Mr. PARSONS. Due to the Silver Purchase Act. How much profit has the Government made out of the silver purchases?

Secretary MORGENTHAU. Just a moment, please. May Mr. Bell answer that? Is that agreeable?

Mr. BELL (Assistant to the Secretary of the Treasury). Up to the end of January we realized $502,700,000 as seigniorage under the Silver Purchase Act. On newly mined domestic silver, $195,000,000 was realized.

Mr. PARSONS. What was the price you paid for it per ounce? Do you issue currency against it to the full monetary value?

Secretary MORGENTHAU. At cost. Equal to the cost.

Mr. PARSONS. If you only pay 642 cents then you issue twice that in currency; is that right?"

Secretary MORGENTHAU. We could do that but the Secretary is authorized under the act to issue not less than the amount of the cost of the silver, and that is what we have been doing.

Mr. PARSONS. Do you put the issue in circulation?

Secretary MORGENTHAU. Yes; most of them are in circulation.

Mr. PARSONS. With regard to the silver purchases the charge is made in the House every once in awhile that that act put China off of the silver standard. Is that true?

Secretary MORGENTHAU. I do not think that we have hurt China. I think that, quite to the contrary, the silver program of the United States is most helpful to China.

Mr. PARSONS. If there were an international agreement between the principal countries, for instance, England and France, and possibly Germany and Italy, upon their agreement on the ratio of gold and silver, could we go back to bimetalism? And could we maintain stable prices by agreement on both silver and gold?

Secretary MORGENTHAU. May I have the question repeated, please. Mr. PARSONS. If we had an international agreement could we maintain bimetalism, that is, the ratio of gold and silver as basic money? Secretary MORGENTHAU. I just do not know, Mr. Congressman, whether we could or whether we could not. I just could not answer that.

Mr. PARSONS. We did for a good many years, that is, up until 1900.

Secretary MORGENTHAU. 1873.

Mr. PARSONS. Prices fluctuated, of course, after 1873.

Secretary MORGENTHAU. Yes; you have to go back.

Mr. PARSONS. That was because we did not have an international agreement?

Secretary MORGENTHAU. Of course, there is no question that if the principal countries who are interested in silver would come to an agreement it would be most helpful.

Mr. PARSONS. That is all.

The CHAIRMAN. Mr. White?

Mr. WHITE. Mr. Secretary, speaking of establishing bimetalism by international agreement, that statute is still in effect? In our laws we have a statute which is the closest we have ever been able to secure an international agreement on bimetalism.

Secretary MORGENTHAU. I think, if I am correct, it is the so-called Pittman agreement.

Mr. WHITE. It is further back, I think, Mr. Secretary, in 1870 or 1890. I regret I do not remember the date. I did not bring the statute down. I do not think we ever repealed that law. When we passed the statute establishing the value of the dollar in gold and silver we pledged this country to attempt to secure international bimetalism by agreement. Do you think that statute still holds in respect to it?

Secretary MORGENTHAU. May I have a moment please? To the best of my knowledge the only agreement we had was the agreement which was entered into in London in 1933, which we refer to as the Pittman agreement.

Mr. WHITE. Mr. Secretary, I refer to the declaration of policy that has been enacted into law, and which has never been repealed, which certainly is authority for having the value, or creating the value, of the silver dollar, which makes it the same as any other dollar. I am sorry I have not the data, Mr. Secretary.

Secretary MORGENTHAU. Our people have not got it either.

Mr. WHITE. Mr. Secretary, I would like to ask a few questions about silver. It has been very widely stated on the floor that we have been paying out gold for silver. I would like to know just how foreign silver which we acquire is paid for. What part the silver certificate plays in acquiring silver.

Mr. BELL. Silver is purchased usually by check on the Treasurer of the United States. After we acquire the silver we issue silver certificates to replenish the general fund for the cost of that silver. It is in effect an exchange of funds. We purchase gold the same way and the general fund has to be reimbursed by the deposit of gold certificates with the Federal Reserve Bank, for which we get credit.

Mr. WHITE. As a matter of fact, does gold flow out of this country to pay for silver coming in?

Mr. BELL. I do not know of any specific case. And it would not, unless there was a balance of payments running against us.

Mr. WHITE. If gold does not flow out of this country to pay for silver coming in, what part does our surplus commodities play, such as wheat, cotton, and other commodities which we export-play in acquiring that silver?

