ness, civic, and commercial organizations in making these appeals throughout the country.

The Treasury's crash program, which the committee hoped would be adequate to relieve the shortage, be vigorously pursued notwithstanding its higher costs and lower efficiency, until sufficient supplies of coin are available and in circulation.

The Mint and the Federal Reserve System maintain inventories of coin adequate to prevent recurrence of any serious shortages.

The Mint use the facilities of private industry to the fullest extent practicable in alleviating the shortage, including the purchase of strip and blanks; and consider the advisability of legislation which, at least on a standby basis, would authorize the Mint, in an emergency, to contract for the minting of coin by private industry under the Mint's supervision.

If and when existing Mint facilities are inadequate to meet future needs, consideration should be given to the timely construction of a new mint.

The Mint should promptly resume its proof set and mint set operations when their suspension is no longer required by reason of the shortage, and should allocate orders for such sets on a basis which will assure their distribution to all coin collectors. Consideration should also be given to the opening of a numismatic sales office so as to provide collectors and dealers with coin under such regulations as would permit the Mint to exercise some degree of control over coin speculators.

If the 45 million silver dollars authorized were to be minted, the Treasury and the Federal Reserve System should take all necessary steps to assure their fair distribution and continuing circulation.

The Mint should give consideraion to discontinuing publication of the monthly statement of coin production by denominations.

The Mint should formulate plans for decreases in production of coin when the present needs and inventory requirements have been met, including the termination of any uneconomic steps undertaken during the crash program to alleviate the existing shortage.

Inasmuch as the shortage was attributable in part to inadequacies in the available means of determining coin needs and the scheduling of coin production, the report recommended that

The Secretary of the Treasury specifically clarify these responsibilities as they pertain to the Mint and to the Federal Reserve System; that the Treasury and the Federal Reserve System continue their efforts to devise more exact means of ascertaining coin requirements, to increase the efficiency and economy of coin production, to provide the Congress with more adequate information on which to determine production appropriations, and to avoid the necessity of requesting supplemental appropriations; and that the Federal Reserve System give consideration to developing more scientific bases for the uniform and equitable distribution of coin.

(b) Estimated monetary and other benefits.-The subcommittee's in-depth probing into the causes of the coin shortage and the means of relieving it stimulated the Treasury's "crash" program to increase the production of coin. While the program actually increased the costs to the Government, its success averted a disastrous shortage in coin which could have slowed the economy and resulted in extreme losses to individuals, business, industry, and the Government. The recommendations have also laid the foundation for improvements in the estimating of future coin needs and in the planning and execution of future production. These savings, obviously large, do not lend themselves to ready calculation.

(c) Hearings.-June 30, July 1, 2, 1964. Transcript printed.

2. "Coin Shortage (Part 2-Treasury's Crash Program-Silver and Its Relation to Coin Production)," House Report No. 195, March 22, 1965. Seventh Report by the Committee on Government Operations.

(a) Summary of report. This study was particularly directed to ascertaining the effectiveness of the Treasury's "crash" coin production program and its potentials for the future; whether there was anything more that the monetary agencies which are charged with the responsibility of coin production and distribution could do to assure a plentiful supply of coin; and the effect the crash program had on the Treasury's silver supply and on the Treasury's undertaking to assure an adequate supply of coin to meet all needs.

By the time of the hearings, in February 1965, the Treasury Department and the Bureau of the Mint had taken steps in accord with some of the recommendations in "Coin Shortage (Part 1)." For instance, they had assisted the American Bankers Association in establishing public relations programs designed to bring coin back into circulation. Also, they had vigorously pursued the crash program of coin production; the Mint had been purchasing strip from private industries and had discontinued publication of monthly statements of coin production by denominations.

The subcommittee found coin production under the crash program to be on schedule; 4.3 billion coins were produced in fiscal year 1964; production in fiscal year 1965 would almost double that figure; and yearly production was planned at a rate exceeding 9 billion pieces by June 30, 1965. The Mint was on an around-the-clock basis, 24 hours a day, 7 days a week.

