Page images
PDF
EPUB

allocated. As far as the Pittman Act is concerned, the transaction is closed when the allocation is made; it is a sale, and the Director of the Mint may do as he pleases with it under any other authority that he possesses.

As I have stated before, the words “over and above the requirements for such purposes " do not mean to meet the daily minting of coins by the mint, because the act has no control over that function, but mean to meet the allocations, or, to use synonymous language as provided in the act, to meet the sales or resales that have been made.

In section 2 of the act it is expressly provided :

* That upon every such sale of bullion from time to time the Secretary of the Treasury shall immediately direct the Director of the Mint to purchase in the United States, of the product of mines situated in the United States and of reduction works so located, an amount of silver equal to three hundred and serenty-one and twenty-five hundredths grains of pure silver in respect of every standard silver dollar so melted or broken up and sold as bullion.”

I call your attention to the word “ immediately.” There was no intention that the Treasury Department should await any action with regard to the bullion so sold or resold. The sale was made, which in the act means allocation. Then it was the duty of the Secretary of the Treasury to immediately order the repurchase of that amount from the American producer at $1 an ounce.

Now, as to the 10,000,000 standard silver dollars : Let us keep in mind that they contained 7,729,978.89 ounces of silver. These were a part of the silver dollars held in the Treasury to redeem silver certificates that had been issued against them. Prior to the enactment of the Pittman Act there was no authority in law to use them for subsidiary coinage, or to settle trade balances, or to sell them for bullion, or for any other purpose than the redemption of silver certificates. It was by reason of this restriction that the Pittman Act was passed. The Treasury Department has no authority in the matter nor has the Dirertor of the Mint except in strict compliance with such act.

What took place under the act? On November 28, 1919, the Director of the Mint, in accordance with the provisions of the Pittman Act, notified the Secretary of the Treasury that he required silver bullion for the coinage of subsidiary coins, and requested the Secretary of the Treasury to allocate, under the Pittman Act, 10,000,000 standard silver dollars then in the Treasury. On the same date the Secretary of the Treasury made this order:

"The Secretary of the Treasury, pursuant to the provisions of section 3 of an act of Congress approved April 23, 1918, hereby allocates to you for subsidiary coinage the silver bullion to be obtained from melting ten million standard silver dollars and, pursuant to section 1 of said act, authorizes you to melt said ten million standard silver dollars for the purpose above mentioned.”

In addition to this, at the same time the Secretary of the Treasury issued an order directed to the Treasurer of the United States, who had possession of said standard silver dollars under the law, to surrender and deliver to the Director of the Mint said 10,000,000 standard silver dollars. The Treasurer of the United States, in response to said order, immediately delivered to the Director of the Mint said 10,000.000 standard silver dollars. They were received by the Director of the Mint, removed from the possession of their legal custodian, conveyed to the mint at Philadelphia, and there, between I)ecember 5, 1919, and March 22, 1920, were broken up, destroyed as standard silver dollars, and converted into silver bullion.

What was then the duty, under the act, of the Secretary of the Treasury? It was this:

* That upon every such sale of bullion from time to time the Secretary of the Treasury shall immediately direct the Director of the Mint to purchase in the United States, of the product of mines situated in the United States and of reduction works so located, an amount of silver equal to three hundred and seventy-one and twenty-five hundredths grains of pure silver in respect of every standard silver dollar so melted or broken up and sold as bullion."

Is there any doubt that the 10,000,000 silver dollars were broken up? Is there any doubt that the bullion was allocated? Is there any doubt that the Pittman Act prescribes that allocation constitutes a sale or resale? Where do you find the authority in the Pittman Act to recoin any silver dollars so broken up except from American silver purchased from the American producer immediately after such silver dollars are broken up? The act is mandatory. If it were not mandatory, why the necessity for the provision that the silver should be purchased from the product of American mines? Why not pur

chase some of the foreign silver that comes into the possession of the Director of the Mint through the purchase and coining of foreign gold bullion? Because one of the very purposes of the act, among others, as stated in the act, was “ To encourage the production of silver" in the l'nited States.

The main reason stated by you for your refusal to purchase silver under the Pittman Act to replace the 10,000,000 silver dollars so broken up and the other silver allocated is that you can buy that amount of silver in the open market cheaper, and that you can save the Government $5,000,000 thereby. All the silver that you have purchased under the Pittman Act since May, 1921, couli have been purchased at less than $1 an ounce. Did that excuse justify you in violating the terms of the Pittman Act?

Upon mature consideration and reflection, it must be apparent to you, as an able lawyer, that the Treasury Department has no discretion with regard to the matter of purchases under the Pittman Act. The mandatory provisions were safeguards thrown around the American producer and were just safeguards. He consented to the flooding of the market of the world with 350,000,000 silver dollars through a patriotic spirit, knowing that the time would come when such act would decrease the demand and depress the silver market. All that he asked was that every one of such silver dollars so broken up should be replaced through the purchase of American silver at $1 an ounce. Congress, in unequivocal language, made such mandatory provision.