Secretary MORGENTHAU. I am sure somebody else has got the answer to that. Would you mind repeating the question?

Mr. WHITE. If gold does not flow out of this country to pay for foreign silver coming in, then what part does the exportation of surplus commodities, such as wheat, cotton, and other commodities, play in paying for that silver so acquired?

Secretary MORGENTHAU. In the vast majority of the cases we have quite a large favorable trade balance. And a great many factors go into that beside gold and silver, such as services and interest both ways. There are a great many factors which go into that, and I do not think I could answer what proportion of it is silver.

Mr. WHITE. Well, as a matter of fact, outside of the silver that was furnished China-I mean gold which we furnished China in exchange for their silver-most of the other silver that was acquired was acquired in exchange for our surplus commodities; wasn't it?

Secretary MORGENTHAU. It is very difficult to earmark what proportion of gold and silver or services we received or furnished in exchange for a particular item. That is, if you refer to China, during the last 2 years the silver which she sold to the United States, and we furnished her with dollars, I suppose a large proportion of that money was spent in this country for the purchase of supplies.

Mr. WHITE. Mr. Secretary, there has been no direct exportation of gold from this country in exchange for silver imported, has there? And we can reasonably assume that the balance of trade is in our favor and that most of the silver is acquired by the exportation of surplus commodities? It can be reasonably assumed? Secretary MORGENTHAU. I think so; yes.

Mr. WHITE. Mr. Secretary, reference has been made to international trade relations and the effect of the stabilization fund. As a matter of fact, international trade is more or less demoralized and in distress and reduced to a barter basis on account of a shortage of money exchange?

Secretary MORGENTHAU. Well, international trade today, as you have stated, is very difficult, and exporters are up against all kinds of special barriers and handicaps, blocked currency, and I do not suppose exporters ever have had as much difficulty in getting payment in good, hard dollars as they have now.

Mr. WHITE. The stabilization fund does not seem to relieve that situation?

Secretary MORGENTHAU. Well, it cannot relieve that situation other than to even out the fluctuations and to make the dollar as stable as possible; it cannot, without giving part of the fund away, which we are not going to do. You cannot furnish dollars unless somebody has got something to give us in exchange which is as good.

Mr. WHITE. Mr. Secretary, with the price-level average falling, and the difficulties in holding our own with foreign trade, is it not evident we need some better system of money and foreign exchange?

Secretary MORGENTHAU. Well, I do not think-if you do not mind my putting it this way--I do not think it is we who need a better system. I think we have a very good system. I think some of the other countries we do business with need better systems.

Mr. WHITE. Then you would be in favor of directing the influence of this country toward stabilizing international exchange and making it function in international trade in a better way?

Secretary MORGENTHAU. To help stabilize the currency of the countries we are doing business with, and those countries which have what we call free exchange. I think the tripartite agreement has been very helpful to do just what you mention.

Mr. WHITE. Mr. Secretary, I want to make an apology. This is a very important topic, and I would like to develop little things which are troubling me.

Secretary MORGENTHAU. It is troubling all of us.

Mr. WHITE. You spoke of the tripartite agreement. My colleague, Mr. Parsons, spoke of international agreement, and you did, in answer to a question. Referring back to that question about international agreement, as a matter of fact, nations of the so-called Latin Union which standardized the currency of several countries worked

satisfactorily until it went out of existence as a result of the FrancoPrussian War. And if we could go back today to that plan of international agreement and standardize the currency to one value, do you not think that would cure some of the difficulties and obviate the necessity of a stabilization fund?

Secretary MORGENTHAU. If we could get the principal trading and commercial countries of the world to agree to stabilize their currency without letting it fluctuate, I do not know anything that would be more helpful. I would be in the front row rooting for it. But unfortunately that condition seems far removed.

Mr. WHITE. Do you not think the influence of this great Government ought to be directed along with the influence of other governments to establishing a stabilizing policy and do away with the inequalities of exchange?

Secretary MORGENTHAU. We are working toward that all the time. And if any country shows the slightest interest, why, I am always ready to drop anything I am doing to meet them more than halfway.

Mr. WHITE. Do you not think that the existence and operation of this stabilization fund between Great Britain and the United States is a disturbing factor, and does not work to that end?

