Hi-Yo, Silver!

One of the worst examples of unnecessary U. S. subsidies is the silver purchase program. Under it a little group of Western silver producers has milked the U. S. Treasury of more than $197,949,383 in the last five years. Four and a half times that sum, $912,822,539, has been handed out to British, Chinese, Japanese, Mexican and other foreign peddlers.

On the Labor Department's list of 784 commodities, silver's importance is rated at .07 of 1%. The chewing gum industry's output is twice as valuable as silver mining. Silver though supported, productionwise is only as important as grape jelly, or wire nails, or packers' prime tallow, or anhydrous ammonia. Silver is less important than linoleum, glue, leather gloves, strawberries, spaghetti, nuts.

Under the 1934 Silver Purchase Act, the U. S. has bought more than 2,200,000,000 oz. of silver--most of it to be buried immediately in West Point, N. Y. vaults. Intent of the Act was to force the Treasury to buy silver until the market price should reach $1.29 per oz. Failing this goal, the Treasury was to buy silver until a fourth of all U. S. bullion (in monetary value) was in silver. Last week the goal was still a mirage--some 60% of the world's gold is held in the U. S.

At a time when every crackpot scheme had a chance, a little bloc of Western silver-State Senators, by vote-trading, logrolling, wheedling, threatening, thrust the 1934 Act down the unwilling throats of Messrs. Franklin Roosevelt and Henry Morgenthau Jr. Only some 2 5 mining companies profit under the Act, and half of them are controlled by Eastern capital. The largest, Sunshine Mining Co., is owned by Pacific Coast Lumbermen; eleven have headquarters in New York City, one in Boston, one in the Midwest. Except for wages, most of the silver subsidy returns to the East.

Congressional silverites in 1934 claimed that 400,000 men would be employed under the Act. At that time less than 3,000 men were mining silver; by 1937 only 56,000 were engaged in all gold & silver mining, only 118,000 in all U. S. metal mining. Silver is almost wholly a mining byproduct. The domestic subsidy has therefore merely paid overhead on many a mine, allowed it to keep open for the profitable production of copper, lead, zinc. Economists, who traditionally agree on nothing, to a man denounce the silver subsidy.

Though the key men of the silver bloc, Nevada's Key Pittman and Pat McCarran, talk sentimentally about silver's importance, in Nevada itself the income from Reno's divorcees (temporary residents) is greater than that from silver; the State's meagre manufactures are five times as valuable as its silver production.

The Senate is used to the silver situation, not to say bored by it. Yet last week a Senatorial Lone Ranger once more took the trail of the wild-riding, hell-for-leather Silver Bloc, grimly determined to stop the Treasury raids. Ordinarily, big, easygoing Senator John Gillis Townsend of Delaware is no Lone Ranger. Gregarious John Townsend, whose head looks like a snowball bush in full bloom, is solidly Republican, completely acceptable to Delaware's Du Pont dynasty. Annually he 1) presents gallery newsmen and the Senate with all the sweet-tart spring strawberries they can eat, 2) gets through sessions with as little effort as possible.

But by early 1939, John Townsend had had enough of silver. An economical man, it annoyed him to think that the amount spent in five years' silver subsidy would run the executive, judicial & legislative branches of the U. S. Government for 25 years; that the average monthly outlay ($17,700,000) would run SEC or the Government Printing Office for over four and a half years; the Weather Bureau for three and a half years; the Public Health Service one year.

Greatest weakness of the subsidy program was the fact that 82% of all silver bought by the U. S. had come from overseas. In order to get their subsidy, the silver producers were willing that the U. S. squander indiscriminately abroad. Ranger Townsend rode through this weak point in the stockade, unloosed both barrels with a bill to end foreign silver purchases.

That bill died of Senatorial indifference. Last month Ranger Townsend resurrected it, set off, sky-hooting down the trail. Fortnight ago a new posse joined him--the twelve regional big-shot bankers of the Federal Advisory Council, adjunct of the Federal Reserve System, who announced in a unanimous yell: ". . . Purchases of foreign silver should be discontinued forthwith."

Last week the Senators, still brooding over the necessity of 1) levying new taxes, or 2) upping the $45,000,000.000 statutory debt limit, were still thrashing around in agonies of indecision. Their eyes lit on the $1,500,000,000 "silver profit"--obtained from seigniorage*--and there they stuck, bedazzled by this vast sum of unspent "money." Unmindful of this, Ranger Townsend was riding high, in his cartridge belt fresh ammunition to blow to kingdom come the silverites' arguments. To protests that ending foreign purchases would bruise U. S.-Mexican relations, Senator Townsend could merely ask "What relations?" and snap one word: "Oil." To reminders that the silver program was designed to raise the world price artificially, he could note that the price was lower than ever (34 3/4-c-) and that without the U. S. purchase plan/- the natural price might be 10 to 15-c- per oz., which would permit the lowliest proletarian to own complete sets of sterling tableware. Finally he could stand pat on the wise remark of Michigan's Senator Prentiss Brown: "If we are going to follow an unsound policy, then let us confine it to our own citizens."

*Seigniorage: the difference between the circulating value of a coin and the cost of the bullion and minting.

/-Flouting common sense, the U. S. Government alone buys silver, supports the market with its artificial price of 35-c- per oz.

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