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Tor Release on Delivery Statement by Chairman Martin of the Board of Governors of the Federal R e s e r v e System on S. 1427, Repealing Certain Silver Legislation, before the Subcommittee on the Federal R e s e r v e System of the Senate Committee on Banking and Currency, July 13, 1955. Existing legislation fixes the price at which silver is purchased by the Treasury, and sets a price below which the Treasury cannot s e l l s i l v e r . The market price of silver has been such, in recent y e a r s , that this existing l e g i s l a tion has caused all silver domestically produced to be sold to the Treasury. To this extent, the role played by silver in our monetary s y s t e m has been increased. S. 1427 proposes to stop this p r o c e s s by repealing those provisions of existing legislation which fix the price at which the Treasury must buy s i l v e r . The Federal R e s e r v e System i s , of c o u r s e , concerned primarily with the effect upon monetary policy of silver purchases under existing legislation. We are not prepared to say that the effect of the silver purchases necessitated by existing legislation has seriously complicated our problems of monetary management in recent y e a r s . It is true that these purchases, when monetized, may increase member bank r e s e r v e s . But as compared with other factors influencing member bank r e s e r v e s in recent y e a r s , their effects on r e s e r v e s have been relatively small; and these effects can be offset, if n e c e s s a r y , by other operations of the Federal R e s e r v e System. Since these purchases are unnecessary from the standpoint of monetary policy, the Board of Governors has no interest in the continuance of existing legislation with respect to silver purchases.
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