation's business-the kind of money that your key, University of Michigan; Olin Glenn Saxon, Yale University; members have steadily opposed; money which you say is harmful and should Joseph A. Schumpeter, Harvard University: Walter E. Spahr, never have been lasued, and now could best be replaced by unredeemable Federal New York University; Oliver M. W. Sprague, Harvard University; Reserve currency, the other kind of money which business or the Government William H. Steiner, Brooklyn College; Charles 8. Tippetta, would be required to borrow from the bank at interest to get it issued and must Mercersburg Academy; Alvin 8. Tostlebe, The College of Wooster; continue to pay interest to the loaning banks to keep it in circulation. James B. Trant, Louisiana State University; Rufus 8. Tucker, "In making you recommendations, it would be interesting to know if the mem- Westfield, N. J.; Russell Weisman, Western Reserve University, bers of your committee have calculated the difference in cost on the item of inter- William O. Weyforth, The Johns Hopkins University; Nathsale est between the expense of using Federal Reserve money and the use of interest- R. Whitney, The Procter & Gamble Co., Cincinnati: Edward free silver money to which your members object so strenuously, or in this conneo- Wiest, University of Kentucky: Max Winkler, College of the City tion has your committee considered the profits accruing to the Government in of New York; Ivan Wright, Brooklyn College." purchasing domestic and foreign silver and revaluing it and putring it into cir- Mr. Speaker, for the information of the Members of the House and especially culation as money in paying current Government expense. For fear that by for the enlightenment of all these 65 economists, there is inserted below & table some mischance all of your 65 members may have overlooked some of these appearing on page 80 of the March Bulletin of the Treasury Department, 000- small items, there is presented the record of seigniorage taken from the report of taining the record of seigniorage made on the silver purchases under the Silver the Secretary of the Treasury (Treasury Bulletin, March 1942) which I submit Purchase Act of 1934. for your files and information in event you desire to have the actual facts, to wit: Sergniorage on silver "On page 80 of this bulletin we find the following totals of seigniorage on silver: [Cumulative from Jan. 1. 1934-In millions of dollars] "(2) Total seigniorage on silver revalued less minor coins (January 1, 1934, to February 28, 1942), $804,700,000; Boureus of selgninrage on allver bullien revaloed "(2) The total seigniorago on minor coinage (January 1, 1934, to February 28 Potential 1942) $192,400,000, which represents the actual gain to the Government on this End of Behenior- Miscèlls- neous Newly National- seignione calendar HUDO on mined Newly silver by revaluing it and putting it out as money. silver and sliver (In- Bilver silver mined fsed sliver Total allver Purchase bullies "This still leaves the Government with a surplus of unused silver amounting year or mine cluding month silver bul- (proclama- Act of (proclams- seigniorage at cost it colus (net of Mon of on silver to 1,364,566,969.7 ounces on hand in the general fund, as appears on Treasury Hon held tion of July 6, June 19, general Dec. 21, 1934 Ang. 0, revalued hand statement of even date with your communication (April 20), surplus silver that June 14, 1933) 1939) 1004) can be revalued and put into circulation as money under existing law in the form 1934) of silver certificates or silver dollare by the Secretary of the Treasury amounting 1934 4,5 48.7 0.4 51.1 25.5 128.7 to $1,764,288,605.24 when revalued for use as money. 1935 18.5 48.7 16.8 225.2 34.5 200.2 2011 "By consulting the Treasury statement, you will find that this nilver has been 1936 00.1 48.7 36,0 3027 3L7 422.1 57.1 1937 63.7 48.7 58.0 361.7 34.7 508.1 MLI taken into consideration by the Treasury in computing the seigniorage as appears 1938 69.8 48.7 74.9 4/7.7 34.7 616.0 in in the last column of the table on page 80 of the March Treasury bulletin, headed 1939, 91.7 48.7 87.3 4.2 520.7 SL7 705.5 SOLF 'Potential Seigniorage on Silver Bullion at Cost in General Fund,' amounting 1040 122.2 48.7 87.6 20.7 M3.7 24.7 789.4 1,00A) 1941 152.1 48.7 87.6 49.3 580.4 04.7 799.7 1,09.0 to a total of $1,096,300,000. When you add up these three seignlorage items, 1942: which is the difference between the cost of the silver to the Government as bullion January 188.5 48.7 87.6 50.2 581.5 34.7 802.5 and its money value when issued by the Treasury in paying Government expense, February 192.4 48.7 87.6 51.6 5821 36.7 804.7 you have a grand total of $2,093,400,000 seigniorage, making a tidy profit of These items represent the difference between the and value and the monetary value of give beller over $2,000,000,000, which has and will accrue to the Government If the Treasury revalued and held to secture nilver certificates. The figures in this column are not cumulative; MI the amount of bullion held changes. the potential will use all the silver as money it has bought under the 'objectionable' Silver relgniorage thereon changes. Purchase Act since 1934. Leaving out the item of potential seigniorage: To date Basis: Daily Treasury Statements. the record discloses the Government has made on the silver used as money, a Regraded Unclassified 708 SILVER SILVER 709 total in seigniorage, amounting to $997,000,000 and has, in addition, enough gilver left over to make another $1,096,300,000 in seignlorage as disclosed in the Senator MUCARRAN. Secretary Jones wishes to make a statement. last Treasury bulletin, and you 65 eminent economists and educators in our lend. ing institutions of learning object to our Government making this little profit in the present emergency, at a time when every monetary thread in the national STATEMENT OF HON. JESSE H. JONES, SECRETARY OF COMMERCE financial fabric is strained to the utmost. "When you consider the cost in the form of Interest the people would be 76- Mr. JONES. Mr. Chairman, there is one point that I think has not quired to pay by retiring the silver money now in use and replacing it with Federal Reserve notes, think of what your plan would add to the expense of doing business. been made quite clear. If the Secretary of the Treasury is to issue "In order to determine the full amount that business has saved by our Govern- money against silver that may be used in bus bars, I think the legisla- ment refusing to follow the money plan you have urged in your repeated recom. tion must include that fact particularly and also the fact that the mendations, we must get the figures on silver in cireulation year by year since the title to that silver remains in the Treasury. I doubt if we can follow silver-purchase program went into effect in 1934 and calculate the interest on Ha the plan we have started with, that we can lend-lease silver and still equivalent in Federal Reserve money. I hope your committee will do that for your own information and the good of the American people. issue currency against it. I think the legislation must take the course "In this time of emergency and mounting tax load on business what valid that the title to the silver remains in the Treasury. I do not think objection is there to Issuing the balance of silver the Government has on hand is that that has been developed quite enough. I think the spirit of money and putting this currency into circulation in paying current Government everybody here is to use the silver but to allow it to be used for dual expenses? Inflation. Your committee will say pointing