Secretary MORGENTHAU. If you do not mind my disagreeing with you, it is just the opposite.

Mr. WHITE. I am just asking the question.

Secretary MORGENTHAU. Because I think if we did not have it today, and France did not have a stabilization fund, I think we would have complete chaos in foreign exchange.

Mr. WHITE. Mr. Secretary, you spoke of 54 nations changing the value of their monetary units. Are any of those upward, in gold, or all down?

Secretary MORGENTHAU. All down.

Mr. WHITE. Then does that indicate to your mind that gold is insufficient and scarce and is not operating as a basis of currency?

Secretary MORGENTHAU. No; but in dealing with these various countries each one naturally is looking out for its own interest and each one is trying to reach for a little advantage. That is the situation we have been up against since 1932.

Mr. WHITE. One more question, Mr. Secretary. If we can be successful in having the powers, the principal powers of the world, unite in adopting international bimetalism and standardizing their units of value, or their currency, on an international bimetallic basis, gold and silver both, would not that be a stabilizing influence and be a good thing for the whole human family?

Secretary MORGENTHAU. I would rather not answer that.
The CHAIRMAN. Mr. Luce.

Mr. LUCE. Mr. Secretary, am I rightly informed that England removed all prohibition against information about their stabilization fund here awhile ago?

Secretary MORGENTHAU. No; I do not think that is correct.

Mr. LUCE. Just what is correct?

Secretary MORGENTHAU. Recently England announced that twice a year they announce, as of 3 months back, the amount of gold in their fund. That is all.

Mr. LUCE. You have furnished us with a statement of the present condition of the fund. Have you any record to give to the public, if

it desired information, any more information, about the early years of the fund?

Secretary MORGENTHAU. It is from its inception to June 30, 1938. Mr. LUCE. And this contains everything a student might want to know?

Secretary MORGENTHAU. Yes.

Mr. LUCE. It is your intention to publish this every year?
Secretary MORGENTHAU. Yes.

Mr. LUCE. Referring to a title of that statement, about alteration in the weight of the dollar. It is almost invariably included in every list of reasons given by Congress and financiers for the delay in the revival of business that uncertainty about the use of this power causes uneasiness on the part of the business world. They may or may not, businessmen may or may not, be justified in that belief, but the belief exists that this is one of the chief reasons for the delay in the revival of business. Do you agree with that?

Secretary MORGENTHAU. If you do not mind, I do not agree with it. I think it depends on whom you talk to about it. I think those people I have had opportunity to talk to in a dispassionate, nonpolitical atmosphere feel that our record for the past 5 years in regard to the dollar and to gold have been a distinctly stabilizing influence. We are practically the only currency in the world that is fixed. Every other currency is plus or minus the dollar.

The businessman who is in the export business, the least of his worries is at what gold weight he will be repaid. I get a fairly large mail, and I get practically no criticism. I feel that if we did not have this power it would be most disturbing. I do not know anything that would disturb me more, as long as the world is as unsettled as it is. Our hands should be untied to permit us to meet any situation which may arise, just as long as things remain as chaotic as they are. Now, I do not think any better illustration can be used than the one of the fleet. I take it that Congress in considering any increase in the fleet thought we are doing this as a peaceful measure to insure ourselves against any aggressor, and that there is no intention in anybody's mind that we are going to attack. Now, I feel the same way about the right to further devalue, if we want to, for defense purposes. But if we take that away and tomorrow some large commercial trading country should decide to devalue for competitive purposes, we just could not meet the situation, and we would be back where we were in 1932. If I remember, England went off the gold standard in 1931, September, and we did not follow until March 1933. And just to talk a little about what happened, I think that in November, which was the low of 1932, sterling depreciated down to $3.25, and wheat went to 30 cents; cotton, 6 cents; corn, 24 cents. Copper was 5 cents. And we had no stabilization fund, and we did not devalue. We found ourselves in a vise. We lost export trade. And I would certainly be most distressed if this power was removed and we could not meet such a situation again if it should arise.

Mr. LUCE. Why have any restriction at all on the President? Secretary MORGENTHAU. In this particular case I think Congress was most wise when they gave him that power, and when they again. extended it. I think he has shown great wisdom in the method of using it. Congress gave him a great many other emergency powers in regard to money which he has seen fit not to use. And we have a