The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
DIARY
Book 533
May 28, 1942
-ABook Page
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
-BBillboard on Treasury Lawn
See Financing, Government: War Savings Bonds
-DDavis, Meyer
See Financing, Government: War Savings Bonds
-FFinancing, Government
Proposed increase in Treasury bill program Bell-Haas memorandum - 5/28/42
Non-defense Economies: Pending legislation with
possibility of non-defense economies - Foley
report - 5/28/42
174
179
War Savings Bonds:
Billboard on Treasury lawn:
HMJr-Mahan conversation - 5/28/42.
HMJr-Kuhn
- 5/28/42
Davis, Meyer: Mrs. FDR-Treasury correspondence
concerning participation in program - 5/28/42..
44
45
164
-GGeneral Counsel, Office of
Report of projects during March 1942.
203
-IIndia
Dollar accounts for American military forces New Delhi-United States correspondence - 5/28/42.
Inflation
Inventory Situation - Haas memorandum - 5/28/42
Inventories
See Inflation
276
251
-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
a) British gold and dollar position, May 15
through December 15, 1942
533
78
124
b) Stimson-HMJr correspondence on three alternative
methods for handling problem of diversion from
foreign dollar financed contracts to United
States Army
c) Payments to armed forces abroad discussed
120
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
Coordinator of Information report:
The War This Week, May 21-28
Kamarck summary - 5/28/42
282
285
286
-SSilver
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 23.26d - 5/28/42
(See also Book 539, page 286 - 6/16/42)
177
Statements by HMJr
Before Subcommittee of Special Senate Committee on
Investigation of Silver, on industrial use of silver -
43
5/28/42
a) Table - United States monetary stocks of silver
as of April 30, 1942
Switzerland
For purchase of Swiss france from Central Bank of
Turkey, see Stabilization Fund
-TTurkey
See Stabilization Fund
41
-UBook
Page
533
265
U.S.S.R.
Shipment of planes and tanks to - Kamarck report 5/28/42
United Kingdom
See Lend-Lease
-WWar 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--' 11
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 confusing.
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.
was to inflate expenses for the evident
purpose of avoiding normal and excess profits taxes on
H.M.JR:
"
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. If
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.
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 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 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 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
-4there.
MR. BLOUGH: Except for purposes of enphasis 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 legislation 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't be the opening paragraph and
put them in a good humor.
them?
MR. KUHN: And then go to tell why you appear before
H.M.JR: Yes.
MRS. KLOTZ: It is a good suggestion.
5
-5MR. 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 Robert 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 a 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 me an-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.
-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.
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.
it
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,
-7MR. 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 officestockholders.
"
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,
-8-
8
just out of school, got $7,500 a year each."
Wait ita make?
minute. We have got to go back. Company A what does
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 label 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 a 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.
-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 fiftysix thousand dollars, I don't think that is-MRS. KLOTZ: A small corporation.
10
- 10 MR. BLOUGH: That one is not so 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." If
What does this company make?
MR. SULLIVAN: That is Jack and Heintz.
H.M.JR:
What do they make?
MR. SULLIVAN: Airplane stocks.
- 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: P11t 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?
11
- 12 -
12
MR. SULLIVAN: We will find a 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."
- 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.
in?
H.M.JR: Do you think it is necessary to put this
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 confident that the great and overwhelming proportion of
- 14 -
14
American corporations are too patriotic even to consider 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 a 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
excessive are being made,
withoutwaiting
for the
normal
determine
whether
expenditures 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.
it.
H.M.JR: No, no. If it is true, I haven't heard of
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 ascertaining 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 reexamine 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 corporation 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 deductions 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 a 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.
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.
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 Helvering
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
Herbert.
this, on the whole, is pretty good now,
MR. KUHN: 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 patriotic 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 avoidance 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 leaving yourself wide open, you have got to take advertising
from somebody for War Bonds, and then go over the income
tax." They will say, 'Mr. Morgenthau, we did this advertising for you, how can you jump on us?'"
22
- 22 MR. GASTON: I was just going to ask whether our
War Bond advertising would be legitimate under that ruling 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."
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 millionofdollars;
they have profits
three
so decide are to have to pay
on they the books, expect they profits, going million ninety-four dollars,
excess profits. They decide, "What we will do with that
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 got
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 I 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 1 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.
24
- 24 -
H.M.JR: Well, he is sick, he can't get at it.
KLOTZ:
There
is noMRS.
question
about
it. must be an answer. I mean, there
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
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 explaining 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-hour?
H.M.JR: Why does Kuhn bring it up at this late
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 advertising.
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?
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 clorify 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 companies. Give me a technical, legal opinion on whether
this will be allowed or disallowed.
be?
MR. SULLIVAN: What the ruling of the Bureau would
H.M.JR: Yes, because I will be asked that the first
thing tomorrow morning.
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.
tion. MR. GASTON: I just tried to get an idea of organiza-
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.
with. MR. SULLIVAN: The standard we expect them to comply
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 guidepost 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.
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 diet
5/28/42
8:45 an
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
oites 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, 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.
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
-2taxation. 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 legislation 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:
31
-31. 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. 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 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, 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
31
-31. 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. 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 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, 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
32
-4in 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
-5with 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 established.
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
34
-6attempt 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 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 proportion
of American corporations are too patriotic even to consider 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 determine whether excessive expenditures are being made,
35
-7without 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 a 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
-8Deductions 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 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 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 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.
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 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.
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, Including 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 extravagant and are not directed to continued public patronage
which might reasonably be expected in the future the
payments will be disallowed as dedictions. Amounts
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 a 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.
May 28, 1942
41
This is what the Secretary took with
him
Hill Senators.
this morning for his meeting
with to
thethe
silver
42
TABLE I - United States Monetary Stocks of Silver (April 30, 1942)
Millions of Onnoes
Short Tons
Silver held in Treasury
Silver outside the Treasury
2,900.6
408.9
99,438
14,018
Total
3,309.5
113,456
TABLE II - #Estimated Monetary Stocks of Silver of
other Countries (January 1, 1941
China
480
India
950
Other countries
1,530
1,646
3,257
5,245
Total
2,960
10,147
1,160.4
39,780
12,746
46,640
*Includes coin held by the public. Does not include
890 million ounces not allocated to monetary or nonmonetary uses.
TABLE III - Classification of Treasury Holdings of
Silver (May 21, 1942)
Silver bullion held for silver certificates
Liver dollars held against silver certificates
Bullion at cost
Subsidiary coin in the General Fund
371.8
1,360.5
9.8
Bullion in the General Fund at recoinage value
Total Treasury holdings of silver
.001
336
-
2,902.5
99,503
Silver Purchase Act Silver
Proclamation Silver
Act of July 6, 1939
*Silver Ordinary
1,246.1
42,719
1,217
78.3
4.9
2,684
Total Silver Bullion at Cost
1,364.8
46,788
TABLE IV - Sources of Treasury Holdings of Silver
Bullion at Cost (April 30, 1942)
35.5
168
*Disposable by the Treasury.
TABLE V - Estimated Production, 1942
World production
United States production
United States imports
245.0
62.0
120.0
8,390
2,123
4,110
BLE VI - Estimated Demand Including Military
Bearing materials
Chemical industry
Containers (returnable)
Dental and medical
Electrical industry
14.6
20.0
102.1
3,500
2.9
100
58.3
2,000
2,300
500
685
Solder
67.1
Miscellaneous
14.6
49.6
1,700
329.2
11,285
1,166.8
40,000
583.4
20,000
Decorative arts (silverware, jewelry, etc.)
Total
Non-consuming uses
Bus bars
Other non-consuming uses
500
SILVER
Pgs 671 675 43
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
VIII
HATTINJ/00
SENATE SPECIAL SILVER COMMITTEE
EDWIN C. JOHNSON, Colorado
PAT McCARRAN, Nevada
SHERIDAN DOWNEY California
STAZIE
CHARLES L. McNARY, Oregon
HENRIK SHIPSTEAD, Minnesota
JOHN THOMAS, Idaho
JAMES E. MURRAY, Montana
ALBERT A. GRORUD, Secretary
11
I
ELMER THOMAS, Oklahoma, Chairman
CONTENTS
Statement ofBatt, William L
Bradbury, Charles I
Carr, Hon. Ralph L
Page
591
636
645
Conover, Julian D.
602
Jones, Hon. Jesse H
Knowlson, J.S
Knorp, Albert
Malone, George W
MacBoyle, Errol
McCarran, Senator Pat
Morgenthau, Hon. Henry, Jr
Murphy, Matt
Nelson, Hon. Donald M
Nelson, Wilbur A
Palmer, Robert S
Strickler, Dave P
709
638
616
648
629
506
671,675
632
673
513,540,600
621
641
III
game
what
721 take
bas
os unbat
PREFERENCE RATINGS FOR MINING MACHINERY
AND EQUIPMENT
TUESDAY, MAY 5, 1942
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 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 Representatives: Hon. Harry L. Inglebright (California), Hon. Lawrence Lewis
(Colorado), Hon. William S. Hill (Colorado), Hon. J. Edgar Chenoweth (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, Materials Division; and Shaw Livermore, principal industry economist,
Office of Progress Reports Division, War Production Board; Mr.
Julian D. Conover, secretary, American Mining Congress, WashingD. C., Mr. A. W. Dickinson, the American Mining Congress,
Washington, ton, D. C.: Mr. Albert F. Knorp, secretary, California
Chapter, American Mining Congress, 300 Montgomery Street, SanFrancisco, 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, Washington, D. C., and San Francisco, Calif.; Mr.
Mr. Errol MacVoyle, chairman, State Mining Board, California;
J. C. Kemprance, Mining Association of California, 381 Bush Street, State
San Francisco, Calif; Mr. Matt Murphy, inspector of mines, Miners
of Nevada; Mr. Charles L. Bradbury, president, New Mexico
912 Ridgewest
R. E. Whitten, care of Owyhee Hotel,
Strickler. Cripple Creek
and Mr. N. Mex.: David Prospectors Mr. P. Association, president, Drive, Development Cripple Boise, Albuquerque, Idaho; Creek, Co.,
Colorado Springs, Colo.: Mr. Thomas A. Copeland, Edward
Colo.; Mr. Merrill E. Shoop, Colorado Springs, Colo.; Mr.
D.
Dickerman, Leadville, Colo., and Mr. H. M. Bratter, Washington,
D.C.
The CHAIRMAN. The committee will be in order.
437
438
SILVER
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
Senate, known as Senate Resolution 187, of the Seventy-fourth
Congress. For the record, I will have a copy of the resolution placed
at this point.
(Resolution No. 187 referred to is as follows:)
SILVER
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
for the committee's use, no allowance can be made for witness fees or traveling
expenses.
Dated this 13th day of April 1942.
Respectfully,
(8. Res. 187, 74th Cong., 1st sess., Aug. 16. 1935
RESOLUTION
Resolved, That a special committee of five Senators, to be appointed by the
President of the Senate, is authorized and directed to confer with the Secretary
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
Law Numbered 438, Seventy-third Congress, approved June 19, 1934 (48 Stat.
1178).
The said special committee, or any subcommittee thereof duly authorized by
the special committee, is further authorized to hold such hearings, to sit and act
at such times and placer during sessions and recesses of the Senate in the Seventy.
fourth and succeeding Congresses, to employ and call upon the executive departments for clerical and other assistants, to require by subpena or otherwise the
attendance of such witnesses and the production of such correspondence, books,
papers, and documents, to administer such oaths, to take such testimony, and to
make such expenditures as it deems advisable. The cost of stenographic services
to report such hearings shall not be in excess of 25 cents per hundred words, The
expenses of the committee, which shall not exceed $10,000. shall be paid from the
contingent fund of the Senate, upon vouchers approved by the Chairman
The said special committee shall report to the Senate as soon as practicable the
results of the investigations, together with its recommendations.
(Membership of committee increased to nine, by motion of Senator
Pitman, January 17, 1939.)
The CHAIRMAN. The resolution provides for the appointment of &
special committee of five Senators. We operated under the resolution
with five Senators for the first few years of the committee's existence,
but on January 17, 1939, Senator Pittman made a motion to amend
the resolution by increasing the number from five to nine. At the
present time provision is made for a committee of nine members, but
there is one vacancy, and the membership is as follows:
Myself, Senator Thomas of Oklahoma, chairman of the committee:
Senator Edwin C. Johnson of Colorado: Senator Pat McCarran of
Nevada; Senator Sheridan Downey of California; Senator James E.
Murray of Montana; Senator Charles L. McNary of Oregon; Senator
Henrik Shipstead of Minnesota: and Senator John Thomas of Idaho.
future. There is one vacancy that will probably be filled in the very near
Pursuant to the authority contained in the resolution, the committee saw fit to fix this date and hour for a special bearing, and I will
place in the record at this point a copy of the notice of this hearing.
(The notice of the hearing referred to is as follows:)
UNITED STATES SENATE,
SENATE SPECIAL SILVER COMMITTEE,
Washington, D. C.
NOTICE OF HEARING
Resolution The Senate 187 Special Silver Committee authorized under and by virtue of Senate
ton, D. Seventy-fourth Congress, will hold a public hearing at WashingMay 1942. at room 424. Senate Office Building, at 10:30 a. the 21st day of
relating to material Subject. preference rating order No. P56-a m., of on March 2, 1942,
ment, and related subjects, entering into the production of mining machinery and equip-
439
ELMER THOMAS, Chairman,
ALBERT A. GRORUD, Secretary,
Senate Special Silver Committee.
The CHAIRMAN. This particular hearing was called to consider just
phase of the silver program. An order has been issued by the
War Production Board which has had and may have more effect
upon silver mining than we now may appreciate or may now understand. It seems that under this order a number of silver mines may
one
be closed, or if not closed, severely restricted. So, for the record, the
order will be placed at this point.
(The order referred to is as follows:)
PART 982-MINES
Preference Rating Order P-56 (as Amended March 2, 1948
Section 982.1 is hereby amended to read as follows:
$ 982.1 Preference Rating Order P-56. For the purpose of facilitating the
acquisition of material for continued and expanded operation of Mining Enterprises in the public interest and to promote the national defense, preference
ratings are hereby assigned to deliveries of such material upon the terms hereinafter
set forth
(a) Definitions. (1) "Person" means any individual, partnership, association,
business trust corporation, governmental corporation or agency or any organized
group of persons whether incorporated or not.
(2) "Mining Enterprise" means (i) Any plant actually engaged in the extraction by surface, open-pit, or underground methods, or in the beneficiation, concentration, or preparation for shipment of the products of mining activity, but
not including any plant more than 30 percent of the production of which in dollar
value consists of gold and/or silver;
(ii) Any plant wholly engaged in the processing and burning of refractories;
(iii) Any prospecting enterprise for the discovery or exploration of new or
additional mining projects.
(3) "Operator" means any person operating a Mining Enterprise, who holds
a Serial Number issued in accordance with the provisions of paragraph (b).
(4) "Supplier" means any person with whom a purchase order or contract has
been placed for delivery of material to an Operator or to another Supplier.
(5) "Material" means any commodities, equipment, accessories, parts, assemblies, or products of any kind.
(6) "Maintenance" means minimum upkeep necessary to continue the working condition of equipment used by an Operator in the operation of a Mining
Enterprise at its then current rate of production or operation.
(7) "Repair" means the restoration of property or equipment used by an
Operator in the operation of a Mining Enterprise to a sound working condition
made
after wear and tear. damage, destruction, or failure of parts or the like have
the property or equipment unfit or unsafe for service.
(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
of a Mining Enterprise and which is generally carried as Operator's stores and
charged to operating expense account. The term does not include raw materials
which enter into or form part of the finished product.
(b) Certification of mining enterprises. (1) Domestic Mining Enterprises.
The agency designated by the Governor or other chief executive officer of each
State, territory, or possession of the United States, including the Commonwealth
of the Philppines, shall furnish to the War Production Board a certificate setting
forth the names of the persons operating Mining Enterprises within such State
territory, or possession. The War Production Board will thereupon issue a Serial
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 as an Operator may apply in writing to the Director of
SILVER
440
SILVER
441
Operations for issuance of a Serial Number. The Director of Industry
Industry thereupon take such action as he deems appropriate. Serial
Operations Numbers may may be cancelled by the Director of Industry Operations in appropriate
cases. Foreign mining enterprises. The Director of Industry Operations may, in
(2) discretion, issue a Serial Number or Numbers to a person operating a Mining
his Enterprise outside the limits of the United States, its territories, and possessions
and cancel any such Serial Number.
may Standards. In issuing, denying, or cancelling Serial Numbers, the Director
(3) Operations will consider the importance to National defense of the
present of Industry and prospective output of materials to be produced, the consumption
essential materials by the Mining Enterprise in its operations, the necessity to
of the Mining Enterprise of obtaining priorities assistance, and the available alter.
native methods of obtaining such assistance.
(c) Assignment of preference ratings. Subject to the terms of this Order, the
following preference ratings are hereby assigned; provided, that no preference
rating is assigned to the delivery of any machinery or equipment, or repair parts
therefor, unless such machinery and equipment are used primarily to maintain
or to increase the existing production of the Mining Enterprise, and not primarily
to reduce operating costs. Nothing herein contained shall prevent the use of
any other or higher rating to which any person may be entitled by reason of any
other Preference Rating Certificate or Order.
(1) As to deliveries to an operator. (i) A-1-a to deliveries of material for repair
property and equipment used in and essential to the operation of a Mining
Enterprise, when and only when there has been an actual breakdown or suspension of operations because of damage, wear and tear, destruction or failure of
parts, or the like, and the essential material is not otherwise available.
(3) Standards In acting on any application pursuant to paragraph (e) (1)
or (2), the Director shall consider the importance to national defense of the
material to be produced by the machinery, equipment, or other material for
which
rating is requested, and the consumption of scarce materials in the
construction thereof.
of
(ii) A-1-e to deliveries of repair parts for machinery and equipment of the
types listed in Schedule A hereto; provided that such repair parts are for use in
a Mining Enterprise less than 30 percent of the production of which in dollar
value for the previous calendar quarter was derived from any one or more of the
following:
Sand (except foundry sand), gravel, crushed stone, and slag, including all
commercially recognized forms of these products;
Clay of all types, except those used for refractories and ceramies for electrical use;
Building and ornamental stone of all types;
Gypsum, tale, soapstone, slate (except for electrical use), and all raw material
for the manufacture of lime and calcareous cements.
Such rating shall be applied by any Operator only to deliveries in any calendar
quarter of a quota consisting of such dollar value of repair parts as may be expressly authorized by the Director of Industry Operations after application by
such Operator in form prescribed by the Director of Industry Operations. For
the first calendar quarter of 1942 such quota shall be the dollar value of repair
parts which bears the same ratio to the dollar value of repair parts delivered to
the Operator in the last calendar quarter of 1941 as the dollar value of the Operator's production in the first calendar quarter of 1942 bears to the dollar value of
the Operator's production in the last calendar quarter of 1941.
(iii) A-1-e to deliveries of repair parts for essential productive facilities to
other Mining Enterprises and/or for other types of machinery and equipment up
to the minimum required to make reasonable advance provision to avert an actual
breakdown or suspension as described in paragraph (c) (1) (i)
(iv) A-8 to deliveries of material for other repairs to for maintenance of, and
for operating supplies for, property and equipment used in and essential to the
operation of a Mining Enterprise.
(v) to deliveries of essential machinery and equipment, whether or not included
in Schedule A, such preference ratings as the Director of Industry Operations may
from time to time assign to particular orders for such equipment submitted to
him for approval in the manner described in paragraph (e) (2) below.
(vi) A-10
to deliveries
operating
supplies.
of material for all other repairs, maintenance and
(2) As to deliveries to a supplier. Deliveries of material which will be delivered
(or physically incorporated into material which will be delivered) to an Operator
under any preference rating assigned by or pursuant to paragraph (c) (1) are
assigned the same preference rating as that assigned to the delivery to the Operator.
(d) Persons entilled to apply preference ratings. The preference ratings hereby
assigned may be applied by (1) An Operator, or (2) A Supplier to enable it to
make to an Operator or to another Supplier deliveries on purchase orders or contracts endorsed or otherwise identified pursuant to paragraph (e)
(e) Application of preference ratings- Application of A-1-a or A-1-c rating
operator. An Operator, in order to apply the A-1-a preference rating assigned
by paragraph (c) (1) (i) or the A-1 preference rating assigned by paragraph (c)
(1) (iii) must communicate with the War Production Board, Washington, C.,
Ref.: P-56, describing the material needed for emergency repair and the nature
of the emergency, or the reasons why advance provision is necessary to avert
breakdown or suspension, and such other information as may be required. The
Director of Industry Operations will notify such Operator, whether, and to what
extent, its application is approved, and a copy of such notification shall be furnished by the Operator to its Supplier to evidence the A-1-a or A-1-c rating.
(2) Application of ratings by an operator to deliveries of machinery or equipment.
An Operator, in order to apply the ratings assignable under paragraph (c) (1) (v)
must communicate with the War Production Board, Washington, D. C., Ref.
P-56, describing the machinery or equipment needed and the reasons why such
machinery or equipment is essential for the proper operation of the Mining Enterprise. The Director of Industry Operations will notify such Operator whether
its application is approved, and if approved, shall assign a Preference Rating
thereto; a copy of such notification and assignment of rating shall be furnished
by the Operator to his Supplier.
by
(4) Application of other ratings by operator or supplier. An Operator in order
to apply the A-1-c preference rating assigned by paragraph (c) (1) (ii), the A-8
preference rating assigned by paragraph (c) (1) (iv), or the A-10 rating assigned
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
original and all copies of the purchase order or contract for such material, signed
by
a responsible official duly designated for such purpose by such Operator or
Supplier
Materials for a Mining Enterprise, Rating A-
under Preference
Rating Order P-56, Serial No. and in compliance therewith
(Name of operator or Supplier)
By
(Authorised signature)
If the material is for export outside the limits of the United States, its territories
and possessions, the Commonwealth of the Philippines, or the Dominion of
Canada, such endorsement shall also contain the sentence:
This material is for export and is covered by Export License No.
dated
Such purchase order or contract so endorsed shall be delivered to the Supplier
such material Such endorsement shall constitute a representation to the
War Production Board and the Supplier with whom the purchase order or contract is placed that such purchase order or contract is duly and properly rated
in accordance herewith. Such Supplier shall be entitled to rely on such representation, unless he knows or has reason to believe it to be false. Any such purchase order or contract shall be restricted to material the delivery of which is
rated in accordance herewith. With respect to any purchase order or contract
for such material placed before the effective date of this Order, such preference
rating
may
be applied
by delivering to the seller a duplicate copy of such purchase
order or
contract
so endorsed.
of
(5) An Operator or Supplier placing any such rated purchase order or contract,
and the Supplier of the material covered thereby, must each retain endorsed copies
of all such purchase orders or contracts, and certificates and notifications made or
received pursuant to this paragraph (e), for a period of two years from the date
thereof. for inspection by authorized representatives of the War Production Board
(6) Restrictions on deliveries by supplier. No Supplier shall deliver machinery,
equipment, or repair parts to an Operator or another Supplier under any rating:
(i) Unless such Supplier has received from such Operator or such other Supplier all certificates and notifications required by paragraph (e).
(ii) If such Supplier knows or has reason to believe that such material is not
properly rated under the terms of this Order.
SILVER
SILVER
442
SCHEDULE A
must report forthwith to the War Production Board the details of
A Supplier to apply any rating in violation of the terms of this Order.
any such Restrictions attempt on application of rating. (1) The preference ratings hereby
(f)
assigned (i) Unless shall the not material be applied to be delivered cannot be secured when required with.
As to all machines listed below, the rating provided herein likewise applies to
equipment items, accessories, and tools customarily sold with such machines.
Aerial tramway equipment
Air compressors for mine use
out such
Air distribution equipment
Assaying and testing laboratory equipment at the mine
for the operation, in and essential to the operation of a Mining Enterprise;
Boxcar loaders
Cages and skips
rating; deliveries greater in quantity or on dates earlier than required
(ii) To obtain maintenance, or repair of the property or equipment used by
an (iii) Operator By a Supplier to obtain material in excess of the amount necessary to
make rated denveries.
Restrictions on inventory. No Operator shall accept deliveries (whether or
(g) rated pursuant to this Order) of operating supplies or other material which
will not such Operator's inventory of such operating supplies or other material
increase amount greater than the minimum necessary for the efficient operation of
to an business, and the ratio of inventory to current production shall in no event
his exceed the ratio of average inventory to average production for the years 1938,
443
Ball-casting machines
Car dumpers- rotary or end
Equipment for Cleaning plants
Equipment for concentrating plants
Conveyore-shaking, belt, chain, or gravity type, including duckbills and other
self-loading heads
1939, and 1940.
Cutting machines-cable reel and self-propelling transportation trucks therefor
Diamond core drilling machines
Dragline dredges, excavators, and scraper units
Dredges-continuous bucket, including pumps
specific resell any operating supplies or other materials (whether or not obtained pursuant
Drills
and drilling machines, power driven, and reconditioning equipment
therefor
Resale of operating supplies and other material prohibited. Except with
(h) permission of the Director of Industry Operations, no Operator shall
to rating assigned by this Order) except to another Operator.
(i) Conservation and standardization. Every person affected by this Order
shall use his best efforts to effectuate conservation of materials by elimination,
simplification, or standardization of types, sizes, or forms, or otherwise, and to
cooperate in any program developed for such purpose by the War Production
Board. The Director of Industry Operations may from time to time issue
specific directions as to conservation, elimination, and standardization
(j) Relief. In case the productivity or sound working condition of any Mining
Enterprise is adversely affected by any provision or application of this Order or
by inability to obtain essential operating supplies or other materials, the person
operating such Mining Enterprise may apply for relief to the Director of Industry
Operations The Director of Industry Operations may thereupon take such
action as he deems appropriate.
(k) Records, audit, and reports. Each Operator and each Supplier shall keep
and preserve for a period of not less than two years accurate and complete records
of all transactions affected by this Order and shall submit from time to time to
audit and inspection by duly authorized representatives of the War Production
Board. Each Operator and each Supplier shall execute and file with the War
Production Board or other designated agency, such reports and questionnaires
as the War Production Board shall from time to time require. Until otherwise
directed, each Operator shall file with the designated State Agency on or before
during
the 10th day of each month a report on form PD-119 of purchases made
the preceding month pursuant to the ratings granted by this Order.
(1) Violations. Any person affected by this Order who violates any of its provisions, or a provision of any other Order, regulation, or other directive of the War
Production Board may be deprived of priorities assistance, or subjected to such
other or further action as the Director of Industry Operations may deem
appropriate
(m) Revocation or modification. This Order may be revoked or modified by the
Director of Industry Operations at any time as to any Operator or Supplier In
the event of revocation, or upon expiration of this Order, deliveries already rated
pursuant to this Order shall be completed in accordance with said rating, unless
the rating has been specifically revoked with respect thereto. No additional
applications of this rating to any other deliveries shall thereafter be made by the
Operator or Supplier affected by said revocation or expiration.
(n) Amendment of prior order. The provisions of Preference Rating Orders
P-22 or P-100 shall not apply to deliveries to which a preference rating is assigned
by this Order.
(o) Effective date. This Order shall take effect immediately and shall continue
in effect until revoked. (P. D. Reg. 1, amended December 23. 1941, F. R. 6680;
W. P. B. Reg. 1, Jan. 26, 1942, 7 F. R. 561, E. O. 9024, Jan. 16, 1942. F. R. 329;
E. O. 9040, Jan. 24, 1942, 7 F. R. 527; sec. 2 (a), Pub. Law 671, 76th Cong., 3d
Sess., as amended by Pub. Law 89. 77th Cong., 1st Sess.)
Issued this 2d day of March 1942.
J. S. KNOWLSON,
Director of Industry Operations.
Dust control equipment
Electrical equipment for mine transportation and power
Loists-including room hoists and car pullers
Hydraulic monitors, with feed pipe and fittings
Jacks for lifting and roof support
Lamps-min miners', safety, and ore-exploration types
Locomotives for mine use
Loaders, mobile, including mucking machines
Equipment for Milling plants
Mine cars, track or trackless
Pit-car loaders and elevating conveyors
Equipment for Preparation plants
Pumps, pipe and fittings for mine drainage or material transport
Rock dusting equipment
Safety and defense equipment
Sand dryers
Scraper loaders
Sheaves and sheave blocks
Shovels, power
Shuttle cars, track or trackless
Slusher hoists and scrapers
Steel sections for support of mine openings
Storage batteries for mine use
Tanks and bins for storage of mine products
Tipples and head frames
Track and track accessories for mine transportation
Equipment for Treating plants
Trucks, tractors, and trailers for mine use
Ventilation equipment
Waste disposal equipment
Weighing equipment, including automatic devices
Wire rope for haulage and hoisting
(F. R. Doc. 42-1800; Filed, March 2 1942; 11:51 a m.)
The CHAIRMAN. While it is true that we will consider only one
phase of the silver program in this hearing, I think it might be well to
place in the record some of the more important laws that are now on
the statute books, inasmuch as the hearing may be broadened later
to take in other phases of the silver program. So, without objection,
I will ask that the record contain a portion of Public, No. 10, Seventythird Congress, approved May 12, 1933. At that time we placed an
amendment to the agricultural bill, giving the President vast powers
over money, both gold and silver, and paragraph 2 on page 151 of the
SILVER
SILVER
444
(g) The Secretary of the Treasury is authorized to make rules and regulations
for carrying out the provisions of this section.
Reserve Act of 1913 with amendments contains the particular
Federal of this amendment that relates to silver. So, I will ask that
The CHAIRMAN. I might suggest that under this law we now have
vast power over silver. The President is authorized to do practically
anything he sees fit with silver, so far as money is concerned He
has the power under this statute to make the silver dollar of any size
be
portion paragraph 2, appearing on pages 151, 152, and a portion of 153,
inserted in the hearings at this point.
(The matter referred to is as follows:)
proclamation to fix the weight of the gold dollar in nine-tenths grains nine-tenths
he sees proper, and he has the power to open the mints to the free and
unlimited coinage of silver.
I might say in passing that William Jennings Bryan made a national
(2) By fix the weight of the silver dollar in grains fine at
fine and also to in relation to the gold dollar at such amounts as he finds necesdefinite fixed ratio investigation to stabilize domestic prices or to protect the foreign
sary from his the adverse effect of depreciated foreign currencies, and to
campaign on this particular issue and that while he failed to accomplish the enactment of the law he had in mind, it is now a statute of
the United States, and all that the President has to do is prepare an
order and sign it and the mints can be opened this afternoon to the
free and unlimited coinage of silver in any ratio the President might
see fit to fix, either coining the present sized standard silver dollar
commerce against the unlimited coinage of such gold and silver at the ratio 80 fixed, or in
provide for Government of the United States enters into an agreement with any
case the governments under the terms of which the ratio between the
government of gold or and other currency issued by the United States and by any such
value governments is established, the President may fix the weight of
government dollar or in accordance with the ratio so agreed upon, and such gold dollar,
the the weight gold of which is so fixed, shall be the standard unit of value, and all forms of
or a smaller dollar.
issued or coined by the United States shall be maintained at a parity with
money this standard and it shall be the duty of the Secretary of the Treasury to maintain
such parity, but in no event shall the weight of the gold dollar be fixed so
as
445
In addition to the statute I have just referred to, I will ask that the
record contain at this point the text of the Silver Purchase Act of
to
reduce its present weight by more than 50 per centum.
1934. That is found on pages 227, 228, 229, 230, and 231 of the same
book I have just referred to, namely, the Federal Reserve Act of 1913
SEC. 44. The Secretary of the Treasury, with the approval of the President, is
hereby authorized to make and promulgate rules and regulations covering any
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 a period of six months from the
date of the passage of this Act, to accept silver in payment of the whole or any
part of the principal or interest now due, or to become due within six months after
such date, from any foreign government or governments on account of any
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
silver accepted under this section shall not exceed $200,000,000.
(b) The silver bullion accepted and received under the provisions of this section
shall be subject to the requirements of existing law and the regulations of the
mint service governing the methods of determining the amount of pure silver
contained, and the amount of the charges or deductions, if any, to be made; but
such silver bullion shall not be counted as part of the silver bullion authorized or
required to be purchased and coined under the provisions of existing law.
(c) The silver accepted and received under the provisions of this section shall
be deposited in the Treasury of the United States, to be held, used, and disposed
of as in this section provided.
(d) The Secretary of the Treasury shall cause silver certificates to be issued in
such denominations as he deems advisable to the total number of dollars for which
such silver was accepted in payment of debts. Such silver certificates shall be
used by the Treasurer of the United States in payment of any obligations of the
United States.
(e) The silver so accepted and received under this section shall be coined into
standard silver dollars and subsidiary coins sufficient, in the opinion of the Secretary of the Treasury, to meet any demands for redemption of such silver certificates
issued under the provisions of this section, and such coins shall be retained in the
Treasury for the payment of such certificates on demand. The silver so accepted
and received under this section, except so much thereof as is coined under the
provisions of this section, shall be held in the Treasury for the sole purpose of
aiding in maintaining the parity of such certificates as provided in existing law.
Any such certificates or reissued certificates, when presented at the Treasury,
shall be redeemed in standard silver dollars, or in subsidiary silver coin, at the
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
required for such redemption may in the judgment of the Secretary of the Treasury be made in subsidiary coins, the balance to be made in standard silver dollars
(f) When any silver certificates issued under the provisions of this section are
redeemed or received into the Treasury from any source whatsoever, and belong
to the United States, they shall not be retired, canceled, or destroyed, but shall be
reissued and paid out again and kept in circulation; but nothing herein shall
prevent the cancelation and destruction of mutilated certificates and the issue
other certificates of like denomination in their stead, as provided by law.
of
(The matter referred to is as follows:)
[PUBLIC-No. 438-73D CONGRESS]
(H.
AN ACT To authorize the Secretary of the Treasury to purchase silver, issue silver certificates, and for
other purposes
Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, That the short title of this Act shall be the "Silver
Purchase Act of 1934."
SEC. 2. It is hereby declared to be the policy of the United States that the
proportion of silver to gold in the monetary stocks of the United States should be
increased, with the ultimate objective of having and maintaining, one-fourth of
the monetary value of such stocks in silver,
SEC. 3. Whenever and so long as the preportion of silver in the stocks of gold
and silver of the United States is less than one-fourth of the monetary value of
such stocks, the Secretary of the Treasury is authorized and directed to purchase
silver, at home or abroad, for present or future delivery with any direct obligations, coin, or currency of the United States, authorized by law, or with any funds
in the Treasury not otherwise appropriated, at such rates, at such times, and
upon such terms and conditions as he may deem reasonable and most advan-
tageous to the public interest: Provided, That no purchase of silver shall be made
hereunder at a price in excess of the monetary value thereof: And provided further,
That no purchases of silver situated in the continental United States on May 1,
1934, shall be made hereunder at a price in excess of 50 cents a fine ounce.
SEC. 4. Whenever and so long as the market price of silver exceeds its monetary
value or the monetary value of the stocks of silver is greater than 25 per centum
of the monetary value of the stocks of gold and silver, the Secretary of the Treasury
may, with the approval of the President and subject to the provisions of section 5,
sell any silver acquired under the authority of this Act, at home or abroad,
for present or future delivery, at such rates, at such times, and upon such terms
and conditions as he may deem reasonable and most advantageous to the public
interest.
SEC. 5. The Secretary of the Treasury is authorized and directed to issue silver
certificates in such denominations as he may from time to time prescribe in a face
amount not less. than the cost of all silver purchased under the authority of
section 3, and such certificates shall be placed in actual circulation. There shall
be maintained in the Treasury as security for all silver certificates heretofore or
hereafter issued and at the time outstanding an amount of silver in bullion and
standard silver dollars of a monetary value equal to the face amount of such
silver certificates. All silver certificates heretofore or hereafter issued shall be
SILVER
SILVER
446
legal tender for all redeemable debts, public on demand and private, at the public Treasury charges, of the taxes, United duties, States and in
dues, and silver shall be dollars; and the Secretary of the Treasury is authorized to coin
standard standard silver dollars for such redemption.
Whenever in his judgment such action is necessary to effectuate the
SEC. 6. the Secretary of the Treasury is authorized, with the approval
policy of President, this Act, to investigate, regulate, or prohibit, by means of licenses or
of the importation, exportation, or transportation of silver
otherwise, contracts the acquisition, and other arrangements made with respect thereto; and to require
and of of reports deemed by him reasonably necessary in connection therewith
the filing willfully violates the provisions of any license, order, rule, or regulation
issued Whoever to the authorization contained in this section shall, upon conviebe pursuant fined not more than $10,000 or, if a natural person, may be imprisoned for
tion, more than ten years, or both: and any officer, director, or agent of any corpo.
ration not who knowingly participates in such violation may be punished by & like
fine, imprisonment, or both.
7. Whenever in the judgment of the President such action is necessary to
SEC. the policy of this Act, he may by Executive order require the delivery
effectuate the United States mints of any or all silver by whomever owned or possessed
to silver so delivered shall be coined into standard silver dollars or otherwise
The added to the monetary stocks of the United States as the President may determine; and there shall be returned therefor in standard silver dollars, or any other
coin or currency of the United States, the monetary value of the silver so delivered
less such deductions for seigniorage, brassage, coinage, and other mint charges
the Secretary of the Treasury with the approval of the President shall have
as determined: Provided. That in no case shall the value of the amount returned
therefor be less than the fair value at the time of such order of the silver required
to be delivered as such value is determined by the market price over a reasonable
period terminating at the time of such order. The Secretary of the Treasury
shall pay all necessary costs of the transportation of such silver and standard
silver dollars, coin, or currency, including the cost of insurance, protection, and
such other incidental costs as may be reasonably necessary. Any silver withheld
in violation of any Executive order issued under this section or of any regulations
issued pursuant thereto shall be forfeited to the United States, and may be Reized
and condemned by like proceedings as those provided by law for the forfeiture,
seizure, and condemnation of property imported into the United States contrary to law: and, in addition, any person failing to comply with the provisions of
any such Executive order or regulation shall be subject to a penalty equal to
twice the monetary value of the silver in respect of which such failure occurred
SEC. 8. Schedule A of title VIII of the Revenue Act of 1926, as amended
(relating to stamp taxes), is amended by adding at the end thereof a new subdivision to read as follows:
'10. SILVER, AND so FORTH, SALES AND TRANSFERS.-On all transfers of any
interest in silver bullion, if the price for which such interest is or is to be transferred
exceeds the total of the cost thereof and allowed expenses, 50 per centum of the
amount of such excess. On every such transfer there shall be made and delivered
by the transferor to the transferee a memorandum to which there shall be affixed
lawful stamps in value equal to the tax thereon. Every such memorandum shall
show the date thereof, the names and addresses of the transferor and transferee,
the interest in silver bullion to which it refers, the price for which such interest is
or is to be transferred and the cost thereof and the allowed expenses. Any person
liable for payment of tax under this subdivision (or anyone who acts in the matter
as agent or broker for any such person) who is a party to any such transfer, or
who in pursuance of any such transfer delivers any silver bullion or interest
therein, without a memorandum stating truly and completely the information
herein required, or who delivers any such memorandum without having the proper
stamps affixed thereto, with intent to evade the foregoing provisions, shall be
deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of
not exceeding $1,000 or be imprisoned not more than six months, or both. Stamps
affixed under this subdivision shall be canceled (in lieu of the manner provided in
section 804) by such officers and in such manner as regulations under this subdivision shall prescribe. Such officers shall cancel such stamps only if it appears that
the proper tax is being paid, and when stamps with respect to any transfer are
canceled, the transferor and not the transferee shall be liable for any additional
tax found due or penalty with respect to such transfer. The Commissioner sha!
abate or refund, in accordance with regulations issued hereunder, such portion of
any tax hereunder as he finds to be attributable to profits (1) realized in the course
447
of the transferor's regular business of furnishing silver bullion for industrial,
professional or artistic use and (a) not resulting from a change in the market
price of silver bullion, or (b) offset by contemporaneous losses incurred in transactions in interests in silver bullion determined, in accordance with such regulations, to have been specifically related hedging transactions; or (2) offset by contemporaneous losses attributable to changes in the market price of silver bullion
and incurred in transactions in silver foreign exchange determined in accordance
with such regulations, to have been hedged specifically by the interest in silver
bullion transferred. The provisions of this subdivision shall extend to all transfers
in the United States of any interest in silver bullion, and to all such transfers
outside the United States if either party thereto is a resident of the United States
or is a citizen of the United States who has been a resident thereof within three
months before the date of the transfer or if such silver bullion or interest therein is
situated in the United States; and shall extend to transfers to the United States
Government (the tax in such cases to be payable by the transferor), but shall not
extend to transfers of silver bullion by deposit or delivery at a United States mint
under proclamation by the President or in compliance with any Executive order
issued pursuant to section 7 of the Silver Purchase Act of 1934. The tax under this
subdivision on transfers enumerated in subdivision 4 shall be in addition to the
tax under such subdivision. This subdivision shall apply (1) with respect to all
transfers of any interest in silver bullion after the enactment of the Silver Purchase
Act of 1934, and (2) with respect to all transfers of any interest in silver bullion on
or after May 15, 1934, and prior to the enactment of the Silver Purchase Act of
1934, except that in such cases it shall be paid by the transferor in such manners
and at such time as the Commissioner, with the approval of the Secretary of the
Treasury, may by regulations prescribe, and the requirement of a memorandum
of such transfer shall not apply.
"As used in this subdivision-
"The term 'cost' means the cost of the interest in silver bullion to the transferor, except that (a) in case of silver bullion produced from materials containing
silver which has not previously entered into industrial, commercial, or monetary
use, the cost to a transferor who is the producer shall be deemed to be the market
price at the time of production determined in accordance with regulations issued
hereunder; (b) in the case of an interest in silver bullion acquired by the transferor
otherwise than for valuable consideration, the cost shall be deemed to be the cost
thereof to the last previous transferor by whom it was acquired for a valuable
consideration; and (c) in the case of any interest in silver bullion acquired by the
transferor (after April 15, 1934) in a wash sale, the cost shall be deemed to be the
cost to him of the interest transferred by him in such wash sale, but with proper
adjustment, in accordance with regulations under this subdivision, when such
interests are in silver bullion for delivery at different times.
"The term 'transfer' means a sale, agreement of sale, agreement to sell, memorandum of sale or delivery of, or transfer, whether made by assignment in blank
or by any delivery, or by any paper or agreement or memorandum or any other
evidence of transfer or sale: or means to make a transfer as so defined.
"The term 'interest in silver bullion' means any title or claim to, or interest in,
any silver bullion or contract therefor.
The term 'allowed expenses' means usual and necessary expenses actually
incurred in holding, processing, or transporting the interest in silver bullion as to
which an interest is transferred (including storage, insurance, and transportation
charges but not including interest, taxes, or charges in the nature of overhead),
determined in accordance with regulations issued hereunder.
"The term 'memorandum' means a bill, memorandum, agreement, or other
evidence of a transfer.
'The term wash sale' means a transaction involving the transfer of an interest
in silver bullion and, within thirty days before or after such transfer, the acquisition by the same person of an interest in silver bullion. Only so much of the interest 80 acquired as does not exceed the interest so transferred, and only so much of
the interest so transferred as does not exceed the interest so acquired, shall be
deemed to be included in the wash sale.
"The term 'silver bullion' means silver which has been melted, smelted, or
refined and is in such state or condition that its value depends primarily upon the
silver content and not upon its form."
SEC. 9. The Secretary of the Treasury is hereby authorized to issue, with the
approval of the President, such rules and regulations as the Secretary of the
Treasury may deem necessary or proper to carry out the purposes of this Act,
or of any order issued hereunder.
SILVER
SILVER
448
10. As used in this ActSEC. The term "person" means an individual, partnership, association, or corporation; term "the continental United States" means the States of the United
The the District of Columbia, and the Territory of Alaska;
States, The term "monetary value" means a value calculated on the basis of $1 for an
amount of silver or gold equal to the amount at the time contained in the standard
silver dollar and the gold dollar, respectively;
"stocks of silver" means the total amount of silver at the time owned
The the term United States (whether or not held as security for outstanding currency
by of the United States) and of silver contained in coins of the United States at the
time outstanding;
The term "stocks of gold" means the total amount of gold at the time owned
by the United States, whether or not held as a reserve or as security for any
outstanding currency of the United States.
SEC. 11. There is authorized to be appropriated, out of any money in the
Treasury not otherwise appropriated, the sum of $500,000, which shall be avail.
able for expenditure under the direction of the President and in his discretion,
for any purpose in connection with the carrying out of this Act; and there are
hereby authorized to be appropriated annually such additional sums as may be
necessary for such purposes.
SEC. 12. The right to alter, amend, or repeal this Act is hereby expresaly
reserved. If any provision of this Act, or the application thereof to any person
circumstances, is held invalid, the remainder of the Act, and the application
or
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
this Act are hereby repealed, but the authority conferred in this Act upon the
President and the Secretary of the Treasury is declared to be supplemental to
the authority heretofore conferred.
Approved, June 19, 1934, 9 p. m.
The CHAIRMAN. Third, I will place in the record without objection
a copy of the last act passed by the Congress giving domestically
mined silver its present status. The present status is that all silver
mined domestically can be turned over to the Treasury and sold for
71 cents-plus per ounce. I will ask that that entire act, found on
pages 307 and 308, be placed in the record.
(The matter referred to is as follows:)
[PUBLIC-No. 165-76TH CONG.]
[Chapter 260-1st Session)
(H.R.3325)
AN ACT extend the time within which the powers relating to the stabilization fung and alteration of
the weight of the dollar may be exercised
Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, That subsection (a) of section 10 of the Gold
Reserve Act of 1934, approved January 30, 1934, as amended, is further amended
by striking out the period at the end of such subsection and adding thereto the
words "and to the Congress.'
SEC. 2. Subsection (c) of section 10 of the Gold Reserve Act of 1934, approved
January 30, 1934, as amended, is further amended to read as follows:
"(c) All the powers conferred by this section shall expire June 30, 1941, unless
the President shall sooner declare the existing emergency ended and the operation
of the stabilization fund terminated.'
SEC. 3. The second sentence added to paragraph (b) (2) of Section 43, title
III, of the Act approved May 12, 1933, by section 12 of said Gold Reserve Act of
1934 as amended, is further amended to read as follows: 'The powers of the
President specified in this paragraph shall be deemed to be separate, distinct, and
continuing powers, and may be exercised by him, from time to time, severally or
together, whenever and as the expressed objects of this section in his judgment
may require: except that such powers shall expire June 30, 1941, unless the
President shall sooner declare the existing emergency ended.'
449
SEC. 4. (a) Each United States coinage mint shall receive for coinage into standard silver dollars any silver which such mint, subject to regulations prescribed by
the Secretary of the Treasury, is satisfied has been mined subsequently to July
1, 1939, from natural deposits in the United States or any place subject to the
jurisdiction thereof.
(b) The Director of such mint with the consent of the owner shall deduct and
retain of such silver so received 45 per centum as seigniorage for services performed by 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 coined into standard silver dollars and the same or any equal
number of other standard silver dollars shall be delivered to the owner or depositor of such silver, and no provisions of law taxing transfers of silver shall extend or apply to any delivery of silver to a United States mint under this section.
The 45 per centum 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 bullion or silver dollars held in or belonging to the Treasury.
(c) The Secretary of the Treasury is authorized to prescribe regulations to
carry out the purposes of this section. Such regulations shall contain provisions
substantially similar to the provisions contained in the regulations issued pursuant to the Act of Congress approved April 23, 1918 (40 Stat. L., p. 535), known
as the Pittman Act, with such changes as he shall determine prescribing how silver
tendered to such mints shall be identified as having been produced from natural
deposits in the United States or any places subject to its jurisdiction subsequent
to July 1, 1939.
Approved, July 6, 1939.
The CHAIRMAN. In addition to the statute that we have just
placed in the record, the secretary of the committee has communicated with the Treasury Department, asking for data with regard
to silver. The Treasury has sent to us a vast amount of data which
will be considered by the committee, and such parts as the committee
deems proper will be added to the record at this point. I do not
desire to make any special request, but after the committee has had
a chance to consider this data, we will pick out that portion which
we think it might be advisable to add to the record.
(The matter referred to is as follows:)
TREASURY DEPARTMENT
Hon. ELMBR THOMAS,
Washington, May 4, 1942.
United States Senate, Washington, D.
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
material relating to gold and silver, a chronology of legislative and Executive
acts affecting monetary policy, and a statement setting forth policies of the
Government with respect to the purchases of gold and silver from March 4, 1933
to date.
There are enlosed herewith the following tables:
1. Silver purchases under the act of June 19, 1934, showing new production
silver, trading silver, and inventory silver.
2. Net imports, mint acquisitions, and Treasury purchases of foreign silver,
1933 to date. (That portion of the table which refers to silver imports since
October 1941, is confidential.)
3. Monetary stock of gold and silver, showing ratio of monetary stocks, 1934
to date.
4. Foreign silver coins-price of silver at which it becomes profitable to melt
each coin for its silver bullion content, at its exchange rate.
5. Newly mined domestic silver, nationalized silver, and foreign silver acquired
since January 1, 1934.
6. Silver seigniorage since January 1, 1934.
There is also enclosed a chronology of legislative and Executive acts affecting
the monetary policy of the United States from March 4, 1933, to date.
The policy of this Government with respect to purchases of gold and silver
from March 4, 1933, to date has been set forth in the speeches, messages, and
73052-42-pt.9-2
SILVER
450
of the President and the Secretary of the Treasury, of embodied in the
statements legislation on gold and silver, and fulfilled in the practice the Treasury in the
purchases understanding of gold and silver. of the Government's policy with respect to gold and silver
A full without an examination of the selected statements which are
is
hardly possible In brief, however, the gold and silver purchase policy is as follows:
enclosed. purchases all gold at $35 a fine ounce less one-fourth of 1 percent
The Treasury mint charges and sells gold at the same price plus one-fourth of 1 perand regular regular mint charges, principally for the purpose of settling international
cent and In the past 6 months, our sales of gold to foreign countries have subbalances. exceeded our purchases of gold from foreign countries. Our purchases of
stantially mined domestic gold have continued, although they have not fully offset
newly our net sales of gold to foreign countries, so that our gold monetary stocks have
been declining.
The Treasury acquires newly mined domestic silver at 71.11 cents per fine ounce
accordance with the provisions of the act of July 6, 1939. In acquiring silver,
the in objective of the Treasury is to minimize fluctuations in the open-market price
of silver while making progress toward attaining the objectives of the Silver
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
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.
Very truly yours,
D. W. BELL,
Acting Secretary of the Treasury.
SILVER
451
SILVER
SILVER
452
453
TABLE II.-Net - imports, mint acquisitions, and Treasury purchases of foreign silver,
1933 to date
[In millions of ounces]
Year and month
Net im
ports
Treasury
purchases
Mintao
quisitions
of foreign
of foreign
silver
silver
117.7
170.8
216.1
271.9
241.5
282.8
January
14.0
February
March
May
June
July
August
September
October
November
December
February
July
August
October
November
1942
December
January
February
March
Total
2,046.9
2,037.1
I Based upon the Commerce statistics of monthly Imports and exports of silver converted to ounces by
dividing monthly price of silver in New York as given by the Bureau of the Mint. Silver
from the Philippine Islands received by the United States mints under the classification of newly mined
domestic silver la included in these figures of net imports.
Source: Treasury Department, Division of Monetary Research.
TABLE III. -Monetary - stocks of gold and silver
(In millions of dollars. on basis daily Treasury statements revised)
Ratio of
Gold ($35
End of fiscal year or month
per fine
ounce)
Silver
($1.29+ per
fine
ounce)
silver to
gold and
silver in
monetary
stocks
1934
7,856.2
898.2
9,115.6
16,110.1
January
February
March
April
May
July
August
September
October
November
December
4,022.9
21,800.8
4,038.9
4,060.0
SILVER
SILVER
454
TABLE IV.-Silver coins of foreign nations and the melting point of each-Con.
TABLE III. - Monetary stocks of gold and silver-Continued
Gold ($35
per fine
End of fiscal year or month
ounce)
Silver
($1.29+ per
fine
Ratio of
silver to
gold and
Silver coin
Country
ounce)
May
June
AUTH
July
August
4,078.6
4,092.5
4,107.6
4,120.8
am
December
4,135.8
4,148.7
4,167.9
February
STATE
March
Denmark
15.5
Dominican Republic
15.5
Ecuador
50 sucres
2 sucres
15.5
Sucre.
15.5
Egypt
15.6
in
in
15.6
15.6
15.7
15.8
Source: Treasury Department, Division of Monetary Research, Apr. 20, 1942.
TABLE -Silver - coins of foreign nations and the melting point of each
Because of the existence of foreign exchange controls, prohibitions upon the
export of coins, and emergency war legislation, and also because many of the countries of the world have been occupied by foreign powers, the representative melting
points for many of the world's coins are no longer available. Therefore, in the
table below the melting points are shown as of August 1939, and are determined
on the basis of the coinage systems and exchange rates that existed on that date.
No allowance is made for the costs of melting or transporting the coins.
Silver coin
Country
Fine silver
content
Melting
Argentina
Australia
Sixpence
Threepence
0.836
111.46
.168
111.46
.064
042
Kroom
096
274.75
Finland
France
None
20 francs
437
121.23
218
Germany
5 reichamarks
402
121.23
497.65
2 reichsmarks
161
None
497.65
Greece
Gustemals
25 centavos
10 centavos
5 centavos
Haiti
None
Honduras
Lempire
50 centavos
20 centavos
Hungary
Chile
Colombia
Costa Rien
Cuba
193
9.72
9.72
rials
Rial
19 rupee
.172
87.28
rupee
.066
87.28
100 leva
50 leva
20 leva
322
373.25
as
in
150
M##
060
166.66
.030
106.08
362
79.45
None
144
43.73
161.74
50 fils
145
161.74
20 fils
058
161.74
None
do
lats
670
2 lats
268
La
Mexico
Netherlands
New Zealand
1.34
10 litu
50 centavos
20 centavos
077
24 florins
578
074
029
Sixpence
Threepence
Nicaragus
Norway
None
Panama
Balboa
Peru
50 centesimos
25 centesimos
10 centesimos
200
145
133.21
072
133.21
228
183.
206.88
182
091
206.88
045
206.88
023
206.88
774
362
181
.072
138.24
138.1
None
50 centavos
, Silver Jubilee commemorative coin.
134.1
133.21
228
180
do
Sol
70.45
58.39
228.
115
10 cents
Half crown
Floria
Paraguay
231
25 cents
Shilling
79.45
None
774
183
067
579
Florin
.072
are
43.73
Várial
Japan
Lithuania
43.73
266
200 fils
50 cents
87.28
10 centavos
190.32
53.39
86.20
I Withdrawn in 1940
, In 1940 the standard fineness was reduced to 0.500.
103
665
43.39
129
40 centavos
20 centavos
190.32
190.32
193
344
Peso
206
386
Rupee .
50 centavos
20 centavos
10 centavos
2 pens6
Peng6
Latvis
138.24
138.24
514
Peso
2 milreis
cents .
072
184.24
391.70
077
600
362
181
043
9.72
300
129.60
Litas
283.10
50 cents
25 cents
10 cents
039
111.
240
Dollar I
129.60
5 penso
5 rials
Iran
129.00
078
391.70
386
Canada
193
215
353.43
064
147.90
430
483
161
136
127.97
066
50 traties
20 francs
Bulgaria
##
147.90
075
lito
Boliviano
British India
340
272
111.46
Bolivia
Brazil
375
188
litu
Belgium
50 centavor
20 centavos
100 milreis
5 milreis
60.49
147.90
274.75
None
Florin.
058
750
10 plastres
plastres
plastres
192
point
Cents per
60.49
2 kroomi
Iraq
fine ounce
60.49
116
Estonia
Italy
Ounces
60.49
232
50 centavos
20 plastres
10 francs
I Preliminary
211.66
580
Flerin
Shilling
15.8
15.8
324
Half crown
Eric
15.7
4,272
20 koruny
None
15.5
15.5
4,257.1
4,267.5
1942-January
fine ounce
point
Centa per
15.6
4,188.1
4,207.1
September
October
November
Ounces
50 koruny -
-
22,357.3
22,505.8
22,574.9
February
March
April
Melting
monetary
Czechoslovakia
1941-January
Fine silver
content
silver in
stocks
22,116.5
455
No longer colned but still in circulation
These have been withdrawn in both Czechia and Blovakia
. Equal in weight and fineness to United States coins.
402
201
47.28
SILVER
SILVER
457
456
TABLE -Sileer coins of foreign nations and the melting point of each-Con
Fine silver
Allver coin
slote
Portugal
146
krona
ore
096
Turkey
United Kingdom
Uruguay
Venezuela
Yugoslavia
4.6
January
February
124.42
March
124.42
10 are
5 franes
403
2 france
1 frane
50 centimes
100 plasters
50 plasters
25 plasters
268
160
234.23
080
234.2
Half crown
227
257.18
128.68
279.29
167.42
134
167.42
067
182
091
257.18
Sixpence
045
257.18
Threepence
&1
7.0
29
14.8
8.0
3.2
6.5
26
11.1
5.8
4.1
1.6
8.6
3.7
1.5
9.5
M
4.8
5.6
6.0
4.9
3.3
1.4
9.3
4.7
3.4
3.4
1.4
8.1
5.1
3.6
28
1.2
7.9
AT
4.8
4.8
023
257.18
TABLE VI.-Seigniorage on silver (cumulative from Jan. 1, 1934)
(In millions of dollars)
None
5 bolivares
2 bolivares
Bolivar
723
50 centimes
25 centimes
dinari
10 dinari
Sources of seigniorage on silver bullion revalued I
217.72
269
234.39
134
234.39
.06/
234.39
.033
234.39
.530
219.60
.112
207.11
Seigntor
End of calendar year
or month
Nationalized 1
Miscel.
laneous
age
silver and sliver (in
minor
cluding
silver but
lion held
June 14,
1934)
Total
Foreign ,
Potential
seigntor
Newly
mined
Newly
Silver
silver
mined
Purchase
(procla-
silver (set
mation
July 6,
June 19
Dec 21.
1939)
1934
Act
National
ined silver
(procisation
Aug.
1934)
1933)
age
Total
seignior
silver butlion
age or
cost
silver
general
revalued
fund
1934
4.5
48.7
0.4
28.5
128.7
132.5
1935
18.5
48.7
16.8
226.2
34.5
326.2
1936
274.6
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
1938
541.6
69.5
48.7
74.9
457.7
34.7
616.0
758.8
91.1
48.7
87.3
4.2
530.7
34.7
705.6
950.6
1939
51.1
1940:
Dollars
1934
21.8
14.1
1935
38.0
27.3
1936
61.1
47.3
1937
70.6
54.6
Ounces
110.6
Dollars
55.2
1.0
2.0
4
Ounces
.2
Ounces
Dollars
Ounces
172.5
494.4
318.2
534.1
346.5
197.9
163.4
304.9
155.9
271.9
150.3
333.4
108.7
312.2
156.9
417.1
199.
120.9
343.3
160.4
1938
61.6
42.2
1939
60.7
39.9
282.8
January
February
March
Dollars
86.5
241.5
355.4
7.3
5.2
14.0
5.7
21.3
10.9
4.5
3.2
20.9
7.8
25.4
11.0
5.6
4.0
11.8
4.4
17.4
8.4
4.5
3.2
17.4
6.3
21.9
0.5
5.1
3.6
12.7
4.5
17.8
4.6
3.6
6.3
2.2
10.9
5.8
3.8
13.4
4.7
19.2
87.5
6.3
533.8
34.7
711.0
961.5
48.7
87.5
7.7
588.3
34.7
716.9
972.1
94.7
48.7
87.5
9.5
542.1
34.7
722.7
987.6
48.7
#
87.5
11.0
546.4
34.7
728.1
998.1
48.7
87.5
12.6
549.2
1,009.6
1,017.4
April
95.5
97.2
June
98.4
99.8
10.4
3.7
14.6
3.4
3.6
15.0
7.0
October
10.3
7.9
5.6
8.0
2.8
15.9
84
November
6.8
4.8
5.6
2.0
124
6.8
December
7.2
5.1
9.0
3.2
16.2
8.3
January
6.5
4.6
7.9
2.8
14.4
7.4
5.9
4.2
4.8
1.7
10.7
5.9
5.7
4.1
6.0
21
6.3
4.5
3.9
1.4
11.7
6.2
10.2
5.9
6.5
4.6
4.7
1.7
11.2
6.3
4.3
3.1
6.1
2.3
10.4
&
6.5
4.6
8.6
3.2
15.1
6.7
4.8
8.7
3.3
15.4
550.2
34.7
735.1
15.9
553.4
34.7
740.3
1,025.0
48.7
87.6
17.2
AMA
34.7
744.0
1,031.0
1,040.1
103.3
107.3
48.7
87. €
18.5
567.2
34.7
746.7
111.9
48.7
87.6
November
21.3
559.8
34.7
752.1
1,047.1
117.3
48.7
87.6
23.3
561.1
34.7
755.4
1,051.1
122.2
48.7
87.6
25.7
562.7
34.7
759.4
1,055.1
48.7
87.6
27.7
763.4
125.3
March.
127.0
48.7
87.6
29.6
565.9
34.7
766.5
1,062.9
1,069.8
128.3
48.7
31.5
567.0
34.7
769.5
1,014.9
April
87.6
132.6
48.7
87.6
33.5
568.1
34.7
May
June
137.2
87.6
35.6
569.1
34.7
1,079.1
143.5
48.7
48.7
772.6
775.7
87.6
37.1
570.7
34.7
778.8
1,079.1
July
149.4
48.7
87.6
39.1
572.7
August
34.7
782.8
155.1
48.7
87.6
41.0
574.9
34.7
786.9
1,079.8
1,087.3
September
October
1941
February
14.2
87.6
August
January
February
6.7
3.0
732.7
87.6
48.7
1941
8.5
4.3
34.7
48.7
September
October
December
A.I
4.7
48.7
93.9
8.
September
June
92.9
May
July
1940
August
Dollars
Treasury Department, Division of Monetary Research, Apr. 20, 1942
257.18
Calendar year or month
July
Ounces
Acquired at 50.01 cents per fine ounce. Executive proclamation of Aug. 9, 1934, repealed Apr. 28, 1938.
I Acquired at various prices averaging approximately 52 cents per ounce.
it
Florin
domestic
May
Dollars
Acquired at 64.64+ cents per fine ounce until Apr. 9. 1935; at 71.11+ cents per fine ounce from that date
234.23
Shilling
Newly mined
March
April
Ounces
cents
71.11+
Dec until 31. Apr 1937, 23. to 1935; July at 1. 77.57+
1939: and
centssince
at fromJuly
Apr. 1
23. 1985
1939 to Dec 31,1937; at 64.64+ cents per fine ounce from
167.45
320
[In millions)
July
August
Total
128.68
.019
TABLE V .-Silver - of specified classifications acquired by mints and assay offices
May
June
Dollars
4.1
5.8
Source: Treasury Department, Division of Monetary Research, Apr. 21, 1942,
April
Ounces
3.2
coins
January
February
March
Foreign
1942
124.42
.047
ore
Switzerland
497.60
7.2
October
December
145.60
145
198
September
November
145.60
386
2 kronor
Dollars
194 -Continued.
126.96
073
100
Sweden
358.22
358.22
336
234 escudos
Rumania
358.22
265
escudos
escudos
Ounces
Centr per
.106
glote
Nationalised
Calendar year or month
fine ounce
530
slote
domestic
point
Ounces
Poland
Newly mined
Melting
content
Country
TABLE V -Silver of specified classifications acquired by mjnts and assay offices-Con.
162.0
564.7
1,076.2
1,089.8
48.7
87.6
43.5
576.5
34.7
791.0
November
109.2
48.7
87.6
45.1
578.3
34.7
794.4
1,085.5
176.4
48.7
46.4
579.4
34.7
1,090.7
December
87.6
796.8
182.1
48.7
87.6
48.3
580.4
34.7
799.7
1,069.0
1,094.2
1,096.3
1,097.8
1942
January
February
March
188.5
48.7
87.6
50.2
581.3
34.7
802.5
192.4
48.7
87.6
51.6
582.1
34.7
804.7
195.3
48.7
87.6
53.3
582.9
34.7
807.2
7.8
8.1
These items represent the difference between the cost value and the monetary value of silver bullion
revalued and held secure silver certificates
'The figures in this column are not cumulative; as the amount of bullion held changes, the potential
seigniorage thereon changes.
Source: Treasury Department, Division of Monetary Research, Apr. 20, 1942.
(additionator)
34.7
SILVER
458
EXTRACT FROM A RADIO ADDRESS OF PRESIDENT ROOSEVELT OCTOBER 22, 1933
I what I have said on many occasions, that ever since last March the
repeat of the Government has been to restore commodity price levela.
definite policy has been the attainment of such a level as will enable agriculture and
The object more to give work to the unemployed. It has been to make possible
industry once of public and private debts more nearly at the price level at which
the payment incurred. It has been gradually to restore a balance in the price
they were that farmers may exchange their products for the products of in-
structure so a fairer exchange basis. It has been and is also the purpose to prevent
dustry from on rising beyond the point necessary to attain these ends. The permanent prices welfare and security of every class of our people ultimately depends on
our attainment of these purposes.
Obviously, and because hundreds of different kinds of crops and industrial
occupations in the huge territory that makes up this Nation are involved. we
cannot reach the goal in only a few months. We may take 1 year or 2 years or
3 years.
No one who considers the plain facts of our situation believes that commodity
prices, especially agricultural prices, are high enough yet.
Some people are putting the cart before the horse. They want a permanent
revaluation of the dollar first. It is the Government's policy to restore the price
level first. I would not know. and no one else could tell, just what the permanent valuation of the dollar will be. To guess at a permanent gold valuation now
would certainly require later changes caused by later facts.
When we have restored the price level, we shall seek to establish and maintain
a dollar which will not change its purchasing and debt-paying power during the
succeeding generation. I said that in my message to the American delegation
in London last July. and I say it now once more.
in
Because of conditions in this country and because of events beyond our control
other parts of the world, it becomes increasingly important to develop and apply
the further measures which may be necessary from time to time to control the
gold value of our own dollar at home.
Our dollar is now altogether too greatly influenced by the accidents of international trade, by the internal policies of other nations, and by political disturbance 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
order to prevent dollar disturbances from swinging us away from our ultimate
goal, namely, the continued recovery of our commodity prices.
As a further effective means to this end, I am going to establish a Government
market for gold in the United States. Therefore, under the clearly defined
authority of existing law, I am authorizing the Reconstruction Finance Corporation to buy gold newly mined in the United States at prices to be determined
from time to time after consultation with the Secretary of the Treasury and the
President. Whenever necessary to the end in view, we shall also buy or sell gold
in the world market.
My aim in taking this step is to establish and maintain continuous control.
This is a policy and not an expedient.
It is not to be used merely to offset a temporary fall in prices. We are thus
continuing to move toward a managed currency.
You will recall the dire predictions made last spring by those who did not agree
with our common policies of raising prices by direct means. What actually
happened stood out in sharp contrast with those predictions. Government
credit is high; prices have risen in part. Doubtless prophets of evil still exist in
our midst. But Government credit will be maintained and a sound currency will
accompany a rise in the American commodity price level.
SILVER
459
But because, in terms of foreign currencies, our products had become so much
more expensive, we were not able to obtain our fair share of the world's trade.
It was, therefore, necessary to take measures which would result in bringing the
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, france
or marks. This was the process which commenced in March 1933 and which had
to be continued until that level was reached. It was not desirable to make this
level too low, because then our own importers would find it difficult to buy foreign merchandise. But it was clear that the level had been too high, and we
wanted to find the appropriate level.
By joint resolution (Public Res. 10, approved June 5. 1933), the Congress declared invalid all gold clauses contained in bonds already issued or thereafter to
be issued, and authorized the payment of these bonds in ordinary legal tender.
This joint resolution was a necessary step in effectuating the Government's control 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
the public interest, and is therefore subject to public regulation and restriction,
and that the gold clauses in bonds obstruct the power of Congress to regulate the
value of the money of the United States.
My message to the World Monetary and Economic Conference also stated the
monetary objectives toward which we were working-"giving to those (national)
currencies a continuing purchasing power which does not greatly vary in terms
of the commodities and need of modern civilization.' I there pointed out that
the important problem was not the temporary fixing of exchange, but stabiliza
tion of each nation's currency, conservation of metallic reserves, and the restoration of world trade by removal of existing commercial embargoes.
There can be no doubt on the part of persons familiar with the facts that by
the end of 1933 the more immediate emegrency goal of the administration, to
remedy the crisis which confronted it in March 1933, had been accomplished
the restoration of public confidence. The sound banks of the country had been
reopened and were functioning normally; money and gold which had been withdrawn from hoarding had been redeposited. The dollar was functioning regularly
as an instrument in international trade, and was gradually and soundly readjusting itself to the value of world currencies.
Measures for permitting the dollar to find its proper place in relation to foreign
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
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
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
in the London market were 7 English pounds for an ounce of gold, and the price
paid by the United States were $35 for an ounce of gold, it would be easy to see
that the price of 1 English pound would be approximately $5.
In the foregoing address, I pointed out that this measure of improvement did
not mean that our work had ended but that it was becoming "increasingly important to develop and apply the sound measures which may be necessary from
time to time to control the gold value of our own dollar at home.
Therefore, the United States must take firmly in its own hands the control of the
gold yalue of our dollar in order to prevent dollar disturbances from
swinging us away from our ultimate goal, namely, the continued recovery of our
commodity prices.
By January 1934 these "sound measures" had been developed and were ready
to be tried. We were ready "to take firmly in our own hands the control of the
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
The depreciation of foreign currencies, prior to 1933, had had the effect of making the dollar more expensive in terms of those foreign currencies. Thus it took
more pounds, more franes, or more marks to buy a dollar than it had formerly and,
since the prices of our export products are determined in terms of dollars, it took
more pounds francs, and marks to buy our export products. The effect of this
had been to contribute to the serious decrease in our foreign trade, not because
our own prices, in terms of dollars, had risen, nor because our products were of
an inferior quality, nor because we did not have sufficient products to export.
Source: The Public Papers and Addresses of Franklin D. Roosevelt, vol. II, pp.
428-429.
ANNOUNCEMENT BY THE SECRETARY OF THE TREASURY, APRIL 19, 1938, OF THE
DISCONTINUANCE OF THE INACTIVE GOLD ACCOUNT
On December 22, 1936, the Secretary of the Treasury stated that, after conferring with the Board of Governors of the Federal Reserve System, he proposed to
take appropriate action with respect to net additional acquisitions or releases of
gold by the Treasury Department whenever it was deemed advisable and in the
public interest to do so.
SILVER
460
SILVER
of that policy, the Secretary of the Treasury, after conferring with
the
In Board pursuance of Governors of the Federal Reserve System, today announces that the
inactive gold account has been discontinued.
461
I believe that you can supply more satisfactory answers to these questions than
anyone els and I should therefore appreciate your replying to them at your earliest
convenience.
Very sincerely yours,
ANNOUNCEMENT BY THE SECRETARY OF THE TREASURY, DECEMBER 22, 1936,
WITH RESPECT TO NET ADDITIONAL ACQUISITIONS OR RELEASES OF GOLD BY
THE TREASURY DEPARTMENT
The Secretary of the Treasury, after conferring with the Board of Governors of
the Federal Reserve System, announces that he proposes, whenever it is deemed
advisable and in the public interest to do so, to take appropriate action with respect
to net additional acquisitions or releases of gold by the Treasury Department
This will be accomplished by the sale of additional public-debt obligations, the
of which will be used for the purchase of gold, and by the purchase or
redemption proceeds of outstanding obligations in the case of movements in the reverse
direction.
ROBERT F. WAGNER.
MARCH 22, 1939.
Hon. ROBERT L. WAGNER,
United States Senate.
Mr DEAR SENATOR: In your letter of March 14 you ask several important
questions. These and similar questions, relating to gold and foreign exchange,
have been asked so frequently that I welcome this opportunity to answer them
and to make clear the policy of the Government with respect to these matters.
As you say, the questions raised involve technical matters which cannot be
adequately handled in a page or two. However, I shall be as brief as is possible
with materials of such complexity.
1. Who owns the gold now in the Treasury?
For Immediate Release, Thursday, March 23, 1939.
Press
Service
No.
16-83.
TREASURY DEPARTMENT
Washington
Secretary Morgenthau today made public the following letter from Senator
Robert F. Wagner, chairman of the Banking and Currency Committee of the
Senate, and his reply thereto:
UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY
March 14, 1939.
Hon. HENRY MORGENTHAU,
Secretary of the Treasury, Washington, D. C.
Title to all gold held by the Treasury, now amounting to about $15,000,000,000,
is vested in the United States.
A large part of this gold ($12,336,858,533 on March 15, 1939) is held as security
for gold certificates (or credits payable in gold certificates) issued to and held by
the Federal Reserve banks pursuant to the Gold Reserve Act. Such gold certificates may be redeemed in such amounts of gold bullion as, in the judgment of
the Secretary of the Treasury, are necessary to settle international balances or to
maintain the equal purchasing power of every kind of United States
currency.
The remainder of the gold held by the Treasury is accounted for as follows:
Gold reserve, held pursuant to law as a reserve against United
$156,039,430
States notes and Treasury notes of 1890
Allocated to the stablization fund
1,800,000,000
Gold in general fund (against which gold certificates or credits
have not as yet been issued)
(a) Balance of increment resulting from reduction in the
142,288,196
weight of the gold dollar
547,899,564
(b) In working balance
The Treasury disposes of gold in the following ways:
My DEAR MR. SECRETARY: My interest in our monetary policy as chairman of
the Senate Committee on Banking and Currency has, of course, been intensified
by the committee's present consideration of my bill (S. 910) to extend certain
monetary powers. I should like your help in answering a number of questions
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 whole subject. I realize that they relate to problems which are somewhat
complex and technical and that any comprehensive answer may of necessity be
somewhat lengthy. Nevertheless, I feel that a satisfactory discussion of them
would be very helpful to the Congress and the public and I would appreciate
your going into some detail.
The questions that seem to me most pertinent are these:
1. Who owns the gold now in the Treasury?
such purpose can purchase gold from the Treasury.
obtained from the sale of interest-bearing obligations of the Government?
3. Why has so much gold come to the United States in the past 5 years?
4. Is it true that gold comes here in large amounts because the Treasury is paying a higher price than other countries for gold and because it buys gold at a
2. How much of the gold in the Treasury was purchased with funds obtained from
the sale of interest-bearing obligations of the Government
The Treasury pays for gold with the cash assets in the general fund, specifically
2. How much of the gold in the Treasury has been purchased with funds
fixed price?
5. How much gold do you think we will get?
6. Why doesn't the Treasury stop buyin gold?
7. Of what use to us is this large stock of gold? Is there any likelihood that
we will get so much of the world's gold that we will "get stuck" with it?
8. Isn't it true that foreigners are getting shares of our productive industries
and giving us in return gold that we have no use for?
9. What action, if any, should be taken with respect to the gold situation?
Should we, for example, return to the gold standard of pre-1933?
10. Did devaluation of the dollar in 1934 have an unfavorable effect on our
imports?
11. Who in England and France has the power of altering the gold value of
their currencies and what is the extent of that power?
12. Is there any basis to the contention that the power to devalue operates to
undermine the businessman's confidence so as to deter him from making loans and
investments in the United States?
(a) For use in industry, profession, or art. Any person needing gold for any
(b) For the purpose of meeting the international balance of payments. To
this end the Treasury sells gold to the members of the Tripartite Accord and to
their stabilization funds and fiscal agencies. The Treasury also may sell gold
to foreign central banks upon application and under special conditions.
Neither Americans nor foreigners can obtain gold from the Treasury for the
purpose of hoarding.
out of the Treasury's deposit account with the Federal Reserve Bank of New
York. The account is normally compensated by the deposit with the Federal
Reserve bank of gold certificates or gold certificate credits issued against the
gold then acquired.
Up to December 22, 1936, it was the policy of the Treasury to issue to the
Federal Reserve bank gold certificates or gold certificate credits against the full
value of the gold acquired. Under this procedure the purchase of gold by the
Treasury did not involve any increase in the Federal debt either directly or
indirectly. Shortly after December 22, 1936, however, the Treasury Department adopted a different procedure with respect to new gold purchases. Gold
purchased was placed in an "inactive gold" account and paid for from the general
cash balance of the Treasury without issue of additional gold certificates against
the new gold acquisitions.
This procedure was departed from several times, however, by the issuance of
gold certificates against gold released from the "inactive" account or against
gold acquired but not placed in the "inactive" account. The "inactive" account
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discontinued in April 1938, and at that time the Treasury issued $1,400,000,000
certificate credits to the Federal Reserve banks against the gold released
in gold gold" account and thus increased its cash balance by that
from the "inactive Since that time the Treasury has followed a policy of issuing gold
amount. periodically for additional gold acquired. Gold purchases are per-
certificates accumulate in the general fund in varying amounts before gold certifimitted to issued against them. On March 15, 1939, there was in the general
cates $548,000,000 are of gold purchases against which gold certificates had not yet
been fund issued but which had been paid for by checks drawn on the Treasury account
with the Federal Reserve Bank of New York.
Gold comes into the United States in settlement of the balance of international
arising out of all transactions between the United States and all foreign
payments These international transactions include exports, imports, shipping
countries. tourists' expenditures, capital movements, interest payments, etc.
services, When the demand for dollar exchange increases more rapidly than the supply of
dollar exchange resulting from these transactions, the price of dollar exchange on
the foreign-exchange market rises. It may rise to a rate at which it becomes
profitable for bankers and dealers, foreign and American, to ship gold to the United
States, sell the gold to the Treasury for dollars, and then sell these dollars on the
foreign-exchange market.
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 so much
in demand.
A survey of our balance of payments for the last few years reveals at once that
the greatly increased demand for dollar exchange which has taken place during
the past 5 years is largely a consequence of the huge flow of capital to the United
States and, more recently, of the large "favorable" trade balance. None of the
other categories of items in our international transactions can be held responsible
for the substantial net increase in the demand for dollar exchange during this
period. In fact, for several important categories the net demand for dollar exchange decreased. It is the flow of capital to this country, particularly before
1938, upon which our attention must be focused if we are to understand the chief
reason for the large gold inflow.
The following figures show the contrast between the large recorded inflow of
capital in the past 5 years and the persistent and large outflow of capital in the
Million outfor
The answer to the first of these two questions, together with a description of the
kinds of capital coming here, was given in some detail in my letter to Senator
Vandenberg of September 22, 1936, a copy of which is enclosed for your
convenience.
In section 3 of that letter the causes of capital imports into the United States
are set forth as follows:
"(a) Capital withdrawn from abroad by American owners because of the greater
security or the more attractive field for investment offered the capital at home.
The return of these funds to the United States- of which left the country
in 1930-32-is, of course, an indication of the relative strength of our recovery
and of the prevailing confidence in the future of American industry and American
financial institutions.
S. Why has 80 much gold come to the United States in the past 5 years?
years preceding:
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Million inflow
1928
850
1934
+386
1929
-217
1935
1930
-752
1936
+1,537
+1,141
1931
-490
1937
1932
-192
1938
1933
-336
+800
+369
The capital inflow in the years 1935 through 1937 was the major factor responsible for the inflow of gold, for it amounted in total to $3,500,000,000 or 86 percent
of the value of gold imported during that period.
The trade item did not become important from the point of view of gold inflows
until the last quarter of 1937. From 1934 to 1937 the excess of our exports over
imports averaged only $250,000,000 a year. (Incidentally, if silver imports were
included in our merchandise imports. which is the procedure followed by many
countries in the world, our excess of exports over imports would have amounted
to only $80,000,000 a year in this period.) In 1938, however, the favorable trade
balance greatly increased and was the dominant factor inducing the large flow of
gold into the United States. The excess of exports over imports
totaled $1,134,000,000 the largest we have had in 17 years. This increased
"favorable" balance of trade, together with other items, was responsible for the
net inflow of gold in that year of $1,600,000,000 of gold.
Thus it is evident that because there was a large inflow of capital in recent
years. and in 1938 a large excess of exports over imports, there was a great increase
in the net demand for dollar exchange: and because of this large increase in the
net demand for dollars there was a large inflow of gold. Therefore, in the final
analysis your question: 'Why has so much gold come into the United States?
reduces itself to the questions: "Why did so much capital come to this country
during
past 5 years?" and "Why did we have so large a 'favorable' trade
balance the
in 1938?'
(b) Funds sent to this country by foreigners who likewise felt that American
securities offered a more attractive or more secure investment opportunity than
did investments available to them elsewhere.
'(c) Repurchase by foreigners of some of the foreign securities which Americans
had purchased during the post-war decade and were now glad to get rid of even at
low prices This was particularly true of the securities of certain countries where
nominal high exchange rates were coupled with devices whereby the nationals of
these countries were encouraged to repatriate these securities at an exchange
profit to themselves, or where maintenance of debt service was provided for only
internally but not for foreign holders.
(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
trade during 1934 and 1935 increased by one-third over the 2 years previous.
It is to be expected that this greater volume of foreign trade transactions would
call for larger working dollar balances
'(c) Fear prevailing in some countries abroad of confiscation of property or of
loss through inflation of their local currencies led during this period to a flight of
capital from some of the countries whose economic and political situations have
been threatened by disturbances with which you are doubtless familiar.
'(f) Lastly, funds sent to this country by speculators in the hope or expectation
that an exchange profit will be possible if and when the currencies of their countries become depreciated in terms of the dollar.
"These are the causes which account for most of the capital inflows. Yet
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
Americans. Whereas in the years prior to the depression, annual foreign investments by Americans of more than a billion dollars were common, since 1931 the
annual sums invested abroad have been negligible; nor does it appear that the
United States will approach in the near future the predepression volume of foreign
investment.'
Since the above was written (September 1936) nothing has occurred to alter
substantially the trend of capital movements or the reasons for them. With the
exception of one 9-month period, capital has continued to flow to the United
States in large volume. During that 9-month period, October 1937, to June 1938,
there was a new outflow of short-term capital of over $1,000,000,000, but the flow
was reversed during the fall of 1938, and more than a billion of short-term capital
has since come to the United States.
Capital will continue to flow into the United States in large amounts so long as:
(a) The opportunities for secure and profitable investment in foreign countries
are not great enough to attract American capital abroad
(b) The prospects of continued recovery here appear satisfactory to foreigners;
(c) The political situation abroad remains disturbed
(d) There is possibility of further depreciation of some foreign currencies.
Whether the flow of capital into the United States will continue to take the form
of gold or whether it will gradually assume the form of goods and services rather
than gold depends upon the rapidity with which the mechanism of adjustments of
international accounts operates In earlier decades this adjustment process
operated tolerably well and with fair speed to transform international movements
of net balances into movements of goods and services. This adjustment process
served to keep gold movements between countries relatively small in volume.
In recent years, however, this mechanism has operated badly and haltingly
Moreover. it has had to operate under sudden and large capital and trade shifts
which differed from those of earlier decades not only in magnitude but in character.
To put it graphically the mechanism of adjustment has had a heavier load to
carry, the road has been uphill, and the incline has grown steeper.
464
and nature of this change taking place in the effectiveness of the
The reasons adjustment process of international accounts are matters too technical
so-called in this letter. Suffice to say that because the numerous
to warrant discussing rapid adjustment still prevail in virtually all countries with free
exchanges obstacles to any large movement of capital to the United States in the near future
will doubtless take the form largely of an inflow of gold.
The significance of this fact as an explanation of the continuing flow of gold to
United States cannot be empahsized too strongly. As compared with the
decades the prior to 1930, there are now different relationships between international
movements of capital and of gold, changes in domestic price levels, trade changes
contraction and expansion of credit, and changes in the volume of business
Realization of this basic economic change is necessary to appreciate
the activity. need for treating present day problems of gold and the capital flows quite
differently than was appropriate prior to 1929. Monetary experience of those
years, possibularly in its international aspects, does not suffice for safe guidance
for present day policy.
4. Is it true that gold comes here in large amounts because the Treasury is paying a
higher price than other countries for gold, and because it buys gold at a fixed price
This is a question we frequently hear. Unfortunately it is not wholly clear
just what it meant since the phrase a "higher price for gold' may be interpreted
in two quite different ways, and the answer to each of the two interpretations
would be arrived at through quite different lines of reasoning.
If the question be interpreted to mean that gold comes to the United States in
large amounts because we pay a higher price than other countries do in terms of
a money price (i. e., in terms of dollars) then the answer is definitely "no" The
United States pays the same price for gold, allowing for arbitrage and transportation costs, that any other country does no more and no less, We do not pay any
higher prices for gold than does England or France or Belgium or India.
The price of gold that is permitted to move freely in international channels of
trade is (and must be) virtually the same the world over. An Englishman who
sells gold in London gets the same return in pounds and shillings for twith
small variations to be explained in a moment-as he would get were he to send the
same gold to New York or to Amsterdam or to Paris or to Bombay to be sold.
Right now, for example, he would get about 148 shillings for an ounce of gold in
the London gold market. If he ships that gold and sells it to the United States,
he gets $35 an ounce (less one-fourth of 1 percent). When he converts the dollar
proceeds of the sale of that ounce of gold back into sterling and deducts the expenses of shipping, he gets approximately the same amount of sterling as he would
have obtained had he sold the gold at -namely, about 148 shillings. In
other words, when a foreigner translates the dollars he gets from the sale of his gold
back to his own currency, he finds that the price of gold is almost the same in
London, Paris, Amsterdam, or Johannesburg. We pay dollars for gold, England
pays sterling, Holland pays guilders, etc., but when conversion from one currency
into another is made at the prevailing exchage rates we find that an ounce of gold
brings approximately the same price in one country as in another.
I say approximately the same price. There are slight relative variations in the
price as between different countries, variations which inevitably result from
changes in the supply of and demand for foreign exchange. Any change, no matter
how slight, in the relationship of the supply of foreign exchange to the demand will
bring about a change in the price for foreign exchange. The fluctuations of exchange rates, together with the fluctuations in the price of gold in terms of foreign
currencies, result in the occurrence of relative differences in the price of gold in
different national money markets when computed in terms of a single currency,
but these relative variations can occur only within narrow limits.
These slight relative variations in the price of gold as among various markets
which make possible a profit in shipping gold from one country to another would
continue whether we paid $10 an ounce for gold, or $50, or $60. Slight variations
in the dollar-sterling dollar-frane, dollar-guilder rates, etc., do give dealers small
profits when selling gold in one market rather than another but those variations
operate as among all countries and at all levels of prices for gold; they are not
peculiar to the United States alone, nor to the $35 price for gold. Exactly the
same condition prevailed when the price of gold was $20.67 an ounce and when
other countries had a fixed price of gold. It is the normal mechanism which has
always prevailed and must inevitably prevail so long as gold is the international
medium of exchange.
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To dispose briefly of another common misconception. It has been sometimes
claimed that gold comes here because the United States pays a fixed price for
gold, whereas other countries buy gold at varying prices. The mere fact of fixity
of the price of gold in terms of any given currency has little to do with the movement of gold. For example, England does not have a fixed price of gold, and yet
her net imports of gold in some of the past few years were greater than ours.
Belgium has had a fixed price for gold for 2 years, yet her reported gold holdings
are no higher now than they were 3 years ago. Moreover, our gold price, although
fixed in terms of dollars, is not fixed in terms of other currencies. When, for
example, an Englishman sells gold to the United States, the number of dollars be
gets may be fixed, but the amount of sterling he gets, if he converts the dollars
into sterling, is not fixed; it fluctuates with every change in the sterling-dollar
exchange rate. The amount in his own currency which an Englishman or a
Frenchman receives when he sells gold is not fixed whether he sells his gold in
New York, London, or Paris.
So far in answer to this question the discussion has been based on the interpre-
tation of the phrase "higher price" as meaning a higher monetary price. If,
however, the phrase is to be understood to is doubtless intended by
many who put the question- a "higher price" in terms not of money but of goods
and services, then the question becomes a quite different one. It should then be
phrased as follows: "Is it not true that gold comes to the United States in large
amounts because we give more goods and services for a dollar (or its monetary
equivalent in foreign currencies) than does any other country?"
The answer to this question is likewise "No,' though less unqualifiedly so because
adequate statistical dsta for a categorical answer are not available.
The purchasing power of the dollar in the United States in terms of goods can
be compared with its purchasing power in other countries only very roughly and
only with respect to those goods which do (or easily might) move from country
to country. With respect to "services" comparison of the purchasing power of
the dollar in the United States and elsewhere relates chiefly to shipping services
and the expenditures by tourists.
Now it is extremely difficult to measure the differences in purchasing power of
gold or currency as between different countries even with respect to such goods
and services. Fortunately, for the purposes of the question we are examining,
no such measurement is necessary. Were it true that an ounce of gold had a
significantly higher purchasing power over American internationally traded goods
than over foreign goods, indirect but definite evidence would be revealed in our
trade figures. Our export excess would have so increased since 1933 that either
we would have drained the outside world of all its monetary gold or we would
have forced other countries to adopt strict exchange or import controls or much
higher tariff schedules. No such developments have occurred. Foreign countries still have large gold holdings; many of them have not significantly heightened
their barriers against imports of the world.
Convincing evidence that we do not pay a higher price for gold than do other
countries in terms of goods and services is contained in the record of our balance
of international payments on current account. For the years 1934 to 1937,
inclusive, the balance of payments with respect to the pertinent commodity and
service items was in the aggregate unfavorable by $1,200,000,000, as far as the
records show. Unfortunately, however, our international accounts, though more
complete and reliable than those of other countries, are still subject to a substantial margin of error. In each year there has been a substantial "residual" item
(i. unaccounted for) which during the 4 years in question totaled approximately
11/2 billion dollars due the United States. Some portion of this favorable balance
must be allocated to trade and services how much it is impossible to know.
But even if we allocated the whole residual item to commodity and service itemswhich would be an extravagant allowance-there would result only a small balance due the United States for those items during the 4 years in question$400,000,000 for the 4-year period. This constitutes too small a sum relative to
the magnitudes involved in our balance of payments to justify the claim that an
ounce of gold can buy more here than elsewhere.
There is little basis, therefore, for the contention that an ounce of gold could
in general buy more goods and services in the United States than elsewhere from
the years 1934 to 1937, inclusive. Or to put it in simpler and more accurate
terms, the United States did not achieve any special competitive advantage in
international markets as a consequence of its external monetary policy. The
change in the gold value of the dollar in 1933 merely helped the United States
73052 42
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its earlier position In 1938 the trade situation appeared to change.
to regain sharp increase in our trade balance. Exports, as pointed
We did experience a imports in 1938 by some $800,000,000 more than in 1937.
out earlier, exceeded this increase cannot be attributed to any changed relationship of
But dollar most to of other currencies because the exports excess arose from a sharp de-
the imports, and not from an increase in exports The recession in the
crease in more marked and earlier than in other countries caused a tempoUnited decrease States in our purchases from abroad greater than the simultaneous decrease
rary This gap may be expected to narrow as recovery proceeds
in The our exports. sense in which it might be said that we give more for gold than other
only is that in addition to $35 an ounce we also give peace, security, prospects
countries returns on investment, and better speculative opportunities, with the
of higher that foreign capital funds flow here in the shape of gold. It is these values
result that constitute the chief factor conducive to a flow of gold to the United States,
5. How much more gold do you think we will get?
How much we will get depends upon the extent and direction of changes in our
balance of trade and services, upon the output of new gold, and upon the trend
of capital movements.
467
the public's confidence in the value of gold.) The leading gold producing areas
would be hard hit and some might even be involved in a major economic crisis,
A closely related question that has frequently been asked is: "Should not the
price of gold be reduced? Is not $35 an ounce too high a price for gold?" Possibly the simplest way to answer this question is to examine the consequences
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).
A reduction by Congress in the monetary value of gold would probably not
be as calamitous as a complete embargo. It would limit the extent of possible
depreciation of gold (or appreciation of the dollar in terms of foreign currencies)
and the psychological disturbance caused by the change would not be as potent,
yet it would have disadvantages serious enough to render resort to any such
action most unwise. If the reduction made in the price of gold were small, our
trade-and-service balance would not be much affected over the next year or so,
nor would the inflow of capital cease. Once the drop in the price of gold was
regarded by the rest of the world as definitive, the subsequent effect in capital
imports would be virtually nil. Our securities would continue to be bought for
the same reasons that they are bought now and dollar balances on foreign ac-
Since capital movements are so sensitive to international political and economic
count would also continue to increase for the same reasons that they are increas(now. But, were a small decline in the price of gold to be regarded by numerous
domestic and foreign investors and exchange speculators as being but the first of
a series of drops, the result might well be to attract more, not less, funds to the
would cause a gold outflow is extremely unlikely.
As for our balance on commodity and service items, the fear of war and the
preparation for war by foreign nations are likely to sustain our exports and reduce
to check. Speculators would rush to buy dollars and hold them here in anticipa-
developments, one can only hazard a guess as to their future trend. At this
moment it looks as though the European situation will remain so disturbed as
to postpone for some time any substantial repatriation of foreign balances. It
also appears as though early resumption of American lending abroad such as
American tourist travel in Europe and developments making for
additional gold inflows. On the other hand, continuance of our recovery here
will tend to increase our imports and to increase American tourist travel in the
Western Hemisphre. I believe the latter trend will outweigh the other and
that on commodity and srevice account the net balance due us will be less in 1939
than it was last year. On the other hand, capital inflows will probably be large
so that, on the whole, it appears that in the near future the United States will continue to get gold, perhaps in as large volume as in recent years.
Current world gold production (outside the United States) now amounts to
over $1,000,000,000 per year. The bulk of this newly-mined gold can go only
to a few countries. Most countries now utilize practically every available dollar
of foreign exchange to purchase imports or to make additional payments on
outstanding foreign debts. Much as they would like to acquire gold, and much
as they need it, they want to acquire additional imports even more. Therefore.
it is to be expected that until current hostilities and intensive preparedness for
wars cease, and until the world economic situation improves, the bulk of the
newly mined gold will be added to the monetary stocks of only a few countries
and the United States will get a substantial share of it.
6. Why doesn't the Treasury stop buying gold?
A simple way of stopping gold from coming into the United States would be for
the Treasury to announce to the world that we will not buy any more gold for
the time being. But, such a step, taken unilaterally, would have disastrous
effects on our economy. It would disrupt the foreign exchanges and gold bullion
markets and would very soon cause such drastic disturbances in international
trade and even in the domestic sphere as seriously to impede the recovery of
business
Present relationships among the various leading currencies would be upset.
The dollar probably would appreciate immediately in terms of other leading currencies. At present, when the demand for dollar exchange increases, foreigners
need only obtain gold (either at home or on the London market), ship it here and
obtain dollars in exchange. Thus an increased demand for dollar exchange
relative to the supply is met. If, however, this means of securing dollar exchange
were removed, dollars would rise in value indefinitely in terms of other currencies. While it is impossible to know in advance what rates of exchange would
finally emerge, we can be certain of at least one thing-that no country would
benefit from the ensuing international monetary disruption.
Were the United States, moreover, to declare a complete embargo on gold
imports, it might deal a serious blow to the value of gold as a monetary medium
(Such action coming at a period when there was discussion of the possibility of
world overabundunance of gold might have repercussions which would disturb
United States, and to intensify the inflow of very thing it is designed
tion of the next appreciation. Thus the effect on capital movements, both
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.
On the other hand, were the monetary value of gold to be cut with one stroke
substantially, and definitely say, for example, to $25 an ounce-the effect would
be quite different from that described above. Such a step might reduce the
volume of gold imports and perhaps give rise to an outflow of large dimensions;
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
in the price of American currencies to foreigners would constitute a severe handicap upon our exports. Our exports play a role in the level of business activity
much in excess of the magnitudes involved and so great an appreciation of our
currency in terms of other currencies would be bound to curtail our exports seriously. In the past 6 months the dollar has appreciated in terms of other leading
currencies by some 5 percent and price movements in the various countries have
not been such as to offset this competitive disadvantage to us. The appreciation
of the dollar has not been due to a change in the dollar price for gold but rather
to a depreciation of foreign currencies in terms of gold. You will note that our
exports during January 1939 were more than 40 percent less than they were in
January 1938. Although it is too soon to evaluate the full significance of the
decline, it is not unreasonable to assume that the less favorable position of the
dollar in terms of other currency (i. e., higher prices of foreign currencies in terms
of gold) contributed to the drop in exports.