to all the danger to our national economy and the disastrous effect on the living standards of labor-if purposes-that is, both in the war program and in the monetary we increase the volume of eash-money of ultimate redemption In the channels program. That has to be taken into account. of trade and business. If this is true, it may be that another fact has escaped the Senator McCarran. That is right. There is just one thought that notice of all of your committee. If I may call this fact to your attention, the I wish to leave with you, Mr. Secretary, and that is this: It would be record discloses that on June 30, 1941, & little less than a year ago at a time when the policy of the chairman of this group at this time to work with you credit WAS vastly expanded in financing our national-defense program, there was Federal Reserve notes in circulation in the amount of $7,001,520.625, and at the to the end that this legislation may be so worked out that the so-called same time there was 1,349,488,385.7 ounces of surplus and idle silver in the truce, as you choose to term it, would be effective. To that end we Treasury which the Secretary of the Treasury could have revalued and issued would work. as money in paying the Government's current expenses. Now less than A year Mr. MORGENTHAU. Yes, later on March 31 we find the Federal Reserve has increased its currency in circulation to $9,056,131,060, an increase of over $2,000,000,000 and we still Senator MCCARRAN. To that end we shall gladly meet with you, have the unused surplus silver left in the Treasury: to be exact the amount with your experts, and with others interested here and try to go as of the date of your communication was 1,364,566,969.1 ounces. The money in forward with this general policy. circulation has been inflated all right but not by revaluing and using our idle Does that meet with the approbation of those present? silver, Money material which represents real profit to the Government now on What would be the thought of your group as to the number who hand and ready to be turned into $1, $5, and $10 bills and put into circulation in should serve on this committee to do the work? paying Government expense just as is being done every day with the new silver that is coming in, these newly engraved silver certificates 'as good ILS gold' being Senator MURDOCK. Do you intend to include only Senate Mem- paid to the Members of Congress and their clerical help are eagerly accepted in bers or to include House Members, too? transacting business everywhere when the Government employees put them in Senator McCARBAN. I do not have any authority or jurisdiction circulation. "In view of these incontrovertible facts and the heavy load of interest piling over the House. We would like to have their advice, counsel, and higher and higher on business everywhere, it is unfortunate, distressingly unfortu- membership, as far as that is concerned. nate, that the true situation and the real facts concerning the profits and the Senator MURDOCK. I move that the chairman of this committee be saving that the American people are deriving from their silver-purchase program empowered or authorized to appoint a committee of whatever number is so confused, and 80 little understood, particularly by the educational leaders he thinks best to confer with representatives of the Treasury, the War in this country. Surely in this critical hour when BO much depends on the stability of national economy and the security of the monetary foundation on which both Production Board, the Defense Plant Corporation, in the preparation public and private credit must rest, the patriotism of our economist and educa- and drafting of this legislation. tional leaders should direct their efforts first to understanding and presenting the Senator McCARRANN. My offhand thought would be that five true facts concerning money and then to advising and assisting those in charge of members would be ample. directing the affairs of our Government in establishing and maintaining a stronger national economy to safeguard the financial integrity of our Government and the Senator CLARK of Idaho. Three would be better. business security of the American people by effecting any saving and obtaining Senator MURDOCK. I will amend my motion to conform with the any profits available in any quarter. suggestion of the chairman. I move that the chairman of the com- Gentlemen, be patriotic; lend your knowledge and your ability to your coun- mittee appoint a committee of five to confer with representatives of try; help the Members of Congress representing the people to right the financial ship of state and provide an equitable, workable, adequate monetary system to the Treasury and other agencies interested in this legislation. lift business and the American people out of this morass of debt and case this Senator McCarran. Without objection, the motion made by the crushing burden of interest and taxes. Senator from Utah is carried. The chair will appoint the committee "Sincerely, between now and 1 o'clock and will notify the members who are so "COMPTON I. WHITE, appointed. "Member of Congress." I will also notify you, Mr. Secretary, and we will try to hold our- solves available. We are grateful to you for coming, and we appreciate your assistance. Regraded Unclassified 708 SILVER BILVER 709 total in seigniorage, amounting to $997,000,000 and has, In addition, enough silver left over to make another $1,096,300,000 in seiguiorage B8 disclosed in the Senator MCCABRAN. Secretary Jones wishes to make 6 statement. last Treasury bulletin, and you 65 eminent economists and educators in our lead- ing institutions of learning object to our Government making this Little prodit in the present emergency, at a time when every monetary thread In the national STATEMENT OF HON. JESSE H. JONES, SECRETARY OF COMMERCE financial fabrie is strained to the utmost. "When you consider the cost in the form of interest the people would be no- Mr. JONES. Mr. Chairman, there is one point that I think bas not quired to pay by retiring the silver money now in use and replacing It with Federal been made quite clear. If the Secretary of the Treasury is to issue Reserve notes, think of what your plan would add to the expense of doing business. "In order to determine the full amount that business has saved by our Govern- money against silver that may be used in bus bare, I think the legiala- ment refusing to follow the money plan you have urged in your repeated recom- tion must include that fact particularly and also the fact that the mendations, we must get the figures on silver in circulation year by year since the title to that silver remains in the Treasury. I doubt if we can follow allver-purchase program went into effect in 1934 and calculate the interest on its the plan we have started with, that we can lend-lease ailver and still equivalent in Federal Reserve money. I hope your committee will do that for your own information and the good of the American people. issue currency against it. I think the legislation must take the course "In this time of emergency and mounting tax load on business what valid that the title to the silver remains in the Treasury, I do not think objection la there to issuing the balance of silver the Government has on hand is that that has been developed quite enough. I think the spirit of money and putting this currency into circulation in paying current Government everybody here is to use the silver but to allow it to be used for dual expenses? Inflation. Your committee will say pointing to all the danger to our national economy and the disastrous effect on the