The numbers of coins commercial banks were returning to Federal Reserve banks as excess to their needs were increasing. The former drastic shortage in pennies had been alleviated. There was marked improvement in nickel production and some in dimes and quarters. Further improvements in nickel and subsidiary coinage were planned. The overall situation was improving.

Contemporaneously with the Mint's increasing production, other efforts, mainly by the banking industry and notably by the American Bankers Association, were directed toward bringing existing coin back into circulation.

Much coin is circulated outside the banking system, among merchants and businessmen. Neither the Treasury Department nor the Federal Reserve Board can estimate the amount of coin so circulating, nor had they made any studies or surveys designed to supply that information. The same conditions apply with regard to the coin holdings of commercial banks. Although the Federal Reserve Board could require member banks to report their actual coin inventories, it had made no attempt to measure the amount of coin held out of circulation by coin dealers, speculators, and hoarders, or the quantities melted down or exported. In the absence of creditable data of such holdings, there is no creditable way of forecasting when the Mint's production may be decreased to avert costly overproduction.

The Treasury's stock of silver was fast declining. At the rates used for coinage and redemption of U.S. silver certificates, the supply was estimated to last only 3 or 4 years. Although the Treasury had been faced with a diminishing stock of silver for some time it had made no efforts to curtail drains on the supply. The Treasury required no end-use information be furnished it, so that the purpose for which silver was withdrawn by purchasers-whether for use, export, hoarding, or speculation-was not known; nor were destinations or ownership required to be disclosed. Since 1959 industrial consumption of silver had increased about 10 percent, coinage consumption 500 percent, and exports 1,000 percent. In 1964 the United States, for the first time, became a net exporter of silver. Exports tripled those of 1963, and were 12 times U.S. production. There were no export controls on silver except on shipments to Communist-bloc countries.

Because of the short supply of silver, the Treasury had studied and tested various possible substitutes for all or part of the silver content of coins. Although it was urgent that Congress deal with the silver problem, the Treasury had delayed its report on coin alloy, due on February 1, until April 1965.

To assure that adequate supplies of U.S. coin would be available to meet all needs, particularly in the light of the Treasury's diminishing silver stock, the report recommended that:

The Treasury Department, the Bureau of the Mint, and the Federal Reserve System, in their effort to devise more exact means for determining coin needs and fostering the equitable distribution of coin, should explore the possibility of obtaining assistance from extragovernmental sources, and determine if the coin holdings of commercial banks should be inventoried periodically.

The Treasury Department and the Federal Reserve System should consider direct deposit of coin in the Federal Reserve System by industries which handle large amounts of coin and from operations conducted by or on Government installations.

The Treasury Department should consider the advisability of legislation to prevent, minimize, or regulate the hoarding of, or speculation in large quantities of coin and the export and melting down of coin.

The Treasury Department should delay minting the 45 million silver dollars then recently authorized, until decision was reached by the Congress on new coin alloys.

The Treasury Department should report its recommendations. to the Congress resulting from its silver and coin alloy studies at

the earliest possible date; and that in arriving at its recommendations, it fully consider

(a) The effects which changes in coin content would have on the efficiency and economy of coin-producing operations, including preparing for the period in which new-content coin would be put into circulation, and in planning production at the new Philadelphia Mint facilities which will soon be constructed:

(b) Whether the stockpiling, hoarding, or exporting of, or the speculation in, silver need be prohibited or regulated in any measure, in the interest of conserving the Treasury's silver stock; and

(c) The manifold interests, public and private, which could be expected to be affected by changes in coin content. The report also recommended that pending congressional action on coin alloys, the Congress and the Treasury take steps to conserve the silver supply against depletion by extensive redemptions of silver for stockpiling, hoarding, export, or speculation.

