That program is reviewed annually by the Appropriations Committee. It does not require an appropriation, however,

If the Appropriations Committee feels there is something which they want to call to the attention of the Director, they do this through reports in the appropriation. In one instance we did get a special limitation on a special fund.

Senator PROXMIRE. Would this change the amount appropriated by Congress to any extent?

Mr. BETTS. Yes, this would change the amount appropriated. In 1968 we are asking for an appropriation of $14,600,000. In the future this amount would not be required to be appropriated from the Congress. This amount would be taken from seigniorage. As Mr. Wallace indicated in his statement, 90 percent of the cost of the manufactured coins now is derived without appropriation action.

Senator PROXMIRE. So that this year's appropriations would be reduced by $14 million, but would it affect the deficit or the surplus? Mr. BETTS. This would have a

Senator PROXMIRE. It also subtracts from seigniorage.

Mr. BETTS. The seigniorage comes into the administrative budget, as receipts.

Senator PROXMIRE. So it is subtracted on both sides, the expenditure and revenue side?

Mr. BETTS. Yes, sir.

Senator PROXMIRE. The washout of $14 million would show a lower appropriation but it would not affect the larger or smaller deficit? Mr. BETTS. That is correct.

Mr. WALLACE. Mr. Chairman?

Senator PROXMIRE. Mr. Wallace.

Mr. WALLACE. I think it may be pretty well known that the Treasury Department takes a very dim view of "back door financing" also. Were it not for the special operation of the Bureau of the Mint and the special needs with respect to fluctuating coin demands, this would not be requested. I myself feel very strongly about that, having written a book on congressional control of spending. This bill does protect Congress' right of annual review. The appropriation would come automatically instead of being enacted but Congress could review it and put limitations on if they wished.

In other words, you would still have the negative power but would not be required to take positive action.

Senator PROXMIRE. Do you have any comments on the House committee's position? I understand they have expressed skepticism on this bill.

Mr. WALLACE. I think the position is based on the desirability for preventing items of Government spending from escaping the annual appropriation process. As I tried to point out here, this is a special situation and Congress would maintain control.

I would like also to say that the Bureau of Engraving and Printing has increased its efficiency tremendously under this funding arrangement. In addition, I would like to point out that, although we have asked for supplementals at least once every year from 1960 to 1966, in 1967 when we had more money than necessary it was returned. So that I think the record of the Bureau of Engraving and Printing and the record of the Bureau of the Mint would indicate that we are not going to be wasting any money if this legislation is enacted.

78-436-67-2

Senator PROXMIRE. That record has been achieved under the present procedures rather than under the proposed procedures.

Mr. WALLACE. All I am saying is when we had more money than necessary, it was returned. We didn't try to figure out ways to spend it.

Senator PROXMIRE. Do I understand that you have some perfecting amendments?

Mr. BETTS. Yes, sir. I have some which I would be glad to file with the committee or with the committee staff.

Senator PROXMIRE. Are they just technical or do they require an explanation that you would like to make at this point?

Mr. BETTS. They are mainly technical.

As I indicated, the first one is needed to capitalize the equipment for the new Philadelphia Mint. Under our draft it had been excluded. We also had failed to make the operative date of the fund compatible with the repeal of some existing accounts. The operating fund would become effective the first of the fiscal year following enactment. had provided for the repeal of two existing funds, effective the date of enactment. If the new legislation was approved in midyear we would be in somewhat of a difficult situation.

Those are perfecting amendments really. (The material referred to follows:)

PROPOSED AMENDMENTS TO S. 1156

We

AMENDMENT TO PROVIDE FOR THE INCLUSION OF EQUIPMENT TO BE ACQUIRED FOR THE NEW MINT IN THE MINT OPERATING FUND

SEC. 2. (a)(3) Assumption of all liabilities of the Mint outstanding at the close of business of the day prior to the operative date, except those incurred for real property pursuant to authority granted by the Act of August 20, 1963, as amended (31 U.S.C. 291–294).

(b) All obligations and other commitments of the Mint outstanding at the close of business of the day prior to the operative date, shall be paid out of the fund, except obligations or commitments incurred or made in connection with land acquisition or with the construction of any buildings authorized by the Act of August 20, 1963, as amended (31 U.S.C. 291-294).

(d) On and after the operative date, and subject to such limitations on obligations as may be imposed by an appropriation act, all expenditures of the Mint shall be paid out of the fund, except those in payment of obligations or commitments incurred for real property under the Act of August 20, 1963, as amended (31 U.S.C. 291-294): provided, that none of the cost of construction of additional buildings or of land acquisition shall be paid out of the fund without the express approval of the Congress.