living standards of labor-if purposes-that is, both in the war program and in the monetary we increase the volume of easti-money of ultimate redemption in the channels program. That has to be taken into account. of trade and business. If this is true, it may be that another fact has escaped the Senator McCarean. That is right. There is just one thought that notice of all of your committee. If I may call this fact to your attention, the I wish to leave with you, Mr. Secretary, and that is this: It would be record discloses that on June 30, 1941, a little less than a year ago at a time when the policy of the chairman of this group at this time to work with you credit WAS vastly expanded in financing our national-defense program, there was Federal Reserve notes in circulation in the amount of $7,001,520.625. and at the to the end that this legislation may be so worked out that the so-called same time there was 1,349,488,385.7 ounces of surplus and Idle silver in the truce, as you choose to term it, would be effective. To that end we Treasury which the Secretary of the Treasury could have revalued and Issued would work. na money in paying the Government's current expenses. Now less than a year Mr. MORGENTHAU. Yes. later on March 31 we find the Federal Reserve has increased its currency in circulation to $9,050,131,060, an increase of over $2,000,000,000 and we still Senator McCaRRAN. To that end we shall gladly meet with you, have the unused surplus silver left in the Treasury: to be exact the amount with your experts, and with others interested here and try to go as of the date of your communication was 1,364,566,069.1 ounces. The money in forward with this general policy. circulation has been inflated all right but not by revaluing and using our idle Does that meet with the approbation of those present? silver. Money material which represents real profit to the Government now on What would be the thought of your group as to the number who hand and ready to be turned into 81, $5, and $10 bills and put into circulation in should servo on this committee to do the work? paying Government expense just as is being done every day with the new silver that is coming in, these newly engraved silver certificates 'as good as gold' being Senator MURDOCK. Do you intend to include only Senate Mem- paid to the Members of Congress and their clerical help are eagerly accepted in bers or to include House Members, too? transacting business everywhere when the Government employees put them in Senator McCarran. I do not have any authority or jurisdiction circulation. "In view of these incontrovertible facts and the heavy load of interest piling over the House. We would like to have their advice, counsel, and higher and higher on business everywhere, it is unfortunate, distressingly unfortu- membership, as far as that is concerned. nate, that the true situation and the real facts concerning the profits and the Senator MURDOCK. I move that the chairman of this committee be saving that the American people are deriving from their silver-purchase program empowered or authorized to appoint a committee of whatever number is 80 confused, and 80 little understood, particularly by the educational leaders he thinks best to confer with representatives of the Treasury, the War in this country. Surely in this critical hour when BO much depends on the stability of national economy and the security of the monetary foundation on which both Production Board, the Defense Plant Corporation, in the preparation public and private credit must rest, the patriotism of our economist and educa- and drafting of this legislation. tional leaders should direct their efforts first to understanding and presenting the Senator McCarrann. My offhand thought would be that five true facts concerning money and then to advising and assisting those in charge of members would be ample. directing the affairs of our Government in establishing and maintaining a stronger national economy to safeguard the financial integrity of our Government and the Senator CLARK of Idaho. Three would be better. business security of the American people by effecting any saving and obtaining Senator MURDOCK. I will amend my motion to conform with the any profits available in any quarter. suggestion of the chairman. I move that the chairman of the com- "Gentlemen, be patriotic; lend your knowledge and your ability to your coun- mittee appoint a committee of five to confer with representatives of try; help the Members of Congress representing the people to right the financial ship of state and provide an equitable, workable, adequate monetary system to the Treasury and other agencies interested in this legislation. lift business and the American people out of this morass of debt and case this Senator McCarran. Without objection, the motion made by the crushing burden of interest and taxes. Senator from Utah is carried. The chair will appoint the committee "Sincerely, between now and 1 o'clock and will notify the members who are so "COMPTON I. WHITE, appointed. "Member of Congress." I will also notify you, Mr. Secretary, and we will try to hold our- selves available. We are grateful to you for coming, and we appreciate your assistance. Regraded Unclassified 710 SILVER for unanimous consent that Senator McCarran be ex officio chairman Senator CLARK of Idaho. I am going to amend the motion by asking of the committee. That is carried. [Laughter.] Senator McCARRAN. Well! Senator MURDOCK. Because of the chairman's modesty, I also will say that the motion is carried. (At 11:40 a. m. the hearing was concluded.) X Just their Sas Regraded Unclassified 44 May 28, 1942 12:05 p.m. HMJr: Hello. Operator: Mahan. Sidney Mahan: Yes. HMJr: Mr. Mahan. M: Yes. Good morning, sir. HMJr: Good morning. Who gave you the authority to put a billboard on the Treasury property? Hello. M: Yes. That was the one that I showed you in Room 281 one morning. HMJr: Yeah, but you didn't tell me where you were going to put it. M: Well, I thought that had been all cleared, Mr. Secretary. HMJr: With whom? M: With Kuhn. HMJr: With Kuhn? M: I thought SO. HMJr: Well, I'll ask him. It certainly never was cleared with me. I'll ask him. Just - all right, thank you. M: Yes. 45 May 28, 1942 12:06 p.m. HMJr: Hello. Operator: Mr. Kuhn. Ferdinand Kuhn: Hello. HMJr: Ferdie. K: Yes, sir. HMJr: I called up Mahan to ask him where he got the authority from to put a billboard on the Treasury lawn. K: Yes. HMJr: He said he got it from you. K: Well, that's right. I talked to Norman Thompson and Bell about it, and I thought that it was all part of our quota campaign to put a billboard in a central place in any town, and HMJr: Yeah, but not on the Treasury property. I've refused that ever since I've been here. K: Well, I didn't realize that at all. HMJr: Yeah. K: Well, it's my fault. HMJr: Yes, it 18. K: You're opposed to it? HMJr: Absolutely. K: Okay. HMJr: Yeah. K: I'll tell them. HMJr: I'll tell them. Norman's here. Regraded Unclassified 46 - 2 - K: All right. HMJr: Yeah. K: Sorry. 