Treasury Silver

Nevada has both its Senators on the Senate Committee of Mines and Mining--and well it may, for Nevada is one of the chief silver producing states of this country. Senator Tasker L. Oddie (Republican) and State Hughes uses, or rather misuses, Senator Key Pittman (Democrat) are the men. Both have been engaged in the mining business at one time or another. At the age of 25 Key Pittman joined the gold rush to Alaska and worked for two years as a common miner. Later he became the first district attorney of Nome. He returned to the United States proper, and settled in Tonopah, Nev., one of the Nevada silver and gold mining cities. In 1912 he was elected to the Senate. There, naturally a champion of the mining industry, he became sponsor for the Pittman Act of 1918 for breaking up silver dollars and selling them as bullion at $1.00 an ounce, during the brief post-war period during which the price of silver went soaring. Under the Pittman Act the Government pays $1.00 an ounce for American silver used to replace its silver dollars melted or broken up. It has done so for about three years. During this time the average price of silver has been 70 cents an ounce (just now it is about 65 cents an ounce). So American silver miners have been getting a bonus of about 30 cents an ounce for their product-- and the Government has been paying that much more for silver than was necessary. Of the silver purchased at $1.00 an ounce, about 10,000,000 ounces were used for subsidiary coins (half dollars, quarters, dimes). In view of this fact, the Treasury Department has discontinued its purchases of $1.00 silver, declaring that it is not obliged to buy silver for subsidiary coins at $1.00, but that it will buy as much as necessary at the market price of 65 cents or thereabouts. Controller General McCarl, watchdog of the Treasury, approved this course. At once Senator Pittman objected. He declared that the Treasury had no right to discontinue its purchases of $1.00 silver. Under Secretary of the Treasury Gilbert replied simply that "there is nothing in the Pittman Act that requires the Treasury at any time to buy silver for subsidiary coinage at the artificial price of $1.00 per ounce." The Government makes a profit, known as "seigniorage," from its subsidiary silver coins because the face value of the coins is greater than the value of the silver in them. At $1.00 an ounce for silver, the cost of silver in a dollar (face value) of subsidiary coins is about 72 cents. At the market price of 65 cents an ounce for silver the Government will pay about 48 cents for the silver in a dollar (face value) of coins. In other words the seigniorage will increase from 28 cents to 52 cents and there will be additional profit of 24 cents on every dollar (face value) of subsidiary coins minted.