Senator CONNALLY. Let me ask a question. The gold is worth in any country whatever that country says it is worth in terms of the money of that country, is it not?

Mr. WHITE. That is not wholly true, Senator. It may fix a price for gold, and the price in that country, in the currency of that country, might be out of alinement with the market price because the government cannot or does not wish to buy and sell gold at the statutory price.

Senator CONNALLY. That would not be because it did not have a sound currency. In the United States, for instance, we called it worth $20 an ounce; it was worth $20 an ounce because we said 20 grains of gold was a dollar.

Mr. WHITE. Exactly.

Senator CONNALLY. And it is worth $35 an ounce now because we say that the same amount of gold is now worth $35, which was formerly worth $20.

Mr. WHITE. Exactly.

Senator BYRD. It is only worth $35 on the assumption that we buy all of the gold offered at $35.

Senator CONNALLY. No; it would be worth just the same regardless of that.

Senator BYRD. It would not be worth that over the world unless we were willing to pay $35 an ounce for all the gold that was offered us.

Mr. WHITE. When Congress says that the price of gold is $35 an ounce, and if we do not impose any restrictions on the amount of gold bought and sold, then whatever gold comes in we pay $35 an ounce for. Senator BYRD. We have bought all the gold that has been offered to us, at $35 an ounce, have we not?

Mr. WHITE. We have.

Senator BYRD. Russia or any other country in the world?

Mr. WHITE. From countries all over the world.

Senator BYRD. What is the cost of production of gold?

Mr. WHITE. It varies very greatly, not only from country to country but from mine to mine. It not only varies from mine to mine but as you well know, it will vary from portions of the same mine.

Senator BYRD. There must be some average figure.

Mr. WHITE. The possibility or likelihood of getting an accurate average figure on the cost of production of gold the world over is extremely small, because gold mines do not issue their cost figures.

Senator BYRD. You are an expert and well-informated about it. What is your opinion about it?

Mr. WHITE. Let me put it this way, Senator, and see whether this answers your question. There are some very rich gold mines that can produce gold at a cost roughly equivalent to $12 an ounce. There are very few such gold mines, however. There are a large number of gold mines that produce gold at costs running from $20 to $30 an ounce. There are some gold mines that produce gold and make a very small profit.

Senator BYRD. What would be the average for these larger mines, 75 percent, say of the production?

Mr. WHITE. I should say somewhere between $20 and $30. It is just a guess and nothing more.

Senator BYRD. We are paying more, considerably more for gold than the cost of production?

Mr. WHITE. For gold from many mines that is true.

Senator BYRD. What percentage of the total gold in the world does this country now own?

Mr. WHITE. I should say roughly about 75 percent.

Senator BYRD. As long as we pay substantially more than the cost of production of gold, then we are paying an artificial price, are we not?

Mr. WHITE. No; I should not say that. Would you say, Senator, that the price of wheat on the market is artificial because there were different costs and some farmers get more than the cost of production? Senator BYRD. That would be governed by how much the fluctuation would be. As I understand you, some large mines produced it at $12 an ounce.

Mr. WHITE. Yes.

Senator BYRD. If you pay $35 an ounce, that is considerably in excess of the cost of production at practically any mine?

Mr. WHITE. If you wish to say when Congress passes a law fixing the price of gold, that Congress is doing something artificial, that is all right.

Senator BARKLEY. What Congress does is not to fix the price of gold, except indirectly by saying how much gold is going into a dollar. Mr. WHITE. That is correct.

Senator BYRD. I want to differ with you, Senator Barkley. We are buying all the gold that is offered to us from all over the world, and the Treasury will pay $35 an ounce for that gold.

Senator BARKLEY. How much of this 75 percent of the gold does the United States own?

Mr. WHITE. It owns all of it. It has title to all of it.

Senator BARKLEY. I am distinguishing between the Government of the United States and the Federal Reserve Bank. What is the proportion of that gold that is in the Treasury?

Mr. WHITE. The title to gold rests in the Government. Senator CONNALLY. The Government issues gold certificates against the gold, it issues certificates to the Federal Reserve bank.

Mr. WHITE. That is right.

Senator BARKLEY. Not to the public. The average man does not get any gold certificates.

Senator BYRD. The gold certificates are passed between the Government and the banks.