47 May 28, 1942 2:00 p.m. TAXES Present: Mr. Gaston Mr. Sullivan Mr. Blough Mr. Kuhn H.M.JR: (Reading speech) "The very helpful inter- est in tax collection problems shown by the members of the Joint Committee on Internal Revenue Taxation, under the able leadership of your Chairman, Mr. Doughton, encourages me to appear before you to discuss an admin- istrative matter. That is good. That is worth two dollars. "I know that this Committee and the Congress are determined that no man and no corporation shall be per- mitted to make exorbitant profits out of the war effort. It is the responsibility of the Congress to draft legis- lation to achieve that purpose. It is our responsibility at the Treasury to use all the powers the Congress has given us to see that all taxes are fully, honestly and justly collected. It is our responsibility to see that by no form of trick or chicanery is any one taxpayer permitted to escape his just share and thus to throw unjust burdens on others." This is good. "I have come before this Committee tonight to tell you of some instances of what seem to me to be particularly unpardonable attempts to escape wartime taxation, and I intends to do to stop these practices. In every instance -" should like to report what the Treasury is doing and That would refer us back to what? Regraded Unclassified 48 - 2 - MR. GASTON: "Instances" in the sentence before that. "I have come before you to tell you of some instances." H.M.JR: "In every instance the method used by the taxpayer was to inflate expenses with the evident purpose of avoiding normal and excess profits taxes on corporation earnings. The devices used included the payment of exces- sive salaries, the distribution of unearned bonuses and the payment of unreasonable sums for purported services to persons closely connected with the management of the companies involved." It seems to me to go very smoothly now. "It will be obvious to members of this Committee that these practices, if successful, would reduce the revenue of the Government, the revenue we need so urgently for fighting and winning the war. Even if those who receive such excessive payments should fully declare them a personal income, the amounts involved would escape corporate profits and excess profits taxation." MR. SULLIVAN: I don't like that. That is assuming that they don't. It says, "Even if those who receive such--" H.M.JR: What do you want? MR. KUHN: Do you want "Even when those who receive such excessive payments should fully declare"? MR. SULLIVAN: We haven't any such instances. MR. BLOUGH: Strike "should fully" out. MR. KUHN: Just "declare them fully." MR. GASTON: We will make that change. H.M.JR: "We do not intend that this shall happen. We do not intend that any of these practices shall succeed. 49 - 3 - The Congress has already given power to the Bureau of Internal Revenue given the Treasury or the Bureau of Internal Revenue? MR. GASTON: Let's make it the Treasury. H.M.JR: The Treasury - "The Congress has already given power to the Treasury.' "We have come upon the instances I shall mention to you through speeding up our investigation of 1941 returns of corporations holding war contracts." I would say there "Through speeding up our investigation of 1941 we have come upon instances.' MR. GASTON: You have already said you come here to point out instances, and we say that "We have come upon these instances I shall mention to you through speeding up our investigation H.M.JR: That is the way I would say it, but I am not going to - I would say "through speeding up our investigations." That is the whole thing. MR. SULLIVAN: "We have come upon these instances." H.M.JR: I am not going to argue with you English scholars. "Reports of the examination of 32 returns for 1941 are now available.' MR. SULLIVAN: That should be thirty-one. H.M.JR: Somebody died since this morning? MR. SULLIVAN: No. H.M.JR: Picked at random? MR. SULLIVAN: They are picked from the thirty-one. I'll bet we will get worse things than this before we get through. H.M.JR: I hope you do. Regraded Unclassified 50 - 4 - H.M.JR: "Let me mention briefly seven cases illustrat- ing the practices with which we have to deal. "Company A makes an important airplane part. This corporation is owned by one man who hired himself as its sales representative. His compensation in 1941 was $1,656,000. By consolidating these earnings with those of the corporation, we have blocked this obvious attempt to divert profits and we have increased the corporation's income tax by $1,117,000. "Company B makes steel. All stock in this corpora- tion is held by three families. Excessive salaries were paid by officers who were also stockholders. The Revenue Agent has recommended disallowance of $82,000 in salaries, and the company has already agreed to a disallowance of $58,000. "Company C makes vital equipment for airplane pilots. This corporation paid $31,104 in rent in one year to the wife of the president for using property which had cost her $45,412. A brother of the principal stockholder, without special training or ability, drew a salary of $15,000 a year and a son and daughter, just out of school, got $7,500 a year each. "Company D makes tools and dies. This company is owned by two brothers and their wives. It paid dividends of $40,000 in 1940 and $100,000 in 1941, while salaries totaling $128,000 were paid in 1941 to the president, his wife, and his brother. "Company E makes forgings. The stock is owned by three families. From 1938 to 1941 the salaries of employees who were stockholders and relatives of stock- holders increased 523 per cent. Excessive salaries for 1941 have been disallowed to the amount of $568,000. "Company F makes equipment for airplanes. Three principal officers of this corporation took salaries of $100,000 each and the corporation claimed it had set aside over $575,000 in bonuses. Amounts of salary above $35,000 have been disallowed, and $516,000 of salaries and bonuses combined were found to be excessive." Regraded Unclassified 51 - 5 - H.M.JR: Where is my favorite company? MR. GASTON: F. H.M.JR: What is the difference between disallowing and excessive? MR. GASTON: They were disallowed. H.M.JR: Why $35,000 disallowed and $516,000-- MR. BLOUGH: Salaries and bonuses combined. MR. GASTON: That is to just avoid using the same language again. That is salaries and bonuses combined, and they disallowed $516,000. MR. KUHN: You could say, "We have disallowed salary payments above $35,000 and a combined total of $516,000-- MR. GASTON: Three $100,000 employees cut to $35,000, the balance disallowed as a corporation expense. That made a total of $195,000, plus the bonuses disallowed makes $516,000. H.M.JR: That is not clear at all. Please put a check on that. I would say "The $300,000 salaries had been disallowed and reduced to $35,000 each." Then you say you don't believe in the President's $25,000 policy? MR. KUHN: I see what you mean. H.M.JR: I am just wondering. It is confusing. Just put a question mark. Anyway, if that one sentence could be two sentences, it might be all right. "Other disallowed deductions included $16,000 paid for watches given to employees, $14,000 for banquets and picnics, $4,000 for photographs taken at banquets and picnics, and $1,900 for tickets to football games. Other important deficiencies were found in the tax return. 