Mr. GUARINI. That is my understanding. Even if it fell short, I think that is the least we can do is to have the recognition given. But there may be a profit, there may be a break-even. It may be a short deficit. It will certainly help to allay all the costs and should.

Mr. SAXTON. So as a member of this committee, I am certainly going to stand side-by-side with Congressman Guarini and other members of this subcommittee to try to expedite this process as best I can. I look forward to working with you in the days ahead. Mr. GUARINI. Thank you.

Chairman LEHMAN. We have a vote on right now. I think we are through with our questions.

Do you have any questions, Mr. Dreier?

Mr. DREIER. I think I will pass, Mr. Chairman.

Chairman LEHMAN. We will dismiss you as a witness and we will proceed.

Mr. GUARINI. You will be hearing from them shortly, Mr. Chair

man.

Chairman LEHMAN. The committee will reconvene at 11:30.

Mr. GUARINI. May I leave with you the suggestion of two short amendments: that it doesn't have to be limited to miniature; and 12 months instead of 6 months to comply with the Secretary of Treasury's request?

Chairman LEHMAN. Certainly. Without objection those will be included in the record, as well.

[The information referred to can be found in the appendix.] (Recess.)

Chairman LEHMAN. The subcommittee will resume.

We will hear next from Mr. Eugene Essner, Deputy Director of the United States Mint. We will put your complete statement in the record, without objection.

STATEMENT OF EUGENE H. ESSNER, DEPUTY DIRECTOR, UNITED STATES MINT

Mr. ESSNER. Mr. Chairman, I thank you for your invitation to present the views of the Treasury Department on two medals bills-H.R. 2575 and H.R. 1699. The purpose of H.R. 2575 is to award a congressional commemorative medal to those veterans of the Armed Forces who defended Pearl Harbor and other military installations in Hawaii on December 7, 1941. H.R. 1699 recognizes the contributions to our Nation's cultural heritage with an award of congressional gold medals to Frank Capra, James Stewart, and Fred Zinnemann.

Turning initially to H.R. 1699, this proposal directs the President to present, on behalf of the Congress, gold medals to Frank Capra, James Stewart, and Fred Zinnemann. The bill also permits the Secretary of the Treasury to strike and sell bronze duplicates of the three gold medals. The Treasury Department foresees no difficulty with the fulfillment of this legislation. The individuals commemorated are certainly recognized leaders in the performing arts.

We do have several concerns with regard to H.R. 2575, the Pearl Harbor commemorative medal. It must be stressed at the outset that meeting the requirements of this legislation is an enormous

undertaking which cannot be accomplished within our current budget.

The bill, as drafted, calls for the presentation of bronze commemoration medals by the Speaker of the House of Representatives and the President pro tempore of the Senate to the members of the Armed Forces who were present in Hawaii on December 7, 1941, and who participated in combat operations that day. The medal may be accepted by the next-of-kin of any deceased veteran. The legislation further requires that the presentations be made as close as possible to the 50th anniversary of the attack on Pearl Harbor.

While we have no information at this time as to the exact number of veterans and next-of-kin who will qualify as awardees for this medal, we understand that it is possible that as many as 100,000 Armed Services personnel were in Hawaii during the attack. A 3-inch bronze medal in a presentation case will cost us approximately $25. If 100,000 medals are to be presented, the costs will be approximately $2.5 million. Funds simply are not available within the Mint's 1990 and 1991 budgets for this expenditure.

Furthermore, while the Department clearly understands the desire to acknowledge this historic occasion, a medal for veterans at Pearl Harbor could well establish a precedent with regard to other historic World War II anniversaries. Other veterans groups may also feel that the heroic and gallant efforts of those who served in such battles as Midway, Normandy, Iwo Jima, and so forth, are likewise deserving of recognition and commemoration.

Although the legislation does not specify the size of the medal, we assume that since national medals are traditionally 3-inches, these medals will also be made in that size. The substantial size and weight of the 3-inch bronze medal offers an appropriate and prestigious presentation piece.

I saw earlier you were looking at some of the presentation medals. In addition, since the awards are to be presented by the Speaker of the House of Representatives and the President pro tempore of the Senate, each medal would be in a suitable presentation case.

