SILVER AND EASTERN TRADE.

Auckland Star, Volume LXIV, Issue 304, 26 December 1933, Page 6

SILVER AND EASTERN TRADE.

As a large producer of silver, and as a trading nation, the United States has been, severely hit in recent years by the fall in the price of the metal; and it is there, more than anywhere else, that a move to raise the value of silver is most insistently demanded. This was apparent six months ago at the World Conference, when America joined with a group of other countries in a silver agreement, and it is so to-day when President Roosevelt is offering a higher price and is prepared to coin silver in much larger quantities/Although his action is confined to the domestic .market, it may be but a beginning of an effort to restore the. status of silver in such a way and on such, a scale that he will require the co-operation of all the parties to the .recent agreement. The support and accord of the Indian Government will be essential, for India is the holder of huge surplus stocks and is a potential seller of first importance. The silver stock of the Indian Government amounts to at least 380,000,000 fine ounces, and it is clear that the producing countries,' of which the United States, Mexico a'nd Canada are at the head of the list, must have an understanding with the East. No longer j can the pastern demand be relied upon to keep the silver market in a healthy condition; no longer are India and China able to buy silver on the same scale as a feAV years ago; and no longer can the Western world afford to ignore the serious consequences which the abrupt fall in the price of silver in the past four years has had upon the purchasing power of 800,000,000 of people who comprise the coloured races. There has been a growing obstacle to trade between the East and the West, and the power of the Chinese and the Indians to import has been undermined by the fact that the value of their savings in four years was cut in half. , There can be no doubt that one of the influences aggravating the trouble was the reduction which Britain and many other countries made in the silver content of their coins, another the sale of stocks, and a third the difficulty of reducing the supply of silver owing to its existence'as a by-product of the mining industry. By agreement, India is committed to limit its sales of silver in the world market to 140,000,000 ounces in the four years commencing on January 1, 1934, and there is to be an expansion-in purchases by.the United States and by other producing countries. The scheme is regarded as tantamount to providing an artificial market for a part of India's surplus, but for only a part, as there will still remain 240,000,000 ounces to be J disposed of. Nothing is said in the agreement as to the price which must be paid, but the new figure. now fixed in the United States shows that Mr. Roosevelt's aim is well above 60 cents, which is not far short of double the London price. It is to be observed that domestic buying cannot have any far-reaching immediate effect upon dollar prices in America, for the addition so made to. the monetary stock would be compartively small, and this suggests that some further move, with repercussions overseas, may follow when the agreement comes into operation at, the opening of the NewJeß.