52 - 6 - "Company G makes a device important to aviation. This corporation is owned almost entirely by one man, his wife, and his brother. The two men increased their salaries from $12,000 and $15,000 in 1939 to $72,000 and $90,000 in 1941. The royalty rate on the patent jointly held by them was increased, with the result that with expanded sales for war purposes, the royalties paid to them increased from $87,000 in 1939 to $1,179,000 in 1941. "You will note that I have not named any of the corporations or the individuals concerned. I leave it to this Committee to decide whether that should be done. Personally I am inclined to believe it would have a very wholesome effect." MR. SULLIVAN: I think I would leave it to this Committee to decide whether it should do it. Even if the Committee, Mr. Secretary, directs you to do it, you are in trouble. H.M.JR: How would you word it? MR. GASTON: You don't need to spell that out. MR. SULLIVAN: What happens if the Committee comes back and says, "Mr. Secretary, we think you should make this public"? MR. GASTON: Just simply tell them what the law is - you do that. MR. BLOUGH: Say, "You write us and ask us for it; we will furnish it to you, and you publish it." H.M.JR: "Assistant Secretary Sullivan and Commissioner Helvering are here tonight to give you further details of the results of some of these investigations. They stand ready to come before you from time to time and to report the results of further investigations now in progress. "It should be noted that these cases all deal with returns for 1941. It is of course true that all of the contracts for war work covered by these 1941 returns 53 - 7 - were signed before the United States entered the war and that nearly all the earnings represented in the tax-dodging devices attempted were pre-war earnings. But I think that changes the situation very little. An attempt to escape lawful taxes while we were actually at war would be only a slight degree blacker than an attempt to evade taxes which would pay for arming and equipping our Army and Navy when we stood in imminent danger of attack. MR. KUHN: Change that "evade" to "escape" to make it the same as the other. H.M.JR: That is all right; that is the hair on the chest right there. MR. GASTON: Yes, some of it. H.M.JR: "It may be that these instances are an isolated few and that not many more of the same kind will be found. I sincerely hope that will be the case. I am wholly confident that the great and overwhelming propor- tion of American corporations are too patriotic even to consider such practices. "We are taking two steps to detect and deal with the evils I have mentioned. In the first place, we are ex- pediting examination of the tax returns and records of all corporations, beginning with those who have war con- tracts, to determine whether excessive expenses are being claimed. Ordinarily our investigation of returns filed for the year 1941 would not begin until July 1, 1942, and this work would continue through the fiscal year ending June 30, 1943. Under present regulations we can not afford to wait so long before acting. By speeding up our investigations we expect to check unlawful practices of this sort at an earlier stage, whether they have been entered into innocently or for the definite purpose of evading taxation. "In the second place, we are disallowing excessive expenditures which have the effect of reducing corporate tax liabilities. We are compelling the corporation to Regraded Unclassified 54 - 8 - include such amounts in earnings, and at the same time we are requiring the recipient to pay full personal income taxes on the amounts received." MR. GASTON: Requiring persons to pay full income taxes-- MR. SULLIVAN: That is all right. H.M.JR: "The disallowance of excessive expenditures does not represent a new procedure. The law and regulations permit the deduction only of ordinary and necessary business expenses for the purpose of determining profits. In applying the law and regulations, the Bureau of Internal Revenue has often disallowed expenditures which seemed to lack sound business justification and which were, in effect, distributions of profits. Today, however, the problem has assumed major importance because of the huge. increases in income of a great number of corporations because of the war effort. "In presenting this problem to you, I am anxious to be as constructive as possible. It seems to me that the businessmen of this country are entitled to know not only the extent of our powers but also the standards that we shall follow. Accordingly, it may be helpful if I outline the following general considerations that will guide us in examining expenses claimed in tax returns." I don't like "powers"- "extent of our powers," I don't like. MR. SULLIVAN: I think "authority"is a better word. MR. GASTON: Of course, "powers" means legal powers. H.M.JR: Then put in the word "legal" if you want to. MR. BLOUGH: I think that might help. H.M.JR: I don't like the word "powers" alone. Regraded Unclassified 55 - 9 - MR. BLOUGH: "Authority" has the same connotation to me. H.M.JR: How about "legal powers"? MR. BLOUGH: "Legal powers" is all right. MR. SULLIVAN: "Also the standards that we shall follow." H.M.JR: He is right. Is the rest the same? MR. GASTON: Up until you get to advertising. Page twelve, "Amounts paid for advertising." MR. KUHN: Get your book. H.M.JR: What book - you mean the Good Book? MR. SULLIVAN: It looked pretty good to me, I will tell you. MR. KUHN: That strikes Peter and me as a fair state- ment. MR. GASTON: We went over it pretty carefully, and I think we all agreed that that was all right. We had Norman Cann and Tim Mooney in. They are not afraid of it. The thing that it opens up in this sentence - Peter inserted there, "This is not intended to exclude institutional adver- tising in reasonable amounts or good will advertising cal- culated to influence the buying habits of the public." They consider two things. One is the maintenance of a trade name, the name of the product, keeping the company before the public, although there is no immediate patronage in sight; second, advertising by associations, such as Sunkist Fruit Growers, and the bakers of the United States, "Eat More Bread, Drink More Milk," and so on. MR. KUHN: And the druggists. MR. GASTON: The place that is advertising isn't selling any product. 56 - 10 - MR. KUHN: As it stood before, it ruled out all advertising by associations. H.M.JR: Have you got a way with this with them? MR. BLOUGH: I am not too happy about it, but I think the word "reasonable" fixes it up all right. We can take care of it later. MR. GASTON: We had quite a bit of conversation on this problem of War Savings advertising, and I think there was general agreement among us that we would dis- allow War Savings advertising if it was excessive from the standpoint of a reasonable advertising budget for this concern. In other words, the budget for advertising has to have some reasonable relation to their present and future business. If they choose to use part of that bud- get for War Savings advertising, that is all right; but if they undertake to greatly expand their advertising budget, and make War Savings advertising, use it for War Savings advertising, that isn't all right. H.M.JR: Well, just as long as John Sullivan feels very strongly - feels that he can rule justly and fairly on this thing-- MR. SULLIVAN: That is exactly as Herbert said, Mr. Secretary, if a concern spends a disproportionate amount of their income in advertising we disallow it; whether it goes into ordinary advertising, institutional advertising, or War Bonds, it is all treated the same. MR. KUHN: Disproportionate in comparison to what they have been spending in the past. MR. GASTON: We treat War Savings advertising as 8. part of their institutional advertising. H.M.JR: In other words, if in 1939 a company spent a hundred thousand dollars for advertising and they want to spend a hundred thousand in 1942, you wouldn't disallow it? 57 - 11 - MR. SULLIVAN: No, sir, if they choose to do that through having War Bond advertisements. H.M.JR: Red Cross, USO? MR. SULLIVAN: That is right. We have been able to find just one case on it. This was decided in 1926 by the Board of Tax Appeals. The taxpayer was B. F. Boyer Company, a manufacturer of woolen yarn in New Jersey. The item was forty-five dollars for advertising and promoting the sale of Liberty Bonds in an advertisement which appeared over its corporate name. The taxpayer sought to deduct this amount in its return for 1919 as