You say that it is not much more than a matter of bookkeeping whether it is standard silver dollars or broken-up silver dollars; that it is all in the Treasury Department. This is not an accurate statement. It is true that the Secretary of the Treasury has supervision over the various departments that function with regard to our finances, but the law prescribes the functions of those various departments, and the Secretary of the Treasury has no jurisdiction or discretion to alter or juggle those functions. Under the law the Treasurer of the United States is the custodian of the standard silver dollars, and he can only part with them in accordance with the law of the country. He did part with them to the Director of the Mint, who performs an entirely different function and who has no control over the standard silver dollars.

When the Treasurer delivered these silver dollars to the Director of the Mint, in accordance with your order and under the allocation made, he did it under the authority of the Pittman Act. It was a sale to the Director of the Mint as far as he was concerned and he was relieved from any further responsibility with regard to it.

You argue that you are justified in ordering these 10,000,000 silver dollars recoined from this silver bullion sold to the Director of the Mint because it is not needed at the present time for the coinage of subsidiary coins. Is there any provision in the act that it shall be needed immediately? Is there any law that requires the Director of the Mint to keep coined all the bullion that he has on hand for the purpose of coining subsidiary coins? The time and the manner of coinage by the Director of the Mint is largely in the discretion of the Director of the Mint, possibly subject to the approval of the Secretary of the Treasury. It is certainly a matter that Congress did not attempt to assume control over under the Pittman Act.

The discretion as to when Pittman Act silver was needed for subsidiary coinage was left to the Director of the Mint and the Secretary of the Treasury. They could not touch a dollar of the standard silver dollars in the Treasury until they exercised that sound discretion. They did exercise it. They took advantage of the act in December, 1919, by solemnly announcing that 10,000,000 silver dollars were required for the purpose of subsidiary coinage. They consummated the sale in accordance with the provisions of the act. The sale could not be legally questioned by anyone because the determination of the . necessity was within the exclusive jurisdiction of the Treasury Department. In your letter to the Comptroller General under date of November 2, 1922, you say :

" It further appears that the allocations of silver for subsidiary coinage under the act were made in part, to make up shortages at the individual coinage mints, rather than for the mint service as a whole, and in part to supply refined silver immediately available for coinage, where the silver already on hand was unrefined."

At the time the Treasury Department undoubtedly admitted that this condition of affairs warranted the allocation of such silver.

In your argument in support of the revocation of the allocation of the 10,000,000 silver dollars you simply rely upon the opinion of the Comptroller General. I again call your attention to the fact that the Comptroller General, while declaring that he sees nothing to prevent the revocation, still expressly states that the question of revocation or nonrevocation is a matter of policy of the Treasury Department which they may determine either way. You are not, therefore, hampered by the opinion of the Comptroller General.

Now, as to the moral duty of the Treasury Department: What was the condition of the silver market at the time the allocation of the 10,000,000 silver dollars was made? The price of silver then throughout the world, including the United States, was $1.30 an ounce. The Government had to have 10,000,000 silver dollars to break up into bullion and coin into subsidiary coin. I presume this is true. To presume otherwise would be to doubt the intelligence or the integrity of the Treasury Department. They had to purchase the amount of bullion contained in 10,000,000 silver dollars. If they had gone into the open market to purchase it they would have had to pay the American producer $1.30 an ounce. Instead of that they took advantage of the sale provision under the Pittman Act and purchased 10,000,000 silver dollars from the Treasury of the United States at $1 an ounce.

Silver continued at above $1 an ounce for six months after that. Did the Treasury Department discover during that period of time that the 7,729,978 ounces in these 10,000,000 silver dollars were not required for subsidiary coinage? How long did it take the Treasury Department to discover that these 10,000,000 silver dollars melted up into bullion and sold to the Director of the Mint were not required for subsidiary coinage? The order of revocation was made on December 19, 1922. Think of it; it took the Treasury Department nearly three years to find out that it did not need these 10,000,000 silver dollars converted into bullion for subsidiary coinage.

How much subsidiary coin did the mints coin for the year the allocation was made? According to the report of the Director of the Mint, during the fiscal year ended June 30, 1920, the coinage was as follows: Philadelphia

$13, 033, 000 Denver

3, 646, 600 San Francisco

3, 084, 000 Total silver..

19, 763, 600 What was the coinage for two years prior and one year subsequent? According to the reports of the Director of the Mint it was as follows: 1918

$35, 004, 450 1919

14, 682, 079 1921

13, 389, 070 And yet at the end of those three years the Treasury Department attempts to treat the sale as never having existed and to have the silver dollars so broken up replaced with what might be in whole or in part the bullion derived from the breaking up of the 10,000,000 silver dollars.

What was the price of silver at the time of the attempted revocation on December 19, 1922? It was 62 cents an ounce. You say that the Government will lose $5,000,000 if they are compelled to buy at $1 an ounce the 10,247,976.52 ounces of bullion so allocated and now revoked. You mean that the Gove ernment will make an additional profit of $5,000,000 by repudiating the sale of the 10,247,976.52 ounces and buying the silver at the present price.

