Fearing the United States might crack down on silver hoarding, the Hunt brothers of Texas last fall quietly began transferring tons of silver out of the country.

In one trans-Atlantic transaction alone, the Hunts shifted two million ounces of silver from Chicago to a Swiss bank, according to documents made public by the Commodity Futures Trading Commission.

The CFTC memos reveal for the first time how the Hunts bought and sold billions of dollars worth of precious metals, often working in partnership with two Saudi Arabian sheiks.

Nelson Bunker Hunt never even met one of the two Arabs, he told federal authorities last fall. Negotiating by telephone, Hunt and the Saudi stranger formed a corporation in Bermuda to buy silver, gold, an oil refinery and a copper mine.

Another previously undisclosed Hunt deal involved the purchase of 40 million ounces of silver -- almost five percent of all the silver used in the United States in a year.

The Hunts discussed their massive silver purchases openly with federal commodity regulators, at the same time urging the government not to interfere in the silver market, the CFTC memos disclose.

CFTC officials were so alarmed by the Hunts' dealings that as far back as September they warned the Federal Reserve Board and the U.S. Treasury Department of irregularities in the silver market.

The Federal Reserve and the Treasury ignored the warnings, say memos written by Read P. Dunn Jr., the CFTC commissioner who acted as liaison with the other agencies.

"They showed no particular interest in silver," notes Dunn, a meticulous memo-writer who made notes on dozens of meetings about silver in the last year. m

Dunn released some of his files yesterday, after sending them to Rep. Benjamin Rosenthal (D-N.Y.), chairman of a subcommittee investigating the collapse of the silver market.

The documents turned over to Rosenthal include memos by Dunn and CFTC staff members on meetings and phone conversations they had with Nelson Bunker Hunt.

At a meeting on October 25, Hunt said, "he tended to prefer silver located in Europe," wrote John Mielke of CFTC's division of economics.

"He (Hunt) said he was afraid the U.S. government might expropriate silver from individuals as it did in the 1930's, when individual citizens were no longer permitted to own gold," Mielke's memo said.

To avoid the cost and risk of shipping tons of precious metals overseas, Hunt worked out trades with foreign silver owners who wanted to sell their metal in the Unites States.

Working with J. Aron & Co. of New York, Hunt in October agreed to trade two million ounces of silver he owned in Chicago for two million ounces Aron owned in Zurich, Switzerland. In another trade, the Hunts got five million ounces of silver from Sharps, Pixley, a London metals dealer, in exchange for U.S. silver futures contracts.

In his discussions, Hunt talked of other deals worked out, he said, by his brother W. Herbert -- another two million ounces from Sharps, Pixley; 5.5 million ounces from Ralph Peters, a big Chicago commodity trader; and a series of transactions that netted 9.2 million ounces of silver for International Metals Investment Company, the partnership formed with the two Saudi Arabians.

Mielke's memo identifies the Saudis as Ali Bin Mussallam and Mohammed Aboud al-Amoudi, the man Bunker Hunt said he had never met, but with whom he shared millions of dollars worth of investments.

The talks between the Hunts and federal regulators showed that restrictions imposed on the silver futures market at the urging of the CFTC did nothing to stop the Hunts' silver-buying spree.

When limits were imposed on the number of silver futures contracts any single investor could own, the Hunts stopped buying their silver in the futures market and got it from U.S. metal dealers in London.

When the downpayment on silver futures contracts was raised to 40 percent, the Hunts found they could finance cash purchases with only 20 percent down.

Bunker Hunt complained to federal officials that the two restrictions were imposed by the Chicago Board of Trade and the New York Commodity Exchange because exchange officers stood to profit from falling silver prices.

Possible conflicts of interest at the CBOT and Comex are among the issues being investigated by the CFTC and congressional committees.

The CFTC, sources there said yesterday, has authorized its staff to subpoena the silver records of 10 companies and eight individuals including Bunker and Herbert Hunt and three of their married sisters, Elizabeth, Mary and Ellen.

Rosenthal's subcommittee has scheduled a vote next Tuesday on whether to subpoena the two Hunt brothers. Rather than talk to Rosenthal's subcommittee, the Hunts reportedly are considering accepting an "invitation" to appear before the Senate Agriculture Committee. a