a donation for adver- tising the sale of Liberty Bonds. The Commissioner disallowed the deduction. The Court said, "On the first of these questions the parties stipulated that the expenditures of forty-five dollars in 1919 for advertising and promoting the sale of Liberty Bonds was for an advertisement over the corpora- tion's name. This advertisement was made in accordance with the custom of the time. Such an advertisement was a combination of patriotic endeavor and business publicity, and received the recognition of the Commissioner in article 562 of Regulations 45. A corporation of the character of the taxpayer is entitled to deduct amounts spent in adver- tising as a part of its ordinary and necessary business expense and, as the particular form of advertising to be employed is, of necessity, within the judgment of the officers of such a corporation as the taxpayer, we believe that the Commissioner improperly disallowed the deduction." H.M.JR: That is the only case? MR. SULLIVAN: That is the only one we have been able to find. H.M.JR: How high did that go? MR. KUHN: To the Board of Tax Appeals. MR. BLOUGH: There is only one sentence there that worries me, and that is where we deliberately come out 58 - 12 - and mention by name institutional advertising and good- will advertising, and thereby put our stamp of approval on it, which I think is very likely to come back and bite us later on. MR. GASTON: But, Roy, right now more than fifter percent of the advertising is institutional advertising, especially the magazine advertising. It may be a high estimate, but & large proportion of it is. MR. BLOUGH: If you strike out that sentence, why does it change the meaning of the next sentence? MR. KUHN: Because institutional advertising - it would have the effect of ruling out institutional adver- tising in which the name of the concern doesn't figure at all, the name of the concern or its product is not mentioned. MR. BLOUGH: If they are not directed to public patron- age, which might - they are disallowed anyway, aren't they? MR. KUHN: No, because institutional advertising-- MR. BLOUGH: That is what the next sentence says. MR. KUHN: institutional advertising can be directed to public patronage, such as milk and oranges, but unless you spell it out there with those safeguards about reasonable amounts, I think that you are seeming to shut the door on perhaps half of the advertising that is going on. MR. BLOUGH: I think when you put it in, you are seeming to open the door in a rather widespread use of it. MR. GASTON. - : think you have got it backstopped there. MR. BLOUGH: I hope you are right. I want to be on record. I think we are being in & position where we are going to regret it. 59 - 13 - H.M.JR: Why didn't you have the argument before you got in here? MR. BLOUGH: We did. I am sorry, this is a repetition of the same argument. I just want to make it clear I am not entirely satisfied. H.M.JR: Who did you pull in to offset Roy? MR. BLOUGH: I am the only one. MR. SULLIVAN: The Commissioner and Tim Mooney. H.M.JR: This is a minority report? MR. BLOUGH: I am just going on record. H.M.JR: "With these principles as our guideposts, we are progressing as fast as practicable with our investi- gation of the 1941 returns. Where did you get that word "guideposts" from? MR. KUHN: This morning-- H.M.JR: That is right - & very good word. "Those who are engaged in this work must, of course, think not only of the best interests of the Government, but also of the need of being completely fair to the tax- payers. The Committee, the Congress and the country are entitled to know that the unscrupulous and selfish few are not being allowed to distort their tax returns so as to escape their fair share of the costs of the war." "The Committee, the Congress, and the country - If that is a funny way to put it. MR. KUHN: The country as a whole. H.M.JR: Why not say "The country, the Congress, and the Committee"? 60 - 14 - MR. GASTON: No, but you build up to a climax. H.M.JR: "The Commitee, the Congress, and the country are entitled to know - " that is all right. Gentlemen, I am very much pleased. MR. KUHN: Mr. Secretary, this is going to break so late tonight. H.M.JR: I just got an idea. My idea was, between him and John we might get-- (Mr. Schwarz entered the conference.) H.M.JR: The thing is finished except for 8. word here and there. I wonder if you (Schwarz) and Mr. Sullivan wouldn't get Mr. Doughton's permission to release this before I go up on the Hill. I think, John, if you showed him the opening sentences that there would be a good chance of getting that released. MR. GASTON: You mean release copies for morning publication? MR. KUHN: It wouldn't be published before. MR. SCHWARZ: We have had a lot of requests. MR. SULLIVAN: I would ask him. If there is any hesitancy, I will bring it up and show it to him. H.M.JR: I would go up and do it and say this, that Mr. Morgenthau was very much upset by that editorial by Mr. Ingersoll last night, and he thought that the best way, in view of the fact that there is such a thing as freedom of the press - it only might make it worse if we paid Mr. Ingersoll the compliment of denying it that night. He is going out of his way in this statement. MR. SULLIVAN: And to give it the fullest possible publicity, we want to release it now. 61 - 15 - H.M.JR: You got it. MR. SULLIVAN: O.K., chief. H.M.JR: And that I feel that I can do him more good by answering directly publicly my approval and confidence in him than in trying to answer a scurrilous editorial of that kind. MR. SULLIVAN: Yes. H.M.JR: Then on that basis, the thing would be released by five o'clock. MR. KUHN: For the morning. MR. GASTON: There are two or three slight corrections there. H.M.JR: Now, I would like to see Herbert all alone. Regraded Unclassified 4th Draje 62 STATEMENT OF SECRETARY MORGENTHAU TO THE JOINT 2 pm COMMITTEE ON INTERNAL REVENUE TAXATION, May 28, 1942 5/28/42 The very helpful interest in tax collection problems shown by the members of the Joint Committee on Internal Revenue Taxation, under the able leadership of your Chair- man, Mr. Doughton, encourages me to appear before you to discuss an administrative matter. I know that this Committee and the Congress are determined that no man and no corporation shall be per- mitted to make exorbitant profits out of the war effort. It is the responsibility of the Congress to draft legis- lation to achieve that purpose. It is our responsibility at the Treasury to use all the powers the Congress has given us to see that all taxes are fully, honestly and justly collected. It is our responsibility to see that by no form of trick or chicanery is any one taxpayer permitted to escape his just share and thus to throw unjust burdens on others. I have come before this Committee tonight to tell you of some instances of what seem to me to be particularly unpardonable attempts to escape wartime taxation, and I should like to report what the Treasury is doing and Regraded Unclassified 63 - 2 - intends to do to stop these practices. In every instance the method used by the taxpayer was to inflate expenses with the evident purpose of avoiding normal and excess profits taxes on corporation earnings. The devices used included the payment of excessive salaries, the distribu- tion of unearned bonuses and the payment of unreasonable sums for purported services to persons closely connected with the management of the companies involved. It will be obvious to members of this Committee that these practices, if successful, would reduce the revenue of the Government, the revenue we need 80 urgently for fighting and winning the war. Even