Our imports on the other hand would, in the event of a reduction in the price
of gold to $25 an ounce, be 30 percent cheaper. Our domestic producers would
then be exposed to greatly sharpened competition in the American market from
foreign producers both because the prices in dollars of imports would be less, and
also because the numerous ad valorem duties would constitute smaller protection.
Foreigners would have a greater advantage in this market but unfortunately
even this would be of dubious value to them. The ability of Americans to buy
goods, whether imports or domestic goods, depends chiefly upon the state of
business activity here. It is chiefly for that reason that our imports during the
recession of 1938 dropped to to almost one-half and that our imports began to
increase in the fall of 1938. Thus, though the sharp appreciation of the dollar
would make foreign goods cheaper in this country, our imports might actually
be less than during the previous period and instead of benefiting the rest of the
world we would be hurting world business as well as our own.
Judging from past experience we could not expect the prices of domestic commodities and services to move either at home or abroad with sufficient rapidity
to adjust quickly and fully to any substantial alteration in exchange rates.
For many months, perhaps for years, the economic position of large groups of
American producers, including farmers, would be worsened and there would be
widespread unemployment. The combined effect on our domestic economy
of a sharp drop in exports and of increasing competition in the domestic market
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469
468
felt. Domestic prices would begin to fall. Many corporations
would be keenly business and profits. In times such as the present these short.
would suffer loss of short-run we mean from a few months to several years-are
run effects and by To brush aside, as some are prone to do these short.
Small countries, which are not procluded by political and prestige considerations from holding their reserves in the form of foreign-exchange assets, can get
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 gold reserves.
of paramount importance. the ground that in the long-run appropriate adjustments will take
run
placeeffects is to ignore on the unstable world in which we live and the real problems which
Some countries (operating with very little gold or foreign-exchange assets)
have been pointed to as illustrations of the phenomenon that countries can carry
on foreign trade and settle international transactions without resort to gold, and
that gold is rapidly becoming obsolete even for this monetary role, Those who
make this claim completely misread the experience of these countries. These
very countries do in fact need and prize gold more and seek it more anxiously,
than do countries that use gold freely to settle balances of international payments.
It is their inability to obtain gold which forces them to adopt a far less satisfac-
confront us from day we to to reduce day. the price of gold and were it to result in an outflow
Moreover, were reason to believe that the countries who most need gold would
of gold there is no contrary. were gold to leave the United States it would probably
get it. On the in the very countries whose currencies would for the moment
find a resting place Certainly no gold would flow to Latin American countries
appear most secure. amount, nor would the Far East or the Balkans obtain more
in any substantial of by the United States would not correct the serious mal-
tory alternative method of adjusting their balance of international payments;
namely, the adoption of strict exchange control, of clearing agreements, of barter
schemes, and the imposition of severe penalties against evasion and all the other
business and liberty destroying procedures necessary to make the system work.
gold. The loss It would gold rather operate only to take away some from the United
States distribution. which has too much and to add it to the holdings of other countries which
likewise have too much.
There is no one thing which demonstrates more effectively the superiority of
gold as a means for settling international balances than the experience of those
countries that have tried to get along without it.
confronted with the fact that though we should like to receive less
Thus we are to get rid of substantial amounts of the gold we already have, there
gold and even the existing circumstances, no acceptable alternative to the policy we
Without either gold or exchange controls, exchange rates would be very unstable.
is, under been pursuing. In the case of all the proposals we have examined, the
have has always been worse than the disease. The best way to reduce our gold
inflow remedy on commodity and service account is for us to have full recovery 80 that our
imports will rise more rapidly than our exports.
Any change in the balance of payments would have to be taken care of by international borrowing or lending, or the exchange rates would have to move to the
point where the sums to be paid and the sums to be received were equated.
Because we have abundant gold reserves we do not have to apply exchange restrictions, and broad changés in our balance of international payments can take place
without interfering with the stability of the dollar exchange.
All these points have been granted by some critics, but they maintain that to
fulfill both these functions much less than $15,000,000,000 worth of gold would
7. of what use to us is this large stock of gold? Is there any likelihood that we will
get so much of the world's gold that we will "get stuck" with it?
Gold performs two monetary functions. First, it serves as a specie base for the
system. Secondly, it serves as the medium for settling international
balances. monetary These are distinct and separate functions. The present gold stock of
the United States is about $15,000,000,000. The question you ask, therefore, is
Is $15,000,000,000 of gold more than enough to accomplish these two functions
which gold now performs in our economic system?
It is doubtless true that we have more gold than we need to provide a specie base
our monetary system. Our laws require that a 40-percent reserve in gold cerfor tificates be held against Federal Reserve notes in circulation and a 35-percent
reserve in gold certificates or lawful money against deposits of Federal Reserve
banks. These legal reserve requirements are based on the assumption that goldreserve requirements operate a control of the volume of means of payment, asa
protection against excessive issue of notes, and expansion of bank credit. At
present, however, gold and gold-certificate holdings are so far in excess of these
legal requirements that they can hardly be said to constitute a protection against
undue expansion of our currency and credit. We now have enough gold to permit
an enormous expansion of credit and currency even after generous allowance for
the outflow of gold that might accompany such an expansion. Legal reserve requirements do not of themselves necessarily protect us against an undue expansion
of the volume of money and the monetary authorities must be prepared, when and
if the occasion arises, to apply appropriate supplementary control. This is
pecially likely to be true when gold holdings are as great as they now are.
But it is desirable that the reserves be above the minimum required by law.
Otherwise in a period of business recovery the limitations on the expansion of notes
and deposits which the gold reserve would impose would operate to curb the rise
in business activity or an outflow of gold would tend to initiate a contraction of
credit, irrespective of the legitimate needs of business It is clear, therefore, that
some excess of gold above the legal minimum is needed to protect our domestic
now,
es-
economy against effects of fortuitous inflows and outflows of gold. We
however, have more gold than is necessary to insure this protection.
The second and more important monetary function of gold is its employment
as a means of settling international balances among nations. Gold has been
used for this purpose from time immemorial, and modern governments have as
yet found no satisfactory substitute: nor is there any sign that a satisfactory
substitute will be found in the near future.
Important commercial countries which carry little or no gold stocks have difficulties in settling their international payments. They have to see to it that their To
imports and exports are maintained in a certain relationship to each other.
achieve that and to keep their foreign exchange rates from fluctuating wildly
they frequently have to maintain strict exchange controls so as to restrict merchandise imports and the movement of capital.
suffice. There is some merit to that contention, yet the future of international
political and economic relationships is much too uncertain to justify our taking
the steps which would be necessary if we were determined to reduce our gold
holdings
One important factor to bear in mind in considering our gold policy is the
psychological reaction of the public to a continuing loss of gold. Should a
country be undergoing loss of gold over a considerable period of time, there is
likely to result impaired confidence in that country's currency and in the stability
of its monetary system long before it has exhausted the gold it possessed in excess
of legal or traditional reserve requirements. This has happened time and again
throughout the world. Without greater ability to forecast future political and
economic developments than is vouchsafed us, it is impossible to say with certainty
that we have too much gold. We can say with some assurance, however, that we
have enough gold to meet all likely contingencies, and that we are in a strong
position to defend the stability of our credit structure and of the dollar against
any quick change in our international balance of payments, including any large
withdrawal of foreign capital.
The danger that gold will no longer be used as a medium of international exchange is so remote as not to merit serious consideration. Other countries will
surely continue to accept gold in the settlement of favorable balances of payments, because gold is as important to them as it is to us. England has over
$3,000,000,000 of gold. France has almost as much; Holland, Switzerland, and
Belgium and many other countries have what are for them large holdings of gold.
It is in the interest of these countries as much as it is in our own interest to continue to rely on gold as an essential part of their monetary system. Moreover,
we must not overlook the fact that nations producing substantial quantities of
gold have important vested interests in the continuation of gold as a monetary
metal. The British Empire alone produces about half the world's gold. Even
countries that produce relatively small amounts of gold find that those small
amounts are an important source of national income to them.
8. Isn't it true that foreigners are getting shares of our productive industries and giving
us in return gold that we have no use for?
The amount of American securities which have been recently acquired by residents of foreign countries has been much less than is generally supposed. During
the past years the total of net foreign purchases of American securities amounted
to only $1,200,000,000, as follows:
1935
1936
$317,000,000
601,000,000
1937
1938
$245, 000,000
49,000,000
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There was, in addition, an increase in direct investments by foreigners as
the Department of Commerce of about $175,000,000 during this
reported Altogether, by the total amount of investments by foreigners in American
been less
period. securities or directly in American industry during the past 4 years has
than one-fifth of the gold sent here during those years.
These sums do not, of course, represent the total of foreign capital which has
into the United States. Short-term funds owned by residents of foreign
come countries increased by $1,800,000,000. The bulk of these were demand deposits,
471
movements are not so general or so rapid as to adjust economic conditions quickly
to changes in exchange rates, and such movements as would occur would take the
form of falling prices, particularly prices of agricultural products and raw mate-
rials. From experience we know that such price movements have disastrous
effects upon incomes, profits, and the level of business activity. We might be
precipitated into a depression rivaling the 1930-33 experience. There can be
no question, therefore, of returning to a gold dollar with the pre-1933 content.
The answer to question 6 above contains a full discussion of the foreseeable effects
which would result from any substar tial increase in the gold content of the dollar.
which do not constitute acquisitions of shares in American industry and which
do not earn any interest.
The acquisition of American securities by foreigners paid for with gold represents
transaction which admittedly is, under existing circumstances, of dubious
a advantage to the United States. Yet, given the relatively minor importance of the
problem to date, we have not been able to convince ourselves that any of the
possible remedies which we have so far examined gave promise of sufficient benefit
to the national economy to offset their disadvantages
On the other hand, it should be pointed out that if foreign holders of American
securities liquidate their holdings and withdraw the proceeds, either gold or goods
(and services), would necessarily be the resultant medium of withdrawal If the
vehicle of transmission were gold, its loss, in view of our large gold holdings could,
of course, be regarded with equanimity. If the medium of transmission were
goods, either because of direct purchases with the proceeds of the funds or because
of the operations of the adjustment process, the resultant increase to our exports
at a time when there exists a large volume of unemployed labor and other idle
resources would have favorable effects on our economy.
9. What action, if any, should be taken with respect to the gold situation? Should we
for example, return to the gold standard of pre-19331
The maldistribution of the world's gold is a reflection of the disturbed economic
situation throughout the world and the chaotic international political situation.
Redistribution can come only with progress toward the solution of the basic
problems confronting world international relations.
In our study of this matter we have examined literally scores of proposals
directed toward possible action to redistribute the world's gold. The major
conclusion we have drawn is that any measure which would take the form of
restrictions on the flow of gold into this country would have, at this time, detrimental effects upon our economy.
What disadvantages may be associated with the gold inflow are fortunately
only of minor magnitude, and should moreover, be attributed to the factors causing that inflow rather than to the inflow itself. Foreign ownership of American
securities may, however, serve as a source of disturbance to our security markets
in times of stress; similarly with short-term foreign capital sent here. On the
other hand, the third factor responsible for the gold inflow to the United Statesour export excess does yield a gain.
The large inflow of gold in recent years has been a major factor in increasing
excess bank reserves. These reserves do in some degree operate to stimulate an
expansion of loans by banks and to keep the interest-rate structure lower-both
developments helping somewhat to promote a higher level of business activity.
Nonetheless, the prospect of continued large inflows of gold has been a cause of
some concern on the part of those who consider a large volume of excess reserves
as constituting a potential danger of inflation, though I do not regard this problem
as one of immediate import.
The only immediately disturbing aspect of the gold problem is the loss of gold
by foreign countries. The countries losing gold may be adversely affected by the
loss and some of the adverse effects would impinge indirectly or us. This is to
deplored, but the factors producing this situation are external to us and beyond
our control, acting alone.
With respect to the suggestion that the United States return to the gold standard of pre-1933, I must state definitely that such a move would be harmful to the
American people and of no value to the people of other countries. In the first
place, a return to the pre-1933 gold standard would mean a return to the $20.67
an ounce price for gold. This, in the absence of similar changes in the gold value
of other currencies, would represent a depreciation of approximately 40 percent
in all foreign currencies in terms of the dollar.
It is obvious that an increase in the cost of the dollar to the foreigner by 70
percent and a decrease in the cost of foreign currencies to the American importer
be
by 40 percent would seriously disrupt our foreign and domestic trade. Price
Even if what were proposed were a return not to the old gold value but to a
pre-1933 gold standard with the present gold content of $35 an ounce, such a
step would be unwise at this time. Our present monetary system differs from
the pre-1933 gold standard in three respects other than gold content. First,
our currency is not convertible into gold coin, secondly, there are Government
controls over the movement of gold in and out of the country, and thirdly, there
is Executive authority to change the gold content of the dollar.
Convertibility of currency would, in my opinion, have no substantial advantages.
Virtually every country in the world has recognized this fact and has withdrawn
the privilege. For in normal times there is nothing to be gained by the right to convert currency into gold, whereas at all times conversibility has the potential disadvantage of creating a possible source of internal gold drain which would come
into play at the very time when it would be most Injurious. Internal hoarding
of specie reserves has been, in the experience of many countries, one of the most
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 nevertheless always be a possibility under a convertible currency system. Moreover,
in the event that there should develop an emergency situation calling for a further
change
in the gold content of the dollar, the existence of private gold holdings
would create unnecessary difficulties.
At present the movement of gold out of the country is in effect subject only
to the restriction that it must be for the purpose of settling international balances.
Gold moves freely to satisfy legitimate commercial and financial needs. The
present powers of control over the movement of gold provide a safeguard that
can instantly be used in the contingency of an international crisis.
The power to change the gold content of the dollar should be lodged in an
authority which can, in case of necessity, act swiftly and in a manner which will
minimize the disturbances resulting from any change. This power should
always be available; its existence contributes to the maintenance of stable exchange
relationships, which make the exercise of the power unnecessary.
It is important to realize that rumors of an impending change in the value of
a currency, or any public discussion by responsible officials that such a change
might be made, would in themselves be enough to induce large flows of capital
either into the country or out of the country, depending upon whether the prospect is for an increase in the value of the dollar or for a decrease in the gold content of the dollar. Discussion in committees would be advance notice to specu-
lators that such action might take place. The mere fact that it might take
place would be sufficient to induce the flow of capital, because if the change did
not actually occur. the speculation would have cost only the small charges attending any exchange transaction. Indeed, congressional discussion would stimulate speculators to engage in activities of a sort which would of themselves
tend to force Congress to take the action which had been in contemplation, even
if on its own merits and in the absence of the situation created by the operations
of the speculators, a negative decision would have been in order. The liquidation of foreign holdings of American capital might, under such circumstances,
easily be powerful enough to disrupt the security exchanges and to introduce a
chaotic situation in markets and in business generally. Since the prospect of
devaluation would arise only under circumstances which were disturbing in any
case, the outflow of capital would simply make bad things worse.
It therefore appears desirable that the Executive should have the power to
alter the gold content of the national currency unit, in the public interest, and
within clearly prescribed limits, as it is in most of the countries in the world, so
that if an emergency situation should require its exercise, it could be exercised
quickly, and without the necessity of prior public discussion and its concomitant
invitation to speculative activities.
472
10. Did devaluation of the dollar in 1934 have an unfavorable effect on our imports?
set of circumstances devaluation of a currency will induce an inUnder one and under a different set of circumstances it may decrease im-
crease
ports. in Devaluation imports of the dollar in 1934 did contribute to an increase in United
States
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imports. of American imports varies, in the main, with domestic business
The value business is good in the United States, our imports are high:
activity. When is bad, our imports are low. For example, between 1929 and 1932
when business from $4,400,000,000 to $1,300,000,000, a decrease of more than
imports dropped in 1938, owing largely to the recession which prevailed through
two-thirds. Again our imports dropped more than one-third. On the other hand,
most of that year, of 1934, 1935, 1936, and imports rose from
during the of years 1.3 billion recovery dollars to over 3 billion dollars. Increases or decreases in
the low value of a out imports are due to changes in prices as well as to
the total quantity. sharp drop in the prices of imported commodities which
changes in with domestic products has economic repercussions which are
are competitive disturbing to the country receiving the imports. At a time when business
very is declining, any potent source of further price declines serves only to
activity lower still further the level of business activity and to increase unemployment.
The best way to increase our imports is to increase our national income. Any
which serves to promote recovery increases our imports and contrariwise
measure any measure which serves to reduce business activity operates to reduce our
imports As a consequence of falling prices and declining business intensified by the
widespread depreciation of other currencies in 1931-33, we bought less because
our national income was less notwithstanding the greatly lowered cost of imported
goods. Even though depreciation of the dollar made imported goods more
expensive, the improvement in business activity which followed devaluation was
one of the factors responsible for the rise in national income and the consequent
increase in imports. Whether or not depreciation of a currency will lead to increased or decreased imports depends upon the conditions which precede such
depreciation, and upon other measures which accompany it, as well as upon the
reaction of other affected countries.
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?
In England the British treasury has the power to alter the sterling price of gold
through its operations in the gold market. There is no statutory restriction on
the extent to which the British treasury can change the sterling price of gold.
Similarly, the French treasury, through the mechanism of its foreign exchange
and gold operations, can alter the franc price of gold without any statutory restrictions. In addition, the Council of Ministers is authorized to fix ultimately by
decree the gold content of the franc. yet, they have not done so. The Council
of Ministers, in other words, can decide whether or not there should be any statutory gold value for their currency and under existing law can fix that value at
any amount it wishes.
12. Is there any basis to the contention that the power to devalue operates to undermine
the businessman's confidence 80 as to deter him from making loans and investments in the United States?
A factor that more than any other will increase the confidence of businessmen in
the future is the assurance that business will improve; a development contributing
substantially to that expectation would be the prospect of a stable or moderately
rising price level. What businessmen fear with regard to the dollar is not that the
price level in the United States may remain stable or rise but that the price level
in the United States may fall (i. e., that the purchasing power of the dollar may
rise.)
From past experience we know that falling prices have disastrous effects upon
our economic system. The national income declines, business profits disappear,
the security of loans is undermined and the level of business activity falls. If the
businessman could be assured that price levels will not fall sharply, he would
have greater confidence that business profits and the value of investments would
be maintained and consequently he would be more willing to make investments
and loans, At no time in modern history have lenders hesitated to lend during
times of stable or moderately rising prices and at no time has their desire to lend
increased during a period of substantially falling prices. The power to devalue
should thus constitute for the businessman an added assurance that prices will
473
not be permitted to decline much or sharply in response to a marked depreciation
of foreign currencies. This added assurance of domestic price stability should
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
public to invest in long-term fixed-interest bonds at almost the lowest interest
rate in the history of this or any other country. The fact that people are willing
to invest billions 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
price level, suggests that they have confidence in the way which counts most;
namely, by their willingness to risk their capital.
The assertion that the continuance of the power to change the gold content
of the dollar generates lack of confidence and hesitation in the business world is
not, I am convinced, based on factual considerations. Rather, it seems to me,
it stems from an effort to reestablish the validity of monetary theories that are
ill adapted to the circumstances prevailing in recent years.
Monetary disturbances in the world today arise from causes almost entirely
outside our control. The effect of these disturbances on our monetary system
has been such as to reflect greater confidence in the American dollar than in any
other currency. This tribute to the soundness of the dollar, taking the form of
huge transfers of funds in the United States, creates an unbalance which is the
only factor in the situation which gives us any cause for real concern. The
powers we possess have been sufficient to prevent any significant damaging effect
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
stability rather than instability in the domestic economy and in the international
field alike.
Sincerely,
HENRY MORGENTHAU, Jr.,
Secretary of the Treasury.
[For immediate release.]
GOLD, AND THE MONEY OF THE UNITED STATES
An Address by Henry Morgenthau, Jr., Secretary of the Treasury, Washington,
.C., Friday, May 3, 1940
One thing you will hardly need to be told about our monetary system; that is,
that the American dollar is the soundest unit of currency in the world. Its value
is unquestioned here at home and it is not questioned where else in the world.
It is a solid rock of strength and stability amid all the monetary@onfusibe created
by aggression and war. It is more than a domestic currency it bad
the last few years more and more an international currency. People thro without
the world who are driven by disaster and fear to hoard currency paper to Board
the currency of the United States, when they can get it.
We have tried through many means to facilitate stability In the currencies of
the world. An outstanding example is the Tripartite Accord which initaited
in September 1936. In all, six of the leading democracies of the world have
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
cataclysm in Europe.
One of the most striking developments of these recent years has been the
universal confidence in the American dollar as one of the very few certain things
in a highly uncertain world.
Some of our citizens who admit the strength of the dollar and the world's
confidence in our currency now suggest that confidence in our dollar has resulted
in this country receiving too much gold
During the last 6 years we have acquired about $10,000,000,000 of gold from
abroad.
Why has so much gold come to the United States?
In the first place, we have exported many billions of dollars' worth of goods
and services in excess of the amounts we have imported. Secondly, large amounts
of foreign funds have come to this country to be placed and kept on deposit with
our banks. Foreigners have sent their funds here for safekeeping because of the
peace. stability, and security which this country enjoys.
Thirdly, foreigners have made large investments in American industries because
they regard American business as a safe and profitable investment. Finally,
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have been withdrawing their funds from abroad and liquidating their
foreign Americans investments in large sums because they prefer the dollar to any other
currency. It is for these reasons that we have had so large a favorable balance of pay.
ments: it is for these reasons that gold has come and is continuing to come to
the United States.
Gold moves from country to country not as a commodity but as a means of
the one final medium through which international settlements are made.
The continued
action
opento acceptance us. There of are, the it gold is true, that other comes courses here is of the action only sound theoretically course
payment,
of
possible, but they would all have disastrous consequences.
Take, for example, the proposal so frequently made to us that we stop buying
It has the charm of simplicity. All that we have to do is to issue an appropriate gold. Treasury order. But let me tell you what I think would happen. Dollars
abroad would instantly become very scarce and more costly, and the foreigner
would find it much more expensive to buy American goods. For example, the
British pound, the Canadian dollar, the French frane, the Dutch guilder would
at once sharply depreciate. A chain of forces would be set in motion which would
disrupt our trade, seriously discourage what remains of world commerce and
move from world finance the strongest element of stability.
The cessation of gold purchases would have the following three immediate
effects of great importance to us:
Firstly, the sale of American products in foreign markets would be made much
more difficult. This would not apply so much to war materials, which foreign
countries want so urgently, but it would hit hard our export of hundreds of Agri-
re-
cultural and industrial commodities not vital to the conduct of the war. We
would lose heavily in the very markets we will badly need when the war is over
Secondly, there would result an immediate flood of imports of cheapened
foreign goods, which would deal an even more serious blow to labor, industry,
and agriculture in America. The very items which compete with our domestic
products would deluge our home markets. Meat and dairy products, textiles,
and hundreds of other articles would at once be subjected to greatly intensified
competition from abroad.
Thirdly, Americans who have investments abroad would find that they had
suffered substantial dollar losses overnight just as foreigners with investments
here would find that they had windfall gains overnight.
So you see this simple remedy is, in effect, a proposal that would completely
disrupt our foreign exchange and our trade and greatly increase unemployment
in this country. And so with the other naive proposals which some well-meaning
citizens suggest as a remedy for our accumulating gold stocks.
Shall we follow their advice and cut the price for gold? A moderate cut would
be ineffective, and a cut in price sufficiently large to have a significant effect on
the gold inflow would introduce the same conditions as would follow prohibition
of gold imports. This also would cause a serious decrease in our trade and & big
increase in unemployment.
Shall we, as some have suggested, discriminate against certain countries in our
purchases of gold? Such a policy would not even have the virtue of effectiveness.
The active cooperation of practically the entire world would be required to prevent
any one country's gold from entering the world's markets and reaching the United
States. Obviously this would be impossible even in normal times, let alone at a
time such as this. Besides, the value of gold is proportionate to its unqualified
use and acceptance as an international medium of exchange. To limit its acceptance would mean to reduce its usefulness.
There is yet another alternative which has always been open to us. Instead of
taking gold we could have granted credit. Americans could again have accumulated huge unsettled claims abroad. We have had experience with that system-
extensive experience the decade that ended with the economic collapse of
1929. It is doubtful that Americans would want to repeat that experience.
For the excess of goods we shipped and for the dollar credits we granted we
have taken gold in the last 6 years instead of promissory notes. The phrase
"good as gold' still has real meaning in the world. I prefer the gold to pieces of
foreign
paper. I think most Americans agree with me.
Our gold policy is carefully adjusted to the realities of a complex world situation
There have been many glib suggestions for changing that policy. Examination of
each of these suggestions has revealed as in the examples I have mentioned, that
in the effort to remedy fancied evils they would bring on real disaster.
475
Of course, should basic conditions alter, should we be confronted with new and
unforeseen economic and political developments, the Government will necessarily
take such action as will best protect American interests. It is to be prepared for
such contingencies that the powers with respect to gold operations have been
kept flexible. The Treasury is constantly observing, analyzing, and studying
the course of events in their relation to monetary problems in which this country
is interested. But nothing has yet appeared which would warrant any change
in our gold policy.
There is only one sound way in which we can work to reduce the inflow of gold
and to promote the return of at least a part of the wealth it represents to useful
service in the lands from which it came. That way is to do everything in our
power to contribute to the return of peace to the world and to encourage reconstruction and the restoration of normal trade. With the restoration of enduring
peace and economic stability abroad the gold problem will solve itself. Our
great export surplus will drop-no because we shall sell less abroad but because
we shall buy more. Foreign capital will be gradually repatriated-no because
we drive it out but because it is attracted home by the reemergence of security
abroad. Our investors will once again invest their funds abroad not because of
the scarcity of opportunity at home but because of greatly enhanced opportunities
for sound and profitable investments in other lands. And finally our tourists
will spend hundreds of millions more in foreign countries.
These are the developments which will automatically and gradually direct the
flow of gold away from the United States. These are the developments upon
which we must concentrate. We must concentrate on the promotion of further
recovery here and peace and security abroad not in order to correct the gold
situation, but because prosperity, peace, and security are in themselves the supreme
ends of governmental policy. That their attainment will also solve the world's
gold problem is only a byproduct, but an important one.
I should like finally to turn to the question of the continued usefulness of the
gold
we have and the gold we are going to get. This is a matter that is troubling
some people.
Let me reassure you once and for all. As long as there are independent nations,
and as long as there is international trade in goods and services, so long will it be
necessary to settle international balances. Gold is the international medium of
exchange par excellence. Its acceptability is universal; its utility as international
money survives changes in economic systems. It is used and needed just as much
by the freest democracies as by the most rigid dictatorships- by capitalist
economies as by socialist economies, It is the refined instrument of international
exchange of goods and services, as well as an essential ingredient in the more
complex international financial transactions an instrument that has functioned
without challenge for hundreds of years. Every foreign country wishes it had
more of it; no foreign country likes to lose any of it; all countries accumulate it as
soon as they can afford to do so. And the fact that some countries find it possible
to conduct their international trade without gold does not mean that they prefer
to do so any more than people reading by candlelight do so because they prefer
candles to electricity.
Gold does not lose its value because some countries are forced to resort to clear-
ing arrangements, barter, import controls, and other substitutes. All these
substitutes are admittedly worse alternatives. They are methods of conducting
trade and finance which will only be adopted when a country does not possess
adequate gold holdings. Governments resort wholly to these substitute methods
for keeping a country's balance of payments in equilibrium only during times of
great and prolonged stress and instability, and only when for one reason or another
they have been unable to prevent the loss of most of their gold holdings. All
countries would like to have more gold, and the countries which have the least are,
you will find, countries which are striving most to add to their gold holdings.
They do so because they know that an adequate supply of gold promotes economic
strength and furthers financial stability.
To be sure, if the political picture of the world should undergo a drastic change
in the future, so that instead of 50 or 60 independent nations there should exist
only one or two groups dominated by ruthless powers, then international trade
and finance may assume the character of domestic trade. There would cease to
be independent monetary systems, as there would cease to be independent foreign
policies. Balances between countries would be settled as balances between our
States are now settled-t is, by transfers of deposits. Under such circum-
stances it might well be that gold would no longer be needed. But under those
circumstances life would be so different that the possible loss in the value of gold
would, I am sure, be the least of our troubles.
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governments may boast of the day when independent democracies will
Certain for have no fears that such boasts can be made good. am
disappear. I. gold one, will continue to be used as the medium of international
as confident that I am that the majority of nations will succeed in maintaining their
payments as With the return of peace and of normal economic and political
independence. present barriers to the free flow of goods, capital, and services
will relationships, be gradually the lowered, and gold will inevitably play its indispensable role in
making that result possible. the exchange we made and are making in return for gold is a
One word for us. It has enabled us to increase employment and recovery.
good bargain possible the utilization of labor, capital, machinery, and resources
It has made otherwise have been idle. We have expanded our exports and encouraged that would our domestic industry. And, moreover, we have at the same time
the safest physical asset in the world.
acquired some sincere people who have been disturbed by stores that this
There had are a monetary policy that threatens to cause loss to the Nation. If
country such people I hope you will reassure them. You may tell them that
you meet and richest country of the world has the best and soundest monetary
the greatest and that there is no reason to fear that it will not remain sound.
system We can feel entirely comfortable in the possession of a supply of gold with
can meet future demands on our monetary system without any shock
which our we economy. We can be prepared also to play the part we ought to play in
the to reconstruction of the world that must follow the senseless destruction of
war.
STATEMENT BY THE PRESIDENT ON THE PURPOSE OF THE PROCLAMATION ON
NEWLY MINED DOMESTIC SILVER
On December 21, 1933, the President issued a proclamation under authority of
paragraph (2) of section 43. title III of the act of Congress approved May 12,
1933 (Public, No. 10). directing the coinage mints of the United States to accept
for deposit newly mined domestic silver subsequent to the date of the proclamation. retaining 50 percent of such silver as seigniorage.
The purpose of this proclamation was to raise and then stabilize the price of
silver in order to help (a) increase and then stabilize the commodity price level;
(b) protect our commerce further from the adverse effects of depreciated foreign
Public
currencies; (c) augment the purchasing power of countries using silver; and (d)
carry out the undertaking made at the London Conference.-P the
Papers and Addresses of Franklin D. Roosevelt, volume II, page 539.
proclamation of December 21, 1933, bringing our current domestic production of
silver into the Treasury, as well as placing this Nation among the first to carry
out the agreement on silver which we sought and secured at the London Conference. We have since acquired other silver In the interest of stabilization of foreign
exchange and the development of a broader metallic base for our currency. We
seek to remedy a maladjustment of our currency
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.
I, therefore, recommend legislation at the present session declaring it to be the
policy of the United States to increase the amount of silver in our monetary stocks
with the ultimate objective of having and maintaining one-fourth of their monetary value in silver and three-fourths in gold.
The Executive authority should be authorized and directed to make the purchases of silver necessary to attain this ultimate objective.
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.
The Executive authority should be enabled, should circumstances require, to
take over present surpluses of silver in this country not required for industrial
uses on payment of just compensation, and to regulate imports, exports, and
other dealings in monetary silver.
There should be a tax of at least 50 percent on the profits accruing from dealing
in silver.
We can proceed with this program of increasing our store of silver for use as a
part of the metallic reserves for our paper currency without seriously disturbing
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
all nations, or at least a large group of nations, is necessary if a permanent measure
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,
although it may turn out that this Nation will ultimately have to take such
independent action on this phase of the matter as its interests require.
The success of the London Conference in consummating an international
agreement on silver, which has now been ratified by all the governments con-
eerned, makes such further agreement worth seeking. The ebb and flow of values
in almost all parts of the world have created many points of pressure for readjustments of internal and international standards At no time since the efforts of this
Nation to secure international agreement on silver began in 1878 have conditions
been more favorable for making progress along this line.
Accordingly, I have begun to confer with some of our neighbors in regard to the
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
debt-paying power.
MESSAGE OF THE PRESIDENT ON THE SILVER PURCHASE ACT OF 1934
FRANKLIN D. ROOSEVELT.
THE WHITE HOUSE, May 22, 1934.
To the Congress of the United States:
On January 11, 1934, I recommended to the Congress legislation which was
promptly enacted under the title. "The Gold Reserve Act of 1934. This act
vested in the United States Government the custody and control of our stocks of
gold BR a reserve for our paper currency and as a medium of settling international
balances. It set up a stabilization fund for the control of foreign exchange in the
interests of our people, and certain amendments were added to facilitate the
acquisition of silver.
As stated in my message to the Congress, this legislation was recommended as
a step in improving our financial and monetary system. Its enactment has laid
a foundation on which we are organizing a currency system that will be both
that we
sound and adequate. It is a long step forward, but only a step.
As part of the larger objective, some things have been clear. One
should move forward as rapidly as conditions permit in broadening the metallic
base of our monetary system and in stabilizing the purchasing and debt-paying
power of our money on a more equitable level. Another is that we should not
neglect the value of an increased use of silver in improving our monetary system.
is
Since 1929 that has been obvious.
Some measures for making a greater use of silver in the public interest are
appropriate for independent action by us. On others, international cooperation
should be sought
the
Of the former class is that of increasing the proportion of silver in the abundant
metallic reserves back to our paper currency. This policy was initiated by
MONEY AND CREDIT
Calendar of Important Regulatory Documents: Including Acts of Congress,
International Agreements, Presidential Proclamations and Executive Orders,
Announcements Regulations, and Instructions of the Secretary of the Treasury,
Supreme Court Opinions. Feb. 27, 1932-Mar. 31, 1942. (Office of the Treasury Archivist, Apr. 18, 1942)
Subject
Document
Feb.
27.
1932:
Federal
Reserve
Act
amendment (72-44).
Extending credit facilities to member
banks, and making Government securities eligible to secure Federal reserve
notes until Mar. 3, 1933.
Feb. 3. 1933: Act to amend Federal
Reserve Act amendment of Feb. 27.
1932 (72-326)
Extending credit facilities to member
banks. and making Government securities eligible to secure Federal reserve
notes until Mar. 3, 1934.
SILVER
478
SILVER
MONEY AND CREDIT-Continued
MONEY AND CHEDIT-Continued
Subject
Document
25, 1933: Act re national bank Authorizing the Comptroller of the Currency to exercise with respect to
powers (72-58 Res.).
Feb.
national banking association powers
which State officials may have with
respect to State banks, savings banks,
and/or trust companies under State
laws, for a 6-month period.
Mar. 6. 1933:
Proclamation No. 2039
Declaring
a bank holiday, Mar. 6-9,
1933, inclusive.
Document
Mar. 7, 1933-Continued.
Emergency
Subject
Banking
Regulation
Authorizing National or Stafe banking
institutions to exercise their usual
functions to such extent as shall be
necessary to meet the needs of the
Banking
Regulation
Authorizing banking institutions having branches in foreign countries or
insular possessions to deposit collateral in the United States to secure
No. 10.
community.
Emergency
No. 11.
Order of the Secretary of the Authorizing the banking institution in
Treasury.
Do
advances.
the Canal Zone to perform its usual
banking functions during the bank
Emergency Banking Regulation
Authorizing banking institutions in the
island of Guam to perform their usual
banking functions during the bank
Emergency Banking Regulation
Authorizing banking institutions in
American Samos to perform their
Emergency Banking Regulation
holiday.
No. 12.
No. 13.
holiday
Do
usual banking functions during the
bank holiday.
Authorizing banking institutions in the
Philippine Islands to perform their
usual banking functions during the
Do
No. 14.
Authorizing banking institutions in the
Virgin Islands to perform their usual
banking functions during the bank
Do
No. 1.
Regulation
No. 2.
Emergency
allow access to safety deposit boxes.
Banking
Regulation
Authorizing banking institutions to
Banking
Regulation
return items received after closing.
Authorizing banking institutions to cash
checks drawn on the Treasurer of the
No. 3.
Emergency
No. 4.
United States.
Emergency
No. 5.
Emergency
No. 6.
Emergency
No. 7.
Banking
Regulation
Banking Regulation
Banking
Regulation
Emergency Banking Instructions
to Federal Reserve Banks-A.
Emergency Banking Instructions
to Federal Reserve Banks-B.
Authorizing banking institutions to accept payments for obligations.
Authorizing banking institutions to conduct operations to facilitate the delivery of foods (revoked by regulation
No. 28 of Mar. 18, 1933)
license. etc.
Authorizing the banks to carry on certain transactions affecting the gold
settlement fund.
Emergency Banking Instructions
to Federal Reserve Banks-C
Authorizing the banks to purchase gold
or gold certificates.
Emergency
Banking Regulation
No. 8.
Authorizing banking institutions to
Mar. 7, 1933:
Emergency
Banking Regulation
No. 9.
complete settlement for checks on the
books before Mar. 4, 1933.
Authorizing banking institutions to deliver documents and securities held
for safekeeping.
conduct fiscal agency functions for
the United States
Emergency Banking Instructions
to Federal Reserve Banks- F.
Authorizing the banks to receive cash
1933.
Emergency Banking Instructions
to Federal Reserve Banks-G.
Emergency Banking Instructions
to Federal Reserve Banks-H.
Emergency Banking Instructions
to Federal Reserve Banks-I
Authorizing banking institutions to
create special trust accounts for the
receipt of new deposits (amplified by
regulation No. 15, Mar. 8, 1933).
Informing the banks of authority given
the Treasurer of the United States to
make payments in gold only under
in a fiduciary capacity to transact
such business (revoked by regulation
No. 31, Mar. 30, 1933)
Authorizing Federal Reserve banks to
Emergency Banking Instructions
to Federal Reserve Banks-E.
Authorizing banking institutions to
Authorizing banking institutions to
of banking institutions.
Authorizing banking institutions acting
"food or food products' in regulation
No. 6 may be interpreted to include
livestock on the way to slaughter.
Informing the banks that pawnbrokers
or brokers making loans on collateral
are to be considered banking institutions within the meaning of the term
as used in the proclamation of Mar. 6,
make change.
Banking
house certificates against sound assets
Authorizing the banks to inform all
banking institutions that the term
holiday.
Emergency Banking Regulation
Authorizing the issuance of clearing-
Emergency Banking Instructions
to Federal Reserve Banks-D.
bank holiday.
Emergency
479
from collectors of public funds for
deposit to the credit of the Treasurer
of the United States.
Authorizing the banks to cooperate
with their member banks to facilitate
certain limited banking operations.
Authorizing the banks to handle checks
and collection items subject to certain conditions.
Authorizing the banks to settle through
the gold settlement fund with other
Federal Reserve banks for all authorized transactions.
Emergency Banking Instructions
to Federal Reserve Banks
Authorizing the banks to continue their
usual functions pertaining to the
handling of collateral securing the
deposit of the public moneys of the
Mar. 8. 1933:
United States.
Emergency Banking Regulation
Extending authority granted under
Emergency Banking Instructions
to Federal Reserve Banks-K.
Authorizing the banks to conduct cer-
No. 15.
Mar. 9, 1933:
Proclamation No. 2040
Order of the Secretary of the
Treasury.
regulation No. 7 to include redeposits.
tain transactions with regard to
foreign accounts.
Continuing in force the bank holiday
proclamation of Mar. 6, 1933.
Authorizing banking institutions in the
Territory of Hawaii to perform their
usual banking functions during the
bank holiday.
Emergency Banking Act of 1933
(73-1).
Providing relief in the existing national
emergency in banking.
SILVER
SILVER
480
MONEY AND CREDIT-Continued
MONEY AND CREDIT-Continued
Subject
Document
Mar. 10, 1933:
Executive Order No. 6073
Emergency Banking Regulation
No. 10 as amended
Document
Concerning the operation of banks.
Extending regulation No. 10 to provide
for cooperation between banks in
different communities (revoked by
regulation No. 28 of Mar. 18, 1933)
Emergency Banking Regulation Authorizing banking institutions
complete transactions in regard to
No. 16.
Mar. 18, 933-Continued
Emergency Banking Regulation
No. 27.
Emergency Banking Regulation
No. 28.
to
Emergency Banking Instructions
to Federal Reserve Banks-L
Treasury bills for which payment was
Banking
Regulation
No. 17.
Mar. 11, 1933:
Emergency
Banking
Regulation
No. 18.
Emergency Banking Regulation
No. 19.
Authorizing banking institutions to pay
checks issued prior to Mar. 6, 1933.
Mar. 21, 1933: Emergency Banking
Authorizing banking institutions to subscribe and pay for U. S. Government
obligations offered by the Treasury.
Authorizing banking institutions to permit the release or substitution of collateral, when collateral of equal value
Mar. 24, 1933: Act to amend Emer-
is received.
Emergency Banking Regulation
No. 20.
Emergency
Authorizing Federal reserve banks to
resume their normal banking funetions.
Banking
Regulation
No. 21.
Regulation No. 29.
geney Banking Act (73-4).
Mar. 28, 1933: Emergency Banking
Regulation No. 30.
Mar. 30, 1933:
Banking Regulation
No. 22.
Authorizing Federal land banks, Federal intermediate credit banks, joint
banks, regional agricultural credit
Prohibiting withdrawals from any banking institution for purposes of hoard-
Emergency Banking Regulation
Authorizing banking institutions to
cash official drafts drawn on the
Regulations of the New York
Governing foreign exchange transactions under the Executive or der of
No. 23.
ing.
No. 24.
Federal Reserve Bank (circular
No. 1176).
Mar. 13,1933:
Emergency Banking Regulation
No. 22 (amendment).
Secretary of State.
No. 32.
may resume their normal banking
functions, corporations organized un-
der section 25 (a) of the Federal
Reserve Act.
Emergency Banking Regulation
No. 25.
Emergency Banking Regulation
No. 26.
Mar. 18, 1933:
Executive Order No. 6080
Authorizing Federal reserve banks to
deliver gold required in trade, profession, or art (revoked by regulations
relating to licensing the purchase and
export of gold, Apr. 29. 1933).
Authorizing banking institutions to
issue drafts transferring credits.
Concerning appointment of conserva-
tors for State banks members of
Federal reserve system.
notes.
Providing for direct loans by Federal
Reserve banks to State banks and
trust companies in certain cases, and
for other purposes.
Authorizing member banks in the hands
of conservators or State officials to
perform limited banking functions.
in a fiduciary capacity to transact
to permit withdrawals of deposits
under certain conditions.
Apr. 5. 1933: Executive Order No.
6102
Forbidding the hoarding of gold coin,
gold bullion and gold certificates
(revoked by Executive order of Aug.
28, 1933).
Apr. 20. 1933: Executive Order No.
6111.
Apr. 29, 1933: Gold Regulations issued
under the Executive Orders of Mar.
10, Apr. 5, and Apr. 20, 1933.
May 12, 1933: Thomas amendment
(inflation act) (73-10, title III).
Relating to foreign exchange and the
earmarking and export of gold coin
or bullion or currency (revoked by
Executive order of Aug. 28, 1933).
Relating to licensing the purchase and
export of gold (revokes emergency
banking regulation No. 25, Mar. 13,
1933) (revoked by gold regulations of
Sept. 12. 1933; pt. I).
Providing for financing- and exercising
power conferred by sec. 8 of article I
of the Constitution: to coin money
and to coin money and to regulate the
value thereof.
Mar. 10, 1933.
Adding to the list of organizations that
the provisions of regulations No. 23.
Authorizing unlicensed member banks
to rediscount or pledge renewals of
Emergency Banking Regulation
Mar. 12, 1933:
Emergency Banking Regulation
as amended.
Informing the banks that deposits of
the kinds described in regulations
No. 7 and No. 15, are not subject to
such business, with certain provisions
(superseding regulation No. 13, Mar.
7, 1933, which is hereby revoked).
Authorizing unlicensed member banks
stock land banks, Federal home loan
corporations, and the Reconstruction
Finance Corporation to resume their
normal banking functions.
Rescinding regulations No. 6 and No. 10,
Authorizing banking institutions acting
No. 31.
tions.
Emergency
Authorizing unlicensed member banks
to permit withdrawals (not exceeding
Emergency Banking Regulation
Authorizing nonmember banks and
banks not organized under the laws
of the United States or under immediate supervision of State authority to
resume their normal banking fune-
Subject
5 percent).
due on Mar. 6, 1933.
Emergency
481
June 5. 1933: Gold Clause Resolution
(73-10 Res.).
Assuring uniform value to the coins and
currencies of the United States.
June 26, 1933: Instructions from the
Acting Secretary of the Treasury to
Concerning gold for use in industry,
July 22, 1933: Agreement entered into
between delegates of India, China,
Concerning the mitigation of fluctuations in the price of silver.
all Federal Reserve banks.
profession, or art.
and Spain, as users of silver, and
Australia, Canada, the United States,
Mexico, and Peru, as producers of
silver, at the Monetary and Eco-
nomic Conference in London.
July 26, 1933: Allotment agreement
signed by the United States in connection with the silver agreement of
July 22, 1933,
pt.
Concerning the amount of silver to be
withdrawn from the market by the
United States.
SILVER
482
SILVER
MONEY AND bant-Continued
MONEY AND Outpre-Continued
Subject
Document
Aug.
28,
1933:
Executive
Order
No.
6260.
Aug. 29, 1933: Executive Order No.
6261.
Aug. 31, 1933: Temporary gold regulations issued under the Executive
orders of Aug. 28 and 29, 1933
(articles 1-10).
Sept. 1, 1933: Temporary gold regula-
tions issued under the Executive
orders of Aug. 28 and Aug. 29, 1933
Relating to the hoarding, export, and
earmarking of gold coin, bullion, or
currency and to transactions in foreign exchange (revokes Executive
Document
Jan. 15, 1934:
Executive Order No. 6558
Executive Order No. 6559
orders of Apr. 5, and Apr. 20, 1933).
Relating to the sale and export of gold
recovered from natural deposits (revoked by Executive order of Oct. 25,
1933).
Temporary gold regulations issued
under the Executive orders of
Aug. 28 and 29, 1933 (articles
16-28).
Temporary gold regulations issued
under the Executive orders of
Aug. 28 and 29, 1933 (articles
29-35).
Sept. 12, 1933: Gold regulations issued
under the Executive orders of Aug.
28 and 29, 1933.
Relating to general provisions and the
filing of returns (revoked by gold
regulations of Sept. 12, 1933).
Regulating transactions in foreign exchange, transfers of credit, and the
Order of the Secretary of the
Supplementing the order of Dec. 28.
1933, requiring the delivery of gold
Announcement of the Secretary of
the Treasury (Press Service No.
1933).
1-13).
Relating to the holding and export of
gold (revoked by gold regulations of
Relating to transactions in gold (pt. I
revokes gold regulations of Apr. 29
Jan. 30, 1934:
Executive order of Oct. 25, 1933,
Gold Reserve Act (73-87)
gold regulations of Oct. 25, 1933).
Provisional gold regulations issued
under the Gold Reserve Act of
Dec. 28, 1933: Order of the Secretary of
the Treasury.
Dec. 30, 1933:
Proclamation No. 2070
Silver regulations issued under the
proclamation of Dec. 31, 1933.
Jan. 11, 1934: Order of the Secretary
of the Treasury.
Jan. 12, 1934: Executive Order No.
6556.
Proclamation No. 2072
Regarding the revaluation of the gold
Amendment to provisional gold
regulations of Jan. 30. 1934,
issued under the Gold Reserve
Relating to transactions in gold.
Act of 1934.
Provisional gold regulations of
Jan. 30-31, 1934, issued under
the Gold Reserve Act of 1934
Announcement of the Secretary of
bullion, and gold certificates to the
Treasurer of the United States.
the Treasury.
Amending Proclamations of Mar. 6 and
Mar. 9, 1933, and the Executive order
of Mar. 10, 1933, and all orders and
regulations pursuant thereto.
Relating to newly mined silver (revoked
coin, bullion, or currency and to
transactions in foreign exchange.
for other purposes.
Relating to transactions in gold.
dollar.
coinage into standard silver dollars
Requiring the delivery of gold coin, gold
regulations of Apr. 16, 1935)
Amending the order of Dec. 28, 1933,
requiring the delivery of gold coin,
gold bullion, and gold certificates to
the Treasurer of the United States.
Amending Executive Order No. 6260 of
Aug. 28, 1933, relating to the hoarding, export, and earmarking of gold
Providing for the protection of the currency system of the United States,
for the better use of the monetary
gold stock of the United States, and
1934.
Providing for the purchase of newlymined silver by the coinage mints for
by the newly mined domestic silver
cates delivered after Jan. 17, 1934.
Jan. 31, 1934:
1933.
Dec. 21, 1933: Proclamation No. 2067
Concerning wrongfully withheld gold
coin, gold bullion, and gold certifi-
mints and assay offices, and the fiscal
agents of the United States.
Aug. 29, 1933).
amending pts. II and III of the
gold regulations of Sept. 12,
of the Reconstruction Finance Corporation will purchase all domestic
newly mined gold, and the Secretary
coin.
1933) (pt. III revokes temporary gold
Relating to gold recovered from natural
deposits (revokes gold regulations of
of Sept. 12, 1933, pts II and III).
coin, gold bullion, and gold certificates
to the Treasurer of the United States.
That, beginning Jan. 16, 1934, the New
York Federal Reserve Bank, instead
bank equivalent amounts of gold
Jan. 17, 1934: Instructions from the
Secretary of the Treasury to the
Treasurer of the United States, the
Gold regulations issued under the
export of coin and currency.
of the Treasury will purchase from the
Sept. 12, 1933) (revokes gold regulations of Apr. 29, 1933)
Relating to the consignment for sale of
gold recovered from natural deposits
in the United States (revoked by gold
regulations of Sept. 12, 1933)
Relating to gold recovered from natural
deposits (revokes Executive order of
10, 1933, and the proclamation of
Executive Order No. 6560
Treasury.
Relating to the acquisition of gold (revoked by gold regulations of Sept. 12,
Executive Order No. 6359
Relating to receipt of gold on consignment by the mints and assay offices.
Amending the Executive order of Mar.
Dec. 30, 1933, concerning the oper-
regulations of Aug. 31, Sept. 1 and
5, 1933) (pts. II and III revoked by
Oct. 25, 1933
Subject
ation of banks.
(articles 11-15)
Sept. 5, 1933:
483
Announcement of the Secretary of
the Treasury (Press Service No.
1-24).
Feb.
7,
1934: Announcement of the
Secretary of the Treasury.
Do.
That, beginning Feb. 1, 1934, he will
buy imported fine gold bare through
the New York Federal Reserve bank,
and other gold, foreign or domestic,
through mints and assay offices.
That he will sell gold for export to foreign central banks when our exchange
rates reach gold export point.
That, beginning Feb. 7. 1934, he will buy
imported fine gold bars and certain
gold held in custody by Federal Reserve banks, through the New York
Federal Reserve bank; and other
gold, foreign or domestic, through
mints and assay offices.
Feb. 20, 1934: General ruling No. 1,
amplifying sec. 35 (d) of the provisional gold regulations of Jan. 30-31,
1934,
Authorizing the mints and assay offices
to purchase under certain conditions
gold which was refined from imported
gold-bearing materials.
SILVER
484
SILVER
MONEY AND Currer-Continued
Feb. 21, 1934: Announcement of the
Secretary of the Treasury (memorandum for the press).
That the Governor of the Federal Reserve bank of New York and the
superintendents of the mints and
assay offices have been advised that
the price to be paid for gold is that
prevailing on the day of the deposit.
Mar. 2. 1934: General ruling No. 2.,
amplifying sec. 35 (d) of the provisional gold regulations of Jan. 3031, 1934.
Mar. 6, 1934: Act to amend Federal
Reserve Act amendment of Feb. 27,
1932 (73-115).
Mar. 8. 1934: Amendment to pro-
visional gold regulations of Jan. 30-
31, 1934
Apr. 20, 1934: Amendment to provisional gold regulations of Jan. 3031, 1934.
May 8, 1934: Order of the Commissioner of Customs, approved by the
Secretary (T. D. 47056).
June 19. 1934
Silver Purchase Act (73-438)
Regulations issued under title
VIII, schedule A, subdivision 10
of the Revenue Act of 1926, as
added by sec. 8, of the Silver
Purchase Act of 1934 (Bureau
of Internal Revenue No. 85).
June 22, 1934: Treasury announcement
(memorandum for the press).
MONEY AND Campre-Continued
Subject
Document
Authorizing the mints and assay offices
to purchase under certain conditions
gold imported before Jan. 31, 1934,
and held in customs custody
Extending credit facilities to member
banks, and making Government se-
curities eligible to secure Federal Re.
serve notes, until Mar. 3, 1935, and
thereafter as the President may prescribe, not exceeding 2 years.
Extending the time to May 1, 1934,
during which the transitory provisions
(sees. 45 and 46) shall be effective
Extending the time to June 1, 1934,
during which the transitory provisions
(secs. 45 and 46) shall be effective.
Requiring consular invoices for all importations of gold exceeding $100 in
value, with certain exceptions.
Authorizing the Secretary of the Treasury to purchase silver, issue silver certificates, and for other purposes.
Relating to tax on transfers of interest
in silver bullion.
Explaining the basis on which or the
ounceage of silver against which silver
certificates may be issued, on the one
hand, and the dollar amount of silver
certificates to be issued, on the other
Document
Aug. 9, 1934-Continued.
Executive Order No. 6814
the order of the Secretary of the
Treasury, approved by the Presi-
dent, June 28, 1934.
July 10, 1934: Amendment to regula-
tion No. 85. Bureau of Internal
Relating to silver.
Governing exportation of silver (revoked
by silver regulations of Aug. 17, 1934).
Relating to tax on transfers of interest
in silver bullion.
Revenue (T. D. 4445).
July 18, 1934: Amendment to regula-
tion No. 85. Bureau of Internal
Revenue (T. D. 4450)
Aug. 1, 1934: Order of the Commissioner of Customs, approved by the
Secretary (T. D. 47203, amending
T. D. 47056)
Aug. 8. 1934: Order of the Commissioner of Customs. approved by the
Secretary (T. D. 47214).
Do.
of the Treasury (Press Service No.
2-58).
ident concerning the issue of silver
certificates.
under the Silver Purchase Act of vokes silver regulations of July
1934).
1934, the proclamation of Aug. 9.
1934. the Executive order of Aug. 9,
1934, and the order of the Secretary
of the Treasury of June 28. 1934.
Aug. 27, 1934: Amendment to regula- Relating to tax on transfers of interest
tions No. 85. Bureau of Internal in silver bullion.
Revenue (T. D. 4465).
31, 1934: General ruling No. 3. Authorizing the minta and assay offices
amplifying sec. 35 (d) of the provi- to purchase under certain conditions
Aug.
sional gold regulations of Jan. 30-31, gold contained in deposits of silver.
1934.
Sept. 1, 1934: Amendment to silver reg- Relating to instruments of transfer. and
ulations of Aug. 17, 1934.
mixtures of "decree" and "non-
decree" silver.
Sept. 12, 1934: Instruction of the Sec- Providing for the transfer of title to the
retary of the Treasury
United States of newly mined silver
in process, through instruments of
transfer.
Oct. 22, 1934: Amendment to provi- Relating to gold amalgam.
sional gold regulations of Jan. 30-31,
1934.
Nov. 2, 1934:
Executive Order No. 6895A
Amendment to silver regulations of
Aug. 17, 1934.
Amendment to Regulations No.
85, Bureau of Internal Revenue
Amending sec. 2A of Executive Order
No. 6814 of Aug. 9, 1934, regarding
silver not required to be delivered.
Regarding silver not required to be delivered.
Relating to tax on transfers of interest
in silver bullion.
(T. D. 4491).
Nov. 12, 1934: Regulations
Nov. 13, 1934: Regulations of the New
York Federal Reserve bank (Circular
No. 1474).
Nov. 23. 1934: Regulations of the New
York Federal Reserve bank (Circular
No. 1480).
Relating to transactions in foreign exchange, transfers of credit, and the
export of coin and currency.
Governing foreign exchange transactions
under the Executive order of Jan. 15,
1934 (superseding Circular No. 1176
of Mar. 12, 1933).
Relating to foreign exchange reports (referring to circular No. 1474 of Nov. 13,
1934).
Nov. 26, 1934: General Ruling No. 4
amplifying sec. 35 (a) of the provisional gold regulations of Jan. 30-31,
Authorizing the mints and assay offices
to purchase under certain conditions
Dec. 1, 1934: Instructions from the
Regarding eligibility of silver contained
in other materials
Secretary of the Treasury to Director
of the Mint.
gold filings, clippings, pieces, etc.,
from certain persons engaged in industry, profession, or art.
Dec. 31, 1934:
Do.
Provisional gold regulations of Jan.
30-31, 1934, issued under the
Gold Reserve Act of 1934, as
Aug. 9, 1934:
Proclamation No. 2092
Requiring the delivery of silver to the
Aug. 17, 1934: Silver regulations issued Regulating transactions in silver (re-
1934.
Requiring consular invoices for all importations of gold exceeding $100 in
value, with certain exceptions.
Subject
United States mints.
Aug. 13, 1934: Release by the Secretary Giving the text of orders from the Pres-
hand.
June 28, 1934: Order of the Secretary
of the Treasury
July 5, 1934: Regulations: issued under
485
Providing for the delivery of silver to
the mint for coinage or addition to
the monetary stocks.
Regulating transactions in gold.
amended
General Ruling No. 5, amplifying
sec. 35 (d) of the provisional
gold regulations of Jan. 30-31,
1934,
Authorizing the mints and assay offices
to purchase under certain conditions
gold refined from sweeps purchased
from a United States mint or assay
office.
(ofdarristor)
5,
SILVER
SILVER
486
MONEY AND Charm-Continued
MONEY AND Curror-Continued
Subject
Document
Feb. 14, 1935:
Amendment to silver regulations Regarding silver salts.
of Aug. 17, 1934.
Proclamation No. 2117
Making Government securities eligible
to secure Federal Reserve notes until
Mar. 3, 1937.
Feb. 18, 1935: Supreme Court Opinions. Concerning the validity of the gold
clause resolution of June 5, 1933, with
respect to the gold clause in obligations.
Apr. 10, 1935: Proclamation No. 2124
Modifying the proclamation of Dec.
21, 1933, by providing for the deduetion of 45 percent instead of 50 per-
cent for seigniorage and services
performed by the Government
Apr. 16, 1935: Newly mined domestic
silver regulations issued under the
proclamation of Dec. 21, 1933, as
amended by the proclamations of
Aug. 9. 1934, and Apr. 10, 1935.
Apr. 24, 1935: Proclamation No. 2125
May 15, 1935: Newly mined domestic
silver regulations issued under the
Proclamation of Dec. 21, 1933, as
amended by the proclamations of
Aug. 9, 1934, and Apr. 10 and Apr.
Relating to newly mined silver (revokes
silver regulations of Dec. 30, 1933)
(revoked by silver regulations of
May 15, 1935)
Further modifying tke proclamation of
Dec. 21, 1933, by providing for the
deduction of 40 percent instead of
50 percent for seigniorage and services performed by the Government
Relating to newly-mined silver (revokes
newly mined domestic silver regulations of Apr. 16, 1935) (revoked by
newly mined domestic silver regulaRelating to silver.
of June 28, 1934.
tions of Aug. 17, 1934, as
amended,
Instructions of the Acting Commissioner of Customs, approved
by the Acting Secretary of the
Treasury (Bureau of Customs
circular letter No. 1390).
June 5, 1935: Silver regulations of Aug.
17, 1934, as amended.
Aug. 15, 1935: Announcement of the
Secretary of the Treasury (Press
Service No. 5-59).
Aug. 23, 1935:
Banking Act of 1935 (74-305)
August. 26, 1935:
Amendment to provisional gold
regulations of Jan. 30-31, 1934.
Provisional gold regulations of
Jan. 30-31, 1934, issued under
the Gold Reserve Act of 1934,
Aug. 28. 1935: Circular-letter (New Referring to circular No. 1474, Nov.1
York Federal Reserve Bank).
1934, re reports concerning transsctions in foreign exchange.
Sept. 10, 1935:
Regulations (Department circular
No. 552).
Regulations (Department circular
No. 553).
Nov. 14. 1935: Instructions of the Commissioner of Customs approved by
the Acting Secretary of the Treasury
(Bureau of Customs circular letter
No. 1473).
Nov. 20, 1935: Amendment to regulations No. 85, Bureau of Internal Rev-
Right to Sue" resolution (74-63
Governing the immediate payment of
gold-clause securities,
Governing the exchange of coins and
currencies of the United States.
Relating to the importation and trans-
portation of foreign silver coins
(amended by Bureau of Customs circular letter No. 1524).
Relating to tax on transfers of interest in
silver bullion.
enue (T. D. 4606).
Dec. 12, 1935: Announcement of the
Secretary (Press Service No. 6-42).
Dec. 24, 1935: Amendment to provisional gold regulations issued under
the Gold Reserve Act of 1934.
Jan. 1, 1936: Provisional gold regulations of Jan. 30-31, 1934, issued
under the Gold Reserve Act of 1934,
Concerning the date on which the new
type $1 silver certificates will be made
available to the public.
Adding secs. 8a, 10a, and amending secs.
16, 18, 21, 26, 27, 36, 43, 44.
Regulating transactions in gold.
as amended
Jan. 10, 1936: Proclamation No. 2153.
Extending powers conferred on the Pres-
ident by sec. 10 of the Gold Reserve
Act of 1934, and sec. 43 of the act
Mar. 6, 1936: Instructions of the Commissioner of Customs approved by
the Acting Secretary of the Treasury
approved May 12, 1933.
Relating to the importation and transportation of foreign silver coins.
Amending secs. 2 and 103-105. and
adding secs. 110-116.
Relating to the importation and trans-
No. 1524).
May 18, 1936: Announcement of the
Secretary of the Treasury (Press
Service No. 7-39).
portation of foreign silver coins
(amended by Bureau of Customs circular letters Nos. 1473 and 1524.)
Regularing transactions in silver.
Concerning the production of a new $1
silver certificate with changes both in
the method of printing signatures and
Sept. 25, 1936: Announcemnet of the
Secretary of the Treasury (Press
Service No. 8-53).
in design.
Providing for the sound, effective and,
uninterrupted operation of the banking system, and for other purposes.
Oct. 8, 1936: Order of the Commissioner of Customs, approved by the
Secretary (T. D. 48574, amending
Amending secs. 28-35.
Oct. 13, 1936:
Regulating transactions in gold.
Announcement of the Secretary of
the Treasury (Press Service No.
8-66).
Authorizing exchange of coins and cur-
rencies and immediate payment of
gold-clause securities by the United
States; withdrawing the right to sue
the United States thereon; limiting
the use of certain appropriations; and
for other purposes.
That the United States would make
purchases from the Central Bank of
China of substantial amounts of
silver and would make available to
the Central Bank of China dollar
exchange for currency stabilization
purposes.
That the Governmental of the United
States, Great Britain, and France
have entered into a tripartite declaration to maintain the greatest possible
equilibrium in the system of international exchange and to avoid the
creation of any disturbance of that
system by monetary action.
Dispensing with consular invoices for
United States silver coins.
T. D. 47214).
That he will sell gold for immediate
export to, or earmark for the account
of, the exchange equalization or
stabilization funds of certain countries
under certain conditions.
as amended,
Aug. 27, 1935: "Withdrawal of the
Subject
(Bureau of Customs circular letter
June 4, 1935:
Amendment to the silver regula-
Document
tions of Jan. 10, 1938).
24, 1935.
May 20, 1935: Order of the Secretary
of the Treasury, amending the order
487
Announcement of the Secretary of
the Treasury (Press Service No.
8-67).
That Great Britain and France are
complying with the conditions specified in the previous announcement of
today.
SILVER
488
SILVER
MONEY AND Custor-Continued
Nov. 24, 1936:
Announcement of the Secretary of
the Treasury (Press Service No.
8-93).
MONEY AND CREDIT-Continued
Subject
Document
That the Governments of Belgium, the
Netherlands, and Switzerland have
made declarations of adherence to the
Document
Oct. 25, 1937: Regulations (Department Circular No. 55 revised)
Dec. 30, 1937: Proclamation No. 2268
principles of the tripartite declaration of Sept. 25, 1936.
Announcement of the Secretary of
the Treasury, supplementing
the announcement of Oct. 13,
1936, and withdrawing the state-
ment of Jan. 31, 1934 (Press
Service No. 8-94).
Announcement of the Secretary of
the Treasury (Press Service No.
8-95).
Dec. 22, 1936: Announcement of the
Secretary of the Treasury (Press
Service No. 9-20).
the account of, the treasuries of
That Belgium, the Netherlands, and
Switzerland are complying with the
conditions specified in the statement
of Oct. 13, 1936, as supplemented by
the previous statement of today
Reserve Act (75-1).
Government.
Jan. 10, 1938: Newly mined domestic
silver regulations issued under the
proclamation of Dec. 30, 1937
Feb. 14, 1938: Announcement of the
Secretary of the Treasury (Press
Service No. 12-51).
That the Secretary will take appropriate action with respect to net
additional acquisitions and releases
of gold by the Treasury Department
through the purchase and sale or
redemption of additional public
Extending the time within which the
President may exercise emergency
powers relating to the stabilization
fund and alteration of the weight of
Reserve Act, as amended (75-9).
Mar. 11, 1937: Instructions from the
Secretary of the Treasury to collectors of customs.
June 1, 1937: Provisional gold regulations of January 30-31, 1934, issued
under the Gold Reserve Act of 1934,
No. 10-71).
Secretary of the Treasury (Press
Service No. 12-79)
Apr. 19, 1938: Announcement of the
Secretary of the Treasury (Press
Apr. 28, 1938:
Proclamation No. 2282
Reserve notes until June 30, 1939.
Regarding requirements for entry into
Executive Order No. 7877
the United States of gold exported
from Mexico.
Regulating transactions in gold.
Order of the Secretary of the
Treasury.
That the Chinese Government will purchase from the United States Treasury
a substantial amount of gold; that the
U. S. Treasury will purchase from the
Chinese Government an additional
Order of the Commissioner of
Customs, approved by the Secretary (T. D. 49535).
amount of silver: that the U. 8.
July 16, 1937: Announcement of the
Secretary of the Treasury, jointly
with the Minister of Finance of Brazil
(Press Service No. 10-78).
Sept. 12, 1937: Statement by the Federal Open Market Committee
Treasury will broaden the scope of
arrangements enabling the Central
Bank of China to obtain dollar ex-
May 25, 1938: Amendment to regula-
change for currency stabilization
July 16, 1938: Memorandum for the
President from the Secretary of the
That the United States will sell gold to
Brazil and that the United States will
make dollar exchange available to
Brazil for the purpose of promoting
exchange equilibrium.
That the Secretary of the Treasury has
released approximately $300,000,000
of gold from the Treasury's inactive
account.
Sept. 14, 1937: Memorandum for the
President from the Secretary of the
Treasury.
Regarding the receipt of newly mined
domestic silver under the proclams-
tion of Dec. 21, 193, as modified,
after midnight of Dec. 31, 1937.
be included in the inactive gold
account only to the extent that such
That the Treasury will defer continuation of the monthly silver purchase
arrangements with Mexico until further notice.
That the inactive gold account has been
discontinued.
Service No. 13-1).
Extending credit facilities to member
banks, and making Government securities eligible to secure Federal
purposes.
That gold acquired by the minta and
assay offices after Jan. 1, 1938, will
$100,000,000.
Mar. 28, 1938: Announcement of the
amended.
July 9, 1937: Announcement of the
Secretary, jointly with the Minister
of Finance of China (Press Service
Relating to newly mined silver (revokes
newly mined domestic silver regulations of May 15, 1935)
acquisitions in any one quarter exceed
the dollar.
Mar. 1, 1937: Act to amend Federal
rency and coin.
Further modifying the proclamation of
Dec. 21, 1933, as modified, by providing that it shall remain in force and
providing for the deduction of 50 percent instead of 40 percent for seigniorage and services performed by the
immediate export to, or earmark for
those countries offering to sell gold
to the United States.
Subject
Governing the exchange of paper cur-
effect until Dec. 31, 1938, and by
That the Secretary will sell gold for
obligations.
Jan. 23, 1937: Act to amend the Gold
489
tions No. 85. Bureau of Internal
Revenue (T. D. 4805).
Treasury.
Dec. 19, 1938: Announcement of the
Secretary of the Treasury (Press
Service No. 15-82).
Dec.
Revoking Proclamation No. 2092 of
Aug. 9. 1934, except as to the provisions thereof relating to settlement
for silver received by United States
coinage mints pursuant to proclamation No. 2067 of Dec. 21, 1933.
Revoking Executive Order No. 6814,
dated Aug. 9. 1934, and Executive
Order No. 6895-A, dated Nov. 2,
1934, relating to silver
Revoking the orders of the Secretary of
the Treasury of June 28, 1934, and
May 20, 1935, relating to silver, and
the silver regulations of Aug. 17, 1934,
as amended.
Revoking T. D. 47214 requiring consular
invoices for importations of silver,
with certain exceptions, as amended
by T. D. 48574.
Relating to tax on transfers of interest
in silver bullion.
Regarding the receipt of newly mined
domestic silver under the proclamation of Dec. 21, 1933, as modified,
after midnight of Dec. 31, 1938.
That the arrangement announced on
July 9, 1937, under which the Bank
of China has been enabled to obtain
dollar exchange for stabilization purposes has been extended for a further
period beyond Dec. 31, 1938
31,
1938: Proclamation No. 2317.
Further modifying the proclamation of
Dec. 21, 1933, as modified, by pro-
viding that it shall remain in force
and effect until June 30, 1939, and
providing that silver to be eligible
must be delivered to the mint by
June 30, 1939.
SILVER
SILVER
490
MONEY AND Oneorr-Continued
MONEY AND CREDIT-Continued
Subject
Document
Jan. 16, 1939: Newly mined domestic
silver regulations issued under the
proclamation of Dec. 31, 1938.
Feb. 10, 1939: Internal Revenue Code,
sec. 1805 (76-1).
Feb. 11, 1939: Prescribing regulations
under the Internal Revenue Code
(T. D. 4887).
Apr. 5, 1939: Act to regulate banking
in the District of Columbia (76-20).
June 20, 1939: Act to amend the Fed-
eral Reserve Act, as amended
(76-135).
Document
Relating to newly mined silver (revokes
newly
mined domestic silver regulations of Jan. 10, 1938).
Levying a tax on transfers of interest in
silver bullion
eral Reserve Act, as amended
(76-162).
Apr. 16, 1940: Announcement of the
Treasury Department (Press Service
No. 20-75).
bia, and for other purposes.
Extending to June 16, 1942, the period
within which certain loans to executive officers of member banks of the
Federal Reserve System may be
Extending to June 30, 1941, the period
during which Government securities
are eligible to secure Federal Reserve
duties, appraisement of merchandise,
wherever the conversion of British
pounds sterling into United States
dollars is necessary for such pur-
poses.
May 7. 1940: Resolution to amend sec.
5 of the Trading with the Enemy Act,
as amended (76-69 res.).
June 11, 1940: Act to amend R. S.
5136, as amended (76-583).
July 19, 1940: Treasury announcement (Press Service No. 21-56).
notes.
the dollar may be exercised.
Newly mined domestic silver regu-
lations issued under the act of
July 6, 1939.
July 18. 1939: Act to amend "An act
to establish a code of law for the
District of Columbia" and of any act
Relating to receipt and coinage by
United States coinage mints of silver
mined pursuant to the provisions of
sec. 4 of the act of July 6, 1939.
Relating to foreign building and loan
associations doing business in the
District of Columbia.
or acts amendatory thereof (76-193)
July 25. 1939:
Proclamation No. 2342
Further modifying the proclamation
as
force
and
respect to mined subsequently
viding of Dec. effect that 21, silver until it 1933, shall Dec. remain 31, modified, 1939, in with pro-
to Dec. 21, 1933, and on or before
Amendment to newly mined domestic silver regulations of Jan.
July 1, 1939.
Amending secs. 1, 2, 20 (c), and 24.
Dec. 27, 1940: Statement of the Secretary of the Treasury and the repre-
sentatives from Argentina (Press
Service No. 23-5).
Apr. 7. 1941: Act to amend the Federal
Reserve Act, as amended (77-31)
Apr. 17, 1941: Treasury announcement
(Press Service No. 24-63).
Amending sec. 6, as amended.
Apr. 25, 1941: Statement of the Secretary of the Treasury and the repre-
sentative from the Republic of
China (Press Service No. 24-77).
June 21, 1941: Act to amend R. S.
3528, as amended (77-117).
June 30, 1941:
Act to amend the Federal Reserve
Act, as amended (77-141).
System (76-229).
Aug. 5, 1939
Act relating to commemorative
coins (76-278).
Act relating to building associations in the District of Colum-
bia (76-282).
Sept. 11, 1939: Announcement of the
Secretary of the Treasury (Press
Service No. 18-72).
Prohibiting the issuance and coinage
of certain commemorative coins and
for other purposes.
Providing for the abatement of personal taxes from insolvent building
Act to amend the Gold Reserve
Act of 1934, as amended
Nov. 19, 1941: Statement of the Secretary of the Treasury and the Mexican
Secretary of the Treasury (Press
Service No. 28-56).
Dec. 18, 1941: First War Powers Act,
1941, Title III (77-354).
associations in the District of Columbia,
That the French Government as an
emergency measure has set up a
system of exchange control in France
and French territories and that the
tripartite declaration continues in
effect.
exchange transactions, etc.
To authorize charitable contributions by
national banking associations.
That Great Britain has resorted to exchange control and has concluded
arrangements between London and
New York for a system of registered
sterling accounts, which should tend
toward stabilizing the sterling rate
and protect the American market
That an exchange stabilization agreement between the United States and
Argentina has been completed.
Relating to foreign accounts in Federal
Reserve banks and insured banks.
Announcement of the purchase of
$132,000,000 of gold in South Africa
U. S. Treasury stabilization fund,
That exchange stabilization agreements
between the United States and China
and between Great Britain and China
have been signed.
Increasing the amount authorized to
be used in the purchase of metal for
minor coins of the United States.
Extending the time during which direct
obligations of the United States may
be used as collateral security for
(77-142).
establishment of the Postal Savings
Providing for the regulation of foreign
from the British Treasury by the
16, 1939.
July 26, 1939: An act to amend the act
approved June 25, 1910, authorizing
That the "official" rate for the British
pound sterling as certified to the
Treasury Department by the New
and the final liquidation of duties
July 6, 1939:
Act to amend Gold Reserve Act Extending the time within which the
powers relating to the stabilization
of 1934, as amended (76-165).
fund and alteration of the weight of
Subject
York Federal Reserve Bank is to be
used in the collection of estimated
Making regulation No. 85, concerning
tax on transfers of interest in silver
bullion, applicable to sec. 1805 of the
Internal Revenue Code.
Relating to banking, banks, and trust
companies in the District of Colum-
renewed or extended.
June 30, 1939: Act to amend the Fed-
491
Jan. 6, 1942: Announcement of the Sec-
retary of the Treasury (Press Service
No. 29-43).
Feb. 27, 1942: Treasury announcement
(Press Service No. 30-50).
Mar. 27, 1942: Second War Powers Act,
1942, Title XII (77-507).
Federal Reserve notes.
Extending the time during which the
powers relating to the stabilization
fund and alteration of the weight of
the dollar may be authorized.
That an exchange stabilization agreement and a silver purchase agreement
between the United States and Mexico
have been signed.
Amending sec. 5 of the Trading with the
Enemy Act, as amended, providing
for the regulation of foreign exchange
transactions, etc.
That the Treasury has purchased
$20,000,000 of gold from the Union
of Soviet Socialist Republica
That the Secretary and the respresentatives from Ecuador have signed an
agreement for exchange stabilization.
Relating to the coinage of 5-cent pieces.
SILVER
SILVER
The CHAIRMAN: Further, Senator Hayden, of Arizona, has sub-
mitted some data for the consideration of the committee. This
will be given due consideration, and if the committee sees fit
request at a later time, we will include some of these data, if not all, in the
permanent record.
[The matter referred to above follows:
UNITED STATES SENATE,
COMMITTEE ON APPROPRIATIONS
May 5, 1948.
Hon. ELMER THOMAS,
Chairman, Senate Special Silver Committee,
Washington, D.
MY DEAR SENATOR THOMAS: I deeply regret that the work of the Senate
Committee on Appropriations will prevent me from attending the meeting of the
Senate Special Silver Committee schedule: to be held this morning at 10:30, in
room 424 of the Senate Office Building. at which time the effect of preference
rating order P-56 in relation to the continued operation of our western mines will
be discussed.
However, I shall be greatly obliged if you will be good enough to allow me to
present herewith for inclusion in the record of this hearing before your committee
the attached statement prepared by Mr. Charles F. Willis, State secretary of the
Arizona Small Mine Operators Association. 528 Title and Trust Building, Phoenix,
Ariz., in which there is set forth in complete detail the reasons why the issuance
of this order by the War Production Board will be detrimental not only to our
western mining industry but to the entire war effort of the United States.
Yours very sincerely,
CARL HAYDEN,
United States Senator from Arizona.
MARCH 4, 1942
Senator CARL HAYDEN,
Senate Office Building,
Washington, D. C.
DEAR CARL: Newspaper releases this morning stated that the War Production
Board had cracked down upon gold and silver mining by denying priorities and
taking back serial numbers on gold and silver mines where the gold and silver was
30 percent or more of the dollar value of the ore.
This creates a very serious situation in Arizona and one that is in many ways
ridiculous, It seems very ridiculous that you may have an ore that has large
quantities of copper, lead. and zinc and because there is an extra value on account
of the gold and silver content you cannot get machinery and equipment. That,
however is not the most serious Arizona situation, although some mines will be
harmed by it, as there are many mines producing base metals which are sweetened
by the gold and silver values which make possible the base metal production.
The serious situation in Arizona, however, is that copper smelters absolutely
require siliceous or lime-fluxing ores. These orea are the gold and silver ores.
They must have them or they cannot produce copper. The big mines must have
a sufficient quantity of silica and lime to make a metallurgical mix and therefore
the smelters have to buy the flux. It costs just as much money to mine silica or
lime having no value, but which uses just as much equipment, and if the smelters
can get fluxing ores which have a value they thereby create an industry.
In 1941 the small mines in Arizona shipped 110,361 tons of ore to copper smelters
and of this 93,374 tons, or 84.6 percent, of the total consisted of fluxing ores which
are ruled out of the priorities by this War Production Board order. Shipments
of smelting ores and concentrates, which were purchased by the smelters primarily
for their base-metal content amounted to only 16,987 tons, or 15.4 percent of the
total. The 93,374 tons of Arizona fluxing ores, for which machinery and equipment
no longer can be obtained, contained gold with a market value of $413,525, silver
with a value of $376,510. and copper with a value of $272,762.
You can appreciate what this means, The copper mines have been combing
the State for fluxing ores which have a metal content, and they must have them or
the production of copper will have to be curtailed, or the price increased to cover
the cost of buying fluxes without value.
We have not had the opportunity nor the facilities for fully analyzing the State,
but from the above you can see that the setting of an arbitrary 30 percent of the
dollar value is going to do a great deal of harm, not only to the State, but to the
base-metal production.
493
While we hate to see any mines shut down, as we believe that we are going to
gold and silver very badly in the after-the-war adjustment, we do think that
need Washington and authorities believe that gold and silver should be eliminated
they if 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
cyanide plants would create a great deal of economic distress in certain parts of
the State, and the quantity of materials which they consume is inconsequential
in the total picture.
am
trying to get together some additional data to send you, but, inasmuch
this news broke today, I thought we better pass along the above to you just
as quickly as possible to see what you can do to help in the situation.
With kindest personal regards, 1 am,
Yours very truly,
I
492
as
CHARLES F. WILLIS,
State Secretary, Arizona Small Mine Operators Association
MARCH 4, 1942.
STATEMENT OF CHARLES F. WILLIS, STATE SECRETARY, ARIZONA SMALL MINE
OPERATORS ASSOCIATION; CHAIRMAN, BOARD OF GOVERNORS, ARIZONA DEPARTMENT OF MINERAL RESOURCES
The War Production Board's crackdown on gold and silver mines by curtailing
the priority assistance available to them in purchasing essential supplies and
equipment for the maintenance of their operations is a serious blow to small mine
operators in Arizona and to the mining industry as a whole.
The Board's order was based on a fallacious reasoning that gold and silver are
not important to the war effort because those two metals are not used in the
actual production of planes, tanks, guns, ships, trucks, etc. Analysis shows,
however, that gold and silver production in Arizona and other Western States
absolutely essential to base metal output.
The Arizona Small Mine Operators Association is preparing a statement
appealing to the War Production Board to reconsider its action which virtually
excludes gold and silver mining from priority assistance and will force a curtailment and gradual shut-down of the mines whose output is vital to maximum copper
production. Arizona is the leading copper-producing State in the Union, but to
maintain its position it must have suitable fluxing ores which are mined in the
State's gold and silver properties.
Gold and silver ores in Arizona are siliceous they have a high silics cont-and silica is used by the smelters for flux. It is an essential element in the
smelting of base ores containing sulfides. How ridiculous it would be to force
the gold and silver mines to shut down and make the smelters acquire their silica
flux from sources which contain no values at all.
In 1941, small mines in Arizona shipped 110,361 tons of ore to copper smelters,
and of this 93,374 tons, or 84.6 percent of the total consisted of fluxing ores.
Shipments of smelting ores and concentrates, which were purchased by the
smelters primarily for their base-metal content amounted to only 16,987 tons or
15.4 percent of the total.
The smelters purchase fluxing ores, and in many cases pay good premiums for
them, in order to mointain a proper metallurgical balance in their reduction
processes. Oftentimes, the metal content alone does not justify the purchase of
these ores, but their silica content make them suitable for mixing with ores which
are deficient in that requirement but have a substantial content of copper. Without the flux, the copper ores could not be smelted.
The War Production Board's order curtails priority assistance to mines in which
the gold and silver content accounts for more than 30 percent of the dollar value
of the product. Such mines must apply for individual priority assistance, which
means long delays and that miles of red tape must be cut if any aid is to be obtained at all.
The seriousness of this to small mines of Arizona is shown by smelter reports
which indicate that 74 percent of the dollar value of Arizona fluxing ores is in gold
and silver. The 93,374 tons of Arizona fluxing ores shipped to smelters in 1941
contained gold with a market value of $413,525 silver with a value of $376,510,
and copper with a value of $272,762.
The order will be a particularly heavy blow to mines in Mohave County, one of
Arizona's most important mining counties, because gold and silver accounted for
74 percent of its production of gold, silver, copper, lead, and zinc reported at
$3,141,236 in 1940. Yavapai County, with a 1940 output of nearly $13,000,000,
is
SILVER
SILVER
also will be seriously hurt because 30 percent of its output of the five major metals
Fluxing ores in Arisona and undoubtedly in many other States come from
large number of different sources. You will note from the report that in 1941 a
there were 259 different shippers of fluxing orea to the Arizona copper smelters
and in addition there were another 64 smaller shippers, with values mainly in
gold and silver, but where information on the exact metal content was not
494
consisted of gold and silver.
Cochise County, which led the State in value of production of the five major
metals in 1940 by accounting for nearly $17,000,000 in value, also has a large gold
and silver output. These two metals accounted for 24 percent of its total value
that year and since this figure is an average it is obvious that gold and silver
content at a number of operations exceeded 30 percent.
DOUGLAS, ARIZ., March 9, 1942.
Mr. WILBUR A. NELSON,
Administrator, War Production Board Mining Branch,
Washington, D. C.
The Arizona civilian defense emphatically protests and urges reconsideration
of recent orders amending P-56 and P-100 reducing priorities ratings to gold and
silver mines having dollar value in excess of 30 percent of total value. This
seriously affects production of fluxing ores necessary to copper smelting; makes
necessary mining of fluxes with no value, which will consume even more machinery
and supplies, as they have to be equipped; cuts down available copper, lead, and
zinc available from ores which could not be mined at all if gold and silver values
were not present and has other serious results. While order has very damaging
effect on economy of State and ruins certain communities which have no alternative industries, at least distinction should be made to exempt from order those
mines containing any base metals. Believe order should be further modified to
permit new mines getting started, as the new mines being made today are the ones
we may be heavily leaning upon a few years from now in the event the war carries
on that long. Believe your objective can be worked out without the damage being
done by order as now written. Heartily concur with features of order giving
higher ratings to base metal production than that which they have had. Would
respectfully suggest cancelation of that part of order referring to gold, silver mines,
and conference with those concerned to order which will create less damaging
situation, yet attain objective you seek.
P. G. BECKETT,
State Chairman, Division Industrial Resources and Production,
Arizona Civilian Defense Coordinating Council.
Dr. WILBUR A. NELSON,
MARCH 10, 1942.
Administrator of Mining Branch, War Production Board,
Washington, D. C.
conDEAR Ma. NELSON: The Arizona Small Mine Operators Association,
sisting of approximately 4,700 members, desires to register a most emphatic
protest against that portion of the recent amendment of preference rating order
P-56 curtailing priorities' to gold and silver mines. We can appreciate the
objective of your order but believe that it has been worked out in a most confused
and complicated way and that the objective can be reached without causing the
damage and disturbances to the war industries that has been caused by this order.
These various orders and changes are keeping the mine operators in such a
state of confusion that they are just about ready to throw up their hands and say
'What's the use?" They have been anxious and ready to produce to help the war
program and find themselves so beset with obstacles and red tape that they do not
know where they are and cannot afford the expense of unraveling the red tape.
I am enclosing a statement prepared by the Arizona Department of Mineral
Resources on this subject of curtailment of priorities to gold and silver mines.
It does not include anything like a complete analysis of the subject, as it has been
hastily compiled with data readily available. It does not begin to show how
damaging the situation really is, but I trust that you will read and absorb the
few points that it does bring out.
The principal feature of this report is that which concerns us most in Arizona
and that is the ability to continue mining fluxing ores under the revised order.
This morning we have been informed that you have made the statement that
mines producing fluxing ores will be taken care of under the provision of the order
which provides for special cases and appeal. This undoubtedly means that a
mine producing fluxing ores can make individual applications to Washington for
reinstatement
see
it here in theunder
field. P-56, but this is in no way a solution of the problem as we
495
obtainable.
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
the fluxes that they want they will have to take it in smaller quantities from a
great number of sources.
It would not be possible to have these sources of fluxing ores developed without
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
and supplies with which to keep going. There are many of them which could
never qualify under present limitations to get started, and yet, if the smelters are
going to produce more copper, they must have the fluxes necessary.
The copper melters of Arizona have been continuously seeking more fluxing
ores than they have been able to get. When they find these additional fluxing
orea they will produce more copper, but until they find them they are restricted.
The situation regarding fluxing ores has often been such that the smelters themselves, or the mining companies owning them, go out and help by leasing or
financing to get the additional supplies that they must have.
not
There is only one way that will satisfactorily solve this problem, and it
by making individual applications to the War Production Board for reinstatement
under P-56. The only way that it can be done is to give some kind of a blanket
rating which will assure these mines that when they start they can go ahead and
keep on going. Many of them do not qualify even under the 10-men-employed
ruling but they make a very definite contribution to copper production.
It should be noted that the smelters will only buy the ores which they need to
make the proper metallurgical mix: therefore, the exemption from the recent order
should apply to all mines shipping to smelters regardless of gold and silver content.
It makes a rather ridiculous situation when any mine is cast aside and priorities
are curtailed simply because they have high values in gold and silver. Only
yesterday I had a letter from one of the members of our association asking me
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 as against 161/2 ounces of gold and silver in a ton of rock, and
yet under the recent ruling he is virtually prohibited from getting equipment and
supplies even though he could make a splendid contribution to copper production.
is
He has 15 times as much copper in a ton of rock as many of the large copper mines.
Undoubtedly this man could qualify under your special application provision,
but in order to do so he has to undertake a lot of expense, reports, delay, and other
obstacles, He not alone has to hurdle those existing today, but, because of what
has happened in the last several months, he has the fear of new and impossible
handicaps being created against him in the future. He simply does not have the
finances back of him to hurdle the obstacles even though he has a very valuable
ore and a much-needed contribution to the war program. Hence he will not start
until he sees a reasonably clear road ahead.
The above is but one of many typical cases and it is to be hoped that this problem can be solved in a manner that is simple enough for these small mine operators
to operate under. They do not have the money with which to go to Washington
to entangle their difficulties. They do not have the funds for financing them
during long delays. They do not have the ability to fill out the many reports
required or the cash to engage an engineer to do it for them, yet they do have
copper, lead, and zinc which the Government wants very badly.
We believe that the cost in curtailment of the Nation's effort for an all-out-for
victory program and the delay caused by the issuance of this gold-silver priorities
order will prove to be of far more importance than the saving of the very small
amount of machinery and supplies used by gold and silver mining. In other
words the country would be better off, in our opinion, if the order had never been
issued for it has added to the confusion and uncertainty
Space or time does not permit of a complete discussion of this most important
subject. There are many other phases of almost equal importance but we believe
that you will see that a mistake has been made and that it will be corrected. We
know that you have a huge problem and that you are approaching that problem
with a sincere and honest effort to solve it. Mistakes will be made because of
failure to appreciate the intricacies and details of all industries which you are
SILVER
SILVER
"Not only that," he went on, "there is another point. It is because we have
these high-grade silica fluxes available that we are able to treat a considerable
tonnage of low-grade siliceous orea containing values mainly in copper. Very
frequently, good copper values are found in low silica orea which in themselves are
useless as flux. Mixed with clean flux, they can be handled.'
Superintendents of other smelters express similar opinions and it is urged that
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 cut off smelters' supplies of fluxing ores, should be modified and corrected
before irreparable damage is done. Even delay would be serious to the base
required to act upon, but we feel that you will promptly make the changes neces
sary to fit the that conditions. the serious mistake of issuing the gold-silver priorities order will
be We promptly hope rectified by setting it aside until a more equitable and less damaging
plan can be worked out
Yours sincerely,
CHARLES F. WILLIS,
State Secretary, Arizona Small Mine Operators Association.
metal program.
STATEMENT TO DR. WILBUR A. NELSON, ADMINISTRATOR OF MINING BRANCH,
WAR PRODUCTION BOARD
Table I, appended to this report, giving data on Arizona custom ore shipments
to smelters for the year 1941 emphasizes the importance of fluxing orea. Eightyfive percent of the custom ores shipped, or 93,374 tons out of a total of 110,361
tons, consisted of fluxing ores which contained a low copper content but high
(Prepared by the Arizona Department of Mineral Resources, Phoenix, Arix.)
The War Production Board's recent amendment of preference rating order
curtailing priority assistance to gold and silver mines, has caused serious
values in gold and silver.
The smelting ores and concentrates, which were shipped for their copper content
and which carried minor values in gold and silver, amounted to only 15 percent of
the total shipments. These figures do not include the ores delivered to smelters
P-56, among mine operators in Arizona and throughout the west. The
apprehension that they feel and have expressed are by no means based solely on the
misgivings dismal outlook for gold and silver mining they are alarmed as well over the effect
that the new order may have on the production of such base metals as copper,
lead, and zinc, which are so sorely needed in the war program.
While the granting of higher ratings to producers of the so-called essential war
minerals is recognized as a constructive step, the exclusion of gold and silver mines
from P-56 has caused concern and consternation because it is not felt that the
A-10 rating, still open to producers of these two metals, is adequate under present
conditions to furnish them with needed supplies and equipment. If an A-10
rating were good enough, there would be no point in granting A-1-c ratings to
producers of base metals.
It is felt that the order barring gold and silver mines from P-56 was due to
misunderstanding and to a lack of appreciation of the importance of gold and
silver production to the mining and treatment of base metals. Gold and silver
ores which contain a high silica content are essential to the smelting and reduction
of copper and high lime is necessary to lead smelting
Smelters have essential requirements for maintaining a metallurgical balance
in their operations These are the proper relative proportions of lime or silica to
sulfides and since the perfect ore that contains exactly the right proportions of
these constituents does not usually occur in nature it is necessary for the smelters
to acquire them from different locations.
In Arizona, the great bulk of the copper ores are sulfide in character with concentrates extra high and consequently there is a deficiency of silica. The situstion in Arizona regarding copper ores applies equally to other States where copper
and lead are mined- is necessary to purchase siliceous or lime ores for smelting
purposes and if they can be obtained with something of value in them, so much the
better.
As a result, the smelters often pay premiums for the siliceous ores produced by
gold and silver properties or high lime ores in order to obtain proper fluxing ma-
terials, and they must have them to smelt copper, lead, and other metals. It
would seem to be absolutely ridiculous to force the gold and silver mines, which
have been providing these materials, to shut down and create either a curtailment
of the smelting of base metals or require the smelters to go out and develop new
sources of flux without value, but with cost and consumption of equipment
equal to that which has value.
As a matter of fact, if it becomes necessary to develop quartz mines in order to
acquire siliceous ores, the cost will be greater and much additional equipment
will be required. The gold and silver mines are already developed and equipped
and are on a producing basis. To start work in unexploited and unexplored deposits will require tremendous expenditures for new equipment and a considerable
delay. Furthermore, A-1-a priority ratings may well be needed to obtain the
new machinery.
A superintendent of one of the Arizona copper smelters stated: "The gold-silver
siliceous fluxing ores are very essential in the smelting of copper ores and concentrates. We depend almost entirely on gold-silver ores, which rarely contain
any copper, for use as flux in the converters in order to complete the production
of copper from the reverberatory matte.'
shipAnother superintendent declared: "It would be a serious blow to us if our
ments of gold-silver siliceous ores were cut off. As far as we are concerned,
the bulk of our receipts of gold-silver ores are used strictly for fluxing purposes
and without them we would be in a serious predicament."
497
by the major copper-producing mines in Arizona including those operated by
Phelps Dodge Corporation, Inspiration Consolidated Copper Co., Miami Copper
Co., Nevada Consolidated Copper Corporation, Magma Copper Co. and Shattuck
Denn Mining Co., but the custom ores shipped from the small mines played an
important part in the reduction of the output of the large producers.
Table II shows the metal content of the fluxing ores acquired by the smelters
last year and reveals that the gold and silver values of the fluxing ores shipped to
smelters in 1941 contained gold with a market value of $413,525. silver with a value
of $373,510, and copper worth only $272,762. Smelters obtained this material
from 259 different shippers and there were 64 still smaller shippers of fluxing
material with values mainly in gold and silver.
Since the Board's order curtails priority assistance under P-56 to any mine
in which the combined gold and silver content equals or exceeds 30 percent of the
total dollar value, it is clearly evident that producers of these fluxing ores would
not be entitled to better than an A-10 priority rating. Arizona is known as the
leading copper-producing State in the Union and the general inclination is to
minimize the importance of the State's gold and silver production. Nevertheless,
much of the copper mined could not be recovered if it were not for the gold and
silver content, and reduction of the copper sulfides would not be possible without
fluxing material which is obtained in large quantities from the gold and silver
producers.
Table III gives data on gold and silver production in Arizona by counties in
1940, gathered from the United States Bureau of Mines' Minerals Yearbook,
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
cutting off priority assistance to gold and silver producers under P-56. It is noteworthy that 18.7 percent of the total value of Arizona production of gold, silver,
copper, lead, and zinc in 1940 was accounted for by gold and silver.
The order will be a particularly heavy blow to mines in Mohave County, one of
the State's most important mining counties, because gold and silver values recovered amounted to $2,329,217, or 74 percent of the total value of its output of
gold, silver, copper, lead, and zinc, which aggregated $3,141,236 in 1940. Yavapai
County, with a 1940 output of nearly $13,000,000, also will be seriously hurt because
percent of its output of the five major metals consisted of gold and silver.
Cochise County, which led the State in value of production of the five major
metals in 1940 by accounting for a total of nearly $17,000,000, also has a large
gold and silver output. These two metals were responsible for 24 percent of the
total value of the county's 1940 output and since this figure is an average it is
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
have on certain areas in Arizona, tables IV and y were prepared to show the importance of mining in Mohave County, where gold and silver dominate mining
operations. Table IV was compiled from the employers' contribution reports to
the Arizona Employment Security Commission and reveals that, of the industries
covered by the Workmen's Compensation Act, mining is by far the most important
providing 57 percent of the employment and 63 percent of the pay roll.
