The Timaru Herald FRIDAY, OCTOBER 16, 1908. SILVER COINAGE IN AUSTRALIA.

Timaru Herald, Volume XIIIC, Issue 13726, 16 October 1908, Page 4

The Timaru Herald FRIDAY, OCTOBER 16, 1908. SILVER COINAGE IN AUSTRALIA.

■ Rather an interesting point in economies is involved in the announcement made by the Federal Treasurer of the Government's , intention to proceed with a Coinage Bill to provide for the coinage of silver in the Australian mints. This is expected * to result in a considerable annual prolii—r * how much we cannot say from the cabled I summary of Sir William Lyne's speech, but it* cannot be anything likt* ' the j £560,000 mentioned in the telegraphic * message. The profit really at isr-s from an economic accident, due to the iluetuations in the price of silver and tho adoption of the gold standard. When I*. ,ih'e British mint adopted the ratio of ten florins to the sovereign, the price of ■ s/.lver' was & an ounce. The ounce of coined silver bore a face. value of S-. 6d, so that the discrepancy between face value and actual value was only slight. For this small disproportion there was a double reason. Jt was introduced partly to cover the cost of coinage, and partly to prevent astute dealers, in case of a :rise in the price of isilver, from melting their'coins into s'lver bullion and selling it at a, profit. .Since those days the proportion of value between silver and gold has l>een groaily changed. The value of gold, in comparison with lint of the commodities which it purcha>=>.«, has steadily risen, while the value of silver has decl.'ned. The market price of sihvr is to-day "something over 2s an ounce, while an ounce of coined silver still bears a face value of 5s 6d. The expense i.f coining is comparatively trivial. Tlurc is thus a large initial profit in the coinage, and after all the expenses of renewal have been met. the profit rema'ns great. In principle, the annual revenue from I lte silver currency is not truly profit, but is rather a loan from the community, and is not distinguishable, except in the propjrtion of value given, from the issue of notes as part of the currency. Rut the loan is a loan in perpetuity, and a wholesale ledeniption : s so unlikely a contingency that within proper limits of issue, th» so-called "profit" may be regarded as profit pure and simple. So far the Australian mints have not coined' silver, arid so the country has lost the profit derived from ths coinage of the silver which circulates in it. Tlrs was not because the British authorities objecied to give up the* profit, but" becaiu-e until federation .-had been accomplished and got into working order, the Australian colonies could not agree among themselves upon a basis from which to work. That d-fticuliy has now been overcome, and ilte Commonwealth can proceed with the provision of its silver as well !ii> its gold coins, and keep whatever profit is to lie made in the process. . The profit • will he handsome,.but not exactly magnificent. What can he expected from Ihe coinage of isilver in Australia i« an' addition to the revenue"-of about £30.000' a. year—an add'iion which will grow larger in time—and a ■■'profit, ' varionsly estimated •aV from £3OOXOO to 13600,000, spread over a long series of years, in case the existing British coinage should be withdrawn, to mane room for an Australian coinage. ' Xew silver is constantly coming in at, the rate of about £IOO.OOO in fate value/ .''per 1 annum,* wh'le the. amount in circulation in the Common' wealtji is estimated at about £1,200.000. The Federal , Government may content itself with coining otity the exita £IOO.OOO required each year, or it may decide that in addition to that, it w ; ll coin the existing £1,200.000 which the Imperial Treasury has expressed its readiness to with draw at the rate of £IOO,OOO a year. Taking the cost price of silver, the protit on coinage would work out at- about aO p-r cent., but allowing for other expenses, such as coins being wetin and having to l>o renewed at a loss. -,uthorties agree that on the average* a permanent prolii equal to about 30 per cent, on the ■'fact* value is to be exp-'eted. On this ba«is the Common wealth will make an annual pvoiit of about £30.000 if it coins only the extra £IOO,CCO which i> yearly introduced into eireubtt'on. If in addition it replaces tlie existing British coiling;* at ih? rate also of £IOO.OOO a year for 12 y.-ars. its total profit annually for that period will be double.!, or £60.000. but when the whole of the exiling coinage has bec-u displaced by locally manufactured coin", the permanent pioiit wII drop down to £30.000 a year, or what i-vci' higher iigure the pe-rcent.ige may have r.-arhtM.