if those who receive such excessive payments should fully declare them as personal income, the amounts involved would escape corporate profits and excess profits taxation. We do not intend that this shall happen. We do not intend that any of these practices shall succeed. The Congress has already given power to the Bureau of Internal Revenue to deal with cases of this kind and that power is being exercised. We have come upon the instances I shall mention to you through speeding up our investigation of 1941 64 - 3 - returns of corporations holding war contracts. Reports of the examination of 32 returns for 1941 are now avail- able. Let me mention briefly seven cases illustrating the practices with which we have to deal. Company A makes an important airplane part. This corpæration is owned by one man who hired himself as its sales representative. His compensation in 1941 was $1,656,000. By consolidating these earnings with those of the corporation, we have blocked this obvious attempt to divert profits and we have increased the corporation's income tax by $1,117,000. Company B makes steel. All stock in this corporation is held by three families. Excessive salaries were paid to officers who were also stockholders. The Revenue Agent has recommended disallowance of $82,000 in salaries, and the company has already agreed to a disallowance of $58,000. Company C makes vital equipment for airplane pilots. This corporation paid $31,104 in rent in one year to the wife of the president for using property which had cost 65 - 4 - her $45,412. A brother of the principal stockholder, without special training or ability, drew a salary of $15,000 a year and a son and daughter, just out of school, got $7,500 a year each. Company D makes tools and dies. This company is owned by two brothers and their wives. It paid dividends of $40,000 in 1940 and $100,000 in 1941, while salaries totaling $128,000 were paid in 1941 to the president, his wife and his brother. Company E makes forgings. The stock is owned by three families. From 1938 to 1941 the salaries of employees who were stockholders and relatives of stock- holders increased 523 per cent. Excessive salaries for 1941 have been disallowed to the amount of $568,000. Company F makes equipment for airplanes. Three principal officers of this corporation took salaries of $100,000 each and the corporation claimed it had set aside over $575,000 in bonuses. Amounts of salary above $35,000 have been disallowed, and $516,000 of salaries and bonuses combined were found to be excessive. 66 - 5 - Other disallowed deductions included $16,000 paid for watches given to employees, $14,000 for banquets and picnics, $4,000 for photographs taken at banquets and picnics, and $1,900 for tickets to football games. Other important deficiencies were found in the tax return. Company G makes a device important to aviation. This corporation is owned almost entirely by one man, his wife and his brother. The two men increased their salaries from $12,000 and $15,000 in 1939 to $72,000 and $90,000 in 1941. The royalty rate on the patent jointly held by them was increased, with the result that with expanded sales for war purposes, the royalties paid to them increased from $87,000 in 1939 to $1,179,000 in 1941. You will note that I have not named any of the corporations or the individuals concerned. I leave it to this Committee to decide whether that should be done. Personally I am inclined to believe it would have a very wholesome effect. Regraded Unclassified 67 - 6 - Assistant Secretary Sullivan and Commissioner Helvering are here tonight to give you further details of the results of some of these investigations. They stand ready to come before you from time to time and to report the results of further investigations now in progress. It should be noted that these cases all deal with returns for 1941. It is of course true that all of the contracts for war work covered by these 1941 returns were signed before the United States entered the war and that nearly all the earnings represented in the tax-dodging devices attempted were pre-war earnings. But I think that changes the situation very little. An attempt to escape lawful taxes while we were actually at war would be only a slight degree blacker than an attempt to evade taxes which would pay for arming and equipping our Army and Navy when we stood in imminent danger of attack. It may be that these instances are an isolated few and that not many more of the same kind will be found. I sincerely hope that will be the case. I Regraded Unclassified 68 - 7 - am wholly confident that the great and overwhelming proportion of American corporations are too patriotic even to consider such practices. We are taking two steps to detect and deal with the evils I have mentioned. In the first place, we are expediting examination of the tax returns and records of all corporations, beginning with those who have war contracts, to determine whether excessive expenses are being claimed. Ordinarily our investiga- tion of returns filed for the year 1941 would not begin until July 1, 1942, and this work would continue through the fiscal year ending June 30, 1943. Under present circumstances we can not afford to wait so long before acting. By speeding up our investigations we expect to check unlawful practices of this sort at an earlier stage, whether they have been entered into innocently or for the definite purpose of evading taxation. In the second place, we are disallowing excessive expenditures which have the effect of reducing corporate tax liabilities. We are compelling the corporations Regraded Unclassified 69 - 8 - to include such amounts in earnings, and at the same time we are requiring the recipient to pay full personal income taxes on the amounts received. The disallowance of excessive expenditures does not represent a new procedure. The law and regulations permit the deduction only of ordinary and necessary business expenses for the purpose of determining profits. In applying the law and regulations, the Bureau of Internal Revenue has often disallowed expenditures which seemed to lack sound business justification and which were, in effect, distributions of profits. Today, how- ever, the problem has assumed major importance because of the huge increases in income of a great number of corporations because of the war effort. In presenting this problem to you, I am anxious to be as constructive as possible. It seems to me that the businessmen of this country are entitled to know not only the extent of our powers but also the standards that we shall follow. Accordingly, it may be helpful if I outline the following general considerations that will guide us in examining expenses claimed in tax returns. Regraded Unclassified 70 - 9 - 1. Salaries and Bonuses Paid to Officers and Employees. Deductions claimed for greatly increased salaries and extraordinary bonuses paid to officers or employees will be disallowed unless the taxpayer proves that the payments are, in fact, for services actually rendered and are reasonable. In determining whether the payments are reasonable, it will be assumed that reasonable compensation is only as much as would ordinarily be paid for like services by like enterprises under like circumstances. The factors that will be considered in determining the reasonableness of such payments are the duties performed by the recipient, the character and amount of responsibility, the time devoted to the enterprise, and the peculiar ability or special talent of the particular officer or employee. Where the payments are to relatives or to shareholders, the taxpayer must show that family considerations have not influenced the amount paid and that the payments are not distributions of profits in disguise. Large profits attributable to causes entirely unrelated to the activities of the officers or employees, which are not Regraded Unclassified 71 - 10 - unusual in these abnormal times, do not of themselves justify or warrant large salary payments. 