These figures cover only those employed directly by the industry while as
matter of fact a heavy percentage of those employed in trade, service, utilities,
30
a
496
pt.
SILVER
498
SILVER
and other industries are indirectly dependent on mining and the pay rolls it
499
TABLE II.-Gold, silver, and copper content of Arizona fluxing ores, year 1941
provides for their livelihood.
Inasmuch as the Workmen's Compensation Act does not cover employees in the
industry and a number of other occupations (see footnote at bottom
Amount contained
Metal
Value
agricultural table IV) table V was compiled from the 1930 United States census figures on
of engaged in gainful occupations in Mohave County to show more clearly
persons mining's relative importance to the county. It will be noted from the table that
only two primary industries appear- mining and agriculture.
Therefore, the entire population of Mohave County is dependent on the new
wealth provided by these industries and by the tourists on whom figures are not
available Without these industries, there would be no need for service, trade,
construction, and utility industries. It is upon mining and agriculture that the
county was built and if one of these two industries is withdrawn the effect will be
almost disastrous.
From the standpoint of the communities and counties dependent on gold and
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
comes first and that it may be necessary to sacrifice communities to the victory
program, there still is no justification for clamping down on the gold and silver
because of the importance of these metals to the Nation's financial structure and
to the production of war essential metals
Gold and silver are thought of as monetary metals and of relatively little
importance today. However, in view of the tremendous expenditures that are
11,815 onnoes
529,475 ounces
2,273,022 pounds
Gold
silver
Copper
Total
County
Coehise
Glas
Fine
Value
ounces
Fine ounces
$1,830,801
$4,108,041
4,961
173,635
144,336
1,680
102,639
276,274
2.333
1,659
3,339
56.62
59,633
5,897
101,108
322,639
3.20
91.08
10.97
8,156,719
354,218
3,141,236
13,253,316
41,475
235,515
1,185
$16,968,111
9,787
16,332,698
Santa Crus
Ysvapsi
43,227
2,545
1,173,375
1,512,945
89,075
75,210
2,632,350
1,061,107
640,710
1,651,555
3,272
114,520
29,700
21,120
135,640
89.83
150,996
294,807
10,318,245
7,075,215
5,031,264
15,349,509
18.68
82,167,759
Yuma
6,729
2,066,295
369,734
394,581
87,124
262,922
280,503
754,565
455,616
2,329,217
1,453,966
2,267,510
74.15
18.94
14,228,443
544,691
31.58
1,174,439
3,806,789
29.69
1,742,558
12,823,783
TABLE IV.-Employment and wage payments in Mohave County, Aris., year 1940
number of
Percent of
total em-
employees
ployees
Average
Industry
Mining
668
$1,045,571.87
10,673.99
23,531.50
.65
1.42
1.11
1038.23
54,871.77
325,701.76
20.00
.85
12,281.76
.74
12.30
127,811.05
4,584.14
6,111.25
7.72
241
10
144
.43
5
100.00
1,171
1.24
3.42
13
Total
Lon
63.18
1.62
.53
Type of cres or 000-
Percent of
total wage
payments
.51
40
Professional service
Miscellaneous
ments
1.62
19
Real estate
Wage pay-
57.05
19
Service
centrates
24.21
3.01
Manufacturing
Transportation
Communication
Silver content
copper,
lead, sinc
2,574,564
Trade
Gold content
metals
Gold,
silver.
$2,277,240
Utilities
Copper content
Percentage
of total-
65,064
Contract construction
in Arizona, year 1941
Gold and
silver value
Value
Pinal
Mohave
Total
TABLE I.-Shipments of custom ores and concentrates to smelters by small lot shippers
100.00
74.34
790,035
a
Maricopa
electrical equipment as a substitute for copper.
action in denying gold and silver mines priority assistance under P-56, this
would be sufficient because in this manner these mines are making a vital and
indispensable contribution to the victory program.
1,062,797
Coconine
Moreover, silver is coming into greater prominence as a result of the war
demand for other metals and the fields in which it can be used as a substitute
The most important reason for giving these mines whatever priority assistance
is necessary to permit continued and uninterrupted operations, however, is the
need of the gold and silver orea by the smelters for fluxing purposes. If there
were no other reason at all for the War Production Board to reconsider its hasty
85.43
25.66
value
Pims
are vital in war, it is finding wider use in plating as a substitute for tin and in
88.91
TABLE III.-Value of mine production of gold and silver in Arizona compared with
total value of gold, silver, copper, lead, and zinc output by counties, year 1940
being made and the always present threat of inflation due to the unprecedented
and rapidly growing national debt, these metals are vital to the Nation's credit
Aside from its applications in photography and the drug industry, both of which
$413,825
376,510
272,726
Gold and silver combined
Graham
Greenlee
system.
Percent of
total value
1.39
3.32
19.69
.28
37
1,654,767.00
100.00
of
an
of
Source: Employers' contribution reports to Arisona Employment Security Commission. These figures
include only workers covered by the Unemployment Compensation Act. Companies with less than
employees are not subject to the law. Neither are agricultural labor, domestic services, Government
3
a
employees, nor the wage earners of certain nonprofit organisations.
Total
250
47
306
84 6
93,374
84.6
15.
16,987
15.4
100.
0
Fluxing
Smelting
110,361
100.
1,273,022
1.22
31.4
4,963,713
14.63
68.6
7,236,735
3.19
11,815
(1)
0. 1265
(1)
529.
471
(1)
5.671
TABLE V.-Personal engaged in gainful occupations in Mohave County, year 1930
(1)
Industry
100.0
Agriculture
I Not available
Mining
Source: Complied by the Arizona Department of Mineral Resources from data submitted by the operators
of smelters treating Arizona ores. Smelters submitting the data from which the table was compiled include
the Clarkdale and Douglas smelters of Phelps-Dodge Corporation the Hayden and El Paso plants of
Miami smelter of International Smelting & Refining Co., and the
Magma
Copper
Co.
American
Smelting
&smelter
Refining Superior
Co., the
at
In addition
tometal
the above
there
areavailable.
also 64 still smaller shippers of fluxing ores with values mainly
in NOTE
gold and
silver, but
content
is not
The above tabulation does not Include Dmenta of the major properties In Arizona operated by PhelpeDedge Corporation Inspiration Consolidated Copper Co., Miami Copper Co., Nevada Consolidated Cop-
per Corporation, Magma Copper Co., and Sbsttuck Denn Mining Oo.
Construction
Manufacturing
Transportation
Communication
Utilities
Number of
employees
Percent of
total em-
Industry
ployees
542
22.16
Trade
531
21.71
3.43
Real estate
Finance
M
85
195
67
55
2.25
Government service
Number of
employees
Percent of
total emplayees
285
11.65
16
.65
24
130
98
5.31
7.97
2.74
Total
2,446
99.99
1.80
Source: United States census figures for the year 1930 classified to correspond as closely as possible to the
break-down of employment used by the Arizona Employment Security Commission in its reports of emplayer contributions. The census figures, which include all persons engaged in rainful occupations natu
of rally are much higher than those of the employment security commission which apply only to employees
businesses where or more individuals are working and does not cover agricultural workers, Government
employees, domestic servants, nor the employees of certain nonprofit organizations.
SILVER
SILVER
501
500
[From the Mining Journal, March 15. 1942
DRIFTS AND CROSSCUTS
it has been expected for some time that the War Production Board
While "crack down' on priorities for gold and silver mines, or give them a less
would place than that occupied by copper, lead, zine, and other metals, the
preferred order that finally came out was many times more drastic than even the most
pessimistic the anticipated. A-10 granted sounds like a fair rating, the way that everything is
While up ahead means that A-10 is being left out in the cold and that very
being nothing pushed will be obtainable under it. The drawing of the line at mines which
contain soon 30 percent or more gold and silver in dollar value, regardless of the base.
metal content or the uses to which the ore is put, is so ridiculous that it is hard to
understand. Even admitting-whie we do not-that the metals, gold and silver, are non-
essentials insofar as the defense program is concerned, the copper, lead, zine,
tungsten, and other metals which are highly assential are so extra important and
much more in volume that we should be quite willing to permit the production
80 of a little silver and gold to get them. It is the silver and gold in many cases
which sweeten the value of copper, lead, and zinc ores and make it possible to
mine them. Without the silver and gold, they would have to be left in the ground.
Likewise important are the minerals contained other than the base metals
Copper smelters need and must have silica and the large copper mines seldom have
enough silica available to offset the high sulfide concentrates which they make
They seour the country for high silicious ores and hope to be able to find them
with a gold-silver content that pays for the cost of handling them. Now these
ores are ruled out. yet the copper smelters will have to find and mine fluxes
The equipment and supplies used in mining fluxes without value will likely be
even greater than mining the same quantities with values as it will mean new
mines to get under way
Similarly, lime is an essential in lead smelting. Without lime flux we will not
get lead and we must have it. Just because you are unfortunate enough to have
a lime rock with some gold and silver values in it to help pay for the cost of mining,
you are prohibited from getting supplies and equipment.
It is such a ridiculous ruling and definition that we feel it will be modified just
as quickly as its sponsors can be made to appreciate what damage they have done
the base-metal production program. We know there are some capable mining
to men connected with the War Production Board. That is what makes it so hard
to understand why they get so far off on the wrong foot.
[From The Mining Journal, April 15, 1942
DRIFTS AND CROSSCUTS
Wars are not won with brave words and stirring bands. Wars are won with
deeds. Wars are won with production. Wars are won through the full, uncompromising cooperation of government, of labor, of industry, and of all the people.
Our war will be won or lost on the home front. Victory depends on whether we
can make and deliver the endless quantities of planes and ships and guns and
ammunition that our troops and our allies so sorely need.
Even while one part of the particular order gives a highly improved and preferred rating to some producers and to the manufacturers of mining machinery,
recognizing mining as being almost on the par with munitions, another section of
the same order gives a lowered rating to those who produce fluxes, And fluxes
are just as essential to base-metal mining as machinery.
Flagrant ignorance of the mining industry was shown by those who wrote that
order. It would be laughable if it were not so serious, but the bottleneck of the
whole production program is the shortage of raw materials. Sometimes it looks
as though deliberate efforts were being made to sabotage the war program by
restricting, or making more difficult, raw-materials output.
There possibly are some gold and silver mines that are not essential to the
war effort, except from an economic point of view, and thus the steel and other
commodities which they consume might be used more effectively in other war
industries. It is always a question of relative importance. However, these
are the exceptional cases, and to "crack down" on a very large group, and then
make each one individually justify its own right to participate in the war effort
is a mighty back-handed way of solving the problem.
Many necessary producing units will never qualify because they cannot afford
the expense and red tape involved. The number of producing units that can
qualify would be at least 50 to 1 as compared with those which would seek qualification on an economic basis.
If it is possible for the mining branch of the War Production Board to shut
down all gold and silver mines and then determine, after individual application
and consideration which ones are sufficiently important to the war program to
be permitted to resume, a reverse procedure likewise should be possible; that is,
let all properties continue to operate and determine by individual examination
of records which ones should be shut down, or which ones consume needed supplies in excess of the importance of that which they produce. The plan being
used means delay and less ultimate production; the other means the speeding
up which is so highly desirable. Again we say that if there is an awkward and
complicated way of doing a thing, they seem to be able to find it in Washington.
It is far from soothing to receive suave assurance that everything will work
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
be held back. They have been hurt and the whole program has been delayed.
Unfortunately, Mr. Jap is not waiting until we get our house in order. We are
engaged in a war that is costing many lives and much money, and every day that
preparations are delayed costs additional lives and extends the financial burden
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- there are
many of them-seemingly lack the guts to tell their policy-making superiors
just how harmful and far-reaching some of their actions are
We do believe that this and other wrinkles will be ironed out eventually, but
why cause the wrinkles in the first place?
CHARLES F. WILLIS.
BELMONT COPPER MINING Co.
Superior, Ariz., March 10, 1942.
Mr. CHARLES F. WILLIS,
Phoenix, Ariz.
And we are never going to make these planes and ships and guns and ammuni-
tion until we first produce the raw materials with which to construct them. The
basic raw materials are minerals and metals and we hope that Washington will
soon learn that it must do something about getting them.
Nothing has happened in the mining industry in a long time which has stirred
so much wrath as the recent ill-advised and ridiculously written order which
up
"cracked down' on mines simply because they happen to have gold and silver
values in excess of 30 percent of the dollar-value of their production, regardless of
the use to which these ores are put. While one department of the Government
tells us how badly it needs copper, lead, and zine, and urges all-out production,
another department "cracks down' and says these metals cannot be produced
without going through and keeping up a complicated procedure that makes it
almost impossible for the mines to produce.
DEAR MR. WILLIS: With reference to the suggestion of the Office of Production
Management that priorities be extended only to those mines where the copper
production is at least 70 percent of the total value in the ore, this would work as a
great hardship on companies that are endeavoring to open up new copper ore
bodies.
In the case of this company, the property was recently and very thoroughly
examined by engineers representing one of the large mining companies and
serious consideration is being given to an extensive development program in the
belief that a rich copper mine will be developed at depth similar to the high-grade
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
leached, with silver and gold predominating. With greater depth the silver and
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
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level. At our property, the veins hundred near to feet the the surface con-
400and 500-foot no copper, and at a depth of several ore runs
tain
practically
between 1 1/2 and 2 percent mines copper. are to be found near the surface is long past and
The day when copper them in proven districts where the geological conditions and
we should look for favorable. This company for several years past has been
surface showings are containing silver, copper, and gold which are required
producing siliceous ores flux but the more important issue in the cause of national
by defense the smelters is the excellent for prospect of finding rich copper ore at greater depth.
Yours very truly,
ARTHUR J. SMITH, Secretary.
[Radio address delivered by Col. station Charles KTAR H. Phoenix, Rutherford, Arit., Civilian March Aide 14, to 1942 the Secretary of War, over radio
How MISTAKEN PRIORITIES POLICIES HANDICAP OUR ALL-OUT WAR EFFORTS
said to you before, in this series of talks on national defense, of and more
I have talks on winning the war, that I consider it the duty every citizen
recently in my to what he believes to be mistakes made by our public officials;
to call attention told you that I consider it the duty of those with an intimate connection
with and I have officialdom to go to bat for the correction of such of the mistakes old
Washington to say, I follow my own advice in this matter, in spite of adages
Strange not trying his own suits. I went to bat on the matter military
about a lawyer dams and utilities-and the guards are here. I helped in the
defenses campaign for against our the mistaken priorities ruling affecting irrigation equipment-
and mistakes have been corrected.
the have come up against a mistake in priorities rulings that takes the
But now we for absolute lunacy. I refer to the recent order cutting down the
grand prize standing of mines having 30 percent or over of their values in gold and
priorities silver. There is no use mineing words, or palling punches, this is so absolutely
absurd that those responsible for it automatically convict themselves of absolute
complete ignorance about mining in all its phases, and by this action convict
and themselves of not having the faintest idea about what-in connection with min-will or will not be helpful in winning the war.
Now naturally, since it is obvious that this ruling-if not materially modifiedwill have a direct and seriously bad effect upon winning the war; and since my
superior officer, the Secretary of War, has so tremendous a responsibility in our
effort the first thing I did when this silly ruling threatened the mining industry
war as a whole, and strategic minerals in particular, was to sit down and write a letter
to the Secretary. Here is what I wrote:
PHOENIX, ARIZ., March 11, 1942.
Hon HENRY L. STIMSON
Secretary of War, Washington, D. C.
DEAR MR. SECRETARY: As your civilian aide in the important mining State
of Arizona, I would be derelict in my duty if I did not call your attention to the of
inevitable handicaps to our war efforts that would follow the recent order
Dr. Wilbur A. Nelson, Administrator of the Mining Branch of the War Production number
Board. This order, unless either revoked or greatly modified, will place a
of handicaps on our conduct of the war, and since you have such tremendous who
responsibilities in carrying on the war you should be informed by persons
know. I have lived and practiced law in Arizona for over 36 years-most of of it the in
mining camps, and much of it concerning mining. I am a past chairman national
Arizona Small Mine Owners Association I have studied the problems of have
defense, and preached national preparedness, for more than 20 years, and I
actively aided in the national preparedness efforts, as civilian side to the Secretary
of War. for 12 years.
I can assure you, out of my long experience and observation of both revoked, mining
matters and of the problems of national defense, that this order, unless
will handicap our war program in all the following ways:
1. This order will seriously interfere with the production of strategic matals
copper, lead. zinc. manganese, tungsten, and others.
2. This order will prevent putting into production large numbers of mines
capable of producing strategic metals, now ready to produce.
3. This order will make it increasingly difficult, if not impossible, to finance
further mining development and production of strategic metals.
This order will create widespread unemployment at a time when employment
4. important, both from the standpoint of economic necessity and of morale.
is very This order will automatically deprive the Government of a large cash income,
5. needed to purchase war supplies, that does not cost the taxpayers & penny.
badly Now let us amplify these statements a little. I have said that this order will
interfere with the production of strategic metals. Here is how: The
seriously producers of copper and other strategic metals all have ores that require the
large addition of fluxing ores for smelting. They buy these ores only when they serve
this The ores they buy are produced, almost exclusively, by mines that
be purpose. closed down by this order. It would cost more, take more machinery, sup-
will and equipment, to provide other sources of these fluxes, than will be required
plies, to continue the operation of the present mines supplying them-and it would
take months to develop them.
In addition, the actual facts are that a large percentage, a large majority in
of the mines producing strategic metals could not operate at all if their ores
fact, not contain enough gold and silver to pay at least part of the cost of operation;
did and there are large numbers of them, whose production of strategic metals
important, that produce gold and silver far above this arbitrary ruling.
is
have said that this order will prevent putting into production important
prospective producers of strategic metals; for instance, a few days ago, the State
secretary of the Arizona Small Mine Operators Association notified Dr. Nelson,
who promulgated this absurd order, of a case in Arizona of a mine ready to go into
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 16 ounces of gold and
silver, this order makes it impossible for him to operate. And what happened?
Two days the man who made the order declared that it would not be modified.
That this order will make it increasingly difficult, if not impossible, to finance
the development and operation of more mines to supply more of the needed
strategic metals. This is almost self-evident. Why should anyone take a
chance on investing money in mine development if they can anticipate that just
such ridiculous orders as this one are likely to destroy the development, close the
mine, and lose their investment?
That this order will create widespread unemployment, which is self-evident and
needs no elaboration.
That this order will deprive the Government of a large cash income, badly
needed to purchase war supplies, that does not cost the taxpayers anything. Here
is how and why:
Under the Silver Remonetization Act of 1939 silver producers ship to the United
States mint. The mint coins 55 percent into silver dollars and sends it as payment, and retains 45 percent as payment for receiving handling, coining, etc.,
most of which is clear profit to the Government Last year this amounted to
nearly $40,000,000 the Government received, which did not cost the taxpayers
anything, and which would buy quite a few planes our beleaguered forces in the
South Pacific need so badly. And Dr. Nelson blithely proposes to stop this source
of revenue to the Government.
Taken altogether, Mr. Secretary, this order reaches such heights of absurdity,
and discloses such depths of ignorance regarding the actual facts in mining strategic metals, that the English language hardly contains strong enough terms to
denounce it.
I am fully aware, of course, that this order comes from a bureau over which
you have no control, just as other orders and rulings which interfere with the most
efficient functioning of your War Department. And, I am also fully aware that
the people of the United States, whenever anybody or any bureau gets in your
way in carrying out the fine job you are doing in winning the war, will back you
up in demanding that the orders that interfere be revoked and the persons who
issue such orders be released where they can do no more harm.
I do not advocate the Japanese system of hari-kiri, for those who made major
mistakes, but I surely hope that something can be done to correct this Govern- major
error, and eliminate those responsible for it. We have no place in this
ment, at this time when we are fighting with our backs to the wall for the preservation of human liberty, for people who make rash and absurd orders that actually
damage our war efforts, and, I can promise you, Mr. Secretary, 100 percent support
from the people of Arizona in whatever efforts you make to cure this situation.
Respectfully submitted.
CHARLES H. RUTHERFORD,
Colonel, Civilian Aide to the Secretary of War.
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a few days later dated March 4 explaining that the order does not mean that
one the mines will be cut off from priorities assistance, but that, "it is felt that each
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
nature covering the mining industry which results in the throwing onto the
this
already overburdened and overcomplicated and overorganized War Production
You might gather from this letter that I am a little "het up" as our "Old
used to say. Well, I am. I have been in public life for more than
Roman" and have observed matters affecting governmental activities much
generation, and I know of no instance where such complete ineptitude, such abysmal
ignorance longer, of the actual facts and the inevitable results, has led to such an inex.
cusable order.
Board the burden of considering every mining operation in this country as a
hope that every citizen within the sound of my voice will write to anybody
I importance in Washington, and protest against the continuance of this absurd
of which if carried out, will close down our mines by the hundred, and make
special case.
One of the earliest arrivals in Washington on this matter had the following
experience: Having explained the position of his mine and its production of lead
and zine coincident with the gold and silver in the ore which exceeded the 30
percent limit, he was informed that if he would go to Mr. X in temporary building Y
order, it more difficult and expensive to produce strategic metals, and which will bank.
rupt many small mine owners and operators; that will throw thousands of men
out of work and handicap mining development throughout the West,
I hope that Representatives in Congress of every mining State will rise up
and make the welkin ring with denunciation of this inexcusable example of
wing Z, and he would certify that the zinc production was necessary, and if he would
bureaucratic bungling.
I hope that the newspapers and cartoonists of the Netto will denounce this
order, and place the proper headgear on this picture of the dunces who are
be
capable of such incompetance.
The miners of the West are good Americans. They are working hard and
fast. They are performing some of the most useful and necessary functions in
connection with the war. They are producing the minerals without which we
would be compelled to fold up and let the yellow termites of Japan eat up the
foundations of our liberties.
We cannot and we will not permit some ignorant bureaucrat in Washington
to put our mining industry out of business, nor to make it impossible for our
miners to do their share in winning the war.
a
The excuse offered is that each case can be heard on its own merits. This is as
silly as the original order. Each case would be heard by the same man who issued
the ridiculous order- and how far would they get? The small mine owners and
producers of the West cannot afford to go to Washington. They cannot afford
to employ high-priced representatives to go there, to fight for their right to exist
and serve their country, and they cannot afford to remain in Washington and wait
their turn for a hearing before people who have already made up their minds and
made them up wrong. as the man did who issued this order.
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
underpinning. Write your Senators and Congressman for action and relief.
Let no one interfere with your desire to do your part in winning the war.
I thank you, and good night.
[From American Metal Market, March 7. 1942
THE METALS LABYRINTH IN WASHINGTON
Our War Production Board has issued an order which denies the use of present
blanket priority ratings to mines whose production consists of gold and silver
more than 30 percent of the total dollar volume produced.
to
Immediately on promulgation of this order, Washington was deluged with
mine operators who could get to Washington overnight, by long distance telephone
messages, and by telegrams protesting against this order and its inevitable results.
then go to Mr. S, in temporary building U, wing V. and he would certify that the
lead production was necessary, he would recommend that the present high
priority rating of the mine, which had been annulled by the order, should be
restored and he held out hope to the operator that, inasmuch as his recommends
tions generally had been approved, that it was likely that this one also would
approved. In the meantime. "They also serve who only stand and wait.'
This is in accord with the policy of the Department which in its last release
dated March 4, as mentioned above, has the following concluding paragraph:
"Border-line cases in which there is some question as to whether the proportion
of gold and silver produced by a mine is high enough to remove it from the cover
age of P-56 will be reviewed on appeal, and the right to use blanket ratings under
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
year and a half at a loss of $62,000 and shut down 30 days ago because under
current conditions of cost of labor and supplies and taxes it could not operate
except at a loss. If it could get a zero quota and operate under the new metals
reserve premium prices to stimulate production it could resume. It applied for a
zero quota and was informed that it did not have to apply, that the quota would
in due time be issued automatically based on the 1941 production. The circumstances being explained the operator was informed that an application could be
filed and would be considered The application was filed and its supporting
documents of statistics and operating data ran to 31 pages plus a mine map
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 a
conference and then would make their recommendation In the meantime the the
production of lead and zine from this mine is not forthcoming. Now some of
men on this committee of 6 are known to be men who have been mining lead and
zine all their lives, and have built large plants in this country and abroad. But
they have no authority. They can only study and recommend
Why is it necessary to issue orders which set up almost insuperable obstacles
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,
bordered with red tape, in an effort to remove these obstacles?
The various metal offices of the War Production Board are now inhabited by
the cream of the mining profession. At every turn one meets old friends from
Africa or South America or the various mining districts in this country. Private
capital has trusted their judgment on the expenditure of literally hundreds of
millions of dollars in the development and operation of mines That they have
justified this trust both in the way of integrity and professional ability is shown
by their rise to eminence in the mining profession. Why should they be put in
subordinate positions in Washington to recommend to someone higher up, who
still has to be educated in the mining business, what should be done to get out
war metals in the midst of this most terrible war?
If such things can happen in an industry which is 80 closely related to our own
daily bread, it is a fair assumption that the same thing is transpiring with respect
to other industries we are not familiar with and it is also a fair assumption that
this is one of the reasons why President Roosevelt is distressed at the number of
"parasites" whom he has ordered out of Washington and it is also a fair conclusion that we do not know any more about running a war than George Washington knew about a Ford car.
Without discussing the question as to when a mine is a gold mine or a basemetal mine, and the fact that the average man would be inclined to say that it was
a gold mine if more than 50 percent of its product was gold, let us see what has
happened on the 30 percent basis of the order and what would happen on & 50percent basis. Take specifically the State of Utah where there are five smelters,
more than in any other one mining district in the country. To smelt these sulfide
ores of copper and lead, it is a metallurgical necessity that they have silicious flux.
It so happens that there are mining camps in Utah, such for example as Tintie,
which mine nothing but dry silicious ores of gold and silver. These dry silicious
ores are the absolutely indispensable fluxing ores needed by the smelters to produce the copper and lead which the same War Production Board and Office of
Price Administration tell us are very much short of war needs.
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
to the smelters? The uproar caused by this order resulted in the issue of another
The chair recognizes Senator McCarran.
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Senator McCARRAN. I notice, Mr. Chairman, that Dr. Nelson has
very kindly consented to be with us this morning, pursuant to the
STATEMENT OF THE HONORABLE PAT McCARRAN, UNITEDSTATES
SENATOR FROM NEVADA
request of this committee. I am wondering if Mr. Batt or Mr.
Knowlson will be present. Dr. Nelson, can you tell us?
Mr. NELSON. Mr. Batt's office called me and said that, at the time
the request came to his office this morning, he had already left the
office for some appointment at the other end of town. They said
they would try to locate him, but they had been unable to locate him
at the time I left.
Senator McCARRAN. A very interesting article entitled "A Message
to Mine Operators and Manufacturers of Mining Machinery and
Supplies," by Dr. Wilbur A. Nelson, has been published in the Engineering and Mining Journal for April 1942. It S not lengthy, but
is full of exceedingly interesting matter. I respectfully suggest that
it be made a part of the record.
The CHAIRMAN. Without objection, the article will be placed in the
Senator McCARRAN. Mr. Chairman, I think it might be well for
to approach this subject with a brief history of what has occasioned
us this meeting, by reason of what has affected the mining industry in
the last few months.
On March 2 of this year there was issued what is known as the
priority order of March 2-priority rating order P-56 as amended on
March 2, 1942, copy of which has already been inserted in the record.
Pursuant to that order, Mr. Chairman, a number of meetings were
held throughout the mining region, one especially at the Mackey
School of Mines in Reno, Nev., and one at Denver, Colo., at which
mining operators and miners attended quite liberally. Those hearings were reported, and the record is available at this time. They are
somewhat voluminous and need not go into the record here, but I
record.
think that they should be before the committee.
(The article referred to is as follows:)
Pursuant to the effecting of the order of March 2, 1942, and by
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
By Wilbur A. Nelson, Administrator, Mining Branch, Materials Division, War
Production Board, Washington, D.C.
5 and calendar day of March 25, 1942. I think that that resolution
might well appear in the record at this point.
The CHAIRMAN. Without objection, it is so ordered.
(S. Res. 232, legislative day of March 5, calendar day of March 25,
1942, is as follows:)
(S. Res. 232, 77th Cong., 2d sess.)
RESOLUTION
Resolved, That the special committee created pursuant to S. Res. 187, Seventyfourth Congress, agreed to August 16, 1935, or any duly authorized subcommittee
thereof, is authorized and directed to make a full and complete investigation with
respect to the origin of, and the necessity for. the amendment made on March 2.
1942, to Preference Rating Order P-56 (relating to preference ratings for deliveries
of materials for mining enterprises) under which mines are excluded from the
benefits of such order if more than 30 per centum of their production in dollar
value consists of gold or silver, or both. In connection with such investigation,
the committee shall ascertain and determine the extent to which consideration
was given, in making the amendment to such order on March 2, 1942, to the effect
of such amendment on (1) the mining industry in general; (2) the economy of
hundreds of communities which are wholly dependent upon mines producing
gold or silver, or both; (3) the creation of additional unemployment in mining
communities; (4) the extent to which silver may be used in the war effort as
substitute for strategic minerals: (5) the activities of prospectors searching for new
discoveries of strategic minerals needed for the war effort; and (6) the losses in
tax revenue to the Federal, State, and local governments resulting from the
closing of mining enterprises which are unable to secure materials for their con-
a
tinued operation. The committee shall report to the Senate, at the earliest
practicable date, the results of its investigation, together with its recommends
tions, if any, for necessary legislation.
For the purposes of this resolution, the committee, or any duly authorized
subcommittee thereof, is authorized to hold such hearings, to sit and act at such
times and places during the sessions, recesses, and adjourned periods of the
Seventy-seventh and succeeding Congresses, to employ such clerical and other
assistants, to require by subpena or otherwise the attendance of such witnesses
and the production of such correspondence, books, papers, and documents, to
administer such oaths, to take such testimony, and to make such expenditures,
as it deems advisable. The cost of stenographic services to report such hearings
shall not be in excess of 25 cents per hundred words. The expenses of the committee. which shall not exceed $5,000, shall be paid from the contingent fund of
the Senate upon vouchers approved by the chairman.
it
In setting up the Mining Branch of the Materials Division of the War Production Board, clear recognition was given to the fact that mining is No. 1 war industry and that certain metals and nonmetallic minerals are prime essentials to a
military victory. No other industry rivals mining in the essential character of
its products, nor can any other industry make its full contribution to the war
without them. Planes, tanks, guns, ships, and all the implements and instruments of modern mechanized warfare call for metals in ever-increasing quantities.
The essential character of these raw materials is axiomatic.
To the mining industry this is at once a matter of pride and responsibility.
The very importance of the industry entails an equal measure of obligation to see
that minerals are produced in quantity-at in time- insure victory The
need was never so critical: the time was never so short. As President Roosevelt
has so well said: 'Never before have we had so little time in which to do so much.'
A heavy duty and responsibility, therefore, rests upon us who are associated in
the mining industry to join forces so that maximum production will be made in
minimum time.
This will call for extreme measures of cooperation to which we are not accustomed in normal times. It will entail sacrifice of self-interest and dislocation of
customary routine. But ordinary procedures will not meet the emergencies of
extraordinary times, so we must coordinate closely the efforts of all elements of
the industry if we are to function effectively. Mine operators, manufacturers,
and the Mining Branch of the War Production Board must unite in a determined
effort to reach the goals set up for our armed forces.
As Administrator of the Mining Branch I have felt for some time that, in
establishing preference ratings, mine operators and makers of mining machinery
should be placed on a parity with makers of munitions. Recent amendments
to preference rating orders P-56 and P-56-a for mine operators and manufacturers of mining machinery, respectively, implement that policy. They give to
those two important groups high ratings for essential repair parts, and provide
for delivery of essential new machinery and equipment on advance application.
Together with preference rating order P-73 for smelters and refiners of essential
metals they provide for the requirements of the mining industry from prospecting
to production of metal.
But preference rating orders alone will not accomplish all that is desired. We
must enlist the self-interest of operators and machinery makers. if we are to insure
adequate supplies of repair parts and raw materials. The requirements of opera-
tors and manufacturers must be inventoried and know far in advance if raw
materials are to be earmarked and allocated for their use. Take a quick glance
at the cold logic of the situation, and note the inevitable conclusion.
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have already reinstated the serial numbers of certain mines, and will com"We this reinstatement as promptly as individual mines furnish us the needed
plete information. Only about 300 mines were notified by wire that their serial
1. Minerals are prime essentials in this war. They must be produced in ever
quantities.
under order P-56 had been withdrawn. May I point out that these
for
numbers still had the priority rating of A-10 under P-100, and that the mine opermines could also use our PD-1A forms to apply for preference ratings on specific
items ator from specific suppliers where such items could not be obtained on an A-10
greater 2. This means hours double- of operation and triple-shift add to days, the wear and and 6- and tear 7-day of machinery, weeks. call
3. Increased parts, and ultimately for new equipment.
more repair and suppliers cannot meet this abnormal demand unless
(a) 4. they Manufacturers have in advance a pretty fair idea of its fabrication. magnitude, and (b) assurance of
rating. "May I also say that all public utilities, railroads, and newspapers are operating
supplies of critical raw materials for
on an A-10 rating at this time.
there were no shortage of mining machinery, there would be no need to
"If
any action in regard to mines producing nothing but gold and silver: but with
take a shortage, and with the great demands on our country to produce the essuch sential and strategic minerals for the building of the implements of warfare for
us and for many of our Allies, we must know that each mining machine is going to
a mine which is part of our direct war effort.'
In a further effort to promote a clear understanding of the withdrawal of serial
numbers from gold and silver mines, I held an informal conference in Washington
with Members of Congress representing western mining States. Subsequently
met with operators and public officials in Reno. Nev., and Denver, Colo., where
I explained the urgency of the situation and the necessity for conserving materials
and supplies for production of critical and essential metals.
adequate operator holds an important key to the situation. He alone can
5. The mine estimate of his own requirements under current operating conditions.
make a fair Production Board holds the critical key; namely, the power to
6. The War by manufacturers the necessary quantities of raw materials,
earmark for primary use information has been supplied by operators. The Mining
once the is using all of its energies to see that this is done.
Branch inevitable conclusion is that operators must inventory their needs by
7. The for the remainder of 1942 and early 1943 and notify their customary
quarters of their probable requirements. Being thus forearmed, manufacturers
suppliers inform the Mining Branch of their needs. The requisite quantities of
should materials can then be earmarked for future use. Only in this manner, and will
with raw the closest cooperation, can any reasonable estimate be made that
insure continuous mine operation at the peak of production.
Another obvious duty remains to manufacturers in the interest of conserva-
I
As a result of the conference and meetings I feel quite sure that after the
and economy, and that is to simplify their lines of products, abandontion nonessential styles, sizes, and varieties, and concentrating their producing tion effort on the most essential. The opportunity for simplification probis not as great in the field of mining equipment and supplies as in some
operators
realize that no injustice was intended and that the amended order was necessary
to conserve scarce materials.
In conclusion I reiterate the desire and intent of the Mining Branch to be helpful to operators and manufacturers; but again I emphasize the point that their
hearty cooperation is imperative if the War Production Board is to carry out the
other ably lines of manufacture, but the possible economies should not be overlooked
Now is a good time to clean house and notify the mining industry of your decision.
It is impossible to overestimate the importance of this matter of coordinating the activities of the mine operator, the equipment manufacturer. and the
Mining Branch of the War Production Board if mining is to make its vital contribution to the war effort. I can assure all concerned that the Mining Branch 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
have
victory program.
Senator McCARRAN. Mr. Chairman, I wonder if Dr. Nelson will
kindly come forward to the table here.
Mr. NELSON. Yes, sir.
Senator McCARRAN. Mr. Chairman, it is the view of the author of
this resolution, pursuant to which this meeting was called, that much
good might come of a meeting with Dr. Nelson and with the other
officials of the War Production Board, especially the branch of the
War Production Board headed by Mr. Batt, so that we might know
what are the full intentions and what is the purport of the order of
March 2, 1942, and that are the intentions of the board with reference
to granting priorities to mines producing precious metal.
In this respect, in order to open the discussion, let me say that we
have reports from the various sections of the country, showing that the
priority order of March 2 has tended to close down mines in the varlous sections of the country and close them down for various reasons.
the trouble to tell manufacturers what they need. Most of the latter
already informed the Mining Branch of their requirements.
Probably a further word is needed at this time in explanation of the amendments to preference rating orders P-56 and P-56-a. The principal changes are
to the following effect.
Complex ore mines, which produce amounts of copper, lead, or zinc needed
the war effort, will continue to receive the priority benefits of preference
rating order P-56, irrespective of the amount of gold or silver produced. The
same will be true for mines producing siliceous ores necessary for the continued
in
operation of smelters.
The A-1-a rating for repair of actual break-downs is continued in effect. It
can be applied only after advance approval by the Director of Industry Operations.
An A-1-c rating is given to deliveries to essential mines of repair parts for
essential machines. An operator is restricted in applying this rating to a quota
established quarterly by the Director of Industry Operations.
An A-1-c rating is given to deliveries of other repair parts and to other mines
after
when necessary to avert break-downs This rating can be applied only
advance approval by the Director of Industry Operations.
Some have suggested that these mining operations have closed down
because of the lack of labor. An investigation into that phase of it
indicates that there is some cogency in that statement. But behind
that, Mr. Chairman, there comes another significant matter, namely,
that mine labor throughout the mining sections of the country, cognizant of the fact that the respective mines in which they are employed
can carry on for only a limited time, and noticing that there is opportunity for employment at much better wages at other places, have not
waited for the closing down but have taken time by the forelock, so to
speak, and have said to their employers, "You are going to have to
close down anyway within a reasonable time, so we are going to hunt
Deliveries of essential machinery and equipment receive such preference ratings
as may be assigned by the Director of Industry Operations after advance spplications.
Suppliers can extend at the same level the ratings received from operators.
The exclusion of gold and silver mines from the benefits of P-56 was naturally
the cause of some disturbance and misunderstanding in the industry. In an
effort to clarify the situation I made public a statement substantially as follows:
'No mines producing copper, lead, or zinc in amounts needed in our war will
effort. irrespective of the amounts of gold or silver produced by such mines
be denied priority ratings under order P-56. Each case will be reviewed and,
where it is found that the mine is producing needed amounts of copper, lead, or
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
maintain the smelter's production of copper and lead.
have responded to my request for information and have been classified
on the basis of their production of gold and silver and base metals, they will
to
other jobs where we can get better wages."
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The result has been, Mr. Chairman, that those who were able to
younger men of the mining-labor population-have in
instances left their places of employment and gone elsewhere to
many seek better wages, knowing that the mines in which they were em-
ployed could carry on but a short time thereafter. That has had two
very material effects. One was to move the mining population out
of the places where they had been and could be employed; the other
was to make certain to the mine operator that with the lack of employees, with the lack of labor, and confronted with the priority order
of March 2, and knowing that his equipment and stock of supplies
could last only a limited time, the mine itself would have to close down
even before the priority order became effective against him, even
before his equipment gave out. That has resulted in throwing out of
employment the older miners because of the closing down of the mines.
Then, again, Mr. Chairman, there has come to us, with whatever
degree of cogency it may be expressed, many rumors and many reports
pertaining to the granting of priority orders. I think it will do no
harm, in the presence of Dr. Nelson-an wish all the board could be
here-to discuss these matters. Though we have no evidence to
support them, I think they might with propriety be discussed.
Let me give one or two outstanding examples. Two men working
on the same dump, handling the same class of ore, the same class of
rock, shipping to the same point, by the same method of shipment,
both apply for priorities. One is granted, and the other is denied.
Naturally, the one denied queries, Why? Then the community
starts to query, Why? Then rumors start pro and con. The imaginative individual sees a reason why, and he attributes the reason to
divers and sundry causes, none of which reflect credit on the adminis-
tration of the War Production Board. They may be wild and un-
warranted, but nevertheless arising from a condition.
Then, again, we have a rumor that comes to us prevalently, which
I seek to bring out, because I think the War Production Board should
know these things: That if shipments are made to certain concerns
for treatment, priorities are granted. If they are not shipped to
those certain concerns for treatment, priorities are denied. Incidents
are given relating that condition. Whether there be the least symptom of truth in the matter or not, it is enough, in my judgment, that
the Board and Dr. Nelson should be advised of the condition, so that
it may be relieved by positive action and positive statement
Taking the subject from another angle, the priority order of March
2, 1942, states, among other things,
Any plant actually engaged in the extraction by surface, open-pit, or underground methods, or in the beneficiation, concentration, or preparation for shipment of the products of mining activity, but not including any plant more than
30 percent of the production of which in dollar value consists of gold and/or
silver.
That order in itself was threatening to the mining industry, where
silver was what might be termed a byproduct of the production of a
strategic metal, as, for instance, lead or zinc or copper.
True, the atmosphere was very much clarified by the statement of
Dr. Nelson, both at Denver and at Reno, in which, among other
things, he said that each case would stand on its own footing and
that-in substance he said-the 30 percent of dollar value of the
product of a mine would not militate against its receiving a priority
order if it was producing war strategic metal. That is the substance
of his statement; I do not quote him exactly. With that in mind,
many applications for priorities, I am advised, have been made, and
many have not been granted, while many have been granted.
My own State reflects a number of applications, and I have had the
State mine inspector of Nevada come on here, and I am asking him
now to bring his files forward, so that I may use them during the
course of this discussion. They show the mines in which priorities
have been granted, the mines in which they have not been granted, and
the mines that have been closed down by reason of either an apprehen-
sion of failure to secure a priority order or the fact that the priority
order had not come forward within a reasonable time.
Mr. Chairman, this whole affair comes about by reason of the con-
dition that presents itself to the country an all-out war condition,
demanding that all metal be curtailed in its use as much as possible
and allocated to war activity. But the production of strategic metals
and war essential metals has been encouraged by the War Production
Board, and it was stated here at a meeting held some weeks ago that
this priority order of March 2 was for the purpose of stimulating mining rather than for the purpose of curtailing mining.
The result, however, Mr. Chairman, has been to the contrary,
because where silver or gold comes in combination with a war strategic
metal, and the operator of the mine, having no other basis than the
priority order of March 2, 1940, sees that the producing of 30 percent
or more of silver or gold, or silver and gold together, cannot get him a
priority order, he becomes immediately discouraged, and either his
financial backers announce to him that the backing will stop very
shortly, or he, realizing that a danger presents itself, together with the
hazard of mining-t hazard that naturally attends mining-advises
his financial backers that he sees danger ahead by reason of this priority
order; and the result is, first of all, a cessation of exploration and
development; secondly, a closing down of the mine.
The thought impresses itself upon me that if we are to encourage
the production of strategic metals, we should, first of all, encourage
it at home here in America, where we know that we have strategic
and war essential metals: First of all, because it does not then become
subject to hazard on the sea, where so many sinkings are taking place
and so much is being lost. We have it within our power, and we
know that we can treat it, and treat it much less expensively than we
could if we were to ship it from foreign countries. We can treat it
with much more security here at home, because it would not, as I
have said, be subject to the hazard that attends shipping over the
seas.
But, Mr. Chairman, there has come to the attention of some of
us the fact that while we are repressing the miner at home by telling
him that he cannot have mine equipment, thus discouraging the
development of war-essential metals and strategic metals, unhappily,
say, the record shows that we are shipping and transporting across
the seas those quantities of mine essentials in the way of machinery
and parts. One correspondent in writing to me put it rather vividly
I think you will find it among the reports of the various mines of Nevada that came into the hands of Mr. Murphy, the mine inspector of
Nevada, wherein this correspondent said:
We are transporting mine machinery and equipment to South Africa and are
then buying South African gold in America at $35 an ounce. At the same time
we are discouraging, if not destroying, mining activity here in America.
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STATEMENT OF WILBUR ARMISTEAD NELSON, ADMINISTRATOR, MINING BRANCH. MATERIALS DIVISION, WAR PRO.
DUCTION BOARD, WASHINGTON, D. C.
Nelson has heard all these things, and I want to say, Mr.
Chairman, Dr. that I, as the author of this resolution, express my sincere
gratitude to Dr. Nelson for coming here, my thought being this:
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
industry, prevailing among the muckers and miners, as we call them,
and prevailing among the mine operators, it impressed me that perhaps by a round-table discussion here among those who are so vitally
interested in the mining activity, you, Dr. Nelson, and your board
could find a way to give greater assurance to our industry of mining
and to those who by their individual wealth hazard their all in speculation for the purpose of developing mining or to those who have
given their lives to the industry of mining, with no other avenue in
which to work, and that other element of the American life, known
the prospector, the fellow who goes out and hazards the hardships
of the desert to discover strategic and war essential metal-that all
of this might, by an expression that we might develop here or some
modification, if you please, of that priority order which has caused
so much consternation, bring more comfort and indeed more support
to the mining industry of America.
Now, that is the aim and object, Dr. Nelson, so far as the author
of this resolution is concerned, of bringing about this meeting.
believe from my discussions with you that you are a friend of the
industry, and that your whole training and background indicate that
I believe that if these homely things are brought to your attention
in a homely way by those who know them best, something can be
as
I
done to relieve the situation. I speak first-handedly of my own
State, not knowing the conditions in other States. There are those
who will speak first-handedly of their respective communities. But
there can be no gainsaying that in Nevada the priority order of
March 2, 1942, has had a most discouraging effect.
It has required the zeal and diligence of all of us to say to the miners
Mr. NELSON. My name is Wilbur Armistead Nelson.
The CHAIRMAN. What is your address, Doctor?
Mr. NELSON. My Washington address is Temporary Building E,
War Production Board.
The CHAIRMAN. What position do you hold in connection with the
Government at this time, if any?
Mr. NELSON. I am administrator of the Mining Branch of the
Materials Division of the W. P. B.
The CHAIRMAN. Would you state very briefly in what business you
have been engaged during the last several years? This is for the purpose of the record, so that anybody who might want to read it will
have an understanding of your position.
Mr. NELSON. At the present time I am on leave of absence from
the University of Virginia, where I hold the position as head of the
Corcoran School of Geology and Corcoran professor of geology.
Before that time I was State geologist of Virginia, brought to
Virginia to reorganize the State survey and also to head the School of
Geology at the University.
At the university the subjects I teach are economic geology and
structural geology, dealing with ore deposits and the mining phases
of geology.
Before that time I was State geologist of Tennessee, and before
that I operated a coal mine in west Kentucky. During the last war
I operated manganese and barite mines in Georgia and Alabama.
The CHAIRMAN. I think that that is sufficient for the record. You
may proceed and make such suggestions as you deem proper in reply
to the suggestions made by Senator McCarran, doing so as fully as
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 considerable 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
and critical metals. do feel our mining order has brought that about.
The 30 percent clause which he mentioned has, as far as we know,
it out for them. "Do not be discouraged. We will try to get a
Expressions of that kind have been essential in many instances, in
order to keep, first of all, the investor sending on his investment to
keep the mine going, in some instances in its primary stages; and
secondly, to keep the operator encouraged enough to go ahead; and
thirdly, and most essential and vital of all, to keep the actual mining
fellow who goes down into the earth at his place of employment
rather than have him seek employment at a greater wage.
Now, that is the initial expression of this meeting. Dr. Nelson,
that we might have some views on your several months of opportunity to see this order effected, we would like to have you discuss it in
your own way.
The CHAIRMAN. Before doing that, will you please state your full
name for the record?
not brought about any diminution in the output of critical materials.
We feel that the output of copper, lead, zinc, chrome, manganese,
tungsten, vanadium, molybdenum, and any other critical materials
has increased, due in part to the priority assistance which we have
been able to give them under the preference rating order P-56 and
under the preference rating order P-56A, which takes care of the needs
of the makers of mining machinery.
Whenever it is found necessary to give high priorities to any group
in order that they may continue to operate, it is necessary to restrict So,
these high priorities, or else they would be of very little value.
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
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the war effort. In order to make these priority ratings of the most
they had to be restricted in their use; and as a gold or a silver
value, producing only god or silver, and no strategic minerals, is a mine
mine that does not fit as much into the war effort as a mine producing copper, lead, zinc, or the other metals which I have mentioned, naturally
they have to take lower priority ratings.
At no time have we denied priority ratings to any mines in the
United States. We have just said that certain mines would have
higher priority ratings than other mines, depending on where they fit
into our over-all war picture. We have no information that any mine
in the United States has shut down due to our priority action. We do
have information that many mine operators have turned to the getting
out of strategic materials, where they were not producing strategic
materials before March 2.
We have at all times since March 2 stimulated prospecting in every
that we could. We have placed in mining order P-56 a clause
way relating particularly to prospectors, where we can give a bona fide
prospector a serial number and whatever priority assistance he needs
in order to go out and prospect for needed or strategic materials. We
have given a number of such prospecting numbers.
Senator McCARRAN. Right there, Doctor, do you mind an
interruption?
Mr. NELSON. Not at all.
Senator McCARRAN. My attention has been drawn to an order
with reference to powder, wherein the use of powder will not be
accorded unless the mine is in production.
Mr. NELSON. That is an incorrect statement, Senator, that was
published by the newspapers. I do not know how it was given out
to the press.
Senator McCARRAN. What is the language of the order, if you have
that before you?
Mr. NELSON. The trouble came about because we added to schedule
of our mining order, under "Mining equipment and machinery," by an
amendment, explosives and explosives equipment.
Some of the press read into that amendment the fact that it meant
that you had to have a priority rating in order to buy dynamite or
black powder. That misinformation has been corrected by a press
release of Tuesday, April 28, 1942, which I would like to turn over to
you to embody in the record.
The CHAIRMAN Without objection, it will be placed in the record.
Mr. NELSON. Would you like me to read the release? It might
clarify the situation.
Senator McCARRAN. Yes. It is short.
Mr. NELSON. It reads as follows:
An amendment to preference rating order P-56 issued April 13, 1942, added
explosives and explosive equipment to the list of mining machinery and equipment
schedule A of the order. This enables mine operators who have serial numbers
under the order to use an A-1-c rating in obtaining repair parts for such equipment
in
That means explosive equipment.
To clear up some confusion which has arisen as a result of this amendment,
Dr. Wilbur A. Nelson, Administrator of the Mining Branch, explained today that
the A-1-c rating is applicable for repairs to blasting machines and similar machinery 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
applicable.
I have not finished, but I would like to make a remark. The A-8
rating is applicable to black powder and dynamite if any rating is
needed. At the present time you can buy all the black powder and
dynamite you wish without any rating. To continue:
Mines which do not operate under P-56 may use an A-10 rating under the
general repair, maintenance, and operating supplies order, P-100, to obtain
explosives.
That is, if they need any rating at all.
The amendment to P-56 does not affect any existing priorities on explosives and
explosive equipment, nor does it prevent any mine operator from obtaining
explosives in the same way as before the amendment was issued.
I know that there was a widespread misconception throughout the
entire country on that amendment. The amendment was added to
the order to help mining people, so that they could get repairs or
explosive equipment which they had had difficulty in obtaining before
that time.
Senator McCARRAN. All right. In keeping with this, Doctor, it
might well be said-and I think you will probably concede this- that
your order of March 2, which I have introduced into the record, has
had a widespread effect by reason of the language used in the order,
which apparently is not the interpretation to be given it.
In other words, if I may express it in another way, the interpretation that I have heard you give to that order is really not to be found
in the language of the order, because it is specific, and there is no
exception to the 30 percent rule.
Mr. NELSON. If you will read the order-and I know you have,
so I should not have said, "If you will read the order" I should have
said, "In the body of the order"- is a clause permitting companics to apply for relief, and it is under that clause that any mine
operator who felt that an undue hardship was being worked upon
him could apply for relief; and where he was producing any needed
amounts of copper, lead, or zinc, he was given that relief, and his
serial number was reinstated: or where he might be producing a
siliceous ore, needed as a flux in a smelter, so that the smelter operations would not be curtailed in any way, as we had no desire to cut
down the production of metals from smelters, such a mine had its
serial number reinstated.
Senator JOHNSON of Colorado. Then, Dr. Nelson, giving relief in
any specific case is not, in your understanding, a violation of your
own order?
Mr. NELSON. No, sir.
Senator JOHNSON of Colorado. Some of our Colorado people seem
to feel that the mere fact of your giving relief is a violation of your
own order.
Mr. NELSON. Well, we have reinstated the serial numbers of a
great many mines throughout the United States, and we feel that we
have the right to do that.
Senator JOHNSON of Colorado Under the order?
Mr. NELSON. Yes, sir.
Senator JOHNSON of Colorado. At this time, Mr. Chairman, may
I have Mr. Palmer, who is secretary of the Colorado Mining Association. come to the table, where he may enter into the discussion?
The CHAIRMAN. Yes, indeed.
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Mr. NELSON. There are one or two of your items that I have not
discussed The CHAIRMAN. Yes. We have not finished with you, Doctor
Senator JOHNSON of Colorado. No. I just wanted Mr. Palmer
to be here.
The CHAIRMAN. The Members of the House, if they see fit, may
occupy chairs around the table, if they care to.
Mr. NELSON. As I was saying, we have given every priority assispossible to the prospectors who are prospecting for strategic
tance and needed minerals. We have also used every effort to see that the
mines producing critical and needed material get 24-hour service on
repair parts for break-downs, for emergency repair parts, and for
needed supplies under ratings which they are given under order P-56.
The mining industry is very fortunate, in that it has, I believe, some
of
the highest ratings that have been given to any industry in the
United States. to keep the necessary mines-necessary for our war
effort-in continuous production. The record of the mining materials
produced by the mines in the United States shows that we have
been able to do that in rather satisfactory manner.
The CHAIRMAN. Are there any questions from the members of the
committee?
Senator McCARRAN. While the doctor is here, I would like to go
over a series of questionnaires answered by the industry in Nevada
The questionnaires were sent out by the mine inspector of Nevada,
and the answers received are quite interesting along the line of your
discussion and my opening remarks.
Mr. NELSON. Yes.
Senator McCARRAN. This is a statement made by a partnership
known as Morrin & Steigmeyer, operating at Round Mountain,
Nev. The former serial number under P-56 was the serial number
36-47. Rating A-8.
What effect has the March 2 amendment to Preference Rating Order No.
P-56 had on your mining operations?
This is an interesting answer, Doctor:
Capitalists contemplating money-advancements (for improvements and development work) quit; miners foresaw a shut-down and several quit at once to
seek stable positions, and "the drifting-away" has been going on ever since until
now we have less than half a crew, and others are not available because minera
have concluded their work has been condemned as unnecessary and "black-balled
and that any gold or silver mining job now offered them will at best be a "short
shift' only. They know we can not buy necessary parts for drilling machinery,
et cetera, to keep going.
Then he goes on:
We are still operating on a greatly reduced scale.
Then there is this question:
Do you expect to shut down because of not having a serial number?
The answer isYes,
If so, about what date?
Within 60 days.
Remarks: Steel under lend-lease for England so that South Africa, which produces about 60 percent of the gold, can continue and sell its output to this Government for $35 per ounce: but no steel for native Americans on the deserts and in
the mountains of Nevada. Mines shutting down, works being flooded that never
again be pumped out; whole communities thus being wiped out; the workers
will to the rapidly rising nomadie types, and the capitalist's fortune confiscated
without added a hearing. This isn't war. When all the United Nations shut down
their gold and silver mines (not on paper but in fact), we American miners are
willing to shut down before!
That is dated April 24, 1942.
Mr. NELSON. As you read each one of those, may I make some
remarks, Senator?
Senator McCARRAN. Yes: that one is in minerlike fashion.
Mr. NELSON. The Mining Branch has not approved any priority
ratings to any of the gold mines of South Africa for several months.
If they have obtained any materials it has not been through the
Mining Branch.
Senator THOMAS of Idaho. Have we exported mining machinery
to South Africa in the last few months?
Mr. NELSON. If it has been done, it has been done through the
Board of Economic Warfare, and it is the foreign policy of the President, and I endorse his foreign policy.
Senator THOMAS of Idaho. Then, we are to assume that the exportation is probably going on at the present time?
Mr. NELSON. If it is going on, it is the foreign policy of the President, and I endorse that policy; but the Mining Branch has not given
any priorities.
Senator THOMAS of Idaho. That does not answer my question. My
question is, Is it going on?
Mr. NELSON. I cannot say, because I have nothing whatever to do
with the B. E. W.
Senator THOMAS of Idaho. Are those facts available anywhere?
Mr. NELSON. You would have to get those from the Board of
Economic Warfare, which is not under the W.P.B.
The CHAIRMAN. But it is a fact, is it not, that America-meaning
the United States-produces and supplies the mines of the world
with a very large percentage of their necessary machinery with which
to mine?
Mr. NELSON. We are giving priority ratings at the present time to
to copper mines, tin mines, and chrome mines in South Africa for
materials shipped to the United States.
We are giving priority ratings to copper mines in South America on
which we are dependent for a large proportion of our copper, and
without which our war effort would be seriously impaired.
The CHAIRMAN. What about Mexico and Canada?
Mr. NELSON. We are giving priorities to the main source of tin
today, which is Bolivia. We are giving priorities to metal mines in
Mexico and the nickel mines in Canada, Canada being our one source
of supply, practically, of nickel, except for some that comes from New
Caledonia, and to the base-metal mines in Canada.
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
Norrando Copper Co. a gold mine. It is where they get their flux for
smelting their copper ore.
We have given priority ratings, under the foreign policy of our
President, to mines in Central merica-Nicaragus and Hondurasand to mines in Venezuela and Colombia, all of them close to the
Panama Canal.
Senator McCARRAN. Their product is largely what? 2
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518
Mr. NELSON. In those four countries they are gold mines, but they
only been given items on PD-1-a forms, which are available to
have gold mine operator in the United States today. We have told
every gold mine operator that he can operate under P-100 with an
every A-10 rating for what he could get on an A-10 rating. When he could
not get anything on an A-10 rating, he was to fill in a PD-1-a form
and send it in to Washington, and we would do what we could to see
that he got the repair parts he needed, if it did not interfere with our
war effort, and that is exactly the same thing we have done in the
Mining Branch with the mines, for instance, of the United States to
Mr. NELSON. In the explanation which I just made, I stated that
when you give high priority ratings to any group, you must restrict
the number of miners that can get those ratings, or else your ratings
have little value.
In the beginning of the mining priority situation, the first time a
mining order was issued we restricted, right at the beginning, in the
first order, placer gold mines, and they never received any of the
priority ratings under even the first order, P-56. But that did not
mean that the placer gold mines were put out of business. They
continued to operate on P-100 and to use the PD-1-a.
Senator MILLIKIN. I did not make my question clear, I think.
which we have given ratings on such forms.
The CHAIRMAN. Are there further questions?
Senator McCARRAN. I may say, Mr. Chairman, as a partial answer
to Senator Thomas' question, that I have before me the record made
Denver, Colo., at which place I had inserted in the record, pursuant
Prior to the date of the issuance of the orders, the mines were proceeding with certain production, they were proceeding under certain
departments of the Government.
You intended to gain something. You intended to gain enhance-
to the chairman's order, certain factual matter coming to me from
Partially answering Senator Thomas' question, it may be noted
that during the months of October, November, and December of 1941
we exported mining machinery from the United States: In October to
the value of $1,843,454; in November to the value of $1,236,186; and
in December to the value of $2,174,673
The commodities or the parts or the machinery transported were
coal cutters, rock drills, mine hoists and derricks, ore crushing and
sorting machinery, concentrating and smelting machinery, and other
mining machinery.
Then, in addition, and in further answer to Senator Thomas' query,
the grand total of that for the 3 months named was $5,254,313.
Iron and steel exported from the United States abroad: In Novem-
ber we exported 410,242 gross tons. In December we exported
592,491 gross tons.
Iron and steel scrap exported from the United States in the calendar years 1939, 1940, and 1941: In 1939, 3,558,551 gross tons; in 1940,
2,791,419 gross tons; in 1941, 793,160 gross tons.
There is one other matter. If you do not mind our breaking in as
we go along, I think it will facilitate the whole matter.
Mr. NELSON. I am here at your service.
Senator McCARRAN. You are always very courteous in that way
Mr. Chairman, would it be proper for you to say if you approve of
anyone who is interested in this subject breaking in by way of a question or a statement to the doctor? I just make that as a suggestion.
The CHAIRMAN. This committee is trying to get data on which we
can formulate some conclusions. This is an informal conference.
Those interested are privileged at any time to break in and bring out
some point if they think it would add to the record.
Senator MILLIKIN. May I ask the witness a question, Mr. Chair-
man?
The CHAIRMAN. Yes, Senator Millikin.
Senator MILLIKIN. Dr. Nelson, I am glad to see you again.
Mr. NELSON. Thank you.
Senator MILLIKIN. What was the factual basis for the orders?
What were you trying to get at? How much metal were you trving
to save? How much were you trying to divert? In other words.
why the orders?
production machinery, and they were proceeding under certain
anticipated requirements, so far as machinery was concerned. Now,
then, what was the reason for changing that?
When I say there probably was a factual reason, I hope there was.
ment of strategic material, or you intended to restrict the manufacture of certain types of machinery. There must have been a
purpose for the order. I would like to get at the basic reason for
the order.
Mr. NELSON. The order we were operating under before the amend-
ment of March 2 was in existence before December 7. After December 7 our condition changed rather rapidly in regard to strategic
materials.
We lost the source of supply of a large amount of our chrome, and
those of us who were looking forward could visualize that we would
rather soon lose the sources of supply of many other of our most
strategic materials. Therefore, we amended this order to restrict
high priority ratings to mines which produced critical materials.
We also amended the order because we found it necessary to have
high priority ratings if the mines producing other materials needed
in our war effort could get those materials. Ratings in the old order
were not high enough around the 1st of March to permit us to get
for the United States mines what they needed. In order to get the
higher ratings, it is necessary to restrict the use of those ratings
Senator MILLIKIN. Now, on balance were the mines of the United
States producing more critical minerals let us call them, than they
were consuming?
Mr. NELSON. If the mines of the United States were not producing
more critical minerals than they were consuming, it would have been
foolish to give the mines any critical materials.
Senator MILLIKIN. So that, on balance, the mines were holding up
their end of the production needs?
Mr. NELSON. If it were not for the mines we could not have any
war program.
Senator MILLIKIN. In Colorado I understand we consume about
2,500 tons of critical minerals in the process of mining, and we
produce about 35,000 tons a year.
Mr. NELSON. Yes.
Senator MILLIKIN. That leaves us with a good picture on balance.
The point I am driving at is, What is the point of disturbing that sort
of situation?
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Mr. NELSON. We must look at the over-all picture. It is a quesof, Do you wish to make another tank, another gun, part of
tion another vessel, by taking a critical material away from a mine pro-
ducing something that is not essential in our war effort, by putting
it into another product which is essential to winning the war and in
that way ending the war that much sooner?
Senator MILLIKIN. Let us take the case of complex ores which are
producing more than 20 or 30 percent in silver or gold. In Colorado
the amounts on balance of the critical materials of complex ores
exceed many times the amounts that are consumed. What is the
point of disturbing a situation of that kind?
Mr. NELSON. I do not quite understand your reasoning there. The
iron and steel furnaces use a certain amount of iron and steel in producing iron and steel, but you would not expect to use up all the iron
and steel in making them. There would not be any use in producing
iron and steel if that were so.
Senator MILLIKIN. I am making the contrary point that, instead
using it up, they produce many times the amount that they
of
Mr. NELSON. That is correct, but we want to conserve as much as
possible of the material that is used for direct war efforts; and if we
can keep a few pounds, a few hundred pounds, a few thousand pounds
of critical material out of a nonessential war use and put that amount,
however small it may be, into the making of some direct war implements, we feel we have just carried the war along faster and into a
better conclusion.
Senator MILLIKIN. These complex ores, copper, lead, and zinc, are
what we call critical materials?
Mr. NELSON. Copper, lead, and zinc are materials necessary for the
war effort.
Senator MILLIKIN. Well, then, let us call them critical materials
we produce more of those than we consume in the process of production, why disturb that situation?
If
Mr. NELSON. If those particular critical minerals are being produced irrespective of the amount of gold and silver produced along
with them, they are still today having the priority advantages of the
mining order we are discussing. They are not disturbed.
Senator MILLIKIN. But if they have over 30 percent in silver or
gold, then, under the terms of the order, they cannot get the preferred
priority, under your interpretation of the terms of the order? Depending upon the state of your liver, you can restore them?
Mr. NELSON. Well, Senator, I suppose you and I both have livers,
but I do not think mine would cause me to make or not make 8
decision. I have tried to base my decisions on the facts that have
been sent in by the mines-definite facts that can be checked and are
checked by the mining engineers in my office.
Senator MILLIKIN. Can you not get out a set of orders that will
state it by classification, or by some sort of definition, in a way that a
man can tell whether it will receive a preferential priority or won't
receive it?
Mr. NELSON. You have mentioned the fact that these are complex
ores.
Senator MILLIKIN. I am speaking in the first instance of complex
ores.
Mr. NELSON. The fact that they are complex ores means that each
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
the situation of each individual mine, to see what they produce and
how it affects the war effort, before we can consider the reinstatement
of a number which has been withdrawn.
Senator MILLIKIN. Well, now, let us take two mines. Both of
them produce over 30 cents on the dollar in silver or gold and produce
other minerals with it. How do you proceed to choose between one
and the other?
Mr. NELSON. We send them a form, which they fill in, showing just
that they produce-copper lead, zinc, gold, and silver. Other data
that we ask for on that sheet are their known ore reserves, how long
they have been in operation, and their full mining picture; and if that
full mining picture shows that the mine can operate for a year or more
and that the amount of copper, lead, or zinc that they are producing
is needed in the war effort, we reinstate their serial number, irrespective of the amount of gold and silver they are producing.
Senator MILLIKIN. What is the test as to the amount? If the
amount they are producing aids the war effort, they are reinstated.
What is the amount? What is the test that is arrived at?
Mr. NELSON. It depends on each particular case. You cannot
give a figure of X number of hours, because X number of hours in one
mine might mean something and X number of hours in another mine
might not mean anything.
Senator MILLIKIN. I would like to have the factors that in one case
mean something to you and in the other do not mean anything to you.
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
over thoroughly by the mining engineers in our branch. If it is
copper, we check with the Copper Branch of the W. P. B. and get
their opinion. If it is lead, we check with the Lead Branch of the
W.P.B. If it is zinc, we check with the Zinc Branch of the
We use our combined best judgment in each individual case.
Senator McCARRAN. Pardon an interruption, Senator. In a combination of that kind, where zinc and silver are being produced, how
does the amount of silver produced by that mine militate against the
activity of the mine producing zinc?
Mr. NELSON. I did not understand your question.
Senator McCARRAN. Well, let us say we have a mine that produces
zinc and silver in combination. Now, under your order, if it was
producing 30 percent or more by dollar value of silver, it would not get
priority, but you say that that is to be modified or is modified in the
way you exercise your judgment. How does the amount of silver
which that mine produces militate in any way against its production
of the more strategic metal or essential metal, zinc?
Mr. NELSON. May I use as an example a mine that we all know?
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,
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
that antimony out unless the mine continues in operation. Therefore,
that mine has a serial number and is operating, because the antimony
is needed in our war effort.
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Mr. NELSON. Well, if one mine was working two shifts and the
Senator MILLIKIN. Pardon me, Senator.
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.
Senator JOHNSON of Colorado. Regardless of the amount of silver
produced or the amount of gold produced?
silver As to of more than 30 cents value on the dollar, is the test quantitative?
Mr. NELSON. If you just had copper or if you just had lead and silver
and nothing else, we might be able to work out some definite X-plus-Y
Mr. NELSON. Yes.
but the fact that you have copper, lead, zinc, and you have
a
antimony figure, mixed with gold and silver makes it, as far as I can see the
picture, impossible to use any formula on which you can reinstate
mine. Each mine has to be handled on its own merits.
Senator MILLIKIN. Do you arrive at any relationship between the
amount of zinc, lead, or copper produced in complex ores by any
particular mine against the amount of critical metal that that mine
consumes in the process of production?
Mr. NELSON. We arrive at that under the provisions of the order.
We give the serial number back to the mine. We give them a quota
for repair parts which they cannot exceed. We also have an inventory
restriction clause in the order that they cannot exceed their inventory
of the average of the end of the year of 1938, 1939, and 1940. They
make monthly reports to us that our field men check.
Senator MILLIKIN. Let me put it to you this way: Assume two
mines, each one of which requires a given piece of machinery, one of
which produces X quantity of zinc, lead, and copper, one of which
produces one-half of X. Does the difference in the amount of production against the requirement of each mine for the same piece of
machinery weigh in your mind?
Mr. NELSON. If there was only one machine and both of the mines
wanted it, the mine producing the X amount would get the machine.
Senator MILLIKIN. Would you say that the most important single
factor, then, is the amount of critical minerals that a given mine
produces?
Mr. NELSON. The amount of critical minerals that a mine produces naturally is the important factor, irrespective of the amount of
gold and silver it produces.
Senator MILLIKIN. So that, then, under the operation of these
orders, as far as I can see now-I am not raising the question now as
to whether or not it should be done-in the course of time the tendency of these orders will be to put all of the small producers out of
business? Will that not result?
Mr. NELSON. As materials get more and more critical we have to
give priority ratings on those materials or allocate them, when we
come to allocation, which I think we will have to come to, to the mine
where the particular machine will get out most of the critical material,
and the mine that gets out less material, if there is only one machine,
will not get that machine.
Senator JOHNSON of Colorado. May I inject an illustration at that
point, Senator Millikin?
Senator MILLIKIN. Certainly.
Senator JOHNSON of Colorado. Suppose you had two mines, each
producing X amount of vital or essential minerals, each of them producing exactly the same quantity, but each of them producing a different
quantity of silver or gold. In that case which mine would get the
priority?
Senator JOHNSON of Colorado. You ignore entirely the amount of
gold and silver produced?
Mr. NELSON. That is correct, because the two-shift mine would be
producing twice as much of the critical material per week, although it
had the same percentage of critical material in the ore.
The CHAIRMAN. Suppose a mine was working three shifts and produced the same amount of critical material as the mine working one
shift. Would the fact that a mine was working three shifts have any
effect on the priority rating?
Mr. NELSON. Perhaps I was misunderstood in what I said. Senator Johnson, as I understood, said that a man had an X percentage of
copper, lead, and zinc and an X percentage of silver and gold, and that
another mine had an X percentage of copper, lead, and zinc and 2X
percentage of silver and gold. Senator Johnson wanted to know who
would get the machine. said the mine working two shifts would get
the machine, because. although the ore had the same percentage of
critical materials, it would be producing twice as much as the other
mine, because it was working two shifts.
The CHAIRMAN. Let me ask my question again. Suppose X mine
works one shift and produced X amount of critical material. Another
mine produces the same amount working with three shifts. Would
the fact that it works three shifts have any influence in giving it the
priority rating as against a mine working only one shift, when it produces the same amount of critical material?
Mr. NELSON. Both mines would probably have priority, but if the
time came in the months to come when we had only one machine to
go to the two mines, and it took three shifts in one mine to get out the
same amount of material that could be gotten out in one shift in the
other mine, we would certainly see to it, if we were that hard up in
this country, that the mine working on one shift would go on a twoshift basis and get the machine, because it would then be producing
twice as much of the critical material.
Senator MILLIKIN. I should like to ask, Senator Thomas, if I may,
a question.
Then. how did you arrive at 30 percent as the dividing line?
Mr. NELSON. The 30 percent in the amendment of March 2 was
the amount used in order that we could get complete information on
all the gold and silver mining operations in the West, so that we could
see which of those mines were essential for our war effort.
Senator MILLIKIN. It was merely a reference point?
Mr. NELSON. It was just a reference. We might just as well have
used 50 or 40 percent.
Senator MILLIKIN. Do you have that order before you?
Mr. NELSON. No: I do not.
Senator MILLIKIN. I should like to invite your attention, Doctor,
to the fact that nowhere in this order do these particular matters
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that we have been discussing appear. The paragraph in question
says:
enterprise" means (i) any plant actually engaged in the extraction by
'Mining or underground methods, or in the beneficiation, concentration
surface, open-pit, for shipment of the products of mining activity, but not including
or
anypreparation plant more than 30 percent of the production of which in dollar value consists
of gold and/or silver.
I should like to suggest, Doctor, that we have been talking about
something here that is entirely at variance with the absolute terms
of that order.
Mr. NELSON. You have a paragraph further on in the order that
permits a person to get relief by applying to Washington for that
relief, and it can be granted, which means that that serial number
can be reinstated, and it would be relief to him in that way,
Senator McCARRAN. Right there, Doctor, going back to the 30
percent, would you say that that was a figure arrived at rather haphazardly or was there a specific reason for the 30 percent?
Mr. NELSON. I do not think it would have made any difference
whether you had 30 percent, 40 percent, or 50 percent in the order.
My wish was 50 percent. The figure put in finally was 30 percent.
I do not think it would have made any difference whatsoever whether
50 or 30 percent was going into the order.
Senator McCARRAN. Who finally decided the difference in judgment between you and somebody else?
Mr. NELSON. All orders that originate in a section go to the clearance committee. The clearance committee has on it the representatives of the Army, Navy, and Munitions Board and other Government
agencies.
Senator McCARRAN. Were you on that board?
Mr. NELSON. No: I am not on that board.
Senator McCARRAN. I am trying to get at how that 30 percent
crept in and why silver and gold were penalized in the way in which
they were by the language of the order.
Mr. NELSON. Well, silver and gold as silver and gold are not
essential for our war effort.
Senator McCARRAN. This is since the order was written, but the
Treasury has decided otherwise and has authorized some 40,000 tons
of silver to take the place of strategic metal only in the last week or so.
Mr. NELSON. I made a suggestion at the Reno meeting that silver
could be used for bus bar. That is not domestic silver but foreign
silver that was brought in at 35 cents an ounce.
Senator McCARRAN. It is domestic silver, because it is silver that
has real seigniorage in the purchase of silver at 71.1 cents.
Mr. NELSON. Well, then, part of it is domestic and part foreign.
Senator McCARRAN. Maybe part of it is foreign, but that brings
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,
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
any longer.
Mr. NELSON. I mentioned, as I said, at the Reno meeting that I
thought we could put silver on a war basis by starting to use it in bus
bars. No answer of any kind was made to my suggestion. It was
dropped immediately.
Senator McCARRAN. It was probably regarded then as largely
academic, but since then it has become quite practical.
Mr. NELSON. Very good.
Senator JOHNSON of Colorado. Because it has become practical
you giving that consideration in the assignment of priorities?
are Has that had any affect on you? You say you refer zinc to the Zinc
Section and copper to the Copper Section. Now, do you refer
anything to the Silver Section to see whether they need the silver?
Mr. NELSON. Well, the mines that are using appreciable amounts
of silver are also producing needed critical materials. They have had
their serial numbers given back to them before this thing came out
publicly in the press. As I mentioned, the Sunshine mine, which is
one of the largest producers of silver, had their number reinstated
almost immediately, because the amount of antimony they produced
was essential in our war effort.
Senator JOHNSON of Colorado. I have some other questions, but I
did not want to interrupt Senator Millikin. He has a chain of thought
there that he perhaps wanted to develop further.
Senator MILLIKIN. Senator, there was one angle of the question
that I wanted to develop a little further, but I shall gladly yield.
Senator JOHNSON of Colorado. No. Go ahead.
Senator MILLIKIN. On mines that produce purely silver and gold,
not in combination with any of these critical minerals, has thought
been given to the general economic consequences of closing down those
mines through a lack of essential priorities? Take a community the
whole of which lives around a mine and depends upon the mine, the
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
silver mine. Has thought been given to the effect of striking down a
mine of that kind, which is to say to strike down a community by
denying it essential priorities?
Mr. NELSON. None of us have any desire to strike down a community.
Senator MILLIKIN. Oh, I understand that, but what weight is given
to that factor in the problem?
Mr. NELSON. We have human casualties and business casualties in
every war. We abhor the whole thing, but if it is our duty to see that
critical minerals get into the war effort as quickly as possible, we
have to do everything we can in the little niche in which we are placed
to see that that takes place.
Senator MILLIKIN. There is not the shadow of disagreement be-
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-
munity when by so doing we blitzkrieg a community of our own.
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.
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
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
amended, when it had lower ratings.
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
under the use of PD-1-a's, which they can use when they cannot get
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526
the repair part they want on an A-10 rating. So the fact that they
are sending in PD-1-a's and we are processing them for them I think
indicates and shows that we have no desire to shut down and destroy
any community.
Senator MILLIKIN. Well, I should suggest that when you take the
preferential priority and toss it out for a general blanket priority,
where one business controls the life of a whole community, and that
business is dependent upon that general priority, which we know is
not quickly available, if available at all, you are in fact granting no
relief.
What I am driving at, Doctor, is this: In the same sense that you
are construing this order and granting exceptions to this order, is it
not possible, where a community-the whole economic and social
life of a community-is stricken down by denial of a preferential
priority, even in the case of a silver or gold mine, to take a commonsense view of that and arrive at some practical solution that will
keep these people going, rather than to dump them into a general
Senator MILLIKEN. I have yet to find a businessman who agrees
with you.
Mr. NELSON. I can show you a number of mine operators through-
out the United States who will tell you that the PD-1-a's that we
have handled in the mining branch have helped them definitely.
Senator McCARRAN. May I interrupt to read a letter that I have
received from the Industrial Accident Commission? I will read it
because it pertains to the mine you have mentioned, the Argonaut,
and the Grass Valley district:
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
say that in a number of instances where mines had been struggliing along under
adverse labor conditions and low-priority classification, the March 2 decision
undoubtedly influenced their decision to cease operations. In other instances
that decision had been reached before March 2. In most cases however, the
break-down of a piece of major equipment would have tied up the job indefinitely
Among the larger mines of this State the following, due to a combination of
circumstances, are now idle, or practically so. It is impossible to say to what
extent priorities are a factor in their closing: The Argonaut Mine; the Kennedy
category which means no relief?
Mr. NELSON. There has been no community entirely stricken down
Mine
yet.
Argonaut mine?
Senator McCARRAN. Yes.
Senator MILLIKIN. It is slow paralysis.
Mr. NELSON. You are anticipating something that has not happened.
Senator MILLIKIN. Every businessman, as you know, Doctor, must
look to the future in his budget, in his future plans, in his employment
plans. These communities that are dependent upon these single
mines must make their hospital arrangements, their school arrangements, their whole municipal budget arrangements. When they are
confronted with an order which is not strangling them today, but will
in 6 months or a year from now, the practical businessman looks to
the end effect and tries to avert it.
Mr. NELSON. We are living under war conditions, which are very
abnormal conditions. My reports from the West indicate that the
major problems of the mines of the West today are labor problems
and not so much priority problems.
Let us take as a pure example of a gold district the mother lode of
California. There are roughly 50 mines operating in the mother lode.
Only 9 of those ever had a serial number under P-56. Yet they were
all operating on March 2, and they are all operating today, except the
Argonaut mine, which was shut down not for priority reasons.
Senator MILLIKIN. That is in the same sense that every automobile
is still operating on its rubber, but every prudent operator of an automobile knows that that rubber is going to wear out.
Mr. NELSON. Oh, no. You cannot get another rubber tire. You
do not have any PD-1-a's you can fill out and get another rubber
tire. You are not permitted to fill one out for a rubber tire.
Senator MILLIKIN. I am saying to you that the last priority order
is so uncertain that it amounts to nothing tangible.
Mr. NELSON. If you saw the thousands of PD-1-a's which come
through the W. B. and which are processed and on which ratings are
given and on which industries are operating successfully today, I
believe I could convince you that a PD-1-a is a very tangible thing
for getting a good priority.
Mr. NELSON. May I interrupt you a minute with reference to the
Mr. NELSON. I would like to insert in the record the financial report
for the year ending December 31, 1941, of the Argonaut Mining Co.,
Ltd., showing they had a net operating loss of $38,036.34, as the
answer to the reason why the Argonaut mine was shut down.
(The document referred to is as follows:)
Argonaut Mining Co., Ltd., income account for the year ended Dec. 31, 1941
Amount
Argonant mine operating Income:
Gross production
Less: Refining and treatment charges
Argonaut mine operating expenses:
Mining (Including development)
Milling
Depreciation
Taxes (other than Federal Income)
General and administrative expenses (including mine office overhead
less overhead charged to Plymouth talls operation)
Argonaut mine net operating income (loss)
, lymouth tails operating net income
$7.16
609,816.48
6.99
498,209.62
77,255.65
14,314.37
31,500.30
Dividends received
Interest on bonds
Miscellaneous
Net Income before depletion
5.71
.RR
16
.36
.30
647,852.82
7.42
58,(66.34)
18,807.21
68,515.39
54,075.00
1,530.00
2,970.85
58,575.85
Other deductions: Federal income tax
.17
26,482.88
Plymouth (Empire) mine development expenses
Other Income:
tons)
$624,774.86
14,958.08
19,889.15
33,314.26
Total net operating income (loss)
Per milled
6,032.46
292.60
5,739.86
45
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McCARRAN. I doubt that that is the reason, however,
because Senator the Argonaut mine is in a peculiar belt where they produce
spasmodically. The next month they may have
Mr. NELSON. That is their year's operating loss.
Senator McCARRAN. That may be true.
Mr. NELSON. And I think they were glad, maybe, to have an excuse
to shut down.
Mr. ENGLEBRIGHT (Congressman from California). I do not want
dispute the doctor, because I know he is well versed in his facts and
to figures and has studied this matter very thoroughly. I have had the
of discussing it with him on many occasions, but I would like
somewhat pleasure to add to what Senator McCarran has said. Many of the
mines in our State, such as the Mother Lode, for a number of years, in
different periods of our history, have operated with an absolute net
loss to the extent perhaps of several million dollars, but operations
have been continued. New ore bodies have been discovered and they
have entered into periods of very profitable operations. Of course,
that has to be under conditions when the operator knows he is going
to be able to follow up his operations, so that he can do his exploration
work.
Mr. NELSON. But you do not believe that is true of the Argonaut?
Mr. ENGLEBRIGHT. I could not say, Doctor, whether that is true or
not. The Argonaut has had many periods of depression; it has had
many periods of profitable operations.
Senator McCARRAN. This letter continues:
The Argonaut mine, Jackson: the Kennedy mine, Jackson: the Keystone mine,
Amador City: the Sheepranch mine, Sheepranch; the Walker mine, Walker-
mine: the Seotia mine, Grass Valley: the Murchie mine, Nevada City;
the Zeibright mine, Emigrant Gap: the Pennsylvania mine, Browns Valley;
the Virgilia mine, Virgilia; Le Roi mine, Mokelumne Hill; the Mountain
Copper mine, Iron Mountain, Calif.
The New Brunswick mine at Grass Valley is reported to be shutting down and
the Central Eureka at Sutter Creek is greatly curtailed.
You are, undoubtedly, familiar with the situation with regard to California
mining districts. A number of mines are very deep. The Argonaut and the
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
out and provide an emergency exit. Most California mines do not have large
financial reserves to tide them over periods of protracted idleness so the result
will be that if they be allowed to fill with water, they may never reopen due to the
terrific cost of unwatering and rehabilitation of the property.
On the Mother Lode and in the Grass Valley district, a shut-down of major
operators would create a very serious condition. There are many miners, and
good ones, in these districts who are between 50 and 65 years of age who know
only mining and who would be thrown out of employment. Speaking, generally,
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
ghost towns of a good many cities like Grass Valley, Jackson, Nevada City, and
others. While the production of gold for the sake of the metal can easily be
dispensed with for the "duration, the problem is bigger than that and should
receive every consideration consistent with our chief aim at this time a quick
and decisive victory
This information is necessarily sketchy. Lack of time precludes a more exten-
sive inquiry into the subject. However, if I can be of further assistance, let
me know.
Very truly yours,
C. H. FRY,
Chief, Industrial Accident Presention Bureau
You are undoubtedly familiar with that problem of the Mother
Lode mines?
Mr. NELSON. Yes.
Senator McCARRAN. It presents a serious problem in that, just as
Senator Millikin and Senator Johnson have referred to, whole communities, where for many, many years they have depended on the
activities of these mines, although some of them were working at a
loss, will be blacked out, if I may use a very homely expression.
Mr. NELSON. As I said, only nine of the fifty-odd mines have ever
had serial numbers under P-56, and they were operating without serial
numbers before March 2. That means that they were operating under
P-100 with an A-10 rating and used a PD-1-a form and were operat-
ing satisiacion Remember, just nine out of the fifty-odd mines
had any serial numbers under P-56. Forty-one of those mines were
operating without the priority benefits of P-56 and had never had
them, and yet they had not shut down and were operating along
satisfactorily.
Senator McCARRAN. That emphasizes the point that I tried to
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,
fully catch the significance or the psychology of this problem. Here
in various places throughout the United States are offers made to the
workers to go to work at very enticing wages, and here is a mine in
which perhaps the worker has been engaged for many years, but he
has been advised that there is a threat over that mine, and perhaps
he reads the language that we have in this order of March 2, and he
says, "Well, this is not going to last very long. They have supplies
on hand for only a few months. I am going to the coast while the
going is good.'
That is what is referred to in this letter from California, where it
has fallen back on the 55- and 60-year-old men to carry on, and they
cannot demand the big wages. The young fellows have gone, and
hence there is a curtailment of the supply of labor.
Therefore, Doctor, those two elements-your priority. order of
March 2, which in turn had its influence on reducing labor, and the
reduction of labor itself or the scarcity of labor-have in many instances brought about the shutting down not alone of precious-metal
mines but also mines having precious metals and strategic materials
in combination.
Mr. NELSON. May I answer?
Senator McCARRAN. Yes, indeed.
Mr. NELSON. I had a long-distance call from the Governor of
Idaho a few days ago. Seventy miners had left their mines to go to
the coast, where high wages were paid. Those mines had their
serial numbers: priority could not have entered into the question at all.
The over-all labor question of men leaving mines to go to the coast
it does not seem to me should be confused in any way with whether a
mine had a serial number taken away from it and had it reinstated.
It is just a general movement which is going to result in a shortage of
labor in the mines producing materials that we need the most, if
something is not done.
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. 9
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531
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530
NELSON. I am looking at it from the broad field. There is a
statement Mr. from the Governor of Idaho of miners leaving mining
districts. THOMAS of Idaho. The statement you made is not only
Senator mines but of farms. The dairymen and the farmers are
true losing of their help. It is curtailing production. It is a terrible
situation. Mr. NELSON. We should not mix up the labor problem with
priorities. They are two different problems.
Senator THOMAS of Idaho. It should be taken care of.
Senator McCARRAN. You won't get mining management to agree
with your last statement that priorities have nothing to do with
migration of labor, because all the letters I get are to the contrary.
Senator JOHNSON of Colorado. Dr. Nelson, I am quite interested
the experience that you have had since March 2 with relief and
in with the granting of priorities. I mentioned that the March 2 order
withdrew priorities of 66 mines in Colorado; that since that time 28
of them have been granted relief; that 38 have not been granted
relief; that only 7 of them are strictly gold-mine operations.
Now, I do not know that any of the 38 have been denied relief.
notice you said a moment ago that priorities had not been refused
to anyone as yet. But what are the prospects of those 38 mining
operations in Colorado being granted relief?
Mr. NELSON. I would first like to know how many of the 38 that
have not been granted relief have furnished us complete information
on what they are producing. Then I could answer your question.
But until I knew that, I would not be in a position to answer your
question.
The reason I say that, Senator, is that a fair number of mines in
the West that have never replied when we have written to them to
send in the data we requested to see whether or not we could give
them relief. Until we do get that information, we cannot act.
Senator JOHNSON of Colorado. Of course, until you get the information you have requested and until they apply, why, quite naturally,
you cannot afford them relief.
Mr. NELSON. I was hunting for this sheet while you were talking.
My figures for Colorado are these: There were 61 withdrawn. There
were 27 reinstated. There were 39 not reinstated. There were 5
whose numbers were not withdrawn, because we had information on
them to start with.
Senator JOHNSON of Colorado, Your number 61 is not correct,
because you had 27 and 39, which would bring the number to 66,
which is the number I gave.
Mr. NELSON. The 61 withdrawn plus the 5 not withdrawn make
Senator JOHNSON of Colorado. I would like to have you develop
something along the lines of what these other mines may expect if
they do apply for relief.
Mr. NELSON. We will be glad to review each case very critically
and very fully and very sympathetically.
Senator Johnson of Colorado. Are you acting sympathetically and and
generously with these applications where they produce vital
essential and critical materials?
Mr. NELSON. We are acting sympathetically with everyone. A
person cannot act generously during a war effort if they are going to
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
what is best to the war effort.
Senator JOHNSON of Colorado. Of course, priority takes in the
element of preference just naturally, but you weigh your priority
against their performance?
Mr. NELSON. Yes; we do.
Senator JOHNSON of Colorado. Now, we have, as Senator Millikin
pointed out, exclusively gold operations in Colorado. There are very
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
yet. Did you mean where only gold is mined?
Mr. NELSON. I mean that any operator operating a 100-percent
gold mine is still operating under P-100 and has the privilege of send-
ing in PD-1-a ratings for items that need a higher priority rating
than he can get under P-100.
Senator JOHNSON of Colorado. Is he actually able to get priority
assignments?
Mr. NELSON. They have in the past, but remember this: that if
they were operating under P-56 they could buy, in a blanket way,
repair parts without having them scrutinized and clearing them
through Washington. Today they have to come in to us for each
item they need as they need it, and they have to show that they
actually need it.
We have got to know that the pooled resources of a gold-mining
district cannot take care of a needed part when it is needed. I have
a list here of items bought by a number of gold mines in the West
before their numbers were taken away, and practically everything
they bought is of a most critical nature today. For instance, here
are machine bolts, chains, key stock, files, pipe dies, fuse links, fuseplugs, a large amount of wire, bushings, lock nuts, cable, and lead.
Things of that type are very critical.
Senator JOHNSON of Colorado. When were these purchases made?
Mr. NELSON. These were purchased in January and February.
They had a right to purchase them, but in going over the list of
things purchased by those mines when they could purchase them
directly from their supplier and just report to us each month what
they purchased, they were purchasing critical materials; and we have
a definite feeling that if a mine operator has to come in to Washington
on a PD-1-8 form for each repair part he needs, he is going to be much
more careful in the amount of critical materials he uses.
I feel that we have made great strides in California since March 2.
due to the fact that the gold-mine operators have gotten together and
pooled their resources, have made available their repair shops to
each other, and I think they are doing a fine job of conserving critical
material and still keeping their mines going.
Senator JOHNSON of Colorado. That is very pertinent information,
and it is information that we want very badly in Colorado. We want
to cooperate, of course, and our gold operations want to cooperate.
They realize the situation we are in, and it is not a spirit of just opposition and contrariness on their part, but they would like to have some
ray of hope that they can get just a few drops. They do not ask for
a whole bucketful, but they would like to have a few drops or a few
I
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532
Mr. NELSON. I would have to look into the specifications. I
of assurance that they are going to be able to get them. Their
imagine they have safety laws in South Africa, as well as they have
crumbs not going to be great. They tell me that if they can get
here.
Senator JOHNSON of Colorado. I have one thought I wanted to
develop, if you are through, Congressman White.
needs renewal are of cable and other more or less essential articles to their
some operations they will get along some way, but they want to know that
Mr. WHITE. Go ahead.
the door is not going to be shut to them.
NELSON. Senator, I admire very greatly the mine operators of
Senator THOMAS of Idaho. You are dealing now with gold operations, Senator Johnson. Could I inject one question?
Mr. and particularly the men who made the West possible
Senator JOHNSON of Colorado. Go ahead.
Senator THOMAS of Idaho. Could I ask one question as to what they
the West, the development of the gold and silver mines. I feel that they
through come through an emergency if they will put their shoulder to the
wheel can and show the ability which I know they have and the ability that
are doing with dredges and how they are caring for gold dredges?
Mr. NELSON. Gold dredges are considered as placer operations and
have never come into the provisions of the mining orders since the
first one issued in September Those gold dredges that are operating
today have been operating continuously since September 22 under
P-100 and by the use of PD-1-a ratings where they needed a priority
higher than A-10.
Senator THOMAS of Idaho. You think they will be able to continue
with their operations?
Mr. NELSON. I cannot say what the critical material situation will
be from month to month, but, as I understand it, most of those dredges
are still operating.
Senator THOMAS of Idaho. Thank you.
Senator JOHNSON of Colorado. Dr. Nelson, I simply wanted to call
your attention to the fact that in the mining industry often one hand
has to wash the other and that there would be a very small amount of
vital and essential and critical ores mined today if it were not for the
their ancestors had.
Senator JOHNSON of Colorado. You really think a gold-mine operator can do that?
Mr. NELSON. I say I feel they can.
Senator JOHNSON of Colorado. You feel that?
Mr. NELSON. But when I write to two of the leading gold operators
the West and offer them a large shipment of drill steel that was
in consigned to South Africa, and which I held up to see if they could use
and receive negative replies from every gold operator that I sent
it, this telegram to, I feel a little sad, because I wonder if they are willing
to change their methods of operation in an emergency in order to carry
on. I realize that that would call for a change in many things that they
doing, because drill steel is of a different size than used in this
are country, but there was a lot of critical material that had been made up
for shipment to South Africa, which was held up in this country at my
request to see if any gold-mine opertor in this country was willing to
or could change his operation so that he could use it. They all of one
accord, after a thorough investigation, wired me back and said that
they regretted very much, but they could not modify their operations
silver and gold that have financed the operations. The mining
industry is financed and its financing is all interwoven. We may have
a gold operation at Cripple Creek that is financing a gold operation in
some other part of our State.
It seems to me that there is a feeling, and I want to find out whether
it is justified or not, that the War Production Board has a prejudice
and use this equipment.
Senator MILLIKIN. Is it not a fair assumption, Doctor, that they
against the mining of silver and gold, instead of realizing that the
knew what they were talking about?
Mr. NELSON. I suppose they did, but that equipment I think is
silver that happens in these complex ores is not a curse, but a great
advantage, and makes it possible to produce quantities, and important
quantities, of these vital, critical, and essential minerals.
My question is, Do you have a prejudice against silver? Are you
going to South Africa.
Mr. WHITE (Congressman from Idaho). May I ask a question, Mr.
Chairman?
trying to reduce the quantity of silver mined? Are you trying to
The CHAIRMAN. Congressman White.
reduce the amount of gold mined? Is there some economic factor in
this picture that has not been disclosed?
I
Mr. WHITE. Dr. Nelson, you appreciate that these machine drills
cost about $400 apiece that you are talking about. Do you mean
you want them to junk all those steel drills and machine drills?
Mr. NELSON. No: I did not say that they would junk them.
was hoping that by some ingenuity they could use it.
Mr. WHITE I do not know the type of machinery you are talking
about. They might change some chuck in a drill, but when you
want to change the whole equipment in a drill, that may be irreplaceable, it might cost more to put the new type of machine drills in operation than it would to use steel that was off shape.
Mr. NELSON. I realize it was a hard problem. I realize that they
would have loved to use that equipment. But I just want to bring
out the fact that we are attempting to help the gold miners where
we can.
Mr. WHITE. You know, there is a law that provides that miners
use hollow steel. Was that steel hollow? Could they comply with
the law and use the steel that you offered?
533
Mr. NELSON. I am only in charge of the mining branch of the
The W. P. has no thought except to see that the critical
materials go to those mines that are producing the largest amounts of
essential war minerals.
Senator JOHNSON of Colorado. There is no effort whatever to curtail
gold and silver?
Mr. NELSON. If a gold mine needs critical materials and there are
not enough critical materials to go around to the metal mine and the
gold mine, the gold mine naturally will have to take what is left, not
because it is gold but because it does not help to make a tank or a gun
or an implement of warfare.
Senator JOHNSON of Colorado. Do you take into consideration the
contribution that is made by silver and gold to the production of zinc,
SILVER
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535
534
lead, copper, and other vital minerals? Do you take that into
consideration? NELSON. We in the mining branch are looking purely at the
material Mr. viewpoint, the material produced and the critical materials
used in producing it, and nothing else.
