minting silverless dimes and quarters, and reduction of silver content of half dollars from 90 to 40 percent.

This study was undertaken to review the progress that has been made to assure the country of a constantly adequate supply of coins for all commercial needs, to evaluate the present coin situation, and to consider the conditions under which return can be made to more normal and economical coin production schedules. It enabled the subcommittee to pronounce the coin shortage as ended, except for half dollars, which failed to circulate in any significant quantity, regardless of how many were produced. However, the subcommittee found little progress had been made toward developing criteria for anticipating coin requirements, and for phasing out the expensive crash coin production pro

gram.

RECOMMENDATIONS

To assure early return to normal coinage operations while providing coin for all purposes, it was recommended that the Treasury Depart

ment:

FORECASTING COIN NEEDS (Recommendation A):

Develop reliable means and criteria of forecasting coin needs, and in that connection consider technological advances in commercial transactions which may lessen the need for coin. Results. The Bureau of the Mint and the Federal Reserve banks initiated steps to implement a reliable forecasting program, with both short-term and long-term estimates. The short-term ranges from 1 to 2 years, the longer covers a 3 to 5 year span. To determine short term or intermediate demand shifts, the program is based on projections of coin needs prepared by the commercial banking community. Selected commercial banks submit their estimated coin requirements to the Federal Reserve banks for evaluation and assessment. Each Federal Reserve bank summarizes, reviews and weighs its estimates in terms of its own inventory position and submits projected coinage requirements to the mint. The initial coin forecasting report on a national basis was completed by September 1967. Because the program has been in operation only 1 year, it is difficult to evaluate its full effectiveness: however, it provides a basis for scheduling deliveries and estimating production requirements.

The mint's long-range planning includes an improved method of financing to provide the funds needed to follow through on projected coinage requirements. Under current procedures, mint funding estimates are subject to reductions at three separate levels: i.e., the Treasury Department, the Bureau of the Budget, and the Congress. A procedure for financing minting operations from seigniorage, which was recommended by the General Accounting Office, has been presented to the Congress. The Treasury's Office of Planning and Program Evaluation assists in studies developing long-range coinage requirements.

INVENTORIES BY DENOMINATION (Recommendation B):

Establish inventory requirements by denominations of coin for both the Treasury and the Federal Reserve System.

Results. In addition to submitting estimates of coin requirements, the Federal Reserve banks also project, on a short-term basis, anticipated levels of coin inventories for each denomination, improving controls over coin inventories at the mint and at the Federal Reserve banks. Maintaining inventory by denomination, however, has been difficult, because 90-percent silver dimes and quarters are to be separated from clad coin, to assure silver for the Treasury, but devices for such separation have been inadequate; also by "runs" on coins-the resumption of mint marks, for example, in 1967, caused temporary shortages, particularly in cents.

METALS AVAILABILITY (Recommendation C):

Measure the effect that existing or potential coin metal shortages might have on the metallic content of coin and determine the effect any possible change in metal content might have on the performance of coin-operated machines and devices.

Results. The Commission on the Coinage presently considers the availability of coinage metals, and whether there is any need to shift to different metallic content. The mint is not now concerned about a potential coin metal shortage, because there is sufficient supply to last through fiscal year 1970.

HALF DOLLARS (Recommendation D):

Determine whether it is necessary to continue minting half dollars as essential coins of commerce, and if so, whether the silver content of the half dollar should be maintained at its present level, in the light of the Treasury's diminishing silver stock.

Results. The status of the half dollar is reviewed at each meeting of the Joint Commission on the Coinage, both as to continuation of the silver in this coin, and the number of pieces to be struck. Treasury still believes these coins are vital to the economy of the Nation, especially the growing vending machine industry. One hundred million half dollars are scheduled for production in fiscal 1969.

NORMALIZE OPERATIONS (Recommendation E):

Initiate plans and advance preparations to assure an orderly and economic adjustment from coin production on a crash basis to more normal operations.

Results.-November 1967, marked the beginning of the end of the crash program, when the Mint started to cut back from a 24-hour-aday, 7-day-a-week program to a 2-shift, 5-day week, with occasional expansion of the work schedule to meet sporadic drains on inventory.

ADDITIONAL MINT (Recommendation F):

Develop guidelines for the determination of conditions which would indicate the advisability, or necessity, of an additional mint. Results. Treasury's study centered on the feasibility of moderniz

ing the Denver Mint, or constructing a new mint there, but further consideration is delayed, at the request of the Bureau of the Budget, to await 1 year's operations of the new mint at Philadelphia.

OUTSIDE PLANNING ASSISTANCE (Recommendation G):

Obtain the assistance of the Federal Reserve System, and such other governmental agencies and private sources as may be helpful in collecting and evaluating pertinent data relating to coin and coinage problems, including those outlined above.

Results. Outside assistance was sought, particularly before implementation of the Joint Commission on the Coinage, which has broad advisory powers on coin and coinage matters under the Coinage Act of 1965.

JOINT COMMISSION ON THE COINAGE (Recommendation H):

Immediately request establishment of the Joint Commission on the Coinage, and the appointment of its public members by the President, as provided for by Public Law 89-81, and assist the Commission in its studies by making available to it data and studies concerning coin and coinage problems.

Results. The Joint Commission on the Coinage members were designated in early 1967, with the Secretary of the Treasury as Chairman. Its first meeting was held May 18, 1967. Four meetings were held by the summer of 1968. Subjects reviewed and discussed include the silver situation, coinage production and operations, disposition of silver dollars and melting of silver coins. The November 12, 1968, meeting was convened to hear a committee report on disposition of the Treasury's silver dollars, and to review all coinage and silver matters discussed at previous meetings.