While the legislation allows the Secretary of the Treasury to reimburse the Mint's appropriations for the costs of the medals by selling miniature duplicates, it is not realistic to anticipate that these sales will even begin to recover the costs.

We estimate that over 2.2 million miniature duplicates would need to be sold to recoup the costs to produce 100,000 3-inch medals. As a point of reference, under the Vietnam Veterans medal program, the Mint has sold approximately 44,000 miniature bronze medals since 1986.

This amount of sales generate income of $50,000 to offset the costs. Even our best seller, the John Wayne medal, for which sales have far surpassed any other medal, sold approximately 715,000 miniature bronze duplicates in a 10-year period.

We also note that the Senate version, S. 1664, provides for the sale of duplicate medals without specifying that they be miniatures. We question whether it is appropriate to sell duplicates where the presentation medal itself is made of bronze, not gold. Producing the duplicates of the same alloy and size may give the

appearance of selling the medal itself which would obviously diminish the significance of the award.

In addition, the production of 100,000 medals in the time frame desired in the bill would not be possible with the Mint's current capacity. The Mint's current 3-inch medal capacity is approximately 45,000 medals per year. Production of these Mint medals is a time-consuming process as each one is individually made on a specially designed press, unlike circulating coinage.

It generally takes at least 6 months lead time for design approval and die production before actual manufacturing of a medal begins. Moreover, we must continue production of other congressionally authorized medals for sale to the public.

Implementation of medal programs recently authorized by Congress, such as the Coast Guard Bicentennial Commemorative Medal, the Laurance Rockefeller Medal, the Andrew Wyeth Medal, and the Jesse Owens Medal, are currently underway. Other medal proposals, presently under congressional consideration, may also be enacted. Production of these medals must also be considered in assessing the Mint's capabilities for the next year.

Mr. Chairman, this concludes my prepared statement. Again, we appreciate the opportunity to testify on these legislative items. I will be glad to answer any questions that you may have.

Chairman LEHMAN. Thank you very much, Mr. Essner.

We are going to proceed to ask you a few questions here before we hear the next witness.

The estimate of $2.5 million is based on 100,000 medals?

Mr. ESSNER. That is right, sir.

Chairman LEHMAN. To the extent it would be reduced below 100,000, 50,0000 would be half that?

Mr. ESSNER. That is right.

Chairman LEHMAN. 20,000 would be 20 percent of it?

Mr. ESSNER. That is correct.

Chairman LEHMAN. Are there any ways you think the costs of the legislation could be reduced?

Mr. ESSNER. Well, we thought of that. We haven't really come up with a good method. The 3-inch presentation medal that you have seen is similar to that we presented to the awardees of the POW/ MIA medals. That is the one in the brown case. That is simply going to cost us about $25 a piece including the presentation case. A smaller medal, the 11⁄2 inch, the other medal that we are prepared-currently have capacity to make, it is a very small medal. We don't really view it as suitable. It is a miniature, the duplicate type medal.

Chairman LEHMAN. And then what do you estimate the proceeds of the legislation at?

Mr. ESSNER. Well, we don't really have a-you mean the revenue we would get?

Chairman LEHMAN. Correct.

Mr. ESSNER. We don't really have an estimate. Like I said, the best selling medal we ever had was the John Wayne medal. In 10 years, that sold 715,000 medals. We make a little over a dollar a piece on those medals. That is how we arrived at the 2.2 million in sales required for this to cover the $2.5 million expenditure.

We really think we should be gauging the sales on the sales of the Vietnam Veterans medal, which sold 44,000 medals.

Chairman LEHMAN. So, how much did the Vietnam medal end up costing the Mint?

Mr. ESSNER. The Vietnam Veterans medal?

We sold-I think I have a chart here.

We sold 44,000 of the 3-inch medals. We sold 44,000 of the 3-inch medals-I am sorry. 45,000 of the 12 inch, the small medals, the duplicates. We sold 16,000 of the 3-inch medals.

We are estimating now that the Vietnam Veterans made a profit of $86,000, but we did not give away any Vietnam Veterans medals. There were no give-aways. If any veteran from Vietnam wanted one of the medals, they were required to purchase it.

Chairman LEHMAN. And I understand for the Senate version of this bill, CBO did a cost analysis that predicted no cost to the Government. You think that is inaccurate?