2. Rents, Royalties and Other Payments to Shareholders. Deductibility of rents, royalties or other payments to shareholders depends upon whether such charges are in fact fair and reasonable payments for the use of property and are not merely a device for distribution of profits. Any shareholder should be entitled only to 8. fair return on his investment in the property which he permits the corporation to use. 3. Payments to Profit Sharing or Pension Trusts. The deductibility of payments to pension trusts is governed by section 23(p) of the Internal Revenue Code. If payments to such trusts are reasonable, their deduction will be allowed. If the payments are unreasonable in amount, or if the trust is not created for the exclusive benefit of employees, or if it is a device to distribute profits to shareholders, the deductions will be dis- allowed. It is also our purpose to 8 et up a barrier to deductions of large salaries, bonuses, or insurance premiums for officers under the guise of payments to & Regraded Unclassified 72 - 11 - pension trust. 4. Payments for Repairs. The deductibility for income tax purposes of costs of repairs depends upon whether the expenditure is actually for repairs, or is in fact a capital ex- penditure which should be added to capital investment or charged against reserve for depreciation, since the costs of repairs are deductible while capital expendi- tures are not. We must guard against the tendency dur- ing high profit years to make extensive improvements and to charge the cost of such improvements against profits under the caption of repairs. It will be our policy to scrutinize carefully the items claimed as deductions for expenditures for repairs. We shall disallow such deductions where it is not shown that the expenditures are in fact for repairs instead of for improvements or betterments which should be capitalized. 5. Expenses or Allowances Paid to Obtain Government Business, Including Fees Paid to Washington Representatives or for Other Professional Services. Regraded Unclassified 73 - 12 - Whether deductions for items of this class will be allowed depends upon whether they meet the test laid down in the Internal Revenue Code, that is, whether they are necessary and ordinary and reasonable. If such items are considered exorbitant or unreasonable, they will be disallowed as deductions. Many of the factors that apply in determining the deductibility of salaries and bonuses will apply also in determining the deductibility of items of this class. Particular attention will be given to deductions for payments which are against public policy, and all such deductions will be disallowed. 6. Amounts Paid For Advertising. The test of whether expenditures for advertising are deductible is whether they are ordinary and necessary and bear a reasonable relation to the business activities in which the enterprise is engaged. This is not intended to exclude institutional advertising in reasonable amounts or good will advertising calculated to influence Regraded Unclassified 74 - 13 - the buying habits of the public. If such expenditures are extravagant and out of proportion to the size of the company or to the amount of its advertising budget in the past or if they are not directed to public patronage which might reasonably be expected in the future, such payments will be disallowed as deductions. With these principles as our guideposts, we are progressing as fast as practicable with our investigation of the 1941 returns. Those who are engaged in this work must, of course, think not only of the best interests of the Government but also of the need of being completely fair to the taxpayers. The Committee, the Congress and the country are entitled to know that the unscrupulous and selfish few are not being allowed to distort their tax returns 80 as to escape their fair share of the costs of the war. I can assure the Committee of this: that nothing is being left undone which will expedite our work. If we find that our existing powers are not adequate to deal with the evil I have been discussing, I shall not hesitate to come before the appropriate committee to ask for any additional authority that may be needed. Regraded Unclassified 75 May 28, 1942 2:35 p.m. Operator: Mayor LaGuardia is on his way back to New York and he should be there by four or four-thirty. HMJr: Well, let me talk to his secretary, whoever it 1s. Operator: All right. HMJr: Will you? Operator: Right. I have his secretary, Miss Cullen. Go ahead. HMJr: Hello. Miss Cullen: Yes, sir. Hello. HMJr: This is Mr. Morgenthau speaking. C: Yes, Mr. Secretary. HMJr: I wondered if you could get this message to the Mayor when he gets in. C: Surely, I'll be glad to. HMJr: Mr. Spyros, S-p-y-r-o-s - it's Skouras, S-k-o-u-r-a-s. C: Mr. Skouras, yeah. HMJr: Of the Twentieth Century Fox C: Yes. HMJr: He's handling for the Treasury these English aviators that are coming over early in June. C: I see. HMJr: And he's leaving for the West Coast either late tonight or very early in the morning, and we need the Mayor's help very badly; and I wondered if the Mayor could see him for a few minutes still late this afternoon. 75 May 28, 1942 2:35 p.m. Operator: Mayor LaGuardia is on his way back to New York and he should be there by four or four-thirty. HMJr: Well, let me talk to his secretary, whoever it 1s. Operator: All right. HMJr: Will you? Operator: Right. I have his secretary, Miss Cullen. Go ahead. HMJr: Hello. Miss Cullen: Yes, sir. Hello. HMJr: This 1s Mr. Morgenthau speaking. C: Yes, Mr. Secretary. HMJr: I wondered if you could get this message to the Mayor when he gets in. C: Surely, I'll be glad to. HMJr: Mr. Spyros, S-p-y-r-o-s - it's Skouras, S-K-O-U-r-a-s. C: Mr. Skouras, yeah. HMJr: Of the Twentieth Century Fox C: Yes. HMJr: He's handling for the Treasury these English aviators that are coming over early in June. C: I see. HMJr: And he's leaving for the West Coast either late tonight or very early in the morning, and we need the Mayor's help very badly; and I wondered if the Mayor could see him for a few minutes still late this afternoon. 76 - 2 - C: I see. Where is Mr. Skouras? HMJr: You can get him at Twentieth Century Fox in New York. C: In New York. I see. Well, I'll be glad to get that message to him; and if it's at all possible, I'm sure he will. HMJr: Well, I mean, couldn't you give him a tentative appointment? C: All right. We'll call him up and see what we can do on it. HMJr: Why don't you give him a tentative appointment 80 he'll be - he won't leave his office, you see. C: All right. HMJr: And I'm counting on the Mayor to help me out on this. We're having these English aviators come over, you see. C: Yes. HMJr: And they're coming to New York first. C: Yes, I see. HMJr: To tour the country for War Bonds. C: All right, Mr. Secretary. I'm sure we can arrange it. The Mayor is coming in but going directly to a Board of Estimates meeting, but I don't think that will last too long. HMJr: Well C: And we'll give him a tentative sppointment or we'll arrange for him to get a call from us just as soon as we can give him a definite time. HMJr: Well, this is - I'm laying enough stress on it, and I'd really like it. 77 - 3 - C: Well, I'm sure that the Mayor will do it. HMJr: Thank you. C: Thank you 80 much. Good-bye.