TRADE WITH THE FAR EAST.

Taranaki Daily News, 7 March 1934, Page 6

TRADE WITH THE FAR EAST.

SILVER CURRENCY AS AID ITS RECOVERY ALREADY BEGUN. THE DOMINION’S OPPORTUNITY. (By Alexander Tetzner.—No. 8.) One of the principal inducements for New Zealand to open now, if ever, trade relations with the Far East is undoubtedly the present position of silver currency. China, with a fourth of the population of the globe, has never abandoned the silver standard, and silver in China today will purchase about the same quantity of Chinese produce as it did 108 years ago. India, rich in silver, is waiting to buy, and China, richer still in all the world wants, is waiting too. There is no wonder that lately a powerful and important movement is manifesting itself all over the world to enhance and stabilise the price of silver. The Chinese Minister of Finance, Mr. T. V. Soong, went even to America, and in a joint statement with President Roosevelt declared that the great medium of exchange in the Far East, silver, must be rehabilitated. On July 23, 1933, India, China and Spain, as holders of large stocks, or users of silver, and Australia, Canada, America, Mexico and Peru, as producers, concluded a treaty designed to mitigate the fluctuation of silver prices. It permits India to sell a reasonable quantity of her surplus silver, while the other signatories will refrain from selling during the currency of the agreement, namely four years. On December 21, 1933, President Roosevelt ratified the silver agreement negotiated at the World Economic Conference and provided for the purchase of domestic silver at about 19J cents above the current market price. This will certainly greatly increase the exports of American goods to the Far Eastern and ether countries with a silver currency base. INTERCHANGE HANDICAPPED. The interchange of goods and produce with the teeming millions of China was handicapped by the low price of silver paid for our goods at the other end. The depreciation of the silver currency has had its immediate effect upon the imports into China as the fall in silver was appalling during the last few years. Principally, the fall in the price of silver was due to the demonetisation of silver coinage during and after the Great War, and Great Britain, Belgium, France and India were mainly responsible for the catastrophe. Some 50,000,000 ounces are being annually put on the market by demonetisation, in addition to the world production by metallurgical process and by silver mines, which was 195,000,000 ounces in 1931. While in 1920 the price of standard silver in pence per ounce was 61.43, this price has dropped about three times, and become indeed a serious menace to any profitable trade at all with the Far East. The figures are of considerable interest. In 1928 the average prices of standard silver in pence per ounce was 26.75, in 1929 it went to 24.43, in 1930 to 17.68, and in 1931 dropped to 12.7 pence. It was not wonder people said “there are no markets in the Far East” in 1931. But in 1932 a change took place, and in April, 1932, the price of silver was quoted at 16.92, while in August, 1932, the price reached 18.16, an increase of 6d during a few months. To-day the situation is completely changed. Silver was quoted in London on February 24, 1934, at per fine ounce 22jd compared with 22 l-8d the day before. It is obvious that from now on it can be reasonably expected that silver will show a tendency to recover substantially, and a rise in the prices must follow. The value paid at the other end for our commodities sold in the immense markets in the Far East must be a better value every day, and a general revival of trade is forthcoming. What an increase in the price of silver means to countries trading with the Far East can readily be understood if this increase will be multiplied by the millions of buyings effected daily in silver currency. RAISING PRICE OF SILVER. “Raise but within modest limits the price of silver,” says Lieutenant-Colonel F. L. Harden, “and there will be an expansion of markets for the wheat, the cotton, the butter, meat and other products from the farms. of many countries.” Coming, as it .is, from a former adviser of the Chinese Government and an associate editor of the “China Press,” is not only true, but very significant It involves the. future of our exports to China and to India and proves that the prospects of trade with the Far East are now 100 per cent better than they were in 1931.

Now the World Economic Conference recommended nations to refrain from measures which ' could appreciably affect the silver markets from further debasement of their silver coinage below a fineness of 800-1000, and to substitute silver coins for low value paper currency as far as budgetary and local conditions permit The recommendation of the World Economic Conference was ratified by the United States. If the action of the United States will be followed by Canada, Australia, Mexico and Peru, it will stabilise the price of silver throughout the world at a satisfactory level until some further action is taken to raise it higher.

To raise the price of silver is not only desirable, but is necessary. It was understood by the Bradford wool and textile industries who a few months ago requested the British Government to initiate or support steps to increase silver value and thereby increase the purchasing power of China and other silver using countries. It was advocated by Sir Robert Horne, ex-Chancellor of the Exchequer, by Lord Desborough and Sir Henri Deterding. Discussion on the Reserve Bank of India had placed the question in the forefront. European interests were strongly behind Sir George Schuster, finance member, who was determined to keep the rupee at Is 6d, while the Indian opposition was in favour of depreciation. In 1930 the Indian Government notified the world that the rupee was to be linked with sterling, and in three years that followed the amount Of “superfluous” silver sold by the Indian Treasury was colossal. In 1934 the rupee is officially quoted at 18d, and the sales of silver are greatly restricted. In New Zealand currency (which is depreciated by 25 per cent, in relation to sterling) the equivalent in silver of !>™ pee . (India) would be approximately j r a Shanghai dollar (China) 20.2 d and of Hongkong dollar (Empire) 22.7 d, as per to-day’s quotations. This gain in exchange is an enormous asset for the £ ew . Zealand exporter, particularly when with goods from' the United States, Germany, France, Italy, Great Britain, Canada, etc. In the words of Sir Robert Horne, tuture prosperity of the world depends largely on ability to open up vast resources in the Far Eart through a remonetisation of the metal in which so ® ast s accumulated wealth is held. Now the process has begun, and it is the right time for New Zealand to go to the Far East, to establish there New Zealand business houses and agencies, and to be ready to. reap the benefits of the revival of- the silver and of the colossal purchasing power of th« Easterners, ‘ — c