THE SILVER PROBLEM

Otago Daily Times, Issue 21529, 29 December 1931, Page 12

THE SILVER PROBLEM

NEW ASSOCIATION FORMED ADVANTAGES OF BIMETALLISM. (From Our Own Correspondent.) LONDON, November 18. A few weeks ago the Silver Association was formed to urge the advantages of employing silver as a metallic basis for currency. f At the inaugural meeting of the association Sir Robert Horne, K.C., M.P., who presided, emphasised that it was a complete fallacy fo suppose that any increase in the price would produce such a glut of the metal that it would be impossible to maintain it as a stable level. There were many various sug-, gestions, he said, as to how the 'silver problem should be dealt with. These suggestions, pointed out Sir Robert, included arrangements between Governments which might sustain tbe price of silver by making their purchases for subsidiary coinages when silver .is below a certain value and selling their store of demonetised silver only when the market price reaches a certain level. ' It was also urged that central banks should hold silver as a part of their currency reserve. Others would go further and remonetise silver and set up a bimetallic basis for the leading monetary systems of the world. All of these suggestions, he added, deserved serious consideration beforehand, and if they were right action along these lines might well prove to be the stimulus which would bring about an improvement in commodity prices and a revival in the trade of the world. TANGIBLE METALLIC BASIS. The Silver Association holds that the world’s monetary psychology still demands that currency and credit should rest upon tangible metallic substances possessing intrinsic, universally recognised value, easily stored and easily transported (writes Sir Robert Horne, in an article in The Times). Experience shows that without such basis confidence in times of crisis gives way to panic, and inflation becomes all too likely. The Silver Association is further convinced that if the need for a metallic basis be accepted the easiest and quickest way of restoring confidence, raising values, and stabilising them when raised would be to widen the metallic basis of currency and restore confidence in silver, especially in the East, by reintroducing it into the world’s monetary system. The question of silver is intimately bound up with the welfare of India and China. Tbe fact that neither country exports silver to pay for its imports, that both normally have favourable trade balances, and that the amount of silver which each imports annually is determined by its trade surplus rather than the price at which the metal is offered do not invalidate the contention that both countries have suffered from the heavy fall in the value of silver which has taken place since 1928. The Silver Association is convinced that an immensely powerful group of communities such as the British Empire and the U.S.A. can do much to mitigate the worst effects of world-wide monetary fluctuations and, indeed, to bring those fluctuations under control. Complete international agreement is, perhaps, in present circumstances impossible; nothing, however, is more likely to assist it than agreement between the British Empire and the U.S.A. with the co-opera tion of the French Republic. It is llieopinion of the Silver Association that if, as a result of such agreement, silver were reintroduced into the monetary system of the world, the present depression would end and prices could be rendered comparatively stable on their higher level. PART OF CURRENCY RESERVE. “I believe,” said Mr L. C. Amery, in nn interview, “ that silver could be made to play an important and helpful part in restoring the general world level of prices and in counteracting the effects of the maldistribution of gold in recent years if it were once more brought into the world’s monetary system and included as part of the world’s metallic basis for currency and medium for international settlements. “To secure this end it would not be necessary,” averred Mr Amery, “ to reestablish any complete scheme of bimetallism with mints open to silver at a fixed ratio, or to restore silver to the position of legal tender. For the purpose jn view it would be sufficient if the leading Central Banks were authorised to include silver as part of their currency reserve up to’ some fixed proportion of the total.”