Q. David Bowers
Silver Operations (June 1921 Report)
The Annual Report of the Director of the Mint for the fiscal year ending June 30, 1921 told the following:
"Silver Operations. The receipts of purchased silver during the fiscal year 1921 exceeded those of any year in the history of the Mint Service, not excepting purchases under the acts of February 28, 1878, and July 14, 1890. The 1921 total was 66,126,511.43 fine ounces, most of which, 62,880,550.20 fine ounces, was Pittman Act silver costing $1 per ounce. The average cost of other purchased silver was $0.77115 per fine ounce, its total cost being $2,503,129.53; the silver received for repayment to the depositors thereof in bars bearing the government stamp totaled 1,306,178.12 fine ounces; the United States silver coin received for coinage totaled 507,893.52 fine ounces, with recoinage value of $702,116.49; silver deposited in trust by other governments totaled 1,706,827.02 fine ounces the transfers of silver between Mint Service offices totaled 1,375,295.25 fine ounces, making an aggregate quantity of silver handled by the Mint Service during the fiscal year 1921 of 71,022,705.34 fine ounces.
"The purchase of silver bullion to replace that obtained by melting silver dollars pursuant to the Pittman Act of April 23, 1918, begun in May 1920, was continued during the entire fiscal year, the total acquired under the act, to June 30, 1921, being 66,967,630 fine ounces, leaving 141,032,370 fine ounces to be acquired before the provisions of the act are fully complied with.
"Coinage of this bullion as required by the act, to replace the dollars melted, was begun in February 1921, and by June 30 a total of $19,043,000 had been delivered.' Every effort is being made to expedite the conversion of this bullion in to dollars, since, as bullion, the silver is a "dead asset," while, as coin, silver certificates may be issued against it and used to take up a corresponding amount of Pittman Act certificates and at the same time replace the Federal reserve bank notes issued in lieu of silver certificates when the latter were retired to make the dollars available for melting. Converting this silver bullion into an active asset thus reduces the public debt to the extent or the coinage executed, and saves the payment of interest thereon. At the time of the writing the accumulated stock of bullion is being rapidly turned into coin and it is expected that this work will be current before the close of the fiscal year 1922, now in progress.
"Early in the fiscal year 111,168 silver dollars were allocated to and were melted at the Denver Mint, under the terms of the act, for use in manufacture of subsidiary silver coin. This gives the total number of dollars melted under the terms of the Pittman Act, 270,232,722."
The Pittman Act June 1921 Report)
The Numismatist, June 1921, under title of "The Price of Silver at the Mint," a letter from Mr. Sidney Jennings to The New York Times was reprinted:
"In a recent editorial article headed 'The Silver Crime of 1921' you advocate that the United States government should repeal the Pittman Act. The main argument you use is that the government can, by purchasing silver at the present market price, make a profit. This profit would be in addition to the one it already made when it sold some of the silver in its Treasury under the Pittman Act at $1.015 per ounce, largely to the British government, in order to satisfy the silver need of India.
"In 1917 India was exporting large quantities of material that was needed for war purposes. The only method of paying for this was to ship into India either gold or silver. Gold was unprocurable and, therefore, silver was shipped. A very rapid increase in the price of silver took place until in September 1917, sales were made as high as $1.145 per ounce. This rapid rise alarmed the British authorities. They realized that unless the needs of India were satisfied its demand for silver would bring about a crisis that the Allies could not then face, and the British authorities also knew that the only place in the world where a volume of silver existed above the ground sufficient to satisfy the demands both of India and China was the United States Treasury.
"Negotiations were started in order to release some of the large quantity of silver stored in that Treasury. The silver producers of the United States realized that if the government kept its hands off the silver market, their product would command as proportionally high a price as other products, such as wheat, cotton and steel. They, therefore, formed associations and sent representatives to Washington, to present their view of the situation. As a result of these discussions, Congress passed the Pittman Act in April 1918.
"Meantime the price of silver had gone down, but as a result of the passage of the Pittman Act, the price was temporarily fixed at $1.015, and remained at that price for several months, until all the silver dollars called for were melted. According to the report for the year 1920 of the Director of the Mint, 270,121,554 dollars were melted under the Pittman Act. This melting would, under the terms of the act, require the repurchase of about 208 million fine ounces of silver produced in the United States from ores mined in the United States. Of this amount some 37 million ounces in round figures have been repurchased by the Treasury Department at a price of $1 per fine ounce.
"In the original purchase of the silver which had been coined into the dollars that were melted under the Pittman Act, the United Statesgovernment made a very large profit as seigniorage. When the entire repurchase of 208 million ounces is completed at $1 per ounce, the United States government will, according to the director of the Mint, neither gain nor lose, although there is, according to the same authority, a small profit of $692,068 in manufacturing silver dollars into subsidiary coins under the terms of the Pittman Act.
"Thus the United States government, when the terms of the Pittman Act are carried out, will have in its Treasury exactly the same number of silver dollars that it had before the operation of the act, and will have maintained and slightly added to the profit made through seigniorage, and will have kept faith.
"The Pittman Act was undoubtedly a solemn agreement between the government of the United States, representing all the people of the United States and the silver producers of the United States, which was faithfully adhered to by the silver producers of the United States and should now be faithfully adhered to by the government of the United States."