Senator JOHNSON of Colorado. In other words, if a mine was pro-
silver and sufficient silver to finance the operation, you would
ducing wipe it out simply because it was producing silver?
Mr. NELSON. If it is producing silver and nothing else
Senator JOHNSON of Colorado. No. It is producing something else,
but not great quantities of it. It is keeping a mine open.
Mr. NELSON. If it is producing enough of some other material that
is needed in our war effort, the mine will be kept going with the
Mr. NELSON. I have figures to show that the gold production in
South Africa is going along about the same. I suppose those figures
are correct.
Mr. WHITE. Are they getting a considerable percentage of their
machinery from us?
Mr. NELSON. I do not believe they are getting very much of anything from the United States, because the members of the South
African Purchasing Commission come in to see me regularly about
once a week, wanting to know when they are going to get something.
Mr. WHITE. But they are getting it from the United Nations supply
house somewhere, whether it is from England or from us?
Mr. NELSON. I cannot answer that. Their mines are operating.
I know that.
Mr. WHITE. You think they are going along at the same rate they
priorities he can get.
Senator McCARRAN. Right there, Doctor, going back to the subject
have been going in the past?
we have not recent developments established the fact that silver itself
is a strategic metal?
against the wind.
Senator McCARRAN. I was going to ask, pertaining to that subject,
Is it not possible that a shipment of machinery that we send to South
touched on a while ago, about your statement made in Reno,
Mr. NELSON. Well, as I said, I had a feeling in Reno that silver
could be used in fair amounts, but I seem to have been alone in that
feeling at that time. I hope that silver can be considered as a metal
that can be used in winning the war from a material standpoint.
Senator McCARRAN. It has won so many wars, there is no reason
why it should not be considered as essential to the winning of this
war. In the Civil War and every other war that I ever read of it
was by the production of silver that the war was won. In fact, it
was by the production of silver and gold that we have been able to
finance our wars. If we do not produce silver and gold, I am wondering how we are going to finance this war.
Mr. NELSON. I am from a Southern State, and although it has
nothing to do with the record, I do not think that was the reason
that the Civil War ended up the way it did.
Senator McCARRAN. Doctor, we will not go into that subject.
Mr. WHITE. Mr. Chairman, may I ask another question?
The CHAIRMAN. Congressman White.
Mr. WHITE. You spoke of the policy of the Government in giving
priorities to gold mines. We more or less cooperate with the British.
We call ourselves the United Nations. Is that same principle being
applied to the gold mines of South Africa? We are told that 50
percent of the gold is produced in South Africa. The Senator told
us a while ago that they sent a warship to South Africa to bring
away the gold. Is that same principle being applied in South Africa?
Mr. NELSON. I must have made the statement before you came
in that the mining branch has not given any priority ratings on any
PD-1- forms to South African gold mines in recent months.
Mr. WHITE. You mentioned a large shipment of steel going to
South Africa.
Mr. NELSON. I said that we held up the shipment of this drill steel
that had been manufactured for some company operating South
African mines until we contacted our mines to see if they could use
it in the United States.
Mr. WHITE. Does the Priorities Division know of any curtailment
in gold production in South Africa due to any essential machinery
not being supplied?
Mr. NELSON. They state to me that they have no backlog of supplies to work on any more, and that they are running rather close
America may be transshipped to South Africa? Is there anything of
that kind going on?
Mr. NELSON. I cannot answer. I do not know.
Senator McCARRAN. You do not know whether the practice of
shipping mine machinery to South Africa will continue?
Mr. NELSON. I will say that when we give a PD-1-a to a particular
mine in South America I am pretty certain that that mine needs whatever it can get so badly that it is not going to transship it to some
other mine somewhere else in the world; and the only material which
we have approved for shipment to South America has been material
to individual mines, and I am pretty certain that an individual mine
is going to keep the material if and when it gets it.
The CHAIRMAN. Dr. Nelson, we are going to have to close at the
present time. I want to make one suggestion.
It is now apparent that the national debt will be around $200,-
000,000,000. It is likewise apparent, I think, to those who have
made any computations, that the Federal Budget after this emergency is over will be from fifteen to twenty billion dollars.
With those two figures being approximately correct, is it not
proper for your Board and you as an individual, as an official of the
Government, to give consideration to the problem of permitting
somebody to make some money to pay these expenses or help pay
these expenses of not only the present time but from this time henceforth? Have you given consideration to that problem in proposing
orders that will have the probable effect of stopping or retarding the
production of gold and silver, which are our most valuable metals?
Mr. NELSON. Well, Senator, the Mining Branch has nothing to do
with the price policy paid for any metals. That is established in the
R. C. We in the Mining Branch have only one duty that has
been assigned to us, and I am a great believer in, if you are operating
a branch, sticking to the duties that are assigned to you, and that is
to get the materials to the mines.
The CHAIRMAN. Then, it is your policy to get copper, lead, and
zinc even though the country goes bankrupt in trying to get it?
SILVER
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536
Mr. NELSON. I did not hear your question.
The CHAIRMAN. I say, it is your policy to get copper, lead, and
zinc and other strategic materials without reference to the economic
effect upon the country in getting those materials?
Mr. NELSON. Senator Thomas, my branch has nothing to do with
the policy making of W.P.B. I am sorry. I am not in that position.
Senator MILLIKIN. I should like to ask, Dr. Nelson, who sat in on
the determination of the policy behind this order that we are talking
about.
Mr. NELSON. I would have to give you the entire membership of the
Board before which it came, and I cannot give you that offhand.
Senator MILLIKIN. Was it taken up in a formal hearing or a series
of meetings? Who was the dominating personality in the policy
behind this order? I assume you are acting mechanically, under the
position you have just mentioned It is not entirely mechanical, but
using your judgment within the sphere of action you have been
confined to. But who decided the policy?
Mr. NELSON. You are bringing up the question of order P-56, and
Senator Thomas was bringing up the question of affecting the price
structure of the metals, which are two different things entirely.
Senator MILLIKIN. They do not have to follow each other. I am
asking who decided the policy basic to this order.
Mr. NELSON. Well, as I said, the fact that an amendment was
needed to the old order P-56 was naturally known in the Mining
Branch, and the Mining Branch drew up a draft of the first amendment to the order.
In drawing up an amendment the branch chief gets in touch with
his attorney, he gets in touch with a representative of Research and
Statistics, and they jointly draw the amendment. The amendment
then has to be approved by a half dozen different people. All this
is on a form that is attached to the front of it. Any of those people
who do not like any item in that amendment make notations in regard
to what they do not like. Then you try to prove your point. If you
cannot, you compromise and modify the order, until it is passed by the
clearance committee, and then signed by Mr. Knowlson.
Senator MILLIKIN. Is there a factual memorandum available that
went into these discussions?
Mr. NELSON. I think there are memoranda attached to this order
as it went through the committee and as it was issued.
Senator MILLIKIN. I am going back to my first question of the
day. What was the necessity for the orders? Can we get a factual
Senator MILLIKIN. A man would wake up some morning and say
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
other in such a quantity, we have to put out a certain kind of order.
That would be a somewhat logical approach to an order of that kind,
would it not?
Mr. NELSON. That is just what I said.
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
it? It was not just a circulation of talk among the members, like a
college bull session, was it?
Mr. NELSON. No: not at all.
Senator MILLIKIN. There must have been some basis for it.
Mr. NELSON. I am afraid we are so busy down there that we do
not have time for some of the bull sessions that we would like to have.
Senator MILLIKIN. I do not deny their proper place, but I do not
think we are getting out orders on bull sessions. I do think, however,
it would be a good thing if we would get at the why of this order.
Mr. NELSON. I mentioned it several times, Senator.
Senator MILLIKIN. You told me it is because of this war need.
Mr. NELSON. I said we have lost our sources of supply of many of
the critical metals that go into alloy steel, that go into the making of
mining machinery, and so forth. Mining machinery is essential for
carrying on the war. The makers of mining machines have to have
critical materials to make the machines. The makers of mining
machinery have the best machine shops in the United States, and they
are using from over 50 percent of their plant capacity down to lesser
amounts in the making of direct munitions for the Army and Navy.
They are limited in the use of critical materials in the making of those
materials. Therefore, we are limiting it to the mines that are produeing the critical minerals.
The CHAIRMAN. It is obvious we cannot complete the hearings this
morning, and some of our Members have another meeting at 2 'clock.
We cannot go any further now.
If agreeable, we would like to have you come back tomorrow at 10
o'clock, Doctor, if you can.
Mr. NELSON. I will be here, sir.
The CHAIRMAN. There will be some other questions to be submitted.
Mr. NELSON. Will the hearing close tomorrow?
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.
We appreciate the attendance we have had this morning, especially
Mr. NELSON. I have already mentioned that the necessity was
that we needed higher priorities for the mines producing critical
minerals in order to see that they get the raw materials that they
from the Members of the House, and you are invited to come back
and sit with us and participate with us so long as the hearings last
needed in order to operate.
Senator MILLIKIN. There must be something below that. You
just do not wake up in the morning and say there must be this, that,
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.
We will meet tomorrow morning at 10 o'clock.
(Thereupon, at 12:45 p. m., an adjournment was had until Wednesday, May 6, 1942, at 10 a. m.)
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 Representatives: Hon. Harry L. Inglebright (California), Hon. Lawrence Lewis
(Colorado), Hon. William S. Hill (Colorado), Hon. J. Edgar Chenoweth (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 Administrator; 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. Dickinson, 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, secretary, 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, inspector of mines. State of Nevada; Mr. Charles L. Bradbury, president. 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
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540
STATEMENT OF WILBUR ARMISTEAD NELSON, ADMINISTRA.
TOR, MINING BRANCH, MATERIALS DIVISION, WAR PRO.
DUCTION BOARD, WASHINGTON D. 1-Resumed
McCARRAN Dr. Nelson, on yesterday I think I was guilty
of Senator interrupting you in the first instance, and later on other interruptions followed.
Mr. NELSON. Yes, sir.
McCARRAN. I noticed that during the making of my preSenator statement you took notes of my remarks, some of which you
liminary started to reply to, and I then interrupted you. But I think you still
have some notes growing out of my statement which perhaps you
might wish to speak upon. If you have, we would be very glad to
have you do so.
Mr. NELSON. Senator, I think I answered you on all the notes
I had.
Senator McCARRAN. Very well.
Mr. NELSON. However, if you feel that there is something I did
not answer, I will be very glad to try to answer it.
Senator McCARRAN. I want to toueh on this just a little, because
I think you would perhaps like to answer it, and I would like to have
your reaction.
Mr. NELSON. Yes, sir.
Senator McCARRAN. Please understand that there are things that
may mention to you here during the hearings that have come to me
but that may have nothing particularly of significance behind them;
nevertheless, if they grow out of an atmosphere, so to speak, that is
out in the field, it might be well for us to bring them up, so that you
in turn might explode them, if I may use that expression.
I
I dwell now on the incident illustrative of expressions that are
abroad that there is a line of demarcation somewhere, whereby some
can get priorities and others cannot. I gave yesterday an illustration
of two miners working on the same dump, both applying for priorities,
both working on the same class of ore. One gets a priority; the other
does not. The inference is that somebody has a pull somewhere
Mr. NELSON. Senator, if I remember, you made that statement
under a heading, in your opening remarks, of rumors that you had
heard.
The CHAIRMAN. This will be off the record.
(Senator McCarran then made a statement which, by direction of
the chairman, was not recorded. The following then occurred:)
Senator McCARRAN. Now, Mr. Chairman, I want to take just a
little different tack, which will later come back to Dr. Nelson's statements 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.
SILVER PUT ON INFORMAL RATION LIST: GOVERNMENT FREEZES PRICE AT 351/2
CENTS-WAR INDUSTRIES GET NECESSARY QUANTITIES BUT SUPPLIES FOR
JEWELRY MAKERS ARE LIMITED
Silver, one of the last of the priority-free metals, is being rationed
Handy & Harman, the leading bullion dealers, now are doling out supplies, it
was learned last night. Industrial companies using the white metal in war work
get what they need; supplies for other consumers, including jewelry and tablewear manufactures, are being strictly limited.
Silver available for industrial use also has been price-fixed, the Government
freezing the quotation at the ruling 35 1/6 cents a fine ounce (35% cents, including
commission, to the consumer).
LONG EXPECTED BY TRADE
The crisis in silver supplies had been long expected in the trade. The only
white metal available for industrial and commercial use is imported. All United
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
foreign supply which may be as small as 100,000,000 ounces this year. But
industrial use is expanding rapidly. Silver is an expensive but desirable substitute
for even scarcer metals. It can be used in solders wire, electrical and chemical
equipment. It has direct armament uses in ship equipment, gunfire control and
recoil mechanisms. The aircraft industry uses silver in radiators, aircraft engine
bearings, etc.
This war-borne industrial demand has been piled on top of expanding use by
the arts and crafts, traditional market for the precious metals.
BUSINESS TURNED DOWN
A considerable volume of business is being turned down by bullion dealers
because of the inability to acquire sufficient supplies of silver with which to meet
this demand. The situation has been aggravated by the fact that some commercial 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
moment.
far, the informal rationing is being carried out on the basis of a certain percentage of the amount of silver a customer used last year. But even the computation of the percentage is difficult, it was explained, because of the uncertainty
regarding available supplies of foreign silver,
Senator McCARRAN. Yes.
Mr. NELSON. I just supposed, as they were rumors, that you did
not want me to answer them, because I do not know just how to
answer rumors.
Senator McCARRAN. Notwithstanding this, it is my belief-and
you know better than I-but it is my belief that there is not any
with
pull, so-called, anywhere in your board; that you are dealing
this subject fairly and squarely and are acting on the up-and-up.
Mr. NELSON. Well, Senator, if there is any pull being exercised by
anyone, anywhere, in my own branch, I know nothing about it.
Every case is handled purely on its own merits.
Senator McCARRAN. That, of course, is what I wanted.
Mr. NELSON. Yes, sir.
Senator McCARRAN. There is one other thing, while we are on the
subject, that hsa come to my attention. With your permission, Mr.
Chairman, I will ask that this be off the record.
TRANSPORTED BY BAIL
The shipping situation has complicated deliveries of metal from Mexico and
all silver now is being sent to the United States from Mexico by rail express rather
than by water.
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
States Treasury as the result of the silver purchase program. Treasury officials
have announced willingness to release 40,000 tons of silver for bus bars to offset
the shortage of copper. The silver market may seek to have a portion of this
tonnage diverted to commercial uses.
I make mention of that, Mr. Chairman, in the presence of the
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
acquiesce in, if I interpret his statements correction-I may be wrong
though-that there should not be any act on the part of the Board
SILVER
SILVER
543
542
supplies, if they are needed for the war effort, will, I believe, [be taken
would curtail the production of domestic silver, because domes-
by my superiors.
which not only valuable from a monetary standpoint, but it is
The CHAIRAN. Doctor, on yesterday you made the statement that
every mine stood on its own foundation.
tic silver is is disclosed by this article here, becoming more and more
with
Mr. NELSON. Yes, sir.
also, essential as as a commercial commodity in the arts and sciences
are dealing today in our war activity.
which 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
Dr. with him and say that when he made mention of it in
issuance of granting of priorities?
Mr. NELSON. Yes.
The CHAIRMAN. Now, this morning you have made the statement
will be I frank did not get the full significance of his statement; but later,
Reno, the Treasury became active, and I saw that they were about to
when lend-lease law to release 40,000 tons of silver, to in turn release
use similar the quantity of copper, I saw that he had something in his mind
when a he made the statement in Reno.
bringing this to his attention now with the hope that his board
I am fit to say to the silver miners of this country and those whose
may see produce a greater quantity of silver, that the order of March
that any mine that produces a required or satisfactory amount orf
necessary war material, such as copper, lead, or zinc, would have its
number reinstated if it had been withdrawn.
Mr. NELSON. Yes.
The CHAIRMAN. With those two statements before the committee.
of what use is any order whatever with respect to the production of
silver, if every mine stands on its own foundation.
which mines limits it to 30 percent, and says that if the mine produces more
Mr. NELSON. If you feel that my two statements are con-
than 30 percent of silver in dollar value it cannot have a priority, that
is not the rule.
I anxious that your Board may see fit to modify that rule a
am bit, so that the fellow who lives on the prairie and has a mine
little the side of a hill may know that he will not have to come here to
on get a priority. If you would discuss that a little, I would appreciate it.
Mr. NELSON. Senator, I have already discussed, yesterday, the
that any mine producing needed amounts of copper, lead, or zine,
fact irrespective of the amount of silver or gold it will produce, will have
its number reinstated if it was withdrawn.
I suppose what you wish me to discuss is not that phase of the
matter but the industrial side of silver or the industrial use side of
The CHAIRMAN (interposing). I did not say that, but the two statements lead me to believe that, inasmuch as every mine stands on its
own foundation, there is no occasion for an order affecting silver or
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
up to your board to consider the application and do what you thought
was best in the case, having in mind, of course, our need for strategic
materials.
silver. Senator McCARRAN. That phase of it; yes, Doctor; together with
this thing; that those of us who are interested in silver mining are
trying to get over to you, with the idea of affirmative action, a change
of the language of the order of March 2. The reason why we are
trying to get that over to you, to get it modified, is that it has a
deterrent effect on mining all over the country. No matter what you
may say here, as you have just made the statement, which I understand perfectly, there are hundreds who do not understand it.
They say, "There is the order. How can you change it?"
Mr. NELSON. Senator, I also made the statement yesterday that
we have no information in the Mining Branch showing that any mine
has shut down due to priority action: furthermore, we have information showing that certain mines have changed to strategic mineral
Mr. NELSON. The amended mine order of March 2 gives various
degrees of priorities to various types of mines. In addition to the fact
that gold and silver mines were limited in their priorities, we also took
out of the higher brackets of priorities sand and gravel operations and
aggregate operations-building stone, gypsum, and certain other
commodities. In other words, we were not discriminating against
any particular type of mine; we were trying to evaluate the different
mines producing different materials as they affected the war effort.
The CHAIRMAN. You stated on yesterday that the largest silverproducing mine was Sunshine.
Mr. NELSON. I said it was one of the largest.
production.
We also all know that the metals essential for winning the war are
being produced in larger amounts this year than they were heretofore,
so our priorities have been used to increase the production of strategic
I
and critical minerals.
tradictory
Senator McCARRAN. Right there, Doctor, if I may interrupt.
read this article and I have made my statement with the idea of trying
to emphasize the fact that silver has now become a metal necessary
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
needed and that can be shown in the months to come to be true,
naturally whatever steps are necessary to get out those additional
The CHAIRMAN. One of the largest, then. You said that because
that mine produced a very large amount of antimony, which was
needed, you would permit that mine, as I understood you to say, to
get whatever material was necessary to operate the mine.
Mr. NELSON. That is correct. Their serial number was reinstated.
The CHAIRMAN. You might have the largest silver mine in the
same condition, or you might have the largest gold-producing mine
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
substantial quantities that was needed for the war effort, you, as I
understand the force of your statement, would go ahead and issue the
priorities necessary to keep that mine in operation?
Mr. NELSON. Irrespective of the amount of gold and silver that a
mine produces, as I said yesterday, if that mine is producing needed
amounts of any critical or essential minerals, and it can substantiate
that fact by furnishing us detailed information of the operations, we
SILVER
545
SILVER
544
that information, and if these critical materials that that
review mine is all also producing are needed in the war effort, the serial number
is reinstated.
I can see in your orders a very powerful and
The CHAIRMAN. influence against the mining industry in those western
psychological with respect to both gold and silver. Now, with my present
States, as I interpret your statement, that each mine stands
understanding, basis of facts, I can see no good purpose whatever that can
on served its own by keeping this order in the active files.
NELSON. If it were not for this mining order, the mine operMr. the country would have no way in which, when they suffered
Mr. NELSON. I do know, however, that a mill is being built, to take
of these ores from the mines you are mentioning, and that,
care instead of producing about 150 tons of antimony, as they did last year
due to their interest in the war effort they will produce between 70 and
75 tons of antimony a month starting in September, or probably a
little sooner, and will acquire ores from nearby properties from which
they will separate antimony. So, their production per month starting
this fall will be around 100 tons a month. Antimony is very essential
in our war effort.
Representative WHITE. I appreciate that, but is the process you
have been discussing-th metallurgical process-one where they
again. CHAIRMAN. You must know all the facts surrounding and have
The mind all the facts upon which the priority orders are requested,
separate antimony in a mill or in a smelter?
Mr. NELSON. I am not familiar with the details of how it is separated, because I am not a smelter expert.
Representative WHITE. I want to come now to this priority matter.
You said that blanket priorities are given to these mining companies.
I understand that when they make special requests for needed replace-
in then you act, independently of everything else, on the facts as
ments, they must conform to certain rules and regulations. They
ations break-down, of and get the highest priority rating needed so they could
a from their supplier the equipment they need to start operations
get We are able to do that on 24 hours notice.
and presented as a basis for this order, so still I cannot see how the order
itself does any good whatever.
Mr. NELSON. There are about 16,000 mines in the United States.
are only between 8,000 and 9,000 of those mines that have
serial There numbers under this order, and those are the mines that are
given high priority ratings for break-downsor anticipated break-downs
are given quotas or a release on their repair parts, or are given special
ratings on new machines, when they need those machines to expand
or to maintain their tonnage.
The CHAIRMAN. I think I see your viewpoint: that this order and
this activity on behalf of your board is really in the interest of the
mines rather than against them.
Mr. NELSON. Absolutely.
The CHAIRMAN. Well, I am trying to see that a little more clearly.
Mr. NELSON. Did I make that clear?
The CHAIRMAN. I see your viewpoint, but I am not convinced
that it is in the interest of the mining States.
Mr. NELSON. The fact that we are trying to get production out is
prima facie evidence that the mines are being taken care of from the
priority standpoint, because they would be unable to increase their
production if it were not for the use of priorities.
Representative WHITE. Mr. Chairman, I would like to make an
inquiry, in order to clear up a matter.
The CHAIRMAN. Congressman White.
Representative WHITE You mentioned, Dr. Nelson, the Sunshine
Mine as a source of antimony.
Mr. NELSON. Correct.
Representative WHITE. As a matter of fact, antimony is a metal
that is deleterious, and the mine owners are penalized for having it
in the ore. How do you take care of that situation?
Mr. NELSON. I know that the past smelter practice in regard to
certain metals being associated with other metals when they go to
the smelter has resulted in certain penalties being charged by the
must name their supplier, state whether the stuff is available, and go
through the provisions of your formula.
Just what plan do you have in mind to take care of these mines?
Do you have a blanket formula by which they can make application,
or do they have to make specific clearance or obtain specific approval
for every instrument they order? Just how do you handle it?
Mr. NELSON. I can go into details in the operation, if you want
me to, Congressman.
Representative WHITE. I just want to know the difference between
the two plans you discussed yesterday
Mr. NELSON. Under the mining order we asked the Governor of
each State to designate a State official as the Emergency Coordinator
of Mines for that State. That State official sent into our office the
names of the mines in his State which he felt should be given serial
numbers, as a serial number was necessary before a mine could participate in the priorities granted under the mining order.
We reviewed those lists and wrote back in many cases for additional
information. Since September 22 we have issued serial numbers to
between 8,000 and 9,000 mines in the United States.
When a mine has a serial number, it is entitled to the priorities
given in Order P-56. There are four or five different types of priorities in that order. The A-1-a rating for break-down must be cleared
by the mine having a serial through the Mining Branch in Washington.
An A-1-c rating for repair parts on a quota basis by quarters is
handled by the mine direct with its supplier, by stamping on the
order to its supplier a clause carrying the mines' serial number and
the A-1-c rating under his quota, in accordance with the provisions
of order P-56. They do not have to come into Washington for their
repair parts under those quotas. The quotas are, however, established in Washington.
We also have an A-8 rating that the mine operator can use in the
same way on his supplier for other operating supplies.
Finally We have an A-10 rating that can be used for office supplies,
smelter against the shipper.
Representative WHITE. It has been long the custom and practice
to penalize the shipper for having antimony in his ore.
73052-42--tt.9-
SILVER
SILVER
547
546
wanting a new mining machine can get it only by writing
or operator wiring to the Mining Branch in Washington and furnishing us all
the information about its need for that machine. That is reviewed
carefully. If the mine operator has proved his case, a rating is given
which will permit the mine operator to purchase that machine.
a
Those are the priorities that are available to a mine operator having
serial number under order P-56.
Representative WHITE. Going into this detailed plan you have just
outlined, have there been any general rules or general instructions
issued to the mining industry to put them on notice or to give them an
opportunity to take advantage of these provisions that you have just
enumerated?
Mr. NELSON. Yes, sir. Every mine operator when he gets his
serial number is told to read the certificate, on which there is stamped
all this information. In addition to that, we send out additional
instructions as conditions change.
Representative WHITE. That mine number is given only upon
application. But the information I would like to have is whether
general information has been furnished the mining industry, to have
them avail themselves of the rules and regulations you now prescribe.
Has that now been done in a general way?
Mr. NELSON. We have in each State in the union an emergency
coordinator of mines, and I am certain that in every case those State
coordinators have seen to it that the mine operators in their State
know that they can apply for serial numbers.
Mr. Palmer is our coordinator in the State of Colorado and has been
very active. I am quite certain that there is not a mine operator in
Colorado who has not been informed that he could get a serial number.
I also am quite certain and know to be quite true that a number of
mine operators who have asked for serial numbers have not been
given them because we thought their operations did not justify them.
Representative WHITE. Have you furnished those coordinators in
the several States with blanket, comprehensive instructions as to what
a mine is entitled to have and can have, and do you know if the mines
have received such information?
Mr. NELSON. Each mine operator himself, when he has a serial
number, has the information and knows how to apply that information.
Representative WHITE. I would assume that. Well, judging from
the hundreds of telegrams reaching my office from miners asking for
help, it is quite apparent to me that they do not have such information and have to go through a very tedious routine to acquire it.
Mr. NELSON. We have sent out these certificates with serial numbers 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
to us as his monthly report. If the mine operator does not understand the certificate and does not understand, by reading it, the
priorities that he can get, we cannot go to between 8,000 and 9,000
mines and read the certificate over to them and explain the details.
Do those companies have the knowledge that they have the privilege
and that they can avail themselves of it? Do you get that infor-
mation to them?
Mr. NELSON. We have attempted, through our State coordinators,
to see that every mine operator was informed of the fact that he had
the privilege of applying for a serial number. The reason we asked
the Governor of each State to designate a State official familiar with
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
privilege of applying for a number.
Representative WHITE. Just a number. But what about the
information of his privileges and rights and the rules and regulations
that went with that number? What about them?
Mr. NELSON. He got the number and he got that information from
If he did not get the number, the information was not necessary.
Representative WHITE. In other words, it boils down to the fact
that there have been no general rules or general instructions made
available to the mining industry.
Mr. NELSON. There have been rules or general instructions given
us.
to the mining industry in many ways: Through our office, through
State coordinators, through trade journals of the country that cover
the mining industry, and by word of mouth.
Representative WHITE. You stated awhile ago that the coordinators
the several States had listed all the mines that they thought were
entitled to this information; that were listed as mines that merited this
of
procedure.
Mr. NELSON. Yes.
Representative WHITE. Has that list you mentioned been given to
these people in any way direct?
Mr. NELSON. The mines on that list which were granted serial
numbers have been given all information in regard to the priority
actions.
Representative WHITE. Mr. Chairman, Ithank you very much, and
I thank Mr. Nelson for his information.
Senator McCARRAN. At this point, Mr. Chairman, while these
gentlemen are before the ccmmittee, I desire to read another extract
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
your attention again as a basis for one or two more questions. This
article reads as follows:
SILVER EXPORTS TO EUROPE ARE BANNED TO KEEP METAL FROM Axis
INDUSTRIES
WASHINGTON-Exports of silver to Europe have been stopped by an unannounced embargo because it has been found that even though shipped to neutrals
the silver finds its way to the Axis for industrial uses.
The new embargo covers Spain, Portugal, Switzerland. Sweden, Vichy France,
Turkey, and French Africa.
It was found that when European countries are occupied by the Axis the pro-
.
supplier. Leaving that side of priorities and going to new machines, a mine
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 California gold mines had not availed themselves of any application.
.
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
cedure is to withdraw all silver coins. This was done by the Axis in France
where 5-, 10-, and 20-franc silver coins were taken up by Germany.
549
SILVER
SILVER
and Italy have long since withdrawn their silver coins and are now
Germany aluminum, and iron coins in place of the more valuable white metal
using zine, shown that Switzerland and Portugal are centers through which flow
It is quantities of coin for the account of the Axis.
large Considerable tonnage of silver was actually en route to Portugal and Spain
it was stopped and brought back to this country.
before weeks, this Government has been negotiating with the representatives
Senator McCARRAN. Yes: that is true, Doctor, but the production
of silver in combination with what you term strictly war essential
metals does two things. First of all, it enourages the production of
war essential metals; second, it keeps the price of war essential
548
In recent governments for the purchase of silver which they hold title
of neutral European Sweden owns some 15 to 20 tons being held in this country.
to in this country. of State, Treasury, and other Government agencies, however, have
Officials getting tougher about silver exports to any of the European countries and
metals down, because silver at 71 cents aids the miner in producing
war essential metals, and today, except in one instance, you have no
straight mines of silver. Every bit of silver is a byproduct, almost
altogether. The only one outstanding exception to that, that I
know anything about, is the Sunshine mine, to which you have made
been we're finally forced to clamp down completely.
reference.
Silver to use substitute metals for coins and this action has caused civilian hoard.
ing, urged which with the confiscation by the Axis of silver coins has produced a diff.
cult silver situation.
brought before you here, which are today current, that the clause in
your order of March 2, being a penalizing clause-and it cannot be
considered in any other way should be removed from that order in
order that your war essential metals, that you hold highest, should
of world war demands, but officials believe that the embargo on silver from this country
have greater production by being encouraged and will cost the Government a lesser price, because silver costs the Government nothing.
Mr. NELSON. As I brought out yesterday, we must always remember that the machines which are being made for our mines must be
used in the mines producing the largest amounts of critical material.
I think that that answers the silver question.
Senator McCARRAN. It would answer it, Doctor, if it were not for
the fact that it is disclosed that silver is a critical material just as well
as the metals you have mentioned.
Mr. NELSON. If you use silver to replace copper, and you have one
machine here that mines 100 pounds of copper, and that can mine
is a scarce metal in Europe because the occupied countries are being
production in Axis-held Europe in 1939 was about 51/2 percent of total
Silver output. This output has probably been stepped up some by the pressure
will hinder the Axis a little and create some discomfort.
Dr. Nelson, I read that extract as a preliminary to this question
Undoubtedly whoever put into the order of March 2 the provision as
to 30 percent of silver and gold or silver or gold must have had the
idea or motive of reducing the production of silver, or at least must
have had the idea that silver was not a war essential metal, because
that order as worded in the priority rule of March 2 penalized the
production of silver if it was in excess of 30 percent.
With that in mind, and with the doctrine that is announced here
in these articles that I have read, I am asking you gentlemen now why
a war essential metal, manifestly a war essential metal, because by
this action it has been barred from export; manifestly a war essential
metal because our enemies are gathering it up wherever they can,
because it is so treasured in war activities- should any phrase
be in the priority order which by its general terms would penalize
the production of silver in this country? I would like to have your
views on it, gentlemen.
Mr. NELSON. Well, we certainly consider that silver and goldthose two metals-are not in the class of copper, lead, and zine, and
the critical minerals like chrome, manganese, vanadium, molybdenum
tungsten, and others.
Senator McCARRAN. But is it not rapidly, according, to the best
information we can get, taking its place as a war essential alongside
those metals you have mentioned?
Mr. NELSON. It is certainly playing a small part at the present
time, and until it can be proved that the amount of silver that is
being produced under the present priority actions is not sufficient to
take care of these new uses of silver, I see no reason for changing our
present priority set-up. I think it would have to be proved first.
Senator McCARRAN. You will concede, however, Doctor, that the
provision in that order does act to penalize the production of silver.
Mr. NELSON. The raw materials going into the making of mine
machines and equipment is one of the controlling factors in mining
These mining machines and mining equipment and repair parts will
produce a much larger amount of copper, lead, or zinc than they can
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
amount of the metals needed in the war effort.
With that in mind, I still insist, with all these other facts I have
X pounds of silver, it is certainly better economy to mine copper.
The silver we have been mining has been accumulating over a long
period of years, and we are just taking advantage in this emergency
of the accumulated silver which was not being used as critical material
in war effort.
Senator McCARRAN. That part would be true and your analysis
would be correct were it not for the fact that a small quantity of silver
outbalances and overweighs a large quantity or tonnage of the war
essential metal. In other words, if you have a mine that produces,
say, 20 ounces of silver or 10 ounces of silver and 10 tons of war
essential metals, and you penalize the production of the tonnage of
war essentials because of the production of more than 30 percent of
silver, then you have not carried out your formula.
Mr. NELSON. We are not penalizing them. We are considering
each mine from the standpoint of copper, lead, or zinc which it produces, irrespective of the amount of gold or silver it produces. We
are thinking first of the copper, lead, and zinc. We have to under the
present methods of warfare.
The CHAIRMAN. Congressman Murdock, have you some questions
that you desire to propound?
Representative MURDOCK. They have been partly answered, Mr.
Chairman, by the latest anwsers to Senator McCarran.
I would like to ask this question: Are there not a good many mines
throughout the country that produce mixed ores, including gold and
silver?
Mr. NELSON. Yes; there are mines that produce copper, lead, zinc,
gold, and silver.
SILVER
SILVER
550
551
INTRODUCTION
Representative MURDOCK. I find in the State of Arizona, for
The present world conflict has been aptly described as a war of metals and
those nations which possess the greatest resources of metalliferous ores and the
facilities to turn them into finished products should eventually be victorious.
that some of our largest copper mines are heavy producers
instance, gold and silver- a byproduct. I wanted to bring
of the fact that the order of March 2, which the Senator has been
While nearly all metals are essential in conducting modern warfare, their
degree of importance varies considerably both from the standpoint of tonnage
required and the practicability of employing substitutes.
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
industrial applications, and its high price and scarcity further limits its uses
Silver, on the other hand, plays an important role in industry and while the quantitles normally required for essential purposes represents less than 50 percent of
our annual output, it could be substituted advantageously for other metals were
it available in large quantities.
Outstanding nonferrous metals: Practically all of the metals have been placed
on the strategic and critical lists of materials, but from the standpoint of tonnages
produced, aluminum, copper, lead, and sinc are the most essential of the non-
out to, does restrict the output of copper-I believe that is true
referring in the State of Arizona, because of the fact that copper, gold, and
silver are produced in the same mine.
In one mine that I think of, at Superior, Ariz., the output of
and silver is rather heavy, and I can see how the order of March
2, gold unless modified in individual cases, would limit the production of
copper. Mr. NELSON. It has not actually limited the production of copper
anywhere, because where any appreciable amounts of copper were
being produced, the serial numbers of those mines were reinstated,
irrespective of the amount of gold and silver present.
Representative MURDOCK. I am glad to hear that.
Senator JOHNSON of Colorado. If it has not restricted it, it has
greatly stimulated the production of these critical minerals every-
ferrous 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
sinc is derived from domestic sources.
During the past 2 years our output of these metals has been stepped up sharply,
vet the demand has increased to such an extent that we cannot adequately supply
both military and civilian needs.
Proposals made by Government agencies to meet expanding need for copper,
lead, and zinc: To meet the expanding need for copper, lead, and sinc, the two
following suggestions have been made:
1. Substitute available silver supplies for copper, lead, or zine and thus release
some of these other metals for essential uses.
2. Mine and smelt only those copper, lead, and zine ores which contain less
than 30 percent of their metal value in the form of gold or silver.
The object of the first suggestion is to utilize silver which is not employed for
essential purposes and substitute it for those metals which can be advantageously
where?
Mr. NELSON. It has.
Senator JOHNSON of Colorado. Why you do not recognize that fact
is the thing I do not understand. Silver certainly has made a great
contribution to the production of copper, lead, and zinc. It has kept
the mines open. It kept them going prior to the war, when the prices
came up.
Mr. NELSON. Prior to the war we did not need priorities of any
kind. When the war broke out we started living under war conditions
and under a set of circumstances that are entirely different from any
set of circumstances that any of us ever dreamed we would have to
used elsewhere.
The announced objective 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
live under.
schemes.
Comparison of prices: The two outstanding objections to the industrial use of
gold and silver are: (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 ninety times greater than that of copper, the
suggestion has been made that because of its high conductivity, it might be temporarily 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.
I
Senator JOHNSON of Colorado. If silver made this contribution
prior to the war and it has been continuing to make it since the war
started, for the reason that it makes it possible for the mines to operate, vou might consider the silver you get as a stimulus or a price
paid as a bonus for the production of copper, lead, and zinc, because
it is exactly that, and that is also true of gold, wherever gold is found
in complex ores. It is a bonus, a stimulus.
Mr. NELSON. Senator Johnson, if it were not for the fact that we
have a shortage of capacity in plants of makers of mining machinery
and a shortage of the materials which go into the making of mining
machinery and repair parts, we would not have to restrict the use of
which
mining machinery and repair parts to mines that are producing those
things which we need first in the war effort, and those things
we need first in the war effort are not gold and silver.
Senator JOHNSON of Colorado. At this point, Mr. Chairman,
should like to place in the record a statement with respect to the
contribution that has been made rnd is being made to the mining
industry by gold and silver, particularly silver. It is as follows
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 is termed "free silver" and it has been proposed to use this idle metal
to replace an equivalent quantity of copper which in turn could be employed for
essential purposes.
The quantity of free silver on hand according to the Treasury Department is
46,740 short tons, an amount equivalent (by weight) to 4.77 percent of our
[reading]:
output of copper in 1941.
Relation between the domestic production of silver, gold, and certain critical
metals essential for national defense, Industrial West Foundation, San FranciscoReno-Washington, C.
The use of this surplus silver for purposes which involved no permanent loss
of the metal would release at least 46,740 tons of copper for those uses wherein
the latter is essential
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552
scheme would have to be carefully safeguarded and the silver employed
Such a possible loss; but the tonnage of copper thus released would be
protected helpful against in offsetting a temporary shortage of this annual metal.
quite available silver: As shown in figure 3, the production of silver
Possible fraction of the copper output so even if all this silver was substituted for
is but a tonnage of the latter metal released for other purposes would be
copper, the But all of this silver could not be released because this metal
relatively small. essential uses for which there are no adequate substitutes. Its im.
has certain photography is such that the quantities required for this purpose
portance in be diverted. Moreover, photography is playing an increasingly im
could not role in aerial warfare and hence the demand for silver to meet miltary
portant The silver used in solder and in certain chemical processes
needs could not is growing. be released for other purposes so only a portion of the annual output
would be available as a substitute for copper.
is a better conductor of electricity than copper, a given quantity of
Since former silver would go further when used in certain types of electrical equipment
This the 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
of these two metals is shown diagrammatically in figures 6 and 7.
production 6 gives the saving of copper when replaced by an equivalent weight of
silver Figure and figure 7 gives the saving when advantage is taken of the additional
conductivity From siliceous of silver. gold and silver ores (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 amounts
shown 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; zine, 8.28 percent.
The above reduction in the output of copper and zine may appear relatively
small but in terms of work performed by these metals, such a reduction would be
very serious. For instance, the above quantity of copper is more than equivalent
to that used in all the radio sets manufactured in 1940; the lead recovered from
such ores was sufficient to cover all the electric cables produced, and the yield
of metallic zinc was more than enough for all the galvanized wire and screen
manufactured in 1940.
Unless, therefore, we are assured of making up this deficit in such metals from
other sources, a curtailment in the production of the ores containing more than
30 percent of their total metal value in the form of gold and silver would be &
erious matter and one which requires careful analysis.
The CHAIRMAN. Have you some further statement you want to
make, Dr. Nelson?
Mr. NELSON. No, sir.
Senator McCARRAN. I should like to query the doctor on a statement he made to Congressman White.
Doctor, you used this expression in answer to my own questions on
one or two occasions. It comes out of your answer about how &
priority is acquired by a mine that is threatened with a shutdown or
has lost its serial number.
You have stated that the application is sent in to Washington,
and then you say that if the mine proves its case, it will be granted
a priority or a release, or its serial number will be returned.
Mr. NELSON. You have two things mixed up there. The breakdown clause is entirely different and would have to be discussed apart
from the clause relating to the return of a serial number to a mine.
Senator McCARRAN. I took your own expressions made on two or
three occasions here. In other words, one applying for a serial number or one applying to get repair parts
Mr. NELSON (interposing). Until a mine has a serial number, it is
not in the favored position of being able to wire in for a high priority
rating in case of a break-down.
Senator McCARRAN. Then, to get the serial number, they do wire
in or write in for priorities?
Mr. NELSON. To get the serial number, they first clear through the
State coordinator, and he sends the name of the mine operator and
pertinent information in regard to the mine in to the Mining Branch.
We then review it.
In certain cases we grant serial numbers. In certain cases ask
for further information. In certain cases the information on hand is
such that we do not feel the mine is justified in having a serial number
granted.
Senator McCARRAN. How many cases of that kind have you had?
Do you recall, Doctor?
Mr. NELSON. Well, there are 16,000 mines in the United States,
and we have granted only between 8,000 and 9,000 serial numbers.
Senator McCARRAN. Do the others all fall under the ban of not
measuring up?
Mr. NELSON. In most cases I would say that is true. There are
probably a few mines in the United States that should have serial
numbers that have not yet applied for them. They are mostly of
the category of mines which are nonmetallic, which are sand and
gravel operations and aggregate operations, and in many cases they are
large operations, and that type has just been operating on PB-1-a
and P-100 and have not bothered to apply for serial numbers.
Senator McCARRAN. Then, I would gather from your answer that
there are but few metal-producing mines that have been denied
serial numbers, that have applied for them?
Mr. NELSON. I would say that our State coordinators in the mining States of the West and in other parts of the country where metal
mines exist have sent in to us a complete list of practically everyone
who is producing anything, even though the mine consist of a hole
in the ground, with two men operating it.
In many cases small operators have not been given serial numbers.
In many cases the State coordinator has been given erroneous information by the mine operator, which he has later on corrected, or
which in some cases they found was erroneous and so notified him.
Where that erroneous information would seem to justify a serial number, we found out when the correct information was obtained that a
mine of that type often did not justify the serial number.
Representative ENGLEBRIGHT. Mr. Chairman, I should like to
address the speaker.
The CHAIRMAN. Congressman Englebright
Representative ENGLEBRIGHT. Dr. Nelson, was it the purpose of
the order of March 2 to eliminate from production mines that are
producing primarily gold or silver? I think the silver question has
been answered pretty well, but I shall ask about mines producing
primarily gold.
Mr. NELSON. Congressman Englebright, when the first mine order
was issued on September 22, we excepted from all the provisions of
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554
that order all placer gold operations, showing that right from the
and back in last September we felt that gold mining was
beginning essential in our war effort. So, when the order was amended on
not March 2, the taking of further high priorities away from a larger
of gold mine operations was just a logical extension of the
group thought which was expressed in the original order on September 22.
Representative ENGLEBRIGHT. Was any consideration given to the
or the condition that surrounds gold mines in many portions of the
fact country, inasmuch as large portions of the population depend wholly
largely on the operation of gold mines, and the economic welfare of
or large communities and populations was dependent on gold mining?
Did you take that phase of the question into consideration when you
made such a decision?
Mr. NELSON. We realized that in all war of the type we are waging
there are business casualties as well as human casualties. They are
casualties we regret. But if we have only a limited amount of material
to go around, we have to see that that material is used in producing
items that will make the most tanks and guns and implements of
warfare.
Of course, we all have a very sympathetic feeling about anything
that happens to any community that affects it adversely during war-
time, and we naturally do not want to do anything to disrupt any
community through priority action any more than has to be done as
the war gets tighter and tighter.
Representative ENGLEBRIGHT. Well, at that time did you consider
the fact as to what methods would be taken or what procedure would
be followed to take care of large portions of our population that are
destitute or are partially destitute by reason of the discontinuance
of gold mining, or to take care of the trading of skilled miners who are
necessary in other portions of your war effort? That is a double
question, but if you can answer those points separately, I will appreciate it.
Mr. NELSON. None of the gold mines that we are discussing have
shut down due to priority action to date. Though they are still
operating, they are operating under labor difficulties, as is shown by
reports that I have obtained from all the mining districts in the West,
in that they have all lost many of their laborers who have gone to the
Pacific coast, where they have received higher wages. As I brought
out yesterday, that was true of metal mines as well as of gold mines.
So, I do not think that we can tie into priorities many of the losses
that undoubtedly will befall certain of the mining districts of the West.
Representative ENGLEBRIGHT. Well, at the time your policy was
formulated, was consideration given to the amount of critical materials
that might be necessary to keep in operation the gold mines upon
which large communities depend for their economic welfare?
Mr. NELSON. We certainly did, and we realized that the story of
the gold mines is the story of every industry in the United States.
The gold mines will use a small amount of steel. They will use A small
amount of lead. They will use a small amount of tin. They will use
a small amount of chrome and nickel.
Taken by itself, that does not seem very much, but if you add up,
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
conserving these one percents in those phases of our industrial life
that do not enter first into our war effort that we can accumulate,
in our laborious way, many of these critical materials that we can no
longer get from abroad and that we must get for our direct armament
program.
Senator MILLIKIN. Dr. Nelson, pursuing the factual basis for the
order theme, if you can give us any further enlightenment on it I am
sure it will be very much appreciated.
Mr. NELSON. The manufacturers of mining machinery were flocking into Washington one after the other, saying that they could not
keep their plants going if they did not get higher ratings from the
mines to whom they were selling their repair parts and machinery.
It was therefore necessary to revise this order so as to give higher ratings for repair parts and new machines to miners, and when you give
higher ratings you have to restrict the mines to which those ratings
are given.
If you will remember, when on September 22 the first mining order
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
was not essential in our war effort.
When we came to the revision of the order on March 2, made neces-
sary by the fact that we had to get higher priorities from the mine
operator to the maker of mining machinery, we further restricted the
number of mines to which these high priorities would apply. We took
out all sand, gravel, aggregates, building stone, gypsum, and operations of that type from certain phases of the amended order.
We did not permit them to have an A-1-c quota for repair parts.
They had to come in to Washington every time they wanted a repair
part. They could not buy it direct from their supplier. We left the
metal mines and the strategic mineral mines in the top class, where
they could handle their quota of repair parts direct with every supplier without coming in to Washington, and fixed it so that we could
give them the highest ratings for the new machines where they needed
them.
While that was being done, following the thought that we had from
the 22d of September in regard to gold, we restricted still further the
higher priorities that were to be given to gold and silver mines.
Senator MILLIKIN. That may be responsive to my question, but if
so, I have not made my question clear, Doctor. I will take another
hitch at it.
Mr. NELSON. All right, sir.
Senator MILLIKIN. Let us take ourselves back to March 1. Let
us assume that a situation developed which came to your attention
that required an additional store of defensive minerals or metals, and
that I assume was the situation. That is the whole war theme.
Well, the mining end of industry would be called upon to meet an
allocation of that need, would it not? On an over-all basis, I assume
that certain units of that expected gain in strategic minerals or metals
would be assigned to the mining industry.
We would sit down and we would commence to assemble statistics
on what the mining industry is consuming in the way of defense minerals in its process of mining; and we would put that on one side of
the ledger sheet, and on the other side of the ledger sheet we would
say, "Now, this is what it is producing.'
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556
because the mines that were essential for our war effort have cleared
their cases with us and had their numbers reinstated.
to put some rational basis behind this thing. On that
I am view trying of the balance of the thing, we would say, "Well, we have
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.
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
not a government by men. Can we not have a government by law
by having regulations which any miner can read and know whether or
not he falls under those regulations?
Mr. NELSON. You have the clause in the order permitting the mine
operator to come back in and ask for relief, and where the war effort
demands that, they will be given relief.
Senator MILLIKIN. Well, that is merely in the nature of an appeal
after you have been sentenced. That is all it amounts to.
Mr. NELSON. Most of our limitation orders that have been issued
in recent months might be classified somewhat in the same way; but
when you have an emergency and you have to start conserving, you
have to start to conserve before the barn door is open.
Senator MILLIKIN. I heartily approve of that relief clause in the
I
factors to do so which on March 1 and prior to that day brought about this
order. NELSON. When you do not have enough mining machines to
Mr. around to all of the mines that are producing even the critical
go naturally you have got to restrict the use of your mining
materials, to those mines that are not essential for the war effort. At
machines the makers of mining machinery had their plant capacity
that time left to them, outside of that which they were using for the
which was and Navy or direct munitions work, taken up for 6, 9, and in
Army 12 months, for some of the most essential types of mining
some machinery cases that was needed in the mines producing the most critical
war materials.
It not a question of saying that if we cut out gold and silver
will was have enough critical materials for the rest of the mines. It
was we just a question that if we cut out gold and silver, we will have
order. Without it the order would be absolutely deadly. But it
more materials for the critical mines, but not even as much as We
should be unnecessary if the other part of the order were clear and
want for them.
meant what it said.
Senator MILLIKIN. All right. Now, we have gone on with that
I think at one time Senator Johnson wrote to you and said, "For
God's sake, put these orders in plain English, so that people can
between ourselves, and we now come to the terms of an order. How
did you bring in that 30-cent clause in relation to that need?
Mr. NELSON. I explained to you yesterday that in drawing the
order, my thought was that 50 percent was a good starting point.
Senator MILLIKIN. Who overruled your thought on that?
understand them."
Was Dr. Nelson the object of that, Senator Johnson?
Senator JOHNSON of Colorado. Donald Nelson.
Mr. NELSON. I was not overruled. In drawing any order, the
order goes before your attorney, it goes before the Bureau of Statistics and Research, and then it goes before a clearance committee,
is
in which you discuss all of these things, and the majority opinion
followed. I do not call that overruling; that is democracy.
Senator MILLIKIN. Now, then, why did they set up any reference
point like that, in view of your testimony here? What was the point
of it?
Mr. NELSON. We had to know and get all of the information we
could about the different mines in the country producing gold and
silver. The 30 percent was an arbitrary figure, just like 50 percent
would have been an arbitrary figure; and, in any case, you would
have had to review all of the mines that fell above or below that
point, and where such mines produced needed amounts of copper,
lead, and zine, naturally such mines would have to have their numbers
reinstated.
Senator MILLIKIN. So that from the beginning there was not any
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
was drawn in its final form.
Senator MILLIKIN. Would you not agree with us, Doctor, that it
would be much better if that order were tossed out and a more
definitive order put out which meant what it said and which would
enable a man reading it to know whether or not he came under its
terms?
Mr. NELSON. I have been administering this order for several
months, and I cannot see, from the administrative standpoint, that
we have held up in any way the production of any critical material,
Senator MILLIKIN. I take up the thought of Senator Johnson: Let
us get up an order that people can understand and that will not leave
it to an individual appraisal of each case.
Dr. Nelson, while we are all entranced with your graciousness, and
we know you want to be fair about the matter, you may not be here
all the time, you may wake up in a bad humor some morning, and all
of those factors enter into it, and no man's business or no man's livelihood in this country-not yet-should have to depend on that sort
of thing.
Representative ENGLEBRIGHT. May I have a word, Mr. Chairman?
The CHAIRMAN. Mr. Englebright.
Representative ENGLEBRIGHT. Mr. Nelson, I am sure we are all
very much impressed, and I am particularly, with your desire to be
fair and assist all phases of the mining industry. I have discussed the
matter with you, and I feel very confident that you want to assist in
keeping the gold-mining industry operating and functioning, particularly in localities where the community welfare depended upon that
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
somewhat of a pall over the entire mining industry. They do not
know what they are going to be able to do, as to whether or not they
are going to be able to proceed with à particular activity, and I am
frank when I state that if it were not for the Government financing of
critical materials and other lines of mining activities, there would
have been a very dilatory effect on the entire industry through your
order with the 30-percent clause.
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A UNITED STATES DENIAL
I believe it is the Government financing that has saved the situation.
and not particularly any encouragement that that order may have
intended, no matter how well meaning the intentions were to the
industry. I represent territories that produce, as you know, chrome, man-
tungsten, and other critical materials, and there is a jittery
ganese, feeling in the mining industry, and there is an indefinite feeling, and
there is a feeling that they may be eliminated at any time and affecting
any particular mine, no matter what it is producing.
In Washington on Thursday night Mr. Sumner Welles said there was no
question at present of sending a mission to South Africa. The United States
already has an engineer in South Africa working to increase the production of
strategic raw materials in the Dominion, he revealed.
These denials follow a report by the Washington correspondent of the New
York Times that preparations were being made to send an American mission to
South Africa to arrange for increased production. It was hoped, the report
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
metals.
BRITISH GOVERNMENT'S REQUEST
They say, do not know how long I am going to be able to run.
It depends on what those fellows in Washington decide to do."
Mr. NELSON. There should be no jittery feeling among the mining
industry where they are producing chrome, vanadium, molybdenum,
tungsten, manganese, copper, lead, or zinc, because they have been
given every assistance even in the prospector stage.
In this mining order we have a provision where we can give priorities
to any bona fide prospector if we know he is a good prospector and feel
he is going on a claim that will develop critical minerals.
Senator McCARRAN. May I interrupt there? You have made a
very emphatic statement: There should be no misapprehension where
a miner is producing chrome, copper, lead, zinc, and the other metals
It will be observed that Colonel Stallard reemphasizes his previous statement,
quoted in the r insucial Times yesterday, that there was no intention of restricting
South Africa's gold output. In this connection the mining editor of the Rand
Daily Mail recently wrote that he understood "a request had been made by the
British Government that the gold output of South Africa should be maintained
at the maximum so that post-war Britain may be able to discharge her commitments to the United States incurred before the introduction of the Lease.
Lend Act, and to help in stabilizing the sterling group of currencies in post-war
reconstruction."
silver may have an apprehension. Is that true?
Mr. NELSON. As our war effort gets tighter and tighter and our
I draw that to your attention to show you that Great Britain is not
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
currencies. Now, that brings to mind the very thought that I tried
to put over to you yesterday, that I hoped you might adopt: that we,
too, should have these metals, basic to our economy even now, because they are just as essential now for post-war economy as is the
production of gold in South Africa for post-war economy in Great
critical materials become scarcer and scarcer, the mines that are less
essential to our war effort are the first mines that are going to feel a
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
you mentioned. Now, that brings to me an implication-
Mr. NELSON. There was an implication.
Senator McCARRAN (continuing). That a miner who is producing
realize that.
Senator McCARRAN. Why should that be true when the very
articles that I read into the record this morning show that more and
more silver is becoming a war essential?
Mr. NELSON. There has never been a world war in civilized times
when the production of silver throughout the world has not fallen off.
You can go right back through your statistics.
Senator McCARRAN. That is because it does become an essential
Britain.
Especially is that true-and you might think I make a hackneyed
silver, being basic to our American currency and basic to our post-war
economy, is also a war essential metal as it goes on.
I bring that out because your last expression to me cannot be construed in any other light than that you will penalize the mine producing
silver. That is just exactly what we are trying to prevent, if it is
possible.
Mr. NELSON. Senator McCarran, I stated yesterday that the
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
material, they are not getting it through the Mining Branch.
mined, year by year, as you check through the ages and mark off your
war periods, shows a depression during the war periods.
your pardon.
Mr. NELSON. The mining falls off. The total amount of gold
Senator McCARRAN. May I at this point, Mr. Chairman, read a
short article appropos of what the doctor has said, from The Financial
Times, of Saturday, the 7th of March 1942? This is a London publication, under the caption:
SOUTH AFRICAN GOLD AND REPORTED UNITED STATES MISSION-OFFICIAL
DENIAL-CURTAILMENT NOT NECESSARY
CAPE TOWN, March 6.-Commenting on the report from New York that an
American economic mission was going to South Africa to arrange for an increase
in the production of essential mine products, Mr. Stallard, minister of mines, said
that he had no knowledge of a visit of an American mission having the object of
curtailing gold production.
"Apart from the fact that curtailment of gold production is not necessary for
the expanded production of war metals, production of gold is the basis of the South
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.
Senator McCARRAN. I do not quite catch that, Doctor. I beg
Mr. NELSON. The Board of Economic Warfare is the board that
should be contacted.
Senator JOHNSON of Colorado. Does Russia get any priorities? I
wanted to ask you that yesterday.
Mr. NELSON. Russia, as I understand it, is on lend-lease.
Senator JOHNSON of Colorado. On lend-lease, but your Division
does not approve that?
Mr. NELSON. We do not approve items on lend-lease.
Senator JOHNSON of Colorado. Is South Africa on lend-lease also?
Mr. NELSON. Not as I understand it.
Senator JOHNSON of Colorado. Is South America?
Mr. NELSON. I am not familiar with all the ramifications of lendlease. I know that we are approving priority ratings to certain of
SILVER
561
SILVER
560
side he had part of his plant capacity working with A-1-A
the gold mines around the Panama Canal and adjacent South American
countries in limited amounts.
Senator McCARRAN. Do they produce gold and gold alone?
NELSON. I said gold mines; yes. That is under the foreignthat
policy Mr. of the Government as relayed to us with the statement
we should take care of their needs in a limited way
Senator McCARRAN. Is it possible to ship mining machinery under
the Lend-Lease Act?
Mr. NELSON. Definitely, yes.
Senator McCARRAN. And that is undoubtedly where South Africa
is getting mining machinery, if she is getting it at all?
Mr. NELSON. If she is getting it at all, it must be indirectly. Of
we are undoubtedly shipping mine machinery to Russia
course, under lend-lease, and it is very advisable for us to do so.
Senator MILLIKIN. Why; if I may ask?
Mr. NELSON. Russia is bearing the brunt of the war for us today,
and if they can use the mining machinery that we send them to make
more machines with which to fight, it is helping us.
Senator MILLIKIN. What about their other mining activities?
Mr. NELSON. I must take it for a fact that Russia is going to use the
mining machinery we ship them for the one ultimate purpose of
winning the war.
Senator MILLIKIN. Are we not shipping mining machinery for gold
and other precious metals?
Mr. NELSON. Mining machinery that is shipped to a country can
be used either in gold mines or strategic mines, but, as I said, I cannot
conceive that Russia would be using any machines under this present
emergency except for one thing, and that is to get strategic metals
out of the ground.
Senator MILLIKIN. Well, South Africa is mining gold.
Mr. NELSON. I do not consider South Africa and Russia in the same
category.
Senator MILLIKIN. South Africa is in the war. She has been
engaged in battles in the Mediterranean area. She is definitely in
the war.
Mr. NELSON. She is in the war, but not in the same category as
Russia.
Senator MILLIKIN. Well, I do not see much difference between &
man spilling blood in Russia and spilling blood on the south shore of
the Mediterranean, but that is beside the point.
I should like to ask you one more question, Dr. Nelson. Who
made the decision as to what part of mining machinery factories
should go to the manufacturer of articles other than mining machinery? Whose decision was that?
Mr. NELSON. The makers of mining machinery month after month
attempted to get high priorities from Washington to make mining
machinery. They could not get that. At the same time, the representatives of the Army and the Navy, knowing they had the finest
precision tools of any manufacturing shops in the United States, went
to them and demanded that they take on certain orders and gave
them an A-1-A rating for this order.
Therefore, you had a maker of mining machinery with a superb
plant, attempting to manufacture mining machinery on ratings of
A-3 or lower, for which he could not get the raw materials. On
either on an Army contract or a Navy contract.
ratings It was thorough, logical that pressure be put on that maker of
machinery by the Army and Navy to take on orders, and when
he mining took on an order, in a few months the Army and the Navy would
say, "Double that order.'
It was only with the greatest difficulty that we were able to get the
of mining machinery to fight on with these low priorities and
makers struggle to continue to make mining machinery, and that was rectified by order P-56 as amended on March 2, as the first step, and finally
rectified in April by a determination of Mr. Batt's Requirements
Committee. So that today the makers of mining machinery have
A-1-A rating for their raw materials for the making of mining
an machines, which puts them on a parity with that part fo their plant
used in the making of munitions.
In other words, we have been able, by restricting the use of mining
machinery, to get the makers of mining machinery put on a parity
with makers of munitions. We have done everything that we could
possibly do to help the mining industry in every way. We have
obtained for them higher ratings as a whole industry than I think
any other industry has as a whole.
I have often wondered why some of the big manufacturers of the
mining machinery continued for several months to make mining machines when they could have taken their whole plant's capacity and
made Army and Navy munitions on a high rating, and they would have
known that whenever they had a shortage of any raw material the
Army and Navy would have it in that plant the next day. Yet they
continued, because they loved mining and loved the mining industry.
Senator MILLIKIN One good reason why they should continue to
make mining machinery is that, under your own testimony, strategic
minerals are essential to winning the war. That is what prompted
my question with respect to the difference between the machine that
makes the essential minerals and the machine that makes the fighting
machines or the tools. There has to be a balance, and I assume that
someone passed judgment on it.
Mr. NELSON. No one passed judgment on it.
Senator MILLIKIN. It grew up like Topsy?
Mr. NELSON. It grew up like Topsy, but they did maintain part
of their plant capacity for the making of mining machinery. That is
all I can say.
Senator JOHNSON of Colorado. Dr. Nelson, I concur fully in what
my colleague has said about the unfortunate formula, the 30 percent
or the 30-cent clause. I want also to express appreciation for your
exercise of the relief clause insofar as Colorado is concerned, because
you have been most helpful in your exercise of that clause.
In my judgment, the whole situation would be greatly improved
if that 30 percent clause could be taken out of the picture. 1 agree
with everything that Senator McCarran has said-that it is a sort of
wet blanket over the whole industry.
I am wondering how many mining operations were eliminated from
review by the 30 percent clause. I presume that the reason that you
put that screen in there was to sift out certain mining operations that
SILVER
SILVER
563
562
would not have to review, operations that might possibly be proyou ducing tungsten, molybdenum, lead, zinc, and copper, and no silver or
gold. I presume you wanted to sift them out. How many operations
were eliminated from review by the 30 percent clause?
Mr. NELSON. Between three and four hundred mines had their
numbers withdrawn.
Senator JOHNSON of Colorado. And how many did not have their
numbers withdrawn?
Mr. NELSON. We have between eight and nine thousand mines in
the United States working under serial numbers under this order,
but they are not all metal mines; over half of them are coal mines.
A large additional number are quarries producing stone, sand and
gravel, and nonmetallic materials.
I cannot give you the exact number of metal mines having serial
numbers, but I can say that slightly over 300 such numbers were
withdrawn from mines producing gold and silver and over 200 were
reinstated.
Senator McCARRAN. Apropos Senator Johnson's question and Dr.
Nelson's answer, some time ago I wrote to mine divisions and mine
departments of various States, and I have here a very comprehensive
answer, I think, from the Bureau of Mines of the State of Colorado,
dated May 2, 1942, in which Mr. Arthur, Commissioner of Mines,
states:
Replying to your letter of April 21, 1942, regarding the question of the priority
order of March 2, will say as follows:
The time is rather short to get actual facts on the workings of the priority
situation. I am adopting a plan at the present time of having my inspectors,
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
getting at the actual facts. It will probably bring out some very fair information
but it will take some time to get a line on what we want I am personally quite
familiar with a large number of the properties throughout the State and have
some study of the matter.
the situation as created by the priority-order publicity has absolutely preeluded and obtaining capital for these purposes.
I shall be glad at any time to furnish any further information I have that you
may require.
Very sincerely yours,
(Signed) EDWARD P. ARTHUR
Commissioner of Mines.
I draw that to your attention to emphasize what I tried to bring to
attention the other day-that the publicity given to this has had
your a detrimental effect. Of course, you answered by saying that your
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 production of this war effort, which was a commendable feature, but then,
again, the price has increased.
Mr. NELSON. We were not responsible for the large amount of
publicity which came out with regard to this order.
Senator McCARRAN. The consternation that was created gave the
publicity, to be frank with you.
Mr. NELSON. Furthermore, the letter you have read gives me the
impression that the small operator is just going to sit down and use up
his supplies and not attempt to use any PD-1-a or use the P-100 to
get additional materials.
Remember that there have been many mines operating in this coun-
try since September 22 on P-100's and PD-1-a's, and they have
worked successfully in getting repair parts on PD-1-a forms.
If these small operators need an occasional repair part that will not
interfere with our war effort, there is no reason why they should not
receive such a repair part or receive a rating from us that would permit
them to get such a repair part.
I feel that the letter you read definitely gives the impression that
they are going to use up their supplies and not attempt to get anything else.
Senator McCARRAN. I wish to say to you, Doctor, right on that
Your first question is: "How many propertier, if any, have shut down as the
result of the priority order of March 27" The number of properties shut down
as a result of this order is unknown as some of the mines had small supplies of
subject, that I have before me, furnished me by the mine inspector 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
mines carry very few supplies. Until the supplies are exhausted, we cannot tell
just how far reaching the order has been.
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
wearing out of what we are now using.
priority order will be hard to answer. It will depend, as I said before, on the
amount of supplies on hand by the various properties, but there is no doubt at
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.
The publicity given the priority situation has had a very serious effect on the
labor question on many properties. A number of men, especially the smaller
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
apparently better wages working in the arms plants or other places of that nature
This publicity has also had a very serious effect on obtaining capital for developing new properties, especially those that produce silver and gold, even
though the lead zine, and other war minerals predominate in quantity
It may be said that the forcing of priority conditions on a number of mining
districts came as a very great shock to them and, if not remedied, will undoubtedly
cause a number of the mining operations in Colorado to cease entirely. Many
men who are getting on in ye. rs and have no experience in anything else except
the particular class of mining in which they have been employed will be thrown
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
beginning operations. These mines require capital for commencing operations,
read some of them:
We will try to keep going as long as we have tools and equipment on hand or that
Mr. NELSON. From what mine was that?
Senator McCARRAN. That comes from W. W. Hartman, Wall
Street Mine, Nelson, Nev.
Here is another one from P. A. Simon, president of the Diamond
Gold Mining Co. This is addressed to the State Mine Inspector:
Replying to your circular letter of the 23d instant, relative to the effect of the
cancelation of preference rating order P-56, so far as gold and silver mines are
so
concerned, we had sufficient supplies and repair parts on hand on March 2, 1942,
that said cancelation has not affected us as yet.
Then I have one from Austin Bros. Gold Mining Co. The effect of
it is that they will shut down when their machinery has broken down or
they have run out of parts.
Here is another from Central Comstock Mines Corporation:
This company is not yet in production but has spent 1 year in rehabilitating
and reconditioning the mine and mill, much of the material used having been on
SILVER
SILVER
565
564
the property. Lack of the necessary priority rating will cause difficulties
securing the small amount of material necessary to put the plant again in operation.
We have expended more than $40,000 on labor alone.
Here is another one from the Summit King Mines, Ltd., at Fallon,
Nev., which says:
We expect that when our present supplies are exhausted we will have to shut
down. Labor is also very scarce and this may be a factor in closing us down
The El Dorado Rover Mining Co. of Nelson, Clark County, Nev.
says:
Because of some inventory stored up many months ago and prior to Office of
Price Administration, we are now able to continue operating. At present time
lack of labor has caused us to lose daily production of about 25 percent of normal
Here is one from Desert Silver, Inc., at Nivloc, Nev.:
Our essential supplies, such as grinding balls and zinc dust will be exhausted
about September 1. If we are unable to replenish them with the existing priority
status we will be forced to shut down about that time.
Mr. NELSON. Didn't they say that if priorities would not shut
them down, labor would?
Senator McCARRAN (reading):
We do not know whether or not we will be able to replenish these supplies with
our A-10 priority rating.
He says this about labor:
To date no effect as far as supplies is concerned.
In other words, he explains that he had supplies.
Labor believes, however, as we do, that we will not be able to replenish some of
our necessary supplies when exhausted, and many of them expect we will close
down in three or four months and are therefore leaving as fast as they can find
other jobs. Thus a labor shortage is resulting.
In other words, labor knows how much of a supply they have, and
labor interprets 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
going to go while the going is good.
Here is one from the Black Mamoth Consolidated Mining Co.,
Prescott lease, James R. Fyfe, manager, at Silver Peak, Nev., which
says:
On account of the statement that Mr. Wilbur Nelson made at the meeting at
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
rating, we decided to discontinue operations and put our plant and equipment
on a strategic mineral property if possible. We are endeavoring to put our
equipment back into A-1 shape in order that we may do this.
They moved their equipment, as I recall it, to Arizona.
Mr. NELSON. That is right. They have gone to producing stra-
tegic materials.
Senator McCARRAN. The Standard Cyaniding Co., Box 357,
Lovelock, Nev., says:
Will probably be able to run until supply of grinding rods is used up.
Mr. NELSON. They estimate that their grinding rods will be used
up December 1.
Senator McCARRAN. This one from the Consolidated Virginia
Mining Co., Virginia City, Nev., says:
While the order of March 2 has not shut us down, it certainly has not stimulated
gold and silver mining industry. The mining stock market has been depressed
the and our future is as uncertain as it is unpredictable.
Mr. NELSON. My information from that company is that there has
been no curtailment in purchases, although it has been necessary to
anticipate requirements further in advance.
Senator McCARRAN. Now the Northumberland Mining Co., Tonopah, Nev., says:
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.
The Consolidated Chollar Gould & Savage Mining Co., of Gold Hill,
Nev., says:
The immediate effect of the March 2 amendment. to preference rating order
No. P-56 was to deprive us of our tire supply, and therefore to make impossible
continuance of our method of mining with power shovel and motor trucks, which
method was carried on by a contractor and his equipment.
Mr. NELSON. We are not responsible for the tire supply.
Senator McCARRAN. No. That is true. I notice you always get
out from under responsibility. I do not blame you.
Mr. NELSON. I wish I were, because I would see that some of the
strategic mines would get what they need in the way of rubber, because
it is affecting vanadium and one or two very essential mining opera-
tions. I am always ready to accept responsibility when I am given
the authority to do so.
Senator McCARRAN. That is true.
Those are some of the reports that have come in here from the State
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
Bureau of Mines statement-the would have reflected somewhat the
same condition, perhaps on a larger scale.
The CHAIRMAN. Are there any further questions to be submitted
to Dr. Nelson?
Representative ENGLEBRIGHT. Just one question. Doctor, I dislike to come back to this question of policy again, but in drawing your
order with the 30 percent clause for gold and silver mines, was any
consideration given to the fact that gold and silver mining activities
aside from copper, have been the backbone of the mining industry in
the West and that continuance of gold and silver mining activities
kept in order an organization skilled in mining, an organization that
could divert its funds into the development of strategic minerals, and
also supply miners and skilled men for strategic mineral activity, and
that if you eliminated your gold and silver mine activities you would
eliminate practically all the mining organization of the West? Would
you consider that?
Mr. NELSON. I am afraid I cannot follow you that far, and, furthermore, I have to realize that we are fighting a war different from any
war that we have ever been engaged in, and what may have been true
in the past does not necessarily remain true under present conditions.
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
567
SILVER
SILVER
566
[The matters above referred to follow:]
and such people and such finances, I cannot follow you to the extent
that you are helping the strategic minerals industry, unless you go to
Government financing.
Mr. NELSON. Today there are many more miners being trained
mines that are not gold mines than there are in gold mines, because
gold mining is not the major part of the mining industry of the West.
Representative ENGLEBRIGHT. It has supplied the financing of the
major part of the mining industry in the West.
Mr. NELSON. It has in the past, but, as I said, conditions in this
war are different from any conditions that this country has ever been
SPECIAL SILVER COMMITTEE OF THE SENATE.
Washington, D. C.
in
faced with.
Representative ENGLEBRIGHT. Do you not think that if some
encouragement were given or of the 30 percent clause had not been
placed in the order you would have had less Government financing
to aid the situation than you have at the present time?
Mr. NELSON. I do not think that would have changed the picture
(Attention Mr. Albert Grorud, Secretary.)
GENTLEMEN: I am attaching two lists requested by Senstor Patrick McCarran
the time of the recent silver hearing. List No. 1 includes the names, dates,
and types of mines to which serial numbers have been granted between March
at
2. and May 15, 1942.
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.
Very truly yours,
WILBUR A. NELSON,
Administrator of Mining Branch.
List No. 1 includes the names, dates, and types of mines to which aerial numbers
have been granted between Mar. 2 and May 15, 1942
ALABAMA-PREFACH 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.
Senator McCARRAN. Mr. Chairman, I respectfully request that the
committee request of Dr. Nelson and his Board to furnish to the com-
mittee an inventory of the mines in America that have applied for
priorities and the mines that have been granted priorities since the
2d of March 1942, and those that have not been granted priorities,
and the reasons why priorities were granted on occasions when they
were granted and the reasons for their denial when they were denied.
Would that take long to furnish?
Mr. NELSON. I would have to read over carefully that statement,
but it impresses me that it might take a good many of the people in
my organization off their work which they are carrying on to keep the
mines operating. That is a rather large order you give us, and we
would prefer much more to have all of our productive efforts in keeping
the mines of the United States going than in getting up statistical
data, although we naturally will defer to your wishes.
Senator McCARRAN. Well, I do not think, with the increase of
clerical help that is coming into the city of Washington, at the rate
of about 10,000 a week, that you will be deprived of any activity to
keep the mines going.
I respectfully suggest, Mr. Chairman, that the request be made and
the doctor can let us know whether or not it is a hardship to him. I
think it would be most interesting to this committee, and I think it
would give this committee a full view of all the doctor has tried to put
before us.
Name
Serial
committee his reaction to the request.
Mr. NELSON. And the time it will take to get it up.
The CHAIRMAN. And such pertinent facts as you see are proper.
Then when we get your answer, we will take it up.
Mr. NELSON Very good, sir.
Date
Type of
mine
No.
Elmore Silica Co. Elmore, Ala
272
Wilkinson Ore Co (Thagord Golson Mooren), Greenville, Ala.
Alabama Clay Products Co. (plant Bessemer, Ala.), Birmingham,
273
274
Ala.
Republic Steel Corporation (Defense Plant Corporation). Sayre
275
Mar. 10 1942
Nonmetallic
Apr. 8,1942
May 6,1942
Nonmetallic
May 13, 1942
Coal.
Mar. 16, 1942
Metallic,
Metallic
mine at Birmingham, Ala.
ARIZONA-PREFACE NO. 48
Helvetis Mining & Milling Co. (Leader & Copper World Mines),
153
Tueson, Ariz.
Hooten, William A. (Republic mine at Dragoon, Ariz.), Tucson,
154
Ariz
Consolidated Feldspar Corporation (Kingman Feldspar Co.),
155
Kingman, Aris
Pine Mountain Mercury Mines (mines in Sunflower, Artz.), Phoenix,
156
Aris
Manganese Ore Co. (M. A. Hanna Co., Artillery Peak mine). post
158
Sullivan Machinery Co., Michigan City, Ind. (drilling operations at
office Congress Junction, Aris.
Mohave
County,
Aria.)
Henry W Berger (Berget and Phillips mine). Kingman, Ariz
Shattuck Denn Mining Corporation (Shattuck mine), Bisbee, Aris
159
160
Orisaba Mining Co., Phoenix, Aris
161
162
163
Asbestos Mines of Arizona (group of claims). Globe. Ariz
N. c. Burson, Los Angeles, Calif.. mine in Pinal County, Aris
Rob Roy Development Co. (Chicago lead claims), Yuma, Aris
164
Arizona Lead Co. (Castle Dome lead mine). Yuma Aris
Grand Canyon Lime & Cement Co. of Arizona (Nelson Quarry),
165
100
Nelson Ariz.
167
168
169
Paul Ducker (Little Butte mine), Bouse, Aris
American Smelting & Refining Co (Chief mine), Tucson Ariz
Storm Cloud Lease (Storm Cloud mine at Prescott, Ariz.), Phoenix
Ariz.
170
Mar. 19. 1942
do
Mar. 31, 1942
Do.
Nonmetallic
Metallic,
Do.
do
157
The CHAIRMAN. I suggest that the reporter furnish the secretary
with a copy of Senator McCarran's request, that the secretary send
that to Dr. Nelson, and then he can advise the secretary for the
WAR PRODUCTION BOARD,
Washington, D. C., June 1, 1948.
Castle Dome lead mine, Arizona Lead Co., Yuma, Aris
do
Apr. 1942
Apr. 1942
Drillers
Metallic,
Do
Do
do
Apr. 1942
Apr. 11.1942
Apr. 14,1942
Nonmetallic
Metallic,
Do
Do
Apr. 1942
Nonmetallic.
Apr. 22, 1942
Metallic.
Apr. 1942
May 1942
Do.
May 1942
Do.
Do.
ARKANSAB-PREFACE NO. 25
182
183
184
185
182
188
189
Quachita Minerals, Inc. (East Grant mine) Mens. Ark
Mar. 1942
Metallic
Nonmetallic.
Mar. 31,1942
Apr. 14,1942
Metallic.
Arkansas State Manufac turing Co. Inc., Glenwo Ark
American Cyanamid & Chemical Corporation, New York, N. Y.:
Pulaski County Ark. mines
Saline County Ark. mines
Wann Mercury Mining Co., Murfreesboro. Ark
Arkansas Coal Co. (mine in Clarksville, Ark)
Paris Purity Coal Co. (Paris Purity No. 5). Paris, Ark
Hoxey & Rogers Manganese Co. W. A. Chinn, Mary Tate, Bell
Hal, Marcus Miller mines), Cushman, Ark.
Do.
Do.
Apr. 21,1942
May 13. 1942
Coal
Do.
Metallic.
SILVER
569
SILVER
568
List No. 1 includes the names, dates, and types of mines to which serial numbers
have been granted between Mar. 2 and May 15, 1942-Continued
List No. I includes the names, dates, and types of mines to which aerial numbers
have been granted between Mar. 2 and May 15, 948-Continued
FLORIDA-PREFACE NO. 27
CALIFORNIA-PREFACE NO. 31
Name
Serial
Date
Type of
Mar. 16,1942
Nonmetallic.
mine
No.
Date
Name
Serial
Type of
mine
Rit Mineral Co (Palm Bay mine). West Palm Beach, Fla
Tigertail Quarries, Inc. Dania, Fla
Bradenton Dredging Co., Inc (dredging oyster shell in Manatee
No.
Pacific Minerals Co., Ltd. (Chill-Bar state quarty and mine), Rich-
365
Mar. 10, 1942
mond. Calif.
Star Spring Mercury, Inc., Skaggs Springs, Calif
366
Bovies Bros. Drilling Co., Salt Lake City, Utah (drilling at Desert
367
Center, Calif.)
Teles Clay A Sand Co (Telsa Pit), San Francisco, Calif
368
Industrial Minerals & Chemical Co. (Spanish mine, Berkeley,
369
Calif.)
Sharp Fellows Contracting Co. (Ore Grande crushing plant, Los
370
Mar. 2,1942
372
373
Metallic
Drillers
Mar. 11,1942
Mar. 21,1942
Nonmetalle
Man 26,1942
May 1942
Canceled
Apr. 9,1942
Mar. 31 1942
378
Graham Bros. Inc (Orange plant), Orange Calif..
379
Calavers Materials Co (Calavera) Oceanside Calif
382
and
587
588
do
ville,
Do.
Clay mine. Milledgeville, Ga
Shale mine, Milledgeville, Ga
Metallic
Do
May 5,1942
Do
May 6,1942
Nonmetallic
Panaminas Inc. (Adamson mine, Pine Creek area, Bishop, Calif.)
Idaho Fire Brick & Clay Co. Troy Idaho
Hercules Mining Co (Hercules mill), Wallace Idaho
Metallic
Federal Mining & Smelting Co (Frisoc mine), Wallace Idaho
Associated Engineers Co., Inc. (Nugent antimony property), Boise,
74
Do.
Drillers
Nonmetallic
75
Metallic.
May 18 1942
w E Gibson, Nederland Star Route. Boulder, Colo
226
Mar. 1942
Drillers
Apr. 1942
Nonmetallic
Metallic
Colo
The Taylor Coal Mining Co. (Rouse mine). Walsenburg,
Double Dick Coals (for mine only). Florence, Colo
Vanadium Corporation of America's Associates' (mining operations
220
228
229
in Boulder. Colo.
230
Geo. R. Rogers, Salida Limerock Co. (limerock quarry at Wellsville. Colo.)
The Colfax Pressed Brick Co. (for only) Denver, Colo
231
232
Hurriano Coal Co (Ludlow mine Ludlow Colo.). Denver,
Colo
233
c. Ryan & Son (mine In Climax, Colo.). Lakewood. Colo.
Molybdenum Corporation of America (the Urad mine at Clear
Creek County Colo.)
w Gilson (Sunny Side mill), Boulder Colo
Denver Mortar & Materials Co., Denver Colo
Roy Lee, Trustee (Yokon Tunnel, Cement Creek, Silverton, Colo.),
236
237
Apr. 22,1942
Coal
Standard Materials Corporation, 610 Illinois Bldg. Indianapolis,
Ind (Montesuma)
335
Pell Coal Corporation (Pell mine), Brazil, Ind
336
337
TO
Do
Metallic
Nonmetallic
340
341
Hoorier Moulding Sand Co. (mine in Martinsville Ind.) Mattoon
Nonmetallic
Metallic.
Nonmetallic
May 8,1942
Metallie
May 1942
Do.
Metallic
Do.
Mar. 25 1942
Nonmetallic
Apr. 23 1942
Coal.
Do
Do.
do
Do.
do
Apr. 28. 1942
Nonmetallic
May 1942
Do
III.
Apr. 28,1942
Apr. 29, 1942
May 1942
May 12,1942
May 14,1942
May 15, 1942
342
Indiana Slad & Ballast Co. (slag dump of Inland Steel Co.), East
343
Pell Coal Corporation (Pell pit at Brazil, Ind), Brazil Ind
Chicago m.
Coal
Nonmetallic
Metallic,
Do.
Nonmetallic
Metallic
433
434
437
438
Nonmetallic
440
441
442
443
DELAWARE-PREFACE NO. 1
444
445
Apr. 7,1942
446
3
DISTRICT OF COLUMBIA-PREFACE NO. 49
445
445
Nonmetallic.
Sunnyside Mining Co., Inc., Cave In Rock, III
Canfield & Clark, Dallas City III
The Alsey Brick Tile Co (MeLaughlin mine). Alsey, III
Geo.
M. Pendergast & Co., Inc (Silice plant 2 miles east of Utica
III.)
France Stone Co., Chicago III
Geo. H Chandellier Sand Co. (Utica crude pit), Ottawa, Ill
F.C. Bellrose Sand & Co (Ottaws crude pit), Ottaws III
Beecher W illiams (Humm mine), Herod. in
The Mine "B" Coal Co. ("A" mine), Springfield, III
Concrete Materials Co. (mine in Byron III). Waterloo. Iowa office
Chicago Fire Brick Co. (yard No 3), Chicago, III
Green Valley Coal Co. Marion. III
Standard Materials Corporation (plant in Amboy, III.). Indianapolis, Ind., office.
Metallic.
447
Mar. 31, 1942
Coal
ILLINOIS-PREFACE NO. 22
435
Apr. 25, 1942
May 1942
Do.
439
United Brick Products (United Brick Corporation). Bladensburg
Rd. and New York Ave. NE., Washington, D. C.
Hill Crest Mining Co., Boonville Ind
Enkoff Coal Co (Enkoff mine) Montgomery Ind
Black Diamond Mining Co (black dismond) Booneville, Ind
American Aggregates Corporation (mine in Indianapolis, Ind.)
Greenville Ohfo.
Do.
CONNECTICUT-PREFACE NO. 5
The Pyrites Co. (Iron sintering plant), Wilmington, Del
Apr. 9,1942
Do
do
436
The Iron Ledge Co., Bridgeport, Conn
Do.
do
do
339
Dallas, Tex.
40
Nonmetallic
do
do
Apr. 24,1942
234
235
Apr. 13,1942
Apr. 14,1942
Apr. 16,1942
Apr. 17,1942
do
Mar. 1942
Michigan City, Ind
333
Fordvee Gravel Co. (for Colorado pit), San Antonio, Tex., office
Do.
INDIANA-PREFACE NO. 19
334
225
Metallic.
May 14,1942
Do.
COLORADO-PREFACE NO. 38
Colo.).
do
May 9,1942
Do
Nonmetallic
Metallic
Nonmetallic
Idaho.
Bullivan Machinery Co.:
Boyles Bros. Drilling Co., Salt Lake City, Utah (drilling at Climax,
May 8,1942
Crystal Lead Mines Co., Wallace, (daho.
Do
332
224
Apr. 21,1942
Apr. 30,1942
Nonmetallic
Metallic
IDAHO-PREFACE NO. 43
71
May 13,1942
May 15,1942
May 15,1942
May 16,1942
Mar. 26,1942
Do
May 4,1942
May 1942
Mar. 10 1942
Ky.
Oconre Clay Products Co.:
Do.
do
Norte Counties, Calif.
590
Skilton Construction Co. (Inmann mine at Canton, Ga.) Louis
Do.
do
J. K. Remsen (Three Sisters and all other mines), Siskiyou and Del
589
93
Do
97
E B. Bishop (Keswick slag job at Shasta, Calif.) Orland, Calif
National Tungsten Co (Bruce group of mines) Long Beach, Calif
Victory Chrome Co (Victory mine). Auburn, Calif
Mitchell Diamond Drill Co. (drilling operations in Merced, Calif.)
Chandler's Palos Verdes Sand Gravel Co., Lomita Calif
385
W. P Buckner. Barnesville, Ga
Joe A Mosteller. Cartersville Ga
96
County, Calif.
384
Merry Bros. Brick Tile Co., Augusta, Gs
G Moore, 712 Main St., Cedartown, Ga
91
92
Apr. . 21, 1942
Pacific Portland Cement Co. (San Juan Bautista, San Benito
383
Metallic
Nonmetallie
U. 8. Flare Corporation (Hipeak tungsten mine). Los Angeles, Calif
Symons Bros. Mine Co. (custom mill). Hollywood. Calif.
381
office.
Cedartown Iron Ore Co., Cedartown, Ga
Do
Apr. 17,1942
M. Tungsten Mines Co. (gold wash claim) Burbank, Calif
380
Do.
do
Refractories Corporation (fire brick plant), Los Angeles, Calif
377
Burgess Battery Co. (plant in Cartersville, Ga.), Freeport, III.,
95
Frank W Royer (Kelly mine lease). Red Mountain, Calif
c. & H. Mining Co. (for tungsten mill only) Weldon, Calif
376
Dellinger, Brown & Duckett, Cartersville, Ga
NG
94
Calif
375
Do
00
E B. Bishop (Stoney Creek sand and gravel plant). Orland, Calif
Mineral Reduction Co. (custom mill). Laws, Calif
Do.
GEORGIA-PREFACE NO. 4
M
do
Rishop Antimony Mining Co. (Bishop antimony mine), Bishop,
374
73
Do.
May 15,1942
River, Fla.)
Mar. 6,1942
Angeles, Calif.)
371
Nonmetallic
Apr. 3,1942
H
R. Ameling Prospecting Co. (drilling operations at Rostclare,
III)
Coogan Gravel Co (mine in Chillicothe, III.). Peoria. III
Plibrico Jointless Firebrick Co. (Illinois plant) Chicago, III
Ottaws Hydraulie Silica Corporation (Bull Island, III. plant),
Chicago, III
Mar. 1942
Mar. 11,1942
Mar. 12,1942
Mar. 13,1942
Metallic
Nonmetallic
Do
Do
Mar. 25.1942
Do
Apr. 8,1942
Do
Do
do
Apr. 1942
do
Apr. 1942
Mar 21. 1942
Apr. 21,1942
Do
Coal
Nonmetallic
Do
Coal.
Apr. 1942
Nonmetallic.
Apr. 28 1942
Metallic.
May 4,1942
Nonmetallic
May 6.1942
Do.
May 13, 1942
Do.
2
SILVER
SILVER
571
570
List No. I includes the names, dates, and types of mines to which aerial numbers
have been granted between Mar. 8 and May 15, 942-Continued
List No. 1 includes the names, dates, and types of mines to which serial numbers
have been granted between Mar. 8 and May 15, 1948-Continued
MISSISSIPI-PREFACE NO. 20
IOWA-PREFACE NO.
Type of
Date
Name
Serial
mine
Name
Serial
Date
Type of
mine
No.
No.
Apr. 18,1942
Coon Valley Gravel Co., Des Moines, Iowa
183
-
Apr. 1942
Noometall
Do.
Des Moines Sand & Fuel Cooperative Association, Des Moines,
May 13,1942
Coal.
White Iowa Ash Mining Co. Inc. (white ash No. 2). Albla, Iowa
May 9,1942
185
Nonmetallic
186
Mason City Brick & Tile Co., Mason City, Iowa
184
141
Kans.) Chicago, II
The Centerville Coal Co., Inc (new No. 9 mine), Cherokee, Kans
142
Stuart Simpson herson, Kans
143
Midwest Pre Cote Co (quarry in Parsons, Kans.
McArthur Mining Co. Kansas Corporation (Grantham lease),
144
145
Baxter Springs, Kans
Superior Mineral Co (Cherryvalley Mine) Cadet, Mo
Irvin Bethe (Noah Bethel mine), New Florence, Mo
Arrow Tiff Mine. Potast Mo
563
564
Mar. 1943
Nonmetallic
Apr. 18,1942
Do
office.
LacLede Christy Clay Products Co. (mine No. 42 at Wellsville,
Mo.) St Louis, Mo.
Louis Heide & Sons (Heidel big pit), Rosebud, Mo
Obed Hall (Obed all mine). Whiteside Mo
Lemons Bros. (drilling operations for La Motte Corporation at La
do
Coal.
Nonmetallic
567
Do.
568
Apr. 28,1942
May 4,1942
Metallia
May 11,1942
569
Do.
Motte Mo).
Forest Johnson (sand quarries in Gasconade County, Mo.), New
570
Florence, Mo.
Mineral Products Co., Pittsburg, Kans
146
c. R. Logan l'horoughman pit), New Florence Mo
Missouri Iron Mining Co. (Christy, Merimac, Ploneer Nos. and 2
571
572
mines). Steelville, Mo.
KENTUCKY-PREFACE NO. 15
Centropolis Crusher Co., Kansas City, Mo
572
Mar. 1942
Kentucky Fire Brick Co. (Nos. 9, 10, 12, 13 mine, Nos and 2 plant),
491
Haldeman Ky
Belfry Coal Co. (Oronacs mine), Belfry, Ky
Dixie Blue Gem Coal Co., Nevisdale Ky
Vincent Mining Co. (mine No 1). Soldier, Ky
Sipple Brick Co (pits only), Staunton, Ky
492
490
494
49
Mar. 16, 1942
Mar. 20 1942
Nonmetallic
Mar. 26, 1942
Coal
498
Cumberland Fluorspar Co (mine at Mexico, Ky)
Apr.
501
502
503
504
506
507
508
509
AIC
512
513
do
1942
Hoffman Bros. Drfiling Co (drill operations in Kentucky)
Apr. 1942
Phillips & White (Baker mine), Hima, Ky
Evans Elkhorn Coal Co (Jones Fork mine, Estill, Ky
Feds Creek Coal Co. (Feds Creek mine), Feds Creek Ky
Manchester Coal Co., Inc. (Paw Paw mine) Hima, Ky
Elkhorn Ferguson Coal Co. (Epoonn mine). Pikeville, Ky
Apr._14,
Bonansa Mines. Inc. (Bonanza mines). Marion, K:
Chloe Elkhorn Coal Co. (Thompson mine) Pikeville, Ky
Maddox Coal Co. (Maddox mine). Beaver Dam, Ky
Elkhorn Mining Co. (Lower Elkhorn mines) Praise Ky
Stone Products Co (open face quarry north of Mazion, Ky)
Leniss River Coal Co. (Lenisa River mine), Fed Creek, Ky
Smith Coal Co.. Lothair Ky
Crider. W H.(W. H Crider fluorspart mill), Mexico, Ky
Suthord & Phillips (Auston City mines), Nortonville, Ky
W. K Holland (W. K. Holland pit), Steedman, Mo
Carrabine Sand & Gravel Co., Webster Groves, Mo.
Mar. 1942
Nonmetallic
Mar. 1,1942
Mar. 21,1942
do
Apr. 1942
Apr. 7,1942
Apr. 8,1942
do
Do
Metallic
Nonmetallic
Do
Do.
Do.
Metallic,
Apr. 14,1942
Nonmetallic
Apr. 16,1942
Apr. 28,1942
Metallic
Do
May 4,1942
May 6,1942
Nonmetallic,
May 13, 1942
Do
Do.
do
Do.
do
Do
Myron Baker contractor (Kahoka quarry at Kahoks, Mo.) Inde-
577
pendence, Iowa.
Do.
Apr. 1942
500
Mo.1
576
Do.
R.L. Brown Coal Mine R. L. Brown mine), Providence, Kv
Baxton Coal Corporation (mine in Kentucky) Illiamsburg, Ky
499
Missouri Illinois Material Co. (plt at Pacific, Mo., plant at St Louis,
574
575
Coal
do
497
490
Nonmetalle
Nonmetallic,
Aluminum Flake Co. (Dillon pits in St. James, Mo.), Akron, Ohio,
565
566
Apr. 21,1942
Apr. 21, 1942
MISSOURI-PREFACE NO. 24
562
KANSAS-PREFACE NO. 34
Fort Scott draulio Cement Co., Fort Scott, Kans
Consolidated Cement Corporation (Fredonia mine at Fredonia,
140
Fleming Gravel Co., Columbus, Miss
32
Fluetsch Bros (Oak Hill Fire Clay Co.), Maplewood Mo.
578
Kansas Explorations Inc., Jasper mine, Post office Box 195, Joplin,
579
Do.
do
May 15, 1942
Mo.
Metallic
do
Do
Metallic
Do.
American Zine. Lead & Smelting Co. (Davey Chat loading plant),
580
Drillers.
St. Louis, Mo.
Coal.
MONTANA-PREFACE NO. 41
Do.
Nonmetallic
Apr. 1942
Apr. 24,1942
May 6,1942
May 7,1942
Coal
Minmont Co (East Pacific mine), Helena, Mont
Minmont Co (Carlson mine) Helena, Mont
132
183
Domestic Managanese & Development Co. (Tsarena mine), Butte,
134
Mont.
Nonmetalle,
Sullivan Machinery Co., Michigan City, Inc. (drilling operator for
the United States Vanadium Corporation Red Lodge, Mont.)
135
Coal.
Do
May 16,1942
Nonmetallic
inshine Mining Co. agents for Metals Reserve Co (mill and mines
in Phillipsburg. Mont.).
136
Coal.
Mar. 31, 1942
Metallic
Do
Apr. 23 1942
Do.
May 1942
Drillers
May 7.1942
Metallic,
NEVADA-PREFACE NO. 36
MINNESOTA-PREFACE NO. 32
Boyles
Bros. Drilling Co., Salt Lake City, Utah (drilling at Las
Vegas, Nev.)
132
8. E. Atkins., Co., Duluth, Minn.:
118
119
Drilling at Coleraine, Mian
Drilling at Trommald, Minn
120
12)
122
123
L. Hultgren & Sons, Kerrick, Minn
Henry J. Kruse, Altkin Minn
Hanna Iron Ore Co. (Draper annex mine at Marble, Minn.), Cleve
land, Ohio.
124
Hedberg-Freidhelm & Co. (Hedberg-Freidheim Co. pit), Minne-
125
Clement K. Quinn Ore Co. (Shada mine, open plt and washing
apolis, Minn
May 1942
do
Metallic
126
127
128
Greenway wash mine, Crosby, Minn
Weebing mines Crosby Minn
Clearwater Gravel Co. (Biwabik, sand and gravel plant) Duluth,
Minn
129
130
131
Great Northern Ry. Co St. Paul, Minn
Winons Sand & Gravel Co (plt 4A). Winona. Minn
Getchall Mine, Inc., Repo. Nev
134
Feb. 24,1942
Feb. 25,1942
Apr. 21,1942
Nonmetallo
Metallic.
Desert sheelite mine, J.L. Warner. Mina, Nev
Ely Valley Mines Co. (Ely Valley group) Ploche, Nev
135
136
Nevada Pacific Minerals Co. Inc., Jean, Nev.