DISTRIBUTION CIRCULAR (Recommendation I) :

Revise Treasury Circular No. 55 to clarify the responsibility of the Federal Reserve System to distribute coin directly, on uni form bases, to both member and non-member banks.

Results. On October 13, 1968, the circular was amended in conformity with the committee's recommendation.

[H. Rept. No. 1663, 89th Cong., second sess.]

COAST GUARD EXAMINATION OF FOREIGN PASSENGER

VESSELS

Thirty-third Report by the Committee on Government Operations

(Submitted to the Speaker June 27, 1966)

The November 1965, SS Yarmouth Castle tragedy, in which 90 per sons lost their lives while on a cruise from Miami to Nassau, brought into question the adequacy of U.S. Coast Guard vessel examination

procedures, since that vessel, of Panamanian registry, carried a recent Coast Guard examination certificate at the time she burned and sank. The report reviews examination procedures under the limitations imposed on the agency by treaty obligations.

Fire is the greatest hazard to life at sea. Since 1936, the United States has required new U.S. ships to be built of noncombustible materials. However, under multilateral treaties governing ship construction, safety equipment, and safety requirements on international voyages, that is the Safety of Life at Sea (SOLAS) Conventions, the United States bound itself to consider all foreign countries which accept the conventions as having inspection laws similar to those of the United States, whether or not that be the fact. While the conventions progressively prescribed higher safety standards, they have not met U.S. standards; "grandfather clauses" exempted ships whose keels were laid before the respective conventions came into force, and permitted some foreign vessels which conformed to the technical requirements to remain in the passenger service despite their high degree of combusibility.

The conventions placed limitations on the Coast Guard's examinations; however, in actual practice, it exercised the full extent of its authority, and employed moral suasion to have vessels maintained at higher degrees of safety than required by the conventions. The hazards of disastrous fires on passenger ships containing large amounts of wood and other combustible materials in their superstructures, decks, and accommodation spaces, however, could not be eliminated by the examinations when the vessels met treaty standards.

In line with the general intent of the committee's recommendations, action was taken to obtain treaty amendments to upgrade international passenger ship fire safety standards; and by Public Law 89-777, which requires the fire prevention standards of the amendments to apply to all ships with berthing for more than 50 passengers which embark passengers in the United States after November 1, 1968. These are discussed in the committee's report entitled "Coast Guard Examination of Foreign Passenger Vessels-Progress Report on Increased Passenger Safety," House Report 829, 90th Congress, first session.

RECOMMENDATIONS

To improve the safety of lives and property at sea the report made recommendations that the Coast Guard:

EXAMINATION CERTIFICATE (Recommendation 1) :

Discontinue the issuance of its certificate of examination to foreign passenger vessels, thus obviating the possibility of passengers believing that the Coast Guard has approved a vessel's general safety.

Results. Because the certificate is an administrative tool, utilized to prevent duplication of examinations where a vessel visits different ports in the United States or calls at the same port a number of times, the Coast Guard has not discontinued its issuance, but has changed its form so that prospective passengers likely will understand that the certificate does not constitute a Coast Guard guarantee of the vessel's general safety.

35-252-69--11

VESSEL INFORMATION SHEET-(Recommendations 2 and 3): (2) Devise an information sheet on passenger ships inspected or examined, United States and foreign, which in layman's language will clearly reflect the relative safety of each such vessel. The information sheet shall briefly describe the particulars (if any) in which the vessel fails to meet U.S. standards in construction and fitting out of the vessel for passenger service, including the materials used therein; the installation and maintenance of firefighting and other equipment designed for the safety of passengers; and the manning and operation of the vessel and its equip

ment.

(3) Provide copies of such information sheets for distribution to the public.

Results. Public Law 89-777 and the regulations promulgated pursuant thereto require operators of foreign passenger vessels to disclose to prospective passengers the safety standards to which a particular vessel conforms; they do not go as far as the committee's recommendations, which was to require the furnishing of information to prospective passengers disclosing that a foreign vessel fails to meet U.S. standards, if such be the fact.

UNIFORM CHECKOFF LIST (Recommendation 4):

Develop a uniform checkoff list to aid inspectors in the examination of foreign passenger vessels.

Results. A standard checkoff list, similar to the standard inspection books used for inspections of U.S.-flag vessels, has been adopted.

RESOLVING SAFETY DOUBTS (Recommendation 5):

If in the course of examination of a foreign passenger vessel any question arises as to whether the vessel can proceed to sea without danger to passengers and crew [the Coast Guard should] resolve all doubts by preventing the vessel from carrying passengers out of U.S. ports until all safety deficiencies are corrected.

Results. While the control provisions of the SOLAS Conventions placed limitations on the Coast Guard's authority, it frequently went beyond the control authority in exercising moral suasion to achieve improvement in safety beyond the level required under the SOLAS Convention. Public Law 89-777 now authorizes Coast Guard to prevent a foreign passenger vessel from leaving a U.S. port with U.S. nationals if the vessel is found to be deficient in safety.

CLASSIFICATION SOCIETIES AND SURVEYORS (Recommendation 6 (a), (b), (c), and (d):

Press for appropriate amendments to the SOLAS Convention

to:.

(a) Include basic standards for qualifications of classification societies and surveyors.