But we are now only discussing the 10,000,000 silver dollars. The Government could not lose, because if it coined the 10,000,000 silver dollars into dimes, quarters, and halves it would sell those coins to banks and to trade and commerce at the fixed price of $1.37 plus an ounce. In other words, the Government would make $2,860,092 if it paid the producer $1 an ounce for it.

If the Government coined the other silver so allocated, it would make a profit on such silver of $931,659. By coining all the silver so allocated, and which has been revoked, the Government would make a total profit of $3.791,751, being the difference between $1 an ounce paid for this silver and $1.37 an ounce, the price at which it would be sold as subsidiary coin. Vot satisfied with this enormous profit, you now seek to make an additional profit of over $3,000,000) by buying the silver at the present low price of silver.

The moral question involved is this: Should the Government make a profit on handling the product of an American producer? Would it be just for the Government to buy wheat at 67 (ents a bushel and sell it to the American consumer at $1.37 a bushel? Would it be fair for the Government to buy sugar from the American producer and then sell it to the American consumer at twice the price? Such a thing is incomprehensible, and yet that is what the Government is now doing and has for years been doing with silver. It has for years carried an account of its profits in dealing with silver which have amounted into the millions.

What the Government should do with regard to subsidiary coinage is to pay the producer the same price at which it sells the silver to banks and to commerce and trade. We are not even asking that at the present time. We are asking that you stand by your sale to the Director of the Mint. We ask you to carry out the spirit of the act and encourage the silver production of the country. We ask you to recognize that if you had any equity with regard to the revocation of the allocation of the 10,000,000 silver dollars that you slept on your rights during a period of three years. We ask you only to make a profit of 37 cents on the silver that you buy from the American producer and which you sell to the banker and to commerce and to trade.

The American people do not want you to make this exorbitant profit on an essential industry of this country. They will be satisfied with the profit that you make by paying $1 an ounce. They are willing to forego the additional profit of $5,000,000 so as to help sustain an industry that is tottering by reason of the oppression and neglect that it has suffered at the hands of its own Government.

You seem to desire to construe the act so that the Government may have won either way. As long as silver was abore a dollar an ounce it was a sale eren for a period of three years, and when silver goes down below a dollar an ounce it is not a sale. No such position could be maintained by an individual under the law. Why should such practices be attempted by departments of the Government?

You are authoritatively informed by the representatives of slver producers that many little producers of silver will be absolutely destroyed by the premature termination of the purchase of silver by the Government under the Pittman Act.

When did this administration hesitate to tax the American people to support and protect industries? The silver miner pars from 15 to 70 per cent increased price for nearly everything that he uses by virtue of the tariff passed by this administration avowedly to protect and sustain the industries of the country. In fact, the silver industry is one of the few industries that has never had tarill protection or any other form of protection except the Pittman Act.

Does this administration and the Treasury Department consider the silver industry of no value to the United States? Our country produces over onethird of the silver of the world. It is essential as an exchange medium in trade with China and India, two of the greatest silver-using countries in the world. The price and control of our own silver is in the hands of the Bank of England, through the price fixing of four brokers in London who are acting by authority of the Bank of England. The Pittman Act itself recognized the necessity for the use of some silver dollars in the Treasury in settling our trade balances in such countries as China and India. It provided for the use of silver dollars for such purposes. At the time that this Government had an embargo upon the exportation of silver it was necessary to pass a special act of Congress so that American silver could be exported to China to take care of our exchange and our commerce with that country.

If this Government has any interest in the production of silver, then it should consider how it has treated the inciustry in the past and what it may do for it in the future. The world's price of silver to-day is approximately what it was before the war. The prices of practically all other products in the United States and throughout the world are from 30 to 60 per cent above what they were before the war. The cost of production of silver has increased enormously, as has the cost of production of all other products. Our Government has made every effort to support all other industries in this abnormal condition, but has done nothing for silver and nothing for the gold-mining industry.

The rescinding of the orders of revocation by the Treasury Department will continue the purchase of silver at $1 an ounce for two or three months longer, and while this is but small assistance, it will give the mine operators an opportunity to arrange their business and probably prevent many failures that otherwise must occur.

The Treasury Department probably figures the actual number of men engaged in mining silver. They forget that whole communities are dependent upon the continuance of such mining operations. They forget that to every one miner there are from five to ten people who are equally dependent upon the continuance of this industry.

The opinion of the Comptroller General, upon which the Treasury Department depends, expressly states, that the matter of revocation or nonrevocation is entirely within the discretion of the Treasury Department.

I respectfully again urge the Treasury Department to reconsider the attitude that it has maintained and utilize the power that it undoubtedly has under the Pittman Act to prevent the sudden and unexpected termination of the purchase of silver at $1 an ounce. Respectfully submitted.

KEY PITTMAN,
Vice Chairman, Senate Commission of Gold and Silver Inquiry.

WASHINGTON : GOVERNMENT PRINTING OFFICE : 1923

« PreviousContinue »