F A Reld and A. V Nelsen (Shenandosh mill. Shenandoah, Hoosier
137
Do.
138
and Root Hill and IXL mines, Goodspring Nev.).
Ely Gold Mining Co. (Taylor mine). Ely, Nev.
Dunlap Copper Co. (Dunlap mine). Mins. Nev
Nonmetalls
do
139
do
Metallic.
140
mine), Reno, Nev.
A B. quicksilver mine. Tonopah, Nev
R McClintock Diamond Drill Co. (drilling operator for Mount-
142
Apr. 27,1942
Apr. 30,1942
May 6,1942
May 14,1942
May 15,1942
Do
143
Do.
Nonmetalle
Driller.
Mar. 26,1942
Mar. 27,1942
Nonmetallic
do
Apr. 6,1942
do
Apr. 7,1942
Apr. 9,1942
Metallic
Do
Do.
Nonmetallic
Metallic
Do.
Apr 14,1942
do
Do.
W Fashington Hill Quicksliver Co., Inc. (W ashington Hill quicksilver
141
plant), Nashwauk Minn.
Evergreen Mines Co.:
U Distom mine), Mount Montgomery, New
133
Do.
Mar. 6.1942
air City Cooper Co.. in the State of Nevada).
Nevada-M assachusetts Co. (Golconda division of Nevada-Masse
chusetta Co., at Golconda Nev.).
144
Metallic.
Nonmetallic
Do
Apr. 21,1942
May 4,1942
do
Do.
Drillers.
Metallic
NEW HAMPSHIRE-PREFACE NO. 9
do
Standard Building Materials Co. (Standard pit No. 3), South St.
Paul, Minn.
13
Northern Feldspar Corporation (Spaulding Hill and Balley Hill
mine), West Rumney, N.H.
Mar. 30 1942
Nonmetallic
SILVER
SILVER
573
572
List No. 1 includes the names, dates, and types of mines to which serial numbers
have been granted between Mar. 2 and May 15, 248-Continued
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
List
OHIO-PREFACE NO. 17-Continued
NEW JERSEY-PREFACE NO.
Type of
Date
Name
Bertal
mine
Name
Serial
Date
Type of
mine
No.
No.
Apr. 15,1942
Brimfield Bros. (pita and plants at Cedar Lake, N.J., and Hayville,
81
International N.J.). Titanium Corporation (plant at Carteret, N. J.)
R2
Norcross
82
Bros. (South Pemberton plant and Birmingham pit),
Pemberton, N
8. W. Downer (Downer mine), Glassboro, N.J
M
Plibrico Jointless Firebrick Co. (New Jersey factory at Trenton,
&
Nonmetallic
The Robinson Clay Product Co (Wright mine). Akron, Ohio
Hoffman Bros. Drilling Co. (drilling operations in State of Ohio),
684
Apr. 30,1912
Do.
May 5,1942
Do.
685
Punxsutawney, Pa
The Cleveland Builders Supply Co. (sand plant known as dock No
686
do
Do
do
Do
10), Cleveland, Ohio.
Black Creek Coal Co. (Ohio No 3 mine), Zanesville, Ohio
687
Robert Raney (New Venture mine) Byesville Chio
American Sintering Co (plant at Hubbard, Ohio), Chicago, III
688
May 13,1942
Do
689
The Standard Sise Co., Youngstown, Ohio:
Warren N.J.). Band & Stone Co. (quarry operator only). Carpentersville,
86
NEW MEXICO-PREFACE NO. 47
Mineral Products Co., Grantes, N. Mex
Lincoln Ore & Metal Co. (Gallinas Mountain iron deposits), Albuquerque, N Mex
New Mexico Consolidated Mining Co. (Kearney mine, care of Peru
Mining Co., Hanover, N. Mex.)
63
64
P. L. Grattan (Sadler No. 2 at Deming, N. Mex.), El Paso, Tex.,
65
office
Sharp & Fellows Contracting Co. (mine in Sals, N. Mex.), Los
66
Angeles Calif. office.
Standard Minerals Corporation (Velarde claims), Hatch, N. Mex
67
Black Range Development Co. (Columbia mine), Hurley N Mex
Kneyer Mines, Inc. N. 8. L.). Knever mines Lordsburg, N. Mex
69
'he Pataca Mica Products Co. (N.S.L.). Alax & Capitana, formerknown as the Cribbinville mine. Pataca, N. Mex.
70
Madelyn Fischbach. trustee, Monticello Canyon Development,
71
Hot Springs, N. Mex.
J. D Torres, Kelly mine, Kelly, N. Mex
72
Hubbard plant
Mar. 6,1942
Ironton plant
Nonmetalite
605
Jackson plant
Metallic
696
Mingo function plant
698
Do.
do
Nonmetallic
Greensburg.
Apr. 7:1942
Apr. 9,1942
Apr. 13,1942
Apr. 14,1942
May 4,1942
May 8,1942
Do
Do
Nonmetallic
704
700
Do
Dayton Ohio.
The Metropolitan Paving Brick Co. (Minerva pit at Minerva
Ohio), Canton, Ohio,
Do.
709
Bellaire Coel (No. and No 2 mines), Bellaire, Ohio
710
River Transportation Co. (preparation and screening plant), Cin-
Do.
NEW YORK-PREFACE NO. 11
W.J. Dyer (W. J. Dyer molding sand pit), Jonesville, N. Y
Oneida Lake sand mines, Cleveland. New York State. N.
Gravel Products Corporation (steamer Niagara, pumping sand and
141
142
gravel), Buffalo
144
Y
The Valley Sand & Gravel Corporation adsworth plant No. 2,
146
Scottsville, N.Y.).
Hornell Gravel Corporation (Cohocton plant at Cohocton, N. Y.).
147
Salamanca, N.
148
149
Mar. 21,1942
Apr. 15,1942
Apr. 21,1942
Do
Sullivan Machinery Co., Michigan City, Ind. (drilling at McAlester,
193
Do
Okla.
Leavel Coal Co (Silvercreat mine), Tulsa. Okla
Dixie R Mining Co. (Dixie R). Picker, Okla
194
Do
The Kelley Island Lime & Transport Co. (Buffalo, N. Y plant)
Wah Chang Trading Corporation (plant: National Reconditioning
Apr. 22,1942
Do
May 5,1942
Do
Southwest Stone Co. (No. 3 plant, Stringtown, Atoka County,
196
Oklahoma) Dallas, Tex.
Eagle-Pleber Mining & Smelting Co., Picher, Okla.
Do
do
Netta Mine
Me Kibben mine
197
May 6,1942
May 1942
May 15,1942
Do
198
199
Do.
Metallic
B R. operation
Trenthem Milling Co. Picher, Okla
Eagle-Picher
Mining & Smelting Co. (South Side mine), Picher,
Okla
200
201
Co., Inc., Staten Island, N.Y.).
Miami Rock Products Co. (Bird Dog plant, also Central MII plant),
Miami, Okla
312
NORTH CAROLINA-PREFACE NO. 12
94
Charlie Ridge mine (Slippery Elm mine), Newland N. c
Bryson Tale Co. (Worth, Peppers Creek, Hennessee, and Bates
mines). Marion N.C.
Macon Mica Mining Co. (Lyle Knob mine), Franklin, N. c
Do
Apr. 29,1942
Do
58
Do
50
93
Apr. 27,1942
57
92
May 16,1942
Krome Corporation (Krome mine), Port Orford, Oreg
Kilkes Bros (a partnership), Mother Lode mine. Prineville Oreg
Independence
Sand & Gravel Co. (Independence pit). Independ
Oreg.
ence.
Pacific Portland Cement Co (Marble Mountain and Colvig Gulch
Metals Reserve Co. (sampling plant, at Grants Pass, Oreg.), Port.
land, Oreg.
OHIO-PREFACE NO. 17
Mar. 11,1942
679
680
681
Sharon Silies Co (Jackson plt, Scurlock pit) Jackson, Ohio
Hope Fire Clay Co. (Hope mine). Jackson Ohio
Inter-State Construction Co. (Erskine quarry), Youngstown, Ohio
Corundite Refractories, Inc., Massillon, Ohio:
Apr. 7,1942
Massillon plant
683
Zoar plant
Nonmetallic
Do
Do
Oak Hill Clay Products Mining Co (Pyro mine). Oak Hill. Ohio
Mar. 20,1942
Mar. 26,1942
682
do
Coal.
Nonmetallic
Apr. 24 1942
Apr. 25,1942
Apr. 29. 1942
May 1942
May 6,1942
Coal.
May 1942
Nonmetallic,
May 1942
Coal
May 14,1942
Do
Mar. 1942
Drillers
Mar. 12.1942
Mar. 14,1942
Apr. 14. 1942
Coal.
Metallic
Nonmetallic
Apr. 15, 1942
Metallic
Do
Apr. 27,1942
Do
May 5,1942
Do
May 12, 1942
Do
May 18 1942
Nonmetallic
Mar. 1942
Metallic
do
Do
Apr. 11.1942
Apr. 17,1942
May 1942
Do.
Nonmetallic,
Do.
quarries, at Gold Hill, Oreg.). San Francisco, Calif
Do.
60
678
Apr. 22,1942
Nonmetallic
M
Franklin Mineral Products Co. (Burr Knob mica mine), Franklin
N.
Colonial Mica Co. (mines in North Carolina), agents for Metals Reserve Company), New York. N Y
91
Do.
Driller.
OREGON-PREFACE NO. 33
Mar. 6, 1942
90
Apr. 21, 1942
Nonmetallic
19d
Rosoff Sand & Gravel Corporation, Kerhonkson, N
141
Nonmetallic
OKLAHOMA-PREFACE NO. 46
do
The Hutton Co. (Hutton mine). Kingston, N. Y
North Shore Sand Gravel Co., Port Washington, N.
143
Apr. 1942
Do
cinnati. Ohio.
N. Mes.).
140
Metallic
do
David Z. Norton Co. (Norton mine). Cleveland, Ohio
700
708
May 12.1942
May 14,1942
Pa
Southern fills Sand, Gravel, & Excavation Co (Southern Hills pit),
700
Metallic
Apr. 15,1942
do
Wahl Refractory Products Co., Fremont. Ohio
The United Sand & Gravel Co., Canton, Ohio
H.W. Koeh & Sons Gravel Co., Wapakoneta. Ohio
700
Metallic
Coal
do
The Malvern Clay Co., Malvern Ohio (for plt only)
700
Apr. 14,1942
do
The Thompson Silica Thompson, Ohio
701
Nonmetallic
.do.
Transue & Williams Steel Forging Corporation (Transue & Williams
mine) Alliance. Ohio.
700
.9,1942
do
American Drilling Co. (drilling operations in the State of Ohio).
699
Driller.
do
Steubenville plant
Massillon plant
697
USE
do
Nonmetallic.
do
W Warren plant
694
Maurice d Autremont (Pastura copper mine, at Guadalupe County,
73
692
693
Mar. 25,1942
62
691
Republic plant
Brier HIN plant
690
N.J.
Apr. 7. 1942
May 1942
Metallic,
SILVER
SILVER
575
574
No. 1 includes the names, dates, and types of mines to which serial numbers
have been granted between Mar. 2 and May 15, 1942-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
PENNSYLVANIA-PREFACE NO. -Continued
List
PENNSYLVANIA-PREFACE NO.
Type of
Date
Name
Serial
Date
Name
Serial
mine
Type
mine
No.
No.
Mar.
Union Collieries Co., Oakmont, Pa. Pa
Renton No. 6, North Besseiner,
Renton No. 8, Rural Ridge, Pa.
1700
1706
W Ellis Johnson Devan, Ps
1707
Dubeis,
1770
do
1710
Coke
D. John Coal Co. New
Co. Derry (Brownsfield Pa mine), Uniontown, Pa
1711
Mar.
1942
Mar.
1942
1771
Nonmetable
Penn Refractor les Co., Bolivar, Pa
1774
Saxman Coal & Coke Co. (Harrison mine), Philadelphia Ps
1775
do
J. O. Clark being partnership (Superior No. mine). Glen Campbell,
1776
1713
M. B. Stewart, West Fairview, Pa.:
do
1714
Leap Ps Ganister Rock Co. (Leap No. 1), Hyndman, Bedford County,
1715
Welch-Bright Ps. Co. Atlantic Ave extended, Monaca Pa
Keystone Portland Cement Co., Philadelphia, Ps
Kenbrook Coal Co., (No. mine), Sligo, Pa
1716
1717
Smith Material Co. (Letterkenny quarry Camp Hill Pa
1718
MscFarlane Robert (MacFarlane mine), Houston Pa
David O. Davis & Son (Shupe mine, Index No 2169), Dravoaburg,
1715
1720
Mar. 11, 1942
Dredging A coal from Busquehanna River in Steelton, Pa.
1777
Nonmetallic
do.
Pioneer Fuel Co. (Pioneer mine) Latrobe PaPa
1722
Kinston Brick Co., R. D No. Latrobe,
Alliance Sand Co., Inc. Northampt Pa
1723
1726
1724
Mar. 16,1942
Mar. 21,1942
do
Coal.
James H. McCrady Sand Co. (mine at Harmerville, Pa.) Spring-
1733
General Retractories Co. (Sandy Ridge plant), Philadelphia, Ps
1734
1735
1736
Springs, Ps.) Milltown.
Helen Jennings Coal Co., Johnstown, Pa.:
Jennings No. mine
Apr. 3,1942
Apr 1942
H. Bigler (Salt Lick mine) Clearfield, Pa
do
Coal
H. N Hough Hough mine). Uniontown, Pa
do
1749
W. D. Little Clay Co. (Bigler mine and quarry), Philipsburg, Pa
1753
1754
Highspire Sand & Gravel Co. (Highspire sand and gravel plant),
1755
American Drilling Co., Greensburg, Pa
1750
1751
1752
Harrisburg, Pa.
1756
1757
Apr. 14 1942
174
Do.
do
175
1765
Apr. 15 1942
do
1767
1768
*178
*179
Driller.
*180
Apr. 7,1942
Apr. 20, 1942
do
Nonmetallic
*181
Southern Mica Co. (Johnson City plant). Johnson City, Tenn
182
Coal.
Nonmetallic
183
184
Do
do
Imperial Mining Co. (Bunch's Hollow mine), Fountain City, Tenn
Birmingham Slag Co. (Calbour plant in Charloston, Tenn.), Birmingham, Ala.
do
185
Hoffman Bros. Drilling Co.Pa.(drilling operations in State of Tennessee)
Driller
186
Do
Do.
187
Do
Punxsutawney,
H R. Ameling Prospecting Co (drilling operations for the American
Zine Co of at Monroe, Tenn.), St. Louis, Mo.
Butler Mining & Development Co. (Taylor Valley mine), Eliza-
189
Williams Lime Manufacturing Co., Knoxville Tenn
Gilberth & Pressnell (Soria mine), Columbia, Tenn
190
Do
Do.
do
Do.
Apr. 23,1942
New Galilee plant at New Galliee,
New Castle Refractories Co. (New Castle plant at New Castle, Pa.),
Apr. 23,1942
New Castle, Pa.
Cumberland
Coal Corporation (Cartwright mine), South Pittsburgh, Pa
Do
do
New Castle Refractories Co. New Castle, Pa.:
Darlington plant at Darlingto Ps
188
do
Hill, Pa.
1766
Do.
*177
do
Willard Kittanning Brick Manufacturir Co
Firestone Products Co., Inc. (quarry in Edge Hill, Pa.) North
Do.
do
Do.
Nonmetallic
do
land No. 2). Houtzdale Pa.
Botfield Refractories Co., Philadelphia, Pa
Mar. 26, 1942
Do.
do
Nonmetallic
Beatty & Scollins Clay Mining Co. (Lumber City clay mines No.
Do.
Memphis Stone & Gravel Co., Camden, Term
bethton, Tenn
1762
Do.
Coal.
*176
1756
1764
Fordtown quarry
Dale Hollow quarry
173
Do.
1758
1763
Lambert Bros. Inc., Knoxville, Tenn.:
Do.
do
do
National Slag Co. Riegelsville, Pa
Coal
Nonmetallic
Nonmetallic,
do
1760
do.
Mar. 6,1942
Hicks Bros., Camden Team
172
do
1761
Do.
May 13, 1942
TENNESSEE-PREFACE NO. 16
171
Apr. 21, 1942
do.
Nonmetallic
Nonmetallic.
Do.
Hoffman Bros. Drilling Co. (drilling operations in the State of
Pennsylvania) Punxsutawney Pa
The Philadelphia Clay Co., Carlisle, Pa
National Mining Co. (Hazel mine). Pittsburgh, Pa
McCleary Bros (Pinols guarry), Chambersburg, Pa
American Bangor Slate Co. Inc. Bangor, Pa
May 12, 1942
Apr. 15, 1942
Gladys Wells (Warren Draw, No. and No. 2), Custer, 8. Dak
Do.
do
do
Acme Coal Cleaning Co. Avello, Pa
Do.
Nonmetallic
Do.
Do.
1747
Do.
do
SOUTH DAKOTA-PREFACE NO. 40
Nonmetallic
1748
do
Apr. 25,1942
Apr. 28,1942
Carolina Refractories Co., Hartsville, 8. c
Southern Silica Mining & Mfg. Co., Columbia. 8. c
Do.
Do.
town, Pa
Do.
Coal
do
Cortez Steam Coal Co. (No silt plant). Scranton, Pa
Do
Nonmetallic
Do
Jennings No. mine
1746
May 7,1942
May 18. 1942
36
Abrusal Coal Co. (Bruceton mine), Bruceton, Pa
Do
Ellwood Stone Co. (Koppel and Rockford plants). Ellwood City, Pa
Do.
Do.
Carpentertown Coal & Coke Co. (Carpentertown mine), Union-
May 1942
1788
do
do
1744
Do.
do
SOUTH CAROLINA-PREFACE NO.
do
1745
Do.
Coal
Do.
do
Pennsylvania Refining Co. (Brunt Strip mine), Butler, Pa
May 4,1942
May 14, 1942
Nonmetallic
Coray Slope Coal Co., Pittston Pa
1743
Nonmetallic
do
Penowa Coal Co. (Waverly mine at Avella, Pa.) Pittsburgh, P.
Coal
1738
1742
do
Do.
Jennings No. mine
Marie Coal Co. (Marie mine), Fairchance Pa
Coal Hollow Coal Co. (Marraccini mine). West Newton, Pa
Do.
1787
Do.
do
do
Pa
Nonmetallic.
The Bessemer Limestone & Cement Co. (Enon mine). Bessemer, Pa
1786
do
1741
Benjamin Franklin Graphite Co., Inc. (Graphite mine, Chester
1785
Nonmetallic
Hill Bros. (Ashman No. and Hill No. 1). Morrisdale, Pa
1740
Fred L. Silhol (No. 2 mine), Bridgeville, Pa
Do
Mar. 25 1942
1737
1739
Mine at Delta.
1783
27
1732
date.
1782
Do
do
do
The Cement Manufacturing Co., Cementon, Pa
1731
The Funkhouser Co., Hagerstown, Md.:
Mine at Charmian Pa
784
Mar 26,1942
George F. Petti Inc. (Honeybrook sand plant), Philadelphia, Pa
1730
M M. Coal Co. (Beechwood No. mine), Dunlovy, Ps
Nonmetallic
do
Woodbury Clay Co. Hollidaysburg, Pa
1729
Apr. 28,1942
Ps.
Do.
do
Rausch Creek str
1728
Domestic Gas Coal Co. (Stephenson mine). Roscoe, Pa
28
1727
1780
1781
do
Otto Collieries, Pottsville, Pa.:
Eagle Hill'strip
Phoenix Coal Co. (John Veith, property, Llewellyn, Pa.), Beranton,
Coal
do
Hanley Co. Summerville plant), Bradford, Pa
1726
1779
Do.
do
Eastvale Clay Products Co., Beaver Falls, Pa
Dredging 008 from Busquehanna River In Millersburg, Pa
1778
Do.
do
do
Calumet Pa. Coal & Coke Co. (Mammoth mine), Scottdale, Ps.
1721
Coal
Pa
1712
Lehigh Parshall River & Crow Steam Coal Co. (Packers Dam operation), Reading,
Pa
Co.,
F. Elsworth (Schupp mine and Klatneback mine), Lucinda Pa.
do
Mar. 10,1942
Slate
Apr 27,1942
Pa
Continental Archbald Coal Co. (Archbald colliery), Seranton, Pa
1772
1773
Richard
c. Ren Indiana, Ps
St. Clair Rinn & Co (Twolick mine).
11709
Shenton
Do.
Pa
w A. Coal Co. (Keys Son mine), Co., Philadelphia Pa
1708
The Arcadia Co. (Wilgus & Smithport mine), Indiana Pa
Bigelow Run Coal Mining
Co. (Bigelow run No 1), Bellefonte,
Slatedale,
Inc.
1769
Coal
1942
Do
Do
Pa
*Blank spaces indicate numbers issued in December, January, and February.
Mar. 13, 1942
Mar. 16, 1942
Mar. 20,1942
Do.
Metallic
Nonmetallic.
Apr. 7,1942
Drillers.
Apr. 8,1942
Do
Apr. 11,1942
Apr. 21,1942
Apr. 23,1942
May 6,1942
Metallic.
Coal.
Nonmetallic.
Do.
SILVER
SILVER
577
576
List No. 1 includes the names, dates, and types of mines to which serial numbers
have been granted between Mar. 2 and May 15, 1942-Continued
List No. 1 includes the names, dates, and types of mines to which serial numbers
have been granted between Mar. 2 and May 15, 1942-Continued
WASHINGTON-PREFACE NO.
TEXAS-PREFACE NO. 28
Type
mine
Date
Name
Serial
Date
Name
Serial
Type of
mine
No.
No.
Mar. 1942
Boyles Bros. Drilling Co., Salt Lake City, Utah (drilling operations
Nonmetallic.
59
Hamlin Sand & Gravel Co., Inc. (Flattop gravel plant), Vernon,
107
do
at Holden Wash.)
Magnetic Mining Co., Colville, Wash
Pacific Coast Coal Co. (Black Diamond mine). Seattle, Wash
Do.
60
DuPre Tex. Sand & Gravel Co., and Road Gravel Co. (DuPre Sand &
pit. and DuPre Road Gravel pit). Victoria Tex.
108
Philip Gravel 8 Hoyt (Columbus, Tex. Flint Gravel pits) Van Horn, Tex
109
Bullivan fachinery Co.,
Michigan City, Ind. (drilling operations
Tex.)
110
New
Braunfels
Grant (Ascarate Grant), EI Paso, Tex
Mar 20, 1942
Do.
Apr. 6,1942
Driller,
Apr. 7,1942
Nonmetallic
Apr. 14,1942
Roche Harbor Lime Cement Co. (guarry operations at Roche
62
Harbor, Wash.), Roche Harbor. Wash
Knob Hill Mines, Inc., Walter Lyman Brown, Republic, Wash
63
Do.
65
111
113
Thermo Fire Brick Co. (Thermo and Troup pits), Sulphur Springs,
114
The Tex Milwhite Co., Inc. (plant, Houston, Harris Co., Texas), Hous-
Wise Co.), Dallas, Tex
ton, Tex
Minerals Production Co. (Spiller mine), Liano, Tex
115
Gann Sand & Gravel Co. Inc. Fort Worth, Tex
Texas Mick & Feldspas Co (Mies mine property), Van Horn, Tex.
Vivianna Mining Co (Vivianna mine). Alpine, Tex
116
117
118
Trinity Portland Cement Co., Dallas, Tex.:
Mine at Fort Worth Tex
119
Apr. 15, 1942
Pioneer Sand & Gravel Co. (plant at Point Deflance, Wash.)
66
Seattle, Wash
Do.
do
Wash
Do.
James Keeth (Keeth Tungsten mine) Spokane, Wash
E.J. Long year (drilling operator at Glacler Peak, Wash.). Minneap
68
Apr. 17. 1942
do
Metallic
Nonmetallic
Apr. 22, 1942
Apr. 28. 1942
Metallic
May 14,1942
Nonmetallie
65
rington, Wash
Zenith Mines. Inc., Cleveland mine. Fruitland, Wash
Nonmetallic.
Apr. 1942
Metallic
Nonmetallic
Apr 27. 1942
Do
Apr. 30, 1942
Do.
Coal.
May 1942
Metallic
Driller.
Metallie(D)
May 1942
Metallic
Do.
do
Germania Consolidated Mines, Inc., Spokane, Wash
Do
do
Mine at Dallas, Tex
120
Coal
Mar. 31,1942
do
M. Hanna (prospecting for copper at Glacler Peak, Wash.), Dar-
70
Metallic
Mar. 13,1942
do
olis, Minn.
Do.
Mar. 11,1942
do
Malestic Coal & Mining Co., Inc. (Nonpariel mine), Centralia,
67
TI
Southwed Ascarate Stone Co. (No. 2 plant-Lone Star Spur (Chico) Texas,
72
112
Drillers
Apr. 17. 1942
Max J. Kuney Co. (Pomona quarry), Spokane, Wash
General Construction Co. (Mats Mats quarry), Seattle, Wash
64
Mar. 1942
WEST VIRGINIA-PREFACE NO. 35
UTAH-PREFACE NO. 45
Mar. 1942
Continental Coal Co. (Maple Creek Coal Co.), Salt Lake City,
109
Utah.
Pyramid Gypsum Co (Pyramid plant), Salt Lake City, Utah
110
Boyles Bros. Drilling Co., Salt Lake City, Utah
111
Do.
do
Do.
do
Do.
do
Do.
Hoffman Bros Drilling Co. (drilling operator in State of West Virginia), Punxsutawney Pa
623
Drillers.
do
North Vein Coal Co (Cork No. mine). Clarksburg. w Vs
620
Shinnston Coal Co. (Hood mine). Shinnston, W. Va
Rock Forge Coal Co., Inc. (MeDonald mine), Morgantown,
622
623
112
do
do
625
114
626
BB
do
115
627
116
W.
Va
Big Branch Winifreder Coal Co., Williamson W.
Christopher Nat' Coal Co. (mine No. 5). Morgantown, W Vs
Carter Cos Co. (Thelman mine at Sic, W Va.). New York, N.
American Drilling Co (drilling operator in the State of West Vir-
624
113
ginia) Greensburg. Pa
117
New Castle Refractories Co. (Newell plant at Newell, W. Va.).
528
118
119
Mar. 9. 1942
120
Rock Asphalt Co of Utah (Utah rock asphalt), Sunnyside, Utah
121
Apex Tungsten Mining Co., Trout Creek, Utah
Grass Creek Fuel Co. Costville. Utah
125
123
Mar. 10,1942
Apr. 14,1942
Apr. 16,1942
Sullivan Machinery Co., Michigan City, Ind. (drilling operations
124
Cedar City, Utah).
125
126
Drury D. Turner Co. (Turner group. including Last Chance.
Raven, Canton Lode, Black Diamond, Green River mining
127
district) Utah
Apex Mining Co. (Apex mine), St. George, Utah
128
Metallic.
Coal.
New Castle, Pa.
Case Coal Co. (Case mine), Camden on Ganley, W. Va
629
I.Q Dickinson Co (plant at Malden W. Va.). Malden, Va
630
West Fork Collieries Inc., Fairmont W Vs
Triangle Coal Co. (Arthur mine). Lost Creek, W. Va
633
Driller
632
Metallie
Apr. 1942
Do
May 12,1942
Do
Consolidation mine 22-A
Consolidation mine 40-A
634
25
Apr. 3, 1942
White Pigment Corporation (mine in Florence, Vt.), Proctor, Vt
Apr. 23. 1942
Do
Do.
Coughlin Mining Co. (zine mine at Shullsburg, Wis.), Chicago, III
50
Waukeshs Lime & Stone Co., Waukesha, Wis
M
Eau Claire Sand & Gravel Co. (plant No. 1), Eau Claire, Wis
Vinegar
Hill Associates, care of Vinegar Hill Zine Co., Cubs City,
Wis.
52
53
VIRGINIA-PREFACE No. 10
Elkhart Moraine Sand & Gravel Co., Elkhart Lake, Wis
W. E. Faithorn (Champion mine), New Diggins, Wis
54
245
Riverton Lime & Stone Co., Inc., Riverton, Va
Hoffman Bros Drilling Co. (drilling operations in State of Virginia),
Apr. 1,1942
Margaret Ann Coal Co. Conaway Va
Apr. 14. 1942
Apr. 17,1942
Apr. 28, 1942
Punxsutawney Ps.
244
247
248
Glad Mountain Corporation (Glad Mountain mine). Marion. Va
The American Rutile Corporation (deposit located Ashland, Va.),
New York,
249
Sulliven Machiners Co., Michigan City. Ind. (drilling operations
for Bethlehem Steel Co at Cornwall, Va.).
250
251
252
Sullivan Machinery Co., Michigan City, Ind. (drilling operations
for the Maryland Bureau of Minesat Lynchburg, Va.).
Limestone Dust Corporation Poeshontas,
Blue Mountain Operating Corporation (Mount Torry mine),
Staunton, Va.
Driller.
Nonmetallic.
Apr. 24. 1942
Coal.
Nonmetallic
Apr. 27. 1942
Coal
May 12. 1942
Nonmetallic
Do
May 13, 1942
May 14. 1942
do
May 18. 1942
Mar. 10. 1942
Apr. 24. 1942
Apr. 27,1942
May 1942
May 14. 1942
May 15. 1942
Mar 1942
Boyles Bros
Drilling Co.Wyo).
Salt Lake City, Utah (drilling at Rock
and
Drillers
Springs
30
do
Nonmetallic
Metallic.
Superior,
Mar. 9,1942
Sullivan Machinery Co., Michigan City, Ind. (drilling at Sunrise,
Wyo.
Do.
May 1942
May 1942
Apr. 23, 1942
Driller.
Nonmetallic
Coal
Do.
Do.
Do
Do.
Metallic
Nonmetallic
Do.
Metallic
Nonmetallic
Metallic
Metallic
49
May 1942
do
Do
WYOMING-PREFACE NO. 44
Coal
51
244
M
Mar. 11, 1942
Nonmetallic
Do
WISCONSIN-PREFACE NO. 30
Nonmetallic
Vermareo Lime Co., Proctor, Vt
Apr. 21, 1942
Do.
Britton Coal Co. (Britton mine). Webster Springs W. Va
Williams Coal Co. (Swamp Run mine), Junior, W Va
639
Green Mountain Mics Corporation Gassetts, Vt
Do.
Do.
The Home Construction Co. (Vunean mine at Sardis, W. Va.), New
Martinsville,
Do.
VERMONT-PREFACE No. 14
24
Do.
do
Consolidation mine 90-A
638
640
23
Coal
Apr. 14,1942
Apr. 16,1942
do
Consolidation mine 84-B
636
637
Mar. 11.1942
Apr. 1942
Do.
Do.
Driller.
W. Va.). Fort Springs W Va
Consolidation Coal Co., Fairmont, W. Vs.:
635
May 14,1942
Apr. 1942
Apr. 1942
The General Crushed Stone Co. (quarry operations at Fort Springs,
633
Apr. 21,1942
The Colorado Fuel & Iron Corporation (deposits at Iron Mountain,
Utah). Cedar City, Utah
Vanadium Corporation of America's Associates" (mining operations
in Monticello, Utah). New York,
Nonmetallic
Coal
Mar. 27. 1942
Cornell Coke Co. (Yale mine), Morgantown w Va
619
Nonmetallic
do
Mar. 1942
Mar 11,1942
Alsted Coal Co., Flemington, W Va
618
Coal.
Casper Chrome, 713 National Bank Bldg., Denver. Colo. (mine at
Casper, Wyo.).
73052 42 pt. 9
Mar. 23,1942
Driller.
Do.
Metallic
SILVER
SILVER
579
578
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. 8 includes the names of persons or organizations that were not granted serial
numbers, but that were advised to operate under order P-100-Continued
MAR. 2 TO 31, 1943-Continued
ALASKA-PREFACE NO. 50
Name
Serial
Person or organization
Type of
Date
City and State
Date
mine
Mar. 10, 1942
No.
-
Buffalo Coal Co. (Buffalo mine) Anchorage, Alaska
Culu Inc., (Keku Lode(Premier
claims),
Juneau, Alaska
mine), Anchorage, Alaska
34
36
Mar 21, 1942
Mar. 23,1942
Coal.
Apr. .1942
Apr. 15,1942
Metallic,
Coal
Metallic
Red Mountain Chromite Inc. (Kensi Peninsula chromite deposits,
37
Seldovia, Alaska), Portland, Oreg.
Lynch Bros., Seattle, Wash.:
Nickle on Yakobi Island. Alaska
39
Chrome on Kenal Peninsula, Alaska
Earl Flamion
do
Zack Anderson
do
American Distomite Co
S. D. Alexander
Smith
Apr. 1942
Mar 11, 1942
Savder
Do.
Mr H. B. Senior
Oscar Dunagan Band & Gravel
MAR. TO 31, 1942
City and State
Date
Person or organization
Mr. W P. Stevenson
Mr. Louie Ewarts, Silver Queen mine
Mario Pendolf Co., Inc
Mr. E Neuenachwander
Laddsdale Coal Co
B. Coal Co
Waltes Pitman Mining Co
United States Quarry Tile Ce
do
Ely. Nev.
Minneapolis, Minn.
Mogollon, N. Mex.
Mr D.E. Flood
do
Irvine, Ky
Estill Ice Co
do
Badger Coal Co
Oakwood Mining Co
Moorefield Township Gravel Co
Maudlin Construction Co
Kess Coal Co
Green Township Gravel Co
Godoway Bros. Coal Co
Gilmour & Jones Coal Co
Durango Chamber of Commerce
Buck Road Coal Co
Brochetti Coal Co
Culbert Olson
Norris Coal Co
Manufacturers and distributors
El Dorado Mine Operators Association
Mr John C. Davis president
Southern Products & Silies Co
Saxon Coal Corporation
Royal Development Co
Lytle Bros
Lester Fluorspare Co
Jackson McCue
Hairbager Coal Co
Gravel Products Corporation
Garretts Mine
Fairview Coal Co
Blandburg Coal & Supply Co
Alsted
Coal
Woodworth Gravel
Wilbert M ining Co., Ltd
Vermont Marble Co
Blacky rood, Vs
Spruce Pine .C.
Canton. Ohio.
Six Mile Run. Pa.
Ranid City. 8. Dak
do
Scranton. Ps
Coshocton, Ohio.
Tacoma, Wash
do
do
do
Lake City, Utah.
Holsopple Pa.
do
do
Reno, Nev
Douglas, Wyo.
do
do
Mar
1942
Dellrov. Ohio
New Moorefield Ohio
do
do
do
do
do
do
do
do
Mar 1942
do
do
do
Mar 1942
Benezette, Pa
Sacramento, Calif.
Peckville Ps.
AS Vegas, Nev.
Denver, Colo
do
Lilesville, N. C
Williamsburg, Ky
Leavenworth, Wash
do
Cleveland, Ohio.
do
do
Princeton, Ky
Mt. Pleasant, Ohio.
Wampum, Pa
do
Buffalo,
do
do
do
do
do
do
Mar 10, 1942
do
Pennington Gap, Vs.
Bellaire, Ohio.
Altoona, Ps.
Flemington, W. Vs.
Woodworth LA
Salt Lake City, Utah.
do
do
do
Bokoshe. Okis
Davenport Iowa.
do
Goshocton Ohio.
Berchola, Ohio.
Squib, Ky
do
Tams qua, Pa
do
do
do
do
Overooker Inc
Terre Haute, Ind.
Houston, Tex.
C
Silver City N. Mex
Baltimore Md.
do
Mar 12,1942
do
do
Omaha. Nebr.
Fairlawn, N.J
Kingsville Md.
Warren. Ohio.
Trenton, N.J
Springfield, Tenn
Burlington, Vt.
Port Washington, N
do
do
do
North Shore Sand & Gravel Corporation
do
Northern Feldspars Corporation
do
Stephenson Vs.
do
Bellefontaine, Ohio.
McKinney & Whitlow Sand Co
Mr. Leslle Mohr
Martin & Elrod
Lutesville Sand & Gravel Co
Little Rock Stone Products Co
Indiana Gravel Co., Inc
Grand Canyon Lime & Cement Co
Gilpatrick Construction Co
Co
Fletcher
Elkhart-Moraline Sand & Gravel Co
Berube Bros
Baugh Coal
Pueblo. Colo.
do
Porter Brown Limestone Co
Barton. Ohio.
Somerset, Pa
Durango, Colo
Edwardsville III.
do
Standard Flint & Spar Corporation
The Crystal River Rock Co
Crushed Rock Products, Inc
Safeway Coal Co
Houston & Bank Sand Co
Raleigh N
do
Webster City, Iowa
New Lexington Ohio.
Cedarville, Ohio
Wendover Utah
Hulman Co
Utics.
do
do
do
Miller Schock
Milbank, S. Dak
do
Stroup Bros
Eldon. lows
do
McKinney
Hamden. Conn
do
do
M. c State
Parsons Bros
do
Mr. Garret Van Decker
Mr. Carl B Temple
Silver Horn Mine
Randolph Valley Coal Co
Fairpoint. Ohio
Deepwater, Mo.
Smelters Idaho
Proctor, Vt.
Albany, Oreg
Mr. w H. Romine
Georgetown Ky
do
Detroit, Mich.
do
Mr. John Cable
Berkeley Bunker
Elkhorn Limestone Co
Mr Joe Dudek
Dixwel Quarries. Inc
Mr E. G. Stengel
do
Mar 5,1942
Mr. Fieldsted
do
Co
do
do
National Chemical Products Co
Mr. James E Kinney
Mr. Harold Jennings
Harrison Bros Co
W. Millard Son
Hedberg-) Friedhelm &
Haverhill Mass.
do
Rohm Bros. Coal Co
wburgh,
do
do
Mr. N. L. Brown
Baltimore Brick Co
The Western Limestone Products Co
do
Yemma Bros
Port Washington N.Y.
Needham Heights, Mass.
do
Superior Lumber Co
Petersburg. Ind
do
do
Kahoka Mo.
do
Spokane Wash
Austin, Nev
Lake City, Utah
Cittadino Quarries
Bryan Monroe Co
Mar. 1942
Shafter, Call
Bethel, Conn
Custar, Ohio
do
do
Mr Harry E Jacobs
Pike Stone Products Co. Inc
Newburgh Sand, Stone & Gravel Corporation
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
do
do
Silver Rock Mines Co., Inc
Do.
Middleton Calif
Clermont, Fls.
Vancouver, Wash.
do
Valley Agriculture Gypsum Co
Standard Asphalt Paving Co., Inc
Bristow, Ind
Mr. Cremen
Colonna Co., Inc
West Rumney, N H.
Smith Grove, Ky
Cape Girardeau Mo
Heber Springs, Ark
Indianspolis, Ind.
do
do
do
do
Los Angeles, Calif
do
Riverton. Wyo
West Chelmsford Mass
do
do
do
Elkhart Lake Wis
do
Leesburg, Fla
Schenectady N Y.
Curtis Bay, Md
New York. N.Y
do
do
Fall River. Mass
Mendota. Mo
do
do
Watson
Volo Mining Co
Steiners Washed Sand & Gravel Co
Standard Paving Co
Soldier Canyon Mine
Smith Material Co
St Clairsville Ohio.
do
do
Mar 1942
do
do
Red Rock Quarries Ltd
do
Albert Paulson Salt Co
Nelson Sloan
Frederick Link Sons
Kohler Bros Sand & Gravel Co
The Junction City Clay Co
Gorta Bros. Blaine Coal Co
Gill 4
Dennis Materials Co
Mr. Eugene L. Campbell
Brown
Coal
do
do
do
do
Nash Brick Co
do
do
do
do
do
do
do
do
Co
Blandburg Coal & Supply Co
Auxvesse Quarry Co
Mr. Fred Simmering
Mid-Continent Mercury Producers
Geyser Marion Gold Mining Co
Coal Co
Morbert Wolbert
Wilkinson Bros Coal Co
Gooding Co
Products Co
West & Material Co
Tulsa, Okla.
Price, Utah.
Camp Hill Pa
do
Richardson Coal Co
Mr. Wilbert Reeder
Placerville, Calif.
Laurs, Ohio
do
do
Mar 14. 1942
do
do
do
Mar 16
do
do
do
Greenwood, Ark.
Muney. Ps.
Vallelo, Calif
Redmond Utah.
Chula Vista Calif
Rocky Mount, N.C.
Halethorpe Md.
aukesha Wis
Junction City Ohio
St. Clairsville, Ohio
Norristown Pa.
Kirkwood, Mo
Summersville, W Va
Nowata, Okla
Altoona, Pa.
Auxvasse, Mo
South Vebster, Ohio
Hot Springs, Ark
Salt Lake City, Utah.
Moberly, Mo
Snydersburg, Pa
New Philadelphia, Ohio.
Plymouth, Mich
Westfield, Mass
Robertson, Mo
581
SILVER
SILVER
580
List No. 8 includes the names of persons or organizations that were not granted serial
numbers but that were advised to operate under order -Continued
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
MAR 2 TO 31, 942-Continued
MAR 2 TO 31, 1942-Continued
Person or organization
City and State
Date
Person or organization
Mar. 20 1942
Mar 16,1942
Waukesha Lime & Stone Co
Waukesha Wis
do
Coalton w Va
do
Boswell, Pa.
Mr. Edward H Shaulis
do
Walsenburg, Colo.
Sampson Coal Mining Co
Mr James Roy, owner
do
Pace Crushed Stone Co
do
Own Truck & Materials Co
do
Rivester Bros
Wesley McKitterick Co
Mr Lester Moore
Montgomery Lime Co
Mission Quarry Co
Mr. Willis Miller
Melcher Fuel Co
Maple Lane Coal Co
M.A M Mining Co
The Lorain Washed Sand Co
Lilly Valley Coal Co
Mr Clayton Wisseman
do
Welborn Stone Co
do
Howard Tackett & Sons
Sobleskie Coal Co
Compton, Calif
Castile Dale. Utah
Merritt Coal Co
do
Jones Coal Ce
do
Johnstown, Pa
Gianforcard Coal Co
do
do
Jackson Ohio.
East Fultonham, Ohio.
The Consumers Sand Co
do
Christiansburg.
do
San Francisco Calif
do
Clarksburg, Pa.
do
Steubenville, Ohio.
Simpson Pa
Lorain. Ohio
do
Lilly Pa.
do
Gebo, Wyo
do
do
Dunmore. Pa
New England Lime Co
The Gulf Dolomite Co
M. Gammino Construction Co
Franklin Mineral Product Co
do
Rush. Ky.
do
Uniontown, Ps
Bennett-Clark Co., Inc
Corbin Coal Co
Central Coal Co
Mr. Butler
Buckles Sand & Gravel Co
Brunn instruction Co
Mr. E H. Baxter
Bambi Sons
Yingling
Canton, Ohio.
Manegold Stone Co
Learner Hunter
Langhorne & Langborne Co
Kinney Coal Mine
Connolls Coal Co
Buffalo Sand Co. Inc
Blackhawk Coal Co
Geo Bevil Gravel Co
The Aluminum Flake Co
Alabama California Gold Mines Co
The Whitehall Cement Manufacturing Co
Woodbury Trap Rock Co., Inc
Lawrence B Vollmer
Tygart Limestone Co
Skelton Wiecks
St. Mary' Sewer Pipe Co
Mr. John McDowel
Neuman Sand & Supply Co
Mr o B McSorley
Wheeling & Son
K & M Coal Co
Horton Stone Co
Colonial Clay Products Co
Roy Coulon & Richard Coulon
Brookdale Coal Co
Mr. John Boyle
Mrs. Breen Gravel Co
Yokom Line Quarry
Southern Brick Co
Shackelford Coal Co
Pioneer Quarry & Supply Co
Pike Stone Products Co
Peekskill Mason's Supply Co., Inc
Paul (Paul mine)
High Test Oil & Gas Co
Gerwing Coal Co
DI Laura Stone Co
Colonial Sand & Stone Co
Mr. Edwin Bebermeyer
Sand Gravel Co., Inc
Cape Girardeau, Mo.
Co
Petersen
Smith
Schults and H E Brunson
Rockaway Quarry. Inc
Ada,Okla
Mr. Z Rish
do
do
Chicago III
Mr. McCreary
do
McKenney Drilling Co
Kansas City, Mo.
Brisbin, Pa
Millers Creek Collieries
Norristown, Pa
Evansville, Ind
Johnson Sand Gravel Co
John Granger & Sons Coal Co
do
Los Angeles, Calif
San Francisco, Callf
do
Sunbury, Pa
do
do
do
Mar 17,1942
Cincinnati Ohio
do
do
Cambria County, Pa
do
Chicora, Pa
Co
Mr c. G McCormick
Wichita Flint Gravel Co
Fairment III.
Mountain Pass, via Nipton, Calif.
do
Tri-State Minerals Co
St. Jude Mining Cc
Scotis Mining Co
George L. Rock Inc
Coal
Harrisburg Pa
do
do
Cape Girardeau Sand Co
O'Connor
do
do
Carbonate King Zine Mine
Athletic Mining Smelting Co
Fort Scott. Kans
do
Coal Co
Mr Harold F Colvin
Jackson. Ohio
do
Gabbert Coal Co
1
Huntington, W Va.
Albuquerque, N Mex.
do
do
Luzerne. Pa.
Buffalo,
do
do
Darlington Pa
do
McAllen, Tex.
Barberton Ohio.
do
do
Engle Albright
The Diamond Grit Co
Aindi & Sons
Emmet Q. Yates. special
Three Fork Coal Co
Steel Service & Sales Co
Pacific Sulphur Co.
Murphy Coal Co
Imperial Salt Co
Mar 18,1942
Ducey & Attwood Rock Co
Philadelphia Pa
Dixon Construction Co
Deters
C&H Mining & Milling Co
do
Toledo, Oreg
St. Marya,
Palisade. Colo.
Acme Brick Co
do
do
do
do
York. Pa
do
Newark, Mo
do
Franklin. Pa.
do
Bronaugh Mo.
Springfield, Mo
do
do
New Brighton, Pa.
do
Oasis. Calif.
do
do
do
Mar. 19,1942
do
do
Mineral Point. Pa
Tamsous Pa
Grand Rapids, Mich
Jonesville. Iowa
Pontotoc Miss
Barwick Ky
do
Vigus, Mo.
Petersburg, Ind.
Peekskill, N.
do
do
Chapman Gravel Co
Bingle Brick Co
Baur Mining Co
West Branch Sand & Gravel Co., Inc
Superior
Mine
Coal
Southern Mines & Minerals Co
Silica
Sand
Roche Harbor, Wash
Adams Mass
Fla
Hainer City,
Providence. R.I.
Tarpon Springs, Fla.
Ibopah, Utah.
do
Blossburg, Pa
Macogdoches. Tex
do
do
Smith. Ark
do
Mar 25 1942
Wichita, Kans
Highspire, Ps.
do
Gold Hill, Nev
Rocksway Beach Calif
do
do
Douglas Ariz.
Black Rock. Ark
do
do
do
Albuquerque N. Mer.
do
Paintsville, Ky.
Spokane, Wash
Vandalla, Ohio
Uhrichsville, Ohio
Glassport, Pa
do
Morgantown, W Va
do
Salisbury, Pa
Baltimore Md
New Britain Conn
do
do
Mar 26. 1942
Carson City, Nev
Ellamore W Va
Chicago, III.
do
Los Angeles, Calif
do
Birmingham Als
do
do
do
do
do
do
Cherokee Ochre Co
McNees, Pa.
Knoxville Tenn
Franklin, N.C.
do
do
Condor Mine
City Burbank
do
do
.do
do
George Coal Co
Torrington, Conn
St. Marys, Pa
Lawton, Ky
do
do
do
E.C.Guy
Auburn, Calif.
do
do
do
Mr. Charles Hensel
Dunlo, Pa.
do
Mar 24 1942
Mr. James Keeth
Milwaukee, Wis
do
do
do
Mar. 21 1942
Williams Lime Manufacturing Co
Roche Harbor Lime & Cement Co
Lawton Ky
do
Old Forge Pa
Archhald Pa
Dorton, Ky.
Topeka Kans
Hellier, Ky.
Bartley Coal Co
Albanes Coal Co
Mozzard Coal Co
Melcher. Iowa
do
Derton Elkhorn Coal Co
Lawton Glass Sand Co
Fort Scott vdraulie Cement Co
Worthington Pa
Drakesboro Ky
do
Holly Lines
Hagerty Coal Ce
Gilmore Coal Co
Dunmore, Pa
Reges Bros. Coal Co
Fernald & Gray Quarries, Inc
Cougar Hill Mine
Mr. Matt Holbert
do
Burkesville,
do
Evansville, Ind.
Flat Woods. Ky
Jessup, Pa
do
do
North Fork Calif
do
Gene Riccardo
Nobbstown, Pa
do
Oliphant Coal Co
Neatrour Knipple
City and State
Date
do
do
do
Los Angeles, Calif
Newland N c
Gallup, N Mex
Pasadena Calif
Centerville Iowa
Bowling Green Mo
Waxhaw c.
Burbank, Calif.
Cartersville Gs
Durand, Mich
Weldon, Calif
Wausau, Wis
do
Montgomery City, Mo
Fort Worth Tex
Williamsport Pa
Linton, Ind
de
Chicago, III
do
Mar 27. 1942
Knoxville Tenn.
Meriden, Conn
St. Marys, Pa
Co
A. Bongivanni & Sons
Pine Valley Coal Co
Luray, Va.
Onley. Va
Page Cooperative Lime Association
Norfolk Supply Co., Inc
burgh Coal Co
Magic City Coal Co
Roy S Imbrie
A.W. Hudson
Newburgh, Ind
Tulsa. Okla
Butler, Pa
Los Angeles, Calif.
Palmyra, N. Y
Schenectady Y
Abram Cleason
Cushing Stone Co. Inc
La Follette Tenn
Gelstown, Pa
Buckeye Mining Co
Crooksville Ohio
do
Paintsville Ky.
do
Exchange, W Va.
do
Albion,
Bonded & Fuel Co
Alfred Gravel & Sand Corporation
Mr. M. Wright
do
do
do
New York City, N.Y.
New Haven, Mo.
Crown Coal Co
Lone Pine Calif.
Brown Sons
Allentown,
do
Mar. 28 1942
Alfred, N.Y.
Berkeley, Calif.
SILVER
SILVER
583
582
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
List No. 8 includes the names of persons or organizations that were not granted serial
numbers, but that were advised to operate under order P-100-Continued
MAR. 2 TO 31, 1943-Continued
MAR. 2 TO 31, 1942-Continued
City and State
Date
Person or organisation
City and State
Date
Person or organization
Mar. 28 1942
Mr Ralph B. Wright
do
Whedon M anganese Mines
do
Frank Vallakin and Associates
Red Cloud Mines, Inc
do
Mr. A. B Miner
Ouray, Colo
Beverly Hills Calif
Las Cruces. Mex
do
Hornitas Callf
Culver City, Calif
San Francisc Calif.
do
Tarentum, Pa
do
Lone Tree Manganese Mining Co
Kutsch Coal Mine
do
Lincolnton, N c.
Ka-MI-Tin Concentrating Corporation
do
Nogales, Aris.
Jefferson Mines, Inc
do
Mr. Roy H. Imbrie
Mr. John Desort
Angelo & Lombardi Coal Co
Base Metal Corporation
do
Wilks Coal Co
do
do
Mar. 30,1942
do
Mr. W. B. Sweigart
Sullivan M fachinery Co
do
Sturgeon Bay Co.
do
Smith & McCollum
Frank B Seorlots' estate
do
do.
do
Mr. Frank Finnigan Santa Francisca Mining Co
do
Sandy Creek Gravel Co
do
Priestley Mining & Milling Co
do
Parkers Bros & Co., Inc
Mr. Geo. W MeIntyre
Mountain Copper Co., Ltd
Arthur Mobley
Mine Development Co
Miffin Sand Co
William Meyer & Sons
Meadwell Lime Corporation
Manhattan Lease
Lynn Camp Coal Corporation
Abble E Lansberry & Son
Kay Coal Mining Co
Mr. Lynn W Smith. Box 81 care of Howe Sand Co
Hall Coal Co., Mr. Guy A Hall
T.J. Haggerty Mining Co., Inc
Mr. John Glass
Mr. John B. George
Fernold Quarries Inc
Eau Claire Sand A Gravel Co
Defense Metals Co
The Cuyahoga Sand & Gravel Co
The
Crossman
do
Long Beach, Calif.
do
Coshocton Ohio.
Blythe, Calif.
do
Lewistown Pa.
do
do
Baltimore Md.
do
Opeliks, Ala
Pinos Altos, N. Mex.
Grundy Va
do
Benton, Wis
Woodland, Pa
Everett. Pa
Holden, Wash
do
do
do
do
Morgantown, Va
do
do
do
do
do
do
do
do
do
do
Mar 31,1942
do
do
do
Starkey Coal Co
do
Mr. James E Small
Mr. Chas H. Segerstrom
do
do
do
Mr. Wm Piccolomini
do
Pettigrew. Stafford & Co
do
do
do
do
do
do
Alba, Mo.
do
Fallon, Nev
Rockville, Ind
do
Cowboy Coal Mine
do
Calleo Tungsten Co
do
Brisco Mining Co
Apex Mining Co
A.&C. Mining Co
Pescock Mining Co., Inc
Madelyn Fischbach trustee
Monticello Canyon Development
The Lincoln Coal Mining Co
Black Range Development Co
Mr. John P. Herndon
Dominic Lombardi
Steam & Domestic Coal
Minnie Moore Mine Development Co
Southwest Lead & Zinc Co
Smith McDonald
Shoshone Nev
Webb City, Mo.
St. George, Utah
do
Picher, Okla.
do
Apr. 1942
Ashland, Ky
Hot Springs, N. Mex
North Lawrence Ohio
Sante Fe. N Mex
do
do
do
Silver City N. Mex
do
do
do
Apr. 3,1942
do
Avoca. Pa
Wellsboro, Pa
Bolse, Idaho
Los Angeles, Calif.
do
Alpine, Tenn
Wallace Idaho
do
New York. N.Y
do
Belmont Cinnabar Mining Co
Mr Henry Arneson
Plattesville, Wis.
Carson City Nev.
Columbus, Ohio
Los Angeles Calif
Toronto, Ohio
Wallace Idaho
Sonora, Calif.
Goodsprings, Nev.
Connellsville, Pa.
San Francisco, Calif
Sandpoint, Idaho.
Cina-San Francisco County,"Ca
Mina, Nev.
Los Angeles Calif
Pacific Palisades Calif
Current O., Nev.
Bokoshe Okla
do
Ely Gold Mining Co
do
do
Bakersfeld, Calif.
do
do
Whitley City, Ky
Fields Branch Coal Co
do
Webb City. Mo
Sanger Callf
do
Fair Oaks Calif
do
do
Georgetown. Ky.
do
New York, Y.
Mr.A.J. Gard
Mr. Cye Cox
Portage Pa.
Joplin, Mo.
do
Deming N Mex.
Beatty, Nev.
Ely, Nev.
Winnemuca, Nev.
Terlingus, Tex.
Grayson, Ky.
Elv. Nev.
Mr. Tom Christensen
Burton, Vessel Clark
do
do
do
Joplin, Mo.
do
Picher Okla
Rosiclare III
do
do
do
do
Dallas, Tex.
do
Mr. Geo. Blow
Birchfield & Dunagan
Lovilla lows.
do
Picher, Okia
do
Zanesville, Ohio
do
do
Haughton Bros
Hawthorne Sludge Co
do
do
Karpen Coal Co
Independent Gravel Co
Hv Grade Coal Co
Dorris & Cuddeback
-Missouri Mining Co
Winston N. Mex
Overland Park Kans.
Locarno Simon Mines
Hilarity Mining Co
Engineers Gold & Silver Mining Co
South Pescock Mine, John A. and L. A. Dorland
do
Hayes Mine (D. F Paine estate)
Grayson Mercury Mine
Leman Machine Co
do
Picher, Okis
Tarpon Springs Fla.
Ear Claire, Wis
Morey Lease Mine
F. Hazen Co
Mr W H Richards
Apr. 1,1942
Small Leasing Co
Cleveland, Ohio
Alderpoint, Calif
Kingsport, Tenn
do
Bishop, Calif
Los Angeles, Calif
Payette, Idaho
Kellogg. Idaho
Los Angeles, Calif
do
Mr. Geo. H Beers
Barren Fork Fuel Co
Victory Mine
Valley View Mines Cc
Utah Alloy Ores, Inc
Tungsten Mill
J. Jerome McLaughlin lessee
McCloskey Mines, Inc
Lavrion Mining Co
Jones & Oldham Stone Co
San Francisco Calif.
do
Oro Mining Co
New Trail Mining Co
New Eldorado Mining Co
Sturgeon Bay, Wis
Oakland Calif
Forty Fort, Pa.
do
Black Creek Coal Co
Root Zine Mine
Michigan City Ind.
Pellean Mining Co
Oak CHD Rand & Gravel Co
Needmore Mining Co
Mahoning Mining Co
do
Co
Carolina Mica Mine Mr. James Edwards
Osceola Mills, Pa
Butler. Pa
Challis, Idaho
Houston Tex
Three Springs Pa
Harding, w Va
do
APR. TO 30, 1942
Southern Mining Co
Smith Craps Mine
Seattle, Wash
Ely Nev.
do
Mr. N. c. Aldo
Oglestown, Pa.
Yatesville, Pa.
Denver, Colo.
Nevada City, Calif.
Baton Rouge, La
do
Little Tom Mining Co
Antolin Coal Co
Big Spring, Tex.
St. Helena Calif.
do
Mr. F. A Bachleb
Sugarcreek Ohio.
do
Service Coal Mine
Painter Dell
do
Relmont Lead Mines
Butler, Pa
do
Tuck Miller
Mar 31, 1942
Bird Mining Co. Inc
Fallon, Nev
Fairbanks, Alaska
East Ely, Nev.
Nes Verde Mines Co
Blue Backet Mine
Midwest Mines, Inc
Mr. V. Cve Cox
Mr. Wm. Wardman
Mr. w A Stansberg
Howard Coal
do
Alexander & Wise, Inc
World's Fair Mines Co
Williams Mining Ce
Penman Mines Corporation
Oro Mines
Kern Mines, Inc
Jefferson Mines, Inc
Mining Co
Golden Conqueros Mines, Inc
Consolidated Chollar Gould
Conqueron Operating Co
Come Back Mining
Calistoes & Development Co
Copper Industries, Inc
Straitsville Brick Co
Caliente, Calif.
Kellogg, Idaho
do
Carrizozo, N. Mex
do
Cuprum Idaho
do
Fallon, Nev.
do
Tonopah, Nev
do
Great Falls Mont.
do
Wanpum Pa
Dennison Ohio
do
Ottumwa lows
Apr. 1942
do
Apr. 1942
do
do
do
do
do
do
do
do
do
do
do
Apr. 7,1942
do
Foster Dixiana Sand Co
do
Postmaster
do
Mr.T.
do
Ruby Gulch Mining Co
Pacific Mines
Pace Crushed Stone Co
Overlook Co.
North Mines Syndicate
The McLaren Gold Miner Co
Montezumma, Summit Co.
do
do
Mr.
Nev
do
do
do
do
do
do
do
Kelly Station R. D. Pa.
Los Angeles, Calif
Harshaw, Via Patagonia, Arls
Idaho Springs, Colo.
Owgrande, Idaho
Auburn, Calif
San Francisco, Callf
Nogales Ariz
Idaho Springs Colo.
Manitou Springs Colo
San Francisco Calif
Idaho Springs Colo
Pioneerville, Idaho,
Los Angeles Calif
Deadwood B Dak
New Straitsville, Ohio.
Zortman. Mont
Prescott, Aris.
Ransburg Call
Avenal, Calif
Burkesvill Ky
Salmon, Idaho
Lewistown, Mont.
Dayton, Ohk
.
SILVER
SILVER
584
List No. 8 includes the names of persons or organizations that were not granted atrial
numbers, but that were advised to operate under order
List No. 2 includes the names of persons or organisations that were not granted serial
numbers, but that were advised to operate under order P-100-Continued
APR 1 TO 30, 1942-Continued
APR. 1 TO 30, 1943-Continued
City and State
Person or organization
Apr. 7,1942
McCorkle Stone Co
do
do
Eugene, Oreg
Inter-City Sand & Gravel Co
do
Howard Henry Quarries
do
Holfiing Bros
do
Mr. W. w Hartman
Grubstake Mine
Greenhorn Mining Co
Green Campbell Mining Co
Golden Red Mining Co
Glimore. Mines, Inc
Mr. John B. Furstenberg
Tecumseh, Kans
Sacramento, Calif
Los Angeles, Calif
do
Butte. Mont.
do
Phoenix, Aris
Silver Star, Mont
do
Spokane Wash
do
do
Seattle, Wash.
do
Denver Colo.
Neihart, Mont
do
The Florence Co
do
Exploration Synidcate, Inc
do
Kripont Mines Inc
De Lamar Milling Corporation
Salt Lake City, Utah
Dillon, Mont
De Lamar, Idaho.
do
El Dorado County, Calif.
do
Cleveland, Ohio
San Francisco, Calif.
Consumers Mines Inc
do
The Cleveland Builders Supply Co
do
Cherokee Mine
do
Mr. Chas L Cassady
The California Hidden Treasury Mines Co
Buffalo Mine
The Argo Mining, Drainage
Anglo Saxon Mines. Inc.
Alabama-California Gold Mines Co
Acme Fireproof Block Co
Accord Lime Industry
Geo. Yocum
Van Patten Bros
Whitaker's Mines
Troy Gravel Co
Standard Gravel Co
Staley Coal
Sims Coal Co
H.
Scott
Marion, Ky.
Denver. Colo
Portland, Oreg
Denver, Colo
Georgetown, Colo
Seattle Wash.
Lima, Ohio
do
do
do
do
do
do
Accord, Y
Apr. 1942
do
do
Lexington, Miss.
Rangely Colo.
Perry, Mo.
Ozark, Ark
do
do
do
San Francisco, Calif
Port Washington, N.Y
do
Co
North Shore Sand & Gravel Co
Mr. O. L. Neyland
Napeo, Inc
Mo Limestone & Fertilizer Co
Miller School
Mr. Sa lord B. Meverson
Merced Sand & Gravel Aggregate Co
Lawrence County Limestone Co
Leger Blue Gem Coal Co
Landa Coal Corporation
Lanwehr Stone Co
Kennedy Mining & Milling Co
l'homas West Son
Jay Kay Mining Co
Jackson Stone Coal Co
Golden West Quarry
Gianfoocard Coal Co
East Steubenvi ille Coal Co
Cunningham Coal Co
Clifford Cox
City of Chattanooga
do
do
do
do
do
do
do
do
do
do
do
do
do
do
Mr. A. Childress
do
do
Statesville Brick Ce
Smicksburg Lime Co
Lee o Shaw
Reliance Whiting Co
Mather & Son Sand Co
Logan County Quarry
do
do
do
do
do
do
do
do
Kish Coal Co
do
Halquist Lannon Stone Co
do
Courtney & Plummer
City of Burlington
Wilson Engineering Works
Taber Parker Mining
Silver Circle Mining Co
Mr. G. Sawyer
Sandoro Mining Co
do
do
Apr. 10. 1942
Sherman Smith
North. Va.
Lamar. Mo
do
do
Moses Gorman
TheHamilton-Trenner Coal Co
Griffs Morrow.
Pleasant View, Ky.
Cambridge Ohio
do
do
Greenwood Ky
do
Hartford Ark
James N Ford Coal Co
Dorton Elkhorn Coal Co
Mr. Donald E. Clements
Dorton, Ks
Englewood Colo
North Adams, Mass
do
Frank Bushek
White Coal Co.
United Coke Co
Troy Coal Co
Apr. 13,1942
do
do
Inc
Pond Creek Mining Co., Inc
Minine
do
Tulsa, Okla
do
Hime. Ky
Maple Ridge, Pa
do
New Green Brian Coal Co
Maple Ridge Mining Corporation
Co.
Linwood Stone Products Co
Abble E. Lansberry & Son
Humphreys Coal Corporation
Hima,
Scottdale, Pa
Crooksville Ohio
Ottumwa, Iowa
Lincolnton, Ga
Stone, Ky.
do
do
Coal Co
Mining
Los Cruces, N Mex.
Wendover, Utah
Baltimore, Md.
Custer, 8. Dak.
do
do
Mr John Ross
Richmond Coal Co
Nichaus Coal Co
Deadwood 8. Dak.
Picher, Okla.
Giants Pass. Oreg
do
William Schwart & Son
do
Potosi, Wis.
Davenport, Iowa.
Woodland. Pa
Denver Colo.
do
do
do
do
Sullivan, Ky
do
Butler, Md.
Evergreen, Colo.
do
Plains. Pa.
do
Dunlevy. Pa
New Marshfield, Ohio,
Leadpoint, Wash
Shinnston, W.Va.
do
Davis Fork Co
Dandy Coal Co
do
Delbarton, Va.
Crown Point Spar Co., Inc
do
Crown Point. N. Y
Ottowa, Ohio.
San Francisco, Calif.
do
New Castle, Pa.
Absecon
do
do
Boyles Coal Supply Co
Sand
Gravel
Co
Wash Sand Gravel Co. Inc
Veango Limestone Coal Co
Tyson Chrome Mines. Ltd
Trafford Coal Co
do
Apr. 14,1942
do
do
Jessup, Pa
Atlantic City, N.
New Orleans, La
Emlenton, Pa
San Francisco, Calif.
Trafford, Pa.
Hopewell, Pa
Sweeney Coal Co
do
Collier, W Va
Surmi Mines. Inc
do
Steam Fuels Co
do
New York,
Angola, Ind.
Spring Run Coal Co
do
Wilkinsburg, Pa
Picher, Okla.
Snyder, Okla
Sand Gravel Co
Stubenville Ohio
Statesville, N C
Crushing Co
do
do
The Prince Manufacturing Co
Pine Top Mine
Wm Piccolomini
do
do
do
Perkins
do
Old Hemer Mine
Meramae Minerals, Inc
Frank Jones & Co. Coal Co
Johnson
do
do
Great Falls Mont.
Bernardsville N Y.
Lexington, Miss
Bowmanstown, Pa
Globe, Ariz.
Connellsville, Pa.
Davy, W Va
Lakeview, Idaho
Cleveland, Ohio.
do
Brazil Ind.
do
Snow Shoe, Pa
Smicksburg Ps
West Lafayette, Ohio
Jshncke Service Inc
do
do
Reno. Nev.
Alton
Mr. James O. Greenan
Craig Coal Co
do
De Soto, III
East Hartford Conn.
Russellville Ky.
owhatan Point, Ohio.
Sussex, Wis.
Neenah, Wis
Burlington, N. C.
Veyo. Utah
Cinel Coal Co
Chester Granite Quarries Co
Mr. c. C. Carter
Black Star Coal Co
F. H. Balley & Sons
do
Spokane Wash.
Tipton
do
Boise, Idaho.
Stiles Son
Los Angeles, Calif.
do
do
Son
Apr. 15,1942
Talmadge Haynes
Mr. James B. Pell
New Orleans, La
Masontown, Pa
Chester. Mass.
Ashtabula, Ohio
Sherrodsville, Ohio
Kenton, Ohio
Strattanvi ille. Pa.
Anthony
Winnemu Nev.
do
do
Canton, Dak
Del Carbo Mining Co
Mr. Ralph Davis
Sombrero Butte, Aris.
Apr. 1942
Mr. lacques Stanland
silver Horn Mine
Gim Coal Co
Dunlevy Coal
Wellsville Ohio
do
do
Burbank. Calif
Gallup, N. Mex.
Fort Wayne, Ind
do
Apr. 11,1942
Trentham Milling Co
Sedalla, Mo.
Tamaqua, Pa
Chattanooga Tenn.
do
1942
Apr. 1942
do
Columbiana, Ohio.
do
Apr.
Do
H
St. Louis, Mo.
do
Belle Eldridge Gold Mines
M.A
Wallare, Idaho.
do
filarity Mining Co
Olsen
San Antonio, Tex.
do.
Hurbes-Roberts
Mr. D. Funberg
Leadville, Colo
San Francisco, Calif.
Logan, Utah.
Wallace, Idaho
Silver Lead Mining Co
do
Jackson, Ohio
San Francisco, Calif.
Archbald, Pa.
do
do
Leader Manganese Mining Corporation
Osean M Gray & Son
Gray Eagle Mining Co
Ashland, Ky
Henderson Ky
do
Apr. 10. 1942
Monumental Mines
San Antonio, Tex.
Williamsburg Ky
do
Fanny Rawlings Mining Co
Haminack Coal Co
Cleveland Ohio.
Winton, Calif.
Black Rock. Ark.
do
Century Granite Co
Boardman Coal Mine
Belma Corporation
Balsu Mining Co
-Butte Operating Co
Wukelic Bros. Coal Co
Milton, Pa.
Bonaparte, Iowa.
Norton, Va
Troy, Ohio
do
do
Joe Simnson Coal Mine
Oakland Calif.
T
Kings River Mining Co
Kalaer-Nelson Co
Milroy, Ind
Fresno, Calif.
Cleveland, Ohio.
do
City and State
Date
Person or organization
do.
do
J.
Date
Mr Albert B. Long
585
Franklin, Pa.
Nashville, Oble
Charleston W. Va.
Lebanon, Mo
Coursegold, Calif.
J
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587
586
List No. 8 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. 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
MAY 1 TO 15, 1943-Continued
APR 1 TO 30, 1942-Continued
City and State
Date
Person or organization
City and State
Date
Person or organization
Apr. 15,1942
Ram Lambert Sons
do
de
Apr. 16 1942
L. Scott Co
Cartersville, Ga
Do
Greenville Ky
Frank Jackson
Harps Hill Coal
Givens McCullen
Mr. E Baydler
Apr. 17. 1942
Sequvia Rock Co
Mr. Geo. M. Rowen
Reed Coal Co....
do
do
Mr. C. Orender
Loy, Creps Hall
do
Apr 20
Newburgh, N. Y.
Maxville, Mont.
Mayport, Pa
Casey, III.
do
Red Lodge Mont.
Ashcamp, Ky.
do
Leechburg, Pa.
Apr. 21, 1942
West Coast Coal Mines Inc
Apr. 22, 1942
Apr. 23,1942
River Coal Supply Co
Batavia,
Seattle,
Lake City, Utah.
Yellville, Ark.
Pineville, Ky
New Albany, Ind.
Canaan, Conn
Mr. c. Loomis
Glenallen (Mo.) plant
Mr. James Keeth
do
Glenaller ,Mo.
do
Spokane, Wash
Apr 24,1942
R.L. Sayers Coke Co
do
San Francisco Calif.
Youngstown, Ohio.
do
Anniston Ala
Tampa, Fla
Bowerston, Ohio.
Columbia, Mo.
Joplin, Mo.
The Safeway Rock Co
Relehman Coal Co.
N.R. Garrett doing business as City Quarry
Colonial Mining
Co
Apr. 25,1942
Harding Coal Co
Melvin Stone Co
Joseph c. Sgarlot
Benter Bartley Coal Co
Cardinal Gold Mining Co
Mr. Adolph Chanosky
Varney Rose
Sheldman Bros
Mike Serge
Henry Porter Co
Oro Mining
Columbia Lead & Zine Mining Co
Darby Coal Mines
Seneca Petroleum Co., Inc
Mr. Elmer N. Learner
Great Northern Iron Ore Properties
Kern Mines, Inc
Inc
Donora Mining Co.,
Coalville Coal Co
Cape Fear Contracting
Lasks-California Gold Mines Co
Cambridge Ohio.
Pineville, Ky.
Apr.
Apr 28,1942
do
do
do
do
do
Wagoner Coal Co
Shelton Crusher Co
do
do
Co
Do.
Mr. J. Raisch
do
Harrisburg m
do
San Jose. Calif.
Dallas, Iowa
New Standard Coal Co
Morris III
Morris Limestone Co.
Mr. Long
Perry. Mo
Goldfield, Nev.
Gallatin, Tenn
Lone Mountain Development Co
Mr. Langford
Hi-Grit Stone Co
Morgantown W Va.
do
Washington, Iowa
Mr. L. Hayes.
Mr. Gifford
Little Lake. Calif.
Feldman Fuel Supply Co
Salt Lake City, Utah.
Wilkeson, Wash
Gale Creek Cole
Salerell Ohio
Mr. John E. Dooley
Dane Poteau Smokeless Coal Co
Columbia Foundation Co
Blue Star Mines, Ltd
Potenu, Okia
Columbia, Tenn.
Los Angeles, Calif
Eyeon
Blue Ridge Coal Co
Black Creek. Wis
Hellier. Ky
Big Branch, Ky.
Blackervek Limestone Co
W Birchfield
Orrick
do
May 1942
Michigan City, Ind.
River Sand & Grave Co
do
Ashcamp, Ky
Richton Investment Co
Mines Plains Coal Co.
Jefferson County Quarry
do
Pawtucket. R. I.
Richton. Miss
do
Plymouth, Pa.
Road Fork, Ky.
Bloomsburg Ps
Agricultural Lime Stone Co
do
Do.
do
Spokane, Wash
Hanley
do
Chicago, III.
Tuscarawas, Ohio
Crawford & Gravel Co
Wm. M. Bronk Coal & Lumber Co., Inc
Black Dismond Coal Co
Hornell Gravel Corporation
Altoona, Ala
Anchor Stone & Materials Co
St.
1942
May
Greensburg, Pa
arter
Syndicate
Co
Tulsa, Okla
Cantil, Calif
Foodward Coal Co
Windber Grade Coal Co
Terra
Charles,
Allegan plant, Salamanca N.
American Mineral Co
Vallecito Co., Inc
Versailles, Ky.
Alfred plant, Salamanca, N.
Bradford, Pa
Washington, Pa
Meadville,
Hudson Falls,
Donley Brick
United Quarry Tile Co
Canastota, N.Y.
Porter, Okia
Salamanca
N.Y.
Irvine plant, Salamance N.
do
Do
Strestor, III
Manchester, N.
Auburn, Calif.
Jackson. Ohio
plant,
Boringville
do
Hornell Gravel Corporation
Jackson, Mich
Louisville Ky
do
Jackson Silies Gravel Sand Co
Sandpoint Idaho.
MAY TO 15, 1942
May 1,1942
Bristol. Va
Lectonia, Ohio
Bergholy, Ohio
Melcher. Iowa
do
Elurospar
Southern
Mr
Worlock Stone Co
Moorefield W Va
Luzerne, Pa.
San Francisco, Calif.
Nederland, Colo.
do
Depoy, Ky
Deadwood. 8. Dak
Sullivan Machinery Co
St. Paul, Minn
do
Inglewood, Calif.
Manchester. Ky
Spadra, Ark
Cumberland, Ky.
do
Apr. 30, 1942
Rawlins,
Nederland, Colo.
Twin City Coal Co
Allen, Ky.
do
Neffs, Ohio.
do
May 1942
Mr Hillard Bartley
Franklin Pa
do
do
Coal Co
Alberton & Son Coal Co
Fort Worth Tex.
Apr. 28 1942
Los Angeles Calif.
Rural Retreat Va
do
Wells Coal Co.
Hollsopple, Pa.
Barnesville, Ohio.
Kent, Ohio
do
Hardy Co. Marl Co
Gilt Edge Mines Inc
Carloo Coal Co
Francis Brennan
Evansville, Ind.
do
Leasing from Wolf Tongue Mining Co
Mr. Donald G. Kopecky
Regina,
Tuscarora Nev.
do
Co
Ironton Ohio
Union City, Tenn.
Melvin, Ohio
Apr.
Construction
Adams, Mass.
Carbondale, Pa.
Denbo, Pa
Baltimore, Md.
do
do
Apr. 18. 1942
Andrew and Marie Balbo
Weller Fuel Co
Collier Mine
The Standard Sing
do
Mrs Chas Smallfield
King Horse Creek Coal Co
Mr. Henry Harris
John Bartley
Robers Conner
H. Fickhill Coal Co
Wickenburg, Aris
Corpus Christi, Tex
do
Mr Luther H Cavaness
Co
Casey III.
do
Wallered Coal Co
do
May 1942
Mr c. Yingling
do
do
Mr John Dooley
do
Lichty
do
Western New York ashed Sand & Gravel Co
Philipaburg, Pa
Co
Coal
Mount Pleasant, Pa
Philipsburg Pa
Hollsopple Pa
Manley Cooperative Mining Co
Campbell Bros
Moonlight Mining Co
Gillett Coal Co.
Crocket Coal Co.
Coal
Owl
New Philadelphia. Ohio
Barnesboro, Pa.
alout Run Coal Co
Chicago, III.
do
Eshbuugh & Sweetzer Coal Co
Cases Lime & Stone Co
Burns Coal Mine
Wilkerson
Russellville, Mo.
San Francisco, Calif.
do
The Windsor Building Supplies Co., Inc
May 1942
Mr. Fred B. Zelmore
New England Lime Co
Sacramento Calif.
Portland, Maine
Carey Brick Co
Stone
Washington H., Ohio
Co
Pete Pettinate
Oswald Bros
Musser
Mr.
do
Alamo Sand & Gravel Co
Coal
Bros
Harrodsburg, Ky.
Salem, Ohio.
Union, Mo.
Mr. Edwin H. Kriege
Grainger Stone Quarry
Edwards
Altavista, Va
do
Del Paso Rock Products Co
Atom Mine
Lupper
May 1,1942
Ce
Norton, Va
Sedalia, Mo
Westminster, Ohio
Kinston, N.
Dodson. Mo
do
California Peat Co
Coal
J Starck Coal Co
Mystic Conn
The Frank Flint Construction Co., Inc
Cumberland Sand & Gravel Co
Mercen County Road Department
Rockwood, Tenn.
Dixon. Mo.
Lemon Cove, Calif.
do
Lantern Hill Silios Co., Inc
The Hutton Co.
Buckeye Coal & Limestope
Union City Tile Co
Miller Coal Co
Flomaton, Ala.
Tracy, Iowa
Waukon, Town
8.
Disle Sand & Gravel Co
Crow Coal Co
Mr. Andrew Bresnahn
Maryaville, Tenn.
Windber Pa.
May 1942
do
do
Newton Iowa
Angels Camp, Cellf.
Parkersburg, W Va.
San Francisco, Calif.
Terra Alta, W Va.
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589
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588
List No. 8 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
MAY 1 TO 15, 1942-Continued
numbers, but that were advised to operate under order P-100-Continued
MAY , TO 15, 1942-Continued
Person or organization
Person or organization
May 1942
Stevens Sons
do
Smallwood Stone Co
do
Smallwood Low Stone Co
The Quality Sand & Gravel Co
do
Parsons Bros
do
Oreans Extension Inc
do
William Miller
do
Mill Creek Copper Co
do
Mr. Joe E Girthy
Limerick Mineral Corporation
do
Coal
Co
Krow Whitemore Quality Concrete & Quarry Products
do
do
Vidmar Bros
do
c. W. Rose Coal Co
Riverdale Gravel Co
Nix
Nix
Midwest Pre Cote Co
Mr. Ralph Meyers
Keck Coal Co.
Hughett Mining Co
H. D. Sand Co
Mr. Galnes
Carl Frymire
Mr. Ralph Everson
Consumers Lime Co
Childress Coal Ct
Ben Archuleta & Wm. Lotters
Apex Coal Co
Gold Cup Mining Corporation
Freeport Coal Co
Frazer Coal Mine
Elkton Lime Stone Co
Diamond Gold Mining Co
Big Four Coal Co
Betchy Coal Co
F. Bartola A Waits
Antimony Producers Co
Warden Mining Co
Wald Lessing Co
Southside Mining Co
Prosper Mining Co
Pike Mining Co
Miller Manganese Mining Co
John W Mallory Ore Co
Hunt-Craig Mining Co
Humphreys Gold Corporation
E. Herndon
Flagstaff Bonanza Mining Co
Mr. E. John Eriksson
Engineers Gold & Silver Mining Co
c. Teus Dautziger and Associates
Columbus Mining Co
Carson Mining & Milling Co
Brighter Days Mining Corporation
Booker Tucker
Big Four Mining Co
Mr. Anson G. Betts
c. Berlin
Yarbrough Hatley
Mr.J. W. Stewart
George A Stoele and Calvin R. Reed
Mr. Lealle Mohr
Mellott Bros. Coal Co
L. Coal Co
do
do
Norwood, Colo
do
Princeton, Ky
do
Treece, Kans.
Elizabethtown, III.
Silver City, N. Mex
do
Terre Haute Ind.
do
Goldbar, Wash
do
Dungannon Va
Walsenburg Colo
Wilkison, Wash
do
do
do
May 1942
do
do
do
Smithfield Ps
Six Mile Run. Pa
do
do
Reno, Nev
Colorado Springs. Colo.
do
do
Salt Lake City, Utah
do
May 1942
do
Mr. Cyril L Garvey
Blackwater Mining Co
Barbour, Smith & Co
A. Arluck
Milford, Utah
Glenwood. Ark
do
Emory, Va
Anniston Ala.
Baxter Springs, Kans
do
do
Denver, Colo.
Versailles, Mo.
do
do
Park City, Utah
San Francisco Calif.
Carrizozo, N. Mex.
do
do
do
do
Pagosa Springs. Colo.
do
Columbus, Kans.
Athens Lime & Coal Co
Gauley Coal Land Co
Warwick Mining Co
Mr. W. Richardson
May 12. 1942
do
do
do
do
May 13,1942
Frenchburg. Ky
Centerville Iown
Glenmont, Ohio.
Lisbon, Ohio
Hartford Ark
Central City, Ky
Sedalia. Mo.
Red Wing, Miss.
do
Picher, Okla
do
Washington, Mo.
do
do
May 14,1942
May 15,1942
do
do
do
do
do
Blytheville, Ark.
Rupert, W.Va.
Warwick. Mass
Do
Castine. Maine
Pouderly, Ky
Drift. Kv.
Centerville, lows.
St. Paul, Va
Senator McCARRAN. Growing out of what has been related here as
to your Board not in anywise controlling the exportation of mine
machinery, I am going to ask you, would it not be well that your Board
have control over the exportation of mine machinery from this
country to foreign countries, in order that you might look with
propriety on the situation and view the situation as you view the
situation at home, as to whether or not the exportation was essential
as against the home demands?
Mr. NELSON. Senator, can I speak off the record?
The CHAIRMAN. This is off the record.
(There was a discussion off the record, after which the following
occurred:)
Mr. NELSON. I would like to state that, naturally, the mining
branch of the Materials Division will be very glad to look after anything relating to mining activity when that duty is assigned to them
by the War Production Board.
Representative WHITE. It is unthinkable that any advantages
that might be obtained in a business or trade standpoint in some
foreign country would be permitted to outweigh the procurement or
production of strategic metals in our own country. You would not
think that would be possible, would you?
Mr. NELSON. I do not think it is.
Representative WHITE. You are talking now abcut economic war-
do
Carl Junction Mo
do
Chloride. Aris
do
La Fayette, Ga
do
Treece. Kans
Now, you would not think that we, for a minute, would tolerate a
do
Denver, Colo
do
Providence Ky.
condition that would take advantage of some trade arrangement and
curtail the production of strategic materials in this country in order
West Cunningham, Mass.
do
May 11. 1942
do
do
Creekside, Pa.
Wellston, Ohio
Bellefontsine, Ohio.
Mineral Hidge Ohio
do
do
do
Mr H H. Hanenkratt
Joplin Mo.
do
do
Hall Hawkins Son
Tunnelton, Vs.
Nelson, Nev
Spiro, Okla
do
The John W Karch Stone Co
B. M Higginson
Hot Springs, Mex
East Brady, Pa
Elkton, Va
do
Kolob Manganese Co
Jones Gravel & Coal
Jones Cut Stone Co., Inc
Los Angeles, Calif.
Fruita, Colo
do
do
Barfield Sand Gravel Co
The Melva Coal Co
Dixon Construction Co
Burtons Ford Coal Co
Kansas City Mo
West Olive Mich
do
Co
Staunton Va
Nucla, Colo
do
Carpenter Mining
Mr. Frank Berner
Richland Peat Mines
Greenville Kv.
Virginia City Vs
Mandan, N. Dak
do
Red Wine Sewer Piper Corporation
Salt Lake City, Utah.
Tunnelton Va
May 1942
Western Lime Products Co
Mr Harvey Tichenor
Mr. Garnet M. Wasson
Jackson, Ohio.
Meeco, Inc
Nashville Lime Stone Quarries Co
The Lisbon Cement Co
Bergholz, Ohio.
Lovelock. Nev.
Knox Dale. Pa.
Cleveland, Ohio
do
Ragona Coal Co
A M. Hobbs Coal Co
Mr. Eddie Mar Webb
Bowden, w Va.
do
Tri County Agriculture Lime Co
Wapakoneta Ohio
Mountain City, Nev.
Inloy, Nev.
do
Lime Mountain Consolidated
Opekiska W.
South Fork Pa
do
Priscilla Coal Co
Monongah Construction Co
Watson, W. Va.
Do.
do
City and State
Date
City and State
Date
London Mills. III
Salt Lake City, Utah.
Cellins, Ohio.
do
Newark Ohio
do
Syracuse,
do
Newburgh Y.
do
Richlands,
do
Kansas City, Mo.
do
Osceola Mills, Pa
do
do
do
Blackwater, Mo.
Los Angeles, Calif.
Vanadium, N. Mex.
fare and capturing foreign trade by competing with foreign production.
to do that?
Mr. NELSON. I do not quite follow you. I think the statement
you are making deals with questions that the mining branch has
nothing to do with.
Representative WHITE. As a policy of the Government, we would
not want to starve our mining industry at home in producing strategic
materials, to export machinery and equipment in an economic war, to
have a trade advantage in some foreign country, and put some com-
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591
590
petitor out of business that is supplying the same kind of machinery?
Is Mr. that NELSON. not the object? That is a very involved question. I am sorry. I
can't follow you.
THOMAS of Idaho. Doctor, yesterday I raised this question.
Senator because I wondered how you were able to arrive at priorities
I raised it supply and demand of mine machinery in order to make
and the possible, when you had another branch of the Government
priorities this machinery to everybody, without your knowing about
exporting it. wondered how you would arrive at it. I did not ask it to be
I I asked it to clear up the subject in my own mind. I asked
critical. what method you used, if you have one department of the Government
that is exporting this machinery and you have no information about
that at all
McCARRAN. The situation presents itself this way to me.
Senator way of looking at it, Doctor: That one Federal authority is
in my poor a scarcity of a commodity by permitting or allowing its
creating and the other Federal agency, your own, is confronted
exportation, with the scarcity created by the other board and reflecting that
scarcity onto the industry that you are fostering.
Mr. NELSON. I cannot say whether that statement is correct.
Senator McCARRAN. I would not expect you to. I am making that
statement of my own accord.
Senator MILLIKIN. Dr. Nelson, how many milling-machinery
manufacturers are there in this country? machinery is
Mr. NELSON. The great majority of mining made
by somewhere between one hundred and one hundred and fifty
companies. Senator MILLIKIN. Has your agency made any survey of those min-
ing-machinery manufacturers to determine exactly what they are
making that is not mining machinery?
Mr. NELSON. The makers of mining machinery in most cases are
either making nothing but mining machinery or mining machinery
and direct munitions for the Army and Navy.
Senator MILLIKIN. That is what I am getting at.
the
Mr. NELSON. The direct munitions that they are making for
Army and Navy I think are more or less military secrets.
Senator MILLIKIN. Then, you have not made a survey of what you of
of those plants, see whether or not they are making things that are
more important than mining machinery?
Mr. NELSON. If a part of your mining machine plant is engaged in
making certain compicated machinery for a battleship, the question
to be decided is whether that equipment should be made or more
mining equipment should be made. If a part of a plant is making
parts for tanks, the question arises whether it is more important to
make those additional tank parts or make more mining machinery.
Senator MILLIKIN. Exactly.
Mr. NELSON. I cannot answer the question.
Senator MILLIKIN. But it might also occur in a number of factories
that they were making things which your agency might conclude were
not as important as mining machinery, and in that event, by a diversion of their energy, might add to the store of mining machinery?
Mr. NELSON. But in each case these plants are making munitions
directly for the Army or Navy or making mine machinery
Senator MILLIKIN. Eighty-three thousand items are included in
the subject of munitions, and out of those 83,000 items there is
probably a large category of items that is not nearly as important as
mining machinery. I am merely making a suggestion to you as to
how you might increase your store of mining machinery
Mr. NELSON. I can say that I have visited personally the plants of
the three largest makers of mining machinery in the United States
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
munitions-parts of tanks or items of that type.
Senator MILLIKIN. I most respectfully urge that you think on that
subject of whether you can store up more mining machinery by diverting such things not as important as mining machinery, if such a situation exists.
The CHAIRMAN. Are there any further questions of Dr. Nelson?
Senator McCARRAN. I want to say that I do hope you will be pres-
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
you here to listen to those who will make their statements, because
they know more about this subject than those of us who are members
of the committee.
STATEMENT OF WILLIAM L. BATT, DIRECTOR OF MATERIALS,
term munitions, because "munitions" covers the whole category
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
that that is 8 fact?
The CHAIRMAN. State your full name.
Mr. NELSON. We know what most of mining-machinery companies to
are making. That part of their plants which are not turned over and
the making of mining machinery, are being used by the Army
Navy in making munitions, or in the making of machine tools.
Senator MILLIKIN. Could you form your judgment on whether imwhat they are making, other than mining machinery, is more
portant to the war effort than mining machinery?
Mr. NELSON I would say it is a very complicated problem.
Senator MILLIKIN. I wonder if you could not, perhaps by a survey
Mr. BATT. William L. Batt.
The CHAIRMAN. Where do you reside?
Mr. BATT. Washington.
The CHAIRMAN. What is your present office?
Mr. BATT. Director of Materials, War Production Board, Chairman
of the Requirements Committee.
The CHAIRMAN. Just in a sentence or two, give us the background
of your experience of the last few years.
Mr. BATT. Well, I am an engineer, Senator.
The CHAIRMAN. What kind?
Mr. BATT. Mechanical engineer and a manufacturer.
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The CHAIRMAN. What products do you manufacture?
Mr. BATT. I have spent all my life in the ball-roller-bearing busibut I have no detailed knowledge of the mining industry, and
Research Council, have appointed a very considerable number of
technological committees to report specially to us on what can be
done with new processes to beneficiate low-grade ores that have
otherwise not heretofore been practical, and we have had some sixtyodd reports from them, just on ore extraction processes alone, many
592
ness, experience with these problems has been more directly gained as a
my result of the way in which the Materials Division has come in contact
with the war program.
I am here this morning, I think, at Senator McCarran's suggestion,
of which have been used.
We have coordinated and consolidated, as far as was practicable,
private capital, and there has been a good deal of it spent in the
not that I have any statement to make, because I know very little
about it. I am very glad to meet with the committee. I have had a
development of the mineral resources of the West.
There are 40 major mineral projects now going forward under
Government auspices, and there is $400,000,000 of Government
money being spent to develop the mineral resources of the West; and
rather liberal education in some of the aspects of this situation which
I never had before.
As I say, I have no formal statement, but I have two or three comments I would like to make, and they arise out of some of the statements I have heard around this table. I have noted them here.
One of them is: Prejudice against the mining industry as indicated
by the action of the War Production Board. Next: Not in the interest of those Western States. Now I wish it could be clear to everyone
20 depots, I think in 18 States, for picking up certain minerals
from the little fellow have been established, and those are being expanded just as fast as it is possible to expand them.
Senator McCARRAN. Do you mind an interruption at that point?
Mr. BATT. Not at all, because you and I have discussed this, and
I know you are very much interested in it.
Senator McCARRAN. What I want to say now is to impress upon
that the War Production Board attempts to take a completely
dispassionate interest in everything except one, and that is, What can
be done more quickly to win the war? While we try to avoid all
prejudices and try to be as completely dispassionate as we can be,
we have no feelings about any industry except as to its contribution
toward winning the war.
Now, the thing that is not understood by the public is the shortness
of these critical materials out of which, for example, mining machinery
is made.
When Mr. Nelson puts up to the Requirements Committee of the
War Production Board a total of his material needs to maintain such
part of the mining industry as is to be maintained, we find there an
impressive total of aluminum, amongst other things, copper, various
forms of steel, and we find at the same time that to make those parts
and that machinery is taking manufacturing space which the Navy
and the Army are more anxious to have.
So it is a positive effort on the part of the War Production Board
against great opposition to maintain the support which the mining
industry has had that the War Production Board has made an
effort to discriminate against the mining industry. Indeed, I think
Senators, that when the history of this effort is written, we will find
that there has been a greater development of natural resources in the
West than ever before in the history of the country in the same length
of time. The figures are rather impressive to me.
I do not know that they have ever been adequately put together,
but I am sure that what has been done in the West in the last couple
of years arising out of the determination of the War Production
you, if I can-and that is the object of this entire meeting-that if
there be something in an order which you have made, which we know
as the order of March 2, which is retarding further production of the
war essential metals and minerals, would it not be well to eliminate
that from the order, if it can do no injury by being eliminated?
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
bring in more of the critical materials which we need, certainly we
would be the last people to urge the existence of language just because
it happened to be drawn up that way.
Senator McCARRAN. I will give you my view, and my view is in a
homely way the expression of others, and I believe it will be corroborated by those who listen to me. There is in that order as it is now
couched in language an element which discourages the discoverer or
producer of war essential minerals. If a discoverer of a mining property finds that on an analysis taken or an analysis made of his product
he would produce more than 30 percent per dollar value of silver or
gold or silver and gold together, he immediately says to himself, "There
is no use in my going forward with this, because if I do I will have to
go through a labyrinth of red tape before I can get anywhere, and I
am not going any further, because the rule says that if it produces
more than 30 percent in dollar value of gold or silver, my other product
is lost. So far as I am concerned, I am not going to waste my time
on it.
Board and other government agencies to get the most critical materials
has not been told in full. I was reading through a record I had last
night in my office, and if you do not mind my taking a minute,
would like to give you that picture.
The War Production Board has 300 mineral and metal specialists.
It works steadily with the Geological Survey and the Bureau of Mines
on the development of new properties. Those two agencies have
right now, I am informed, between 50 and 60 parties out in the field
I
looking for new properties.
The National Academy of Science and its subordinate, the National
593
Now, that is a serious situation, and not a mythical situation. It is
not like some of the rumors I have talked about here. It is a reality.
While vour production may have increased, let me draw your attention 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 be a price for the commodity which has grown out of the war:
and I make the assertion, without fear of contradiction, that if you will
eliminate the 30-percent penalty on gold and silver or on gold or silver,
you will produce more war essential metals than you are producing
now.
73052-42-pt.9-11
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594
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
was solely from what the War Production Board has done, not at all.
What it has done has been to attempt to focus the best brains
country, in Government agencies and without Government agencies,
to the end that that expansion shall be driven forward at the rate
that it is being driven forward.
I looked over a list of expected production of various materials
metals, as between 1939 and 1942, and also planned and expected
for 1944 and 1945.
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595
I have to emphasize, however, that the objective of the War
Production Board is the control of materials at that point where they
will serve the war effort best. As this order operates, the effect of
it is not to keep somebody from having something, but it is to pick
out somebody and put him in a high priority position, rank him right
up with the manufacturer of guns and tanks, to enable him to get
these spare parts.
In that sense it may be construed to be discrimination, but actually
it is an extraordinary help which will benefit him. Those people are
put up above a great part of the civilian economy, as indeed they
I am not going to give the specific items. I think it might not be
to the public interest. However, I should like very much for the
Senators to see them at any time. Some of these items run up to
should be.
7 1/2 times as much material expected in 1942 as was produced in 1939,
This objective that you are speaking of, Mr. Batt, sounds very
attractive, I am sure. Is that through Government finance or is it
and 20 times as much in 1943, 1944, and 1945. I look at two items
here, and I see that 20 times as much is expected in 1944 in one and in
1945 in the other.
Senator JOHNSON of Colorado. Is that domestic production, Mr.
BATT?