(b) Estimated monetary and other benefits.--Direct monetary benefits are difficult to compute. The adoption by the monetary agencies of scientific measures for forecasting future coin needs and curtailing expensive crash coin production at the earliest opportunity could conserve millions of dollars. The coin shortage has been alleviated to the extent that pennies, nickles, dimes, and quarters, for the most part, are adequate to permit the carrying on of all commercial enterprises requiring coin. By focusing attention on the Nation's silver situation and on the need for keeping adequate quantities of coin in circulation, the study supplied a background for the enactment of the Coinage Act of 1965, with its provisions for coin of less silver content and for preserving coin supplies.

Estimates of the profits that will inure to the Treasury over the costs of manufacturing the new clad coins (i.e., seigniorage) are in the neighborhood of $500 million for fiscal year 1966 and $1.5 billion in fiscal year 1967.

(c) Hearings.-February 16, 17, 1965. Transcript printed.

3. "The Gold Situation," House Report No. 702, July 30, 1965. Seventeenth Report by the Committee on Government Operations. (a) Summary of report.-Communications received by the subcommittee indicated considerable concern that the U.S. gold supply was being drained away and that adverse effects were inevitable. Quite often the communications indicated a confusion and misunderstanding of the technicalities and even the nomenclature employed by the experts and technicians who deal with the problems.

When the report was issued (July 1965) the United States held gold worth some $14.3 billion. Five years ago its holdings were worth almost $18 billion, and 10 years ago nearly $22 billion. The U.S. stock of gold has declined some $8.5 billion in the years since 1957, years in which the United States annually had had deficits in its balances of international payments.

The report is a factual, objective review of the country's gold reserves; of the drains thereon through the redemptions of dollars by foreign countries brought about chiefly through deficits in U.S. international payment balances. It treats of such subjects as U.S. policy as regards the redemption of dollars for gold, the adequacy of U.S. gold reserves, the strength of the dollar, the remedies applied to stem the imbalances of U.S. international payments, speculation in gold and suggested curbs on speculation, and the various plans that have been suggested for improving international monetary arrangements.

(b) Estimated monetary and other benefits.-No monetary benefits derive directly from this study. Its prime purpose was to examine the gold situation of the United States in the light of international demands and to provide a better understanding of this area of concern. Greater understanding of the real situation can serve to hasten solution of the problems. Some indications that it has been considered to be of educational value may be found in the large number of requests the subcommittee has received for copies of the report from Members of Congress, the public, libraries, schools and universities, business establishments, foreign countries, and large U.S. corporations engaged in international trade. The U.S. armed services obtained. large quantities of the report for use in their training programs. The U.S. Chamber of Commerce requested several hundred copies in connection with its October 1966, national symposium on the international balance of payments.

4. "Federal Reserve System-Check Clearance Float, House Report No. 1335, March 17, 1966, Twenty-Second Report by the Committee on Government Operations.

(a) Summary of report.-Float is the dollar value of checks which have not yet been collected in the Federal Reserve System's clearance process but on which member banks receive credit to their reserve balances with the System. In developing the Fed's system of check clearing, it was found impracticable to devise a method of debits and credits which could be made at the exact times when checks were actually collected. Schedules were developed, therefore, under which member banks were given credit based on the distances between the collecting and drawee banks. Originally, the schedules approximated actual collection times, so the "float" was small. However, as better means of transportation and bookkeeping methods advanced, the credit times were reduced, the last reduction going from a maximum of 3 days to 2 days in 1951. While actual collection times for most checks which give rise to float are longer (the average is 3 days), the maximum deferment under the schedules is but 2 days. Between $700 and $800 million of float, which had a daily average of $1.8 billion last year, could be wiped out by the System's enlarging the deferment time to 3 days.

For various reasons, including the anticipated unpopularity with its member banks of any such change, the Fed has hesitated to take such action. It believes that technological advances will soon ( as these things are measured) completely eliminate the float, by enabling simultaneous entries to be made of debits and credits on checks; and, in fact, by eventually doing away with the need for checks.