I understand your concern about not wanting this to blow up and become a big issue in the family. Anyone would want to avoid having other people drawn in to a dispute like this and have the situation escalate out of control. But I have a couple of questions.
First, what would trigger the involvement of other family members? This is primarily between the two of you. He never returned your saws, and you should not be shy about asking for their return, or even that he remitt some payment if he no longer has them. If you were to bring this issue to your wife and start complaining about him, then you would incur the risk or blame for stirring the pot, and she might defend him. But you SHOULD NOT be afraid to confront him because he may choose to run to your wife or other members of the family to complain about you.
The second and more troubling question is this: Are there members of your wife's family that would take his side in this matter? I know that blood is thicker than water, but what he did is simply impossible to defend. Any right thinking person should be able to clearly see who the bad guy is in this situation. If there are people in that family that would take his side, and living with that is the only way to "keep the peace", then such peace is coming at an awfully high price.
Your wife may indeed be a great lady, and they all come with a family of some sort. But some families are more like a mine field from which you can never find your way out. It's one thing to write off the saws that he already has and let it go, but if you are further concerned that refusing to give him more stuff can also cause some family problems, then yours is a lost cause.
Sometimes my friend, it's better to rock the boat than to ride it over the falls.