Mr. BATT. This is domestic production: Twenty times as much,
20 1/2 times as much, 20.8 times as much. That is production that is
expected in 1944 and 1945 as compared with 1939.
These other increases for 1942 as against 1939 run 150, 150, 180,
340, 720, 270, 507, 900, and so on. There has been tremendous
development.
Senator JOHNSON of Colorado. Is that just wishful thinking, a mere
hope, or is that an objective? If it is an objective, it is important.
Mr. BATT. It is a specific objective, Senator, given me by the best
technical authorities. I hope it is right.
Senator JOHNSON of Colorado. I am not questioning the estimates,
and that is nothing more than an estimate, of course; but is it some-
thing that you are shooting at? Is it a goal? Is it something you
are trying to realize? Are you sincerely trying to get that production?
Mr. BATT. The goal we have is to get every pound of essential
critical material we can in 1942, 1943, and 1944.
Senator JOHNSON of Colorado. Is that your goal? If that is, God
help you, is my wish.
Mr. BATT. You asked me if that is a specific goal. We definitely
can and expect that in 1944 and 1945 one of those will produce 2,180
percent of what it produced in 1939. Another will produce 2,050
percent.
Now, there has been a tremendous effort, as Congressman White
knows, on the development of public roads, access roads, and the
War Production Board has used every pressure at its command to
increase the development of access roads, because many of these
western resources can only come in through the construction of new
roads.
The War Production Board has gone before the Congress. It has
urged the War Department for special funds. It has taken it up
with the Budget Bureau, Wherever an opportunity affords itself for
us to put our pressure behind new roads, we have done it. This has
been a joint effort of all the agencies of Government, and I think it is
one that is going to bulk up very large when we are looking into the
history of this war effort in the future.
Regresentative ENGLEBRIGHT. Mr. Chairman, would the gentleman
mind yielding right there?
through the ingenuity and development of the prospectors and miners
themselves?
Mr. BATT. No; these two items are entirely the result of Government financing.
Representative MURDOCK. Mr. Chairman, may I ask a question?
The CHAIRMAN. Mr. Murdock.
Representative MURDOCK. It is heartening to hear the statement
we have just heard. I would like to ask this question: Have your
efforts been directed toward a few large companies, or are you trying
to bring in a larger number of small mine operators, perhaps? We
know that our West is full of minerals, much of which have been undiscovered, and if we are going to get the maximum we ought to get
many small operators to find and develop these small mines into
bigger mines. Gentlemen, as no representative from the State of
Arizona other than myself is here, I want to take this opportunity to
comment briefly and to summarize the opinion and sentiment often
expressed to me by small mining men in the great mining State of
Arizona. We feel sure that there is vast untouched, unlocated mineral
wealth in our State. We feel that the mining industry should not be
discouraged, but that it should be fostered in peacetime, and much
more particularly in wartime. In Arizona, as elsewhere throughout
the West, some of our greatest copper mines began as silver mines or
gold mines. From that fact alone gold and silver mining should not
be discouraged, even if gold and silver did not in themselves constitute
sinews of war and bases of peace economics.
Ever since I have been a Member of Congress the small mine
operators' associations of Arizona have urged me to call attention to
our potential wealth, to interest the Government more thoroughly in
its development, and to lend every possible encouragement financially
and otherwise. You may think ours is but a selfish interest, but these
men know the basic importance of mining in human economy. I am
not here today to put in an argument or to speak for these mining
men, but to put in a plea to all Government officials to give them more
and better consideration
Mr. BATT. We are trying to get the maximum we can with the
minimum utilization of critical materials to bring it in. In other
words, we want the most net result with the least expended in mining
machinery
There is no discrimination*on our part as to the place it comes from.
SILVER
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597
596
We have wiped out the dollar sign in the War Production Board as
determining factor in the bringing in of raw materials. have just
one cost factor over there: What is the cost in machinery and other
critical materials to bring in this product?
Senator McCARRAN. Well, the cost in machinery, Mr. Batt, to
bring in a product would not be lessened by the fact that the product
which you desired produced was intermingled with a precious metal.
Mr. BATT. That may be. I think that certainly would have to be
weighed, and that is the purpose of this order. If I understand correctly, the basis on which the serial numbers are granted, you weigh
what the mine has to contribute in the way of copper, lead, and zinc,
and if what they contribute is sufficient to justify the use of the ms.
chinery they ask for and the high priority treatment to give it to them,
they get it.
Senator McCARRAN. Why do you not amend that and say, "copper,
lead, zinc, and silver"
Representative ENGLEBRIGHT. And gold, Senator.
Mr. BATT. I am no authority on this. There are newspaper people
here, and I am sure I would get myself in deep water. If I may make
a comment or two off the record, I think it would be better.
The CHAIRMAN. This is off the record.
(There was a discussion off the record, after which the following
occurred:)
Senator MILLIKIN. Mr. Chairman, I would like to ask a question.
Mr. Batt, yesterday I was exploring the factual basis for this order.
The net conclusion in my own mind at the close of the day was that
I had not found any part of that factual basis. I assume that the
order-was not arrived at arbitrarily; that it was designed to produce
calculated results in the way of developing critical minerals or metals
which would not be developed were it not for the order.
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
informal circulation of memoranda among various men in the Board
who are interested in the metal business.
I should like to ask you, is there factual datum in the form of &
memorandum or in the form of a report which will show the necessity
for the order? The reason I pursue that line of inquiry, Mr. Batt, 18
that many people in the United States have the feeling that many
orders that come out of Washington are arbitrary and are not necessary. That hurts the morale of the country. It makes a man who
has to close up as a result of one of those orders feel that he has been
arbitrarily destroyed rather than destroyed on a true basis of war
necessity.
Now, I should like to see developed at this hearing the factual basis
for this order, the necessity for it, in other words, what you expected
to gain. We do not want the answer that because we are in a war
we have to do this. That kind of argument does not spell anything,
unless you were proceeding arbitrarily, which I do not presume for
moment.
You must have set up some sort of balance sheet of what you would
gain and what you would lose by these orders, and I would like very
much to see that. I think the committee would, too.
Senator McCARRAN. I take it what you mean is by that one phase
in that order, and that is pertaining to the 30 percent.
Senator MILLIKIN. Yes; and I would like to develop that before
Mr. Batt gets away.
The question is: Is that material available? Could we see it
in
order to see what your judgment was operating on when you promulgated that?
Mr. BATT. I will have to turn to Dr. Nelson. I was generally
familiar with the discussions that took place incident to it, but there
is a great mass of problems that pass over and are discussed in the
War Production Board. I do not know what factual data we have,
Senator.
Mr. NELSON. I was discussing that with you at the time the meet-
ing adjourned yesterday, and I think I could have developed it to
your satisfaction had we not adjourned.
Senator MILLIKIN. Then may I go into that with you a little later?
Mr. NELSON. I will be glad to.
Senator MILLIKIN. While Mr. Batt is here, I would like to ask this
question. It has developed at the hearing, Mr. Batt, that the 30
cents feature of this order of a dollar value does not mean what it
says, that it is a sort of reference point, a commencing point, that
starts the cogitations going in your Board to determine whether a mine
shall be given a preferential priority or not. It has been developed
that that part of the order which excludes a preferential priority, if
you have 30 cents or more on dollar value of gold or silver, does not
mean what it says.
Well, as Senator McCarran has pointed out, that is an alarming
order to go out to the mining industry, not only the gold and silver
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,
and that there are no definite standards which a man may take out of
an order and say, "I do come under it,' or "I do not come under it."
That in itself creates great confusion in the mining industry, and I
am pleading, as Senator McCarran has been pleading, "For goodness'
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
man's liver.'
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
that deceptive or false-I do not mean that in an invidious sense-30
percent provision of the order, because it is admitted that it does not
mean anything.
It is things of that kind that confuse an industry and destroy confidence in the administrative branches of our Government. I urge
that you give that very careful consideration, Mr. Batt.
Mr. BATT. Yes: that will have very careful consideration.
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?
If not, we are very glad to have had you come before us.
(There was a discussion off the record, after which the following
occurred:)
The CHAIRMAN. Without objection, we will meet on Friday morning
at 10 o'clock.
(Thereupon, at 12:25 p. m., an adjournment was had until Friday,
May 8, 1942, at 10 a. m.)
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 RepresentaHon. Harry L. Englebright, Hon. Lawrence Lewis, Hon. William
S. tives: Hill of Colorado, Hon. J. Edgar Chenoweth, Hon. James G. Scrug-
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,
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, Washington, D. C., and San Francisco, Calif. Mr. Errol MacBoyle, chairman, 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, Leadville, 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
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600
SILVER
STATEMENT OF WILBUR ARMISTEAD NELSON, ADMINISTRATOR
MINING BRANCH, MATERIALS DIVISION, WAR PRODUCTION
BOARD, WASHINGTON, D. C.-Resumed.
Mr. NELSON. Mr. Chairman, I am authorized by Mr. Batt to state,
after his conferring, as I understand it, with Mr. Knowlson, that they
will recommend to Mr. Donald Nelson that the 30 percent clause in
order P-56 be taken out of it by amendment. At least, that will be
their recommendation to Mr. Donald Nelson The administration of
the order, however, will be carried on in exactly the same way as in
the past. I want to make it clear that we cannot change our method
of giving priority assistance to gold and silver mines.
The CHAIRMAN. If you eliminate from the order any statement
that might have a psychological influence of being a deterrent to the
continued operation of these mines, I am sure that will be helpful.
As I understood you on a former occasion, you said that each case
stood on its own foundation.
Mr. NELSON. Yes.
The CHAIRMAN. Then, there is really no occasion for any kind of
order, if they understand that. But I am not telling you what to do;
I am just speaking from my viewpoint. I think it will be helpful.
Senator McCARRAN. If I may at this time do so with propriety,
Mr. Chairman, I should like to express my sincere appreciation and
gratitude for the announcement made by Dr. Nelson. I feel that
with that clause eliminated, much of the apprehension that has, in
my judgment, acted psychologically as, if I may say so, a wet blanket
on mining activity will have been eliminated.
I can also see where there is ample reason for Dr. Nelson's further
statement-that is, that the rule will be administered as it has been
in the past-but I am confident that with that clause eliminated,
mining will take an upward trend; and with the policy that has been
carried out as regards precious metals, under the statements made by
Dr. Nelson from time to time, if that policy is still continued, I have
great hope that mines of precious metals-that is, that predominate
in precious metals-wi be permitted to go on as each case is presented. I take it that they will deal with the individual case in each
instance.
I want to say again that I am grateful for the broad view that has
been taken by the authorities on this subject.
Now, that is all that you had to say, Doctor?
Mr. NELSON. Yes, sir.
Senator McCARRAN. Thank you very much. With that in mind,
I think that much that would have been presented to this committee
may be eliminated, and we may save a lot of time here.
I am going to ask a general question, with your permission, Mr.
Chairman.
The CHAIRMAN. Very well.
Senator McCARRAN. Is Mr. Conover here?
Mr. CONOVER. I am right here.
The CHAIRMAN Mr. Knowlson is present, Senator McCarran, if
you want to question him.
601
Mr. CONOVER. I did not hear all of it. Mr. White has advised me
of the gist of it.
Senator McCARRAN. Did you hear the statement that I just made?
Mr. CONOVER. No, sir; I have just come in.
Senator McCARRAN. Did it impress you that I have about correctly
expressed what would happen to the mining industry by reason of the
action of eliminating the 30 percent clause?
Mr. Conover. I am sorry I did not hear what you said, Senator.
Senator McCARRAN. I made the statement that, in my judgment,
it would eliminate much of the confusion and remove much of the
psychological depression, so to speak, that has prevailed with reference to mining in the West, by having that clause eliminated. Do
you agree with that?
Mr. CONOVER. I think that is a very fair statement, Senator. I
think we should certainly remove all the uncertainties that we, can.
The mining industry has enough hazards and uncertainties, as it is,
and if we can remove any of the additional difficulties that beset it
here in Washington, that should certainly be done.
Senator McCARRAN. Will you come forward, please, Mr. Conover?
Mr. CONOVER. Yes.
Senator McCARRAN. Do you have a statement that you wish to
make?
Mr. CONOVER. I have a few remarks that I would be glad to
present.
Senator McCARRAN. Do you wish to discuss them?
Mr. CONOVER. Yes; if you please.
The CHAIRMAN. Governor Carr, did you have a question you
wished to ask?
Governor CARR. Is there to be something substituted for the 30percent clause that is to be removed, or what is to be the procedure
in place of the quantity under the 30 percent?
Mr. NELSON. A mine having a serial number will participate in
the benefits of this order, and a mine that does not have a serial
number will not participate in the benefits of the order. As I stated,
we shall administer the order according to the same general principles
we have used in the past as affects gold and silver mines; that gold
and silver mines not producing material necessary to the war effort
would operate without the priority benefits of this order.
Governor CARR. Will you bear with me for just one moment, Mr.
Chairman?
The CHAIRMAN. Proceed, Governor.
Governor CARR. You say that mines having priorities will benefit.
Do you mean by that mines which had priorities before the order of
March 2?
Mr. NELSON. I mean those that have serial numbers at the present
time,
Governor CARR. Only those which have been, to use the term,
reinstated since the March 2 order will benefit?
Mr. NELSON. And those who had their orders and did not have them
taken away. We will still review each case on its merits as it is presented to us.
Senator McCARRAN I would just like to have Mr. Knowlson
Governor CARR. There were 64 in Colorado which received the
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
listen in.
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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
Governor CARR. But that does not mean that they will benefit
that confusion has been or will be largely eliminated by the explanations which have since been made. The restoration of their serial
numbers and the action announced by Dr. Nelson this morning will
under this attitude now?
Mr. NELSON. Not until their number is reinstated.
Governor CARR. It does not give them a right to a priority rating?
Mr. NELSON. That is correct.
Senator McCARRAN. Let me follow along that line of inquiry for
just one or two questions.
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
restored and others which may secure serial numbers will be able to
go ahead just as they did previously, with the anticipation that they
will continue to receive these high priority ratings.
I believe that is correct, is it not, Dr. Nelson?
Nothing pertaining to this change will militate against them in
any way if they have a meritorious case to present?
Mr. NELSON. It they enter into our war picture.
The CHAIRMAN. What have they to do now to enter into the war
picture?
Mr. NELSON. The same thing they were doing before, Senator:
that is, producing needed amounts of essential or strategic material
The CHAIRMAN. Then, as I understand it, this statement of yours
with respect to the face of the order, does not in any way materially
affect the procedure that will be followed in the future?
Mr. NELSON. It does not affect it in any way
The CHAIRMAN. Except in relieving mines from discrimination
in the event that such mines produce more than 30 percent of gold
and silver?
Mr. NELSON. That is a correct statement.
The CHAIRMAN. Now, Mr. Conover, you may make your statement for the record.
STATEMENT OF JULIAN D. CONOVER, MINING ENGINEER SECRETARY OF AMERICAN MINING CONGRESS
The CHAIRMAN. Mr. Conover, please state your name and position
for the record.
Mr. CONOVER. My name is Julian D. Conover. I am a mining
engineer and am secretary of the American Mining Congress.
At the outset, I should like to express the appreciation of mining
people generally throughout the country and of manufacturers of
mining machinery to Dr. Nelson for his fairness and his consistent
efforts to help the industry.
Dr. Nelson, we know, has been working very long hours, very
arduously, and under very difficult conditions for a good many months
in a very sincere effort to keep our mines going, and we do appreciate
very much his efforts. We feel that we are fortunate to have a man
like Dr. Nelson as the head of the Mining Branch of the War Production Board.
With reference to this March 2 amendment to order P-56, it has
just been brought out in the discussion of the last 5 minutes here that
there are really two principal problems involved.
The first one relates to the mines producing copper, lead, zinc, or
other critical materials, including fluxing ores for the smelters, which
are fortunate enough to have small quantities of gold and silver
present in their ores, which simply help to meet the pay roll and of
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
Mr. NELSON. Yes.
Mr. CONOVER. That is the first aspect of the situation. As I have
said, we feel it is very important that this order should be made just
as clear as possible, because we know that the men who are actually
mining out in the hills are not priority experts. They have enough
uncertainties and hazards in the mining business anyhow, and if we
in Washington can in any way remove some of these additional
difficulties, it is very much to the benefit of the men who are trying
to produce these materials that are needed for the war program.
Senator McCARRAN. It is my feeling, from my conversation and
contact with the miners of the West, that they are anxious and willing
to cooperate in any way for the success of this country in the war effort.
All that they want is the opportunity to cooperate. Do you agree
with that?
Mr. CONOVER I agree with that, Senator. I think that there is
no more patriotic group of men than the miners of the West
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
silver mines which are not producing copper, lead, zinc, or other socalled strategic metals and are not producing fluxing ores for the
smelters. They still do not receive these high priority ratings, but
are dependent on order P-100 with its A-10 rating; to get a higher
rating on any item, they must apply to Washington on form PD-1A.
Our feeling with respect to these mines is that they have always
been and always will be an extremely important part of the economy
of our country. Their product is the basis of our currency, the basis
of our world trade and foreign exchange, and we are going to need
their continued production in the future as we have in the past.
Senator McCARRAN. May I interpose right there? I hope that I
correctly interpret Dr. Nelson's statement. If I do not, I hope that
I will be corrected while you gentlemen are here.
As I understand the attitude of Dr. Nelson and those with him, it
is not their intention to entirely eliminate the operation of mines produeing only-straight gold or straight silver but, rather, to put them
in a deferred position as regards their having a priority order for
mining equipment or mining essentials.
Is that a fair interpretation of your attitude, Dr. Nelson?
Mr. NELSON. I think so, Senator. I might say that there are two
problems involved-tw material problems involved-that I think
have not been definitely separated in the minds of all of us. One
the material produced by the mine when it is essential for our war
effort. The other is the material consumed by the makers of mining
machinery, which is critical material and limited in amount and, therefore, should be used, first, only in a mine producing strategic and crit-
is
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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
naturally we would not want to prohibit its use by gold and silver
mines. I doubt if that will be the case.
Senator DOWNEY. I do not quite understand that last remark.
Mr. NELSON. I doubt that things will be so critical that your gold
and silver mines will not get a limited amount of material, but I
cannot make a positive statement to that effect.
Senator DOWNEY. You are speaking now of those mines that are
exclusively gold and silver mines?
Mr. NELSON. am, yes.
Representative ENGLEBRIGHT. Mr. Chairman-
The CHAIRMAN. Congressman Englebright.
Representative ENGLEBRIGHT. Doctor, with the cooperation of the
gold miners and the silver miners with reference to the pooling of
equipment and material that may be necessary for replacements, under
the present situation do you anticipate that it will be necessary to
deprive the gold mines or silver mines that have over 30 percent gold
or silver of necessary repair parts and equipment so as to continue
their operations?
Mr. NELSON. That can only be answered from month to month
and week to week. At the present time I certainly feel that they
should be able to get a limited number of repair parts and material.
Representative ENGLEBRIGHT. That is, with their cooperation?
Mr. NELSON. With their cooperation. But each individual case
will have to be handled through Washington.
Senator McCARRAN. I should like to make a statement off the
record, Mr. Chairman
The CHAIRMAN. This will be off the record.
(Senator McCarran then made a statement which, by direction of
the chairman, was not recorded. The following then occurred:)
Senator McCARRAN. All right, Mr. Conover.
Mr. CONOVER. Speaking of the position of these straight gold and
silver mines, I wish to record the fact that these mines are generally
in isolated localities and are generally the sole means of support of the
communities in which they are located. A very large number of substantial communities with an important part of the population of our
Western States is dependent upon them. Not only the mine workers
and their families but also the tradesmen and farmers in nearby areas,
the railroads, and the local, county, and State governments and
school systems are largely or completely dependent upon their con-
tinued operation. They mean a great deal to the economy of our
Western States.
In previous depressions, the gold and silver mining areas have been
the "white spots" on the business map. Gold and silver mining communities have been those areas which showed up with the highest
levels of employment, pay rolls, and business activity when most of
will
the rest of the country was in the dumps. We feel that the time
come when they will again occupy that position, and that they will be
of the highest value to our Nation in the readjustment period that we
are bound to go through when this war is over.
We are glad to have the assurance of Dr. Nelson that all possible
efforts will be made to keep these mines going. We feel that we
should certainly make every effort to preserve them as sources of
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employment and the creation of new wealth. I wish to make a very
sincere and earnest plea that the War Production Board continue to
give just as much consideration to the needs of these mines as can
possibly be given consistent with our supreme objective today, namely,
winning this war at the earliest possible date.
do want to point t-and other witnesses can bring it out in more
detail-the fact that the quantities of material required to keep these
mines in operation are extremely small; also, that they are responding
very patriotically, They realize that they must make the best possible use of materials that are available to them. They are patching
up old equipment, they are pooling their stocks of repair parts and
critical materials, and they are providing that there shall be a minimum drain on steel and all the other materials which are critical to
the war.
Senator McCARRAN. In that respect, Mr. Conover, I am wondering
if you would join in the expression that I tried in a homely way to
make the other day in the presence of the gentlemen who have this
matter in hand.
We have here a situation, as you have heard related, where certain
amounts of mining machinery and mining equipment are being
exported from the country. The thought I tried to express the other
day, and which I hope you might dwell on for a moment, was that if
the exportation of mining equipment and mining essentials was placed
in the hands of this War Production Board, having this whole industry
in hand, there would not be transported out of this country mining
equipment and mining machinery to the irreparable loss of our own
home production.
I wondered if you cared to dwell on that, as to your recommendation
that the matter of exportation of mining machinery and mining
equipment be handed over to this Board for administration.
Mr. CONOVER. So far as I can see the situation, Senator that would
be a very constructive step. We have confidence in those in the
War Production Board who are handling this problem. We would
like to see their arm strengthened to handle the problem in the best
possible manner for all interests concerned We think it would make
for coordination and tend to prevent overlapping or conflict in the
method of handling this extremely important supply of mining
machinery and equipment.
Senator MILLIKIN. Mr. Conover, has the Mining Congress made
any studies on the relation of gold and silver to the fiscal systems of
other countries after the war?
Mr. CONOVER. That situation is changing so rapidly, Senator, that
I am afraid we are not in a position to produce any studies at this
session which would be of any real help.
Senator MILLIKIN. Might I ask whether it is your personal judgment that after the war we will have the job, in addition to furnishing
food, clothing, and any other items of reconstruction for foreign
countries, of furnishing gold and silver as the basis for their fiscal
systems in a world that will have to be reorganized along sound economic lines? I am asking really for your personal opinion.
Mr. CONOVER. We feel that hard money is the only sound basis of
a currency and that naturally there will have to be some means worked
out, whereby, for value received, the stocks of precious metals may
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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.
the future.
Senator MILLIKIN. If that be true, it then follows, of course, that
these, let us call them, large supplies of silver and gold that We have
stored in this country will find their way out of the country in the
same way that our surplus food will find its way out of the country.
Then, if that be true, that which may appear as excessive from
monetary viewpoints at the present time will disappear very rapidly.
The gold and silver that we might accumulate during the war period
would serve a very useful function not only for our own domestic
fiscal system but in aid of a stabilized world economy. Would you
say that that follows?
Mr. CONOVER. I think that is a fair statement, Senator. We have
never been impressed with statements that there was too much gold
or too much silver in the world.
Senator MILLIKIN. I took a careful hedge on that to accommodate
varying views on that point; but no matter how you look at it, it
seems to me that the accumulated gold and silver stores, whether or
not we consider them excessive at the present time, will perform &
very essential function in the reconstruction of the world after the
war and that, therefore, it is a sound policy to continue to produce
gold and silver during the war.
Mr. CONOVER. I think I would agree with that, Senator.
We realize that there are a great many industries in our country
that are suffering today and necessarily must suffer from shortages
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
Senator MILLIKIN. Has the congress made any estimate as to the
actual quantity of critical materials that are normally consumed in
gold and silver mines?
Mr. CONOVER. I would refer you for that, Senator Millikin, to some
the witnesses who are present from various mining districts. Those
of
who are here from the California and Cripple Creek areas, for example,
have made very careful estimates of their requirements
They are, as I have said, very small in amount, and the mines are
doing all they can to get along by patching up and welding old equip.
ment, and making things go as far as possible. The consumption is a
very, very smail quantity of steel and other critical materials.
Senator McCARRAN. Mr. Chairman. at this point I desire to offer
for the record a very comprehensive statement put out by the California Chapter of the American Mining Congress, of date May 1, 1942.
To my mind, it goes into many of the things that we would not care
to hold these committee hearings for, but it is so comprehensively and
so logically stated that I think it is worth while to have it go into the
record, and I ask permission to have it inserted in the record
The CHAIRMAN. Without objection it may be included in the record.
(Booklet entitled "California Gold Mining Industry" is as follows:)
CALIFORNIA GOLD MINING INDUSTRY-FACTS JUSTIFYING PRIORITIES
Submitted by California Chapter, American Mining Congress, May 1, 1942
CALIFORNIA CHAPTER
THE AMERICAN MINING CONGRESS
different in this respect from a manufacturing plant. Many of our
gold mines are very deep. They require constant pumping in order
to keep the water out and constant retimbering to keep the workings
open. If they are closed and fill with water and the workings cave
in, it may be impossible ever to reopen them.
In many cases the reserves of ore are not large. They are ample
to justify continued operations, and additional reserves are being
developed as mining goes on. But if they were now to shut down,
the amount of ore actually proved or which could be depended upon,
in many cases, would not be sufficient to justify the very great expense of reopening. Hence, we feel that we should exert every effort
to keep these mines operating at this time and not lose a source of
wealth to this country in the years to come.
Might I emphasize also the desirability of providing prompt delivery of repair parts which may be required in emergency cases,
and without which the mines might be flooded or operations seriously
disrupted. We have discussed this with Dr. Nelson, and hope that
means will be worked out to secure the quickest possible action on
priority applications in such cases.
I know that Dr. Nelson and his associates understand these situations, but I wish to record these views in the hope that what we say
here may lend some strength to their arm and perhaps be of some
help to them in the efforts which we feel confident they are going
to make to try to keep our mines going.
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
San Francisco, Calif., May 1, 1942.
To THE PRIORITIES DIVISION OF THE UNITED STATES WAR PRODUCTION BOARD:
In accordance with resolutions adopted at a meeting held in Sacramento,
Calif. on Friday, March 27. 1942, by over 200 representatives of the gold mining
industry in California, the California Chapter of the American Mining Congress
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
priority allocations of necessary mining supplies, together with such arguments
as exist for consideration of these needs by your Board in the light of the present
national war emergency.
In accordance with this authorization, the following brief of facts and arguments is respectfully submitted- not with the request or anticipation that your
Board accord to the members of this industry any undue priority in the matter
of materials where a great national emergency is involved, but with the idea that
it will assist your Board in determining meritorious cases for the allocation of
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
priority orders indicate that the production of gold is not considered as an essential
industry to the war, nevertheless the maintenance and the preservation of the
gold mining industry in California from utter destruction, by the award of necessary 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
that these minimum priorities can be awarded without any substantial drain
being made on the national stocks of strategic materials
With these points in mind, the brief is respectfully submitted for your consideration and reference in determining your minimum allocations to this industry.
CALIFORNIA CHAPTER OF THE AMERICAN MINING CONGRESS,
WORTHEN BRADLEY President
By ALBERT F. KNORP. Secretary.
By
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APPLICATION OF THE CALIFORNIA GOLD MINING INDUSTRY FOR LIBERALIZATION
OF PRIORITY ALLOCATIONS TO GOLD MINES AND SUMMARY OF THE FACTS
SUPPORTING THE APPLICATION
In behalf of the gold mines and dredger operators of California, the California
of the American Mining Congress respectfully submits its application
for Chapter such modification of revised order P-56, as will permit of the allocation to
these gold mines and dredgers of the minimum quantities of strategic metals
and materials essential to the maintenance of existing operations on the various
properties involved, and in support of this application sets forth the following
facts:
(1) APPLICANT AND ITS AUTHORITY
The applicant is an unincorporated organization of the gold-mining and dredg.
ing operators in California, and represents through its membership all of the gold
dredging operations and practically all of the gold-mining operations in the State.
It was authorized by resolution of these operators to present this application
A copy of this resolution is attached hereto and marked 'Exhibit A.
(2) REASON FOR APPLICATION
Revised order P-56 of the Priorities Division revoked all general priority
numbers heretofore accorded to the gold-mining industry, and it has already
become apparent to the members of this industry that unless some consideration
be given by the Priorities Division to its minimum needs, all of its members will
have to close down operations for lack of essential materials within a relatively
short period of time, with disastrous consequences to be hereafter noted. The
applicant feels that a fair and reasonably accurate presentation of the facts to
the Division may justify an improvement in this situation which will save an
important industry from practical destruction.
(8) HISTORY AND IMPORTANCE OF THE GOLD MINING AND DREDGING INDUSTRY IN
CALIFORNIA
Without any desire to elaborate upon the background of the industry repre
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
earliest development was founded Over the years since 1850 the industry has
added to the national gold stocks over $2,212,800,000 (figures from Minerals Year-
book, U. S. Bureau of Mines). It furnished a financial and industrial basis for
the development of west-coast civilization in the United States, It made vitally
necessary contributions to the Union Treasury during the Civil War. It has
supported the domestic economy of some 19 counties of this State, and constitutes
the major, if not the sole, basis for economic support of these areas. Attached
hereto as exhibit B is a map of California correctly showing in colors (exhibit B
not printed but on file with committee), with the exception of the counties n
district 3, district 5, and district 6, the areas in which gold mining and dredging
constitute the sole or major economic support. As to the excepted counties, gold
mining and dredging is a very important factor in their domestic economy, but
perhaps not the major one.
In support of this statement there is submitted as exhibit C hereto, a compila-
tion based on answers to questionnaires sent out to the mine operators and series
of certificates from the county officials of these various counties, showing the names
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
give an idea of the importance of the business brought by these mines to local
merchants, farmers, and residents. The tax payments show their contribution
to the cost of government-Federal, State, and local. From this data it may
readily be ascertained that a destruction of gold mining would be economically
as effective as a hostile bombing raid in these mountain counties.
There is also submitted a compilation (exhibit D) showing the latest available
figures of gold production in California (1940), subtotaled by counties and dis-
tricts. While the 1941 figures are not yet published, it is our information and
belief that they will not vary substantially from those shown on exhibit D.
(4) NATIONAL IMPORTANCE OF THE INDUSTRY
The production of gold in California during the past few years has approximated
$50,000,000 worth of gold bullion each year. All of this bullion has been added
to the Treasury supply and under existing currency laws furnishes a metal backing
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for about $100,000,000 in currency each year. Attached hereto as exhibit E is a
compilation of statistics (taken from records of the State Industrial Accident
Commission and State Division of Mines) showing the employment of men in
gold mining. During the past depression the gold mines of California furnished
steady employment to over 10,000 men and kept them and their families off
relief rolls. During the present emergency these mines have sent thousands of
trained miners into the defense industries, aiding in the construction of underground storage facilities in Hawaii and elsewhere and in the construction of military 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-
creasingly rapid. But this is all to the national benefit. The mines are con-
stantly accepting a supply of untrained labor and are training and developing this
type of labor into skilled miners whose services will be needed by the Nation in its
war efforts. All of this has been done without in any way impeding the military
draft or naval recruiting program. The industry is obviously not one in which
industrial deferment for military service has been granted or should be granted.
Some of the younger miners trained in the gold mining industry also later trans.
ferred to employment in mines engaged in the development of strategic minerals
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
voluntarily migrate to other mining communities where even greater need for
their services may exist. The gold-mining industry contributes an important
increment to the national tax roll, both in the form of income taxes and excise
taxes.
We understand that representations have already been made to your honorable
Division by representatives of the smelter industry that the operation of a sufficient
number of gold mines to furnish siliceous concentrates as a flux for the smelting
of various strategic metals, is an absolute necessity to the continuance of their
smelting operations. Practically all of the gold mines of California extract and
mill siliceous ores. Their continuance in operation will enable an adequate
quantity of siliceous concentrates to be regularly delivered to the smelters at
Selby, Calif., and Tacoma, Wash.
(5) PROBLEM OF THE OLDER WORKERS
In the older mining districts of California like Alleghany, Grass Valley, and
Jackson, a decidedly human problem is involved in keeping the older -those
of nonmilitary age-employed in their home communities These men have been
miners for so long that they are not suited to other types of employment. They
own their own homes in these little mining communities, and they and their
fathers before them have resided there since pioneer days. They are not the type
of labor which normally migrate to new fields or more highly paid industries.
It would create a decided hardship for these men if they were thrown out of employment and forced to move to other communities. Their homes would be unsalable, and they would suffer a financial loss, heavy for them. Furthermore, their
presence in these communities is of importance as a defense reserve for combatting various fires in the adiacent national forests, and for the maintenance of
local defense organizations. If the mines close down the communities will disintegrate because they have no other source of support, and a large area of California would be left without men of the type that are badly needed for local
defense organizations. It will be seen that these workers are in a different class
from those referred to in paragraph 4 of this brief.
(6) NECESSITY FOR CONTINUANCE OF THE MINING INDUSTRY TO AVOID
DESTRUCTION
It is of course possible that some of the smaller and shallower properties now
being operated in California might be closed down, allowed to fill with water (which
is uniformly the result of closure), and after the war be pumped out and reopened.
This is not the case, however, with the more important units of the industry.
Attached hereto as exhibit F is a table showing the depth of the more important
lode mines in California In each of these deep mines many miles of underground
workings exist. For example, in the Empire-North Star group of interconnected
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 properties permitting the workings to fill with water and to cave in through lack of repair
would result in irreparable damage to the properties, and undoubtedly their total
permanent abandonment An example supporting this conclusion may be noted
73052-42-pt.9-21
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the case of the Utica mine at Angels Camp, which was closed for war reasons
611
from the Priorities Division, its own house must be at all times set in order. It
in the time of the last World War, was permitted to fill with water, and has
must be in a position to convince the local representative of the Priorities Division
about since been operated. although it is believed still to contain valuable and
that waste is being eliminated; that maximum economies in the utilization of
materials on hand is being made, and that only minimum requirements to keep
properties operating and in minimum safe repair condition are being asked for.
In short, the California gold mining industry believes that the maximum utiliza-
never minable ore. The community in which it is located has never recovered from the
blow, in population, in business, or in industry.
In further support of this conclusion, we attach to exhibit F copy of a letter
received from Dean D. H. McLaughlin of the University of California College of
tion of what it has is just as important a factor in its preservation as the allowance
of any priorities for deficiencies which the industry cannot supply.
Mines. On the other hand, the allocation of priorities for a minimum amount of material
necessary to keep these mines in operation would avoid this type of irremediable
disaster. It is economically nonfeasible and in some cases physically impossible
to reopen these old properties which have been worked for more than half a cenwhen once they are allowed to close and fill with water. The same state
ment tury may be made with respect to practically every mine listed in exhibit F, and
they constitute the largest producers of the State, employing the greatest number
(9) CURRENT UTILIZATION OF STRATEGIC MATERIALS
On the basis of questionnaires supplied and answered by individual operators
over the signatures of their responsible officials, and from conservative estimates
made as to the requirements of one or two operators who failed for some reason
or other to answer these questionnaires, we are able to present to the Priorities
Division a composite picture of the current monthly utilization of strategic
of men.
materials in the industry as a whole, in each of the various districts, and by the
(7) NECESSITY FOR CONTINUANCE OF DREDGER OPERATIONS
lode mines as distinguished from the placer and operations. We have
The gold dredgers of California, as shown by exhibit D. have produced almost
half of the gold output of the State, and have given continuous employment to
1,800 men (exhibit E). Even more than the mines, the dredging industry depends upon machinery for its operation, and it is a type of machinery which
deteriorates very rapidly if operations are long suspended. The great floating
also compiled separately the current requirements for these materials in each
of a number of mines which we have characterized as "deep mines.' These
figures attached to this memorandum as exhibit G (on file with the Committee,
but not printed). The totals of these figures do not present a very heavy demand
on the stocks of critical materials of the country. Furthermore, we ask the
Division to remember that these totals will be reduced by all of the savings,
economies, and exchanges which the industry is able to make. They represent
an average monthly utilization. It is the intent of the industry through coopera-
dredgers, the dragline equipment, and the chains of buckets must be maintained
and kept in operation partly because they are situated entirely in the open, subject
to all of the effects of the elements, and if left idle will rapidly rust, silt up, and
become practically unusable; also the placer ground in which they work often has
to be stripped well in advance of actual operations, and unless these operations
are permitted to follow the stripping which has already been done, the effect of
this work would be lost through erosion and the operators would have to do it all
over again. The great hulls into which the dredgers are built also require the
maintenance of ponds to keep them afloat, and if through shut-downs these ponds
dry up and the hulls are exposed to the air, the effect would be much the same as
leaving the hull of a wooden ship exposed to the air for a long period of time
The dredgers do not use as much labor in proportion to the work done as the lode
mines because of this use of machinery, and their continued operation can be
tive efforts in the various districts to so arrange the purchase of needed new materials or equipment that is spread out and averaged, as much as possible, thus
avoiding peaks in demand. Each operating manager is required to ask himself
before placing an order: "Do we really need this, or can we get along with what
we have? Can I repair the equipment which it is suggested we replace? Can
use over again any of the supplies which we have heretofore been consuming?
How will my demand for these items fit in with the total demand from my district this month?"
Only after answering these questions and ascertaining the immediate indiapensability of the items sought to be purchased will an order be placed.
permitted without any noticeable interference with labor supply for defense
(10) OUR REQUEST TO THE DIVISION OF PRIORITIES
purposes.
(8) THE MAXIMUM UTILIZATION OF AVAILABLE SUPPLIES
The gold mining industry of California is in the fullest accord with the program
of the Division of Priorities for the utmost utilization of available supplies
strategic materials and scrap before drawing upon any portion of the national
of
stock of these materials for operating purposes. We desire to outline to the Division the steps which have been taken to carry this program into effect. The State
of California has been divided into six districts, as indicated on the map, exhibit B
(on file with the committee). Districts Nos. 1, 3, and 5 contain practically all
the dredging and placer operations in the State; districts Nos. and 6. the lode
operations. In each of these districts there is an organization through which the
operators can cooperate locally. Each operator has taken a careful inventory of
his supplies and materials and of scrap on hand, and has exchanged the information shown therefor with the other operators in his district.
Due to the great distances between the northern and southern parts of Callfornia it is not practicable for the operators in the State to cooperate as a whole in
the exchange of facilities, but within each of the districts mentioned a serious
attempt is being made to trade, exchange, or make available to any operator who
needs an item of material or equipment which another operator can spare, so as
to provide for the utilization of every item which is not presently in use or not
required for the immediate future. Cooperative efforts are made also toward
repairing broken equipment. An operator who has a machine shop will cooperate
repairing equipment for one who does not. Surplus mill capacity is being made
available for handling the ores of operators who do not have mills, thus avoiding
the necessity of any new construction Scrap piles are being overhauled and after
segregating material which will be needed in the immediate future for working over
into needed parts, the maximum possible disposal of this scrap to the national
defense pile is being made. Both formal and informal meetings of the operators
in each district take place at which ideas can be exchanged, and the principle
carried out that if the gold mining industry expects any serious consideration
in
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610
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
industries which are entitled to exist; to take into account the minimum amounts
of materials necessary for the maintenance of that existence in determining the
allocations as between war industries, military and naval needs, and civilian
requirements; to consider requests for priorities on orders for these strategic
materials as having been made only after the exhaustion of all local sources and
means of avoiding the request for priority; to give these requests prompt and
sympathetic consideration and to make an award consistent with the premise
that, even in wartime, and notwithstanding the general national shortage of
materials, there are some civilian industries that the national interest requires to
be kept alive, and that the gold mines are in that category. We particularly
ask this consideration for requests from those members of the industry who are
operating what may be termed the "deep mines,' which must be kept operating in
order to avoid flooding, caving, and permanent irreparable damage, as well as for
minimum requirements of the dredging industry which will prevent irreparable
loss and deterioration to valuable equipment.
We feel that our request is not a selfish one, that it does take into account the
interests of the nation as a whole and that in the interest of preserving a substan-
tial portion of the national territory from irreparable loss, in the interest of
preserving the local economies of a large section of the State of California from
unnecessary destruction, with consequent injury to both public and private credit,
and in the interests of giving a fair deal and fair consideration to the welfare of the
thousands of citizens engaged in the gold-mining industry in California, our request should be granted.
Respectfully submitted.
CALIFORNIA CHAPTER OF THE AMERICAN MINING CONGRESS,
By WORTHEN BRADLEY, President.
By ALBERT F. KNORP, Secretary.
Dated: May 1, 1942.
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EXHIBIT A
EXHIBIT €
RESOLUTION ADOPTED AT A MEETING OF CALIFORNIA GOLD MINE OPERATORS HELD
LODE MINES
AT SACRAMENTO, CALIF., ON FRIDAY, MARCH 27, 1942
WHEREAS it has been brought to the attention of the responsible operators of
result in the closing down of all gold mines and dredging operations in California;
and
WHEREAS it is the unanimous opinion of the industry representatives gathered
here that such a closing of the gold mines would be an unnecessary and irreparable
injury to the State and Nation for the following, among other reasons:
1. Many of the mines are very deep and must be operated in order to prevent
caving and filling of workings with water, rendering it virtually impossible to ever
work them again.
2. These mines constitute the sole or major domestic economy in 19 out of the
58 counties in this State, supplying the pay rolls, paying the taxes, and buying
materials which enable these communities to exist. Their destruction will cause
untold private economic injury and will be destructive to local public credit.
3. The gold produced from these mines is an important contribution to public
wealth and furnishes the basis for large increments of State and Federal taxes
4. Destruction of these mines by priority deprivation and the resulting loss
and unemployment will be a severe blow to public morale at a time when the
National Government is seeking to foster courage and industry on the part of the
public and will tend to destroy public confidence in gold as an essential element of
our monetary system, and
WHEREAS the operators here present and the communities frota which they
come are more than anxious to support the national war effort in every respect
and at any sacrifice necessary therefor, but believe that the minimum amounts
of strategic materials necessary to keep their mines open and running, without
extension of existing operations, is so small that with the conservation measures
hereinafter resolved upon, the same could be allocated to the industry without
noticeable effect on the country's war needs: Now, therefore, be it
Resolved First. We are unalterably opposed to the destruction of the gold
mines of California due to entire withdrawal of priorities necessary to give them
minimum supplies of strategic materials which are required for present operations
and to any Government policy which would enforce such priority withdrawals;
Second We pledge ourselves to form community units, pooling supplies of
salvagable materials, repairing every possible item of equipment, cooperating
in the use of machines and endeavoring in every way to work with the local
representative of the War Priority Administrator;
Third We request the associations and operators here present to cooperate in
the compilation of facts showing the soundness of the position we have here
Fourth. We recommend that the cost of presenting such a case to the Government be imposed upon the entire gold-mining industry through appropriate action
to that end to be taken by said several associations present after conference
between their respective executives,
(feet)
Nevada
Empire
North Star
of men
Estimated
em-
total pay roll
8,000
10,650
do
Zelbright
Yuba
Nevada
Brown's Valley
Idaho Maryland
New Brunswick
274
25
1,300
65
4,600
500
do
4,500
400
Golden Center
do
2,000
150
Spanish
do
1,000
30
Spring Hill
do
1,200
20
Sierra
3,000
100
do
1,000
do
1,320
do
850
do
1,125
6,400
5,900
Original Sixteen to One
Oriental
Plumbago
Ruby
Sterra Buttes
Argunsut
Kennedy
Amador
do
15
25
20
240
97
Old Eureka
do
3,750
200
Keystone
do
1,600
95
Belma
do
Calaveras
Carson Bill
Rol
Jumbo
Royal
Sheep Ranch ,
Heslep-App-Sweeney
Eagle Shawmut
Pine Tree and Josephine
Alabama-Shumway
Alabama-California
1,600
1,850
18
3,250
150
2,500
do
2,200
do
1,600
1,200
do
1,000
18
500
do
1,350
600
16
850
150
600
40
725
Shasta
Montezuma
(1)
Siskiyou
Oro Grande
350
Kern
Governor
Gold Crown
Standard
40
50
20
10
675
do
Monarch Rand
135
50
800
do
1,100
do
1,250
do
1,100
do
650
165
100
50
do
700
do
900
35
do
1,000
10
San Bernardino
800
1,200
do
Inyo
Margaret
65
54
do
do
Kelly
20
1,100
do
Bagdad-Chase
Old Gold
58
Placer
Virgilia
Golden Queen
Kern Mines
Cactus Mines
30
2,500
do
Standard
Quarts Hill
40
do
Plumas
Iron Mountain
20
do
Dorado
Oro Fino
Rawhide
Cherokee
190
1,000
Mariposa
Mount Gaines
Malvina
20
3,500
do
Tuolumne
Lobleasa
500
do
500
650
do
County
tates paid
1941
546
1,759
do
taken and the justification for definite allocations of priority materials to our
mines and dredges so as to make continuation of existing operations possible and
to insure preservation of these mines: and further through appropriate representatives to be selected by the associations present at this meeting, to present these
facts
the merits of our proposal without delay to proper Federal officials for
actionand
thereon,
Depth
Location, county
ployed
,
the California gold mining industry through the issuance of war priority order
P-100 that the priorities heretofore accorded the industry under order No. P-56
have been revoked and that the purchase of all allocated materials which are
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
WHEREAS the rapidly accruing shortage of these materials indicates that it
shortly will be impossible to acquire any of them under an A-10 priority, and
inability to acquire minimum requirements of such materials and will inevitably
Number
Name of property
12
23
20
16
15
$1,636,859.37
48,000.00
$18,739.73
3,111.00
168,000.00
842.00
1,593,006.00
40,468.13
292,500.00
51,000.00
34,000.00
196,329.66
10,500.00
24,995.50
42,485.00
33,943.65
3,685.86
353.91
785.91
5,324.06
1,048.27
1,400.00
1,500.00
1,152.45
388,000.00
174,871.87
350,000.00
165,415.30
33,509.18
359,564.53
33,493.75
50,250.00
30,485.60
262,498.45
8,038.00
5,650.00
6,782.44
1,893.92
162.87
4,756.84
1,021.65
11,565,306
13.147.80
3,754.60
55,116.20
1,000.00
103,557.00
993.00
33,500.00
118,500.00
85,352.98
246.65
3,571.64
1,020.68
0.512.00
16,500.00
222,750.00
1,380.21
202.02
62,732.24
26,389.50
71,948.51
62,098.65
78,522.00
85,147.00
35,100.00
17,498.65
11,901.00
1,296.00
1652.40
850.00
4,195.97
217.80
391.00
129.95
9,627.00
887.10
366,400.00
94,737.78
199,674.43
73,293.17
18,000.00
51,896.00
14,900.00
24,394.65
29,865.40
27,952.00
2,151.38
1,075.00
280.00
750.00
285.00
$00.00
750.00
$52.00
275.00
26,250.00
PLACERS
Location, county
Name of property
Arata Van Sandt
Arroyo Seco
Arroyo Seco Ranch
Bueria Vista
Butte Operating Co
Butte Unit
Farnham Ranch
Feather River
Ginella Ranch
Kister
Lemon
Peters Ranch
Plombo
Placer Development Co
Amador
do
do
do
Butte
do
Type
Dredge (backet line).
Dragline
Do.
Dredge (bucket line).
Dragline
Dredge (bucket line).
Drazline
do
Do.
do
Do
do
Do.
do
do
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).
Do.
Do
Do
Do
SILVER
614
SILVER
EXHIBIT C-Continued
EXHIBIT C-Continued
PLACERS-Continued
PLACERS-Continged
Location, county
Name of property
Butte
William Richter & Sons
Wevmans Ravine
Wm. Kister
Do.
do
Calaveras
Genochio
R. M
Dredge (bucket line).
Dragline
Stagan
Blockton
Stockton Grecory
Reservoir
Arroyo
Carson Creek
Dunlap Ranch
El Dorado
Frank Kipp
Dragline.
McCormick Ranch
do
Do
Do.
Do.
Yuba.
Do.
do
Do.
do
Do.
Sumpar
do.
do
Yuba Unit
do
Do.
Do
do
Do.
do
Do.
Do.
Dredge (bucket line).
Do
EI Dorado
Do.
do.
Do.
do
Do.
do
Do
do
Do.
EXHIBIT D
1940 California gold production by counties and districts I
do
Operation No. 2
Marlposs
Baker
Do.
County
District
total
total
2,068,815
1,679,135
1,730,155
5,478,105
Do
Chase Ranch
Merced
P. H. Bottoms
Merced Dredge No.
Do
Type mining
Dredge (bucket line).
Merced Unit
Robinson Bros
do
Do
do
Dragline
San Joaquin Dredge No. 1
do
Dredge (bucket line).
do.
Snelling
Nevada
Champion Flat
Coleburn
Do
Dragline
Do.
Scotts Flat Creek
yandotte
El Oro
Gladding Ranch
Guilford Ranch
Type
do
do.
do
Lemroh
Tuolumne
Chinese Camp Unit
Jackses
Kent
Big Ravine
Far West
Princess Pine
do
Wolhall
Location, county
do
Do.
Ban Andreas
Name of property
Type
Dragline
do
615
do
Do.
do
Do.
Placer
Do.
do
Do.
22
Innis
Midland
do
Do.
do
Do.
do
Do.
do
Recalp
Plumas
Innis
Capital
Sacramento
Consumpes
Do
Do.
Dredge (bucket line).
Do.
Drazline.
Fassett-Parker Hanlon
General Dredge No. 1
do
Do.
Hoosier Gulch
do
Do.
Martin Quinn Estate
McQueen & Downing
do
Do.
Natomas
do
do
do
Do
Dredge (bucket-lime).
Dragline
Vincent
California
Luess Putnam
San Josquin
do
McGurk
do
Watkins
do
Champion Gulch
China Gulch
Clear Creek
Cow Creek
Daly Guleh
French Gulch
Happy Valley
Lost Channel
Ploneer
Happy Camp
Humbug Creek
Kangaroo
Klamath River
Larsen & Harms
Do.
do
Do.
do
Do.
do
do
do
do
Do.
Do
do
Do
do
Do
do
Do
do
Do.
do
Do
do
Stanislaus
do
do
do
do
do
Junction City
Weaverville
, Operations suspended at date of this brief.
Do.
Dredge (bucket line).b
Dragline
do
do
Carrville
Hayfork
Do.
Do.
do
Sophy
Dragline
do
Saechi Spellenberg
California
La Grange
Placer Properties
Do.
Shasta
Siskiyou Unit
Yeaks
Dredge (bucket line).
Trinity
do
Shasta
Trinity
District 2:
Plumas
1,302,070
Sierra
958,685
Nevada
10,964,415
1,813,210
Placer.
Butte
2,543,835
3,885,875
Yuba
District
El Dorado
Dredge (bucket line).
Do.
Dragline
Do.
Dredge (bucket line).
Dragline
Dredge (bucket line).
Dragline
Dredge (bucket line).
Dragline.
Do.
Do.
Practically all lode mines.
6,439,710
Practically all dredgers
1,341,585
Amador
Calaveras
10,217,445
Tuolumne
Mariposa
District
Sacramento
San Josquin
Practically all lode mines.
949,690
5,538,295
327,175
1,276,240
Stanislaus
Merced
District 5:
8,960,455
Practically all dredgers.
3,818,220
Practically all lode mines.
1,816,745
Kern
2,887,255
Inyo
415,555
San Bernardino
515,410
Miscellaneous, outside above districts
996,171
State total
50,948,486
I Figures from Bulletin 123, California Division of Mines.
Of this total $26,275,265 comes from the lode mines and $24,673,320 comes from placers and dredgers
EXHIBIT E
Employment in California gold mines
(Includes only persons employed by operators and excludes prospectors, mipers, leasers, and independent
workers)
Number of
Number of
Do.
Dragline
15,038,380
Practically all placers.
District 3:
Do
do
do
Siskiyog
Dredge (bucket line).
do
do
District 1:
men
men
Calendar year:
1930
1931
1932
1933
1934
1935
Figures from State division of mines.
Figures not available- estimated.
employed
Calendar year-Con.
employed
4,411
4,760
1936
12,499
1937
12,871
5,104
7,333
1938
12,147
1939
, 10,000
1940
: 9,200
443
13,710
1941
8,800
SILVER
616
SILVER
EXHIBIT F
Deep gold mines of California
Name of mine
Argonsut 1
Kennedy
Central Eureka
Empire
6,700 feet, all Incline shafts
Jackson
5,900
feet,
1,400
feet vertical
incline. shaft 4,500 feet In depth and
do
4,000 feet, all incline.
8,000 feet, all incline
Grass Valley
North Star
Original Sixteen to One mine
New Brunswick
Idaho-Maryland
Lava Cap
Golden Center
Depth of Incline
Location
Incline.
vertical shaft 4,200 feet in depth balance
3,000 feet, all Incline
Allechany
Grass Valley
4,500 feet, vertical and incline.
Nevada City
1,500 feet.
2,000 feet.
Grass Valley
4,600 feet. all incline.
1 Operations suspended at date of this brief.
-Above data obtained from Carl Johnson, mine Inspector for the Industrial Accident Commission
of California
EXHIBIT G
UNIVERSITY OF CALIFORNIA,
DEPARTMENT OF MINING AND METALLUROY
Berkeley, Calif. April 17, 1942
Mr. A. F. KNORP.
Secretary, California Chapter American Mining Congress,
San Francisco, Calif.
DEAR MR. KNORP: In balancing the gains and losses that might be expected
from restricting the supplies of critical materials required to keep the gold mines
that
of California in operation, the damage and in some cases the complete loss
would result from shut-down should not be overlooked.
Under ordinary conditions, the majority of the mines now active on the Mother
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
the profits to the owners might not be large. A prolonged shut-down, however
would practically end the industry, for only a few of the larger companies could
stand the expense of dewatering flooded workings and reopening caved ground.
The region undoubtedly contains large tonnages of ore that are still to be recovered. 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
would hardly be enough in most cases to justify the heavy expense of reopening
mine once the pumps had been pulled.
On the Mother Lode in particular, where many of the mines are deep and where
the ground is notoriously heavy, it is unlikely that the industry could ever recover
from such a shut-down, and this probable result should surely be kept in mind
when decisions with regard to priorities for the gold mines are made.
Yours very truly,
DONALD H. McLAUGHLIN,
Dean, College of Mining
Senator McCARRAN. Mr. Knorp, if you care to be heard, we will
hear you.
Mr. KNORP. I shall speak briefly, Senator.
STATEMENT OF ALBERT KNORP, SECRETARY, CALIFORNIA CHAP.
TER, AMERICAN MINING CONGRESS, SAN FRANCISCO, CALIF.
Senator McCARRAN. Please state your name, your residence, and
your official position, if any, Mr. Knorp.
Mr. KNORP. My name is Albert Knorp. I am secretary of the
California Chapter of the American Mining Congress. My office is
in San Francisco
I do not want to take up any more of your time than is absolutely
necessary. I can only reiterate to a great degree that which has been
617
said before me, particularly as to the fairness we have found on the
part of Dr. Nelson. There is one thought, however, that I should
like to leave with you, and we are not begging this thought with the
idea of placing gold mining in the strategic-metals class
The figures that I have received on a not too independent survey
in California indicate that there are over 600,000 new arrivals in
California since the last census was taken.
The CHAIRMAN. Do you mean since 1940?
Mr. KNORP. I mean since 1940. My understanding of that figure
is that those people have been attracted there because of the defense
jobs. Our airplane factories, our shipyards, and our other facilities
that are devoted to defense work have been tremendously expanded.
That presents the possibilities of a terrible relief situation when this
defense buying is over.
I mention that because during the last depression the mining camps
in California were what were known as the white spots of America.
Their production was up high. Therefore, they present to this Nation
only perhaps a small percentage, but, Doctor, these percentages mount
to absorb the unemployment that is inevitable. It would be a rather
substantial percentage in California
do not think we should overlook the possibilities that the gold mines
present to this Nation when the boys are knocked from the defense
pay rolls. Of course, We all realize that as soon as the war is over,
they will be shot off them rather abruptly. Unfortunately, Cali-
fornia's climate keeps most of the people in the State, even after a
boom is over. I have been told by some of the chamber of commerce
boys-I do not know how true it is-that of 100 newcomers to California, only about 15 leave the State during a depression. That may
be due to our weather; I do not know.
One other thought, touching on the matter that Senator Millikin
brought out.
I think it should be stressed a little bit more thoroughly. That is,
that while gold does not go into tanks 01 ships or planes today, never-
theless, when this war is over gold and silver. I think, will be the
strategic metals of the world. Certainly it would be futile to win the
war from a military angle only to lose it at the peace table. I believe
that that happened after the last war.
Gold and silver can be used to rehabilitate many of the stricken
nations of the world, and the $50,000,000 that California is annually
producing in gold would go a long way toward helping, let us say,
Greece back onto her feet. I make this statement without asking
that We be classified as manufacturers of tanks. We realize that we
are not a defense industry, strictly speaking, but we believe that we
come very close to being a defense industry if people will only project
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
already been offered by others. Our brief has been filed.
Representative WHITE. Your reasoning is governed by the fact that
history shows that every war has been prosecuted with what they
called a war chest. Napoleon, Bismarck, and all the others who fought
really successfully accumulated vast amounts of treasure, precious
metals, and money metals.
Mr. KNORP. Yes, I believe that even the man in deep, dark Africa
understands gold, though he would not understand paper money.
SILVER
618
SILVER
Representative WHITE. Ve read in the papers this morning that the
French have now voted to send $1,000,000,000 from Martinique to
CURRENT ASSETS AND LIABILITIES-Contiqued
SILVER
Venezuela.
Mr. KNORP. Yes; and I am mindful also of the fact that despite
Hitler's statements that he does not need gold, wherever he occupied
a country the first thing he did was to get the gold out of it.
I might further state that I believe that President Roosevelt's
judgment in accumulating a gold supply was a very far-sighted policy
that none of us appreciated at the time, because I feel that he has
given us now the sinews of peace. The gold that we hold in Fort
Knox is going to be very valuable to us as soon as the war is overnot only that gold but all the gold we can produce.
Representative WHITE. I have heard it said that the gold in the
Western States was what saved the credit of the American Nation
and made possible the winning of the Civil War.
Mr. KNORP. I think that is an established fact.
The CHAIRMAN. I think it might be well, in view of the suggestion
just made, to place in the record at this time the amount of gold
which the United States has.
According to the Daily Statement of the United States Treasury of
date May 2, 1942, we have gold to the value of $22,690,513,844.19
I might state also in this connection that on the same date we had
silver certificates outstanding in the total sum of $1,967,998,210.
Without objection I will ask that the detailed statement put out by
the Treasury on the bulletin just referred to be placed in the record at
this point.
(The Treasury statement referred to is as follows:)
Compiled from latest proved reports from Treasury offices and depositaries,
May 2, 1942
LIABILITIES
Gold certificates:
Outstanding (outside of
Treasury)
$2,875,405,519.00
Gold certificate fund-Board
of Governors, Federal Re-
serve System
17,678,967,613.74
Reserve notes
Gold reserve
156,039,430.90
Redemption fund-Federal
14,870,002.80
NOTE-Reserve against $346,
681,016 United States notes and
notes of 1890 are also secured by
silver dollars In the Treasury
Exchange stabilization fund
1.800.000.000.00
22,525,283,166.5
Gold in general fund:
Balance inerement re-
suiting from
reduction in
the weight of
the gold dol-
$143,425,358.24
Total
Silver in general fund
Total
1,978,643,416.03
Total
$1. 997,998,210.00
1,158,522.00
9,486,684.03
1,978,643,416.03
Mr. ENGLEBRIGHT. Senator; does that give the amount of earmarked
gold we may also have and also the amount of earmarked
silver?
The CHAIRMAN. The statement, appearing in detail in the record.
will show.
Senator MURRAY. Mr. ChairmanThe CHAIRMAN. Senator Murray
Senator MURRAY. Doctor, if you find it necessary to restrict
radically these scarce materials or machinery to the silver mines, that
would affect largely only the small operators, would it not?
Mr. NELSON. I cannot say It might affect a large operator sooner
than it would a small operator.
Senator MURRAY. For instance, in some States, like in my State of
Montana, the larger operators that produce silver and gold are the
big corporations, like the Anaconda Copper Co., which, I suppose,
produces 90 percent of the silver that is produced in the entire State.
Would not the effect of your regulations be to destroy the small
independent
operators and leave the big corporations in complete
control of the field?
If it had not been for this first mining order, which came out on
September 22, and the revisions of that order made at certain stated
21,805,319.
probably shut down long ago. I mean mines of every type. We are
just giving varying degrees of priority to mines, depending upon how
important they are to the war effort. The small gold or silver mine
can operate, we feel, under P-100 and by the use of P-D-1A when
they need a particular repair part or particular item, if they will just
anticipate their needs and not attempt to do business as usual.
Now, many of these small mines have never even requested a serial
Senator MURRAY You have found no difficulty, then?
Mr. NELSON. Of course, occasionally there may be some difficulty
because a small mine may wish something that is so critical it will
not be easy to furnish it to them.
Senator MURRAY Well, so far you have not found it necessary to
cause the shut-down of any small operator?
Mr. NELSON. As I stated in a meeting earlier this week, we have
had no information to show that any mine in the United States has
shut down due to any priority action that has been taken by the
In working bal-
690,
ing
mentioned.
1890 outstanding Treasury
Total
Blvver certificates outstanding
Treasury notes of 1890 outstand
number under P-56 but have been operating under the basis I have
$1,158,522 of Treasury notes of
ance
481,720,920.00
granted to mines, many mines in the United States would have
GOLD
far
LIABILITIES
$1,496,922,496.03
intervals after that, which raised in each case the priority ratings
CURRENT ASSETS AND LIABILITIES
$22,690,513,844.19
Silver (oz 1,157,775,993.03
Silver dollars (oz. 372,581,024.0
the positive and not the negative side. It is not that we are destroying
things; we are helping everyone in the mining industry.
DAILY STATEMENT OF THE UNITED STATES TREASURY
Gold (oz. (48,300,395.5)
ABSETS
Mr. NELSON Senator, I like to look at the mining picture from
OFFICE OF THE SECRETARY OF THE TREASURY
ASSETS
619
165,230,677.62
2,690
513
mining branch
Senator MURRAY. You do not anticipate that conditions will de-
SILVER
620
velop that will make it necessary for you to adopt any radical policy
with reference to supplying materials to those smaller companies?
Mr. NELSON. We will not adopt any radical policy at any time,
but if we do not have enough material to go around, we may be unable 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
of critical materials will be month by month.
Senator MURRAY. At the present time you do not anticipate that
there is going to be such a serious shortage as to make it necessary
for you to adopt any stringent regulations now?
Mr. NELSON. We do not need to adopt those regulations at the
present moment, Senator, but I am sorry that I cannot see into the
future. I wish I could.
Senator MURRAY. If, for instance, as in my State, the great production of these minerals comes from the large corporations, it would
not be a very large amount of material or machinery that would be
necessary to operate the smaller concerns, would it?
Mr. NELSON. That is true, Senator, but, as I have been told by so
many people in the W. and as I likewise have told many people,
if you save 1 percent here or a fraction of 1 percent here and do that
in a hundred different industries, you have saved enough to put over
the war effort; while if you dissipate those fractions of 1 percent of
critical materials in a hundred industries, you may affect our war
effort very adversely.
Senator MILLIKIN. Might I put reverse English on that? If you
SILVER
621
STATEMENT OF ROBERT S. PALMER, SECRETARY, COLORADO
MINING ASSOCIATION, AND SECRETARY, STATE MINERAL
RESOURCES BOARD, DENVER, COLO.
Senator McCARRAN. Please state your name and official position,
Mr. Palmer.
Mr. PALMER. My name is Robert S. Palmer.
The CHAIRMAN. What is your address?
Mr. PALMER. My address is Denver, Colo
The CHAIRMAN. What is your present position and business?
Mr. PALMER. My present position is secretary of the Colorado
Mining Association, and secretary of the State Mineral Resources
Board and also I am attempting to assist Dr. Nelson in Colorado as
State Emergency Coordinator of Mines.
First, I should like to explain, so that it will be a matter of record,
that our position throughout this alleged controversy has been one of
the utmost cooperation. The mining people of our State are very
anxious to cooperate with Dr. Nelson and the War Production Board
and to assist in every possible way in bringing about a complete under-
standing of the problems of our industry, and I wish to assure the
Senate committee that we are just as anxious to win the war and do
everything that we possibly can to win the war as any other group of
people.
Colorado, of course, is a mining State. It is primarily known for
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 dollar value of the gold and silver was $1,382,552,191. But the
been destroyed.
and silver content of our ores we could not have produced $1,843,000,000-plus worth of copper, lead, and zinc.
The CHAIRMAN. At this point it would be interesting for the record
to show the relative production of gold, silver, and other metals with
the ice-box man, and the filling-station man 1 percent at a time,
pretty soon this economy that must keep this war effort going has
Mr. NELSON. Those people working on the over-all war effort, I
think, know the picture more thoroughly than anyone else, and I am
willing to follow their leadership.
Senator MURRAY. I do not think they know it quite as well as those
who are being put out of business and destroyed completely. I think
they have a more vivid understanding of what is happening than some
of these people who are providing regulations.
Mr. NELSON. They may have a vivid understanding of their own
problem; I will admit that-and it is a very serious problem to each
individual.
Senator MILLIKIN. Senator Murray's committee, under his distinguished leadership, has developed many facts which go to show that
there is not entirely the infallibility that Dr. Nelson suggests about
many parts of our war direction.
The CHAIRMAN. Senator Murray. have you finished?
Senator MURRAY. I have finished.
The CHAIRMAN. Mr. Conover, have you finished?
Mr. CONOVER. That is all I have to say.
The CHAIRMAN. We thank you for your statement.
Senator McCARRAN. Mr. Palmer, will you come forward, please?
important point that we wish to bring out is that without the gold
relation to former times. mean by that, Is the production of gold
and silver increasing constantly; is it stationary; or is it decreasing?
In other words, are your mines playing out, with no prospect of new
ones being found?
Mr. PALMER. The mining people of our State are curtailing production of gold and silver at the present time and are increasing pro-
duction of copper, lead, and zinc. In many of the districts there is
no evidence of a playing out of ore bodies; in some, of course, the
reverse is true.
Just before coming to this hearing, we made a study of the priorities
situation. These are figures which we compiled just before I left
Denver.
Senator McCARRAN. Mr. Chairman, right here may I interrupt?
I think that an additional statement in answer to the chairman's
inquiry would not be out of place here.
I think it will be conceded that the mines that produce straight
silver, for instance, are not as prevalent and are not as much in
existence today as they were in times past. Today silver-an 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, zinc, and so forth. The mine that was in the class of the Comstock Lode, for instance, which was practically straight silver, exists
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United States. That is the Sunshine Mine, of Idaho. That comes
nearest to being a second Comstock or Virginia City. As to the
Virginia City mines, whether or not they are played out, which is
always a moot question, suffice it to say that they have been worked
so that conditions now exist which make the mining of silver non-
profitable because of a vast volume of hot water that had to be
handled in the lower levels of the Comstock Lode.
I think that the production of silver-dealing, now, with silver
alone- is much less today, coming as straight silver, than it was in
times past. That is a partial answer to your question.
Then, again, I cannot permit the statement of my good friend, Mr.
Palmer, to go by without comparisons, which are also very interesting,
in keeping with the chairman's question, and that is the amount of
precious metal produced by the State of Colorado,
Let it be noted that while Colorado was producing a billion and a
half dollars in precious and nonprecious metals, the State of Nevada
took out of just one small hole in the ground a billion dollars, and at
a very important time in the history of this country.
Representative ENGLEBRIGHT. I may add, Senator, if you will
permit, that the State of California, prior to the time you took that
out of the hole, produced another billion dollars.
Senator MURRAY Mr. Chairman, while We are on this subject,
I want to say that we have produced two billion dollars out of the
Butte Hill, which is the richest camp on earth.
Mr. NELSON. Mr. Chairman, might I also inject a remark? Before
the California gold rush, the gold center of the United States was in
Virginia and North Carolina, and Thomas Jefferson described one of
the first gold nuggest ever found in the United States.
The CHAIRMAN. All of which leads me to wonder what would have
happened to a number of these States had it not been for gold and
received favorable action on their applications. It is interesting to
note that none of the coal mines have had their serial numbers
rescinded.
A comparative study of metal production with the metal needs of
the industry was presented to Dr. Nelson at the Denver hearing. It
was shown that 70,134,000 pounds of lead, zinc, and copper were
produced in Colorado in conjunction with gold and silver, and that all
these mines required only 350 tons of manganese steel, 250 tons of
carbon-treated steel, 1,400 tons of mild steel, and 500 tons of alloy
steel, or a total of 2,500 tons.
Senator McCARRAN. As against what production?
Mr. PALMER. Seventy million-plus pounds. Mr. Dickerman, statistician for the State mineral resources board, has made a study of the
needs of the industry. The results give a clear picture of 79 percent
the production of the State. I desire to offer this statement for
of
the perusal of the committee. It shows how small our needs are, but
how important our production is to the welfare of Colorado.
The CHAIRMAN. Do you wish to have it placed in the record?
Mr. PALMER. Yes.
The CHAIRMAN. Without objection it is so ordered.
(Paper entitled "Priorities Information" is as follows:)
Priorities information
Drill steel
Estimated
Net con-
salvage
sumption
tons
607.19
Steel plates
230.29
do
Ball mill liners
791.75
368.85
307.15
do
106.25
376.90
484.00
262.60
Balls
do
1,044.88
3.60
Rails
1,041.28
do
609.45
Chrome moly
64.95
do
121.13
29.47
544.50
91.66
Mr. PALMER. Mr. Chairman, I think it is quite evident that when
there was a rumor that our mining industry, which is the basic industry of our western section, was being threatened by an ill advised
order, published without proper consideration of the mining industry,
it was only natural that not only those directly interested in mining,
but people generally, were very much disturbed, and still are. The
reassurance of Dr. Nelson in rescinding the 30 percent clause will
have a far reaching effect on future mining activities in our State.
Our study shows two classifications under the priorities system in
is and N-Inch wire rope
Babbitt
Brass
Bronze welding rod
Solder
Mercury, 3,845.4 (flasks)
Sodium carbonate
Acetviene
Oxyren
Hot-rolled bars
Pire (carbon)
Wire reds (alloy)
Air hose
15i-inch 4-ply rubber hose
Cyanide
Xanthate (copper sulfate)
Hydrochloric seid
Sulfurio acid
Nitric acid
135 received them: 107 were either turned down or, at least, have not
Roda bicarbonate
8.25
17.75
9,500
4,000
12.500
7,169
753
6,416
3,893
697
50
3,196
6,776
do
114-inch wire rope
Colorado, namely metal mines and coal mines. There were 242
different concerns requesting preference rating numbers. Of these,
serial numbers. Eighty-three were given ratings, and 73 have not
consump
tion
silver.
Including all of the varied types of mines, there are only 95 operating
with serial numbers in Colorado.
Astudy of the coal mines show that 156 separate operators requested
Estimated
Material
Abrasive res. (screen plates)
been given numbers, for reasons unknown to the applicants. Ther
were 66 companies notified that their serial numbers had been withdrawn as of March 2. Of these, 28 have been reinstated, and 38
companies have not been reinstated. Of the total number under
this classification, 67 have not been withdrawn. These consist largely
of tungsten, molybdenum, and vanadium mines and the nonmetallics.
623
feet
do
pounds
do
7,000
do
6,826
do
2,101
do
49.3
49.3
do
58,630
58,630
706,517
cuble feet
do
2,101
706,517
2,485,930
2,485,930
tons
141.87
27
do
203.20
25.20
do
16.85
pounds
do
de
do
do
do
28,139
4,456
114.45
178
16.60
23,424
4,710
4,316
140
397,118
222,382
397,115
222,342
292,313
292,313
4.235.225
4,235,225
do
16,407
do
13,850
16,407
13,850
do
770,155
770,155
Borax
0
in only one instance today, of which I have any knowledge, within the
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0
622
Mr. PALMER. Some mention has been made by the Senator from
Montana of the small mines. Our situation in Colorado is largely a
question of small operators and small mines. The individual production of strategic metals from each individual mine perhaps is small
and may not be given proper recognition by some of the war agencies,
but the sum total of the production of all of these little mines is a
very vital part of our production of metals.
We have in Colorado the leasing system as well as the other systems.
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If a man decides to develop a particular property, having been
assured by the Price Administration that he is to be given a premium
on lead, zinc, and copper, on a marginal operation, he usually takes
the property on a lease. Under the terms and conditions of the lease,
he is required to work a certain number of shifts per month. Now,
many of these operators find themselves in this predicament. If they
don't work the shifts they lose their holdings. How can they work
without tools. This is true in the strictly gold-mining areas as well
as in the complex ore areas of the State. They have everything that
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
but also such property as has been affixed to the mines.
These people have their homes in these mining communities.
Many of the men who have called at my office tell me that their sons
are in the armed forces. In some instances they are actually working
in the mines although their age is such that they should not be engaged
in active mining operations; but they are taking the places of their
sons in order to keep the mines working. They are buying their
percentage of War Bonds, they are helping to carry the tax load of our
State, and they have no desire to go on relief
These men tell me that they cannot work in high-speed industries.
They would be of no value whatever to the war effort, for example,
in an arms plant. They know their districts, because they have
gained their livelihood in those districts. They know the formations of those districts, and they know how to mine those districts.
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
study of our situation would indicate that that is not possible. These
men have asked me in all sincerity to offer the plea here to the Senate
committee and to the members of the War Production Board to help
them stay in the districts in which they gain their livelihood and allow 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.
As to cooperation in the use of steel and other equipment, I wish
to call your attention to the original P-56 order. Section G, which
provides for restrictions on inventory, as follows:
No operator shall accept deliveries (whether or not rated pursuant to this
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
the minimum necessary for the efficient operation of his business, and the ratio
of inventory to current production shall in no event exceed the ratio of average
inventory to average production for the years 1938, 1939, and 1940.
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 utmost to cooperate; and after all, it is our feeling that the operator of
a mine, when he gives you his cooperation, can save more than any
arbitrary ruling which may or may not be made here in Washington.
If you have the whole-hearted cooperation of the superintendent of
the mine, the foremen, and the workmen. you are going to save all
the equipment possible. They are not going to use any more supplies
in the operation of the mine than is absolutely necessary.
I have made mention of the small operators. These men are not
wealthy men; they are generally poor men. They are mining marginal
ore. They are not able to maintain large inventories. Many of the
larger operators tell me that they can comply with the inventory
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625
program of the War Production Board; but the small operators, who
go to the local merchants to buy particular pieces of equipment which
may be necessary to keep their operation going, are not able to maintain an inventory even over a 3-month period.
As far as allocating materials to a particular camp is concerned, I
want to point out that one company in our State, in the Cripple Creek
area, has done a marvelous job in helping these smaller operators by
keeping a small stock available for their use prior to the priorities
system.
So, we want this clearly understood; that the mining industry wants
to do everything that it possibly can to cooperate with you men in the
War Production Board and to assist you. We are indeed grateful to
Dr. Nelson and the others who have seen fit to modify this order,
which has done so much harm to our section of the country.
I will gladly answer any questions.
The CHAIRMAN. Are there any questions from any member of the
committee or others interested? If not, we certainly thank you, Mr.
Plamer, for your statement
Senator McCARRAN. Thank you, Mr. Palmer.
Mr. PALMER. May I introduce, Senator, the statement which was
made at the Denver hearing, as showing some additional facts?
The CHAIRMAN. That is, as a part of your statement?
Mr. PALMER. As a part of my statement.
The CHAIRMAN. Without objection, it may be received.
(The statement referred to is as follows:)
COLORADO A GOLD AND SILVER STATE
Colorado is well known as a gold and silver State. In total value gold was the
leading metal produced in Colorado from 1858 to the present, but in annual value
it was surpassed by silver from 1874 to 1896.
MINING IS ONE OF COLORADO'S MOST IMPORTANT BASIC INDUSTRIES
Mining is one of Colorado's most important basic industries. Mineral-
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
counties. Numerous taxes are paid by those operating these mining concerns,
including real property taxes, production taxes, corporation taxes, income taxes,
sales and service taxes, social security taxes, workmen's compensation costs, etc.
As an illustration of our situation in Colorado, one county has not a single acre of
agricultural land in the county Farm products are bought locally, and the
closing of the mines not only affects the miners themselves and their numerous
dependents but all of those who supply the mines with materials used in them as
well as the supplies necessary for the men who run the mines. The far-reaching
effect on the counties, the State, and the Nation can only be referred to here.
ORES COMPLEX
The large majority of Colorado mines produce gold, silver, copper, lead, and
zinc from complex ores in which all or a part of the five metals mentioned are
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
gold and silver production was $1,382,552,191. Subtracting the second figure
from the first, we have $448,752,744 as the total figure for the production of
copper, lead, and zine in Colorado. These figures show us that 75.2 percent
value of gold and silver and 24.8 percent in value of copper, lead, and zinc were
produced. These figures are introduced here only to show us that if we take into
account the total production of our State from 1859 to the present we can readily
see that none of the production could have possibly taken place had the present
priority classification existed.
pt.
in
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626
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627
1940 FIGURES
Taking the 1940 production figures in value for all gold, silver, copper, lead,
zine
producers in Colorado we find the following: Total gold and silver production and
in 1940 was $19,762,153. In the same year the total copper, lead, and zine
duction was $4,531,512, the total of the two being $24,293,665. The percent provalue of gold and silver was 81.4 percent and the percent value of copper, lead, and
zinc was 18.6 percent. Thus we see that the production during 1940 is faris
The third governmental agency to announce publicly the policy of the United
States Government was the Secretary of the Interior, Harold L. Ickes, who
stated over a national broadcast: "The Interior Department is for a greater use
of mineral resources of the Nation than has yet been made." The policy then as
announced by our Government is quite clear that the mining men of Colorado
and of the West are called upon to increase the production of copper, lead, and
sinc.
excess of the 30 percent set out in the order. We know from experience in Colorado duction that is when up, taking the gold into and consideration silver production all economic is up, factors. copper, lead, and zine
PROCEDURE
Two points should be made clear before we proceed any further with the presentation of the facts and reasons why we believe you are justified in extending
the provisions of Preference Rating Order P-56, amended March 2, 1942, to the
metal mines of Colorado.
First. The mining people of Colorado are as patriotic as any group of citizens
in the United States. As evidence of this fact miners from Colorado were among
the first listed in the notices of casualties in the Far East. We have oversub
scribed our allotments for Defense bonds: we have curtailed the use of materials
vital to the national defense and made substitutions where practicable; have
replenished steel plants with our scrap metal and have kept inventories at bare
minimum for continued operation; we are endeavoring now to increase the production of the metals which are vital to our national security, and have pledged
our cooperation in every other way consistent with sound policy at our recent
convention in Denver on January 24.
Second We are not criticizing Dr. Wilbur Nelson, Administrator of the Mining
Branch, Materials Division of the War Production Board, for we feel that he is
capable, efficient, conscientious, and courteous. We fully appreciate the prob
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
which Dr. Nelson and his assistants are working, and of the confusion which of
necessity must exist with the assumption of such a tremendous task as handling
the requirements of the mining industry. With a new staff the difficulties are
doubly apparent. We only wish that Dr. Nelson had more authority and more
facilities, as well as a larger staff with which to work. We feel that with the clarification of the facts here presented, and the portrayal of the exact conditions which
exist in the mining industry in Colorado, based on past relations with Dr. Nelson
and others in this governmental agency, the proper corrections will be made; and
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
those metals for victory which the mining industry of Colorado can produce.
RELEASE OF EMERGENCY MANAGEMENT ON PREMIUM PRICES
On February 1, 1942, the Office for Emergency Management released informstion explaining that on that date premium prices of 17 cents for copper, 11 cents
for zinc, and 91/4 cents for lead would be paid to producers of these metals in excess
of 1941 production for a period of 21/2 years, ending July 31; 1944, with the provision that should the emergency end before July 31, 1944, the Metals Reserve
Company reserves the right to terminate this arrangement on equitable terms to be
announced at a later date. While it is true that as far as we are informed none of
our producers have yet received this premium for metals produced in this State,
we desire to call your attention to the first paragraph of this release which we take
to be the announced policy of William L. Batt, Director of Materials Division
of the War Production Board, and Leon Henderson, Administrator of the Office
of Price Administration:
"The expansion of the armament program following the entry of the United
States into the war has made it imperative that unusual steps be taken to increase
further the output of copper, lead, and zinc because of their prime importance III
the production of armaments.
In the first paragraph of Preference Rating Order P-56, as amended to March
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
enterprises in the public interest and to promote the national defense, preference
rating orders are hereby assigned to deliveries of such material upon the terms
hereinafter set forth.'
WAR PRODUCTION BOARD RULINGS
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:
'(a) (2) (i) Any plant actually engaged in the extraction by surface, open-pit,
or underground methods, or in the beneficiation, concentration, or preparation
for shipment of the products of mining activity, but not including that form of
mining known as gold placer mining.
Under Preference Rating Order P-56, as amended on March 2. 1942, we find
in addition to the former definition of a mine the following exclusion: Any plant
more than 30 percent of the production of which in dollar value consists of gold
and/or silver.
We feel that discussion here on preference ratings should be restricted primarily
to the reasons why this peculiar yardstick was used in granting serial numbers
or rights to obtain materials with which to mine. Preference Rating Order P-100
was issued on December 18, 1941, and is a blanket order under which the mining
industry can qualify but in numerous instances has been unable to get materials
and supplies for repair and maintenance
While we realize that discussion of PD-1-a forms will creep into this hearing,
we point out that this order was made optional last February 2 and was required
after March 1. We were, therefore, operating until the recent order largely under
Preference Rating Order P-56 as amended December 2, 1941, and were trying
our best to produce the metals which our Government has announced it needs to
win this war.
We are at a loss to understand why in the order of March 2, 1942, we were
excluded simply because the values of our ore in dollar value is in excess of 30
percent and that we are restricted from using this particular order unless we go
through the procedure which you have described at this hearing. You have
sent to all of those companies who formerly had serial numbers a questionnaire
in which you have asked them to state the dollar values of the different metals
in their ore. One might well ask "What difference does this make as long as the
metals needed by our Government are being produced? What value should we
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
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?
We We call feel your fully attention justified in to objecting the fact to that discrimination the actual amounts against Colorado's received in mines, final
settlements for copper, lead, and zino in Colorado are, in many instances, much
lower than in some of the other States. Are we to pay additional penalties by being
deprived of priorities simply because we are at the present time penalized more
than they are in some sections to which we will refer?
What logical basis is there for this 30 percent figure? We have shown that it
certainly was not the result of an analysis of the ore values produced in the State
in any year from 1859 to the present; or using the total figures of the entire period
this was not the case.
Since the order has been released you tell us that while we are excluded from
the order you intend to take care of us one by one after we have made application
to Washington, and you have referred our individual cases to the proper metal
divisions.
For example, copper to the copper division, lead to the lead division,
and so forth
We submit in all fairness that it is much easier to examine the production of the
metais in our State and of the different mines in the State and to tell us whether
you want the total amount of lead, zinc, and copper we are now producing and
whether you are sincere in your announced policy and are in line with the other
departments of Government which seem to think that we need these metals for
our war effort.
When you examine our smelter schedules submitted here for your convenience
we believe that any fair-minded person would see the inconsistency of the dollar
value basis in a district such as ours. We again hear your answer: "We have
nothing to fear.' We realize that you are a square-shooter and that you mean
628
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SILVER
just what you say, but as pointed out by Senator McCarran in Nevada, you
not glued to your job and there is always the possibility that we might have are
deal with someone other than yourself. We know from past experience in dealing
with offices located at any istance-whether they be in Washington or elsewherethat it is far better to have a ruling made specifically so that all will be treated
provisions the mines of Colorado and not exclude those mines which produce
more than 30 percent of their dollar value in gold and silver.
We have called your attention to our smelter situation-one lead smelter
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
were cut off, you know the smelter would close down. Since the order has been
issued you have told us that you have no intention of shutting down these mines
or the smelter; that you intend to take care of us by some other method; that we
might use an A-10 rating under P-100; that we might have our rights reestablished after our applications have been referred to Washington on an individual
basis and individual action taken after recommendations have been made by the
different metals sections of the War Production Board.
in
on the same basis regardless of personalities.
We might well ask, Do you want the 70,134,000 pounds of lead, zine, and
the additional production we can make in Colorado if you but put copper your
orders in writing 80 that the industry will know exactly where it standa? Mining
operations cannot be conducted with fairness to all on such a proposition you
submit to us. We were given assurances by other departments of the Federal
Government, but we are sorry to say that experience has taught us that these
assurances have never materialized.
and
TIME IB SHORT-RED TAPE SHOULD BE ELIMINATED
MATERIAL IS SHORT
It requires effort both at the mine and in Washington to handle these orders.
Someone pointed out that the orders themselves are printed with type made
from lead. We can do away with a great many of these orders and simplify them
and enable many of the men employed in Washington to help in some of the
- understand that there is a shortage of many of the materials used by the
mining industry in producing the metals necessary for war, but in examining the
figures in Colorado of steel. for example, we do not think that our demands are
great enough to justify you in closing down entire communities and in disrupting
our way of life and the economic well-being of the people who will stay at home
and fight the battles here on the home front while their sons are fighting in the
front lines. Our figures show only 350 tons of manganese steel were used in 1941
only 250 tons of the carbon drill steels, only 1,400 tons of mild steel, and 500 tons
of alloy steels, or a total of 2,500 tons. Surely the production of the lead, zine,
and copper justifies the use of this small amount of steel in Colorado. Had you
used the requirements of the industry in the form of steel as a basis on which
priorities might be granted, there might be some logic to your position
We even go further. We state that in many districts in Colorado the scrap
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 ex-
essential industries, and by the same token enable the miners to spend more time
in the mine getting out the metals we so desperately need.
Boats carrying ore to this country are being sunk. We must produce these
metals and we submit in all fairness that individual applications, based on the
theory that all items purchased from one company be included on an individual
application but separate applications must be made where purchases are made
from different suppliers, complications too numerous to mention will creep in. We
want the industry classified as an industry and not on an individual and possibly
a personal basis.
Ore bodies in Colorado may be smaller and may change from time to time in
metal values, but we are able to get by and produce the metals you ask us to
produce because of the gold and silver values Gold and silver have made many
our other industries possible. Many of these mining organizations are today
financing additional development work in districts which have heretofore, and
possibly will in the future be known for the strategic metal values.
We are all in this war together; we want to win; we want all of the mines to
work: we want all of the people in all of the mining districts to do their part.
We will pay back in taxes a large part of the values of the gold and silver. We
will build up and strengthen our economic welfare. We will do the things for
cessive for we returned part of this steel to the steel plants to be used for processing
in making new equipment.
of
PD-1-A FORMS
We think that PD-1-A forms might be used by some companies where they
have efficient bookkeeping methods, clerical help, etc., and where the operations
are large enough to justify the keeping of stocks of supplies. We call your
attention to the fact that under the old order P-56 we agreed to keep our stocks
which we are fighting this war and you can count on the Colorado miners to deliver.
at a minimum and that we would not use priority ratings except where they
were needed, and then you will recall each plant agreed to file each month on
form PD-119 a list of those items which it has purchased during the prior month
on which it had used preference ratings. You have a constant check on these
companies, and not only that but you have the full cooperation of the mining
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
yardstick. If you want to make a survey of the amount of material used under
these higher preference ratings, we will be most happy to make this survey and
show you how small the demands of the industry are in comparison with its
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 CODsidered with results, and the morale of our people, as well as the livelihood
those of us who must stay put during this emergency, need your consideration
Our little mines keep very small inventories: in fact it can be proven that
large companies use more material per ton of ore produced than little miners.
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
survive, It is 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
of these little mines is our one hope of increased metal production in this country
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 consideration for the small mines. It is silly to say that we are misrepresenting
your order. Your order means exactly what it says. The order should
The people of this State are aroused, and justly so; they are indignant to think
that such an order as yours would be thrust upon us at this time. We count on
our public officials to get the job done-not penalize the mining industry by
making such ridiculous orders as P-56 as amended March 2, 1942.
Senator McCARRAN Mr. MacBoyle, will you please come to the
table?
STATEMENT OF ERROL MacBOYLE, MINING ENGINEER AND
CHAIRMAN, STATE MINING BOARD OF CALIFORNIA
of
be
changed to include the situation which we have in Colorado.
The mining men of the State of Colorado, after careful consideration, a greatat
deal of deliberation, concerted discussion, and numerous conferences with
torneys, engineers, technicians, operators, prospectors, and miners recommend its
to you that you amend your Order P-56, dated March 2, 1942, and include in
629
Senator McCARRAN. Mr. MacBoyle, will you kindly state your
name, address, and position or occupation for the record?
Mr. MACBOYLE. My name is Errol MacBoyle. I am a mining
engineer and am chairman of the State Mining Board of California.
I am representing Governor Olson, who has asked me to represent him
here.
I do not have any notes or any data; that will be covered very comprehensively in Mr. Knorp's report, which I think you have, that was
compiled by the California Chapter of the American Mining Congress.
All of us operators-I am a gold-mining operator syself-supplied
that data, which I think will give any information which the War
Production Board or the committee may need.
The CHAIRMAN. For the record, would you please state whether or
630
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not the order as it existed 10 days ago was having a harmful effect
on the industry in your State?
Mr. MACBOYLE. I would say that the order, when it came out of &
clear sky, caused great consternation, to say the least. The Governor
of California was very much disturbed over that, because it meant
the way the order read, practically the closing of all our gold mines
on the mother lode, some of which had operated without stopping
since 1850.
As to the mine which I represent, the Idaho-Maryland, which is
probably the second largest gold mine in the United States, it would
have meant ultimately the closing down of the property, and that
means destruction of the communities. For instance, in Nevada
County there are about 20,000 people, of whom probably 18,000 are
dependent upon the gold mines.
At that time we did not know whether the taking over of the mines
the Philippines by the Japs was any worse than what the War
Production Board was going to do with the gold mines of California
But Dr. Nelson in his administration is, I think, trying to do the best
he can under very adverse circumstances.
The CHAIRMAN. That gives the influence that the order had when
it was first promulgated. For the record, if you will, state whether or
not the execution or the administration of that order has been harmful
in
to your mines.
Mr. MACBOYLE. Well, in a few cases it has. Of course, Dr. Nelson
mentioned here the other day the Argonaut mine and said that the
mine was really closed because it was making a small losa. But that
mine, if I may disagree a little, has a large fund behind it. Probably
the loss of $30,000 or so would not have made any difference under
normal conditions; but under the conditions of uncertainty and the
lack of labor that now exists it does make a difference. For instance,
our mine which a year ago was operating with 1,000 men has,
according to the last report, probably 600 left. I want to make
mention. too, of the rather unfortunate publicity that goes out on
some of these things, which, I have been assured by Dr. Nelson,
being taken care of. However, the last order about the powder
came out in the headlines of the Wall Street Journal as "Gold Mines
Denied Powder.' Well, immediately there was great consternation
in California, because you cannot dig holes without dynamite.
Representative ENGLEBRIGHT. If I may interrupt, on that powder
order, I might say out of deference to Dr. Nelson, I got in touch
with Dr. Nelson the day he arrived in Washington from a trip out of
town and spoke to him with reference to that particular situation, and
he assured me that it was an error in publication, and I told him at
is
that time that I intended to communicate with all the northern
California papers in order to correct the situation. It was very
unfortunate. Would you tell us just what effect it had with reference
to labor right in our home community, because we both live in the
same community?
Mr. MACBOYLE. I can say that within 2 days we had lost 75
men. It would have been all right if those men had gone into war
production, but unfortunately that was not the case. Quite a number
went down to that camp at Marysville and immediately became
carpenters.
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631
Mr. NELSON. That publicity was just a misinterpretation of a
priority order. It was misinterpreted by the press.
Mr. MACBOYLE. I appreciate that, Dr. Nelson. The unfortunate
part of it is that some of the press will jump at conclusions.
But I think that Congressman Englebright will back me up when
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,
would close down and let the mines fill.
But as to the amount of this material and whether a lot of these
orders are really necessary, we think it can be cleared up and shown
to the War Production Board and shown to the people of California
and the other mining States. I think it is going to take quite a
burden off the shoulders of Dr. Nelson and the War Production Board.
I do not want to tell them how to run their business, but that is just
the opinion of an observer. We feel that the gold mines can be kept
in operation with the use of very little material. The larger mines
have supplies on hand that will last for some time.
But the thing that was uppermost in our minds was the fact that
the gold mines would be closed down without any chance afforded to
try to keep alive. We feel that if the gold mines can be kept alive
through this period of stress, ultimately the gold mines are going to
help save the United States after this is over, because we all feel-w
may be prejudiced--that gold and also silver will be badly needed
after the expenditure of these, shall I say, astronomical figures is over
with. Dr. Nelson in his administration has, I feel, given every consideration he could. For instance, I asked him at Reno whether if a
pump broke down we would have to close our mine. Since then,
under his administration, we feel that we can go ahead, operate, and
keep our mines out of water.
The mine I represent has about a hundred miles of working-as Mr.
Conover said, heavy ground, and the rest of it. If that mine should
fill up, it would probably cost us a million dollars to reopen it, if it
ever was reopened, because these deep mines are difficult to reopen.
The Idaho-Maryland was filled up and was reopened a few years ago
at a cost of a million dollars. That is mentioned just to give you a
picture of what it means,
The CHAIRMAN. What is your reaction to the statement made by
Dr. Nelson this morning as to the clause about the 30 percent? What
effect will that have upon your industry?
Mr. MACBOYLE. I think that that will all be from the psychological
end. The men have felt that they have got to move out of the gold
mine areas because of the uncertainty of what the future will be.
They all feel from the publicity that has been put out that the War
Production Board was ultimately going to close down the gold mines.
They were looking for some place to mine.
I know what has been these men could be put to better
work in the strategic minerals. But we feel that if these gold mines
can be kept in operation-I am speaking now for our own mine-our
directors have said, "Go ahead into strategic minerals, even at a
loss, in order to produce," and that is what Governor Olson has
wanted, too.
We have out there a fund to stimulate the production of strategic
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
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632
SILVER
633
Mr. MURPHY. But they didn't know it. They said, "We cannot
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
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.
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
out by this hearing, that every mining camp and every mine, in effect,
is an individual problem.
Mr. MACBOYLE. I think it is.
The CHAIRMAN. It has to be considered by the Board, on the one
hand, or the mine or the community on the other. Then you will
come to some agreement, and that agreement will be presumed to be
in the best interest of our war effort.
Mr. MACBOYLE. I agree entirely with that. As I say, Dr. Nelson
has been very fair in all his rulings. I think that if it is left in hands
like that as to the future, the gold mines can get by until better times.
The CHAIRMAN. We thank you for your statement, unless there are
some questions.
Mr. NELSON. Might I just state that I do not doubt at all any of
the statements made by Mr. MacBoyle, but I would like to call
attention to the fact that at the time this amendment was made on
March 2 there were only 9 of the 50 mines of the Mother Lode that
were operating under this order.
Mr. MACBOYLE. Yes; I appreciate that. Of course, nobody wants
to get under regulations until it is absolutely necessary.
Senator McCARRAN. Mr. Matt Murphy is the next speaker.
STATEMENT OF MATT MURPHY, INSPECTOR OF MINES, STATE
OF NEVADA, CARSON CITY, NEV.
Senator McCARRAN. Will you please state your name, your official
position, and your residence for the record?
Mr. MURPHY My name is Matt Murphy. I am State Mine In-
spector for the State of Nevada, and I am located at Carson City,
Nev. I am also Emergency Coordinator of Mines of the State of
Nevada.
Senator McCARRAN. Any statement you care to make we will be
glad to have, Mr. Murphy.
Mr. MURPHY. Well, I was very well pleased when I heard Dr.
Nelson say this morning that the 30 percent of gold and silver was
cut out, and I am sure it will have a very good effect in our State as
well as in all the other Western States.
Now, there is one thing I would like to ask Dr. Nelson to do.