AMENDMENT TO CHANGE THE EFFECTIVE DATE OF REPEALING SECTIONS 3528 AND 3552:

SEC. 3(b) Section 3528 of the Revised Statutes, as amended (31 U.S.C. 340), and Section 3552 of the Revised Statutes, as amended (31 U.S.C. 369), are repealed effective as of the close of business of the day prior to the operative date of the fund. Coinage metals held in the Coinage Metal Fund (31 U.S.C. 340) as of the close of business of the day prior to the operative date will remain in such fund until purchased by the Mint Operating Fund for coinage requirements.

Senator PROXMIRE. Senator Monroney is now chairman of the Treasury and Post Office Subcommittee of the Appropriations Committee. He succeeded Senator Robertson to that position. He and Senator Allott sent us a letter commenting on this bill. We will be glad to make it available to you for your comments.

(A copy of the letter follows:)

Hon. WILLIAM PROXMIRE,
U.S. Senate, Washington, D.C.

MAY 5, 1967.

DEAR SENATOR PROXMIRE: This letter is in reference to S. 1156, a bill to provide for the financing of the operations of the Bureau of the Mint, and for other purposes, now pending action before the Subcommittee on Financial Institutions of the Committee on Banking and Currency.

It is alleged by the sponsors of S. 1156 that a change in the method of financing the operations of the Bureau of the Mint is needed to provide more flexibility because it is now impossible to make accurate predictions of coin needs; that it has been necessary to resort to supplemental appropriations or to re-programming action; and that there now exist undue delays because of reliance on the appropriations process.

In connection with the matter of flexibility, a 10-year history of budget estimates and ensuing appropriations for the Bureau of the Mint indicates that when Congressional reductions have been imposed, they have been minor and insignificant, and therefore have not had a crippling or detrimental effect on coin production. The enclosed tables on appropriations for Salaries and Expenses, and Construction of Mint Facilities are submitted for your information and review. In recent years, appropriations have, in most instances, equaled budget requests. The Congress has been generous in this regard, as attested by the fact that funds were transferred out of this account in 1966 to other agencies in the amount of $5,140,000; and for 1967, there is pending, in the Supplemental Bill now under consideration, a request to transfer further funds from the Mint to the Internal Revenue Service in the amount of $5,107,000 and another $400,000 to the Committee on Coinage. Notwithstanding the Congressional reduction of $5 million in the 1967 estimate, because of evident slippages in coin production, the Bureau of the Mint over-estimated its requirements by over $5.5 million.

It would appear, therefore, that the Bureau of the Mint has not suffered unduly for lack of funds and that sufficient flexibility has been provided by the Congress in furnishing, in fact, an excess of funds over the actual requirements.

The Bureau of the Mint is not unique in that its workload and subsequent funding requirements are determined by public needs. There are a number of other governmental agencies, such as the Bureau of Customs, the Internal Revenue Service, the Bureau of Accounts, the Bureau of the Public Debt, the Post Office Department and others who also must predict and gear their requirements to the public demand, and, in so doing, they use various techniques to forecast their needs as accurately as possible and with considerable effectiveness. For example, the Post Office Department, in handling well over 79 billion pieces of mail annually, has been able to forecast its anticipated workload within 1% to 1.5% of the actual figures, notwithstanding seasonal and other variations. It would appear that the Bureau of the Mint could do as well by using the econometric approach used by the Post Office Department to forecast its workload volume.

Further, in regard to the 10-year table on appropriations, it will be noted that no regular appropriation requests or supplemental requests "have just died", or that undue delays have resulted because of inaction by the Congress.

There is no provision in S. 1156 to provide for affirmative Congressional control. It is our contention and belief that the present appropriation process followed in financing activities through annual appropriations provides the best means for effective Congressional control and that the need for departures from this process has not been clearly demonstrated or justified.

During the coin crisis, coin inventories were low, and antiquated mint facilities and equipment were used to cope with the increased demand for coins. However, today, with the new modern Philadelphia Mint going into full production in the near future, with current all-time high coin inventories and production, with the installation of modern equipment at the Mints, for which funds have been provided, with the subsequent opening of the San Francisco Mint in 1965, with full production capability and with the current practice of purchasing approximately 95 percent of the required clad strip from private industry, there is little likelihood that unforeseen emergencies, should they occur, could not be met head-on in an effective and efficient manner under the present method of Congressional funding. In a statement submitted by Treasury officials to your committee on May 2, 1967, it is stated, in part, as follows:

"We feel that there are many advantages to this plan, but the greatest advantage will be that the Mint's operations can be on a businesslike basis as befits as essen

tially manufacturing type organization. Congress will benefit because the statements submitted to it will make full disclosure of the income and costs of the Mint's past and future operations." (Emphasis supplied.)

