Comments on H.R. 1325 To Authorize the Disposal of Certain Amounts of Silver Now Held in the National Stockpile

To prevent what could be a dangerous and costly dependence on foreign supply sources during periods of crisis, the United States stockpiles 93 strategic and critical materials at 117 locations throughout the country. Numerous changes have occured in U.S. defense preparedness assumptions since World War II which have affected stockpile policy and caused changes in the types and amounts of materials stockpiled. These assumptions, which pertain to the duration of conflict and the number of men that would be involved, reduced the quantities of materials required for the stockpile. The Federal Preparedness Agency (FPA), which is responsible for planning, programming, and reporting on the stockpile, has determined that no stockpile goal exists for the silver, and would like to dispose of it through phased sales.In order to determine how much silver should be disposed of, an analysis of how much is needed must be made. The FPA implemented a new methodology using a computer-modeling technique to estimate the Nation's wartime strategic and critical materials requirements. Although modeling techniques have their limitations, it is widely recognized that they often represent the best analytical tools available for making economic projections which, because of their complexity, cannot be approached using other techniques. The defense wartime silver requirement, based on the 1976 goals, averages about 38.4 million troy ounces a year; an increase of 34.9 million troy ounces a year over peacetime consumption. The FPA uses only projections of domestic production and expected levels from foreign suppliers to determine the silver supply available to meet the needs of the wartime economy. However, additional sources of silver do exist. The examination indicates that an excess of silver supply exists over projected wartime requirements, and that the methodology used by the FPA to make this determination is a reasonable type of economic analysis.