Mr. ESSNER. I don't see how it could possibly be operated at no cost to the Government.

Chairman LEHMAN. I understand CBO is reworking that.

Mr. Hiler.

Mr. HILER. Thank you, Mr. Chairman.

You have not come up with any way in which you think the program could be totally self-funding; is that correct?

Mr. ESSNER. No, sir. Not giving away a large number of medals. Mr. HILER. The current estimated cost of the medal, this medal here was essentially for $25 plus packaging?

Mr. ESSNER. No. That includes the packaging.

Mr. HILER. About $25 is the cost of the 3-inch medal?

Mr. ESSNER. That is correct.

Mr. HILER. Tell me, again, how you handled the Vietnam Veterans medal.

Mr. ESSNER. That is not the Vietnam Veterans medal I am referring to. That is the POW/MIA medal. With the POW/MIA medal, if I can elaborate just a minute, is-Mr. Lehman asked earlier whether there was an example of the Secretary of Defense being involved. The POW/MIA medal, we were initially authorized to do 2,400, I believe 2,484 medals to be given to the next-of-kin of the POWS and MIAS.

Then later-160 additional medals were authorized. We still have about 500 of those medals for which the Secretary of Defense or Defense Department which has turned over its responsibilities to the Air Force has not or told us they want the medals because they have now identified the recipient.

On the other medal, the Vietnam Veterans medal, that was a separate piece of legislation. It authorized us to produce the Vietnam Veterans medal. We had a competition, a nationwide competition for the design of the medal. That is the one with the helicopter, the other medal you see there.

Mr. HILER. This is the miniature?

Mr. ESSNER. That is the miniature of that medal. There was no presentation medal at all on the Vietnam Veterans program. It was simply produced and then made available for sale.

Mr. HILER. I believe your testimony was that the Pearl Harbor medal, the sales at large, that you would estimate the sales would

be along the lines of what the Vietnam Veterans medal sales were? Do you have any testimony in that area?

Mr. ESSNER. We think that that would be a better example to use as a gauge of the sales than the John Wayne medal.

Mr. HILER. Are medals very big numismatic items?

Mr. ESSNER. No, sir.

Mr. HILER. So the sales literally are driven by the public-atlarge's interest in a particular issue or subject?

Mr. ESSNER. Yes.

Mr. HILER. What is the cost to mint the first medal?

Mr. ESSNER. We have a standard cost estimate of about $20,000 to produce a medal.

Mr. HILER. $20,000?

Mr. ESSNER. Yes. It really depends upon the subject, how much interaction we have with the subject, how many changes people want in the medal. All of that takes time and that is costly.

Mr. HILER. Thank you.

Mr. Chairman, I have no further questions.

Chairman LEHMAN. Thank you.

Mr. Saxton.

Mr. SAXTON. How did you arrive at the figure of $100,000?

I talked to other people. They seem to think that is about fivefold what the real umber is.

Mr. ESSNER. Well, we used the basis of the legislation, which says the people that were engaged in combat operations in Hawaii at the time. The first thing we found was a piece of congressional testimony in 1945 in the investigations of the attack on Pearl Harbor. In that testimony, a colonel, I believe, from the Army testified that the Army had 43,000 men stationed in Hawaii during the-on the day of the attack.

That did not include anyone from the Navy or Marines. We have attempted-we talked to the Navy. They were not able to give us good estimates.

We talked to an individual who was with the Pearl Harbor Historical Association, a non-profit organization. He estimated the Navy had about 50,800. Those two alone came up to about 94,000. Then we were told also that that did not include any Coast Guard personnel.

So around

Mr. SAXTON. 100,000 is the total number of people you believe were in the Armed Services and in Hawaii on December 7, 1941? Mr. ESSNER. That is our estimate, yes.

Mr. SAXTON. You assumed every single person in Hawaii and in the Armed Services is going to request a medal?

Mr. ESSNER. No. We don't know that. We are saying that that is how many people may be eligible. If we are prepared for that maximum number

Mr. SAXTON. Aren't your cost figures based upon 100,000?
Mr. ESSNER. Yes.

Mr. SAXTON. Therefore, you are assuming all 100,000 are going to request a medal?

Mr. ESSNER. Sir, I am simply saying if all do request the medal, or the next-of-kin request the medal, that is how much it will cost

us.