Senator LA FOLLETTE. I would like to very respectfully suggest that the Banking and Currency Committee may feel we are impinging on their domain.

Senator DANAHER. We do not get any further there either.

The CHAIRMAN. Senator Gerry, any questions?

Senator GERRY. No.

The CHAIRMAN. Senator Guffey?

Senator GUFFEY. I have no questions.

The CHAIRMAN. Senator Danaher?

Senator DANAHER. Mr. Chairman, I would like to ask the Secretary if there is under consideration some new plan for the taxation of insurance companies?

Secretary MORGENTHAU. Not as far as I know. It has not been brought to my attention.

Senator DANAHER. I understood you in your statement, or at least in answer to some questions, you said the last thing you wished to impose would be a general manufacturers' sales tax, or words to that effect?

Secretary MORGENTHAU. That is right.

Senator DANAHER. Well, would not you consider the imposition of this manufacturers' sales tax, which we call an excise tax in the bill submitted, to be just that?

Secretary MORGENTHAU. To my mind, there is quite a difference. Senator DANAHER. "There shall be imposed on the following articles sold by the manufacturers: Sporting goods, electrical appliances, office equipment, photographic apparatus, washing machines," those are not excise taxes, are they?

Secretary MORGENTHAU. That list has been very carefully selected from the point of view of articles which would compete with our national defense, or articles which are considered luxuries at this time. Senator DANAHER. Do you consider typewriters to be luxuries? Secretary MORGENTHAU. That depends upon who uses them. Senator DANAHER. The Government uses over half of those produced. Are you going to drive those out of business on that principle? Secretary MORGENTHAU. We may have to. [Laughter.] The CHAIRMAN. Senator Radcliffe, have you any questions?

Senator RADCLIFFE. Mr. Secretary, do you believe that the mandatory joint return is essentially sound, or do you approve of it merely because of the fact that there have been certain transfers of the character which you referred to?

Secretary MORGENTHAU. I would say a combination of both.
Senator RADCLIFFE. Will you explain that?

Secretary MORGENTHAU. I just feel this way, that at this time, a husband and wife through being able to make separate returns, have a privilege that enables them to pay less than if they paid on one return by each one of them, and if we are going to go out and ask the man who earns $750 a year to pay a dollar or two of tax, I for one, cannot face that man unless I can say to him, "I have exhausted every other opportunity to make every other group pay their fair contribution."

Senator RADCLIFFE. That is, you think the method is sound even though there were not these transfers to which you referred. Do you think that is a sound way of doing it, even though they were not transferred from husband to wife and therefore, the taxes not reduced?

Secretary MORGENTHAU. I believe, under the present abnormal conditions, it is sound.

The CHAIRMAN. Senator Brown, do you wish to ask the Secretary any questions?

Senator BROWN. Mr. Secretary, this bill is divided into main parts, income taxes producing 2%1⁄2 billion and miscellaneous income-revenue taxes producing the balance of about a little over a billion. How much are we losing every day or every month by not having the excise taxes in effect now?

Secretary MORGENTHAU. May Mr. Sullivan answer that?
Senator BROWN. Yes.

Mr. SULLIVAN. A little over $2,400,000.

Senator BROWN. Per day?

Mr. SULLIVAN. Per day, sir.

Senator BROWN. It took the Ways and Means Committee roughly 3 months to perfect this bill and present if for passage in the House. I made a suggestion some time ago that I thought it would be wise to attempt to divide the tax bill and give consideration as rapidly and as early as possible to the excise taxes. While there would be considerable discussion, I do not think there will be as much discussion as there will be over the income taxes, with the joint return fight, lowering the base fight, so on and so forth. Would it, from your standpoint, be possible and desirable to attempt to divide this bill into two parts and pass the excise tax section and leave out the income tax for further consideration, having in mind that the income taxes do not and cannot be effective until January 1, while the excise taxes, as I recall it, under this bill would go into effect 10 days after passage? Mr. SULLIVAN. Our experience, Senator Brown, has been that the members of the committees feel that there is an interrelation between the different parts of the taxes; that is, what they are willing to do in personal income taxes depends in some measure upon what they do in excise taxes. Now we share with you the view that it is important and profitable to have the excise portions of this bill go into effect as soon as possible.

