SILVER AND THE DOLLAR

Evening Post, Volume CXIX, Issue 98, 27 April 1935, Page 8

SILVER AND THE DOLLAR

The United States Administration has taken a further step in the devaluation of the dollar. This time it is the announcement that it will pay a high premium ahove the market price for silver. Something of the kind has been foreseen for some weeks past by those interested in the silver market, for the price of that metal has been steadily rising in London since the beginning of this year. It was down to 2s per oz at the close of 1934; it rose to 2s 3|d on Tuesday last, and on Thursday the London spot price was quoted at 34 7-Bd. As the gold content or value in gold of the United States dollar was by proclamation reduced by 41 per cenj., this really meant that those having savings in "written" dollars had those savings reduced by that amount. But drastic as this step was, it was justified by the Adminis: tration. as an essential part of the economic recovery policy to which the country was committed. The effect of this action upon the value of the savings and investments in dollars of persons or corporations was completely ignored. Those savings or investments no doubt were in the confident belief that the dollar in writing meant the equivalent in value of 23.22 grains of pure gold. Today it means nothing of the kind. Now more dollars are required to buy silver; in other words the written dollar has been devalued. According to Mr. Morgenthau, Secretary to the United States Treasury, the dollar may be still further devalued, should it become necessary to do so, as much as 1 dollar 29 cents an ounce being paid for silver. The objective of the devaluation of the dollar and its cheapening in foreign markets is a rise in domestic commodities in the United States, and ultimately in an advance of wages to meet those prices. This cheapening of the dollar and anxiety to pay up to 77.57 cents or more for an ounce of silver appears to some onlookers as an attempt to revive a sulky fire with petrol—it can be done, but this method is not commended. It has been attempted in New Zealand and success is claimed in some quarters for it. We refer to the devaluation of the New Zealand fl, which is worth 16s in London, under 16s in Canada and the United States, and well under 10s in certain important trading countries on the Continent which buy New Zealand wool. But has this cheapening of the New Zealand £1 raised the price of wool? It has not. What thinking people may well ask is whether the petrol can is being too freely but not over-carefully handled. Some misgivings about it

persist in the United Stutes. There the depreciation of the gold content of the dollar is still considered to be a doubtful expedient and that after fifteen months' experience. Now comes the high premium on silver. The principal objection to this kind of thing is not its failure to lift prices to the desired levels but the fact that il: engenders fears and uncertainties which in themselves do more than anything else to shake confidence and delay economic recovery.