The CHAIRMAN. Will you speak a little louder, please?
Mr. MURPHY. There is one thing I would like to ask Dr. Nelson
to do, and I think it would help out a lot in our State as well as the
others.
A lot of the miners back there, when that order came out about
the powder, that they had to have a serial number under P-56, A-8,
to get powder at all, came into my office and said they tried to get
powder from the dealers and couldn't get it; they had to have serial from
numbers. They had been telling them that under instructions
Dr. Nelson they could not get any powder without a serial number.
Mr. NELSON. They can.
it. So, they were kind of confused about the matter. I was just
have it published in all the papers of the State, and it would be
helpful.
Mr. NELSON. I will give you that letter before you leave.
Mr. MURPHY. I heard Dr. Nelson make the statement that he did
not know of any mines that had been shut down on account of priorities. I sent out a lot of questionnaires to the mines, and quite a
few of them have been returned. We have had mines in Nevada
that shut down, as the statements will bear out, because they cannot
go on. They have stated, also, in some cases, that they can run only
from 60 to 90 days, and not later than the 1st of August, on account
of a lack of supplies. The reason they are working now is that they
had supplies on hand that will carry them over until that time.
Senator McCARRAN. Are the mines you are now mentioning mines
that are producing strategic or war-essential metals?
Mr. MURPHY. No; the ones producing strategic or war-essential
metals have got serial numbers. It is gold and silver mines I am
speaking of.
Senator McCARRAN. Are they straight gold or silver mines?
Mr. MURPHY. Some are gold and silver, and some are straight
silver. For instance, the Nevlock, near Silver Peak, is purely silver;
nothing else. They are working 150 men there, and his questionnaire, returned, said that about the 1st of August he would have to
shut down.
Senator McCARRAN. Is that Mr. Chord?
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. Mr. Chord's is what?
Mr. MURPHY. Mary Mines.
Senator McCARRAN. That has closed down?
Mr. MURPHY. That has closed down.
Senator McCARRAN. Was that straight silver?
Mr. MURPHY. Gold and silver.
Senator McCARRAN. And no war essential metal?
Mr. MURPHY. None whatever. The camp at Silver Peak was
depending on that particular mine, and there is nobody at all there
now.
Senator McCARRAN. I wonder what the record is, if the doctor has
that? What is the record, if you have it with you, as to whether or
not the Mary Mine of Mr. Chord made application?
Mr. NELSON. They stated that they were voluntarily closing down
to go into the mining of strategic materials.
Senator McCARRAN. That is what his written statement says?
Mr. NELSON. That is what his written statement says.
Senator McCARRAN. So, he did not make application for a serial
number?
Mr. NELSON. No, he said he was going to try to go into the mining
of strategic minerals and was shutting his mine down.
Mr. MURPHY. His questionnaire reads differently. He shut down
on account of not being able to get supplies.
634
SILVER
Senator McCARRAN. Yes.
Mr. MURPHY. Now, the conditions that existed in our State before
the seriel numbers were taken away were that several of the gold
mines in our State had engineers out looking over properties containing
strategic materials and were financing their inspections and development work with money derived from their gold mines, having no money
available from other sources. If they cannot operate their gold mines,
Iment
am informed,
they will have to stop their exploration and developwork.
Because of the uncertainty of getting material with which to work,
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
any reserves to fall back on. Consequently they will be forced to
close, as the overhead expenses would be as great for a small crew of
men as for a full force mining ore and also doing development work.
We have many miners working the gold and silver mines who are
now past 50 and 60 years of age and have never done any other work
but mining. Put them in a mine, and they are just as good men at
this work as they were 20 years ago, but take them out of a mine and
they would be lost.
At the present time the majority of the miners employed in the gold
mines are past the draft age, most of the younger men having been
called in the draft. know of a number of instances where these elderly
miners have sons that have been called to duty with the armed forces.
Most miners have families, own their own homes, are regular investors
in war bonds, and are in general good, substantial citizens. If they
are compelled to leave their homes because of the mines shutting down,
and have to go out and look for some other kind of work, it will work
a great hardship on them and their familis. These men are past the
age where they can secure employment in defense work, and even if
they could, I am doubtful if they could hold down such jobs, because
of the difficulty of learning a new trade after a lifetime spent in mining.
Not only would there be a great deal of personal hardships if the
gold mines should shut down, but it would have serious effects economically. The standard of living of this large group of people would
be greatly reduced, and hence their ability to buy bonds and stamps.
Because of their lack of skill in a new type of work, they could not
command as high wages as they had earned mining. Also, many
communities in Western States are almost wholly dependent upon a
nearby mine or mines for their livelihood. They would be seriously
affected and their very existence threatened if those mines were closed
down.
Nearly all of our gold mines are fully equipped with machinery,
but in case of a break-down they should have a higher rating than the
A-10 rating provided by Order P-100. Form PD-1A, which they
can use to apply for a higher rating, would have to be filled in, sent to
Washington, and approved by the War Production Board before
needed equipment could be purchased to mend the break-down. In
my opinion the amount of material the gold mines use in their operations would not work any great hardship on the need for such material
for national defense. While in Nevada and all the Western States
the first thought of all our people is to win the war and win it as
quickly as possible, still I believe there should be a change made in
SILVER
635
the present priority rating for gold and silver mines so that they can
continue to work and not be forced to shut down.
That exists today in our State, and there is a lot of dissatisfaction,
especially since this powder order came out. We all appreciate what
Dr. Nelson has done since the meeting in Reno. I have heard a lot
of people speak highly cf Dr. Nelson and they believe that his heart
and soul is with the mining people; at the same time they do not
think that they should be cut out of powder; that they have to do
development work even in looking for strategic materials.
Mr. NELSON. They were never cut out of powder. That was
just a misstatement made in the press.
Mr. MURPHY. The miners in our country do not know anything
different from what Will Rogers said: They know only what they
read in the papers.
Mr. NELSON. I do not believe that anyone supplying powder to a
miner can stop supplying him on the basis of a newspaper story, do
you?
Mr. MURPHY. He might not be able to stop supplying him, but
when a miner goes up and looks for powder and is told, You can't
have it," it is like the story of the man who was in jail and was told
by his friend, "They can't put you there." But the man said, "I
here." It is the same story exactly.
Mr. NELSON. I do not think we can be blamed for that.
Mr. MURPHY. If we can clarify that situation, I think it would
help a lot; and if you, Dr. Nelson, will give me that letter, as you say,
I will see to it that the miners in the State of Nevada all get it.
Mr. NELSON. We have already put out a number of releases on that
subject to clarify the whole thing, and We understood it went to all
the Western papers.
Mr. MURPHY. Well, there are a lot of prospectors and men doing
small operating who do not get those papers except once a month or
once every 2 months. They are a long distance from the railroad,
they have no automobile tires, and they have to walk, and the walking
in parts of Nevada is pretty rough. That is the reason. But I can
write to each one, after I get it from you.
Mr. NELSON. All right. I will furnish you with that.
Representative ENGLEBRIGHT. Just taking into consideration the
more or less consternation that resulted from the unfortunate press
release, I wonder if it would be possible for Dr. Nelson to send to the
Representatives in Congress who come from these localities where
critical conditions exist and where gold and silver mines are located,
copies of the press releases. In other words, we do not get that news
until we read it in the newspapers. Then, as in this case, the damage
has been done. If we can pick it up at the same time the press does,
perhaps we may be able to eliminate the difficulties. I wonder if
that would be possible.
Mr. NELSON. Congressman Englebright, I will be delighted to send
any press release or any information we have in our office at any time
to any list that will be furnished me.
The CHAIRMAN. Again, that is an individual proposition, and those
Members of the Congress who desire to secure the releases should, I
suggest, take the matter up with the Department and make that
request, and no doubt it will be granted.
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636
SILVER
STATEMENT OF CHARLES L. BRADBURY, PRESIDENT.
NEW
MEXICO MINERS AND PROSPECTORS ASSOCIATION, ALBU.
QUERQUE, N. MEX.
Senator McCARRAN. Mr. Bradbury, will you state your full name'
your residence, and your position, if any?
Mr. BRADBURY. My name is Charles L. Bradbury. I come from
Albuquerque, N. Mex. I am president of the New Mexico Miners
and Prospectors Association. am a mining engineer operating lead,
zinc, and copper mines in New Mexico.
When we had this friendly rivalry among the Western States about
production a while back, I believe Montana got first prize with
$2,000,000,000. I think it might be of interest to note that the Butte
mines were originally silver mines, with hardly a trace of copper, and
that only by working those silver mines did they eventually come into
the copper mines, which became the richest hill in the world.
Mr. NELSON. Gold and silver.
Mr. BRADBURY Also, I think it is a known fact that a great many
prospectors who are panning streams for gold have found a lot of
alluvial tin deposits in various places in the world.
About this silver, which has been so kindly settled for the time
being, our principal silver mine in New Mexico is the Mogollan.
That is one of the few mines in our State that we have worked con-
tinually for almost 60 years. In the Apache country in the early
years it was a very dangerous place to be, and the man who dis-
covered the district was killed by the Apaches on the place.
It was only due to the fact that the Mogollan was working that the
very big copper deposits of Morenci, in Arizona, 30 miles away, were
discovered and opened up. The fact that the Mogollan was the
spearhead of civilization permitted that to be done. That mine is
one of the mines that has gold and silver and is under a cloud on
account of this matter which we are discussing.
I happened to work in this mine as mine shift boss some years ago,
so
I have some personal recollection of the situation there. They
have about a 100-ton operation, and I would assume that the principal
item of consumption of iron and steel is in grinding lia-grinding
balls and crushing surfaces-and the consumption is probably about
100 tons a year. That is a very small amount of steel or iron, and I
am sure that there must be thousands of tons of scrap on the property
at Mogollan.
I have in mind for the mines the idea that has been adopted for
swapping an empty toothpaste tube in order to get a full one. Why
cannot the mines do that, working on the same basis? The only thing
scarce is the metal-the iron and steel. What stops that is that this
particular scrap around this mine is 75 miles away from a railroad, and
the price at which scrap iron is now pegged makes it impossible to
bring that scrap steel 75 miles by truck and railroad and then many
more miles to the nearest smelter, at Pueblo, Colo. So what is actually steel.
causing that shortage is, apparently, the price peg on scrap iron
and
I think that that is true also of a great many other mining properties
in the remote places of the West. I think there are enormous quantities of scrap iron and steel on the properties, but they are so remote
637
from markets that it is just impossible to bring this stuff out and get
it to a smelter.
It has been mentioned here several times that every mine is an
individual problem, which is certainly true-almost as human beings
are individuals. Of course, we are just going into this war now and
must look forward to a long period of cooperation and help from the
War Production Board and the miners in doing everything in their
power to help insure the maximum production of all the metals. That
goes without saying.
I am sure that the War Production Board was organized very
suddenly and very recently, but it is of the utmost importance, to
my mind, that the management and administration problems through
which they control the entire metal-mining industry be capably
handled. Of course, it is essentially true that the personnel of the
Board should be composed of the most capable, most experienced
producers of metals available in the country. Of course, also, it is
hard to say who is and who is not. But I think it might be of great
assistance to the mining men if a record of, say, the top 25 men in the
Materials Division of the War Production Board, their experience
record, and so forth, were made available, so that we may understand
each other and talk the same language. Mining men are, you might
say, micronisms in their own little world and know one another very
well.
In the most recent edition of the Mining Journal, for instance, there
appears a full-page diagram showing the personnel. It has on one
page here 25 names of top men in the Materials Division. have been
mining for more than 20 years, and I was rather surprised-I think
perhaps I am getting out of circulation, becoming an old fogey-than
did not recognize a single name on the paper.
So I undertook to inform myself and look them up in a volume
entitled "Who's Who in Engineering,' a very large, catholic document
that has thousands of engineers listed, and I was able to find only 4
of those 25 listed.
Now, this is the directory of the American Institute of Mining and
Metallurgical Engineers. It has the names of 12,000 men who are
mining engineers or are engaged in allied branches. I could find the
names of only 5 of the 25 in that. Of the 5, 4 were college professors
and 1 was a geologist. There is nothing in this record to show that
any of these gentlemen have operated a mine.
The CHAIRMAN. What do you want the committee to conclude as a
result of your statement?
Mr. BRADBURY. Why, I have no suggestion whatever to make in
that respect. I might add that, unfortunately, Dr. Nelson is not in
either one of these.
Mr. EATON. Just as in a mine all the work is done underground, so
in the War Production Board the work is done below the level of the
top 25 who get their pictures in the paper.
Mr. BRADBURY. This is just overhead, then.
Mr. NELSON. In qualifying myself to speak on the first day of the
hearings, I stated what my mining experience was.
The CHAIRMAN. I am afraid that that is a matter this committee
cannot do very much about.
Senator McCARRAN. We might have you listed in Who's Who.
Mr. NELSON. I have been in Who's Who for over 20 years, and I
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638
belonged to the Association of Mining and Metallurgical Engineers
until I resigned several years ago.
Representative ENGLEBRIGHT. I might say that when I first met
Dr. Nelson, 15 or 16 years ago, he was, I believe, operating mines. I
knew him as a mining operator.
The CHAIRMAN. I do not believe it would be profitable to go very
far back into the records of all of you.
Gentlemen, Mr. Knowlson is with us, and he desires to make a
statement.
STATEMENT OF J. S. KNOWLSON, CHIEF, DIVISION OF INDUSTRIAL
OPERATIONS, WAR PRODUCTION BOARD
Mr. KNOWLSON. My name is J. S. Knowlson. I am Chief of the
Division of Industrial Operations, War Production Board.
I simply want to take this opportunity of expressing my appreciation for being asked to come here and for having the opportunity of
listening to and learning something about the problems of the industry.
I am in the Materials Division of the Board, and I have the misfortune to be a manufacturer rather than a mining man. Therefore, it
is particularly advantageous to me to have this chance to be here with
you.
I want to say that from the operating point of this picture, because
the general supervision of priorities comes in under the supervision
of my division, we have always felt that the mining interests received
very sympathetic and intelligent treatment under Dr. Nelson. We
think that he appreciated the problems and fought the battles of that
group or industry as well as any other was taken care of in the Board.
One statement announced by Dr. Nelson created the impression
that perhaps members of the staff of the War Production Board felt
that they were superminds. For myself and the other members, I am
sure I can speak to say that we are far from feeling that we are super-
intelligences. I think that we, more than any other group, are
conscious of how we do stumble and of how much too large for any of
us these jobs are that we are trying to do. Time hangs over us all
like a vulture, and we are trying to rush to do this work. We are
conscious that we make many, many mistakes. The only thing I can
say is that we are willing to correct them as soon as possible. I think
you have evidence of that today in this removal of the 30 percent
limitation.
I am very much interested in the comments about the scrap situa-
tion. I think perhaps we can do something about that. I will take
it up at once with the proper authorities.
Once again I want to thank you and tell you how much I appreciate
the opportunity of being here.
Senator MILLIKIN. May I ask a question of Mr. Knowlson, Mr.
Chairman?
The CHAIRMAN. Certainly, Senator Millikin.
Senator MILLIKIN I am delighted to ask you, Mr. Knowlson,
because you are a manufacturer.
I think that two points have been developed here very clearly.
One is that the mining industry more than carries its weight in the
boat, so far as production of critical materials is concerned.
Then, we are confronted with the problem of the manufacturer of
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639
mining machinery. Dr. Nelson developed yesterday or the day before that many of these mining-machinery plants, because of the fine
quality of their equipment and the expertness of their workmen, have
been converted, in whole or in part, to making munitions. I think
it was also developed that there are probably 83,000 items of munitions
and that perhaps it is a subject of speculation whether some of those
are more important than mining machinery.
Would it be a practical thing, for the benefit of the committee, to
have a survey made of the 183 plants that formerly made mining
machinery and that have, in whole or in part, been converted into
the making of munitions, to find out exactly what those plants are
making and what percentage of their pay roll, or any other standards
you want to take for judgment, is used in making mining machinery
and what percentage is used in making munitions, and also the type
of munitions, so that this committee can judge whether there is the
bottleneck which in part might be removed?
My point is that I suspect that out of the 183 manufacturers some
are probably making munitions, let us call them munitions, if you
please, that are not PS important as mining machinery, but they are
making those munitions because there is more profit in them than
there is in making mining machinery. If that is not developed as a
fact, then we shall have witnessed a revolution in human nature.
Would it be a practical, feasible thing to make such a survey?
Mr. KNOWLSON. I would think it might be perfectly feasible to
make at least a sample survey of that. It may be that we have at
this time available enough information on a survey we made in the
last quarter to give a certain picture of that situation. With your
permission, I will have that checked up and give whatever information
we have to Dr. Nelson at once.
Senator MILLIKIN. Mr. Chairman, I would most respectfully ask
that the committee receive such a report and consider it, because I
think it goes to the heart of one-half of our problem here.
Mr. KNOWLSON. We will only be able to tell you, I think, from the
rated pattern of their orders, which I have an idea we can do, how
important their munitions work is.
Senator MILLIKIN. But it would be possible, if the committee
wanted more details, to get them?
Mr. KNOWLSON. Oh, yes.
Representative MURDOCK. Mr. Chairman, I have here a statement
from one small mine operator in Arizona. I am wondering if it
might be submitted for the record. This is just one statement from
a small mine operator in my State. I thought it might be substituted
here for the record.
The CHAIRMAN. Is it in the nature of a letter?
Representative MURDOCK. Yes, Senator. It is from the owner of
a small gold mine who has attempted to get help from outside the
State.
The letter indicates that the effect of the order of March 2 has been
to stop such development, and quotes three replies made by business
firms showing that effect. Their statements were that due to the
order of March 2 they would not be interested for some time to come.
I felt that this would give some indication of the detrimental influence
upon the mining industry, as it worked out in this case. This is one
of several communications I have received from Arizona complaining
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of the harmful effects of the uncertainty occasioned by some of these
necessary wartime regulations.
The CHAIRMAN. Without objection the letter or the statement
be placed in the record.
(The letter referred to is as follows:)
641
somewhat. I do not know to what extent; perhaps Dr. Nelson does.
Mr. NELSON. The procedure is that you first apply to your county
board, and if you cannot get relief from your county board, you
apply to your State board, which has an 8-percent State quota, as I
understand it. If your State board does not give you relief, you
MESA, ARIZ., May 4. 1948.
apply to the national board, that has a 2-percent national quota for
SENATE COMMITTEE ON MINES AND MINING,
Washington,
such purposes.
If
you do not get relief from any of those agencies, I do not know
what your next step would be.
Mr. MURPHY. Mr. Chairman, that was rectified to quite an extent
some time back. We could not get tires, but there was an order that
came out from the rationing boards that the mine inspectors can get
tires, and they went. Three or four months ago we were not able to
get them in Nevada.
One of the mine inspectors applied for a new tire. He wanted to
DEAR SIRS: While you are studying proposed legislation to give exemption
from assessment work to owners of mining claims, please permit me to present
picture
of the predicament of the small gold-silver claim holder by citing my
own case.
get a spare tire. So, the board ruled that he would have to turn in
a tire before he could get one. If he turned in one, that left only
three, so he told them, 'If you give me one back, I will still have the
&
After 8 years of hard work and putting all the money I could raise into my
group of six claims, I now have them developed to the point where I have shipping ore and should, in normal times, interest capital to work them. I have
advertised to no avail and have written to everyone I know of who mines for
gold, and here are samples of the answers which am receiving:
From the Ohio Mines Corporation, Goldpoint, Nev.:
'With the increased restrictions on gold-silver mines imposed by the War
Production Board we think it best to forego any examinations of new properties.
If, at some future date, things should once more return to normal, we will be
only too glad to contact you concerning the property.
From the Bald Mountain Mining Co., Trojan, S. Dak.
"It is becoming increasingly more difficult to obtain supplies for a gold and
silver operation and it is practically impossible to secure equipment to open
new property, to place an old one in operation, or to expand production.
"Under normal conditions we would be interested in a property having the
apparent value of yours, but until the war is over it does not seem practical for
us to even consider making an examination.
From Burton Bros., Inc. Rosamond, Calif.
From your description of the property it should be attractive in normal
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 a new
property.
Such letters as these, coupled with the fact that the largest gold operators in
the country are shutting down for the duration of the war. are conclusive proof to
us owners of gold-silver claims that we have been forced out of business for the
duration. Of course, you know that gold-silver claims have been excluded from
the priority rating for equipment and supplies with which to mine.
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
duration of the war. In the past, exemption was granted yearly about this time
of year after everyone had either made sacrifices to get his work done, or WM
beside himself with worry because he was unable to do it. I hope that you will
not give us the same treatment in this crisis.
Sincerely yours,
ETHEL S. CAPPS.
Representative MURDOCK. Senator, may I ask a question that I am
not sure has a bearing on this? What about tires for the work of mine
inspectors, and that sort of thing? Has that been gone into?
The CHAIRMAN. That has not been touched, as I remember.
Representative MURDOCK. It occurs to me that it is a vital matter
to furnish tires for mine inspectors in their work of safety, lifesaving,
and that sort of thing.
The CHAIRMAN. That gets back to the observation I made here
this morning: That each of these communities and each of the mines
presents an individual proposition. That is an individual proposition
to each inspector, and if these inspectors do not have the right to
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,
no doubt they will be afforded tires by the proper authorities.
Representative MURDOCK. Perhaps the situation has been alleviated
same number as before."
The CHAIRMAN. I think that everybody has already observed that
the conversion of a peacetime nation of 130,000,000 people into a war
unit has occasioned not only delay but embarrassment. However,
my own observation is that we are making rapid progress and that
these problems are being worked out as rapidly as we could reasonably
expect, and I think we are doing a fine job.
Senator McCARRAN. The next speaker will be Mr. Dave Strickler.
STATEMENT OF DAVE P. STRICKLER, PRESIDENT. CRIPPLE
CREEK DEVELOPMENT CO., COLORADO SPRINGS, COLO.
Senator McCARRAN. Please state your full name, residence, and
the position you hold.
Mr. STRICKLER. My name is Dave P. Strickler. I live at Colorado
Springs, Colo. I am president of the Cripple Creek Development
Co., which operates in the Cripple Creek district.
I am attorney for the Midland Terminal Railroad, which hauls all
the ore from the Cripple Creek district to the Golden Cycle mill.
am also attorney for the Golden Cycle Corporation, which produces
about five and a half million a year, and 90 percent of this comes
I
640
from the Cripple Creek district. I have been familiar with the
Cripple Creek district for about 35 years.
I want to say, first, that I am greatly pleased with the statement
made by Dr. Nelson this morning. I think it is going to clear up, I
am satisfied, a great many people who were very much disturbed
before that announcement. Perhaps they did not understand it,
nevertheless, that will clear it up.
Another thing, Doctor, that want to say to you is that your administration of this order, worded particularly as it is, is certainly conclusive evidence to my mind of a most profound and sympathetic
interest
in the mining industry. I do not think anybody can deny
that,
I like Senator McCarran's suggestion, too, that the matter of shipping mining machinery to foreign countries be turned over to this
board. I think that is where it should be.
73052-42-pt.8-14
642
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Mr. Bradbury brought up a matter here that hasnot been mentioned
by anyone else. It has surprised me that it was not mentioned before.
That is the price of scrap metal. There is no question that there
lot of scrap metal, that is produced in the operation of gold and silver
mines, and other mines, too, as far as that is concerned, in very remote
sections of the country, where the present selling price is insufficient
to pay the cost of gathering and transporting that to the mill or the
smelter, where it could be used. It seems to me that it would be
is
advantage to the Government to have that scrap metal price increased. an
It may not be fair to increase it flatly, but there ought to be some provision somewhere that will enable people who are mining in remote
sections to gather together that scrap metal and get it where it can be
used in the war effort.
Another thing: That camp has been in existence since 1891. It
has been there so long that the people who live there are people who
are devoted to the gold-mining industry. They own their homes.
I took a survey not long ago, and I found that the average age of the
miners of the district was about 48 years. To talk about transporting
those people and putting them into some other industry is just out
I think I know gold miners perfectly well. I think it can be fairly
are fighting-rather, disagreeing-about everything in the world,
except that both sides agreed that we needed that gold to lick the
miner. They are a good deal like firemen and policemen. By the
very nature of their work they have disqualified themselves from
becoming efficient in any other occupation. You cannot transport
them. So, it is serious.
I know of only one other place in the country where it is any more
serious than in my county, and that is at Homestake. Homestake
has the same situation. There is nothing at the Homestake except
that mine. There is nothing up there in Cripple Creek except our
gold mines.
Now, Mr. Palmer mentioned a thing I should like to touch upon.
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
interest in the Cripple Creek district that, as he put it, did a fine job
in helping out everybody. That is the Carlton interests. I am
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
Midland Railroad, and they own the Golden Cycle Corporation.
Mr. NELSON. No; we needed the gold not to lick the other fellow
but perhaps to buy some things that we would have had to get by
other means if we had not had the gold.
Mr. STRICKLER. Well, they had a big fight about it: I know that.
I think that gold and silver are necessary to the war effort. I think
that hard money is an absolute necessity to any economy. I remember
I
Gentlemen, if we have to close down our gold mines in the Cripple
Creek district, I do not know what is to become of our community.
In the first place, mines in Colorado that have a production of more
than $5,000 annually are taxed upon production. In some States
they call it a severance tax. We call it a production tax. Fifty-seven
percent of the entire revenue of Teller County, Colo., which embraces
the Cripple Creek district, arises from the production tax, and 95
percent of the total revenue of Teller County comes either directly or
indirectly from gold mining.
It is impossible for us to function.
stated as a general proposition that once a gold miner, always a gold
The other day, in response to a question by Senator McCarran, in
which Senator McCarran intimated that he thought gold in the West
helped to enable the North to win the war, Dr. Nelson said he did
not think so. Well, Dr. Nelson, that is contrary to the history of my
State. General Sibley came up from Texas with one object in mind,
and that was to get the gold at Central City, and he was then going
on to California for the same purpose, because the South considered
that it needed that gold in the war effort.
We fellows up North thought they were right about it. Now we
so much of it.
Now, how can we support our county form of Government and how
can we support our school districts if we are deprived of that tax?
of the cards.
Our production is limited solely to gold. We have just a little bit
of silver. We do not like it to be thought that we are not engaged in
an industry that is useful in the war effort.
when I was a boy we had the greenback or fiat currency craze.
remember hearing Colonel Ingersoll make a speech in which he said
he had a silver certificate and a gold certificate in his hand. He made
an argument against greenback or fiat money.
He said, "The reason I am in favor of gold and silver certificates is
that when I look upon them, I know that their redeemer liveth.
I am an old-time Democrat, and Bob was a Republican, but I think
that was perhaps one time when Bob was right.
The CHAIRMAN. As far as that is concerned, that was the only
redeemer that Mr. Ingersoll recognized, was it not? [Laughter.]
Mr. STRICKLER. That is right. That is probably why he thought
643
You can see readily how it is to their interest.
We are fortunately situated to have an interest whose interest is
to keep that railroad going and to keep that mill going. The Carlton
interests cannot keep the railroad going and cannot keep the mill
going on their own production. So, they are interested in assisting
all the little fellows and, further, the operators, the lessors, the splitcheck lessors, and everybody else, and they always have been, even
before this war came on.
We are continuing to do that now. We are trying to substitute as
much as we can. For instance, instead of using our hose, we are
using pipe and are doing everything we know how in order to rescue
every bit of scrap we can. We are using it and are sending to the
smelter everything that we cannot use.
I mentioned awhile ago about that thirteen dollars and a half not
being sufficient. It is sufficient so far as we personally are concerned,
but there is a peculiar condition existing that makes it sufficient.
There are some coal mines down at Canyon City, and those fellows
haul coal up to Cripple Creek. They do not have anything to carry
back, so we are unable to get a cheap haul. So, the $13.50 is sufficient.
But I am talking about the fellows- there are a great number of
them-for whom it is not sufficient, and it is certainly to the interest
of the Government to get that into the mill or the smelter.
Now, there is another thing that I want to bring up here. I do not
know whether it would be unpopular in my State or not, but I do not
like it. You take anybody in the position we are in up in Cripple
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645
Creek and tell him that he has to close down because of our
Governor Carr, would you care to make a statement at this time?
Governor CARR. Yes, Mr. Chairman.
amount of steel needed. I do not think, Doctor, that we need for small the
entire district-that we can get along on-any more than about
tons of steel a year. That will see us through For us to be told that
150
STATEMENT OF THE HONORABLE RALPH L. CARR, GOVERNOR
OF THE STATE OF COLORADO
we cannot have that steel, in order to save it for the Government in
war effort, that is necessary, and at the same time know
Government is driving a 15-mile tunnel through the Rocky Mountains
right now as a Government project, for only one purpose, namely,
to transport water from one side of the mountain range to the other
side of the mountain range, and to be doing it during these wartimes,
we just do not understand it, because we do not think we can lick the
Japs by throwing water at them. I think it is about time for the
Government itself to be governed by some of its own restrictions.
Another reason why I think so is that after antewar is over we have
got to have some jobs for these soldiers to come back to some honorable jobs, some jobs that have some proper compensation for them.
We cannot give them any reward by having them rake leaves, as was
done in the last depression. We have to think about our reconstruction period.
I think gold and silver are necessary to this war effort. I think
they are going to be useful after this war is over.
Just as Mr. Knorp, of California, said, I know that after the war
between the States President Lincoln said that our war debt would be
paid by the gold from California and Colorado. I know also from
newspaper accounts that every time Hitler goes into a country, he
grabs all the gold that country has and takes it up to Berlin. He
Colorado, which has to do with agriculture and power, and the
must think that it is necessary.
As I understand it, during the last World War Australia put a $10
premium on gold to assist in their war effort. I understand that
Great Britain right now is doing the best it can to aid South Africa
in the production of gold. It seems to me that both our Allies and our
enemies are agreed upon that one proposition, just as we in the West
and you southerners agreed on the same proposition during the Civil
War. I think that the nation that has the largest amount of gold and
silver at hand when this war is over is going to have the loudest voice
at the conference table. I think that the nation that has the largest
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
by the war.
I am not quarreling with Dr. Nelson's administration of this act.
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
simply because of his sympathy with the mining industry.
Doctor, you mentioned once or twice or asked the question, "Has
anybody been deprived of any priority order? Has anybody closed
down?' I think when I called on you you asked me, or you did not
is
deny it. At any rate, I answered, "No." and I answer "No" now.
I think the consideration that has been given is remarkable, assuming
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
is, that you do not think that gold and hard money are necessary to
the war economy.
The CHAIRMAN. We thank you for your statement, Mr. Strickler.
Governor CARR. My name is Ralph L. Carr. I live at Antonito,
Colo. I am a lawyer.
I am interposing here for the purpose of trying to placate some
evident difficulties which may be arising between my own brothers.
Mr. Strickler just suggested that it was unfair to continue the construction of the tunnel through the Continental Divide, taking water
out of the Colorado River over into northeastern Colorado, and
suggested that we cannot lick the Japs with water. I am sorry that
he has put that interpretation on the activities in connection with the
driving of that tunnel and that he would suggest that we can take
care of our mining industries at the expense of the power and agricultural industries in Colorado.
The tunnel in question is being driven for two definite purposes,
one to make it possible to furnish a supply of irrigation water, which
is needed in northeastern Colorado, and the other to answer definitely
the power problem in that portion of Colorado which is east of the
Continental Divide and is perhaps the most essential project which
Colorado may be able to offer in the solution of the war problem.
There is no direct conflict possible between that activity in northern
mining industry in Cripple Creek. For the record, I may suggest
that I not only love the farms of northeastern Colorado, but I was
reared in the Cripple Creek district and spent all of my younger life
there. I am here because of my interest in the mining situation.
I want to confirm before I close the statements which have been
made by Mr. Palmer and also by Mr. Murphy of Nevada as to the
conditions which are existing with respect to the order which has this
morning been modified. A great deal of our mining activity has a
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.
Dr. Nelson has suggested that, as far as they know, no mines have
shut down as a result of the order regarding the 30 percent gold and
silver. While the mines may not have shut down, the Honorable
J. Price Briscoe, State Senator from Colorado and chairman of the
Committee on Mines of the Council of Defense, was in to tell me last
week and to supplement what I already knew of the conditions that
are existing in the mining camps of Colorado. The people are depressed as they have not been in many, many years and are looking
for places to go to with no hope that they may be able to find places
where they can work profitably. The situation is as difficult, I might
say, Doctor, as the one we experienced in the early years of the
depression in Colorado as the result of the uncertainty from this
order that has this morning been modified.
I want to say that I am as happy as Mr. Strickler or anyone else
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
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
646
SILVER
months ago, and the 60 days just past have caused a great deal
hardship,
suffering,
and not
lossmodified
in Colorado
States because
this was
then.and the rest of the mining of
I am not satisfied with the fact that you have modified your state.
ment by taking out the 30 percent order. I think that there will be
some more definite understanding of the status of the mining industry
in connection with the activities of your organization, so that
will grubstake these lessees, whom Mr. Palmer talked about, who
will be willing to put the capital into the operation of the mines, may
know that they have some definite basis upon which to function beyond
the idea that their request for the right to operate by securing priority
numbers is dependent upon some judgment that may be reached by
some human being.
If it was necessary in the first place to issue an order which restricted
them, I say that there is some way in which we can say that a production 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
money will have something definite on which to make competition in
determining whether or not they will back miners and lessees. It
seems to me there should be some substitute for the order which has
been withdrawn, something which will say to the mining industry,
definitely, "If you produce a certain percentage of zinc, lead, copper,
or what have you, or if you produce in proportion to some fixed stand-
ard-this, that, or the other-then you will have a priority."
join with the others, Doctor, in my attitude toward you and your
fairness toward our problem; but, Doctor, you possess along with us
the frailties of other human beings, and men who do not know you
and who have the money which might be put into mining do not
share with us that confidence in you. I think it would be a protecticn to you to have some definite standard by which they can put
their money on the line and go. I say in support of that fact that
my one bit of unhappiness in connection with this is that this was
not modified when you were called upon repeatedly at Reno and
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
have been done at that time, and we would have been saved a lot of
trouble.
I feel that there is not any reason why that cannot be done, and I
think that the attendant psychological boost that the mining industry
would get throughout the West would show very quickly.
I thank you.
The CHAIRMAN. We thank you, Governor Carr.
I want Mr. George Malone to have a chance to make a statement
before the committee adjourns.
Senator McCARRAN. Before that is done I should like to make &
brief statement, Mr. Chairman.
The CHAIRMAN. Proceed.
Senator McCARRAN. It is brought about by the expressions of my
good friend Governor Carr of Colorado. I, too, wish that the order
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,
Dr. Nelson was confronted with the situation wherein he had to say
to us that he was only one and that he had his superiors that he was
compelled to fall back on.
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647
It was with that in mind, Mr. Chairman, that I sought to bring
about the meeting which has taken place here and that I sought to
have Mr. Batt and the others of the board present.
I only make mention of this, Mr. Chairman, to emphasize the
proposition that sometimes in dealing with groups it is much more
difficult and much more slow to bring about results, the happiness of
which came to us this morning when there was a modification of this
order. I think, as you do, that the knowledge of this modification
going out to the mining communities of America will bring about a
rejoicing that has not been there for a long time.
There is just one other thing I want to bring to your attention before
Mr. Malone comes on
Dr. Nelson, I have before me what purports to be a Priorities
Bulletin under date of April 20, 1942. I take it you are familiar with
that?
Mr. NELSON. I will have to see what you are referring to.
Senator McCARRAN. It is put out by the American Mining
Congress.
Re Interpretation of Quota Items as Related to Preference Rating Order P-56,
Amended March 2, 1942.
I notice there all the ratings and your reference to A-10 as being
the one under which certain priorities could be secured. Rating A-10
does not appear in this list at all.
Mr. NELSON. I think that Mr. Conover had better reply to that,
that is something he published.
Mr. CONOVER. Senator, that has reference to the order P-56 as
issued on March 2. On March 4 the announcement was made by Mr.
Knowlson that the gold and silver mines that had been excluded from
the order would be permitted to operate under order P-100, which
provides for A-10. We issued a subsequent bulletin which covered
the A-10 rating.
Senator McCARRAN. You have a later bulletin than this?
Mr. CONNER. Yes.
Mr. PALMER. The thing our men out our way would like to know,
Dr. Nelson-and I am sure everyone else here would like to know,
too-is: Are these ratings on this order essential to get those particular
items, or are those simply for quota purposes? In other words, as
each item you have listed officially from your office, is it necessary to
to
have those ratings in order to get those particular items? You are
familiar with the order, if I may hand it to you, I am sure. Is it simply
a quota basis on this A-1?
Mr. NELSON. That is a list of items about which there might be some
controversy as to whether they would come under the mine's repair
parts quota, where the mine has a serial number, or whether they
should be purchased only after receiving permission direct from the
Mining Branch. As there were a number of such items, we stated
that certain of those items could be bought under that quota with an
A-1 rating by buying them directly from the supplier without clearing
through Washington.
Mr. PALMER. My question was, Doctor, Can any of those items, in
your judgment, be obtained under an A-10 rating?
Mr. NELSON. I would have to check each item in order to answer
that question.
Mr. PALMER. That is for quota basis and not for priorities?
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SILVER
Mr. NELSON. This is purely for quota basis, for a mine operator
use as a guide when he is making purchases under order P-56 and to to
but does not determine it and when it is fixed, he is the administrator.
However, this committee is in a position to investigate policy, it seems
to me, as to whether or not out of all the material that is available,
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
tell him what things he shall charge up against his quota.
Mr. PALMER. Thank you.
The CHAIRMAN. Mr. Malone, will you come to the table, please?
just share.
STATEMENT OF GEORGE W. MALONE, DIRECTOR, INDUSTRIAL
WEST FOUNDATION
Now, there must be an over-all picture somewhere by which someone establishes policy. When that is done and the mining industry
assigned its share, they divide it as best they can between the mines
that are in operation and people that are trying to find mines in accord-
Mr. MALONE. My name is George W. Malone, of Reno, Nev.,
my Washington address is National Press Building I am director
ance with any policy adopted. The thing is then-and that is where
mean the incentive price is necessary-that must get more of these
materials. We have been 18 months on the job, and have not yet
adopted principles and policies that will bring out the maximum of
of the Industrial West Foundation, a fact-finding and research
organization dealing with the resources of 11 Western States.
The CHAIRMAN. Mr. Malone, you have been present at these
hearings, and you have heard the discussion. As a result of our
these raw materials. I am speaking of manganese, chromite, tungsten,
mercury, antimony, zinc, lead, and copper. However, the ones familiar with this production knew that they were going to be short of these
materials a year and a half ago. The West can and will produce a
large increased amount of these minerals when the unit price is right.
This is beyond Dr. Nelson, but I have discussed it with him, and
discussion and the deliberations of the conference, the War Production
Board has seen fit to modify the text of a certain order. I should
like to have you discuss that as it affects States in which you are interested, and to have you make such comments as you may care to make
Mr. MALONE. Mr. Chairman, it seems to me from listening to the
questioning of Dr. Nelson and his answers that the situation, in fact,
I know that he agrees with me. Take manganese, for example.
Nearly every State in the West can produce manganese, and some
States in the East, in the Appalachian range. South Dakota and
Minnesota also have large low-grade deposits. But most of it will
is not changed but the impression to the country will be entirely
different.
If I get his answer correctly, he did in the beginning and is going to
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
done, I think, on the large, low-grade deposits; but to bring out small
deposits and to get the smaller miners and prospectors looking for
these minerals, there is no adopted policy at this time that will bring
this material out.
There are two types of potential producers that must be reached:
1. The hundreds of small miners and producers who must dispose
him. But he has clarified this thing, and I agree with Senator
McCarran and all the rest of the witnesses that it will have 8 tremendous psychological effect.
One of the things apparently forgotten by a good many people, and
maybe, as indicated by one of the witnesses, not everyone knows it, is
that in order to get a mine, you have first to find a prospect. After
you find the prospect, maybe one out of a hundred of them may
produce some ore. In order to develop a prospect after it is found,
someone must do a lot of digging without pay. That is the history of
the whole mining industry. In order to get them to do that, there
of their ore in small not ask for Government funds, outside
of a possible development must have a definite market at
must be some incentive. In other words, there must be an incentive
price, so that these men out in the hills know they can sell the ore
when they find it.
There was a tendency in the War Production Board and other organizations to assume that they knew where all the minerals were located
adequately covered by Mr. MacBoyle, Mr. Conover, Mr. Palmer,
Governor Carr, and others. I want to endorse their statements.
First, we understand that Dr. Nelson carries out only what the
Board decides to do. In other words, he may assist in fixing a policy,
a
and that they must conserve those minerals. I am speaking now of
the strategic minerals-manganese, chromite, zinc, lead, copper, and
tungsten. As a matter of fact, that is far from the facts. A prospect
today may be a mine tomorrow, and they find new prospects when
enough people are looking for them.
In order to keep these thousands of men in the hills looking for the
prospects, digging, there has to be an incentive price for the product
to assure an adequate reward for their work.
I wanted to bring out two or three points that I do not think were
touched upon in previous statements. Most of the rest of it has been
649
designated rail or terminal stations-and must be paid promptly on
a unit price basis that will pay the necessary wages and sorting, or
processing costs, leaving a reasonable margin, with a price guaranty
over a period of time which will provide an opportunity for the return
of development and plant investments. These are the men who
discover new occurrences of ore in their widespread operations, and
develop "prospects" to a point where the Federal Bureau of Mines
is justified in further exploration.
2. The larger investor in processing plants and development operations, requires Government financing-these can be handled through
negotiated unit price in the customary and established procedure
of your organization.
There are six principles that must be recognized in any practicable
set-up to increase this Nation's production of its strategic minerals:
1. Adjusted unit price that will pay American wages, and the
necessary sorting and processing costs.
2. Designated points of acceptance of ore or concentrates.
3. Prompt payment to the producer on the assay returns.
4. Guaranty of such adjusted unit price over A period sufficient
to return development and plant investments-a minimum of 2
years following notification.
650
SILVER
SILVER
5. Liberal use of the provision of the National Highway Act,
providing for the construction of "access roads
sources
of raw materials." (This amendment was sponsored by the Senate
Military Affairs Subcommittee on Strategic and Critical Minerals
to
and Materials.)
6. Establish the grade of acceptable material in each case to con-
procedure complete -chromite is accepted in truckload lots-35
cent manganese will be accepted-and the unit price for tungsten is
guaranteed until December 1943. Suggestions included in this
Memorandum follow substantially the principle outlined in May
1941, and included in the hearings by the Senate Military Affairs
Subcommittee on Strategic and Critical Minerals and Materials
CHROMITE
In the announcement dated March 5, 1942, the price of $50.70
of
The following suggestions are made to facilitate procurement of the
minerals:
A. A minimum unit price of $1 per 100 percent ($40 per ton for 40
percent Cr3Og)-acceptance of a 35 percent Cr2O3 product, with &
premium on the higher grades, above 40 percent, and lower chrome-
iron ratio.
to accept the material in truckload paying the producer almost
MANGANESE
A. A minimum unit price of $1 per unit for the 35 percent manganese with a premium on the grades over 40 percent, and lower
alumina, iron and silica content-accept it in truckload lots at designated stations, and pay the producer immediately on the assay
returns- with suggestions, numbers 2, 3, and 4, for chromite, applying
equally to manganese. The recent announcement of $1 per unit for
numbers 3 and 4 under chromite applying, and number 2 as far as
applicable in getting ore to existing processing plants.
The Metals Reserve Co. has guaranteed the present price of $24
per unit until December 1943 which adopts the principle recommended, but the price will not bring the necessary marginal properties
into production, and valuable time is being lost.
GENERAL
in plants and developments.
of the first grade available, and very little of the second.
The price then immediately drops to a $28 base price per long
ton for low-grade-40 percent Cr2O2 with no limit on iron content
No product under 40 percent Cr2O2 is accepted. A large tonnage
this ore can be secured but not at $28 per long ton.
operating season is short.
TUNGSTEN
The remainder of the list should be handled on the same general
principle, of establishing a stable market at adequate unit prices with
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
chrome-iron ratio; $40.50 is the base price for high-grade-45 percent
Cr2O3, with a chrome-iron ratio of 2.5 to 1. There is practically none
company will cease. This takes care of investments, and gives the
Congress an opportunity to determine policy.
D. Accelerate clearance of requests for construction of necessary
roads to such chromite deposits under the National Highway Act.
These deposits are, for the most part, in the higher altitudes-the
grade of material is simply not available in large quantities in this
country.
WO, with a premium on higher grades, with suggestions under
The recent announcements on chromite, manganese, and tungsten
each contain elements of the above factors, but in none of them is the
immediately upon the assay returns.
C. Guarantee such established unit price for a minimum period of
2 years following date of official notification, that purchases by your
the 48 percent grade is academic, and of no practical effect, since this
A. Establish the minimum base unit price at $35 for 60 percent
form to the available mineral and the requirements of industry.
B. Establish additional purchasing depots at rail stations in any
area presenting evidence of substantial annual production-contin
651
The higher unit price on lead and zipe should be available to the
established producer when shown that he has invested a reasonable
percentage of the added price in new development and exploration
work. The dual price is not a satisfactory method, but would be
more workable if arranged to stimulate exploration for new ore bodies.
The total amount of funds involved in the necessary adjusted unit
prices to bring in the maximum amount of these materials is relatively
small, considering that they are the basic raw materials for the entire
war production effort and is shown in the accompanying table.
The regular 2,000-pound ton should be adopted in dealing with
American purchases-the 2,240-pound, or long ton, is a throw-back
to the old British shipping days, allowing for shrinkage in wet shipments-in this country it is only confusing and serves no good purpose,
since the moisture content is handled in the specifications.
By establishing a market at a specified adequate unit price, and
point of acceptance, the Government assumes no responsibility in
development operations, thereby avoiding any possibility of claims
for adjustments following the war, that proved so troublesome after
World War I.
All of the chromite, tungsten, and mercury-and most of the
manganese, antimony, lead, and copper is found in the 11 Western
States. They do not understand why priorities in these materials
are being cut to the bone, with many marginal properties available
for added production.
The top price for domestic chromium (Cr2O3) was reached in 1918-
$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
low was $10.28, reached in 1921.
The top price for domestic manganese (50 percent Mn) was also
reached that year (1918) $68.50, and 305,861 tons were produced.
The top price paid for antimony was 45 cents per pound.
SILVER
652
SILVER
High- and low-price domestic production
beyond official notification that they will cease buying such minerals,
so that investments would be protected. Then the incentive price
Percent supplied
domestic mines
Wartime high
would bring out investments, because they could be reasonably certain
of repaying the capital investment.
Price
Mineral
Date
Tungsten
Nickel
1913
1940
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
1913
1941
$84.00
68.50
$44.99
63.63
1916
300.00
1916
105.00
1918
45.0
35.0
14
1916
125.12
22.27
20
0.0
$11.19
54.00
82.0
100.0
40.07
31.0
100.0
7.24
.42
2.0
.86
.1
shows, for example, the relationship between the production of zinc,
lead, and copper and the production of silver and lead in the Western
States. For instance, you will find on inspection that the amount of
***
12.50
10.0
190.00
26.00
silver and gold in the ores many times helped just enough in the
41
M
1918
Tin
1918
1.10
44
Note-Mercury went to 100 percent production, in fact a small amount was exported Tungaten
listed at 100 percent in view of recent performance, and on account of recent Idaho discoveries of grade ore.
.
mining operations of the companies to keep the mines running.
In these tables, you will find the amount of gold and silver, lead,
is
Antimony
Mercury
1918
Average
2
Chrome
Manganese
High
653
-
The top price per pound during World War I was-lead, 11 cents;
zinc, 18 cents; and copper, 31 cents.
We were getting these materials when this war started from
about 32 foreign nations, widely scattered throughout the world.
where the low-wage policy prevailed and where in the main, material
like manganese and chromite were of a high grade. You could get
your manganese from Russia and lay it down here at the ports or
even in Pittsburgh for $17 ot $18 a ton- 44 to 48 percent manganese
You could get chromite from New Caledonia or Turkey for about the
same price and grade.
It had been a matter of economic policy, up to the time of the decla-
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
country, thought we should develop strategic minerals in peacetime,
so that we would not be off balance when war was declared. Nevertheless, it is a matter of necessity now and they can get them in this
country. Therefore, it must now be determined what unit price and
what conditions of acceptance will bring out the maximum of these
minerals.
I believe that in order to bring out the maximum of chromite and
manganese that you will have to establish at least a dollar a unit for
manganese and a dollar per 1.00 percent for chromite accepting
35 percent with a premium on the higher grades. The Metals Reserve
Company is now accepting as low as 40 percent in these materials
but at the price being offered the small operator cannot produce and
deliver the ore. But if a price is offered that will pay American wages
and necessary processing costs-thousands of additional miners and
prospectors will go to the hills and get these minerals out of the ground
besides keeping such men who are already in the hills at work who
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
stock-piled alongside the high grade, and processed later it is good
insurance. In other words, if the war is over right away, you may not
need it, by the same token if the fire never hits your house, you do not
need your insurance; but if it does, it is well worth it.
Therefore, there is a lot to be done where this committee could be
very helpful in getting the information before the proper people,
members of the War Production Board and the Metals Reserve
Company-the proposition of purchasing lower grades, paying higher
unit prices, and guaranteeing them over a period of, say, two years,
zinc, and copper produced through the siliceous than 30
percent in dollar value of gold and silver-by State for the 11 western
States, together with a summary, and the amount of money returned
from the sale of these ores. In other words, it was predicated on the
30 percent order, but it is still pertinent in any discussion as to what
effect silver and gold mines have upon the production of strategic
minerals.
I submit the brief containing tables and charts for the record.
The CHAIRMAN. The committee will be very glad to have them.
Are there any questions to be submitted to Mr. Malone? If not,
we thank you again, Mr. Malone.
(The above-referred-to document follows:)
BRIEF SUBMITTED FOR THE RECORD BY GEORGE W. MALONE, FRIDAY, MAY 8
WASHINGTON, D. C., May 5, 1948.
Dr. WILBUR NELSON
Director Mining Division, War Production Board,
Washington,
DEAR DR. NELSON: Pursuant to your request, I am submitting herewith an
line of factual material, including the necessary charts and tables, showingout
the relation between the domestic production of silver and gold, and certain critical
metals essential for national defense.
The data and information contain charts showing the effect of drafting available
"free silver" in the United States Treasury, to replace copper in industry, and the
tables show the possible effect on the production of copper, lead, and zinc, of
retarding the operation of mines producing orea containing in excess of 30 percent
of their total dollar value in gold and silver, or gold, or silver.
The report simply presents the factual material, with no attempt to interpret
the many ramifications, or indirect effects of any economic rearrangement.
Sincerely,
GEORGE W. MALONE, Managing Director.
RELATION BETWEEN THE DOMESTIC PRODUCTION OF SILVER, GOLD, AND CERTAIN
CRITICAL METALS ESSENTIAL FOR NATIONAL DEFENSE
INTRODUCTION
The present world conflict has been aptly described as a war of metals and those
nations which possess the greatest resources of metalliferous ores and the facilities
to turn them into finished products should eventually be victorious.
While nearly all metals are essential in conducting modern warfare, their degree
of importance varies considerably both from the standpoint of tonnage required
and the practicability of employing substitutes.
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
Industrial applications, and its high price and scarcity further limits its uses.
Silver, on the other hand, plays an important role in industry and while the
quantities normally required for essential purposes represents less than 50 percent
SILVER
654
of our annual output, it could be substituted advantageously for other metals
were it available in large quantities.
OUTSTANDING NONFERROUS METALS
SILVER
655
DOMESTIC PRODUCTION OF GOLD, SILVER, COPPER, LEAD, AND EING
The domestic production of gold, silver, copper, lead, and sino in 1940 and 1941
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 lists
of materials, but from the standpoint of tonnages produced, aluminum, copper,
lead, and zinc 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
zine 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 zinc, the two following suggestions have been made:
1. Substitute available silver supplies for copper, lead, or zinc and thus release
some of these other metals for essential uses.
2. Mine and smelt only those copper, lead, and zinc ores which contain less than
30 percent of their metal value in the form of gold and silver.
The object of the first suggestion is to utilize silver which is not employed for
essential purposes and substitute it for those metals which can be advantageoualy
GOLD
$510.41
Per Avoi
Pound
used elsewhere.
The announced objection of the second suggestion is to step up the production
of copper, lead, and zinc 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.
COMPARISON OF PRICES
The two outstanding objections to the industrial use of gold and silver are:
(1) The high price of these metals: (2) the limited supplies available.
SILVER
$10.37
Avoi
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 suggestion 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 zine 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 is
termed "free silver" and it has been proposed to use this idle metal to replace an
equivalent quantity of copper which in turn, would be employed for essential
COPPER
$0.116
Per Pound
purposes. The quantity of free silver on hand according to the Treasury Department is
46,740 short tons, an amount equivalent (by weight) to 4.77 percent of our output
I Preference Rating Order P-56 and P-56-A, War Production Board (1942).
$0.083
$0.073
Per Pound
Per Pound
SCALE
of copper in 1941.
The use of this surplus silver for purposes which involved no permanent loss
of the metal, would release at least 46,740 tons of copper for those uses wherein
the latter is essential.
Such a scheme would have to be carefully safeguarded and the silver employed be
protected against possible loss; but, the tonnage of copper thus released would
quite helpful in offsetting a temporary shortage of this metal.
The relation of free silver on hand to our production of copper in 1941 is shown
diagrammatically in figure 2.
ZIMO
LEAD
$ 0.10
FIGURE 1.
United States Bureau of Mines and while the data for 1941 are preliminary, they
show the upward trend in domestic production. The output of copper in 1941
increased 9 percent, the production of lead 0.5 percent, and the output of zine
about 11 percent over 1940. Gold and silver production, however, fell off slightly
in 1941.
SILVER
656
The tonnage and value of these metals produced in 1941 are shown diagram
matically in figures 3 and 4.
3 brings out rather forcibly the fact that our annual production of the
Figure metals is extremely small as compared with our output of copper, lead
precious and zinc. It is clear, therefore, that even if all of this gold and silver were sub-
SILVER
657
POSSIBLE AVAILABLE SILVER
As shown in figure 3, the annual production of silver is but a fraction of the
copper output, so even if all this silver was substituted for copper the tonnage of
PROPORTION
REPLACABLE BY FREE SILVER
46,740
tons
(4.77%)
46,740
TONS
COPPER
PRODUCTION
1941
979,500
tons
FIGURE 2.
stituted for any one of the other nonferrous metals the quantity of the latter
released would represent only a fraction of 1 percent of the annual production
In figure 4 the total relative values of these metals produced in 1941 are shown for
By comparing figures 3 and 4, the great cost of substituting gold and silver the
copper, lead, and zine can be readily visualized. As a concrete example, silver
amount of copper produced in 1941 was nearly 307 times greater than the of the
production yet the total value of all this copper was less than 5 times that
silver produced.
the latter metal released for other purposes would be relatively small. But all
of this silver could not be released because this metal has certain essential uses
for which there are no adequate substitutes. Its importance in photography
such that the quantities required for this purpose could not be diverted. Moreover, photography is playing an increasingly important role in aerial warfare and
hence the demand for silver to meet military needs is growing. The silver used
73052-42-pt. 9-15
is
SILVER
658
BILVER
solder and in certain chemical processes could not be released for other
80 in only a portion of the annual output would be available as a substitute for purposes copper.
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
of the silver consumption therefore would probably be the maximum
portion available from our annual production. Assuming that the production of silver
in 1941 was distributed on this basis, the supply available as a 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.
Photographic
Industry
/DENTAL
25.4%
FIGURE 5.
Since silver is a better conductor of electricity than copper, a given quantity of
the former would go further when used in certain types of electrical equipment.
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 zinc without by
greatly increasing our output of gold and silver, an order was recently issued
659
SILVER
SILVER
661
the War Production Board 1 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
annual output of copper, lead, and zino from the 11 Western States the folour
lowing tables and chart have been prepared:
Table 4 is a summary showing the quantity and value (by States) of copper,
lead. and zine recovered from siliceous gold and silver ores in 1940 and the proportions of our total domestic production of copper lead, and zino 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
Xer
individual States. These tables also show what proportion of the total metal
value in such ores is represented by the gold and silver content.
here_date may be briefly summarized as follows: From these siliceous gold
and allow-ores (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; zinc, 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 amounts shown
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; zinc, 8.28 percent.
TABLE I.-Production of gold, silver, copper, lead, and sinc (by States) in 1940
Gold
Silver
Fine ounces
Fine ounces
Alaska
756,964
173,141
Arizona
Arkansas
299,345
1,443,889
States
SHOI
TOS LOT
Alabama
California
Colorado
Georgia
M
779
6,129,788
281,169
13,266
2,224,590
9,378,409
6,438
1,772
12,152
11,476
5,060
17,477,054
3,349
104,834
70,601
369,075
13
966
544
Indians
Kansas
Kentucky
79
1,508
4,818
11,927
67,032
360
90.218
Michigan
Missouri
Montana
Nevada
145,190
273,369
379,868
New Jersey
New Mexico
39,210
New York
North Carolina
685
172,052
12,703
126,391
23,036
52,587
11,833
78,454
5,102,102
Pennsylvania
Philippines
91,400
1,576,102
69,848
35,743
1,683
6,390
113,715
191,820
Carolina
South Dakota
Tennessee
1,977
14,077
1,299,199
Utah
Virginia
Washington
7,900
587.100
170,680
38,947
352,331
1,294,966
11,686,321
231,864
389,481
9,612
83,880
711
162,935
573
30
494
205
75,688
43,788
2,285
2,555
11,560
445
5,770
457,392
665,068
74
Undistributed
Total
35,686
35
l'isconsin
Wyomine
1,973
88
12,872
303
Texas
3,822
30,313
21,240
1,140,126
1,278
45,198
Oklahoma
Oregon
15,456
440
144,980
20th SHOL
Short form
Short tons
Short tons
6
12,732
6,003,105
$69,585,734
878,080
I Mine returns.
Silver production-0.3 percent of weight of copper produced.
1
+
Zine
Lead
Copper
5
660
Preference Ratings orders P-56 and P-56-A War Production Board (1942).
W yoming is not included because of its almost negligible production of such ores.
SILVER
662
SILVER
The above reduction in the output of copper and zine may appear
663
TABLE -Normal distribution of silver consumption by industrial uses (percent
small, but in terms of work performed by these metals such a reduction relatively
very serious. For instance, the above quantity of copper is more than equivalent would
to that used in all the radio sets manufactured in 1940; the lead recovered
such ores was sufficient to cover all the electric cables produced, and the yield from
metallic zinc
was more than enough for all the galvanized wire and screen manu- of
factured
in 1940.
Unless, therefore, we are assured of making up this deficit in such metals
other sources, a curtailment in the production of the ores containing more from
30 percent
of their
metal value
in the
formanalysis.
of gold and silver would than be
serious
matter
and total
one which
requires
careful
of weight)
Percent
36. 4
Sterling silver industry
Photographic industry
Electroplating industry
Jewelry, optical goods and novelty industry
Chemical industry (exclusive of electroplating)
Silver solder and other industrial uses
25. 4
14. 9
8.6
6.0
6.6
Dental suppliers
1,9
Miscellaneous consumption
0. 2
100 0
Total
TABLE II-Production of gold, silver, copper, lead, and zinc (by States) in 1941
(preliminary figures, U. S. Bureau of Mines)
TABLE IV.-Summary showing quantity and value of lead, copper, and zinc reStates
WESTERN STATES, ALASKA, PHILIPPINES
Alaska
Arizona
California
Silver
Gold
Fine
ounces
690,649
315,000
1,411,800
Colorado
377,503
Idaho
150,000
246,500
Montana
Nevada
Copper
Lead
Fine
Short tons
ounces
191,896
Short tons
92
332,750
16,275
2,147,000
7,234,487
16,605,000
11,304,000
5,786,000
3,905
3,305
6.501
3,900
12,607
Oregon
127,500
78,810
71,562
99
South Dakota
610,223
325
Texas
Utah
Washington
Wyoming
Total
11,203,733
385,290
482
80
5,836,871
Total
value
Value
Pounds
Value
Pounds
Value
15,99
77,800
21,750
55,900
9,490
Arizona
14.00
California
4,565
37,548
998,773
Colorado
Idaho
68
Montana
Nevada
175
New Mexico
262,577
69,435
39,630
8,612
Oregon
3,660
13,967
Utah
896,346
66,523,216
Pounds
103,500
***********
1,105,913
Zinc
16,000
300
1,300,300
166,202
347,784
81,569
Lead
Copper
a
1,109,667
Short loss
696
7,551,000
New Mexico
Philippines
covered in 1940 from orea containing 30 percent or more of their total metal value
in form of gold and silver
Zine
245,536
271,943
12,874,300
24,304,000
5,407,838
1,235,671
456,900
101,766
176,000
$98,877
1,287,420
2,430,401
540,785
123,567
45,690
10,177
17,600
999,039
5,118,178
3,502,600
22,952,000
24,211,642
14,380,055
2,692,100
$255,909
175,310
1,147,601
$3,276
637,149
1,210,582
713,769
70,000
731,202
134,605
35,688
3,500
141,337,357
7,566,862
Washington
19,222,977
1,922,297
26,836
1,689
Total
74,758,618
7,475,853
215,004,537
11,262,768
9,990,393
$354,786
52,000
10,113,481
1,465,826
4,215,151
1,751,367
854,769
180,295
45,865
21,100
87,551,100
5,515,719
14,081,620
1,923,986
97,716,581
6,156,144
24,894,765
EARTERN STATES
Percent
Alabama
35
300
4
Georgia
Proportion of copper from domestic ore thus affected
Proportion of lead from domestic ore thus affected
34
New Jersey
93,300
New York
36,000
North Carolina
3,117
2,675
15,400
Tennessee
228
6,861
17,000
6,051
39,177
Virginia
245
135
22,000
105,262
Pennsylvania
South Carolina
Total
2,100
Proportion of zine from domestic ore thus affected
38,220
Copper at $0 10 per pound lead at $0.05 per pound; zine at $0.063 per pound.
13,453
35,000
3,381
22.00
5,500
190,000
4
2,250
18,990
Indians
Kansas
13,975
Kentucky
Michigan
Missouri
280
166,271
25,200
351,000
750
Total
Grand total
190
7,560
67,937
4X
54,000
Oklahoma
Wisconsin
423,990
5,858,871
67,052,469
8.28
Prepared by Industrial West Foundation from data by U. 8 Geological Survey, U. 8. Bureau of Mines,
19
CENTRAL STATES
Arkansas
Illinois
4.25
24.80
47,595
957,394
20,988
169,000
7.8%
208,730
273,922
459,756
735,862
and State bureaus of mines.
Value
Value
Pounds
of ore75,376
Pounds
Value
210,312
Pounds
885
$4,547,830
$2,353,505
90
94
95
39.0
41.1
32.5
Ounces
93.5Ounces
36.3
Value
86.5
72.0
88.5
85.0
96.8
Value
98.5
98.8
67,243
Gold ore
total
129,938
Gold and
Zine
Lead
tion ofGold ore
silver-
value
total
value
silver
(percent)
Dry and siliceous-
Gold and
776,670
8,208,641
each type
each type
Value
Pounds
of ore
Zine
Value
Pounds
Pounds
Value
83,307
$2,536,867
98.8
$4,461,892
111.600
$5,580
$34,490
344,900
$859,847
1,211,052
$3,561,975
1,104,917
99.8Gold
4,200
14,500
210
1,450
420,092
Gold-silver are
591,651
683,165
$13,236
19,519
Prepared by Industrial West Foundation from data of U.S. Geological Survey, U. 8. Bureau of Mines, and State bureaus of mines.
Zine
Lead
silver-Gold. $35 per ounce: silver, $0.71 per ounce: copper. $0. 10 per pound; lead, $0.05 per pound; zine, $0,063 per pound
tion of
Gold and
tion of
propor-
Dry and siliceous-Gold and
each type
total
Value
Value
Pounds
Pounds
Value
of ore
Value
Pounds
Ounces
Value
Ounces
Zine
Lead
silver-
Total value
propor
Value
Ounces
Ounces
Value
of metal in
value
of metal in
Total value
(percent)
Gold ore
712,395
264,721
1,666,140
1,691,921
$15,690
976,270
49,905
998,109
Copper
Copper
Copper
Lead
Copper
156,896
43,307
433,072
2,027,334
$4,929,536
$198,973
81,000
4,050
12,326,100
1,232,610
3,979,458
207,259
$154,436
$149,322
8,131,877
(percent)
Dry and siliceous-
21,254,198
4,803,730
141,142
2,125,420
$33,411
Silver
17,762
918,320
12,611
69,537
103,115
1-549
217,516
291.914
2012
10,787,758
7,659,308
443,206
22,183,303
Value
Pounds
94Value
of ore
6,389,528
255,909
1,109,165
1,758,825
5,118,178
BE
23,030
110,134
867,066
615,617
11,013
22,820
Silver
221,594Gold
424,327
597,643
30,205
588,415
988,773
978,607
1,378,318
5,056,135
658
98,877
597
652
863
16,669
Pounds
Value
Pounds
Value
valueTotal
144,461
Ounces
Value
Ounces
2,218,927
Silver
Gold
propor
10,113,481
$637,149
of metal in
TABLE VII. -Colorado: Ore sold or treated in Colorado in 1940 with content in terms of recovered metaleach type
totalof metal is
tion ofSilver ore
23,168,908
81.8
Gold, $35 per ounce: silver, $0.71 per ounce: copper, $0 10 per pound; lead, $0.05 per pound: sinc. $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
TABLE VIII.-Idaho: Ore sold or treated in Idaho in 1940 with content in terms of recovered metal
Gold
Silver
Total value
78.1Total value
109,087
proporCopper are
81.7
7,998,490
Gold, $35 per ounce: silver. $0.71 per ounce: copper. $0 10 per pound: lead, $0.00 per pound; sinc. $0.063 per pound.
9,928,696
496,435
24,211,642
3,276
52,000
175,130
3,502,600
1,287,420
12,874,300
1,629,419
2,294,928
637,149
12,061,760
9,707,071
6,891,997
22,952,000
2,430,401
24,304,000
478,100
483,752
7,031
140,611
1,210,582
1,147,601
264,201
570,363
13,019,077
4,903,245
10,113,481
404,958
187,583
217,910
13,388
1.339
95,929
4,797
411,629
22,159
$3,276
163,700
8,185
52,000
106,572
123,700
12,370
75,666
506,976
TABLE California: Ore and old tailings sold or treated in California in 1940, with content in terms of recovered metals344,107
1,204,779
Silver ore
173,147
1,731,470
1,061,585
44.6
295,260
157,105
3,142,100
5,407,838
Total
Total
540,785
350,336
Prepared by Industrial West Foundation from data of U.S. Geological Survey, U. B. Bureau of Mines, and State bureaus of mines
Gold, $35 per ounce: silver, $0.71 per ounce; copper, so 10 per pound; lead, $0.05 per pound; zinc $0.063 per pound.
Total
750,717
6,226
1,020
Gold and silver are
252,554
7,196
179,313
Silver ore
43,673
652,007
Gold and silver ore
4,367
14,564
Prepared by Industrial West Foundation from data of U. 8. Ocological Survey, U. B. Bureau of Mines, and State bureaus of mines,
13,660
Gold and silver ore
Silver are
9,590
274
Copper ore
Lead ore
TABLE -Arizona: Ore sold or treated in Arizona in 1940, with content in terms of recovered metals
30,331
Copper ore
378,208
6,500
65,100
66,555
93,739
65,100
1,860
Lead ore
Lead ore
71.9
64,890
207,252
1,854
12,780
104,788
1,278
33,836
11,827
16,630
69.0
1,575
14,787
Lead-copper ore
56,469
5,647
17,060
397,100
515,096
725,487
Zine-lead ore
99.8Gold
Dry and siliceous:
98.9
11,230
9,566,443
731,202
Silver
65,500
$7,320
$481,561
73,200
$3,275
14,380,055
678,255
$8,337,700
310,306
66.4of ore
100,805
2,016,100
Pounds
Value
98.6
41.0
96.1
75.4
value
value
1,235,671
2,253,999
123,567
3,174,649
6,457,675
(percent)
Gold ore
238,220
total
total
value
of are
Value
Pounds
Pounds
Value
Pounds
Value
Ounces
Value
80.8Ounces
1,391,472
94,614
1,892,280
140,487
167,131
34.2
857,820
11,236,487
235,396
39,130
3,240
$1,421,700
$99,746
131,800
$13,180
25,700
32,400
561,824
1,463,835
206,317
176,000
146,485
17,600
70,000
3,500
1,631,410
Ounces
98.7Value
Value
Value
Ounces
Value
Pounds
Pounds
385
Gold are
185,205
40,620
(percent)Total
5,104
total
745,514
74,551
1,115,452
Lead are
of ore.
1,571,060
3,009
30,085
186,727
262,996
106,260
tion ofLead ore
1,118
98.9each type
219,100
10,955
value
tion of
Dry and siliceous-
each type
of metal in41,825
106,855
Value
3,036
ValueLead are
16,400
each ton
totalGold and silver ore
$6,242,035
617,767
$43,088
$21,511
215,113
905,213
1,640
1,274,948
3,053
$325,926
200,060
Value
459,052
Pounds
of ore
$5,851,510
98.9Total value
19,570
391,400
334,900
1,356,396
1,910,417
33,490
1,376,970
propor-Silver ore
5.716
Prepared by Industrial West Foundation@from data of U. 8. Geological Survey, U. 8. Bureau of Mines, and State bureaus of mines.
$3,386
$192,034
95.1
Gold and silver ore
14,245
775,228
498,575
3,943
78,867
1,005
10,048
550,412
1,063,935
99.0
Total
19,657
10,177
687,995
817,739
713,769
580,594
35,688
101,766
1,314,454
96.5
TABLE XII.-Oregon: Ore and old frailings sold or treated in Oregon in 1940, with content in terms of recovered metals
Gold
Silver
Gold, $35 per ounce: silver, $0.71 per ounce: copper, $0.10 per pound; lead, $0.05 per pound; zine, $0.063 per pound.
$1,285
Prepared by Industrial West Foundation from data of U.S. Geological Survey, U. S. Bureau of Mines, and State bureaus of mines.
tion ofGold, $35 per ounce: silver, $0.71 per ounce: copper, $0.10 per pound; lead. $0.05 per pound; sinc. $0.063 per pound.
91.1each ton
Dry and siliceous:
Gold and
Gold and
Zine
Lead
silver-
of metal in
167,186
Lead
$8,829,856TABLE L.-Nevada: Ore and old tailings sold or treated in Nevada in 1940, with content in terms of recovered metal
silver-
Total value
propor-
of metal in
Value
Value
Value
Ounces
Value
Pounds
Pounds
Pounds
Ounces
Zine
tion ofGold are
Lead
Lead
Zine
Gold andGold and silver ore
Zine
Gold and
silver-
Total value
propor-
of metal in
Ounces
Value
Ounces
Value
Pounds
Value
Value
Pounds
39,342
1,300
65
67,710
50,000
2,500
12,782
76.4Prepared by Industrial West Foundation from data of U. 8. Geological Survey. U.S. Bureau of Mines, and State bureaus of mines.
Lead ore
10
522
Copper
Copper
Copper
Copper
100
120
9,340
5,226
Silver
169
90,010
30,100
3,010
2,696
1,914
13,156
94.7
1,075,116
633,521
31,676
244,959
24,496
625,894
881,541
Silver
Silver oreGold
silver-
517,192
25,859
55,703
48.8TABLE XI.-New Mexico: Ore sold or treated in New Mexico in 1940 with content in terms of recovered metals(percent)
190
190
420
17,675
13,404
9,517
2652
26,517
393,050
6
12
505
$11,325
13,044,456
TABLE IX.-Montana: Ore sold or treated in Montana in 1940 with content in terms of recovered metal
Gold
Total value
2,692,100
$5,998
134,605
propor-
$171,325
45,690
456,900
2,910,301
4,099,016
15,951
9,953,860
Gold ore
Total
284,396
Total
Prepared by Industrial West Foundation from data of U. 8. Geological Survey, U. 8. Bureau of Mines, and State bureaus of mines.(percent)
Gold, $35 per ounce; silver, $0.71 per ounce: copper, $0.10 per pound: lead, $0.05 per pound, sino. $0,063 per pound.
$1,535,911
Gold, $35 per ounce; silver. $0.71 per ounce: copper. so 10 per pound; lead, $0.05 per pound; zine, $0,063 per pound
Silver ore
99.0
Gold and silver ore
1,193
41,755
62,965
44,705
14,000
1,400
43,000
2,150
Copper are
Dry and sillceous-
4,895
59,975
SILVER
668
SILVER
669
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.
Senator McCARRAN. 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
and for their general attitude toward the problems which we have
tried to present.
Representative CHENOWETH. May I inquire if there will be a time
when persons who desire to make statements but cannot appear may
submit briefs?
The CHAIRMAN. Yes. I will-Gay now that if anyone who is present
would like to submit something for the consideration of the committee, we will welcome it. Send it to either Senator McCarran or
myself.
Representative CHENOWITH. You are not fixing any time limit
on that?
#####
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
keep it alive, will remain alive.
Representative ENGLEBRIGHT. I should like to file a statement
for the record.
@@@@@
*****
The CHAIRMAN. Without objection I will state for the committee
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
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.
Representative WHITE. Is there any limit to the time in which a
statement may be submitted for printing in the hearings?
The CHAIRMAN. Well of course, there would be a limit, Congressman White, but a reasonable time will be allowed before the statements are made ready for the printer.
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
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 statements 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.
(At 12:42 p. m. the hearing was concluded, and the committee
stood in recess subject to the call of the chairman.)
INDUSTRIAL USE OF SILVER
THURSDAY, MAY 28, 1942
UNITED STATES SENATE,
SPECIAL SILVER COMMITTEE,
Washington, D. C.
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 Trease
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 Mountain Metals Foundation, Washington, D. C.: and Mr. William Broadgate, 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 pursuant 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.
the
There are about 47,000 tons of so-called free silver, leaving
balance of the silver behind outstanding currency.
That is a very brief picture of the Treasury's position. I think Mr.
671
Nelson will explain to you why he wants this, and the picture will hen
unfold itself.
Senator WHEELER. You propose to lend the 40,000 tons?
Mr. MORGENTHAU. That is, as I understand it, our arrangement
with the Defense Plant Corporation, of which Mr. Jones is the head
We lent to the Defense Plant Corporation, under a ruling of the
Attorney General, some 40,000 tons, which the Defense Plant Corporation guarantees the Treasury it will return to us.
Senator WHEELER. Why could you not lend 80,000 tons, or an
extra 40,000?
Mr. MORGENTHAU. My general counsel feels that we cannot. That
is why we are here.
Senator WHEELER. Why not?
Mr. MORGANTHAU. May Mr. Foley explain that?
Senator McCARRAN. Certainly.
Mr. FOLEY. Senator Wheeler, what we propose to lend Mr. Jones
calls for the use of the free silver; the rest of the silver is behind the
silver certificates. We feel that without some authority from Congress we should not take the silver that is behind the circulating
certificates.
Senator McCARRAN. What do you mean by "free silver"?
Mr. FOLEY. I mean silver that has not been put behind the certificates.
Senator McCARRAN. You have not much of that, have you, in the
Treasury?
Mr. FOLEY. There are approximately 47,000 tons of that.
Senator McCARRAN. Against which currency has not been issued?
Mr. FOLEY. That is right.
Senator McCARRAN. You have other silver besides that, do you
not? What you are speaking of is really the seigniorage silver?
Mr. FOLEY. That is silver that has not been monetized. It could
be called the seigniorage silver. We feel that. to take the silver that
has been put behind the certificates that are circulating as money
and to lend it to Mr. Jones for nonconsumption uses would require
some affirmative grant of power from Congress, since it is part of our
money.
Senator WHEELER. You have not anything behind the rest of the
money, have you?
Mr. FOLEY. Well, I think that this is a rather novel use for the
silver that is behind the certificates that we are circulating as money
and that Congress should tell us to what use it should be put.
Senator WHEELER Then, what I understand you to want is some
SILVER
673
hear Mr. Nelson, first, and then to discuss the subject at large.
think perhaps the story would unfold better.
Mr. Nelson, will you kindly give us your statement on this?
STATEMENT OF DONALD M. NELSON, CHAIRMAN, WAR PRODUC.
TION BOARD
Mr. NELSON. Mr. Chairman, our present production of war matériel is, in my opinion, limited only by the materials that we have to
make things out of. We have plenty of facilities in the United States
to produce practically anything we want and in practically any
quantity, limited only by our materials, and that goes today down
even to wood. Wood is scarce at the present time. But of the items
that are most important, copper is one of the most important single
items of which we are limited in quantity. We are, of course, sup-
plying copper to all of the United Nations. Copper is used for a
wide variety of things, the principal one being ammunition; and in
this war, with so many airplanes, so many machine guns, and so
many rapid-firing rifles, the quantities of ammunition that we need
are perfectly staggering and take an immense amount of copper.
Also, of course, we use copper for producing some of the other
very important things we need, such as aluminum, chlorine, or
magnesium. A great amount of copper is used in bus bars for the
conduction of electricity. It occurred to us that we could borrow
silver from the Treasury in order to replace the copper and have
the copper to use for ammunition. We took the matter up with
the Secretary, and he worked it out so that we could use free silver,
which we have loaned to Mr. Jesse Jones to put into the defense
plants as bus bars, therefore replacing more than an equivalent
amount of copper, because silver is a better conductor.
Senator WILEY. You will put it into defense plants for what?
Mr. NELSON. As bus bars. I think we will use up in that way the
whole 40,000 or 45,000 tons that the Secretary has in the Treasury.
Indeed, that silver will be comparatively safe, with about 30,000 volts
of electricity going through it; and being in the form of very large bars
hanging from the ceiling, it can readily be guarded. There will be
very little trouble about its return when this war is over and it can be
replaced with copper.
Senator McCARRAN. It is not likely to be taken with high voltage
passing through it.
Mr. NELSON. No, sir: it is not likely to be taken when 30,000
certificates for lending to the Defense Plant Corporation?
volts are going through it.
We have another problem facing us, and that is in connection with
the making of synthetic rubber. We are keenly and eagerly following
proposal.
every process for making butadiene, which is one of the principal
constituents of synthetic rubber. In making butadiene from grain,
law that will permit you to use the silver that is behind the silver
Mr. FOLEY. That, as I understand it, is part of Mr. Nelson's
Senator MURDOCK. Mr. ChairmanSenator McCARRAN. Yes, Senator Murdock.
Senator MURDOCK. If that is the only question confronting the
Treasury, the War Production Board, and the Defense Plant Corporation, why could it not be handled by merely suspending redemption
in silver during the period of the emergency?
Senator McCARRAN. I worder if it would not be well for us to
I
SILVER
672
you catalyze alcohol. You make alcohol from the grain, run it through
a catalyzer, and then through a condenser made of rubber. It may
take large amounts of copper in order that this thing may be done
quickly. We should like, if possible, to get from the Secretary more
silver in case we need it. We are investigating all methods of making
synthetic rubber. As you know, it can be made from petroleum,
it can be made from grain alcohol, which is ethyl alcohol, it can be
73052-42-pt.
674
SILVER
made from butyl alcohol, and it can be made from various other
processes.
You spoke about Seagram's. We are authorizing for them a pilot
plant for them to make butadiene out of ethyl glycol under a method
SILVER
675
that I am very jealous in watching anything that will attempt to
disturb the existing monetary system or the existing laws on silver.
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 a
good or better or cheaper way of making it.
Of course, it is time that is the principal element in this whole
synthetic rubber picture. We want to use the process that will get it
for us the quickest. If it becomes necessary to use ethyl alcohol and
to use copper in connection with the conversion of ethyl alcohol into
butadiene, we should like permission to borrow this silver again for
making these coils out of it. We are making experiments to see if
Mr. MORGENTHAU. We estimate the production of U. S. silver to
be 62,000,000 ounces, or an equivalent of 2,123 tons, and our imports
will be, we estimate, 120,000,000 ounces, or the equivalent of 4,110
tons for the year 1942.
Senator JOHNSON of Colorado. The last figure is for the imports?
Mr. MORGENTHAU. The last figure is for the imports.
Senator JOHNSON of Colorado. The first was domestic?
Mr. MORGENTHAU. Yes, sir.
there is any reaction of heated gases to silver. It looks entirely
possible at the present moment, but we are not entirely sure of it.
But we want to have permission, if we need copper, to substitute
silver for the copper in these condensing tubes in the conversion of
grain alcohol into butadiene.
That, sir, is the story.
Senator McCARRAN At the present time, as I understand it,
tentative permission has been granted by an opinion of the Attorney
General by which 40,000 tons could be turned over to you by the
Treasury?
Mr. NELSON. That is right, sir.
Senator McCARRAN. Of which only about 13,000 tons have been
turned over up to date?
Mr. NELSON. That is right, sir.
Senator McCARRAN. Leaving a balance of some 20,000 tons yet to
be turned over?
Mr. NELSON. That is right, sir.
Senator McCARRAN. Is it in excess of that?
Mr. NELSON. It is in excess of the 40,000 tons; sir.
Senator McCARRAN. The minimum requirements of the United
States in all lines, both manufacturing and arts and sciences, are
about 230,000,000 ounces of silver. That is the average annual
requirement. The over-all maximum requirements are about
445,000,000 ounces of silver, that being for the currency and for the
arts and sciences.
My recollection of our intake, Mr. Secretary-and will your experts
check me on this, please?-of silver from all sources for the last year
or so has not been in excess of something like 140,000,000 or 150,000,000
ounces? Am I correct or nearly correct in that?
Mr. NELSON. I have 6,200 tons.
Senator McCARRAN. You are dealing in tons; I was dealing in
ounces, The question is, Are We acquiring silver as rapidly as we
could acquire silver under existing law? Can we not acquire more
domestic silver, for instance, by a more encouraging and conducive
price for domestic silver and thus produce more silver domestically?
Again, can we acquire more silver from abroad if we purchase more
silver? Can We raise the world price of silver? It is 35 now. In
place of freezing it at 35, as Mr. Henderson has or at approximately
35-can we take off that ceiling and thus find silver coming to us and
not have to disturb the existing laws?
Let me say to you frankly-and I am now speaking personally-
Senator HAYDEN. The imports are about twice the domestic pro-
duction?
Mr. MORGENTHAU. Yes, sir.
Senator THOMAS of Idaho. Is that the maximum amount of imports you might be able to acquire?
Mr. MORGENTHAU I would not say that, but I think we are getting
about all that we can get, because in the silver purchase program that
we have followed, now, since 1934 we have, I think, mopped up most
of the silver of the world that is salable or for sale.
Representative WHITE. Mr. Chairman, may I ask the Secretary a
few questions?
Senator McCARRAN. Yes, Congressman White.
Representative WHITE. Secretary Morgenthau, in operating the
Treasury's fiscal policy in dealing with silver, it averages out that the
total volume of silver costs about 50 cents an ounce, averaging the price
paid for foreign silver and domestic silver?
Mr. MORGENTHAU. Over what period, Mr. White?
Representative WHITE. Since you started purchasing under the act
1934. I have the seigniorage figures before me, taken from the
bulletin of March.
Mr. MORGENTHAU. I understand my men to say that that is approximately correct. You most likely have it.
Representative WHITE. Could you give the committee just about
the average cost of all the silver you have bought, that is now on hand,
both for the silver certificates outstanding and the silver that you call
free silver over in the Treasury?
Mr. MORGENTHAU. Yes, I have that right here. Had I better talk
of
in ounces?
Senator McCARRAN. I think it would be more understandable.
Mr. MORGENTHAU. I can give it in both ways. The silver in the
Treasury as of April 30 was 2,900,000,000 ounces, or 99,438 short tons.
Silver coinage in circulation outside the Treasury, like silver dollars
and subsidiary silver coin, was 409,000,000 ounces, the equivalent of
14,018 tons.
That made a total of silver owned by the Treasury and coinage in
circulation of 3,309,500,000 ounces, the equivalent of 113,456 tons.
Senator McCARRAN. That is the total amount of silver owned by
the Treasury, both in and out?
Mr. MORGENTHAU. Yes.
Representative WHITE. But under date of April 30, 1942, according
to your circulation statement, you had outstanding in silver certificates
676
SILVER
SILVER
$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. No.
Representative WHITE. You had on hand this silver that you
Representative WHITE. Has the Treasury any definite reason for
not using that silver?
Mr. MORGENTHAU. Mr. Chairman, if you want to go into the whole
Treasury policy on silver and why we have not issued silver certifi-
mentioned, and if you balance what you received for silver in circula.
tion and silver dollars with what you have on hand, it averages about
50 cents an ounce?
Mr. MORGENTHAU. I agreed with you; yes.
cates, I shall be delighted to do it, while I am here. We are not
I
find that it is carried as 1,360,000,000 ounces. Going back to
April 20, I found the amount was 1,364,000,000. So, as against the
1,360,000,000 ounces, there is a decrease there. Is that accounted
for by the 13,000 tons you have disposed of?
Mr. MORGENTHAU. No; there is a little misunderstanding some-
where. We actually have not yet turned over any silver.
Representative WHITE. Well, you have moved out of the Treasury
stocks, silver to the amount of 4,000,000 ounces, according to your
own figure.
Mr. MORGENTHAU. Whatever it is, we shall be glad to furnish it
to the committee; but, to my mind, that has nothing to do with silver
going to the Defense Plant Corporation.
Representative WHITE. I believe you are asking for legislation
authorizing you to move certain idle stocks of silver. The figures in
your statements coming out from time to time develop that you are
moving it. It fluctuates, and I was told 3 months ago that the diminishing figures indicated the quantity of silver revalued in the general
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 statement, they show a difference of 4,000,000 ounces that you have disposed of or by which you have reduced stocks.
Mr. MORGENTHAU. The slight movement of silver from one category to another is due to the fact that more coinage is required.
When coinage is required for a quantity of silver quarters, that will
take the silver from one category and place it in another.
Representative WHITE. Would the coinage of minor coins account
for that reduction of stocks?
Mr. MORGENTHAU. I am sure that you will find, after we have
given you an explanation of these items, that there has not been any
diminution in the monetary situation.
Senator JOHNSON of Colorado. Why can we not go ahead and get
the statements from our guests this morning, first.
Senator McCARRAN. I understood that Mr. Nelson had not finished.
Representative WHITE. I am a member of the Coinage and Weights
Committee of the House. I had quite a little to do with the passage
of the Gold Revaluation Act. I think that this is pertinent to the
issue.
Senator JOHNSON of Colorado. I should like to know what the proposal is.
Representative WHITE Well, I should like to ask one or two more
questions; then I will yield.
Senator McCARRAN Go ahead.
Representative WHITE. Could not this idle silver be used as money
by issuing silver certificates against it?
Mr. MORGENTHAU. Yes.
Representative WHITE. There is nothing in the law to prevent it?
Mr. MORGENTHAU. Yes.
Representative WHITE. You have on hand quite a volume of free
silver. According to your statement which came in this morning,
677
hiding 4,000,000 ounces by taking it from one pocket and placing it
in another; it is all accounted for. If you want to go into the whole
monetary policy on silver, I will stay here until I can, at least, answer
every question that every member of the committee has,
But if you are interested in the terrible situation that are up
against and why we cannot assist Mr. Nelson in prosecuting the war,
by lending to him, through Mr. Jones, the silver that he needs as a
substitute for copper, then, if you do not mind my saying so, I think
that is another proposition.
Senator McCARRAN. May I state what my views are?
Mr. NELSON. I have one more thing that I should like to say.
Representative WHITE. At this juncture, I should like to make
apology to the Secretary for having put a question that may be disturbing; but the question is, as I understand it, the disposition of
this silver, because we have idle silver, all of which has been acquired
under provisions of the Silver Purchase Act of 1935 and the Silver
Act of 1939.
Mr. MORGENTHAU. You do not owe me any apology, Congressman
White,
Representative WHITE. I will ask a direct question: Is it a fear of
inflation that causes the failure to use the silver as money?
Mr. MORGENTHAU. No. We have never done it. We have never
issued these extra silver certificates.
Representative WHITE. You just have not done it, but there is
nothing to prevent your doing it?
Mr. MORGENTHAU. There is nothing to prevent our doing it: but
it has been our policy since the Silver Purchase Act not to do it.
There is nothing new about it. Since 1934 we have not done it.
Senator McCARRAN. Mr. Nelson wished to make a further and
concluding statement, as I understand it. I should like to have him
make now.
Am I correct in that understanding, Mr. Nelson?
Mr. NELSON. That is right. I had not finished when you asked
about the purchase price.
If we can replace the copper that will be needed for making other
things, such as aluminum, chlorine, or magnesium, or butadiene, and
use this silver instead, the silver will have only a very nominal amount
of wear. I mean we are not talking about using up the silver: although,
frankly, if it meant making ammunition, and we had to have the
ammunition, and silver would do, we probably should use it up as
ammunition. if that is the thing we need to prosecute this war.
Senator WILEY. Will it be determined by chemical or engineering
experts whether silver can be used?
Mr. NELSON. Oh, yes.
Senator WILEY. That has not been tried out?
SILVER
678
Mr. NELSON. In the case of butadiene it has not; in the case of bus
bars it has been.
Senator WHEELER. You can use silver instead of copper in the
stills, can you not?
Mr. NELSON. Oh, yes. It is a good conductor, an excellent con.
ductor, of electricity.
Why we came before you, sir, was to ask if we could not find some
to use this silver to replace copper, because of the deficit of
way copper; and this deficit of copper will come right out of our ammuni-
tion requirements. I think it would be a great pity if we had to
close down any one of our ammunition plants for a lack of copper if
we could substitute another metal which we have on hand and are
not using, and thereby make more ammunition out of the copper
which we have.
Senator WHEELER. If this is done, would it affect the financial
policy of the Treasury at the present time with reference to the silver
situation? You are not seeking to change the silver law with reference to the purchase of silver, as to prices, in any way, shape, or form?
Mr. MORGENTHAU. I do not know if Mr. Nelson has told his whole
story.
Mr. NELSON. Yes, I have. I wish, if I may, to make one request,
and that is that the amounts of these deficits be kept off the record;
I only wanted the committee to have a picture of what our copper
requirements really are
Senator McCARRAN. Have you now, Mr. Nelson, concluded your
statement or gone as far as you want to go? Have you now concluded such statement as you think you should preliminarily make?
Mr. NELSON. At this time, sir.
Mr. MORGENTHAU. Senator Wheeler, in answer to your question
just now, Mr. Nelson tells me that that is all he is asking for.
If this committee feels that this is a worthwhile project-and I
hope that they will, and will give us the legal authority, or that this
committee will recommend to Congress that we be given the legal
authority, then, to answer your question, we have, as far as I am
concerned, no idea of disturbing the silver legislation, other than,
with your authority, to lend to Mr. Jones' Corporation the balance
of the silver in the Treasury if Mr. Nelson says he needs it for war
purposes.
Senator WHEELER. That is the thing that seems important to me
at the present time. I mean the fact that we passed this law would
not change the silver policy as enunciated by Congress heretofore?
Mr. MORGENTHAU. Well, from what Mr. Nelson has told you, I
do not see why it would be necessary.
Senator WHEELER. I could not see why it would be necessary either,
but I wanted to get your own view upon it.
Mr. MORGENTHAU. But We in the Treasury do feel that we need
legislation to give him the balance of the silver.
Senator WHEELER. I understand that; but if we pass the legislation that you have suggested, it will not change the silver policy with
respect to the price of silver?
Mr. MORGENTHAU. It could not.
Senator WHEELER. That is what I thought.
Mr. MORGENTHAU. You want the assurance?
Senator WHEELER. I wanted that assurance.
SILVER
679
Mr. MORGENTHAU. I stand just where I did before. I am here
simply backing up Mr. Nelson's request that we be given the legal
authority to do what he needs to have done.
Senator WHEELER. I am speaking only for myself. As far as I am
concerned, I feel that if it is necessary to use this silver under these
circumstances, in order to conserve other needed war materials, those
of us who are interested in silver could not very well take the position
that we were not going to permit the use of that silver or of any other
material, no matter what it was. If we needed to use the gold that
is in the Treasury in order to carry on the war, I would say to use
the gold-or the silver or anything else that we have.
Senator MURDOCK. Mr. ChairmanSenator McCARRAN (presiding). Senator Murdock.
Senator MURDOCK. My question is based on a statement made to
me that we are not only taking care of our own country but are also
furnishing a large amount of copper to the United Nations.
Mr. NELSON. Yes, sir.
Senator MURDOCK. I em wondering if you have made or if anyone
else has made an investigation of any kind to determine whether or
not any of the other United Nations are utilizing silver in place of
copper in order to make copper readily available.
Mr. NELSON. Well, as far as I know, I do not know of any case
where the United Nations-unless Russia is doing it, and we have no
information on that-are doing the same kind of job of increasing their
supply of other things as we are, such as in the case of aluminum and
synthetic rubber.
In the case of synthetic we are the only one that has increased
the production of synthetic rubber. We have grain over here and
we have the petroleum to make synthetic rubber. We will have to
supply synthetic rubber for the United Nations.
Senator MURDOCK. It seems to me, Mr. Chairman, that certainly
the Congress and the officials of this Government should be informed
on that question. If it is necessary here in the United States to utilize
silver in place of copper in nonconsumptive uses, it seems to me that
we should certainly ask our Allies, before sending copper over there to
them-and I am wholeheartedly in favor of doing that-What are
you doing along this same line?
have asked that question, because it seemed an important question,
for this reason: That when the war comes to a conclusion-and It think
it will come to a victorious conclusion for the United Nations-the
United States is going to find at the peace conference that its large
stocks of gold and silver are going to be very important factors. So,
while I agree with Senator Wheeler, I have no objection, coming from
a big silver-producing State, to the utilization of every ounce of silver
and every ounce of gold, if necessary, in nonconsumptive uses for
the winning of this war. But, as the chairman of the committee has
stated, I do not want to see at this time any material change made
with reference to the monetary use of silver. However, I can see no
damage or no harm to the silver program if the Treasury is allowed to
use the silver or to lend it for nonconsumptive uses under proper
safeguards.
Senator McCARRAN. Mr. Secretary, do you care to comment.
Mr. MORGENTHAU. I can answer Senator Murdock's question.
As far as I know-if I am wrong, I will correct it-none of the United
680
SILVER
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
lease-lending some silver for industrial uses. England is short of
silver; in fact it has not enough silver now for its own coins, That is
the situation as far as England goes.
Senator MURDOCK. Is that true with reference to China?
Mr. MORGENTHAU As far as I know, I think we bought about all
the silver that China had to sell.
Senator MURDOCK. What about India?
Mr. MORGENTHAU. Well, I do not know offhand how large their
silver stocks are or whether they would be readily available for industrial purposes.
Senator MURDOCK. There is an inflow of silver into this country?
Mr. MORGENTHAU. But certainly as far as England is concerned,
England is asking us now for silver for industrial use.
Representative WHITE. Mr. Chairman, may I ask a question?
Senator McCARRAN. Yes.
Representative WHITE. Mr. Secretary, in your opinion, which do
you think would be more beneficial to the American people: to take
this silver and issue it in circulation under silver certificates to pay
running expenses of the Government or to use it industrially, as you
propose?
Mr. MORGENTHAU. I do not see how you can compare the two
things.
Representative WHITE. I am just asking for your opinion.
Mr. MORGENTHAU. I could not compare them. In one situation
we have a gun at our belly, and we need copper bullets. Issuing the
maximum amount of silver certificates is not going to help us one bit
at the front. I do not see how you can compare the two things.
Representative WHITE. There are a great many metals that can
be substituted for copper. One of them is aluminum. Do you think
it would be more advantageous to the American people to use this
silver industrially than to turn it into money or to issue silver certificates against it, just as you have been doing all the time in buying
silver and putting out silver certificates?
Mr. MORGENTHAU. I do not think the two things are comparable,
Mr. White.
Senator JOHNSON of Colorado. You are doing both under your plan.
Senator CLARK of Idaho. There is no reason why you cannot issue
silver certificates against these bus bars, as long as they are properly
policed.