We also feel that it is important to the taxpayer, as Secretary Morgenthau said in his statement, that the individual and the corporate income taxpayer shall have a fair idea of what his taxes are to be as soon as possible.

Senator BROWN. My view is, we are losing pretty close to $90,000,000 a month by not having these excise taxes in effect. We have been in difficulties over the income-tax side of this bill. If we take as long a time as the Ways and Means Committee did-which I hope we will not-if it takes 3 months-we might get these excise-tax difficulties out of the way in a month and we would save $180,000,000; that is, we would gain $180,000,000 if we could do that.

Mr. SULLIVAN. That would be about $2,500,000 a day.

Senator BARKLEY. Inasmuch as the House has sent this bill over as a whole, if we simply struck out all of it except the excise taxes and passed it, the whole bill would have to go to conference between the House and Senate.

Senator CLARK. That would mean striking out all except the excise taxes and then going over it again?

Senator BARKLEY. We could not initiate the excise taxes and raise the income we are talking about.

Senator JOHNSON. I wanted to ask, Mr. Secretary, if the Treasury is entirely satisfied with title V and title VI that have to do with the levying of excise taxes, or will there be additional recommendations from the Treasury with respect to these two titles?

Secretary MORGENTHAU. Senator, I would be glad to answer, but I believe Mr. Sullivan is going to follow me. Will it be agreeable to you to wait?

Senator JOHNSON. Perfectly agreeable.

Secretary MORGENTHAU. I think that is right.
Does not he follow me, Mr. Chairman?
The CHAIRMAN. Yes; if you wish him to.
Secretary MORGENTHAU. That is agreeable.

The CHAIRMAN. That is entirely up to the Treasury.

Secretary MORGENTHAU. Could he take care of that?
The CHAIRMAN. Yes.

Secretary MORGENTHAU. Is that agreeable?

Senator JOHNSON. Perfectly agreeable.

Senator WALSH. Mr. Secretary, I was impressed with your suggestion about simplifying the form on which tax returns can be made by people with incomes under $3,000. Has the Treasury thought of a system to simply ask the taxpayer questions in writing and having him file it and the Treasury compute a tax and send him his tax bill, which is done by local communities very often?

Secretary MORGENTHAU. We have not thought of that, but Mr. Sullivan has the simplest blank I have ever seen.

Senator WALSH. It requires a taxpayer, however, to do the compilation?

Secretary MORGENTHAU. This would not.

Senator WALSH. He would not have to figure what his tax was finally?

Mr. SULLIVAN. No, sir.

Senator WALSH. Very good. That is along the line on which I have been speaking.

Secretary MORGENTHAU. Yes.

Senator WALSH. There is one other thing I would like to ask about. Will you or somebody from the Treasury submit the proposed increases of the estate and gift taxes?

Secretary MORGENTHAU. We will be glad to.

Senator WALSH. And the Treasury's plan for excess-profits taxes? Secretary MORGENTHAU. Yes, sir; we will be glad to.

Senator GUFFEY. Mr. Secretary, is it your intention, or the intention of your Department, to offer a modified joint tax return on the lines you suggested to the present form?

Secretary MORGENTHAU. This blank which I was talking about is in connection with income of people under $3,000.

Senator GUFFEY. I mean a modified joint tax return for husband and wife.

Secretary MORGENTHAU. We can.

Senator GUFFEY. Are you going to submit one on that?
Secretary MORGENTHAU. We will, at your request, be glad to.

Senator CONNALLY. It will not include the Senator from Pennsylvania, of course.

The CHAIRMAN. Senator Clark, did you have anything?

Senator CLARK. No.

The CHAIRMAN. Are there any other questions for the Secretary to answer? If there are no other questions, we will proceed with Mr. Sullivan.

Senator CONNALLY. I want to ask some questions of somebody. The CHAIRMAN. Do you wish to ask him some additional questions? Senator CONNALLY. Yes, Mr. Chairman. Is there a tax on yachts now?

Mr. SULLIVAN. Under this bill there is a tax.

Senator CONNALLY. Has there not been all the time?

Mr. SULLIVAN. No, sir.

Senator CONNALLY. You do tax yachts. How about sporting goods?

Mr. SULLIVAN. Sporting goods are included.