We submit that there is nothing novel or new about that statement, as the Bureau of the Mint has, in fact, been on a business-like or accrued cost basis since the early 1940's, with subsequent refinements as a result of and in compliance with the Budgeting and Accounting Procedures Act of 1950. The General Accounting Office approved the system in 1953. The justifications in support of budget estimates for the Bureau of the Mint read, in part, as follows:

"The Mint's budget is presented on an accrued cost basis, reconciled in total with obligations, in order to properly reflect the actual cost of the manufacturing type operations. Costs are applied on the basis of actual use of resources for the various activities, and full consideration is given to changes in stores, work-inprocess inventories, and other pertinent asset and liability accounts.'

Facts presented above make it evident that the only advantage to the Bureau of the Mint in converting to an Operating Fund would be to reduce Congressional scrutiny and control. This, in our opinion, amounts to an abdication by the Congress of its responsibility under Article I, Section 9, of the Constitution.

It is our firm belief that the real need lies in the development by the Bureau of the Mint of more accurate methods of prediction and more reliable forecasting of coin needs and production requirements.

We strongly and fully concur with the language appearing on page 6 of House Report No. 144, accompanying H. R. 7501, in connection with this matter. An excerpt from the House Report pertaining to this item follows:

"The Committee goes on record as being opposed to the establishment of a revolving fund at this time to finance the operations of the Bureau of the Mint. In view of the recent coin crisis, the removal of silver from the coinage, the existing silver shortage and the current construction and modernization program for the Mint, the Committee feels that such a proposal at this time is, to say the least, untimely.

"A Commission on the Coinage has recently been appointed for the purpose of considering coinage problems and the Committee understands that the Commission will be convened in the near future. It seems to be a poor time to initiate such a basic change in the method of operating the Mint before the Commission even has an opportunity to consider the matter."

In summary, financial flexibility has been and is provided the Bureau of the Mint under the present method of financing; supplemental requests and the re-programming of funds have been acted upon by the Congress with dispatch; the proposed legislation would weaken Congressional control at a time when it needs to be strengthened; a mere review of Mint operations by the Congress, as proposed, would be meaningless, and there is little likelihood that another major coin crisis will occur. Althouth a decrease in expenditures would be reflected in the Federal budget under the proposed legislation, there would be a concurrent reduction in the amount of revenues deposited with the Treasury equal to the obligations included in the financial presentations. Thus, the net effect on the Federal budget would be unchanged.

In view of the above, it is urged that consideration of this matter be deferred until such time as the Coinage Commission, which is presently being organized, has had an opportunity to fully study and report its findings on this matter to the appropriate Congressional Committees.

Sincerely your,

A. S. MIKE MONRONEY,
U.S. Senate.

GORDON ALLOTT,

U.S. Senate.

1 Excludes $160,000 for activities transferred in the estimates to "Salaries and expenses, Office of the Secretary." The amounts obligated in 1961 and 1962 are shown in the schedule as comparative transfers. 2 Includes $675,000 for minting silver dollars and $500,000 for regular coinage by transfer from Office of Treasurer.

Contained in 1965 Appropriation Act (Public Law 88-392) to be derived by transfer of 1964 funds from Office of Treasurer, and to be available until June 30, 1965, for minting 45 million silver dollars.

4 Language in Second Supplement Appropriation Act, 1966, provided for transfer to Bureau of Narcotics ($80,000), Coast Guard ($5,000,000) and Office of the Treasurer ($60,000).

Proposed transfer to "Internal Revenue Service, Compliance," for pay increases.

1 Contained in 1965 Appropriation Act (Public Law 88-392) to be derived by transfer of fiscal year 1964 funds from Office of Treasurer and to remain available until expended.

(See additional material submitted by Treasury Department at p. 38.)

Do you have any information on the Coinage Commission? I questioned Miss Adams about it while she was testifying on S. 1008. Mr. WALLACE. Yes, sir. It is Secretary Fowler's intention to call a meeting of the Joint Commission on Coinage very shortly. That means within the next 2 to 4 weeks.

Senator PROXMIRE. How often would he expect it to meet?

Mr. WALLACE. It is difficult to say. I would think probably around once a month or so, because it will require a study by the Commission members in between meetings. In other words, the first meeting will probably be a review of the issues to be considered by the Commission. They might start immediately on some subject such as the disposition of the 2.9 million rare silver dollars. Other issues such as the time when and circumstances under which the Government should cease to maintain the price of silver would be something which probably couldn't be considered until we are further along in the transition period.