Mr. MORGENTHAU We could. Thank you.
Senator JOHNSON of Colorado. That would be doing two things: It
would be doing what Congressman White would have you do and what
Mr. Nelson would have you do.
Mr. MORGENTH\U. We could do that.
Representative WHITE. I was just trying to get at the policy of the
Treasury as to the use of this silver: Whether it should be used as
money or whether it is better to keep it idle. I am wondering why it
has not been used as money before.
Mr. MORGENTHAU. Well, it has.
Representative WHITE. You have the mechanics for creating silver
money and are using silver all the time. It is not my purpose to embarrass the Secretary it is simply my purpose to get at the policy of
the Treasury in the use of this silver.
SILVER
681
Senator McCARRAN. Boiled down to the last analysis, as I gather
the whole question here and I will express this in my own homely
way-the bus bars, or the silver that is in the bus bars, being in such
condition as not to be deteriorated, may be regarded, as I view it, as
silver backing for certificates that might be issued. Am I correct in
that?
Mr. MORGENTHAU. You are perfectly correct in that, but you
know, certainly as well as I do, Mr. Chairman, that as we buy silver
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
not issued silver certificates against what you call free silver or
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,
there has not been any criticism. That is the policy we have followed
since 1934.
Senator McCARRAN. Following that policy out, suppose you turned
over to Mr. Nelson for his use all the silver, We will say-47,000 tonsthat you have and that you then continued to acquire silver, as you
naturally would in the annual purchasing. That newly acquired
silver could in turn have certificates issued against it and also could
be turned over to Mr. Nelson for his use: is that correct?
Mr. MORGENTHAU. Just a minute. You are asking me a very
important question I want to be sure I am right.
Representative WHITE. Then, by this scheme we have the dual use
of silver. We use it industrially and at the same time use it as
security for silver certificates?
Senator CLARK of Idaho. It could be put into a bar of the type that
electricity flows through.
Mr. MORGENTHAU. That is right.
Representative WHITE. To do this, you will have to get away from
the old redemption provision, because you could not very well say that
"on presentation of this certificate, you can demand $1 in silver."
Senator WILEY. Well, a person could go down and take a piece off
a bus bar.
Senator McCARRAN. Let us have the Secretary's answer.
Mr. MORGENTHAU. The answer to your question is just about the
way you put it. We would continue the same policy, but as we
acquired new silver, we would continue to issue silver certificates
against the cost. If Congress enacted the legislation, we would continue to issue silver certificates against newly acquired silver and
then turn around and lend it on arrangement with Mr. Jones, who
would turn it over to the plants that Mr. Nelson designated.
Senator WHEELER By doing that, you would help to pay for the war.
Representative WHITE. In the event all the silver was now used as
coverage for the issuance of silver certificates and you had no free
silver, would it be possible to put silver to dual use-to use it industrially and still have it available for coverage of your silver currency?
Mr. MORGENTHAU. Well, Mr. White, we in the Treasury like to
live up to both the spirit and the letter of the law. My legal counsel
advises me that we can lend to the Defense Plant Corporation the
so-called free silver, but the silver which is in the Treasury, backing
up the outstanding silver certificates, we feel we cannot lend out unless
we get additional legislation from the Congress, and that is why we
are here today.
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
placed in circulation, more than the equivalent of all the idle silver.
Is not that a fact?
Mr. MORGENTHAU. I think that is correct.
Representative WHITE. Since June 30, 1941, there has been placed
in
circulation more Federal Reserve currency than the equivalent of
all the silver. In other words, the currency of this country has been
expanded or inflated to an extent far larger than the utilization of all
the idle silver? That is a fact?
Mr. WHITE. The increase in the Federal Reserve notes is more than
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?
myself. It would be my view that no group in this country could
are making.
If I do not, someone may take issue with me. I will speak now for
afford-and certainly I would not think that I could afford-to
oppose any policy or plan for the successful prosecution of this war.
If there is in the Treasury of the United States metal essential for the
successful prosecution of the war, and the value of that metal in its
place in the monetary system of this country can still be retained, and
it is integrated while retained in the monetary system, then personally
I would try to work out a law that would afford the Treasury and
Mr. Nelson an opportunity to utilize that silver in industrial uses,
but always remembering that it is integrated as a part of the monetary system and the economic plan of our country, which must be
retained. I believe that that can be worked out.
Is there anyone who is here and is interested in this subject who
takes issue with me?
Senator JOHNSON of Colorado. I concur completely, Senator. I am
sorry that I must now leave to go to another meeting.
Representative WHITE. I might observe that the question resolves
itself into a simple proposition, whether it is more beneficial to the
people of the United States to utilize silver as money by issuing it in
the form of silver certificates, to pay the Government's running expenses, just as is being done now, or whether it should be used indus-
trially as a substitute for copper.
It occurs to me that there is a possibility in framing this law that
you have in mind the putting of this silver to a dual use. Will
it be held as coverage for this currency, and available for that purpose, and at the same time used industrially but checked and held in
control by the Treasury in that industrial use?
I should like to point out at this juncture that the currency of Hong
Kong was good money until something upset the government over
there; then the Hong Kong dollars were flying around the street, not
worth picking up. Had that been silver, those dollars would have
been good in any country at the bullion value of the silver.
Senator McCARRAN You are entirely right on that, Congressman.
Senator MILLIKIN. Mr. Nelson, during the course of your explanation of the proposition, you made some reference to possible consumptive use of silver. That is not contemplated in your proposal?
Mr. NELSON. No, sir; not in the proposal I am presenting.
Senator MILLIKIN. Such a proposal would call for more legislation?
Mr. NELSON. That would call for legislation different from this. the
Senator MILLIKIN. Your proposal, of course, contemplates
return to the usual storage place of the Treasury of this silver following the conclusion of the war?
Mr. NELSON. The proposal I am making to you today, sir, does
involve just that.
Senator MILLIKIN. The contracts would cover that feature?
Mr. NELSON. That is right.
Senator MILLIKIN. So it simply amounts to changing the usual
place of storage of the silver?
Mr. NELSON. Yes, sir; and putting it to a useful purpose.
Senator MILLIKIN. It would simply be stored in another place?
Mr. NELSON. That is right.
Mr. NELSON. No, sir; not at the present time on this proposal we
Senator McCARRAN. Secretary Morgenthau, I do not want to be
captious, but I did not quite like your answer to Senator Wheeler's
question; in other words, I did not think you were quite clear or
emphatic enough. Maybe I want you to be more emphatic than you
would be, but I want to ask you this: Is there now in contemplation
any plan or scheme whereby through this legislation you would
impair the integrity and value of silver in the monetary system of this
country?
Mr. MORGENTHAU. I am glad you asked me that question, because
it gives me a chance to ask one.
My answer to you is emphatically No. At the same, time what I
should like to have an expression from this committee on is this: As I
understand it, by my saying emphatically to you No, it establishes
what I shall call, for want of a better name, a friendly truce. I
should like to have from this committee an expression that if legislation
is introduced to make it legally possible for us to lend through Mr.
Jones' Defense Corporation this silver, at the same time there will
not be any legislation making it mandatory upon the Treasury to
issue certificates up to the full amount of the silver; in other words,
changing our policy to issue silver certificates against the seigniorage,
the thing evidently that Mr. White has in mind. In other words, I
should like to keep the status quo.
Senator McCARRAN. That comes back again to my thought, perhaps
poorly expressed, that the silver, if I understand the proposal fairly
well, can be utilized in two ways. It stands as a backing for the
issuance of certificates, and it also serves an industrial use. Is that
your conception of it?
Mr. MORGENTHAU. That is perfectly correct. But may I restate
my position again? What I should like to see, if you gentlemen agree,
is a law that will make it legally possible for us to lend all of the silver
that we have in the Treasury to plants designated by Mr. Nelson, the
silver to be used as a substitute for copper.
But in this proposed legislation, you are asking me if we are going to
ask for anything which will change the silver picture. I say No.
I think, in fairness, that I might say that I hope you gentlemen, if
this legislation goes through, will not change the silver picture or the
monetary picture as far as the Treasury goes. Is that fair?
Senator McCARRAN. It looks fair, but I want to protect it a little
684
SILVER
SILVER
bit. You are not looking beyond the emergency or the war, are you?
Mr. MORGENTHAU. No, sir.
Senator McCARRAN. In other words, any legislation that you would
ask for would terminate with the war?
Mr. MORGENTHAU. Or 6 months after the war, in order to give
those plants a chance
Mr. NELSON (interposing). That is right; in order to give those
plants a chance to replace the silver with copper.
Senator CLARK of Idaho. My own view, Mr. Secretary, is that
whatever legislation is enacted here should be enacted, on both sides,
entirely apart from the silver policy, you for your part to go ahead
exactly as you have been under the Silver Purchase Act, and this
legislation to be confined to a war use of silver, so that we will not
get into the silver question as an outgrowth of this legislation.
Mr. MORGENTHAU. That is what I am asking for, and that is what
the chairman has asked me. Yes; for my part, if this is introduced,
I, speaking for the Treasury, will not ask for anything else than to
make it legally possible; but I think that in return
Senator CLARK of Idaho. I do not think we should clutter it up.
That is my offhand opinion.
Mr. MORGENTHAU. If this committee says it will not be, it will not
be.
Senator McCARRAN. One other question, Mr. Secretary. You
have in circulation how much in silver dollars? What is the amount
of your metal silver, both in the Treasury and out?
Mr. WHITE. Do you want to know how much silver there is in
circulation at this time?
Senator McCARRAN. In and out of the Treasury.
Mr. WHITE. In ounces, if you would like it that way, there are
2,900,000,000 ounces held in the Treasury, either against silver
certificates or as free silver.
Senator McCARRAN. I am speaking of coined silver.
Representative WHITE. In the Treasury, in standard silver dollars,
there are $481,741,220 That is money that is in the Treasury but
not in circulation, as of April 30, 1942.
In circulation, as of April 30, in silver dollars, there are $63,465,132.
Senator MURDOCK. Does that include your subsidiary coins?
Representative WHITE. No, just coined silver dollars.
Senator MURDOCK. Is it intended to do away with subsidiary coins
as well as silver dollars?
Senator McCARRAN. That is what I was just going to follow up.
Does this plan propose to interfere with the silver money, as I choose
to term the coins in circulation and in the Treasury? In other words,
would that be a withdrawal of your circulating medium?
Mr. MORGENTHAU. No, I have nothing in mind today like that.
As I told you before, if I do, I will tell you here. I do not want to
disturb the status quo of the silver-monetary situation at all in coming up here and asking on behalf of the Treasury to make it legally
possible to lend silver. We will continue in the same way we have
since 1934. To use the vernacular, what I should like to say to this
committee is that we won't start anything if you won't start anything.
Senator CLARK of Idaho. I think you are right.
Mr. MORGENTHAU. That is clear enough.
685
Senator CLARK of Idaho. That is clear enough, and I think you
are right.
Senator MURDOCK. You say you do not want to disturb the silver-
monetary policy, but am I not right in this: that you will have to
ask, or we will have to ask, if we go along with you on this policy,
for at least a suspension of redemption of silver certificates during
the emergency? You cannot redeem silver certificates if there is
nothing in the Treasury with which to redeem them. It would seem
me that if we from the beginning would suspend the redemption
to
of silver certificates during the period of the emergency, the question
would practically be solved.
Mr. MORGENTHAU. That is the way you write legislation.
Senator MURDOCK. That is the point I have been making, or have
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
months thereafter, and at the same time authorize you to lend to the
war effort the silver in the Treasury.
Mr. MORGENTHAU. I think you are right.
Representative WHITE. You stated that there were 100,000 tons
of silver on hand. Of those 100,000 tons, 47,000 tons are free silver
not obligated for redemption into anything. You are only proposing
today to get .law that will permit you to move 47,000 tons?
Senator McCARRAN. No, he is going to go the whole road.
Mr. NELSON. If necessary.
Representative WHITE. You propose to take the entire 100,000
tons?
Mr. MORGENTHAU. If Mr. Nelson certifies it as a necessity, yes.
Representative WHITE. Does Mr. Nelson contemplate using more
than 47,000 tons of free silver?
Mr. NELSON. That is what I am here for.
Representative WHITE. You want the whole 100,000 tons?
Mr. NELSON. We may need or we may not need the whole 100,000
tons.
Representative WHITE. In other words, you would do exactly as
Canada has recently done. You would suspend coverage of your
currency, and we would have, as far as silver certificates are concerned,
a fiat money basis?
Senator MURDOCK. You would be in the same position as on gold.
You cannot redeem gold certificates, but you know the gold is there.
If it is necessary in the war effort, as Senator Clark has said, what
difference does it make to the silver people whether it is buried in the
vaults or whether it has 30,000, 40,000, or 60,000 volts of electricity
going through it in the form of a bus bar?
Representative WHITE. It is a question of whether you have
coverage-redemption of your silver-certificate currency.
Senator MURDOCK. But the gold is buried, and you cannot redeem
gold certificates. As I understand it, this would be only during the
emergency.
Representative WHITE. Referring to the law of 1939, you are
working under subsection (b) of section 4. We are in effect remonetizing silver. That section reads as follows:
The Director of such mint with the consent of the owner shall deduct and retain
of such silver so received 45 per centum as seigniorage for services performed by
the Government of the United States relative to the coinage and delivery of silver
dollars. The balance of such silver so received, that is 55 per centum, shall be
SILVER
686
SILVER
coined into standard silver dollars and the same or any equal number of
in the thought that you have expressed several times during the hour.
want to ask Mr. Nelson a question which seems to me to have a
bearing on this matter.
Your request now is based on the assumption that you need so
standard
silver dollars shall be delivered to the owner or depositor of such silver, other
and
no provisions of law taxing transfers of silver shall extend or apply to
I
delivery of silver to a United States mint under this section. The 45 per centum any
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
bullion or silver dollars held in or belonging to the Treasury.
many additional tons of copper over and above what We are now
getting. You are not able to obtain that extra tonnage apparently
from any source; therefore, you ask for this substitution?
Is it proposed in any way to disturb that present existing law that
has in effect remonetized silver?
Mr. MORGENTHAU. May I ask one of my attorneys to answer that?
Mr. FOLEY. The answer, Congressman White, I would say, is no.
Representative WHITE. Silver has in effect after 77 years been
Mr. NELSON. That is right.
Representative MURDOCK. May I ask how many tons of copper
you think we might need but will be short of?
Mr. NELSON. I would not like this information to go into the
remonetized with 'seigniorage to the Government of 45 percent.
You are not proposing to disturb that at all? You are just going to
record.
Senator McCARRAN. Very well. This will be off the record.
use the silver you have taken in for industrial purposes?
Mr. FOLEY. For nonconsumptive purposes.
Senator MURDOCK. I think that has been emphasized. What is
wanted this morning is the nonconsumptive industrial use of idle silver
in the Treasury.
(Mr. Nelson then made a statement which, at the direction of
Senator McCarran, was not recorded.)
Representative MURDOCK. This request is based on the assumption
that you are inevitably going to be short that much?
Mr. NELSON. Yes.
Senator CLARK of Idaho. Let us get that clear. The Secretary
Representative MURDOCK. You see no possibility of increasing the
output of copper in order to meet that need? Arizona is the greatest
copper producing State and we want to go the limit.
Mr. NELSON. I think we are doing everything we can to increase it.
If anybody can suggest additional things to do in order to increase it,
we, of course, will be glad to know about them.
Representative MURDOCK. As a Congressman from a silver-produc-
told us at our previous meeting his personal views on silver, which are
definitely in disagreement with the views of this committee. On the
other hand, he told us that he was trying as best he could to follow the
law as Congress had written it in the Silver Purchase Act. As I
understand his proposal now, it is that neither side, as he puts it, will
start anything; that Mr. Nelson needs some metallic silver in order to
conduct electricity and perhaps to be used in stills; and that if we will
broaden his authority, he can get that silver into something useful in
the war effort.
Mr. NELSON. In place of copper.
Senator CLARK of Idaho. The Secretary and his staff will not
undertake in any way to let that policy interfere with the established
monetary policy of purchasing under the Silver Purchase Act, and we
on our side should not undertake to clutter up this law with any
further silver legislation looking toward the benefiting of silver mines
or looking toward any other general policy legislation. Is that
correct?
Mr. MORGENTHAU. You have put it much better than I could.
Senator CLARK of Idaho. Oh, no.
Senator McCARRAN. Let me amend that. If that policy is carried
out, the Secretary will then go forward with the silver program in the
full spirit of the law.
Senator CLARK of Idaho. Yes: as he has.
Mr. MORGENTHAU. As I have since 1934. I mean I will not change
anything in the Treasury as to the policy of carrying out the Silver
Act of 1934, and I will not change the policy of the Treasury in carry-
ing out the Silver Purchase Act in the future in any way. If at any
time I feel that I should want to do that, I will come before you
gentlemen. But you have my word that we in the Treasury will
continue carrying out the Silver Purchase Act in exactly the same way
as We have from 1934 to date. If there is any time when I want to
change that, I will come before you gentlemen.
Representative MURDOCK. Mr. Chairman
Senator McCARRAN. Congressman Murdock.
Representative MURDOCK. I want to say at the outset that I concur
687
ing State, I am tremendously interested, and I want to make that
clear. One of the gentlemen here said that he would be willing to see
not only silver used in a double capacity, but gold, too, and so would
I, for the winning of this war.
Senator MURDOCK. I made that statement, and I am very emphatic
in it.
Representative MURDOCK. I feel exactly the same way. I would
be willing to see the gold taken from the ground at Fort Knox and
used to fill the teeth of soldiers, if necessary, or to be make into bullets,
if it is necessary, in order to win this war.
Representative WHITE. Has the cost of guarding that gold ever
occurred to the gentleman?
Representative MURDOCK. With this understanding, I concur
especially in your statement, Senator McCarran, that we must main-
tain the integrity of silver in our monetary system. I believe that
the moment we put it to industrial use, even to nonconsumptive bus
bar use, there will be a psychological undermining of that integrity.
Silver may become thought less a precious metal and more an indus-
trial metal. However, this is an offhand opinion and may not
necessarily be correct. Jealous as I am of its previous value in our
monetary system, I am willing to have it jeopardized, to whatever
extent it will become jeopardized, in order that it may be used in the
war purposes.
Representative WHITE. In taking over this silver, Mr. Nelson, is
proposed that the title remain in the Treasury of the United States?
Mr. NELSON. By whatever mechanism they lend silver for defense
plants-by whatever lending processRepresentative WHITE. Title will remain in the Treasury, and the
silver will be returned to the Treasury?
it
is
SILVER
SILVER
688
Mr. NELSON. It will be returned to the Treasury.
Senator McCARRAN. May I ask one more question while this group
here? My understanding is that this legislation, if it is worked out,
689
Senator McCARRAN. Very well. They will be inserted in the
record.
(The matter referred to is as 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
into dollars, and we have in circulation silver dollars and silver subsidiary coins. None of them would be affected, and there would not
be-and this is one question that I wish the experts from the Treasury
would listen to--there would not be such curtailment of coining as
would affect the circulating medium of silver in the United States and
the commercial transactions of the country?
Mr. MORGENTHAU. I am sure that the answer is "No," as far as
circulating coinage is concerned.
Mr. WHITE. With one exception. There are silver dollars which
have been gathered into the Treasury and are the backing of the silver
certificates. If the legislation is written in such general terms as are
suggested here, it would include not only the silver bullion, but it
would also include silver dollars which are now the backing for outstanding silver certificates.
Senator McCARRAN. Do you mean outstanding silver certificates in
circulation?
Mr. WHITE. Yes.
Senator McCARRAN. Why should we have to go that far?
Mr. WHITE. I say that it all depends on how your legislation is
written. If it is written in the general terms you were speaking of,
it will include not only bullion but also silver dollars which have come
back into the Treasury and which had been minted earlier as a reserve
behind the silver certificates now held in the Treasury amounting to
481,627,820 silver dollars. So, they would be subject to the same general principle as bullion.
With respect to the coins outstanding, that, as I gather, is a matter
not mentioned herein
Senator McCARRAN. I would hesitate to concur in a policy that
would take the silver dollar, that Americans know today as the
American silver dollar, out of free circulation in the business transactions of the country. I think it would be exceedingly depressing to
the people of this country if that were done.
Representative WHITE. The gentleman knows that only $63,000,000
of those are in circulation, according to the Treasury statement.
Senator McCARRAN. There are more than that in the Treasury.
Representative WHITE. Mr. Nelson, if this legislation is drafted so
that it affects only the free silver, which is 47,000 tons, do you not
think that that would be a good start?
Mr. NELSON. That would not be enough We do not need any
legislation for that.
be
Senator McCARRAN. All bullion silver will be affected. Let that
understood. Let no one have any misconception about that.
Representative WHITE. I want to propound a unanimous-consent
question at this time. I have a letter from Mr. Bell, the Secretary
of the Treasury's assistant, giving factual data concerning monetary
operations with reference to silver in Canada I should like to know
if I may have that included in the record at this point and also have
included at this point a statement I have recently written, for publication, on the Silver Purchase Act.
TREASURY DEPARTMENT.
Hon. COMPTON I. WHITE,
House of Representatives, Washington, D. C.
Washington, May 25, 1948.
MY DEAR MR. WHITE: In accordance with your telephonic request of Mr.
Southard of a few days ago, I am enclosing herewith for your information a short
memorandum on Note-issuing Powers and Regulations in Canada
Very truly yours,
D. W. BELL,
Under Secretary of the Treasury.
NOTE-ISSUING POWERS AND REGULATIONS IN CANADA
The right to issue notes payable to bearer on demand and intended for circula-
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
any amount subject to the condition that it maintain a gold reserve equal to an
amount not less than 25 percent of its total notes and deposit liabilities Under
the Order in Council of April 30, 1940, authorizing the transfer of the bank's
gold holdings to the Foreign Exchange Control Board, the minimum gold reserve
requirement has been temporarily suspended.
Bank of Canada notes are legal tender and are the first charge upon the assets
of the bank. The Bank of Canada Act of 1934 provided for their redemption in
gold bullion, but it also provided that this provision could be suspended by the
Canadian Government, and this was done immediately.
Prior to the establishment of the Bank of Canada in March 1935, notes issued by
Canadian chartered banks were the chief circulating medium in the hands of the
public. The provisions regarding these notes were immediately changed, with the
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
own bank notes gradually during the 10-year period, 1935-45, by 5 percent
annually during each of the first 5 years, and by 10 percent during each of the latter
5 years, to an amount not in excess of 25 percent of their unimpaired paid-up
capital on March 11, 1935.
Chartered bank notes are not legal tender but they are convertible into Bank
of Canada notes which are legal tender. Chartered banks are obliged to accept
payment in their own notes, which are a first charge on the assets of these banks.
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 "circulation
redemption fund" is held solely for redeeming the notes of banks which have failed.
In the event of failure of any bank the others may be called upon to make further
contributions to the fund so that in this way each bank is partly responsible for
the redemption of the notes of all other banks,
Ever since the passage of the Silver Purchase Act of 1934, silver has proven to
be a practical and satisfactory backing for a substantial amount of the national
currency now amounting to around $2,000,000,000. A fiat currency has always
been abhorrent to our banks and business interests. In explanation of the operation of the Treasury's fiscal operations in creating and circulating our present
silver currency, the following article was written for publication by Congressman
Compton I. White of Idaho:
'Not many people know it but Uncle Sam, which is another way of saying the
United States, is making a tidy profit on the Tressury silver-purchase program in
meeting the monthly pay rolls of the Members of Congress and Capitol employees.
Stacks of newly engraved silver certificates, costing the Government about 50
cents on the dollar are being put out by the Sergeant of Arms of the House of
Representatives and the Senate disbursing office in meeting pay rolls
Our dollar, it may be explained, contains a little less than seven-eighths of an
ounce of silver, or to be exact 412 1/2 grains standard silver which makes a full
ounce of silver worth $1.291/: if a dollar was an even ounce of silver, all silver
money calculations would be much simpler.
"For many months the currency sent over from the Treasury has been brand
new money in denominations of $1, $5, $10, and $20 bills. The $1, $5, and $10
73052-42-pt
SILVER
690
SILVER
(From the Congressional Record, February 1942, p. A369
are exclusively new silver certificates redeemable in silver dollars. The
bills only Federal Reserve notes being paid out by these Government offices are the
needs the money.
"The fact is that the gains made by the Treasury in revaluing both gold and
silver is about even, the increment on gold being a little more than the increment
silver.
"Both of these figures show up every day in the Treasury statement, The
gold increment is set aside in the stabilization fund carried now at $1,800,000,000
and silver inerement is put in the general fund in terms of ounces (unrevalued)
and carried at the original cost of the silver before the seigniorage is taken into
account.
"This is a bookkeeping entry that may be compared to the transaction of &
wheat buyer purchasing wheat for 70 cents a bushel and selling it for $1 a bushel
and keeping his working capital in hand by selling up to the cost of his wheat
as fast as it comes in. When he has bought up to a thousand bushels for $700
and sold 700 bushels for $1 a bushel and has 300 bushels on hand, his bookkeeping entry would show his 300 bushels representing an investment of $210 when
in fact he has his money all back and the 300 bushels of wheat to show as a profit.
"So it is with surplus silver in the Treasury carried at $664,421,302.93 in the
Treasury statement but when we come to analyze this situation, if the seigniorage
is taken into account, this surplus silver did not actually cost anything and as
to the seigniorage item, it is either one thing or another. If it is entered as &
profit to the Government, then the surplus silver represents what it cost. If
the seigniorage is not carried on the Treasury books as a profit, then the total
surplus silver represents a profit which may account for the Secretary's sidestepping the question recently when he was asked as to the extent of the loss the
Government might sustain in disposing of its surplus silver.
"Some think that the fear of inflation has prevented the United States Treasury
from making a profit and a big saving at the same time by using our idle silver as
money but a lot more Federal Reserve money than all of our surplus silver would
make has been put in circulation in the last 9 months. The record discloses
that we had most of the idle silver on the last day of last June when the total
Federal Reserve notes stood at $7,001,580,625; just 9 months later on March
31, this figure stood at $9,056,131,000, an increase of over $2,000,000,000 and
now when the April statement comes along we find another big jump in the
circulation of Federal Reserve notes which have increased to $9,239,843,390.
Evidently inflation is not the answer to our surplus silver problem
"With these facts so obvious and easily understood and the patriotism of our
leading publications being constantly proclaimed, it is difficult to understand the
barrage of propaganda and innuendo appearing in these high-class publications
against silver. The interest income the banks would get if this form of cash
was retired and replaced with Federal Reserve currency is well understood
although it is difficult to believe that the patriotism of our bankers would permit
a profit motive to outweigh their interest in the welfare of the American people
struggling under the overburden of an interest load; as for our leading publica-
tions, it is difficult to understand their motive in putting out all this flood of
misleading propaganda against silver.'
MONEY
Extension of Remarks of Hon. Compton I. White of Idaho, in the House of
Representatives, Monday, February 2. 1942
LETTER BY HON. COMPTON L WHITE, OF IDAHO
Mr.
WHITE. Mr. Speaker, under leave to extend my remarks in the Record
submit an analysis of the development of our monetary system as I have outlined it in a letter replying to a treatise on the subject:
I
1920's This money flows into general circulation very quickly-the well-known
spending propensity of Federal employees takes care of that.
"From the money making standpoint (literally and figuratively) the plan has
advantages; the Government saves the difference between the cost of the
silver two this paper money represents and the face value of the certificates (bills)
which amounts to about 50 cents on each dollar when you average the price of
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
is the saving in interest to business, realized in using this kind of money in place
of bank currency
"The sticker in the plan is that for some unexplained reason the Secretary of
the Treasury will not put all of the silver the Government is buying to work as
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 silver') and piles up
the other half that really represents the Government's profit in a stock surplus
that could just as well be used like the first half is being used as money. In
reality the only cost of this so-called surplus silver to the Government is the
administration expenses in acquiring this money material that could be turned
into a profit at a time when everyone seems to think the Government really
691
Mr. CARL SCHMIDT,
Dayton, Ohio.
DEAR MR. SCHMIDT: In appreciation of your interest in the money question,
the subject of the treatise which accompanied your letter recently received, I
wish to commend your bringing this vitally important subject to the attention
of the Members of Congress.
Any medium of exchange to be real money must be legal tender established by
law.
Other things may function as a medium of exchange but they are not real
money. We must not confuse the function of money with money itself.
Under the system of money adopted when our Government was established,
both gold and silver, of standard fineness and quantity were made money by
statute and the unit of value was fixed by law. Section 314 of the United States
Code provides:
"The dollar consisting of 25.8 grains of gold 0.09 fine shall be the standard of
value.
Section 316 of the United States Code provides that:
The weight of the dollar shall be 4121/2 grains troy of standard silver."
So, 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- other
forms of money were established on this foundation.
The Government has the prerogative and can exercise a monopoly in the
creation of money; however, our Government has always maintained a position
as an entity that deals with money as an individual raising its income by taxation
and paying its obligation by money obtained from taxable sourees of public
borrowing.
The effect of the law establishing our money medium was to make the metal
gold and the metal silver of definite weight and fineness wherever they existed
The prospector roaming the mountains that came upon a gravel bar containing
nuggets of gold, when he mined this gold, dug lawful money out of the ground
The silver miner, mining and crushing his ore to extract the silver from a vein, in
effect dug lawful money from the ground, and his Government removed the dross
by refining the metal and coining it for the convenience of the miner and the
people who used money.
Trade and business put this money in circulation, a circulation the Government
accelerated by levying taxes and imports and accepting this silver and gold in
payment. paying out the silver and gold again in meeting the expenses of con-
dueting the Government.
In pursuing the subject of money further some have asked why not use other
metals for money- copper aluminum, tin, or platinum, as well as gold and silver.
These other metals mentioned are too unstable for use as money when we consider
the basic principles of economic law affecting the function of money. Any money
to be stable in value must increase of itself or by substitutes evenly in volume with
the growth of population or the expansion of business, an increase which is esti-
mated by economists at a rate of 3 percent annually The requirement for a
money medium of stable value has been met from the beginning of civilization until
very recently by the production and use of gold and silver.
Statistics disclose that on the average about 141/2 times by weight of silver
produced to that of gold, with the result that a ratio of value has been established
between the two metals of 16 to 1. Over a long period of time we find from
statistics that the average of gold increases in volume by 1 percent annually and
silver by 2 percent. When taken together the production of these metals make the
3-percent increase in volume that keeps pace with the growth of population.
If we consider copper, we find that the production of this metal far exceeds the
growth of population and would, if the mints were open for copper coinage, soon
become so plentiful that it would steadily lose value as money On the other
hand, if we were to use platinum for money alone, the production of the metal is so
is
SILVER
692
SILVER
693
short of keeping pace with the growth of population that the continued demand
far for and the resulting appreciation of this coinage would bring unstable
business money conditions and a continued fall in prices, as people sacrificed their goods
and services to obtain the necessary money to meet their obligations.
By discarding the use of silver as money, the world governments have upset the
between money and the value of the things exchanged for money.
equilibrium result of the financial disturbances of the Civil War period in this country,
As new a kind of money was invented based on government credit and regulated
a quantity by the ability of people to borrow and pay interest on bank loans. This
currency is the national bank note (made legal tender by law) which up to recent
circulated in our currency system and got into circulation by being loaned
years 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
its use as money in trade and business yielded an income to the issuing banks in
the form of an interest charge in a system which also operated to increase the
banks income by the interest received from the Government bonds deposited with
the United States Treasury as security for the repayment of the national bank.
note currency.
With this kind of money in circulation, the American people soon saw legisia.
tion enacted to discontinue the use of any new silver as money a plan which natu.
rally increased the demand for and the use of national bank-note currency and
precipitated the struggle between the free-coinage champions of silver and the
gold-standard advocates, who supported a plan which would work for the wider
use of national bank-note currency. This struggle resulted in the adoption of
several monetary expedients directed to stabilizing the price of silver but never
restoring the metal to its former status as money of itself but leaving it to remain
a commodity to be bought and sold by the Government on a commodity basis
and when new silver was used after demonetization in connection with the national
currency system its use was based on its commodity value.
The principle that the stability of money value rests on the control of the
volume in circulation is generally recognized.
In the past the stabilization of the volume of the money medium has been controlled automatically by the natural limitation of the production of precious
metals, gold and silver. After silver was demonetized, there came into operation
a mixed control, one, the natural limitation of production of gold; the other,
governing national bank note currency (a substitute for silver money) was limited
in volume by gold reserve and redemption restrictions and the ability of the people
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 &
large factor in regulating the volume of national bank note currency in circulation
During the period from demonetization of silver in 1873 and the nationalization
of gold in 1933, this country had a dual control on the creation of money exercised
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
hand, a scheme which functioned for a time, until commercial and bank credit,
which had largely replaced money (cash) in the transaction of business, collapsed
with almost total failure of the element of confidence. In this emergency, due
to the shortage of the only money metal in use, gold, it developed that the currency system based on gold and gold redemption could not fulfill the money requirements of the several nations and gold in turn was demonetized and our
monetary system shifted to a managed currency. In this system gold is DAtionalized and held on deposit as a 40-percent coverage for the outstanding Federal
reserve notes which were controlled in volume by the component organization
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 supplemented 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
Banking System The first of these adjustable controls is the discount rate
whereby the lending operations of the lending banks is stimulated or depressed
by the rediscount rate charged by the Federal Reserve bank, i. e., the division of
the interest between the Federal Reserve bank and the member bank who is
responsible for the collection of the note which is offered for the security of the
issuance of currency by the Federal Reserve bank. If the lending bank takes
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, so the volume of
the loans are controlled by this device. And then a third provision is the open
market transactions dealing in Government bonds.
When the Federal Reserve banking authorities deem it expedient to reduce the
amount of money in circulation they go into the market and sell Government
bonds and the money paid for the bonds is withdrawn from circulation: on the
other hand, if they want more money in circulation, they go into the market and
buy Government bonds and the money paid for the bonds flows out to be invested and put to use by the people selling the bonds,
So you see we are today conducting all the business of this country with a
managed currency, a system that is largely dependent for its normal function on
confidence.
If a banker to whom an application is made for a loan lacks confidence concerning any conditions affecting the repayment of principal and interest the loan is
not made. It may be his apprehension of the effect of legislative or administrative policies of the Government; it may be due to his uncertainty of local business situations, but in all events, confidence is a controlling factor. The cash
element in the hands or ownership of the average business organization or individual is a small factor and a decreasing element.
We find the Government handles its financial dealings on practically the same
basis of individuality as any other corporation. We also find that weare using
and depending upon a managed currency controlled principally by the ability of
the people to borrow money and repay the principal with interest and that the
interest on business borrowings that supports the circulation of our currency is in
reality an income to the members of the Federal Reserve banking system and we
are further confronted with the fact that if all business could be placed on a cash
basis and was out of debt and the Government paid off the national debt, as it
did when Andrew Jackson was President, business would be paralyzed because
we would not have a cent of money under our present system, except the small
change, our subsidiary coinage-the halves, quarters, dimes, nickels, and pennies,
a few silver dollars and silver certificates.
You are to be commended upon your interest in this subject and your efforts to
help devise and put into operation a good workable, adequate money system with
which to transact the business of this country.
Sincerely yours,
COMPTON I. WHITE.
Senator McCARRAN. Mr. Secretary, would you care to have inserted in the record the statement that you used? Would it be useful in giving us light on this?
Mr. MORGENTHAU. I have it available.
Senator McCARRAN. It will be inserted in the record, with your
permission.
Mr. MORGENTHAU. It is just statistics.
Senator McCARRAN. Yes.
Mr. MORGENTHAU. Surely.
Senator McCARRAN. As of today?
Mr. MORGENTHAU. Yes. That is available.
(The matter referred to is as follows:)
TABLE I.-United States monetary stocks of silver (Apr. 30, 1942)
Millions of
ounces
Silver held in Treasury
Silver outside the Treasury
Total
2,900.6
Short tons
99,438
408.9
14,018
3,309.5
113,456
SILVER
694
SILVER
TABLE II.-Estimated monetary stocks of silver of other countries (Jan. 1, 194112
Senator McCARRAN. I would not want anything to happen to prevent the continual replacement that keeps this silver money in circula-
Millions of
tion. I think it would be very depressing for the people.
Short
ounces
695
Senator MILLIKIN. There would have to be some reserve kept.
Mr. MORGENTHAU. We would have to keep some reserve on hand
China
India
at all times to keep, at least, the number of silver coins in circula-
Other countries
2,960
Total
10,147
Includes coln held by the public. Does not include 890 million ounces not allocated to monetary or BOO.
,
monetary uses.
Senator McCARRAN. I am going to make this suggestion, and if
there is any objection to it, I should like to hear it. It is quite apparent 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
TABLE III. Classification of Treasury holdings of silver (May 21, 1942)
Millions of
Short tons
ounces
tion; and as the volume of business increases, we are constantly adding
to the number of silver coins in circulation.
original drafting of this legislation. I for one look upon this with a
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
Silver dollars held against silver certificates
Bullion
at
cost
1,160.4
371.8
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
.001
2,902 5.
99,500
Millions of
Short toos
ounces
1,246.1
Proclamation silver
Act July 1939
42.719
35.5
1,217
78.3
2.6M
4.1
Silver, ordinary
Total silver bullion at cost
I want to know if it would be in keeping with the spirit of those
46,660
9.8
TABLE IV.-Sources of Treasury holdings of silver bullion at cost (Apr. 30, 1948)
Silver Purchase Act silver
is to be used.
12,746
1,360.5
Subsidiary coin in the general fund
Bullion in the general fund at recoinage value
Total Treasury holdings of silver
39,780
1,364.8
46,788
Disposable by the Treasury.
1
TABLE V.-Estimated production, 1942
Millions of
ounces
World production
United States production
United States imports
Short tons
with the experts of the Treasury and the Secretary of the Treasury
and others interested along that line in the drafting of the proposed
legislation, and that following the action of this group in working with
the Treasury, the chairman be again authorized to call your group
together for study of the legislation.
Does that meet with general approbation?
Mr. Secretary, what do you think of it?
Mr. MORGENTHAU. I think it is an excellent suggestion, but before
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,
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
expression from this committee, namely, that it is not going to start
anything such as adding any riders of a monetary nature to this
legislation. I think that is a fair request.
Senator McCARRAN. I will speak for myself, if I may.
Mr. MORGENTHAU. Certainly.
Senator McCARRAN. My policy would be just as you have expressed
245
it.
62
120
TABLE Estimated demand, including military
Millions of
ounces
Bearing materials
Chemical Industry
Containers (returnable)
Dental and medical
Electrical Industry
14.6
20.0
102.1
2.9
Solder
67.1
Miscellaneous
14.6
Decorative arts (silverware, jewelry, etc.)
49.6
Total
Nonconsuming uses, bus bars
Other nonconsuming uses
329.2
1,166.8
583.4
Short tota
Senator CLARK of Idaho. And it would be mine, Mr. Chairman.
Senator McCARRAN. I am not trying to bind anybody, but I think
that I may, with a reasonable degree of propriety, say that I think
that is the spirit of this meeting.
Mr. MORGENTHAU. If something like that should happen-and I
hope it will not-we should want to feel free to protect ourselves in
the matter; that is all.
Representative WHITE. With the cooperation of the Treasury, I
prepared an analysis from the earlier statement of the Treasury, and
it has been extended in the Congressionel Record. I should like to
include that and another extension in this record.
Senator McCARRAN Very well.
SILVER
696
(The matter referred to is as follows:)
SILVER
TREASURY DEPARTMENT
Washington, April 27, 1942.
Hon. COMPTON I. WHITE,
House of Representatives,
Washington, D. C.
Mr DEAR MR. WHITE: In further reply to your letter of March 2, 1942, the
Treasury is glad to submit the following replies to the 12 questions concerning
silver which you quote from one of your constituents:
1. Q. Is foreign silver coming into this country in exchange for goods in the
form of bullion?-A. The foreign silver imported into this country is chiefly in
the form of coin, bars, ore, and concentrates.
The dollar proceeds from silver imports are credit items in the international
balance of payments of the countries which sell silver and as such, offset the
various debit items, which include payments for imports, transfers of capital,
service of foreign debts, and other international transactions
2. Q. Does our Government ever actually buy silver, either domestic or
foreign, or just coin and issue it as money for the-owners?- Silver is acquired
by the Treasury pursuant to the provisions of section 3 of the Silver Purchase
Act of 1934. Silver certificates are issued against such silver in an amount
equal to its cost. Of the newly mined domestic silver eligible for acceptance by
the mints and delivered to them, in keeping with the terms of the act of July 6,
1939, and the regulations issued thereunder, 45 percent is retained by the minta
and 55 percent, in silver dollars, or its equivalent in value, is returned to the
depositor.
3. Q. At what value is foreign silver rated? Domestic silver?-A. Silver pur-
chased pursuant to the Silver Purchase Act of 1934 is carried on the Daily Statement of the United States Treasury at its cost value, except that silver against
which silver certificates have been issued is carried at its monetary value ($1.29
per fine ounce). By the terms of the Act of July 6, 1939, domestic silver mined
since July 1, 1939, and eligible for delivery to the coinage mints is settled for at
return to the depositor of 71.11 cents per fine ounce. This silver, too, is valued
at cost or, when made the basis of outstanding silver certificates, at $1.29 per
fine ounce.
What nations use silver for money? Is the silver certificate issued by
our Nation only?-A. As shown in the enclosed extract from the annual report
of the Director of the Mint entitled "The World's Monetary Stocks, many
countries have stocks of monetary silver. The United States silver certificate is
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 Brtiiah
India, Mexico, and Cuba.
Since when have silver certificates been used as money in the United
States?-A Silver certificates were first authorized by the act of February 28,
1878.
6. Q. Are our silver certificates acceptable at face value in other nations?-A.
So far as is known silver certificates are accepted everywhere on the same basis
as other United States paper currency.
Q. When did our Government first begin coining silver at a profit?-A. The
act of February 21, 1853, authorized the coinage of fractional silver coins containing about 7 percent less silver than the proportional weight of the silver
dollar. Silver dollars were first coined out of silver costing less than the monetary value of the coin in pursuance of the act of February 28, 1878.
8. (a) Q. Is all profit on the coinage of silver termed seigniorage?-!! Broadly
speaking, all "profit" on the coinage of silver is termed seigniorage.
(b) Q. What has been the total profit on the coinage of silver since the Silver
Purchase Act was passed in 1934?-A. The enclosed extract from the Treasury
Bulletin contains a table entitled "Seigniorage on silver" on a cumulative basis
since January 1, 1934.
(c) Q. What becomes of this 45 percent profit?-A. Seigniorage on silver is
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.
9. Q. What ratio do silver certificates in circulation bear to printing-press
Federal Reserve notes in existence? Is the Secretary of the Treasury or the Fed- The
eral Reserve banks allowed to take silver certificates out of circulation?-A
697
enclosed circulation statement of United States money shows the amounts of
silver certificates and Federal Reserve notes outstanding and in circulation. The
circulation of silver certificates is governed by the provisions of section 5 of the
Silver Purchase Act of 1934 and section 821 (b) (2) of title 31, United States Code
10. (a) Q. Who has control of the $2,000,000,000 of idle. unused silver
seigniorage now in the Treasury vaults, Congress or the Secretary of the Treasury?-A. As shown on page 1 of the enclosed Daily Treasury Statement, there are
over 1,362,000,000 ounces of silver bullion at cost value in the general fund of the
Treasury, valued at over $663,000,000 This silver is administered in accordance
with the enactments of Congress. As of possible interest, copies are enclosed of
extracts from Annual Reports of the Secretary of the Treasury for various years.
42 and 43 of the report for 1935 set forth the policy concerning monetization
Pages
of newly acquired silver, and pages 130-135 of the report for 1940 review silver
policy and seigniorage on silver.
(b) Q. And how can Congress claim there is no moneyfor old-age pensions
with $2,000,000,000 of idle silver on hand?-A. It 38 been the Government's
policy, as explained in full in the Secretary's annual report of 1935, to issue silver
certificates only up to the cost of the silver acquired under the silver purchase
program. Certificates have been issued up to that amount
11. Q. Are new silver certificates based upon bullion out of these "profits"?
A. Silver certificates are issued against silver held in the account entitled "Silver"
on page 1 of the Daily Treasury Statement. No silver certificates are issued
against the silver in the general fund.
12. Q. How are the Government-owned silver certificates paid into circulation
and who has the "say' as to what silver shall lie idle, or what proportion shall be
used as money?- 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
exchange for deposit credits where they are paid out by the Federal Reserve banks
as required by the demands of the public for additional paper currency. The
Secretary of the Treasury has authority to issue silver certificates against silver
purchased under section 3 of the Silver Purchase Act of 1934 (sec. 5 of the act of
June 19. 1934, 48 Stat. 1178, U. S. C. title 31, sec. 405
The President has authority to issue silver certificates against any silver bullion,
silver, or standard silver dollars in the Treasury not then held for redemption
of any outstanding silver certificates (sec. 12 of the act of January 30, 1934, 48
Stat. 342, S. C. title 31, sec. 821 (b) (2)).
Very truly yours,
D. W. BELL,
Under Secretary of the Treasury.
TREASURY DEPARTMENT
Washington, May 8, 1942
Hon COMPTON I. WHITE,
House of Representatives,
Washington, D.C.
My DEAR MR. WHITE: Reference is made to your letter of May 4 to the Seeretary of the Treasury requesting information relative to the amounts of gold
certificates, silver certificates, national bank notes, and Federal Reserve notes
of the large size outstanding at the present time.
The amounts of these kinds of the old series or large size paper currency outstanding on April 30, 1942, were as follows:
Gold certificates
Silver certificates
$28, 136, 224.
305, 427.
National bank notes
360, 061.
Federal Reserve notes
699, 170.
Very truly yours,
D. W. BELL,
Under Secretary of the Treasury.
SILVER
698
SILVER
699
(From the Congressional Record, February 12. 1942, p. 9572
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,
THE PRESENT Use OF GOLD AND SILVER IN OUR MONETARY SYSTEM
1941-Continued
CURRENT ASSETS AND LIABILITIES-Continued
Extension of Remarks
of Hon. Compton
I. White
of Idaho
in the House of Rep.
resentatives,
Thursday,
February
12, 1942
GENERAL FUNDS
STATEMENT AND LETTER SUBMITTED BY HON. COMPTON I. WHITE, OF IDAHO
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.
To clear up any existing misunderstanding concerning the status of this gold in
our monetary system and the status of silver and the profits made by the Treasury
in the form of silver seigniorage I have prepared a statement analyzing the gold
and silver items appearing on the Treasury statement of June 12, 1941, printed
herewith in answer to a letter I have received and which I submit for inclusion in
the RECORD under permission to revise and extend my remarks.
The Treasury statement follows:
Office of the Secretary of the Treasury-Daily Statement of the United States Treasury,
compiled from latest proved reports from Treasury offices and depositaries, une 18,
1941
Gold (as above)
At monetary value (as
above)
Subsidiary coin (oz. 2,218,
804.2)
At cost value (oz. 1,350.317,670.8)
Minor coln
United States notes
Federal Reserve notes
Federal Reserve bank notes
National bank notes.
National and other bank
Gold certificate fund- Board of
Redemption fund-Federal Reserve 5% notes
$2,878,476,189.00
17,498,297,500.00
9,506,153.30
reserve
NOTE -Reserve against $146.-
59,300,000.00
327,426.03
666,354,764.20
2,581,689.53
1,993,181.00
12.885.362,50
228,135.00
271,595.00
22,092,326.38
Postmasters clerks of courts, disbursing officers, etc.
Uncollected items, exchanges, etc
4,889,242.18
87,944,680.54
15,945,493.09
209,001,339.12
Balance today
Increment on
gold (a s
above)
$148,161,553.72
Seigniorage (all963,577,884.10
ver) see note
Working bal654,004,000.00
anoe
604,760,956.10
1,799,550,962.4
To credit of Treasurer
Governors, Federal Reserve
system.
12,556,574.13
depositaries:
Outstanding (outside of Treasury)
$28,365,349.18
5-percent reserve, lawful
Other deposits
236,851.81
of sales of Government
Gold certificates:
Board trustees, Postal Savings
money
securities
Gold
3,067,294.50
At recoinage value (oz.
Federal Reserve banks
LIABILITIES
Treasurer's checks outstanding
Deposits of Government officers:
Post Office Department
System:
Special depositaries account
ASSETS
$22,399,331,246.28
8,778,704.65
Bullion
Deposits in:
GOLD
Gold for 645,695,178.51
$257,021,962.19
Silver:
Unclessified-Collections, etc
CURRENT ASSETS AND LIABILITIES
LIABILITIES
ARSETS
156,039,430.00
United States.
69,662,477.80
ernment officers
61,444,268.37
To credit of other GovForeign depositaries:
To credit of other Gov-
ernment officers
Philippine treasury:
United States
681,016 of United States notes and
$1,100,822 of Treasury notes of
1890outstanding Treasury notes
213,160.58
To credit of Treasurer
Total
2,547,473,472.30
1,970,579.09
2,756,474,811.42
Total
2,756,474,811.42
of 1890 are also secured by silver
dollars in the Treasury
Exchange stabilization fund
1,800,000,000.00
22,342,329,254.00
Gold in general fund:
Balance of incre-
from reduction
In the weightof
the gold dollar $143,161,553.72
In working bal-
Total
22,599,331,246.28
113,860,408.47
Total
In answering your communication of June 11, I wish more of the people of this
country would give their attention to the principles and the workings of our
monetary system. I am very pleased to give you such information as I can on
this subject, a subject which I feel is paramount to all other issues affecting the
ment resulting
ance
Miss FLORENCE SELBY,
Eagle, Idaho:
257,021,962
22,509,331,246.29
SILVER
welfare of our country and the American people.
Answering your question as to who owns the gold stored in this country, there is
enclosed a copy of the daily statement of the United States Treasury for June 12,
the day following the date of your card. Under the heading "Gold" on the credit
side, you will find the first item, $2,878,476, represents the gold for which gold
certificates (warehouse receipts) have been issued and delivered to the Federal
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-
LIABILITIES
ASSETS
Silver (oz. 1,108,735,993.1)
Silver dollars(oz.381,192,905.7)
Total
$1,433,517,243.65
492.855.474.00
1,926,372,717.65
Silver certificates outstanding
Treasury notes of 1890 outstanding
Silver in general fund
Total
$1,916,433,191.00
1,160,822.00
8,778,704.88
1,926,372,717.66
standing gold certificates called in for redemption under the provisions of the Gold
Reserve Act of 1936, amounting to $60,000,000 of old series of certificates that for
soma reason have never been returned for redemption.
The next item of $17,498,287,510.80 represents the gold held as security for gold
certificates (warehouse receipts) in the possession and ownership of the Federal
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;
700
SILVER
SILVER
thereby increasing the number of dollars as represented by the gold taken
into nominal ownership of the Government under the provisions of the Gold over
Reserve Act of 1934, which increased the dollar value to a little over $2,000,
000,000. This increment was set aside at the time of the change as a fund to
used by the Secretary of the Treasury to stabilize (manipulate) the value of the be
United States money in relation to foreign money by the process of buying or
selling our money or their money as the exigency might require,
The next item of $257,021,962.19 includes 43,161,553.72 the balance of the
increment of gold subsequently acquired which has not been used or include
other items. It also includes gold delivered to the Treasury by Federal Reserve
banks for which gold certificates have not been issued.
So you see, reduced to fundamental principles, the only gold actually owned
the United States Treasury is the gold in the stabilization fund of $1,800,000,000
which will not be spent in paying Government expenses or put in circulation in our
regular currency system, except the item of $143,161,553.72 "the balance of the
gold increment resulting from the reduction in the weight of the gold dollar"
(see note on Treasury statement) which can only be spent by being transferred
to the gold certificate fund of the Federal Reserve banks in exchange for bank
credit. All gold enumerated in the other items is stored by the Government and
is really owned by the banks, as represented by the Federal Reserve Banking
System, just as wheat that the farmer delivers to a grain elevator, for which be
receives a warehouse receipt, is the property of the farmer or the firm to which be
sells the wheat as represented by the warehouse receipt; with the difference, of
course, that the farmer must pay the taxes and storage charges on his wheat
while the gold is nominally the property of the Treasury, and the banks, the real
owners or its equivalent in gold certificates, escapes storage, insurance charge,
by
and taxes.
As this is Sunday afternoon with no one else about the office and I am on an
interesting subject, I might explain the item of silver in the Treasury statement
as I understand it. For a more extensive discussion of silver, see my answer to
68 eminent economists made in the March 10, 1939, issue of the Congressional
Record, a copy of which is enclosed,
The silver items represent all the silver owned and in the possession of the
United States Treasury. The Treasury is buying silver all the time. The silver
mined in the United States is bought at the price fixed by law, 71.11 cents per
ounce. The foreign silver is bought at the world market price of somewhere
around 35 cents, the last time I noticed the quotation.
In taking up the silver items as shown on the Treasury statement, we find on
the debit side assets of two items. The first (1,108,735,993.1 ounces) valued at
$1,433,517,243.65. The second item is silver dollars on deposit in the amount of
$492,855,474 making a total of almost $2,000,000,000, or exactly $1,926,372,717.65.
(A dollar is roughly seven-eighths of an ounce of silver, of 4171/2 grains of standard
silver, which is equal to 37114 grains of pure silver with 10-percent copper added
when coined.)
On the credit side we find the account balanced with $1,916,433,191 represented
701
would be $1,745,865,267.64. This silver was obtained by buying silver at the
market price in the domestic and foreign market, with enough of the silver so
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 is then set
aside in a reserve fund against which its dollar value equivalent is issued and put
circulation as money in the form of silver certificates (legal tender currency
in
redeemable in silver dollars). This idle silver, like the gold in the stabilization
fund, represents an increment without actual cost to the Government and the
entry in the statement is equivalent to the item carried representing the gold in
the stabilization fund.
By way of explanation of the financial status of the unused silver, we find that
while the Treasury carries a cost value of this idle silver at $666,354,764.20 in
fact. it has issued and its creditors have accepted silver certificate currency up
to the total cost of all the silver bought, this item represents the allocation of
that part of the cost of purchasing this silver, based on the actual cost of all the
silver purchased from any source by the Government before any part of the
silver was revalued for use as money in the national currency system.
On the other side of the statement (liabilities) as an offset there is the item
$604,760,956.10 seigniorage (silver) but this.i not the total profit on the silver
that has been purchased. On page 2 of this same statement we find in the general and special accounts another item seigniorage $63,692,754.44 for the fiscal
year 1941, representing another profit made in minting and placing in circulation
the subsidiary silver coins (half dollars, quarters, and dimes) between the cost of
the silver and the face value of the coins.
In considering the total actual profit made on silver since the Silver Purchase Act
went into operation, in consulting the bulletin of the Treasury Department of
January 1942 we find on page 79 that the seigniorage (profits) on silver dollars and
and silver certificates amounts to $580,400,000 and the seigniorage (profits) on
subsidiary coins (half dollars, quarters, and dimes) amounts to $182,100,000.
Taken together, the seigniorage totals $799,700,000. The Treasury statement
goes further and gives the potential seigniorage on the idle silver in the general
fund at $1,089,000,000.
The continued use of the silver money now in circulation and utilization of the
idle silver as money is the subject of considerable controversy. When we consider
the function of money and the present state of our country's finances in relation to
our national indebtedness, and the stimulating effect of a new gold discovery on
business and the national income, it appears the idle silver should be put to use as
money to service business in the form of silver certificates, currency of small
denominations, the same kind of money that is now flowing in the channels of trade
and business in the form of $1, $5, and $10 bills, money that is eagerly accepted
through the country, the kind of money that is created and paid out by the Gov-
ernment in paying current expenses, a currency that circulates continuously
minus the interest charge inherent to the issuance and circulation of Federal
Reserve bank note currency.
Trusting I have answered your question, I am,
Sincerely yours,
COMPTON I. WHITE,
Member of Congress.
by silver certificates in circulation in the form of $1, $5, and $10 bills, money that
is in circulation and is being handled every day in every community in the United
States.
The next item, $1,160,822, represents silver held as security for redemption of
Treasury notes of 1890. These notes are, in fact, a reissue of the famous greenbacks of Civil War days. The item of $8,778,704.65 represents silver money that
has flowed back to the Treasury and its several branches throughout the country
in its transaction of Government business
So you see, the three items just mentioned on the credit side balances with the
two items on the debit side, which represents the money value of silver currency.
But there is more silver owned by the Treasury.
Coming down to the items in the general fund, you find the first silver item of
$8,778,704.65 on the debit side is the same item as the last item on the credit side
above under the heading of "Silver" coins (or certificates) reserved and on hand
for transacting Government business. The next silver item of $3,067,294.50
represents subsidiary coins (half dollars, quarters, and dimes) on hand. The
item of $327,426.03, expressed in the terms of ounces (236,851.8) represents,
am told, defective, abraded, and mutilated coins on hand waiting to be reminted
The next item as carried on the statement of $666,354,764.20 represents silverThis
on hand and owned by the Government not in use as money in any form.
item of silver represents neither its actual cost to the Treasury nor its coinage
value as money.
The statement shows it to be 1,350,317,670.8 ounces of silver, which if coined
[From the Congressional Record, May 14, 1942, p. 1929]
THE CASE FOR SILVER
Extension of Remarks of Hon. Compton I. White, of Idaho, in the House of
Representatives, Wednesday, May 13, 1942
Mr. WHITE. Mr. Speaker, in reading current newspapers and many of the
leading publications, it is very evident the real facts concerning the place of
silver in our monetary system and the profit the Government is making on its
silver-purchase program is not understood by the public in general, and for
some reason is being purposely misrepresented to the average reader.
In an endeavor to correct this situation and present factual information con-
cerning silver, the records of the Treasury Department have been consulted,
and I have endeavored to present these facts in a radio address in a Nation-wide
broadcast which I submit for printing in the Record:
With so much being said about silver and the Government's silver purchasing
program and the cost of this program to the American people, I am sure everybody
listening in will be interested to learn the facts about silver and the way the
SILVER
702
Government finances the purchase of silver and the use of this metal in our more
There is much to be said about the fundamental principles
tary system. and the use of gold and silver as money, but I desire to address myself to of
money the facts concerning the present-day purchase and use of silver as money
stating and to avoid a tedious recitation of figures. I shall use as far as practical round
numbers in stating these facts.
"The figures presented in the Treasury statement from day to day and the
of figures in the Treasury bulletin issued every month contains the
record compilation of the Government's fiscal operations in buying and using silver as money.
profits the Government has actually made in buying and using silver under
the The Silver Purchase Act now stands, or did on the 20th day of April, at $997,000,000
This money, or the profit on silver, is now invested in the unrevalued silver which
amounts to one and a third billion ounces and is carried in the Treasury account
an item in the general fund.
"How has the Government made the profit that is represented by this surplus
and unused silver? Simply by purchasing domestic and foreign silver at the
market prices and then revaluing the metal that is used for monetary
prevailing The Treasury staten.unts disclose that the Government has revalued
and purposes. put in circulation as money enough silver to evenly balance with all the money
that has been spent in buying silver- and in doing this has placed in circulation
silver money amounting to $2,024,000,000 in silver dollars and silver certificates.
These certificates are redeemable in silver dollars. The silver money in circula.
tion is chiefly silver certificates in the form of $1, $5, and $10 bills, as you will find
in checking the daily Treasury statement.
To give you an example of how the plan has worked, we can compare it to the
transaction of a miller in taking toll when the farmer brings in his grain to the
mill to have it ground into flour or meal; the farmer's grist is measured and
dumped into the receiving bin: the miller takes out the toll (his share) and puta
it into the toll bin, and then grinds the farmer's grist and delivers it back to him
without further costs. In the case of domestic silver the miner brings his bullion
to the mint and gets for every ounce 71.11 cents in silver certificates (paper money),
by which the Government puts a value on the silver the miner brings in of $1.29%
per ounce. The silver left over is put in the Treasury toll bin, general fund.
Under this plan the Treasury has piled and here I'm going to give you the
exact figures-1,364,566,969.1 ounces of unrevalued silver, as shown on the
Treasury statement of April 20 this year.
"This plan has worked so well and made such a big profit for the Government we
wonder why the Treasury doesn't use the balance of its silver the same way, just
as it is doing with the first half, revalue it and issue its equivalent in silver certificates, cash money, in paying some of the Government's running expenses.
I do not believe anybody would say Uncle Sam does not need money, especially
when we have unused in the Treasury a billion and one-third ounces of silver
bullion ready to be revalued which would bring its money value up to one and
three-fourths billion dollars that can be kept on hand to redeem the new crisp
paper bills, the kind of money that is being engraved by the Treasury every day.
"There is nothing in the law to prevent it. Section 5 of the Silver Purchase
Act provides:
The Secretary of the Treasury is authorized and directed to issue silver
certificates in such denominations as he may from time to time prescribe in a face
amount of not less than the cost of all silver purchased under the authority of
section 3. and such certificates shall be placed in actual circulation.
'Please note the provision just quoted 'not less than the cost of all silver purchased.' There is nothing anywhere in the language of the law itself or in the
amendment of July 6, 1939, that prevents the Secretary of the Treasury from
putting the surplus silver owned by the Government into circulation as money.
failed
It may be that the Secretary is afraid of inflation-evidently this fear has
to influence the policy of the Federal Reserve banks.
"In checking the record we find that we had most of this idle silver on June 30
year the Federal Reserve money in circulation was a little over
a
$7,000,000,000, and now. according to the circulation statement of the Treasury,
regardless of inflation, the Federal Reserve banks have put another $2,000,000,000
of this kind of bank-note money in circulation and are steadily increasing the
amount. The Treasury circulation statement for March shows the Federal Reserve money in circulation has been increased to $9,056,000,000, and now comes
along the April circulation statement showing a further increase of $200,000,000.
And we, you and I, and the rest of the good American people, still have our idle
silver.
SILVER
703
"The papers persist in telling us how useless the silver is and how we should
rid of it. Make electric bars of it. make anything out of it, anything to get
get rid of it. They might just as well talk about retiring the silver certificates and
melting down the silver reserves now being held for their redemption. The one
would reduce the monetary metal reserve as much as the other: the only difference
would be that one lot of silver is in use as money and the other is available and
ready to be put to the same use. There is not a line of law to prevent
I'm sure all of us agree that the Government needs the money just now, even the
Defense-bond salesmen will tell you that.
The best answer to this barrage of propaganda against silver is the figures in
the printed tables on silver seigniorage appearing regularly in the monthly bulletin
of the Treasury Department, and for your information there is submitted the
figures of three totals taken from the columns of the table appearing on page 80
of the March bulletin under the heading. "Seigniorage on silver.' The total of
the first column is $192,400,000; this is seigniorage (profit) made in buying silver
and minting the subsidiary coins, half dollars, quarters, and dimes: the next
important for our consideration is the total shown in column 8of $804,700,000.
This is the seigniorage or profit on silver that has already been revalued and put
in circulation as dollars and silver certificates: add these two figures together and
you get the actual profit the Government has made up to the present on the silver
that the Government has bought and put into circulation, but there is a larger
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
revalued and put into circulation in the form of silver certificates, the Government will realize the full amount of the profit on its silver-purchase program.
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
seigniorage on silver bullion at cost in the general fund.' I give you the exact
figure amounting to $1,096,300,000.
know that I have promised not to tire you with a tedious recital of figures but
to get the facts and determine the full amount the Government has made on its
silver-purchase program, it will be necessary to add the three silver seigniorage
items shown in the Treasury statement which makes a grand total of $2,093.000,000. In the face of these figures and the incontrovertible facts, what becomes
of all this barrage of propaganda concerning the loss the Government is taking
in buying silver?
The fact is that the gains made by the Treasury in revaluing both gold and
silver are about even, the increment on gold being a little more than the increment
on silver. Both of these figures show up every day in the Treasury statement.
The gold increment is set aside in the stabilization fund carried now at $1,800.000,000 and silver increment put in the general fund in terms of ounces (unrevalued) is carried at the original cost of the silver before the seigniorage is taken
into account.
This is a bookkeeping entry that may be compared to the transaction of a
wheat buyer purchasing wheat for 70 cents a bushel and selling it for $1 a bushel
and keeping his working capital in hand by selling up to the cost of his wheat as
fast as it comes in. When he has bought up to a thousand bushels for $700 and
sold 700 bushels for $1 a bushel and has 300 bushels on hand, his bookkeeping
entry would show his 300 bushels representing an investment of $210 when in fact
he has his money all back and the 300 bushels of wheat to show a profit.
"So it is with surplus silver in the Treasury carried at $664,421,302.95 in the
Treasury statement but when we come to analyze this situation, if the seigniorage
is taken into account, this surplus silver did not actually cost anything and as to
the seigniorage item, it is either one thing or another. If it is entered as a profit
to the Government, then the surplus silver represents what it cost. If the seigniorage is not carried on the Treasury books as a profit, then the total surplus silver
represents a profit which may account for the Secretary's sidestepping the question
recently when he was asked as to the extent of the loss the Government might
sustain in disposing of its surplus silver.
With these facts so obvious and easily understood and the patriotism of our
leading publications being constantly proclaimed, it is difficult to understand the
barrage of propaganda and innuendo appearing in these high-class publications
against silver. The interest income the banks would get if this form of cash was
retired and replaced with Federal Reserve currency is well understood although
it is difficult to believe that the patriotism of our bankers would permit a profit
motive to outweigh their interest in the welfare of the American people struggling
under the overburden of an interest load; as for our leading publications, it is
SILVER
704
SILVER
705
difficult to understand their motive in putting out all this flood of misleading
propaganda against silver.
tables giving the seigniorage on silver, taken from page 80, March Bulletin of
"In closing let me quote the immortal words of one of America's greatest ata
James G. Blaine, Speaker of the House of Representatives, when he
neen, If, therefore, silver has been demonetized, I am in favor of ordering to said: be
the Treasury Department.
The SPEAKER pro tempore. Is there objection to the request of the gentleman
resumed. If it has been restricted, I am in favor of having it enlarged. The
two metals have existed side by side in harmonious, honorable companionship M
money, ever since intelligent trade was known among men. It is well-nigh 40
centuries since "Abraham weighed to Ephron the silver which he had named in
audience of the sons of Heth- 400 shekels of silver current money with the
the merchant." Since that time nations have risen and fallen, races have disappeared, dialects and languages have been forgotten, arts have been lost, treasures
have perished, continents have been discovered, Islands have been sunk in the
sea, and through all these ages and through all these changes, silver and gold
reigned supreme, as the representative of value, as the media of exchange. The
dethronement of each has been attempted in turn and sometimes the dethrone-
emtn of both: but always in vain. And here we are today, deliberating anew
over the problem which comes down to us from Abraham's time- weight of
silver-that shall be "current money with the merchant.'
[From the Congressional Record, April 30, p. 3978
MONETARY POLICY
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Idaho (Mr. White) is recognized for 20 minutes.
Mr. WHITE. Mr. Speaker, today is pay day in the Capitol of the United States
It is very interesting to go into the office of the Sergeant at Arms of the House
and then go over to the disbursing office of the Senate and see all the young folks,
the clerical help employed about the Capitol, lined up and drawing down their
pay, cashing their Government checks, and being handed out cash for those checks
When we stop to think of the operations of the Treasury's fiscal policy, it is
interesting to see that most of the money that is being paid to these folks, being
paid to the Senators, and being paid to the Members of the House, is silver or
tificates, in $1, $5. and $10 denominations, that are redeemable in silver dollars
silver that is costing the Government, so the magazine Time said in an article
have just read, and that is borne out by the record of the Treasury, about 50
cents. In other words, instead of its costing the Government $10,000 a year to
maintain one Congressman in Washington, it costs the Government in actual
cash about $5,000 a year. That is a very interesting situation.
Today when the Sergeant at Arms was himself on hand I took occasion to draw
a little check in the amount of $16 in drawing down some of the pay that isider
me for serving here in this capacity. The Sergeant at Arms handed me a brandspanking-new $1 bill, a $5 bill, and a $10 bill. On each one of these bills is inscribed Redeemable in silver.
It was such an interesting fact, and so well refutes the constant barrage of
propaganda put out against the Government's silver policy, that I took occasion
to have a photographer on hand, a gentleman with a flash bulb and a camera,
to take a picture and give ocular evidence that there was such a policy in openstion by the Government, and that we are being paid with money "as good as
gold, these silver certificates, flowing through the channels of trade and business,
in every pocket and every till in this country where money is handled, certificates on which the Government is making a profit and on which the good people
of the United States are making a big saving every day in the form of interest
that they would have to pay if this money were retired and replaced by Federal
Reserve notes.
Mr. Speaker, I want to refute this specious propaganda that is being put out
against one of the best pieces of money ever invented, the American silver dollar,
a monetary unit which we got from the good people of Poland, as I mentioned in
my remarks a few minutes ago. I take this occasion to answer a pronouncement
There was no objection.
Mr. WHITE. Mr. Speaker, the statement of the Economists' National Committee on Monetary Policy is as follows:
"SIXTY-FIVE MEMBERS URGE CONGRESS TO REPEAL THE SILVER PURCHASE ACT
OF JUNE 19, 1934, AND THE DOMESTIC SILVER PURCHASE LAW OF JULY 6, 1939
APRIL 20, 1942.
"We the undersigned members of the Economists' National Committee on
Monetary Policy, again urge Congress to repeal the Silver Purchase Act of June
1934, and the domestic silver purchase law of July 6, 1939.
"The former has never been sound in principal or practice, the common arguments for it were neither valid nor admirable, and its results have in the main
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
price for this domestic silver with the consequence that the Treasury has greatly
overvalued the silver which it holds.
"Both acts have disturbed the silver markets of the world, have drained silver
from industry and other countries' treasuries to our Treasury vaults, and have
been important factors in the expansion of our money supply at a time when such
expansion has been unnecessary and undesirable
"It is gratifying to note that both Secretary of the Treasury Morgenthau and
Chairman Eccles of the Board of Governors of the Federal Reserve System are
recommending the repeal of these laws. In January of this year, Secretary
Morgenthau stated to the House Appropriations Committee that 'So far as I am
concerned, I will be glad to see Congress strike all of the silver legislation off the
books. In the hearings before the Committee on Ways and Means of the House
in March and at a press conference in February he again made similar statements.
Chairman Eccles, in a letter to Senator Arthur H. Vandenberg on March 30, this
year, stated that his views on this matter are generally in accord with those
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
war situation, it is all the more urgent that the inflationary effects of the silver
program be removed and that so far as possible the materials, machinery, and
labor now devoted to silver production be utilized in the war effort.
"On April 20, 1934, the executive committee of the Economists' National Committee on Monetary Policy issued a statement opposing the enactment of the
pending Silver Purchase Act of 1934.
"Substantial majorities of the full committee signed pronouncements in opposition to the Government's silver program as follows:
" 'May 25, 1936: Recommending abandonment of the silver-purchase policy
and that Treasury silver be disposed of as advantageously as possible;
"June 14, 1937: Advocating repeal of the silver-purchase program;
"December 28, 1937: Urging, among other things, repeal of the Silver Purchase
Act of 1934;
"December 23, 1938: Urging that Government subsidy to silver interests be
ended and that the Silver Purchase Act be repealed;
"May 15, 1939: Urging enactment of the Townsend bill repealing the Silver
Purchase Act of 1934: and
"September 30, 1941: Recommending among other things, repeal of the Silver
Purchase Act of 1934 and of the act of July 6, 1939, providing for the purchase of
domestic silver at 71.11 cents per ounce approximately twice the market price.
"We agree with Secretary Morgenthau's statement of January that if the
Government's silver program were repealed
by 65 members of the Economists' National Committee on Monetary Policy.
They have just made a pronouncement under date of April 20 against the silver-which
purchase program of the Government and against this kind of money, on
the Government is making a profit and on which the people are making & huge
saving in interest.
Mr. Speaker, I ask unanimous consent that in connection with my remarks
there may appear in toto, with all the signatures attached, this communication
from the Economists' National Committee on Monetary Policy, and also
from Idaho?
the
it would be helpful at this
time. I think it would be well received.
"Signed: Eugene E. Agger, Rutgers University: Benjamin M. Anderson, Jr. University of California in L. A. Charles C. Arbuthnot,
Western Reserve University; Don C. Barrett, Haverford College:
Benjamin H. Beckhart, Columbia University; James Washington
Bell, Northwestern University; Ernest L. Bogart, University of
Illinois; Frederick A. Bradford, Lehigh University: William A.
Brown. Jr. Brown University: J. Ray Cable, Washington Un,
versity: Wilbur P. Calhoun, University of Cincinnati; N
-pt.
SILVER
706
SILVER
Carothers, Lehigh University Edward H. Collins, New York
Herald Tribune; Garfield V. Cox, The University of Chicago
William W. Cumberland, Wellington & Co., New York: Charles
A. Dice, the Ohio State University D. W. Ellsworth,
& Co., Inc., New York: William D. Ennis, Stevens Institute Axe
Technology Fred R. Fairchild, Yale University; Clyde Olin of
Fisher, Wesleyan University; J. Anderson Fitzgerald, The Uni.
Mr. Speaker, what I want to know is, what is it worth to the banks to keep
money out of circulation? And in connection with that I should like
know what is the profit to the Government and the saving to the American
silver
institutions of higher education in this country, analyzing and making response to this communication put out to the country, the President, and the
ing
Congress for their guidance:
To the Members of the Economists' National Committee on Monetary Policy:
GENTLEMEN: In considering the recommendations of your committee of 65
economists to repeal the Silver Purchase Act of June 19, 1934, and the domestic
silver-purchase law of July 6, 1939, made in your communication of April 20,
presumably addressed to the President, the Congress, and the country, you
state: Its results have been harmful to both the United States and certain
foreign countries." How has it been harmful? Do you seek to imply that
William H. Kiekhofer, The University of Wisconsin: David
Kinley, University of Illinois: William H. Kniffin, Bank of
Rockville Centre Trust Co., Long Island; Frederic E. Lee.
University of Illinois; J. F. Leonard, University of Southern
University; Howard H. Preston, University of Washington:
Leland Rex Robinson, 76 Beaver Street, New York: R. G. Rodkey, University of Michigan; Olin Glenn Saxon, Yale University;
Joseph A. Schumpeter, Harvard University; Walter E. Spahr,
New York University; Oliver M. W. Sprague, Harvard University;
William H. Steiner, Brooklyn College; Charles S. Tippetta
Mercersburg Academy; Alvin S. Tostlebe, The College of Wooster:
James B. Trant, Louisiana State University; Rufus S. Tucker,
Westfield, N. J.: Russell Weisman, Western Reserve University
William O. Weyforth, The Johns Hopkins University; Nathaniel
R. Whitney, The Procter & Gamble Co., Cincinnati; Edward
Wiest, University of Kentucky; Max Winkler, College of the City
of New York: Ivan Wright, Brooklyn College.
Mr. Speaker, for the information of the Members of the House and especially
for the enlightenment of all these 65 economists, there is inserted below a table
appearing on page 80 of the March Bulletin of the Treasury Department, containing the record of seigniorage made on the silver purchases under the Silver
Purchase Act of 1934.
Seigniorage on silver
[Cumulative from Jan. 1. 1934-In millions of dollars)
Seignior
End
calendar
year
month
BEO
silver and
minor
coins
Potential
Miscells
Newly
peous
mined
silver (in-
silver
cluding
(proclams
tion of
silver but
lion held
Dec. 21,
June 14.
1933)
1934)
Newly
mined
silver
(act of
July 6.
1939)
Silver
Purchase
Act of
June 19,
1934
seigntore
National
Ized silver
Total
(proclams
tion of
seigniorage
Aug.1
revalued
on silver
silver
bullion
at cost #
general
fund
1934)
28.5
128.1
1821
34.1
326.
DAY
34.7
422
BOL
34.7
508
1934
4.5
48.7
0.4
1935
18.5
48.7
16.8
1936
46.
48.7
36.0
302.7
1937
63.7
48.7
58.0
366.7
1938
69.5
48.7
74.9
457.7
34.7
616.0
758.1
1939
91.7
48.7
87.3
530.7
34.7
705.6
960.8
51.1
226.1
4.2
ML
1,068.8
1940
122.2
48.7
87.6
25.7
562.7
34.7
759.4
1941
182.1
48.7
87.6
48.3
580.4
34.7
799.7
1,089.0
January
188.5
48.7
87.6
581.3
34.7
802.1
1,004.7
February
50.2
192.4
48.7
87.6
51.6
582.1
34.7
804.1
1942
1,096
These items represent the difference between the cost value and the monetary value of silver bullier
revalued
and
held
to
secure
silver
certificates
The figures in this column are not cumulative; as the amount of bullion held changes, the potential
reigniorage thereon changes.
Basis: Daily Treasury Statements.
$2,024,000,000 in the form of silver dollars and silver certificates, $1, $5, and $10
bills. redeemable in silver dollars now in circulation in the channels of trade and
business, is harmful to our national economy or to the American people?
"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
more specific, let me point out to you, gentlemen, first, that on the day your
communication was issued, April 20, there were $1,962,101,367 in silver certificates outstanding, which, as you know, are redeemable in silver dollars (April
20 daily statement, U. S. Treasury), and in addition there were 62,327,405 silver
dollars in circulation (March 31 Treasury Statement, United States money in
circulation)-money issued by the Government interest free and in use throughout the country in handling the Nation's business the kind of money that your
members have steadily opposed; money which you say is harmful and should
never have been issued, and now could best be replaced by unredeemable Federal
Reserve currency, the other kind of money which business or the Government
would be required to borrow from the bank at interest to get it issued and must
continue to pay interest to the loaning banks to keep it in circulation.
"In making you recommendations, it would be interesting to know if the members of your committee have calculated the difference in cost on the item of interest between the expense of using Federal Reserve money and the use of interestfree silver money to which your members object so strenuously, or in this connection has your committee considered the profits accruing to the Government in
purchasing domestic and foreign silver and revaluing it and putting it into circulation as money in paying current Government expense. For fear that by
some mischance all of your 65 members may have overlooked some of these
small items, there is presented the record of seigniorage taken from the report of
the Secretary of the Treasury (Treasury Bulletin, March 1942) which I submit
for your files and information in event you desire to have the actual facts, to wit:
"On page 80 of this bulletin we find the following totals of seigniorage on silver:
"(2) Total seigniorage on silver revalued less minor coins (January 1, 1934, to
February 28, 1942), $804,700,000;
Sources of seigniorage on silver bullion revalued 1
to
people in using silver money in transacting business?
Now I am going to read you my reply to these eminent economists of the lead-
versity of Texas: Herbert F. Fraser, Swarthmore College; Roy
Garis Vanderbilt University: Arthur D. Gayer, Queens College
Harry D. Gideonse, Brooklyn College; Earl J. Hamilton, Duke
University, with reservations as to second paragraph; Lewis H.
Haney, New York University; E. C. Harwood, American Institute
for Economic Research; Hudson B. Hastings, Yale University:
William F. Hauhart, Southern Methodist University Frederick
C. Hicks, University of Cincinnati; John Thom Holdsworth The
University of Miami: Edwin W. Kemmerer, Princeton University
California: James D. Magee, New York University; Arthur W.
Marget, University of Minnesota: A. Wilfred May, New York
City; Mark C. Mills, Indiana University; Margaret G. Myers,
Vassar College: Melchior Palyi, The University of Wisconsin:
Ernest Minor Patterson, University of Pennsylvania; Clyde W.
Phelps, University of Chattanooga; Charles L. Prather, Syracuse
707
"(2) The total seigniorage on minor coinage (January 1, 1934, to February 28
1942) $192,400,000, which represents the actual gain to the Government on this
silver by revaluing it and putting it out as money.
This still leaves the Government with a surplus of unused silver amounting
to 1,364,566,969.7 ounces on hand in the general fund, as appears on Treasury
statement of even date with your communication (April 20), surplus silver that
can be revalued and put into circulation as money under existing law in the form
of silver certificates or silver dollars by the Secretary of the Treasury amounting
$1,764,288,605.24 when revalued for use as money.
By consulting the Treasury statement, you will find that this silver has been
taken into consideration by the Treasury in computing the seigniorage as appears
in the last column of the table on page 80 of the March Treasury bulletin, headed
to
"Potential Seigniorage on Silver Bullion at Cost in General Fund, amounting
to a total of $1,096,300,000. When you add up these three seigniorage items.
which is the difference between the cost of the silver to the Government as bullion
and its money value when issued by the Treasury in paying Government expense,
you have a grand total of $2,093,400.00 seigniorage, making a tidy profit of
over $2,000,000,000. which has and will accrue to the Government if the Treasury
will use all the silver as money it has bought under the 'objectionable' Silver
Purchase Act since 1934. Leaving out the item of potential seigniorage: To date
the record discloses the Government has made on the silver used as money, a
SILVER
708
SILVER
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 seigniorage as disclosed in the
Treasury bulletin, and you 65 eminent economists and educators in our lead.
last institutions of learning object to our Government making this little profit in
ing the present emergency, at a time when every monetary thread in the national
financial fabric is strained to the utmost.
When you consider the cost in the form of interest the people would be reto by retiring the silver money now in use and replacing it with Federal
STATEMENT OF HON. JESSE H. JONES, SECRETARY OF COMMERCE
quired Reserve notes, pay think of what your plan would add to the expense of doing business.
money against silver that may be used in bus bars, I think the legisla-
'In order to determine the full amount that business has saved by our Government refusing to follow the money plan you have urged in your repeated recommendations, we must get the figures on silver in circulation year by year since the
silver-purchase program went into effect in 1934 and calculate the interest on its
equivalent in Federal Reserve money. I hope your committee will do that for
your own information and the good of the American people.
"In this time of emergency and mounting tax load on business what valid
is there to issuing the balance of silver the Government has on hand as
objection and putting this currency into circulation in paying current Government
money 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-I
increase the volume of money of ultimate redemption in the channels
of we trade and business, If this is true, it may be that another fact has escaped the
notice of all of your committee. If I may call this fact to your attention, the
record discloses that on June 30, 1941, a little less than a year ago at a time when
credit was vastly expanded in financing our national-defense program, there WM
Federal Reserve notes in circulation in the amount of $7,001,520,625 and at the
same time there was 1,349,488,385.7 ounces of surplus and idle silver in the
Treasury which the Secretary of the Treasury could have revalued and issued
money in paying the Government's current expenses. Now less than a year
as
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
have the unused surplus silver left in the Treasury; to be exact the amount
as of the date of your communication was 1,364,566,969.1 ounces. The money in
circulation has been inflated all right but not by revaluing and using our idle
silver. Money material which represents real profit to the Government now on
hand and ready to be turned into $1, $5, and $10 bills and put into circulation in
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
paid to the Members of Congress and their clerical help are eagerly accepted in
transacting business everywhere when the Government employees put them in
circulation.
"In view of these incontrovertible facts and the heavy load of interest piling
higher and higher on business everywhere, it is unfortunate, distressingly unfortu-
nate, that the true situation and the real facts concerning the profits and the
saving that the American people are deriving from their silver-purchase program
is so confused, and so little understood, particularly by the educational leaders
in this country. Surely in this critical hour when so much depends on the stability
of national economy and the security of the monetary foundation on which both
public and private credit must rest, the patriotism of our economist and educational leaders should direct their efforts first to understanding and presenting the
true facts concerning money and then to advising and assisting those in charge of
directing the affairs of our Government in establishing and maintaining a stronger
national economy to safeguard the financial integrity of our Government and the
business security of the American people by effecting any saving and obtaining
any profits available in any quarter.
'Gentlemen, be patriotic: lend your knowledge and your ability to your country: help the Members of Congress representing the people to right the financial
ship of state and provide an equitable, workable, adequate monetary system to
lift business and the American people out of this morass of debt and ease this
crushing burden of interest and taxes.
"Sincerely,
"COMPTON I. WHITE,
'Member of Congress.
Senator McCARRAN. Secretary Jones wishes to make a statement.
Mr. JONES Mr. Chairman, there is one point that I think has not
been made quite clear. If the Secretary of the Treasury is to issue
tion must include that fact particularly and also the fact that the
title to that silver remains in the Treasury. I doubt if we can follow
the plan we have started with, that we can lend-lease silver and still
issue currency against it. I think the legislation must take the course
that the title to the silver remains in the Treasury. I do not think
that that has been developed quite enough. I think the spirit of
everybody here is to use the silver but to allow it to be used for dual
purposes- is, both in the war program and in the monetary
program. That has to be taken into account.
Senator McCARRAN. That is right. There is just one thought that
I wish to leave with you, Mr. Secretary, and that is this: It would be
the policy of the chairman of this group at this time to work with you
to the end that this legislation may be so worked out that the so-called
truce, as you choose to term it, would be effective. To that end we
would work.
Mr. MORGENTHAU. Yes.
Senator McCARRAN. To that end we shall gladly meet with you,
with your experts, and with others interested here and try to go
forward with this general policy.
Does that meet with the approbation of those present?
What would be the thought of your group as to the number who
should serve on this committee to do the work?
Senator MURDOCK. Do you intend to include only Senate Members or to include House Members, too?
Senator McCARRAN. I do not have any authority or jurisdiction
over the House. We would like to have their advice, counsel, and
membership, as far as that is concerned
Senator MURDOCK. I move that the chairman of this committee be
empowered or authorized to appoint a committee of whatever number
he thinks best to confer with representatives of the Treasury, the War
Production Board, the Defense Plant Corporation, in the preparation
and drafting of this legislation.
Senator McCARRANN. My offhand thought would be that five
members would be ample.
Senator CLARK of Idaho. Three would be better.
Senator MURDOCK. I will amend my motion to conform with the
suggestion of the chairman. I move that the chairman of the coma committee of five to confer with representatives of
the Treasury and other agencies interested in this legislation.
Senator McCARRAN. Without objection, the motion made by the
Senator from Utah is carried. The chair will appoint the committee
between now and 1 o'clock and will notify the members who are so
appointed.
I will also notify you, Mr. Secretary, and we will try to hold ourselves available. We are grateful to you for coming, and we appreciate
your assistance.
SILVER
708
SILVER
in seigniorage, amounting to $997,000,000 and has, in addition, enough
total to make another $1,096,300,000 in seigniorage as disclosed in the
silver left over bulletin, and you 65 eminent economists and educators in our lead.
last institutions Treasury of learning object to our Government making this little profit in
the ing present emergency, at a time when every monetary thread in the national
financial fabric is strained to the utmost.
consider the cost in the form of interest the people would be TO
"When you by retiring the silver money now in use and replacing it with Federal
quired to pay think of what your plan would add to the expense of doing business
Reserve notes, to determine the full amount that business has saved by our Govern.
"In refusing order to follow the money plan you have urged in your repeated recomment mendations, we must get the figures on silver in circulation year by year since the
silver-purchase program went into effect in 1934 and calculate the interest on its
equivalent in Federal Reserve money. I hope your committee will do that for
your own information and the good of the American people.
"In this time of emergency and mounting tax load on business what valid
is there to issuing the balance of silver the Government has on hand M
objection and putting this currency into circulation in paying current Government
expenses? money 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
increase the volume of cash-money of ultimate redemption in the channels
we of trade and business. If this is true, it may be that another fact has escaped the
notice of all of your committee. If I may call this fact to your attention, the
record discloses that on June 30, 1941, a little less than a year ago at a time when
credit was vastly expanded in financing our national-defense program, there was
Federal Reserve notes in circulation in the amount of $7,001,520.0 and at the
same time there was 1,349,488,385.7 ounces of surplus and idle silver in the
Treasury which the Secretary of the Treasury could have revalued and issued
money in paying the Government's current expenses. Now less than a year
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
as
have the unused surplus silver left in the Treasury: to be exact the amount
as of the date of your communication was 1,364,566,969.1 ounces. The money in
circulation has been inflated all right but not by revaluing and using our idle
silver. Money material which represents real profit to the Government now on
hand and ready to be turned into S1, $5, and $10 bills and put into circulation in
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
paid to the Members of Congress and their clerical help are eagerly accepted in
transacting business everywhere when the Government employees put them in
circulation.
"In view of these incontrovertible facts and the heavy load of interest piling
higher and higher on business everywhere, it is unfortunate, distressingly unfortunate, that the true situation and the real facts concerning the profits and the
saving that the American people are deriving from their silver-purchase program
is so confused, and so little understood, particularly by the educational leaders
in this country. Surely in this critical hour when 80 much depends on the stability
of national economy and the security of the monetary foundation on which both
public and private credit must rest. the patriotism of our economist and educational leaders should direct their efforts first to understanding and presenting the
true facts concerning money and then to advising and assisting those in charge of
directing the affairs of our Government in establishing and maintaining a stronger
national economy to safeguard the financial integrity of our Government and
business security of the American people by effecting any saving and obtaining
any profits available in any quarter.
'Gentlemen, be patriotic: lend your knowledge and your ability to your country; help the Members of Congress representing the people to right the financial
ship of state and provide an equitable, workable, adequate monetary system this to
lift business and the American people out of this morass of debt and ease
crushing burden of interest and taxes,
the
"Sincerely,
"COMPTON I. WHITE,
Member of Congress.
709
Senator McCARRAN. Secretary Jones wishes to make a statement.
STATEMENT OF HON. JESSE H. JONES, SECRETARY OF COMMERCE
Mr. JONES. Mr. Chairman, there is one point that I think has not
been made quite clear. If the Secretary of the Treasury is to issue
money against silver that may be used in bus bars, I think the legisla-
tion must include that fact particularly and also the fact that the
title to that silver remains in the Treasury. I doubt if we can follow
the plan we have started with, that we can lend-lease silver and still
issue currency against it. I think the legislation must take the course
that the title to the silver remains in the Treasury. I do not think
that that has been developed quite enough. I think the spirit of
everybody here is to use the silver but to allow it to be used for dual
purposes-tha is, both in the war program and in the monetary
program. That has to be taken into account
Senator McCARRAN. That is right. There is just one thought that
I wish to leave with you, Mr. Secretary, and that is this: It would be
the policy of the chairman of this group at this time to work with you
to the end that this legislation may be so worked out that the so-called
truce, as you choose to term it, would be effective. To that end we
would work.
Mr. MORGENTHAU. Yes.
Senator McCARRAN. To that end we shall gladly meet with you,
with your experts, and with others interested here and try to go
forward with this general policy.
Does that meet with the approbation of those present?
What would be the thought of your group as to the number who
should serve on this committee to do the work?
Senator MURDOCK. Do you intend to include only Senate Members or to include House Members, too?
Senator McCARRAN. I do not have any authority or jurisdiction
over the House. We would like to have their advice, counsel, and
membership, as far as that is concerned
Senator MURDOCK. I move that the chairman of this committee be
empowered or authorized to appoint a committee of whatever number
he thinks best to confer with representatives of the Treasury, the War
Production Board, the Defense Plant Corporation, in the preparation
and drafting of this legislation.
Senator McCARRANN. My offhand thought would be that five
members would be ample.
Senator CLARK of Idaho. Three would be better.
Senator MURDOCK. I will amend my motion to conform with the
suggestion of the chairman. I move that the chairman of the committee'appoint a committee of five to confer with representatives of
the Treasury and other agencies interested in this legislation.
Senator McCARRAN. Without objection, the motion made by the
Senator from Utah is carried. The chair will appoint the committee
between now and 1 o'clock and will notify the members who are so
appointed
I will also notify you, Mr. Secretary, and we will try to hold ourselves available. We are grateful to you for coming, and we appreciate
your assistance.
SILVER
710
Senator CLARK of Idaho. I am going to amend the motion by making
for unanimous consent that Senator McCarran be ex officio chairman
of the committee. That is carried. (Laughter.)
Senator
Well!
McCARRAN
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
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
M:
Yes.
put a billboard on the Treasury property? Hello.
That was the one that I showed you in
Room 281 one morning.
HMJr:
M:
Yeah, but you didn't tell me where you were
going to put it.
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:
HMJr:
K:
HMJr:
Yes.
He said he got it from you.
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
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:
HMJr:
Well, it's my fault.
Yes, it is.
K:
You're opposed to it?
HMJr:
Absolutely.
K:
Okay.
HMJr:
Yeah.
K:
HMJr:
I'11 tell them.
I'll tell them. Norman's here.
46
-2K:
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 legislation 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
should like to report what the Treasury is doing and
intends to do to stop these practices. In every instance _"
That would refer us back to what?
48
-2MR. 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 excessive 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
-3The 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." 11
"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.
50
-4H.M.JR: "Let me mention briefly seven cases illustrating 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 corporation 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.
51
-5H.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.
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
-7were 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 contracts, 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
54
-8include 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.
like.
I don't like "powers". "extent of our powers," I don't
MR. SULLIVAN: I think "authority"is a better word.
MR. GASTON: Of course, "powers" means legal powers.
to.
H.M.JR: Then put in the word "legal" if you want
MR. BLOUGH: I think that might help.
H.M.JR:
I don't like the word "powers" alone.
55
-9MR. 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 statement.
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 advertising in reasonable amounts or good will advertising calculated 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 a
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 advertising 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 corporation'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 advertising 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 fi ft
percent of the advertising is institutional advertising,
especially the magazine advertising. It may be a high
estimate, but a 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 advertising 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 patronage, which might - they are disallowed anyway, aren't they?
MR. KUHN: No, because institutional advertising-MR. BLOUGH: That is what the next sentence says.
institutional advertising can be
MR. KUHN:
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
there.
: think you have got it backstopped
MR. BLOUGH: I hope you are right. I want to be on
record. I think we are being in a 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 investigation of the 1941 returns.
Where did you get that word "guideposts" from?
MR. KUHN: This morning--
H.M.JR: That is right - a 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." If
"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"?
- 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 a 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.
STATEMENT OF SECRETARY MORGENTHAU TO THE JOINT
COMMITTEE ON INTERNAL REVENUE TAXATION,
4th
Gage
2 pm
May 28, 1942
5/2 8/42
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 Chairman, 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 legislation 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
63
-2intends 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 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 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 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
-3returns 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
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 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
-4her $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
-5Other 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.
67
-6Assistant 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
68
-7am 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
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, 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.
70
-91. 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
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 a 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 S et up a barrier to
deductions of large salaries, bonuses, or insurance
premiums for officers under the guise of payments to a
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 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.
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.
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
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.
75
May 28, 1942
2:35 p.m.
Operator:
Mayor LaGuardia is on his way back to New York
HMJr:
and he should be there by four or four-thirty.
Well, let me talk to his secretary, whoever it
Operator:
All right.
HMJr:
Will you?
Operator:
Right. I have his secretary, Miss Cullen. Go
HMJr:
Hello.
Miss
Cullen:
HMJr:
C:
HMJr:
is.
ahead.
Yes, sir. Hello.
This is Mr. Morgenthau speaking.
Yes, Mr. Secretary.
I wondered if you could get this message to the
Mayor when he gets in.
C:
Surely, I'11 be glad to.
HMJr:
Mr. Spyros, S-p-y-r-0-8 - - it's Skouras, S-k-o-u-r-a-s.
C:
Mr. Skouras, yeah.
HMJr:
Of the Twentieth Century Fox
C:
Yes.
HMJr:
C:
HMJr:
He's handling for the Treasury these English
aviators that are coming over early in June.
I see.
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:
HMJr:
Mayor LaGuardia is on his way back to New York
and he should be there by four or four-thirty.
Well, let me talk to his secretary, whoever it
is.
Operator: All right.
HMJr:
Will you?
Operator:
Right. I have his secretary, Miss Cullen. Go
HMJr:
Hello.
Miss
ahead.
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'11 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:
C:
HMJr:
He's handling for the Treasury these English
aviators that are coming over early in June.
I see.
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
-2I
C:
HMJr:
see. Where is Mr. Skouras?
You can get him at Twentieth Century Fox in
New York.
In New York. I see. Well, I'll be glad to
get that message to him; and if it's at all
C:
HMJr:
possible, I'm sure he will.
Well, I mean, couldn't you give him a tentative
appointment?
All right. We'11 call him up and see what we
can do on it.
C:
HMJr:
Why don't you give him a tentative appointment
SO he'11 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:
HMJr:
C:
Yes, I see.
To tour the country for War Bonds.
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 appointment 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
-3C:
HMJr:
C:
Well, I'm sure that the Mayor will do it.
Thank you.
Thank you 80 much. Good-bye.